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OF SHAREHOLDERS |
The Hartford Financial Services Group, Inc.
Wednesday, May 17, 2023 12:30 p.m. EDT Access* www.virtualshareholdermeeting.com/HIG2023 Record Date You may vote if you were a shareholder of record at the close of business on March 20, 2023. Voting Items Shareholders will vote on the following items of business: |
Date and Time
Wednesday, May 18, 201612:30 p.m. EDT
Location
Wallace Stevens Theater atThe Hartford Financial Services Group, Inc.’s Home Office
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, One Hartford Plaza, Hartford, CT 06155 at 12:30 p.m. EDT.
Voting Items
Shareholders will vote on the following items of business:
VOTING | ||||||||||||||||||
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www.proxyvote.com | |||||||||||||||||
By toll-free telephone 1-800-690-6903 | ||||||||||||||||||
By mail Follow the instructions on your proxy card | ||||||||||||||||||
Board Recommendation | Page | At the Annual Meeting Follow the instructions on the virtual meeting site | ||||||||||||||||
1. Elect a Board of Directors for the coming year; | FOR | |||||||||||||||||
2. |
| FOR | IMPORTANT INFORMATION IF YOU PLAN TOATTEND THE ANNUAL MEETING: You are entitled to participate (i.e., submit questions and/or vote) in the Annual Meeting if you were a shareholder of record at the close of business on March 20, 2023, the record date, or hold a legal proxy for the meeting provided by your bank, broker, or nominee. To participate, you will need the 16-digit control number provided on your proxy card, voting instruction form or notice. Shareholders may also vote or submit questions in advance of the meeting at www.proxyvote.com using their 16-digit control number. If you are not a shareholder or do not have a control number, you may still access the meeting as a guest, but you will not be able to participate. If you have difficulty accessing the Annual Meeting, please call the number on the registration page of the virtual meeting site. Technicians will be available to assist you. | |||||||||||||||
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Record Date
You may vote if you were a shareholder of record at the close of business on March 21, 2016. The Hartford’s proxy materials are available via the Internet, which allows us to reduce printing and delivery costs and lessen adverse environmental impacts.
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 75 under “How do I vote my shares?”
We urge you to review the proxy statement carefully and exercise your right to vote.
Dated: April 7, 2016
By order of the Board of Directors,
Donald C. Hunt
Vice President and Corporate Secretary
| http://ir.thehartford.com** and www.proxyvote.com, which allows us to reduce printing and delivery costs and lessen adverse environmental impacts. | ||||||||||||||||
We hope that you will participate in the Annual Meeting, either by attending and voting We urge you to review the proxy statement carefully and exercise your right to vote. Dated: April 6, 2023 By order of the Board of Directors | |||||||||||||||||
Donald C. Hunt | |||||||||||||||||
Senior Vice President and Corporate Secretary | |||||||||||||||||
* In order to support the health and well-being of our shareholders, employees, partners and communities, and to provide a convenient opportunity for shareholders to participate from wherever they are located, the Annual Meeting will be held in a virtual meeting format via audio webcast only, and not at a physical location. | |||||||||||||||||
**References in this proxy statement to our website address are provided only as a convenience and do not constitute, and should not be viewed as, an incorporation by reference of the information contained on, or available through, the website. Therefore, such information should not be considered part of this proxy statement. |
2023 Proxy Statement | 1 |
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Back2022 was an outstanding year of financial performance and progress for The Hartford across our strategic objectives. During the year, the Board oversaw the Company’s execution on its strategy to Contents
Q&A WITH OUR CHAIRMAN & CEO AND PRESIDING DIRECTOR
Q. What are your thoughtsmaximize value creation for all stakeholders, which focuses on advancing underwriting excellence, enhancing digital capabilities, maximizing distribution channels, optimizing organizational efficiency, and advancing sustainability leadership. As the 2023 Annual Meeting of Shareholders approaches, it is our privilege as you reflectChairman and Lead Director to share details on the year 2015 at The Hartford?
Chris Swift: First
Tom Renyi: I share Chris’s pride in the strong results delivered in 2015 and the commitment to executing on our long-term strategy. I know my fellow directors and I feel good about the collaborative dynamic we have with this management team on strategic initiatives, risk management, and attracting and retaining talent. We remain committed to protecting shareholder value through best-in-class governance practices and were very pleased to be recognized byappoint Edmund Reese, who brings extensive senior leadership experience with several trusted and admired companies and deep knowledge of investments, financial reporting, strategic planning, operations and product launches. We believe we continue to have the New York Stock Exchange in 2015right mix of skills and expertise necessary to support the Company’s strategy. The current Board is a diverse group whose collective credentials bring varied perspectives to the oversight of The Hartford.
Q. Can you comment on your plans for 2016 and beyond?
Chris Swift: We’re focused squarely on our market leading Property & Casualty, Group Benefits and Mutual Funds businesses. Our strategy for continuing to achieve profitable growth is based on what we call the “five pillars.”evaluations. The first pillar is product; we want to become a broader risk player by expanding our risk appetite and product offerings. The second pillar is distribution; our goal is to maximize the great distribution system that we enjoy today. Third is customer experience; putting the customer at the center of everything we do so that it is easier for the customer to interact with the company. The fourth pillar is operating capabilities, most notably improving technology and data analytics, areas where we’re making big investments. Finally, talent; we have over 17,000 very talented employees, but we're always looking to attract additional talent that would enhance our ability to compete in the marketplace. We believe that our focus on these areas will create long-term shareholder value by achieving continued improvement in our core earnings return on equity(2) and generating total value creation, measured by dividends and growth in book value per diluted share(3).
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The Hartford Financial Services Group, Inc.
Tom Renyi: I would addthird-party facilitator concluded that the Board continues to befunction at a very engagedhigh level and remains deeply committed to serving the Company and its stakeholders.
Q: What are your views on capital management?
Chris Swift: As we consider management of excess capital in the future, we will prioritize opportunities that accelerate our premium growth and operating capabilities. In the event we do not find opportunities that meet our strategic and financial objectives, we will continue to return excess capital to shareholders. As I mentioned, our primary focus continues to be on the profitable growth of our Property and Casualty, Group Benefits and Mutual Funds businesses, which have been strong generators of excess capital.
Tom Renyi: The Board has fully supported management’s thoughtful approach to excess capital deployment in recent years. As we look ahead, we agree that placing a high priority on revenue generating opportunities is a sound approach in today’s competitive environment.
Q. What are the challenges you expect to face in executing on your strategy and what are the risks that the Board is particularly focused on now?
Chris Swift: I’ll describe the challenges and let Tom address the risks. While we enter 2016 with a strong foundation, we are very mindful of the challenges we face. Consolidation across our industry; IT challenges and opportunities; potential disruptors such as big data and autonomous cars; and new capital entering the market, all contribute to increasing competition. Despite these headwinds, we are confident that with a stable management team and a clear strategy, we can maintain our underwriting discipline, expense control and capital flexibility at a time when some of our industry peers are facing strategic or financial challenges.
Tom Renyi: The Board spends substantial time on risk management. The Harford has an exceptional Enterprise Risk Management (“ERM”) organization that has developed cutting edge tools and processes for the identification, assessment, and, when appropriate, response to internal and external risks to the company's operations and business objectives. Like most companies, we are particularly focused on cyber risks. The Board receives two formal standing reports on cyber each year, but the topic comes up more frequently than that. In addition to modeling the financial impacts of potential cyber events on The Hartford under various scenarios, The Hartford retains third parties to conduct cyber-attack simulations. These simulations use real-world scenarios and help The Hartford identify and address potential vulnerabilities and enhance response protocols.
Q. What is The Hartford’s philosophy on community engagement and social responsibility?
Chris Swift: Character is central to our company’s vision to be exceptional. We want to be known not only for our financial performance and our value to customers, but also for being the best neighbor we can be. Improving our communities is a big part of that. In 2015, the company and our employees contributed more than $10 million to the community, giving through time, talent and donations. Our national philanthropic program, Communities with HART, reached more than 14,500 U.S. students in 2014-2015 as a title sponsor of Junior Achievement’s JA Company Program, which provides basic economic education for high school students, and dispersed 60 micro-finance loans to small business owners in four markets.
Tom Renyi: We’re also committed to environmental stewardship – as an employer, insurer, investor, property owner and responsible corporate citizen. Our efforts have won a number of accolades over the years that we have highlighted in our proxy statement disclosures, but those accolades don’t tell the full story of the incredible work and countless hours that go into our sustainability initiatives, which include everything from installing electric vehicle charging stations to support electric car use, switching to more fuel efficient fleet vehicles, reducing our paper consumption and even planting a community garden on The Hartford’s campus. Each year, the company puts together, and the Board reviews, a comprehensive sustainability report, which is available on The Hartford’s website and tells this larger story.
Q. Any final thoughts?
Tom Renyi: As stewards of the company, the Board is committed to helping The Hartford deliver superior returns for our shareholders and protecting that value over the long-term. I know I speak for the Board when I say what a privilege it is to serve this great company and its shareholders.
Chris Swift: We have a clear strategy, an experienced and stable management team, a powerful national distribution network, differentiated products and a brand that stands for strength and integrity. As we enter 2016, we remain focused on building strength as a larger player across a broader spectrum of risk, product, distribution and geography. In addition to the profitable growth of our businesses, I believe that our increased focus on the customer, process excellence and continuous improvement will drive greater operating efficiency and effectiveness and continue to create shareholder value in the future. I am proud of what we have accomplished in 2015 and I am confident in our ability to navigate this dynamic and competitive environment and continue to create shareholder value.
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Christopher J. Swift | Trevor Fetter | ||||||||||
Chairman and Chief Executive Officer | Lead Director |
2 | www.thehartford.com |
TABLE OF CONTENTS
PROXY SUMMARY | ||||||||
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BOARD AND GOVERNANCE MATTERS | ||||||||
Item 1: Election of Directors |
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Governance Practices and Framework |
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Board Composition and Refreshment |
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Committees of the Board |
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The Board's Role and Responsibilities |
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Director Compensation |
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Certain Relationships and Related Party Transactions |
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Communicating with the Board |
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| Director Nominees | |||||||
AUDIT MATTERS |
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Item 2: Ratification of Independent Registered Public Accounting Firm |
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Fees of the Independent Registered Public Accounting Firm |
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| Audit Committee Pre-Approval Policies and Procedures | |||||||
Report of the Audit Committee |
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COMPENSATION MATTERS |
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Item 3: Advisory Vote to Approve Executive Compensation |
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Compensation Discussion and Analysis |
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Executive Summary |
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Components of the Compensation Program |
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Process for Determining Senior Executive Compensation (Including NEOs) |
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2022 Named Executive Officers' Compensation and Performance |
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Compensation Policies and Practices |
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Effect of Tax and Accounting Considerations on Compensation Design | ||||||||
Report of the Compensation and Management Development Committee | ||||||||
Executive Compensation Tables | ||||||||
CEO Pay Ratio | ||||||||
Pay Versus Performance | ||||||||
SHAREHOLDER PROPOSAL | ||||||||
Item 4: Vote on Shareholder Proposal That the Company’s Board Adopt and Disclose a Policy for the Time Bound Phase Out of Underwriting Risks Associated with New Fossil Fuel Exploration and Development Projects | ||||||||
INFORMATION ON STOCK OWNERSHIP | ||||||||
Directors and Executive Officers |
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Certain Shareholders |
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Delinquent Section 16(a) Reports |
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INFORMATION ABOUT THE HARTFORD’S ANNUAL MEETING OF SHAREHOLDERS | ||||||||
Householding of Proxy Materials |
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Frequently Asked Questions |
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Other Information |
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APPENDIX A: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
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2022 Proxy Statement | 3 |
Proxy Summary
PROXY SUMMARY
This summary highlights information contained elsewhere in this proxy statement. This summaryIt does not contain all of the information that you should consider and you should read the entire proxy statement carefully before voting.
ITEM 1 | ELECTION OF DIRECTORS | |||||||||
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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 |
Board Nominees | |||||||
Name | Age | Director since | Experience | Independent | Current | Other Current | |
Yes | No | ||||||
Robert B. | 69 | 2008 | Former regional CEO, Deutsche Bank Americas | ✓ |
| • Audit* • FIRMCo | • Ellington Residential Mortgage REIT • GasLog Partners |
Trevor Fetter | 56 | 2007 | President and CEO, Tenet Healthcare | ✓ |
| • Comp* • FIRMCo | • Tenet Healthcare |
Kathryn A. Mikells | 50 | 2010 | CFO, Diageo plc | ✓ |
| • Audit • FIRMCo | • Diageo plc |
Michael G. Morris | 69 | 2004 | Former Chairman, President and CEO, American Electric Power Company | ✓ |
| • Audit • FIRMCo • NCG | • Alcoa • L Brands • Spectra Energy |
Thomas A. Renyi(2) | 70 | 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 | 52 | 2014 | Former Partner, Providence Equity Partners | ✓ |
| • Audit • FIRMCo | • VEREIT, Inc.
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Teresa W. Roseborough | 57 | 2015 | Executive Vice President, General Counsel and Corporate Secretary, The Home Depot | ✓ |
| • FIRMCo • NCG |
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Virginia P. Ruesterholz | 54 | 2013 | Former Executive Vice President, Verizon Communications | ✓ |
| • Comp • FIRMCo • NCG | • Frontier Communications |
Charles B. Strauss | 73 | 2001 | Former President and CEO, Unilever U.S. | ✓ |
| • Audit • FIRMCo* • NCG |
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Christopher J. Swift | 55 | 2014 | Chairman and CEO, The Hartford |
| ✓ | • FIRMCo |
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H. Patrick Swygert | 73 | 1996 | President Emeritus and professor emeritus, Howard University | ✓ |
| • Comp • FIRMCo • NCG* | • United Technologies Corporation |
Director Nominee, Current Age and Present or Most Recent Experience | Independent | Director since |
Committees(1) |
Public Company Boards | |||||||||||||
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Former President, CEO and COO, Avis Budget Group | ✓ | 2020 | • Audit • FIRMCo • NCG | • United Rentals, Inc. • Air New Zealand | ||||||||||||
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Former Vice Chairman and Lead Evangelist, Sprinklr |
✓ |
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• FIRMCo • NCG |
BOARD AND GOVERNANCE HIGHLIGHTS
BOARD HIGHLIGHTS
• PROS Holdings | ||
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✓ | 2007 | • Comp • FIRMCo | None | ||||||||||||||
| Donna James, 65 President and CEO, Lardon & Associates | ✓ | 2021 | • Audit • FIRMCo • NCG | • Boston Scientific(3) • Victoria's Secret • American Electric Power | ||||||||||||
Kathryn A. Mikells, 57 Chief Financial Officer Exxon Mobil | ✓ | 2010 | • Audit • FIRMCo* | None | |||||||||||||
Edmund Reese, 48 Chief Financial Officer Broadridge Financial Solutions | ✓ | 2022 | • Audit • FIRMCo | None | |||||||||||||
Teresa W. Roseborough, 64 Executive Vice President, General Counsel and Corporate Secretary, The Home Depot | ✓ | 2015 | • Comp • FIRMCo • NCG* | None | |||||||||||||
Virginia P. Ruesterholz, 61 Former Executive Vice President, Verizon Communications | ✓ | 2013 | • Comp • FIRMCo • NCG | None | |||||||||||||
Christopher J. Swift, 62 Chairman and CEO, The Hartford | 2014 | • FIRMCo | • Citizens Financial Group | ||||||||||||||
Matthew E. Winter, 66 Former President, The Allstate Corporation | ✓ | 2020 | • FIRMCo • Comp* | • ADT • H&R Block | |||||||||||||
Greig Woodring, 71 Former President and CEO, Reinsurance Group of America | ✓ | 2017 | • Audit* • FIRMCo | None |
As a result of shareholder feedback* Denotes committee chair.
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4 | www.thehartford.com |
PROXY SUMMARY |
Proxy Summary
GOVERNANCE HIGHLIGHTS
The Board and management regularly review best practices in corporate governance and modify our governance policies and practices as warranted. Our current best practices are highlighted below.
Independent Oversight |
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✓ | Independent key committees (Audit, Compensation, Nominating) | |||||||||||||
✓ | Empowered and engaged independent | |||||||||||||
Engaged Board /Shareholder Rights | ✓ | All directors elected annually | ||||||||||||
✓ | Majority vote standard (with plurality carve-out for contested elections) | |||||||||||||
✓ | Proxy access right with market terms | |||||||||||||
✓ | Director resignation policy | |||||||||||||
✓ | Over-boarding policy limits total public company boards, including The Hartford, to five for non-CEOs and two for sitting CEOs | |||||||||||||
✓ | Rigorous Board and committee annually; third-party Board and individual director evaluations conducted triennially | |||||||||||||
✓ | Meaningful Board education and training on recent and emerging governance and industry trends | |||||||||||||
✓ | Annual shareholder engagement program | |||||||||||||
Other Governance Practices | ✓ | Board ethnicity | ||||||||||||
✓ | Mandatory retirement age of 75 | |||||||||||||
✓ | Diversity policy or "Rooney Rule" commitment to ensure diverse candidates are included in the pool from which board and external CEO candidates are selected | |||||||||||||
✓ | Annual review of CEO succession plan by the independent directors with the CEO | |||||||||||||
✓ | Annual Board review of for senior management and the CEO | |||||||||||||
✓ | Stock-ownership guidelines of 4x salary for other named executive officers | |||||||||||||
✓ | Annual Nominating Committee review of | |||||||||||||
Commitment to Sustainability | ✓ | Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework | ||||||||||||
✓ | Comprehensive sustainability reporting, including a Sustainability Highlight Report, TCFD and SASB reports and EEO-1 data | |||||||||||||
✓ | Sustainability Governance Committee, including several subcommittees, comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring the full Board is briefed at least annually |
2023 Proxy Statement | 5 |
PROXY SUMMARY |
As an insurer we appreciate the risks that environmental challenges present to people and communities. Our 2050 net zero goal is indicative of that appreciation, and also a motivating force behind our work. As environmental stewards, we commit to mitigating climate change and building community resilience to its impacts. | SOCIAL | EMPLOYEES Responsible growth depends on the attraction, retention and development of top-flight talent. That talent both requires and enables us to fulfill the needs and aspirations of the diverse customers and communities we serve. | |||||||
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Our top priority is to foster resiliency – bringing crucial support and peace of mind to our customers through the most challenging of times. Our insight-driven products and our commitment to empathetic, high-quality service are the keys to our customer approach. | ||||||||
We are proud of | ||||||||
SOCIAL | COMMUNITY Our commitment to our communities transcends the products and services we offer – it includes using our knowledge, data, people and resources to make positive contributions to society. Our community engagement focuses on advancing social equity, addressing the critical needs of our neighbors in our communities, enabling human achievement and supporting the causes our employees care about most. | ||||||||
6 | www.thehartford.com |
PROXY SUMMARY |
ITEM 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||||||
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 |
ITEM 3 | ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | |||||||||
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The Board is asking shareholders to approve, on an advisory basis, the compensation of our named executive officers | ||||||||||
✓ | The Board recommends a vote "FOR" this item |
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PERFORMANCE HIGHLIGHTS
EXECUTING ON OUR STRATEGY
2015 was a successful year for The Hartford. Despite an increasingly competitive marketAn ethics, people, and a less favorable investment environment, we achieved strong financial results, continued to improve profitability and returned capitalperformance-driven culture drives our values. We have proactive positions on ESG issues important to our shareholders. Our financial strength, operating performancesustainability and strong balance sheet were recognized through rating upgrades by A.M. Best, Moody’s and Standard & Poor’s. We achieved these financial results while investing in operating capabilities and talent that are making us a broader, deeper risk player and a more efficient and customer-focused company. Highlighted below are some of our key accomplishments in 2015. We entered 2016 with a strong foundation and with confidence that we can maintain our underwriting discipline, expense control and capital flexibility in the face of increased competition.
DELIVERING LONG-TERM SHAREHOLDER RETURN
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Proxy Summary
The chart below illustrates key actions we have taken since 2013 to drive shareholder return.
2015 COMPENSATION HIGHLIGHTS
PROXY SUMMARY |
Decision
8 | www.thehartford.com |
PROXY SUMMARY |
Compensation Component | Description | ||||
Base Salary |
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Annual Incentive Plan | •Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance goals aligned with the Company's strategic priorities | ||||
Long-Term Incentive Plan | •Variable awards granted based on individual performance, retention and market data. •Designed to drive long-term performance, align senior executive interests with shareholders, and foster retention •Award mix (50% performance shares and 50% stock options) rewards stock price performance, peer-relative shareholder returns (stock price and dividends) and operating performance |
Target Pay Mix — CEO* | ||||||||
Salary 8% | Annual Incentive 21% | Long-Term Incentive 70% | ||||||
Variable with Performance: 91% |
Target Pay Mix — Other NEOs* | ||||||||
Salary 17% | Annual Incentive 26% | Long-Term Incentive 58% | ||||||
Variable with Performance: 84% |
2022 Compensation Decisions | Rationale | ||||||||
The Compensation Committee approved an | Performance against the pre-established | ||||||||
| The Compensation Committee | The Company's average annual Compensation Core ROE during the |
Base Salary | AIP Award | LTI Award | Total Compensation | |||||||||||||||||||||||||||||||||||
NEO | 2022 | Change from 2021 | 2022 | Change from 2021 | 2022 | Change from 2021 | 2022 | Change from 2021 | ||||||||||||||||||||||||||||||
Christopher Swift | $ | 1,200,000 | 4.3 | % | $ | 4,440,000 | (6.3) | % | $ | 10,000,000 | 8.1 | % | $ | 15,640,000 | 3.3 | % | ||||||||||||||||||||||
Beth Costello | $ | 775,000 | 6.9 | % | $ | 1,924,000 | (6.3) | % | $ | 2,500,000 | 25.0 | % | $ | 5,199,000 | 8.8 | % | ||||||||||||||||||||||
Douglas Elliot | $ | 950,000 | 0.0 | % | $ | 2,812,000 | (6.3) | % | $ | 5,450,000 | 0.0 | % | $ | 9,212,000 | (2.0) | % | ||||||||||||||||||||||
David Robinson | $ | 650,000 | 8.3 | % | $ | 1,184,000 | (3.3) | % | $ | 2,000,000 | 37.9 | % | $ | 3,834,000 | 17.1 | % | ||||||||||||||||||||||
Deepa Soni | $ | 650,000 | NA* | $ | 1,036,000 | NA* | $ | 1,250,000 | NA* | $ | 2,936,000 | NA* |
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PROXY SUMMARY |
2015 NEO COMPENSATION SUMMARY
TheThis table below reflects the 2015 compensation package (base salary, AIP award and long-term incentive (“LTI”) award) for each NEO. Although this table is not a substitute for the Summary Compensation Table information beginning on page 55, we believe it provides a simple and concise picture of compensation decisions made in 2022, and highlights changes from 2021. Another view of 2022 compensation for the NEOs is available in 2015.
Compensation Component | C. Swift | B. Bombara | D. Elliot | B. Johnson | R. Rupp | ||||||||||
Base Salary Rate | $ | 1,000,000 | $ | 650,000 | $ | 900,000 | $ | 525,000 | $ | 600,000 | |||||
2015 AIP Award | $ | 2,450,000 | $ | 1,200,000 | $ | 2,000,000 | $ | 1,400,000 | $ | 1,400,000 | |||||
2015 LTI Award(1) | $ | 6,400,000 | $ | 1,650,000 | $ | 4,400,000 | $ | 1,200,000 | $ | 1,400,000 | |||||
Total 2015 Compensation Package(2) | $ | 9,850,000 | $ | 3,500,000 | $ | 7,300,000 | $ | 3,125,000 | $ | 3,400,000 |
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COMPENSATION BEST PRACTICES
The Compensation Committee regularly reviews best practices in executive compensation. Our current best practices and policies include the following:
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✓ | Compensation heavily weighted toward variable pay | ||||||||||||
✓ | Senior Executives generally receive the same benefits | ||||||||||||
✓ | Double-trigger requirement for cash severance and equity vesting upon a change of control* | ||||||||||||
✓ | Cash severance upon a change of control | ||||||||||||
✓ | |||||||||||||
✓ | Risk mitigation in plan design and annual review of compensation plans, policies and practices | ||||||||||||
✓ | Claw-back provisions in compensation and | ||||||||||||
✓ | Prohibition on hedging, monetization, derivative and similar transactions with company securities | ||||||||||||
✓ | Prohibition on Senior Executives | ||||||||||||
✓ | Stock ownership guidelines for directors and Senior | ||||||||||||
✓ | |||||||||||||
✓ | Competitive burn rate and |
WHAT WE DON'T DO | |||||||||||
û | No Senior Executive tax gross-ups for perquisites or excise taxes on severance payments | ||||||||||
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 stock options | ||||||||||
û | No reload provisions in any stock option grant | ||||||||||
û | No payment of dividends or dividend equivalents on equity awards until vesting |
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10 | www.thehartford.com |
PROXY SUMMARY |
Proxy Summary
ITEM 4 SHAREHOLDER PROPOSAL THAT THE COMPANY ADOPT AND DISCLOSE A POLICY FOR THE TIME BOUND PHASE OUT OF UNDERWRITING RISKS ASSOCIATED WITH NEW FOSSIL FUEL EXPLORATION AND DEVELOPMENT PROJECTS | ||||||||
Vote on the shareholder proposal that The Hartford’s Board of Directors adopt and disclose a policy for the time bound phase out of underwriting risks associated with new fossil fuel exploration and development projects. | ||||||||
× | The Board of Directors recommends that shareholders vote "AGAINST" this Proposal for the following reasons: •The Hartford has established itself as a U.S. insurance industry leader in its commitment to address climate change through a proactive, balanced and pragmatic approach. •Proscriptive approaches to address climate change fail to account for the complexities of the U.S. insurance system or the role the fossil fuel industry must play in energy transition. Divestitures and boycotts are not the optimal foundation to reach net zero. •Recent geopolitical and economic events have underscored the need for insurers to remain pragmatic and flexible in their underwriting approach during the energy transition. •U.S. insurers are operating in an increasingly complex regulatory environment, making a balanced and pragmatic approach to underwriting of vital importance. •A strong majority and wide variety of stakeholders support The Hartford’s energy transition approach. |
2023 Proxy Statement | 11 |
ITEM 1 ELECTION OF DIRECTORS | ||||||||
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BOARD AND GOVERNANCE MATTERS
GOVERNANCE PRACTICES AND FRAMEWORK
At The Hartford, we aspire to be an exceptional company celebrated for financial performance, character, and customer value. We believe that goodstrong governance practices and responsible corporate behavior are central to this vision and contribute to our long-term performance. Accordingly, the Board and management regularly reviewconsider best practices in corporate governance and shareholder feedback and modify our governance policies and practices as warranted. Our current best practices include:
Independent Oversight |
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✓ | Independent key committees (Audit, Compensation, Nominating) | |||||||||||||
✓ | Empowered and engaged independent | |||||||||||||
Engaged Board /Shareholder Rights | ✓ | All directors elected annually | ||||||||||||
✓ | Majority vote standard (with plurality carve-out for contested elections) | |||||||||||||
✓ | Proxy access right with market terms | |||||||||||||
✓ | Director resignation policy | |||||||||||||
✓ | Over-boarding policy limits total public company boards, including The Hartford, to five for non-CEOs and two for sitting CEOs | |||||||||||||
✓ | Rigorous Board and committee annually; third-party Board and individual director evaluations conducted triennially | |||||||||||||
✓ | Meaningful Board education and training on recent and emerging governance and industry trends | |||||||||||||
✓ | Annual shareholder engagement program | |||||||||||||
Other Governance Practices | ✓ | Board ethnicity | ||||||||||||
✓ | Mandatory retirement age of 75 | |||||||||||||
✓ | Diversity policy or "Rooney Rule" commitment to ensure diverse candidates are included in the pool from which board and external CEO candidates are selected | |||||||||||||
✓ | Annual review of CEO succession plan by the independent directors with the CEO | |||||||||||||
✓ | Annual Board review of for senior management and the CEO | |||||||||||||
✓ | Stock-ownership guidelines of 4x salary for other named executive officers | |||||||||||||
✓ | Annual Nominating Committee review of | |||||||||||||
Commitment to Sustainability | ✓ | Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework | ||||||||||||
✓ | Comprehensive sustainability reporting, including a Sustainability Highlight Report, TCFD and SASB reports and EEO-1 data | |||||||||||||
✓ | Sustainability Governance Committee, including several subcommittees, comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring the full Board is briefed at least annually |
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BOARD AND GOVERNANCE MATTERS |
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Articles of Incorporation
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By-lawsBy-laws
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Corporate Governance Guidelines (compliant with the listing standards of the NYSENew York Stock Exchange ("NYSE") and including guidelines for determining director independence and qualifications)
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Charters of the Board’s four standing committees
(the Audit Committee; the Compensation and Management Development Committee ("Compensation Committee"); the Finance, Investment and Risk Management Committee ("FIRMCo"); and the Nominating and Corporate Governance Committee ("Nominating Committee"))•
Code of Ethics and Business Conduct
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Code of Ethics and Business Conduct for Members of the Board of Directors
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Code of Ethics and Political Compliance
Copies of these documents are available on our investor relations website at http://ir.thehartford.com or upon request sent to our Senior Vice President and Corporate Secretary (see page 7780 for details).
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Board and Governance Matters
DIRECTOR INDEPENDENCE
The Board annually reviews director independence under standards stated in our Corporate Governance Guidelines,applicable law, the listing standards of the NYSE and other applicable legal and regulatory rules.our Corporate Governance Guidelines. In addition, per our Corporate Governance Guidelines, in order to identify potential conflicts of interest and to monitor and preserve the independence, of those directors who meet the criteria for independence required under applicable law and by the NYSE, any director who wishes to become a director of another for-profit entity must obtain the pre-approval of the Nominating and Corporate Governance Committee.
The Board has affirmatively determined that all nominees for director other than Mr. Swift are independent.
BOARD LEADERSHIP STRUCTURE
The roles of CEO and Chairman of the Board (“Chairman”) are held by Christopher Swift. Mr. Swift has held these roles since January 2015. In late 2014, prior to Mr. Swift assuming the role of Chairman, the Board deliberated extensively on the company’s board leadership structure, seeking feedback from shareholders and considering extensive corporate governance analysis. The Board concluded that the company's historical approach of combining the roles of CEO and Chairman while maintaining strong independent Board leadership continues to be the optimal leadership structure from which to carry out its oversight of the company's strategy, business operations and risk management. The CEO, as the principal leader of business operations, is uniquely positioned to identify and communicate key strategic and operational issues and the interests of the company’s stakeholders to the Board. In addition, Mr. Swift’s experience and qualifications enable him to fulfill the responsibilities of both roles and effectively lead the company with a unified vision.
The Board believes that other elements of the company’s corporate governance structure ensure that independent directors can perform their role as independent fiduciaries in the Board’s oversight of management and the company’s business, and minimize any potential conflicts that may result from combining the roles of CEO and Chairman. As noted above, all directors other than Mr. Swift are independent. Whenever
2023 Proxy Statement | 13 |
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 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 executive session without the CEO and Chairman present (six such meetings in 2022). As part of its evaluation process, the Board reviews its leadership structure annually to ensure it continues to serve the best interests of shareholders and positions the Company for future success. | 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 they are available, when appropriate, for consultation and direct communication; and •Leading the Board’s evaluation process and discussion on board refreshment and director tenure, as well as setting and reviewing board goals. The Board believes that these duties and responsibilities provide for strong independent Board leadership and oversight. |
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presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
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serving as a liaison between the Chairman and CEO and the non-management directors;
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approving information sent to the Board;
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approving meeting agendas for the Board;
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approving meeting schedules to help ensure there is sufficient time for discussion of agenda items;
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calling and presiding over meetings of the independent directors; and
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if requested by shareholders, being available, when appropriate, for consultation and direct communication.
As part of itsa multi-year effort to enhance the evaluation process, the Board has adopted the following changes:
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BOARD AND GOVERNANCE MATTERS |
Board Evaluation and Development of Goals (May) | The Lead Director, or third-party evaluator, leads a Board evaluation discussion in an executive session guided by the Board’s self-assessment questionnaire and key themes identified through one-on-one discussions. The Board identifies successes and areas for improvement from the prior Board year and establishes formal goals for the year ahead. | |||||||
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 the Board's interim review of progress made against the goals established in May. | |||||||
Board Self-Assessment Questionnaires (February) | The governance review and shareholder feedback inform the development of written questionnaires that the Board and its standing committees use to help guide self-assessment. The Board’s questionnaire covers a wide range of topics, including the Board’s: • Fulfillment of its responsibilities under the Corporate Governance Guidelines; • Effectiveness in overseeing our business plan, strategy and risk management; • Leadership structure and composition, including mix of experience, skills, diversity and tenure; • Relationship with management; and • Processes to support the Board’s oversight function. | |||||||
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. Beginning in 2022, third-party led discussions also include directors' evaluations of their peers. |
2023 Proxy Statement | 15 |
BOARD AND GOVERNANCE MATTERS |
Development of Candidate Specification | Screening of Candidates | Meeting With Candidates | Decision and Nomination | |||||||||||||||||||||||||||||
•Develop skills matrix to identify desired skills and attributes, including diversity •Target areas of expertise aligned with our strategy | •Select outside search firms to lead process and/or consider internal or shareholder recommendations •Screen candidates for each specification identified | •Top candidates are interviewed by Nominating Committee members, other directors, and management •Finalist candidates undergo background and conflicts checks | •Nominating Committee recommendation of candidates and committee assignments to full Board •Board consideration and adoption of recommendation |
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BOARD TENURE AND REFRESHMENT
The Nominating Committee strives for a Board that includes a mix of varying perspectives and breadth of experience. Newer directors bring fresh ideas and perspectives, while longer tenured directors bring extensive knowledge of our complex operations. As part of its annual self-assessmentevaluation process, the Board evaluatesassesses its overall composition, including director tenure. In addition, as noted above, the Board considers the independence of its members under applicable laws, regulations and the NYSE listing standards on an annual basistenure, and does not believe the independence of any director nominee is compromised solely due to Board tenure. The Board has a formal directorbelieves that its rigorous self-evaluation process (described above), combined with its mandatory retirement policy at age 75, whichare effective in promoting Board
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BOARD AND GOVERNANCE MATTERS |
Amongdriving positive outcomes. The Nominating Committee considers diversity in the current director nominees, four have fewer than five years of service, four nominees have between five and ten years of tenure, and the remaining three have over 10 years of service. The average tenurecontext of the Board as a whole and takes into account considerations relating to race, gender, ethnicity and the range of perspectives the directors bring to their Board work. As part of its consideration of prospective nominees, is 7.6 years. the Board and the Nominating Committee monitor whether the directors as a group meet The Hartford’s criteria for the composition of the Board, including diversity considerations. As part of our continuing efforts to bring diverse perspectives to the Board:
TALENT DEVELOPMENT AND SUCCESSION PLANNING
Talent development and succession planning have been and will continue to be onename of the most important partscandidate, together with a brief biography, an indication of the Board’s governance responsibilities.candidate’s willingness to serve if elected, and evidence of the nominating shareholder’s ownership of our Common Stock.
In recent years, the Board's robust talent development and succession planning efforts have resulted in the seamless and well-managed transition of internal candidates into the company’s most senior roles.
2023 Proxy Statement | 17 |
PROVEN SUCCESSION PLAN
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Board and Governance Matters
COMMITTEES OF THE BOARD
The Board has four standing committees: the Audit Committee; the Compensation and Management Development Committee; the Finance, Investment and Risk Management Committee;FIRMCo; and the Nominating and Corporate Governance Committee. The Board has determined that all of the members of the Audit Committee, the Compensation and Management Development Committee and the Nominating and Corporate Governance Committee arequalify as “independent” directors within the meaning of the SEC’s regulations,under applicable law, the listing standards of the NYSE and our Corporate Governance Guidelines. Each committee conducts a self-evaluation of its performance on an annual basis.
The current members of the Board, the committees on which they serve and the primary functions of each committee are identified below:
AUDIT COMMITTEE | |||||||||||
CURRENT MEMBERS:* L. De Shon D. James K. Mikells E. Reese G. Woodring (Chair) MEETINGS IN 2022: 9 |
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• •Oversees • • • •Oversees operational risk, business resiliency and cybersecurity. •Oversees the company's compliance with legal and regulatory requirements and our Code ofEthics and Business •Discusses with management policies with respect to risk assessment and risk | |||||||||
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COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE | ||||||
CURRENT MEMBERS: C. Dominguez T. Fetter T. Roseborough V. Ruesterholz M. Winter (Chair) MEETINGS IN 2022: 6 |
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•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 the •Has sole authority to retain, compensate and terminate any consulting firm used toevaluate and advise on executive compensation •Considers independence standards required by the NYSE or applicable law •Reviews initiatives and progress in the area of human capital management, including an annual review of the diversity of the company’s workforce and diversity, equity and inclusion (“DEI”) programs, and of the company’s process and analysis for assessing pay equity. • Reviews succession and continuity plans for the CEO and each member of the executive leadership team that reports to • • | ||||
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FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE | |||||||
CURRENT MEMBERS: L. De Shon C. Dominguez T. Fetter D. James K. Mikells (Chair) E. Reese T. Roseborough V. Ruesterholz C. Swift M. Winter G. Woodring MEETINGS IN 2022: 5 |
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•Reviews and recommends changes to enterprise policies governing managementactivities relating to major risk exposures such as market •Reviews •Reviews and recommends changes to •Provides a forum for discussion among management and the entire Board of keyfinancial, investment, and risk management | |||||
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BOARD AND GOVERNANCE MATTERS |
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ||||||
Current Members: L. De Shon C. Dominguez D. James T. Roseborough (Chair) V. Ruesterholz MEETINGS IN 2022: 4 |
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•Advises and makes recommendations to the Board on corporate governance •Considers potential nominees to the •Makes recommendations on the organization, size and composition of the Boardand its •Considers the qualifications, compensation and retirement of •Reviews • |
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BOARD AND GOVERNANCE MATTERS |
THE BOARD’S ROLE AND RESPONSIBILITIES
BOARD RISK OVERSIGHT
The Board as a whole has ultimate responsibility for risk oversight. ItWe have a formal enterprise Risk Appetite Framework reviewed by the Board at least annually, which sets forth the Company's risk preferences, tolerances, and limits. Throughout 2022, the Board focused on the macroeconomic outlook and implications to the investment portfolio and insurance underwriting performance. The Board also continued to focus on talent, cyber risk, property catastrophe exposures and the COVID-19 pandemic’s effect on the risk profile of the Company, including impacts to insurance coverages, and the legal and regulatory environment.
BOARD OF DIRECTORS | ||||||||||||||||||||||||||||||||
AUDIT COMMITTEE •Financial reporting •Operational risk •Cybersecurity •Legal and regulatory compliance | COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE • Compensation programs • Talent acquisition, retention and development • Succession planning • Diversity, equity and inclusion (DEI) initiatives and pay equity practices | FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE •Insurance risk •Market risk •Liquidity and capital requirements •Climate risk | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE •Governance policies and procedures •Board organization and membership • ESG |
In addition to
To assist the Board in discharging its oversight function, from time to time, the Board deems it advisable to form either a special committee or a working group to lead oversight of key strategic matters. Beginning in 2012, the Board established a Talcott Resolution Board Working Group (formerly known as the “Variable Annuity Working Group”) to discuss risks and mitigation strategies related to the company’s runoff life insurance and annuity businesses. This group, consisting of Robert Allardice, Julie Richardson, Virginia Ruesterholz and Charles Strauss, met five times in 2015.
At the management level, we have established an Enterprise Risk and Capital Committee (“ERCC”), which oversees the risk profile capital management and risk management practicesactivities.
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BackTalent development and succession planning are important parts of the Board’s governance responsibilities. The CEO and independent directors conduct an annual review of succession and continuity plans for the CEO. Succession planning includes the identification and development of potential successors, policies and principles for CEO selection, and plans regarding succession in the case of an emergency or the retirement of the CEO. Each year, the Compensation Committee reviews succession and continuity plans for the CEO and each member of the executive leadership team that reports to Contents
the CEO. The Compensation Committee’s charter requires that it discuss the results of these reviews with the independent directors and/or the CEO. However, given the importance of the topic and the engagement of the full Board on the issue, all directors are invited to these sessions. The full Board routinely meets and Governance Matters
BUSINESS ETHICS AND CONDUCT
“Always act with integrity and honesty, and be accountable in everything you do.” | ||||||||||||||
The Hartford's Code of Ethics and Business Conduct |
Striving to do the right thing every day and in every situation is fundamental to our culture, and we are proud that we have been recognized eightreceived the following honors:
We provide our employees with a comprehensive and ongoing educational program, including courses on our Code of Ethics and Business Conduct, potential conflicts of interest, privacy and information protection, marketplace conduct, and ethical decision-making. Hotlines and online portals have been established for employees, vendors, or others to raise ethical concerns and employeespotential code violations, including through anonymous reporting. Employees are encouraged to speak up whenever they have an ethics-orientedethics or compliance concern or question, or problem.
SHAREHOLDER ENGAGEMENT
In the fall of 2015, as part of the annual shareholder outreach program begun in 2011, management contacted shareholders representing approximately 50% of shares outstanding and had discussions with shareholders representing approximately 26% of shares outstanding. More shareholders declined calls than prior years, which we believe reflects lack of concern with our governance and compensation programs. As a result of shareholder feedback and an analysis of industry trends and best practices, the Nominating Committee took several important actions to enhance the company's corporate governance practices.
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ANNUAL BOARD SELF-ASSESSMENT PROCESS
The Nominating Committee oversees the Board evaluation process, leveraging a multi-step process to ensure an ongoing, rigorous assessment of the Board’s effectiveness. In response to shareholders’ interest for a robust and candid self-evaluation process, commencing in 2016, the Board augmented its self-evaluation process with individual one-on-one discussions led by the presiding director and a mid-year review of progress against goals.
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In addition to the full Board evaluation process set forth above, the standing committees of the Board undertake separate self-assessments based on written questionnaires, generally between February and July.
POLITICAL CONTRIBUTIONS AND LOBBYING EXPENDITURES
The Nominating Committee reviews the company'sCompany's political and lobbying policies and reports of political contributions and expenditures consistent with the company’s Code of Conduct.annually. As part of thisour Code of Ethics and Business Conduct, we do not givemake corporate contributions to political candidates or parties, and we require that no portion of our dues paid to trade associations be used for political contributions. We do allow the use of corporate resources for non-partisan political activity. Ouractivity, including voter education and registration. We have two political action committees (“PACs”), The Hartford Advocates Fund and The Hartford Advocates Federal Fund. The PACs are solely funded by voluntary contributions from eligible employees in management-level roles and directors. The PACs support candidates for federal and state office who are willing to listen to and understand our priorities, and promote practical, reasonable solutions to key public policy challenges. The PACs contribution guidelines have been expanded to include a focus on policymakers who demonstrate a record of operating in a bipartisan manner. The PACs also formalized a commitment to proactively educate lawmakers on The Hartford’s core values. Lastly, the PACs are driving increased transparency into our contribution strategy across the entire enterprise and its website includes information on: (1) contributions made by The Hartford's PACs; (2) our policy for politicalon corporate contributions for political purposespurposes; and information on(3) annual dues, assessments and contributions of $25,000 or more to trade associations and coalitions. To access our policy and report of 2015 contributions, please go to http://ir.thehartford.com under the heading “Corporate Governance” — “Governance Documents” — “Code of Ethics” — “Code of Ethics and Political Compliance.”
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Board and Governance Matters
ENVIRONMENT AND SUSTAINABILITY
The Hartford is a leader in sustainability and we are committed to operating in a socially responsible manner. As an eco-friendly insurance company, we recognize the clear consensus within the scientific community that climate change is of real and increasing concern. As an insurer, investor, employer, property owner and responsible corporate citizen, we are committed to understanding, managing and mitigating the risks associated with global climate change. In the past few years, we have undertaken a number of initiatives that exemplify our commitment, including installing electric vehicle charging stations to support electric car use, switching to more fuel efficient fleet vehicles, reducing our paper consumption and planting a community garden on The Hartford’s campus.
As a result of our efforts to operate in an environmentally and socially responsible manner, in 2015 the company received the following national recognitions:
To learn more, about The Hartford’s corporate responsibility and sustainability efforts, please access our latest Sustainabilitymost current Political Activities Report,, which presents at https://ir.thehartford.com/corporate-governance/political-engagement.
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BOARD AND GOVERNANCE MATTERS |
ENVIRONMENT As an insurer we appreciate the risks that environmental challenges present to people and communities. Our 2050 net zero goal is indicative of that appreciation, and also a motivating force behind our work. As environmental stewards, we commit to mitigating climate change and building community resilience to its impacts. | SOCIAL | EMPLOYEES Responsible growth depends on the attraction, retention and development of top-flight talent. That talent both requires and enables us to fulfill the needs and aspirations of the diverse customers and communities we serve. | |||||||
SOCIAL | CUSTOMERS Our top priority is to foster resiliency – bringing crucial support and peace of mind to our customers through the most challenging of times. Our insight-driven products and our commitment to empathetic, high-quality service are the keys to our customer approach. | ||||||||
GOVERNANCE We are proud of our role as an industry leader in exhibiting outstanding governance practices and ethical standards, and we have fortified our sustainability governance model to reflect that standard and to prepare for the adaptive challenges that ESG will bring. | ||||||||
SOCIAL | COMMUNITY Our commitment to our communities transcends the products and services we offer – it includes using our knowledge, data, people and resources to make positive contributions to society. Our community engagement focuses on advancing social equity, addressing the critical needs of our neighbors in our communities, enabling human achievement and supporting the causes our employees care about most. | ||||||||
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BOARD AND GOVERNANCE MATTERS |
BOARD AND SHAREHOLDER MEETING ATTENDANCE
The Board met seven times during 2015create long-term shareholder value and each of the directors attended 75% or more of the aggregate number of meetings of the Board and the committees on which he or she served. The average attendance of all directors at Board and committee meetings was approximately 92%. We encourage our directors to attend the Annual Meeting of Shareholders, and all of our directors attended the Annual Meeting of Shareholders held on May 20, 2015, except Ms. Mikells, who had a scheduling conflict.
SELECTION OF NOMINEES FOR ELECTION TO THE BOARD
CRITERIA FOR NOMINATION TO THE BOARD OF DIRECTORS
The Nominating Committee is responsible for identifying and recommending to the Board candidates for Board membership. At the request of the Nominating Committee, we have retained an outside search firm to identify prospective Board nominees. The Nominating Committee also considers candidates suggested by its members, other Board members, management and shareholders.
The Nominating Committee evaluates candidates against the standards and qualifications set forth in our Corporate Governance Guidelines as well as other relevant factors as it deems appropriate, including the current composition of the Board and each candidate’s:
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experience and its relevance to our business and objectives;
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financial and accounting expertise;
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ability to meet the required independence criteria and avoid conflicts of interest;
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personal and professional ethics, integrity and values; and
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availability to attend Board meetings and to devote appropriate time to preparation for such meetings.
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In addition, the Nominating Committee considers the candidate’s potential contribution to the diversity of the Board. The Board believes that a diverse membership with varying perspectives and breadth of experience is an important attribute of a well-functioning board and will contribute positively to robust discussionsociety at meetings. The Nominating Committee considers diversitylarge.
BOARD NOMINATION PROCESS
SHAREHOLDER PROPOSED NOMINEES
The Nominating Committee will consider director candidates recommended by shareholders using the same criteria described above. Nominations for director candidates are closed for 2016. To recommend a candidate for our 2017 Annual Meeting, shareholders must deliver or mail their nomination submission to Donald C. Hunt, Vice President and Corporate Secretary, The Hartford Financial Services Group, Inc., One Hartford Plaza, Hartford, CT 06155. Nominations must be received by February 17, 2017 and must include the information specified in our By-laws, including, but not limited to, the name of the candidate, together with a brief biography, an indication of the candidate’s willingness to serve if elected, and evidence of the nominating shareholder’s ownershipSustainability section of our stock.
ESG Governance
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BOARD AND GOVERNANCE MATTERS |
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board, as described below.Board. Members of the Board who are employees of The Hartford or its subsidiaries are not compensated for service on the Board or any of its committees.
For the 2015-20162022-2023 Board service year, non-management directors received ana $110,000 annual cash retainer of $100,000 and a $160,000$180,000 annual equity grant of restricted stock units (“RSUs”).
ANNUAL CASH FEES
Cash compensation for the 2015-20162022-2023 Board service year beginning on May 20, 2015,18, 2022, the date of the 20152022 Annual Meeting of Shareholders, and ending on May 18, 2016,17, 2023, the date of the 20162023 Annual Meeting, is set forth below:
Annual Cash Compensation | Director Compensation Program | ||||
Annual Retainer | $ | ||||
Committee Chair Retainer | $35,000 – Audit | ||||
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Board and Governance Matters
ANNUAL EQUITY GRANT
In 2015,2022, directors received an annual equity grant of $160,000,$180,000, payable solely in RSUs pursuant to The Hartford 20142020 Stock Incentive Stock Plan. Outstanding RSUs are credited with dividend equivalents equal to dividends paid to holders of our common stock.
The RSUs were granted on July 29, 2015, the first dayDirectors may not sell, exchange, transfer, pledge, or otherwise dispose of the scheduled trading window following the filing of our Form 10-Q for the quarter ended June 30, 2015. The number of RSUs of each award was determined by dividing $160,000 by $47.67, the closing price of our common stock as reported on the NYSE on the date of the award. Directors who join the Board during the Board service year receive a pro rata portion of the annual RSU award.
The RSUs vest and will beare distributed as common stock at the end of the Board service year, unless the director has elected to defer distribution until the end of Board service. Directors may not sell, exchange, transfer, pledge, or otherwise dispose of the RSUs awarded. Resignation from the Board will result in a forfeiture of all unvested RSUs at the time of such resignation unless otherwise determined by the Compensation and Management Development Committee. However, RSUs will automatically vest upon the occurrence of any of the following events: (a) retirement from service on the Board in accordance with our Corporate Governance Guidelines,Guidelines; (b) death of the director,director; (c) total disability of the director, as defined in the 2014 Incentive Stock Plan,director; (d) resignation by the director under cases of special circumstances where the Compensation and Management Development Committee, in its sole discretion, consents to waive the remaining vesting period,period; or (e) a “change of control,” as defined in the 20142020 Stock Incentive Stock Plan.
OTHER
We provide each director with $100,000 of group life insurance coverage and $750,000 of accidental death and dismemberment and permanent total disability coverage while he or she servesthey serve on the Board. We also reimburse directors for travel and related expenses they incur in connection with their Board and committee service.
STOCK OWNERSHIP GUIDELINES AND RESTRICTIONS ON TRADING
The Board has established stock ownership guidelines for each director to obtain, by the third anniversary of the director’s appointment to the Board, an ownership position in our common stock equal to five times his or herthe total annual cash retainer (including cash retainers paid for committee chair or presiding directorLead Director responsibilities). All directors with at least three years of Board service met the stock ownership guidelines as of December 31, 2015.
Our insider trading policy prohibits allcontains a robust prohibition against directors engaging in hedging, activities by directors,monetization, derivative, speculative and similar transactions involving company securities, including holding stock in a margin account or pledging stock as collateral for a loan, and permits directors to engage in transactions involving The Hartford's equity securities only throughthrough: (1) a pre-established trading plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934,1934; or (2) during “trading windows” of limited duration followingfollowing: (a) the filing withpublic release of the SEC of our periodic reports on Forms 10-KCompany's financial results for the most recently completed fiscal period, and 10-Q and following(b) a determination by the companyCompany that the director is not in possession of material non-public information. Even if pre-clearance is granted, directors must make an independent determination that they do not possess material non-public information. In addition, our insider trading policy grants us the ability to suspend trading of our equity securities by directors.
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2023 Proxy Statement |
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BOARD AND GOVERNANCE MATTERS |
DIRECTOR SUMMARY COMPENSATION TABLE
We paid the following compensation to directors for the fiscal year ended December 31, 2015.
Name | Fees Earned or | Stock Awards | All Other | Total | ||||||||
Robert Allardice(2) | 135,000 | 160,000 | 2,001 | 297,001 | ||||||||
Trevor Fetter | 125,000 | 160,000 | 870 | 285,870 | ||||||||
Kathryn A. Mikells | - | 260,000 | 753 | 260,753 | ||||||||
Michael G. Morris | - | 260,000 | 2,001 | 262,001 | ||||||||
Thomas Renyi | - | 285,000 | 1,878 | 286,878 | ||||||||
Julie G. Richardson(2) | 10,000 | 260,000 | 630 | 270,630 | ||||||||
Teresa W. Roseborough(3) | 116,700 | 186,700 | 864 | 304,264 | ||||||||
Virginia P. Ruesterholz(2) | 10,000 | 260,000 | 630 | 270,630 | ||||||||
Charles B. Strauss(2) | 135,000 | 160,000 | 2,826 | 297,826 | ||||||||
H. Patrick Swygert | 110,000 | 160,000 | 2,949 | 272,949 |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
Larry D. De Shon | 110,000 | 180,000 | 1,268 | 291,268 | |||||||||||||||||||
Carlos Dominguez | 110,000 | 180,000 | 1,268 | 291,268 | |||||||||||||||||||
Trevor Fetter | 150,000 | 180,000 | 1,268 | 331,268 | |||||||||||||||||||
Donna James | 110,000 | 180,000 | 2,000 | 292,000 | |||||||||||||||||||
Kathryn A. Mikells | 135,000 | 180,000 | 992 | 315,992 | |||||||||||||||||||
Edmund Reese(3) | 64,400 | 105,300 | 514 | 170,214 | |||||||||||||||||||
Teresa W. Roseborough | 130,000 | 180,000 | 1,268 | 311,268 | |||||||||||||||||||
Virginia P. Ruesterholz | 110,000 | 180,000 | 1,268 | 291,268 | |||||||||||||||||||
Matthew E. Winter | 135,000 | 180,000 | 2,000 | 317,000 | |||||||||||||||||||
Greig Woodring | 145,000 | 180,000 | 2,948 | 327,948 |
(1)Directors Dominguez and Fetter each elected to receive vested RSUs in lieu of cash compensation. The vested RSUs will be distributed as common stock following the end of the director's Board service. (2)These amounts reflect the aggregate grant date fair value of RSU awards granted during the fiscal year ended December 31, 2022. (3)Director Reese received a pro-rated annual cash retainer of $64,400 upon his appointment to the Board on October 17, 2022. Director Reese elected to receive vested RSUs in lieu of cash compensation. The vested RSUs will be distributed as common stock following the end of his Board service. Director Reese also received a pro-rated restricted stock unit award valued at $105,300 on October 31, 2022, the second trading day following the filing of the Company’s Form 10-Q for the quarter ended September 30, 2022.
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DIRECTOR COMPENSATION TABLE—OUTSTANDING EQUITY
The following table shows the number and value of unvested equity awards outstanding as of December 31, 2015.2022. The value of these unvested awards is calculated using a market value of $43.46,$75.83, the NYSE closing price per share of our common stock on December 31, 2015.30, 2022. The numbers have been rounded to the nearest whole dollar or share.
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Name | Stock | Number | Market Value | ||||||
Robert Allardice | 7/29/2015 | 3,372 | 146,547 | ||||||
Trevor Fetter | 7/29/2015 | 3,372 | 146,547 | ||||||
Kathryn A. Mikells | 7/29/2015 | 3,372 | 146,547 | ||||||
Michael G. Morris | 7/29/2015 | 3,372 | 146,547 | ||||||
Thomas Renyi | 7/29/2015 | 3,372 | 146,547 | ||||||
Julie G. Richardson | 7/29/2015 | 3,372 | 146,547 | ||||||
Teresa W. Roseborough | 7/29/2015 | 3,372 | 146,547 | ||||||
Virginia P. Ruesterholz | 7/29/2015 | 3,372 | 146,547 | ||||||
Charles B. Strauss | 7/29/2015 | 3,372 | 146,547 | ||||||
H. Patrick Swygert | 7/29/2015 | 3,372 | 146,547 |
Stock Awards(1) | |||||||||||||||||
Name | Stock Grant Date(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($) | ||||||||||||||
Larry D. De Shon | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Carlos Dominguez | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Trevor Fetter | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Donna James | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Kathryn A. Mikells | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Edmund Reese | 10/31/2022 | 1,454 | 110,257 | ||||||||||||||
Teresa W. Roseborough | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Virginia P. Ruesterholz | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Matthew E. Winter | 8/1/2022 | 2,854 | 216,419 | ||||||||||||||
Greig Woodring | 8/1/2022 | 2,854 | 216,419 |
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BOARD AND GOVERNANCE MATTERS |
Board and Governance Matters
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has adopted a Policy for the Review, Approval or Ratification of Transactions with Related Persons. This policy requires our directors and Section 16 executive officers to promptly disclose any actual or potential material conflict of interest to the Chair of the Nominating Committee and the Chairman of the Board for evaluation and resolution. If the transaction involves a Section 16 executive officer or an immediate family member of a Section 16 executive officer, the matter must also be disclosed to our General Auditor or Director of Compliance for evaluation and resolution.
We did not have any transactions requiring review under this policy during 2015.
Shareholders and other interested parties may communicate with directors by contacting theDonald C. Hunt, Senior Vice President and Corporate Secretary atof The Hartford Financial Services Group, Inc., One Hartford Plaza, Hartford, CT 06155. The Senior Vice President and Corporate Secretary will relay appropriate questions or messages to the directors. Only items related to the duties and responsibilities of the Board will be forwarded.
Anyone interested in raising a complaint or concern regarding accounting issues or other compliance matters directly with the Audit Committee may do so anonymously and confidentially by contacting EthicsPoint:
By internet | By telephone | By mail | ||||||
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Visit 24/7 www.ethicspoint.com | 1-866-737-6812 (U.S. and Canada) | The Hartford c/o EthicsPoint |
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2023 Proxy Statement |
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BOARD AND GOVERNANCE MATTERS |
DIRECTOR NOMINEES
Eleven individuals will be nominated for election as directors at the Annual Meeting. The terms of office for each elected director will run until the next annual meeting of shareholders and until his or hertheir successor is elected and qualified, or until his or hertheir earlier death, retirement, resignation or removal from office.
In accordance with our Corporate Governance Guidelines, each director has submitted a contingent, irrevocable resignation that the Board may accept if the director fails to receive more votes “for” than “against” in an uncontested election. In that situation, the Nominating Committee (or another committee comprised of at least three non-management directors) would make a recommendation to the Board about whether to accept or reject the resignation. The Board, not including the subject director, will act on this recommendation within 90 days from the date of the Annual Meeting, and we will publicly disclose the Board's decision publicly promptly thereafter.
If for any reason a nominee should become unable to serve as a director, either the shares of common stock represented by valid proxies will be voted for the election of another individual nominated by the Board, or the Board will reduce the number of directors in order to eliminate the vacancy.
The Nominating Committee believes that each director nominee has an established record of accomplishment in areas relevant to our business and objectives, and possesses the characteristics identified in our Corporate Governance Guidelines as essential to a well-functioning and deliberative governing body, including integrity, independence and commitment. Other experience, qualifications and skills the Nominating Committee looks for include the following:
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 | Extensive experience in the insurance and financial services | ||||
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. | ||||
| We place great importance on attracting and retaining superior talent, and motivating employees to achieve desired enterprise and individual performance objectives. |
The Nominating Committee believes that our current Board is a diverse group whose collective experiences and qualifications bring a variety of perspectives to the oversight of The Hartford. All of our directors hold, or have held, senior leadership positions in large, complex corporations educational institutions and/or charitable and not-for-profit organizations. In these positions, they have demonstrated their leadership, intellectual and analytical skills and gained deep experience in core disciplines significant to their oversight responsibilities on our Board. Their roles in these organizations also permit them to offer senior management a diverse range of perspectives about the issues facing a complex financial services company like The Hartford. Key qualifications, skills and experience our independent directors bring to the Board that are important to the oversight of The Hartford are identified and described below.
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BOARD AND GOVERNANCE MATTERS |
Board and Governance Matters
Independent Director: | Larry De Shon | Carlos Dominguez | Trevor Fetter | Donna James | Kathryn Mikells | Edmund Reese | Teresa Roseborough | Virginia Ruesterholz | Matthew Winter | Greig Woodring | ||||||||||||||||||||||
COMPETENCIES | ||||||||||||||||||||||||||||||||
Public Company CEO/ President Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||
CFO Experience/Finance and Accounting | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||
Leadership Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||
Insurance Industry Experience | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||
Financial Services Industry Experience | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||
Digital/ Technology | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||||
Corporate Governance | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||
Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||
Business Operations/ Strategic Planning | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||
Regulatory | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||
Human Capital Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ |
| LARRY D. DE SHONINDEPENDENT | |||||||||||||
–Executive Vice President, Operations (2006-2011) • UAL Corporation (parent of United Airlines) –Positions of increasing responsibility, including Senior Vice President positions in marketing, on-board service and global airport operations (1978-2006) |
Age: 63 Committees: • Audit • FIRMCo • Nominating Other public company directorships: •United Rentals, Inc. (2021-present) •Air New Zealand (2020-present) •Avis Budget Group, Inc. (2015-2019) | |||||||||||||
Skills and | ||||||||||||||
As a former chief executive officer and director of Avis Budget Group, Mr. De Shon provides extensive leadership and corporate governance experience, deep operating skills and international expertise. He has successfully led organizations through times of disruption and global transformations, developed innovative solutions to strengthen his companies’ positions in the marketplace and modernized systems for better customer and employee experiences. At Avis Budget Group Mr. De Shon created the first end-to-end digital car rental experience, migrated the platform to the cloud, and built one of the largest connected car fleets in the world. In addition, he oversaw businesses in Europe, the Middle East, Africa, Asia, Australia and New Zealand. Prior to joining Avis, Mr. De Shon had a 28-year career with United Airlines, most recently leading an organization of 23,000 employees in 29 countries. |
Leadership: Served2023 Proxy Statement 29
BOARD AND GOVERNANCE MATTERS |
CARLOS DOMINGUEZINDEPENDENT | ||||||||||||||
Professional highlights: • Sprinklr Inc. –Vice Chairman of the Board and Lead Evangelist (2020-2022) –President (2015-2020) –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 Age: 64 Committees: • Compensation • FIRMCo • Nominating Other public company directorships: •PROS Holdings, Inc. (2020-present) •Medidata Solutions, Inc. (2008-2019) | |||||||||||||
Skills and qualifications relevant to The Hartford: | ||||||||||||||
Mr. Dominguez has more than 30 years of enterprise technology experience. He provides extensive and relevant digital expertise as The Hartford focuses on data analytics and digital capabilities to continuously improve the way it operates and delivers value to customers. As President of Sprinklr Inc., Mr. Dominguez guided strategic direction and led the marketing, sales, services, and partnerships teams for a leading social media management company. Prior to joining Sprinklr, he spent seven years as a technology representative for the Chairman and CEO of Cisco Systems, Inc. In this role, Mr. Dominguez engaged with senior |
TREVOR FETTERINDEPENDENT — LEAD DIRECTOR | ||||||||||||||
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 Age: 63 Committees: • Compensation • FIRMCo Other public company directorships: •None | |||||||||||||
Skills and qualifications relevant to The Hartford: | ||||||||||||||
Mr. Fetter has nearly two decades of experience as
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BOARD AND GOVERNANCE MATTERS |
| DONNA A. JAMES INDEPENDENT | |||||||||||||
–President and Chief Executive Officer (2006-present) • Nationwide Mutual Insurance and Financial Services –President, Nationwide Strategic Investments (2003-2006) –Positions of increasing responsibility, including Executive Vice President – Chief Administrative Officer; Co-President Shared Services; Executive Vice President Human Resource; and Vice President Office of the Chief Executive Officer (1993-2003) | Director since:
Committees: • Audit • FIRMCo • Nominating Other public company directorships: •Boston Scientific, Inc. (2015-present)* •Victoria's Secret (2021-present) •American Electric Power (2022-present) •L Brands, Inc. (2003-2021) | |||||||||||||
Skills and | ||||||||||||||
Ms. James brings to the Board extensive insurance-industry experience in a range of functions, including accounting, investing, operations, treasury and human resources. She is president and CEO of Lardon & Associates, a business-advisory firm specializing in corporate governance, new business development, strategy, and financial and risk management. She had a 25-year career with Nationwide Mutual Insurance Company, culminating in the role of president of strategic investments. Before that, she held a variety of positions, including chief administrative officer, chief human resources officer, assistant to the CEO and director of operations and treasury services. Ms. James has significant corporate governance experience by virtue of her service on several major public company boards, including as audit committee chair. |
Other Public Company Directorships:(2015-present)(2015-2021)Select QualificationsDirector since: 2010Skills and Skills:Leadership: Experiencequalifications relevant to The Hartford:Ms. Mikells has extensive experience in a variety of executive management positions, with a focus on leading the finance function of global organizations. Finance and Accounting: Significant 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 publicly-tradedpublicly traded companies. The Board has determined that Ms. Mikells meets the SEC’s criteria of an audit committee “financial expert.”Business Operations and Strategic Management: Strongprovides strong management and transformational skills, demonstrated during ADT’s successful transition into an independent company, andas well as significant mergers and acquisitions experience acquired through the sale of NacloNalco to Ecolab and the merger of United Airlines with Continental Airlines.Risk Management: Demonstrated She has demonstrated risk management skills as a leader responsible for financial and corporate planning for domestic and international organizations.Talent Management: Strong In addition, Ms. Mikells has strong talent development skills acquired through years of leading global finance divisions.
2023 Proxy Statement | 31 |
BOARD AND GOVERNANCE MATTERS |
| EDMUND REESE INDEPENDENT | |||||||||||||
– Chief Financial Officer (2020-present) • American Express Company – Chief Financial Officer, Global Consumer Services & Senior Vice President (2019-2020) – Positions of increasing responsibility in investor relations, consumer services, and finance (2009-2019) • Merrill Lynch & Co., Inc. –Client Coverage Group: US Advisory Director,
– Corporate Client Group/Stock Plan Services: Vice President & Chief Financial Officer (2003-2005) – Positions of increasing responsibility in strategy and
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Age: 48 Committees: • Audit • FIRMCo Other public company directorships: •None | |||||||||||||
Skills and
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Mr. Reese is the chief financial officer for Broadridge Financial Solutions, Inc., a global fintech leader that helps clients transform their businesses with technology solutions that power trading, investor communications and corporate governance. Previously, he served as Chief Financial Officer and Senior Vice President of
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Board and Governance Matters
| TERESA WYNN ROSEBOROUGH INDEPENDENT | |||||||||||||
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32 | www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
VIRGINIA P. RUESTERHOLZ | INDEPENDENT | ||||||||||||||
–President, Verizon Partner Solutions (2005-2006) • Positions of increasing responsibility in operations, sales and
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Age: 61 Committees: • Compensation • FIRMCo • Nominating Other public company directorships: •Bed Bath & Beyond Inc. (2017-2022) •Frontier CommunicationsCorporation (2013-2019) | ||||||||||||||
Skills and
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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.
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Board and Governance Matters
| CHRISTOPHER J. SWIFT — CHAIRMAN | |||||||||||||
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• Vice President and Chief Financial Officer, Life and Retirement Services, American International Group, Inc. (2003-2010) • Partner, KPMG, LLP (1999-2003) • Executive
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| Director since: 2014 Age: 62 Committees: • FIRMCo Other public company directorships: •Citizens Financial Group, Inc. ( 2021-present) | |||||||||||||
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Board and Governance Matters
| MATTHEW E. WINTER INDEPENDENT | |||||||||||||
• The Allstate Corporation –President (2015-2018) –President, Allstate Personal Lines (2013-2015) –President and Chief Executive Officer, Allstate Financial (2009-2012) • American International Group, Inc. –Vice Chairman (Apr. 2009-Oct. 2009) –President and CEO, of AIG American General (2006-2009) • Massachusetts Mutual Life Insurance Company –Executive Vice President (2002-2006) –Positions of increasing responsibility (1996-2002) |
Age: 66 Committees: • Compensation (Chair) • FIRMCo Other public company directorships: •ADT Inc. (2018-present) •H&R Block, Inc. (2017-present) | |||||||||||||
Skills and qualifications relevant to The Hartford: | ||||||||||||||
As President of The Allstate Corporation, Mr. Winter oversaw the complete range of Allstate’s P&C and life insurance products and was responsible for business operations, including field offices located across the U.S. and in Canada, and distribution through Allstate and independent agencies. He brings to the Board significant expertise in areas relevant to our business, including operations, distribution and risk management, gained from over 25 years as a senior leader in the insurance industry. Before joining Allstate, Mr. Winter held numerous senior executive positions at large insurance providers, including as vice chairman of American International Group, where he was responsible for a number of business units with global reach; and executive vice president at Massachusetts Mutual Life Insurance Company, where he led the company's domestic insurance businesses. In addition, he spent more than 12 years on active duty with the United States Army and also practiced law for several years before joining the insurance industry. |
GREIG WOODRING INDEPENDENT | ||||||||||||||
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 Age: 71 Committees: • Audit (Chair) • FIRMCo Other public company directorships: •None | |||||||||||||
Skills and qualifications relevant to The Hartford: | ||||||||||||||
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 on the Executive Council of the International Insurance Society and is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries. |
34 | www.thehartford.com |
ITEM 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||||||
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, 2023. D&T has been retained as the Company’s independent registered public accounting firm since 2002. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. In selecting D&T for fiscal year 2023, the Audit Committee carefully considered, among other items: •The professional qualifications of D&T, the lead audit partner and other key engagement partners; • 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; • The appropriateness of D&T’s fees for audit and non-audit services; and •D&T’s commitment to diversity & inclusion. 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, when a rotation of the audit firm’s lead engagement partner is mandated, the Audit Committee and its chair are directly involved in the selection of D&T’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of D&T to serve as the Company’s independent external auditor is in the best interests of the Company and its investors. 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 | |||||||
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AUDIT MATTERS
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees The Hartford's financial reporting process on behalf of the Board. Management has the primary responsibility for establishing and maintaining adequate internal financial controls, for preparing the financial statements and for the public reporting process. Deloitte & Touche LLP (“D&T”), our independent registered public accounting firm for 2015, is responsible for expressing opinions that (1) our consolidated financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with generally accepted accounting principles and (2) we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015.
In this context, the Audit Committee has:
(1) reviewed and discussed the audited financial statements for the year ended December 31, 2015 with management;
(2) discussed with D&T the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 16, Communications with Audit Committees; and
(3) received the written disclosures and the letter from D&T required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with D&T the independent accountant’s independence.
Based on the review and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements should be included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.
Report Submitted: February 24, 2016
Members of the Audit Committee:
Robert B. Allardice, III, ChairmanKathryn A. MikellsMichael G. MorrisJulie G. RichardsonCharles B. Strauss
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Audit Matters
FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents fees for professional services provided by Deloitte,D&T, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) for the years ended December 31, 20152022 and 2014.
| Year Ended | Year Ended | ||||||||||
Audit fees | $ |
| 14,242,000 | $ |
| 15,188,000 | ||||||
Audit-related fees(1) |
| 336,000 |
| 1,048,000 | ||||||||
Tax fees(2) |
| 693,000 |
| 1,070,000 | ||||||||
All other fees(3) |
| 244,000 |
| 134,000 | ||||||||
Total | $ |
| 15,515,000 | $ |
| 17,440,000 |
Year Ended December 31, 2022 | Year Ended December 31, 2021 | ||||||||||
Audit fees | $ | 10,572,000 | $ | 11,041,000 | |||||||
Audit-related fees(1) | $ | 1,046,000 | $ | 1,071,000 | |||||||
Tax fees(2) | $ | 68,000 | $ | 47,000 | |||||||
All other fees(3) | $ | 650,000 | $ | 33,000 | |||||||
Total | $ | 12,336,000 | $ | 12,192,000 |
(1)Fees principally consisted of procedures related to regulatory filings, acquisition or divestiture related services and internal control related services. (2)Fees principally consisted of tax compliance services. (3)Fees pertain to permissible services not related to financial reporting.
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The Audit Committee reviewed the non-audit services provided by the Deloitte Entities during 20152022 and 20142021 and concluded that they were compatible with maintaining the Deloitte Entities’ independence.
2023 Proxy Statement 35
AUDIT MATTERS |
The Audit Committee has established policies requiring pre-approval of audit and non-audit services provided by the independent registered public accounting firm. These policies require that the Audit Committee pre-approve specific categories of audit and audit-related services annually.
The Audit Committee approves categories of audit services and audit-related services, and related fee budgets. For all pre-approvals, the Audit Committee considers whether such services are consistent with the rules of the SEC and the PCAOBPublic Company Accounting Oversight Board ("PCAOB") on auditor independence. The independent registered public accounting firm and management report to the Audit Committee on a timely basis regarding the services rendered by, and actual fees paid to, the independent registered public accounting firm to ensure that such services are within the limits approved by the Audit Committee. The Audit Committee’s policies require specific pre-approval of all tax services, internal control-related services and all other permitted services on an individual project basis.
As provided by its policies, the Audit Committee has delegated to its ChairmanChair the authority to address any requests for pre-approval of services between Audit Committee meetings, up to a maximum of $100,000 for non-tax services and up to a maximum of $5,000 for tax services.$100,000. The ChairmanChair must report any pre-approvals to the full Audit Committee at its next scheduled meeting.
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ITEM | ADVISORY APPROVAL OF 2022 COMPENSATION OF NAMED EXECUTIVE OFFICERS | |||||||||
As described in detail in the Compensation Discussion and Analysis beginning on page 38, our executive compensation program is designed to promote long-term shareholder value creation and support our strategy by: (1) encouraging profitable organic growth and ROE performance while maintaining an ethical culture supported by industry-leading sustainability practices, (2) providing market-competitive compensation opportunities designed to attract and retain talent needed for long-term success, and (3) appropriately aligning pay with short- and long-term performance. The advisory vote on this resolution is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our NEOs, as well as the philosophy, policies and practices described in this proxy statement. You have the opportunity to vote for, against or abstain from voting on the following resolution relating to executive compensation: 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. | ||||||||||
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Compensation Discussion and Analysis
COMPENSATION DISCUSSION AND ANALYSIS
This section explains our compensation philosophy, summarizes our compensation programs and reviews compensation decisions for the Named Executive Officers (“NEOs”) listed below. It also describes programs that apply to the CEO and all of his executive direct reports, other than senior executives directly supporting our mutual fundsHartford Funds business who have an independent compensation program (collectively, “Senior Executives”).
Name | Title | ||||
Christopher Swift | Chairman and Chief Executive Officer | ||||
Beth | Executive Vice President and Chief Financial Officer | ||||
Douglas | President | ||||
| Executive Vice President and | ||||
| Executive Vice President, |
*Mr Elliot retired from the Company effective at the close of business on December 31, 2022.
DELIVERING STRONGThe Hartford’s mission is to provide people with the support and protection they need to pursue their unique ambitions, seize opportunity, and prevail through unexpected challenge. Our strategy to maximize value creation for all stakeholders focuses on advancing underwriting excellence, emphasizing digital capabilities, maximizing distribution channels, optimizing organizational efficiency, and advancing ESG leadership.
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COMPENSATION MATTERS |
In 2015, The Hartford achieved strong
2023 Proxy Statement | 39 |
COMPENSATION MATTERS |
Key business metrics for full year 2022 compared to outlooks provided in February 2022 | |||||||||||||||||
Commercial Lines | Personal Lines | Group Benefits | |||||||||||||||
Written premium growth of11% was above the outlook of ~4-5%, primarily driven by higher-than-expected workers' compensation exposure growth. Combined ratio(1) of 90.2 was within the outlook of 90.0-92.0, with favorable prior accident year reserve development ("PYD") partially offset by higher current accident year ("CAY") catastrophe ("CAT") losses and an underlying combined ratio closer to the high-end of the range. Underlying combined ratio* of 88.3, which excludes CAY CATs and PYD, was at the upper-end of the outlook of 86.5-88.5, primarily due to higher non-CAT property losses. | Written premium growth of2% was above the outlook of flat-to-slightly down, as a result of higher pricing and new business above expectations. Combined ratio of 100.3 was above the outlook of 97.0-99.0, primarily due to a higher underlying combined ratio, partially offset by favorable PYD and lower CAY CATs. Underlying combined ratio of 93.7, which excludes CAY CATs and PYD, was above the outlook of 90.0-92.0, primarily due to higher-than-expected auto claim severity, partially offset by lower non-CAT property losses in homeowners and a lower expense ratio. | Earned premium and fee income growth of 7% was above the outlook of ~2%, driven by strong book persistency, higher sales and exposure growth on existing accounts. Net income margin was 5.0% and the core earnings margin* was 6.5%, which was above the outlook of 3.1%-5.4%, primarily due to higher net investment income and more favorable prior period development in group disability, partially offset by a higher group life loss ratio. |
USING OUR FINANCIAL STRENGTH TO RETURN CAPITAL, REDUCE DEBT AND INVEST IN OUR BUSINESSES
Because of our strong financial position, in 2015, The Hartford was able to expand its 2014-2016 capital management plan, increasing the total authorization by $1.6 billion to $4.375 billion for equity repurchases and by $275 million to $1.431 billion for debt management actions. In 2015, we returned approximately $1.6 billion of capital to our shareholders in share repurchases and common stock dividends, reduced debt by $750 million, and, in September, increased the quarterly dividend rate by 17%.
We also deployed capital to invest in our businesses to drive profitable growth. We made significant investments in our systems, including new systems for P&C claims, Group Benefits enrollment and Middle Market underwriting, to continue to improve operating efficiency and agent and customer experience. In addition, we continued to attract strong talent to the company, helping to develop a broader and deeper risk profile. We also made marketing investments that have increased the visibility of our brand, including our sponsorship of Major League Baseball, which fully rolls out in 2016, as well as the extension of our 20+ year relationship with U.S. Paralympics to 2020.
FOCUSING ON THE FUTURE
We have a strong portfolio of businesses and capital flexibility. We remain focused on organically growing each of our businesses while maintaining underwriting discipline, and will tightly manage expenses to support ongoing investment in the capability and talent needed to be a top-of-mind company for the products we offer. We will explore acquisitions that can help us accelerate our profitable growth strategy and that meet our financial and strategic objectives. Through strong business performance and effective capital management that returns excess capital to shareholders, we are confident in our ability to create long-term shareholder value. As we look at 2016 and beyond, our primary financial goals are to:
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continue to expand our core earnings ROE, excluding Talcott Resolution;
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efficiently manage the run-off and return of capital from Talcott Resolution, while maintaining its capital self-sufficiency;
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redeploy the excess capital generated by our businesses to create greater shareholder value; and
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generate average total value creation of at least 9% annually, as measured by common dividends paid plus growth in book value per share, excluding accumulated other comprehensive income (“AOCI”).
With our strategic and financial transformation essentially complete, The Hartfordindividual performance. Each NEO has a strong foundationtarget total compensation opportunity that is reviewed annually by the Compensation Committee (in the case of the CEO, by the independent directors) to ensure alignment with our compensation objectives and despite increasing competition, we are confident we can maintain underwriting discipline, expense control and capital flexibility.
DELIVERING LONG-TERM SHAREHOLDER RETURN
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Compensation Discussion and Analysis
The chart below illustrates key actions we have taken since 2013 to drive shareholder return.
2015 COMPENSATION HIGHLIGHTS
COMPENSATION MATTERS |
Decision
Compensation Component | Description | ||||
Base Salary |
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Annual Incentive Plan | •Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance goals aligned with the company's strategic priorities | ||||
Long-Term Incentive Plan | •Variable awards granted based on individual performance and market data. •Designed to drive long-term performance, align senior executive interests with shareholders, and foster retention. •Award mix (50% performance shares and 50% stock options) rewards stock price performance, peer-relative shareholder returns (stock price and dividends) and operating performance. |
Target Pay Mix — CEO* | ||||||||
Salary 8% | Annual Incentive 21% | Long-Term Incentive 70% | ||||||
Variable with Performance: 92% |
Target Pay Mix — Other NEOs* | ||||||||
Salary 17% | Annual Incentive 26% | Long-Term Incentive 58% | ||||||
Variable with Performance: 84% |
2022 Compensation Decisions | Rationale | ||||||||
The Compensation Committee approved an | Performance against the pre-established | ||||||||
| The Compensation Committee | The Company's average annual Compensation Core ROE during the |
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COMPENSATION MATTERS |
The table below reflectsCompensation Committee (and, in the 2015case of the CEO, the independent directors) approved the following compensation package (base salary, AIP award and long-term incentive (“LTI”) award) for each NEO. Although thisNEO:
Base Salary | AIP Award | LTI Award | Total Compensation | |||||||||||||||||||||||||||||||||||
NEO | 2022 | Change from 2021 | 2022 | Change from 2021 | 2022 | Change from 2021 | 2022 | Change from 2021 | ||||||||||||||||||||||||||||||
Christopher Swift | $ | 1,200,000 | 4.3 | % | $ | 4,440,000 | (6.3) | % | $ | 10,000,000 | 8.1 | % | $ | 15,640,000 | 3.3 | % | ||||||||||||||||||||||
Beth Costello | $ | 775,000 | 6.9 | % | $ | 1,924,000 | (6.3) | % | $ | 2,500,000 | 25.0 | % | $ | 5,199,000 | 8.8 | % | ||||||||||||||||||||||
Douglas Elliot | $ | 950,000 | 0.0 | % | $ | 2,812,000 | (6.3) | % | $ | 5,450,000 | 0.0 | % | $ | 9,212,000 | (2.0) | % | ||||||||||||||||||||||
David Robinson | $ | 650,000 | 8.3 | % | $ | 1,184,000 | (3.3) | % | $ | 2,000,000 | 37.9 | % | $ | 3,834,000 | 17.1 | % | ||||||||||||||||||||||
Deepa Soni | $ | 650,000 | NA* | $ | 1,036,000 | NA* | $ | 1,250,000 | NA* | $ | 2,936,000 | NA* |
Compensation Component |
| C. Swift |
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| B. Bombara |
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| D. Elliot |
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| B. Johnson |
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| R. Rupp | ||||||||||||||||||||||||||||
Base Salary Rate | $ |
| 1,000,000 |
| $ |
| 650,000 |
| $ |
| 900,000 |
| $ |
| 525,000 |
| $ |
| 600,000 | |||||||||||||||||||||||
2015 AIP Award | $ |
| 2,450,000 |
| $ |
| 1,200,000 |
| $ |
| 2,000,000 |
| $ |
| 1,400,000 |
| $ |
| 1,400,000 | |||||||||||||||||||||||
2015 LTI Award(1) | $ |
| 6,400,000 |
| $ |
| 1,650,000 |
| $ |
| 4,400,000 |
| $ |
| 1,200,000 |
| $ |
| 1,400,000 | |||||||||||||||||||||||
Total 2015 Compensation Package(2) | $ |
| 9,850,000 |
| $ |
| 3,500,000 |
| $ |
| 7,300,000 |
| $ |
| 3,125,000 |
| $ | 3,400,000 |
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“SAY-ON-PAY” RESULTS
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OVERVIEW OF COMPENSATION PROGRAM
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.
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Compensation Discussion and Analysis
COMPENSATION BEST PRACTICES
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✓ | Compensation heavily weighted toward variable pay | ||||||||||||
✓ | Senior Executives generally receive the same benefits | ||||||||||||
✓ | Double-trigger requirement for cash severance and equity vesting upon a change of control* | ||||||||||||
✓ | Cash severance upon a change of control | ||||||||||||
✓ | |||||||||||||
✓ | Risk mitigation in plan design and annual review of compensation plans, policies and practices | ||||||||||||
✓ | Claw-back provisions in compensation and | ||||||||||||
✓ | Prohibition on hedging, monetization, derivative and similar transactions with company securities | ||||||||||||
✓ | Prohibition on Senior Executives | ||||||||||||
✓ | Stock ownership guidelines for directors and Senior | ||||||||||||
✓ | |||||||||||||
✓ | Competitive burn rate and |
WHAT WE DON'T DO | |||||||||||
û | No Senior Executive tax gross-ups for perquisites or excise taxes on severance payments | ||||||||||
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 stock options | ||||||||||
û | No reload provisions in any stock option grant | ||||||||||
û | No payment of dividends or dividend equivalents on equity awards until vesting |
PAY MIX
NEOSAY-ON-PAY RESULTS
As the following charts show, approximately 89% of CEO target annual compensation and approximately 84% of other NEO target annual compensation are variable based on performance, including stock price performance.
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COMPENSATION MATTERS |
COMPONENTS OF THE COMPENSATION PROGRAM
Each Senior Executive has a target total compensation opportunity comprised of both fixed (base salary) and variable (annual(including both annual and long-term incentives)incentive) compensation. In addition, Senior Executives are eligible for benefits available to employees generally. This section describes the differentthree main components of our compensation program for Senior Executives and lays out the framework in which compensation decisions are made. For a discussion of the 20152022 compensation decisions made within this framework, see Pay for2022 Named Executive Officers' Compensation and Performance beginning on page 49 and 2015 Named Executive Officers Compensation and Performance beginning on page 50.
1. BASE SALARY
Each Senior Executive’s base salary is reviewed by the Compensation Committee (and, in(in the case of the CEO, the independent directors) annually, upon promotion, or following a change in job responsibilities,responsibilities. Salary decisions are based on market data, internal pay equity and level of responsibility, experience, expertise and performance.
2. ANNUAL INCENTIVE PLAN (“AIP”) AWARDS
Our employees, including the Senior Executives, are eligible to earn cash awards under the AIP based on annual company and individual performance.Each employee has a target AIP opportunity that is set as a percentage of base salary. At the conclusion of each year, the Compensation Committee establishes an annual AIP funding level that is derived through a holistic review of company performance. The AIP funding level is the main driver in determining the amount of individual AIP awards.opportunity. The Compensation Committee uses the following three-step process to determine individual Senior Executive AIP awards. Actual company
Financial performance againstsignificantly exceeding target is(120% of target). In 2021, the primary factor in determiningCompensation Committee updated the AIP funding level. Core earnings iscurve to reduce the basisslope for measuring financial performance. payouts in the range of +/-5% of target, which increases predictability and reduces volatility of payouts for performance in that range.
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the Committee felt itIt currently believes core earnings best reflects annual operating performance;
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itCore earnings is a metric commonly used by investment analysts commonly look to when evaluating annual performance;
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Core earnings is a prevalent incentive plan metric among peers; andall•All employees can impact it;core earnings.
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it is prevalent among peers.
are neither advantaged nor disadvantaged by the effect of certain external items that do not reflect operating year performance. At the beginning of eachthe year, the Compensation Committee approves a definition of “Compensation"Compensation Core Earnings” that specifies in advance certain itemsEarnings." The definition lists adjustments that will be adjustedmade to core earnings at the end of that year,year-end in order to arrive at Compensation Core Earnings, such as accounting changes,non-recurring tax benefits or charges, catastrophe losses above or below budget, orand unusual or non-recurring items. The Compensation Committee excludes the impact of these items because it believes they do not reflect the performance of our underlying businesses,2022 definition and it wantsa reconciliation from GAAP net income to ensure that management is held accountable for performance it controls and is neither advantaged nor disadvantaged for the effect of certain items outside its control. The Compensation Committee’s definition of Compensation Core Earnings for 2015 isare provided in Appendix A.
In addition to setting a target,performance, the Compensation Committee establishes a threshold performance level, below which no AIP awards are earned, as well as a maximum funding level for performance significantly exceeding target. Actual company performance in relation to target results in a formulaic AIP funding level, as illustrated below.
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Compensation Discussion and Analysis
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Once the formulaic AIP funding level is determined, the Compensation Committee reviewsalso considers a number of qualitative factors, including achievements that cannot be measured formulaically or are not yet evident in our financial performance. As a resultincluding: quality of itsearnings, risk and compliance, peer-relative performance, expense management, and non-financial and strategic objectives. Informed by this qualitative review, the Compensation Committee may if it deems appropriate,then adjust the formulaic AIP funding level up or down to arrive at an AIP funding level more commensurate with the Company’s performance.
The Compensation Committee believes retaining the flexibility to adjust the formulaic AIP funding is aligned with shareholders' interests because it allows the Compensation Committee to arrive at a final AIP funding level that best rewards holistic company performance and mitigates the risk inherent in a strictly formulaic approach. Using a strict formula may have unintended consequences due to events or market conditions unanticipated when goals are set, or may overemphasize short-term performance at the expense of long-term shareholder returns or undervalue achievements that are not yet evident in our financial performance. These factors are particularly relevant in the P&C insurance industry, where the “cost of goods sold” (that is, the amount of insured losses) is not known at the time of sale and develops over time — in some cases over many years. Because of this industry dynamic, a substantial majority of our 2022 Corporate Peer Group (listed on page 52) include discretion in their annual award design. | ||||||||
2023 Proxy Statement | 43 |
COMPENSATION MATTERS |
2022 Compensation Core Earnings | ||||||||
2022 AIP Funding Level: When setting the operating plan, which forms the basis for the Compensation Core Earnings target, management and the Board anticipated strong Commercial Lines results driven by written premium growth including price increases in excess of loss trends in nearly all lines except workers’ compensation and lower catastrophes; higher margins in Group Benefits due to lower mortality in group life, partially offset by lower investment income and moderation in favorable disability incidence and recovery trends; deterioration in Personal Lines driven by increases in automobile claim frequency and severity, higher levels of non-catastrophe losses in homeowners and higher catastrophes, as well as not assuming the same level of net favorable prior accident year development that was recognized in 2021; and lower limited partnership and other alternative investment returns relative to the strong returns in 2021. |
The Compensation Committee believes that grounding theformulaic AIP funding level in formulaic financial performance against targets, but retainingand undertook a qualitative review focused on the flexibility to adjust it to reflect qualitative factors allows itdescribed on the following page.
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COMPENSATION MATTERS |
FORMULAIC RESULTS | ||||||||||||||
COMPENSATION CORE EARNINGS PERFORMANCE AGAINST PRE-ESTABLISHED TARGET | ||||||||||||||
• Total adjustments to arrive at Compensation Core Earnings increased core earnings as reported by $69 million, primarily driven by catastrophe losses higher than plan and Hartford Funds core earnings unfavorable to plan. (see Appendix A for a description of all adjustments). • Compensation Core Earnings against the pre-established target resulted in a formulaic AIP funding of 164% of target. | ||||||||||||||
QUALITATIVE REVIEW | ||||||||||||||
Composition of Earnings | Strategic Accomplishments | |||||||||||||
•Premium growth ahead of guidance in Personal Lines, Commercial Lines and Group Benefits •Group Benefits’ margin exceeded guidance •Underlying combined ratio for Commercial Lines was near the upper-end of the guidance range while Personal Lines was above the guidance range •Net investment income exceeded plan by $239M due to favorable partnership returns, including a benefit from unplanned real estate sales Importance: Understanding trends that drove earnings informs how the Compensation Committee thinks about holistic company performance | •Named Top U.S. Industry Leader at the inaugural ESG Insurer Awards given by The Insurer magazine •Launched new Property Choice and enhanced General Liability Choice product offerings •Achieved top quartile employee survey results for employee engagement and enablement •Diverse representation of women and people of color in executive level roles ahead of goals Importance: Strategic accomplishments position the Company for long term-growth and often represent significant successes in a given year, but such accomplishments may not be reflected or may reflect negatively in the quantitative formula | |||||||||||||
Peer-Relative Performance | Risk and Compliance | |||||||||||||
•Top quartile core earnings per share growth and Core ROE •Above median book value per share growth •Total shareholder returns at 36th and 50th percentile for one- and three-year period, respectively Importance: Performance against the public companies within our 2022 Corporate Peer Group on key financial metrics and TSR is not captured in the quantitative formula but informs how the Compensation Committee thinks about holistic company performance | •#1 ranked insurance company in Just Capital and CNBC list of “JUST” companies in 2022 •Named one of the “World’s Most Ethical Companies” by Ethisphere Importance: Linked to strategy of attracting and retaining talent, as prospective employees are significantly more likely to work for a company that has a strong reputation of ethical conduct | |||||||||||||
Strategic Expense Management | ||||||||||||||
•Total managed expenses, excluding AIP awards and variable Hartford Funds expenses were favorable by $31M •Operational transformation and cost reduction plan ("Hartford Next") expense reductions were favorable by $23M Importance: Managing expenses is critical to maintaining competitive pricing and freeing up resources for investments in the business |
2023 Proxy Statement | 45 |
COMPENSATION MATTERS |
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the ability to attract, retain and incentivize employees who contribute to the long-term value of the company. Historically,148% of target, a level the Compensation Committee has used the qualitative review to both increase and decrease the AIP funding level to levelsbelieved was more commensurate with overall company performance, but, in recent years, has determined no adjustments were necessary to achieve that result.
For each Senior Executive, the company
3. LONG-TERM INCENTIVE (“LTI”AWARDS
The LTI program isawards are designed to drive long-term performance and encourage share ownership among Senior Executives, further aligning their interests with those of shareholders to promote shareholder value creation.shareholders. LTI awards are granted on an annual basis following an assessment of individual performance potential, and market data. 20152022 LTI awards for Senior Executives consist of performance shares (50% of the award value) and stock options (50% of the award value). This LTI mix provides LTI awards that appropriately blend actualrewards stock price performance, comparative stockpeer-relative shareholder returns (stock price performance, and actualdividends) and operating performance.
2022-2024 Performance Shares (50% of LTI Award)
Performance shares are designed to reward and retain Senior Executives by offeringallowing them the opportunity to receiveearn shares of our common stock upon achieving pre-determinedbased on predetermined performance criteria. The performancePerformance shares have a three-year performance period, and are settled in common stock based on the following metrics:
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Sharesshares of common stock ranging from 0% to 200% of the number of performance shares granted may be payable depending upon the performance achieved.
Performance Metric | Rationale | ||||
Compensation Core ROE (50% weighting) | Strategic measure that drives shareholder value creation | ||||
Peer-relative TSR (50% weighting) | Measure of our performance against peers that are competinginvestment choices in the capital markets |
ROE: For 50% of the performance share award, payouts at the end of the performance period, if any, will depend upon achieving ana target average annual Compensation Core ROE over a three-year measurement period.period, as adjusted for compensation purposes. Because of the adjustments made for compensation purposes, Compensation Core ROE will differ from both the net income ROE and Core Earnings ROE provided in our financial statements. The Compensation Committee's definition of Compensation Core ROE for 20152022 performance share awards is provided in Appendix A. Threshold, target and maximum Compensation Core ROE values were established in February 2015 based on the company’s 2015-2017 operating plan. There is no payout for performance below threshold. Achieving target payout of 100% requires meaningful growth in core earnings, increased profitability and prudent capital
In January 2022, the Compensation Committee set the target for 2022-2024 performance share awards at an average annual Compensation Core ROE for 2022, 2023, and 2024 of 13.5%, as reflected in the 2022-2024 operating plan. As illustrated in the graph at right, the Compensation Committee also set a threshold performance level (80% of target), below which no payout for the ROE component of awards is received, and a maximum payout for the ROE component of 200% for performance significantly exceeding target (120% of target). | 2022-2024 Compensation Core ROE | |||||||
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COMPENSATION MATTERS |
Compensation Discussion and Analysis
management. The maximum Compensation Core ROE payout of 200% reflects ambitious, longer-term goals that require performance significantly above and beyond target.
Peer-Relative TSR
TSR: For 50% of the performance share award, payouts, at the end of the performance period, if any, will be made based on company TSR performance relative to a Performance Peer Group at the end of the three-year performance period.period relative to a Performance Peer Group. The current Performance Peer Group represents 15 industry specific public companies against which we benchmark performance for compensation purposes. While there is some overlap, the Performance Peer Group is distinct from the Corporate Peer Group described on page 52, which includes mutual companies where financial data is not publicly available, as well as companies that compete with us for talent. The Compensation Committee believes that the Performance Peer Group should be limited to publicly traded companies that (1) publish results against which to measure our performance,offer similar products and (2)services and are competing investment choices in the capital markets. The Compensation Committee reviews the composition of the Performance Peer Group annually.
For each company in the Performance Peer Group, TSR will be measured using a 20-day stock price average at the beginning and the end of the performance period in order to smooth out any volatility. As illustratedIn response to shareholder feedback in prior years, the graph below, there would beTSR payout curve for performance share awards targets above-median performance. There is no payout for performance below the 30th percentile, 50% percentile; 35% payout for performance at the 30th percentile, 100% percentile; target payout for median performance at the 55th percentile; and 200% payout if our TSRfor performance ranks ahead of all companies inat the Performance Peer Group.
2015 Performance Peer Group
| Three-Year Relative TSR Ranking | ||||||||||
Allstate Corp. | |||||||||||
American Financial Group, Inc. | |||||||||||
Berkley (W. R.) Corp. | |||||||||||
Chubb Limited | |||||||||||
Cincinnati Financial Corp. | |||||||||||
CNA Financial Corp. | |||||||||||
Everest Re Group, Ltd. | |||||||||||
Hanover Insurance Group, Inc. | |||||||||||
Markel Corporation | |||||||||||
Mercury General Corp. | |||||||||||
| MetLife, Inc. | ||||||||||
| Old Republic International Corp. | ||||||||||
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For 2015,(1) While the peer group approved by the Compensation Committee revised the Performance Peer Group to includeconsisted of 16 companies, that,Berkshire Hathaway subsequently acquired Alleghany Corp., resulting in the aggregate, represent the current mix of business and are competing investment choices in the capital markets. The newa 2022 performance peer group of 20 companies includes companies that meet these criteria and have market characteristics and historical stock performance similar to the company’s.
Three-year Relative TSR Ranking
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Stock Options (50% of LTI Awards)
The use of stock options directly aligns the interests of our Senior Executives with those of shareholders because options only have value if the price of our common stock on the exercise date exceeds the stock price on the grant date. The stock options are granted at fair market value, vest in three equal installments over three years, and have a 10-year term.
PERIODIC RETENTION AWARDS AND SPECIAL EQUITY GRANTS
In 2020, the Company set a goal to improve diverse representation among its executive ranks by the close of 2030 to 50% women and 20% people of color. In keeping with these aspirations, the Compensation Committee updated the 2021 LTI program to include a performance share modifier tied to the Company’s progress toward those goals as of the close of 2023. The 2021 performance share awards will pay out between 0% and 200% based on achievement of predetermined TSR and ROE goals. The modifier will increase or decrease the total payout (if any) by 10%* based upon performance against predetermined year-end 2023 representation goals for women and people of color in executive level roles. Final results against these goals will be measured in early 2024.
Representation | As of December 31, 2020 | December 31, 2023 Goal | December 31, 2030 Goal | ||||||||
Women | 34.1 | % | 37.3 | % | 50.0 | % | |||||
People of Color | 10.9 | % | 12.8 | % | 20.0 | % |
Achievement as of December 31, 2023 | Performance Share Modifier* | ||||
Miss both goals | (10) | % | |||
Achieve one goal | no adjustment | ||||
Achieve both goals | +10% |
2023 Proxy Statement | 47 |
COMPENSATION MATTERS |
Senior Executives are eligible for the same benefits as full-time employees generally, including health, life insurance, disability and retirement benefits. Non-qualified savings and retirement plans, including those that have been frozen, provide benefits that would otherwise be provided but for the Internal Revenue Code limits that apply to tax-qualified benefit plans.
We provide limitedcertain additional perquisites to Senior Executives, to better focus their time, attentionincluding reimbursement of costs for annual physicals and capabilities on our business, consistent with market practice. Such perquisites generally includeassociated travel, certain relocation benefits (whenwhen a move is required),required, and occasional use of tickets for sporting and special events previously acquired by the companyCompany when no other business use has been arranged and there is no incremental cost to the company.Company. The CEO also has the use of a company car and driver to allow for greater efficiency while commuting.
We own a fractional interestsinterest in a corporate aircraft to allow Senior Executives to safely and efficiently travel for business purposes. This allowsThe corporate aircraft enables Senior Executives to be more efficient while traveling than if commercial flights were utilized, as the aircraft providesuse travel time productively by providing a confidential and more productive environment in which to conduct business and eliminateseliminating the schedule constraints imposed by commercial airline service. The CEO is, and the President was, permitted personal use of corporate aircraft to minimize their time spent on personal travel and to increase the time they are available for business purposes. Corporate aircraft also enables them to work more productively while traveling for time-sensitive personal matters. During 2022, the President's use of the corporate aircraft for personal travel was subject to an annual limit of $90,000. Our aircraft usage policy otherwise prohibits our Senior Executives from engaging in personal travel via corporate aircraft by Senior Executives except in extraordinary circumstances. No suchThere was no personal use by Senior Executives due to extraordinary circumstances existed in 2015.
From time to time, a Senior Executive’s expenses for a purpose deemed important to the business may not be considered “directly and integrally related” to the performance of the Senior Executive’s duties as required underby applicable SEC rules and, thus, would berules. These expenses are considered a perquisiteperquisites for disclosure purposes. Examples of such expenses may include attendance at conferences, seminars or award ceremonies, as well as attendance of a Senior Executive’s spouse or guest at business events or dinners where spousal or guest attendance is expected. We attribute income to Senior Executives for these expenses when
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COMPENSATION MATTERS |
2022 Compensation Decisions | ||
• Salary. $1,200,000, a 4.3% increase from 2021. | ||
• AIP Award. Target of $3,000,000, unchanged from 2021. The Compensation Committee approved a 2022 AIP award of $4,440,000 (148% of target), which was equal to the company AIP funding level of 148% for 2022. | ||
• LTI Award. In February 2022, the Compensation Committee granted him an LTI award of $10,000,000, an increase of 8.1% from the previous year, in the form of 50% stock options and 50% performance shares. |
2022 Compensation Decisions | ||
• Salary. $775,000, a 6.9% increase from 2021. | ||
• AIP Award. Target of $1,300,000, unchanged from 2021. For 2022, the Compensation Committee approved an AIP award of $1,924,000 (148% of target), which was equal to the Company AIP funding level of 148% for 2022. | ||
• LTI Award. In February 2022, the Compensation Committee granted her an LTI award of $2,500,000, an increase of 25.0% from the previous year, in the form of 50% stock options and 50% performance shares. |
2023 Proxy Statement | 49 |
COMPENSATION MATTERS |
2022 Compensation Decisions | ||
• Salary. $950,000, unchanged from 2021. | ||
• AIP Award. Target of $1,900,000, unchanged from 2021. For 2022, the Compensation Committee approved an AIP award of $2,812,000 (148% of target), which was equal to the company AIP funding level of 148% for 2022. | ||
• LTI Award. In February 2022, the Compensation Committee granted him an LTI award of $5,450,000, unchanged from the previous year, in the form of 50% stock options and 50% performance shares. |
2022 Compensation Decisions | ||
• Salary. $650,000, an 8.3% increase from 2021. | ||
• AIP Award. Target of $800,000, an increase of 3.2% from 2021. For 2022, the Compensation Committee approved an AIP award of $1,184,000 (148% of target), which was equal to the Company AIP funding level of 148% for 2022. | ||
• LTI Award. In February 2022, the Compensation Committee granted him an LTI award of $2,000,000, an increase of 37.9% from the previous year, in the form of 50% stock options and 50% performance shares. |
2022 Compensation Decisions | ||
• Salary. $650,000 | ||
• AIP Award. Target of $700,000. For 2022, the Compensation Committee approved an AIP award of $1,036,000 (148% of target), which was equal to the Company AIP funding level of 148% for 2022. | ||
• LTI Award. In February 2022, the Compensation Committee granted her an LTI award of $1,250,000 in the form of 50% stock options and 50% performance shares. |
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COMPENSATION MATTERS |
COMPENSATION COMMITTEE
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Annual Compensation Design, Payout and Performance Goal-Setting Process | ||
December to January | ||
• Review feedback from fall shareholder engagement | ||
• Approve design of AIP and LTI programs for the upcoming year, including updates to Performance and Corporate Peer Groups | ||
• Determine enterprise AIP funding based on the previous year's actual performance against the pre-established Compensation Core Earnings target and a review of qualitative factors | ||
• Review Senior Executive stock ownership | ||
February | ||
• Review Senior Executive performance for previous year and determine individual AIP awards | ||
• Establish AIP and LTI performance targets based on the Company's approved operating plan | ||
• Review and approve current year total compensation recommendations for Senior Executives, including salary, AIP targets and LTI awards | ||
• Establish Senior Executive leadership goals and objectives for the current year | ||
May to July | ||
• Review Say-on-Pay voting results and recommendations of proxy advisory firms | ||
• Review company pay equity status | ||
• Review talent succession planning, workforce diversity and the Company’s diversity programs | ||
September | ||
• Review Enterprise Risk Management's annual compensation risk assessment | ||
• Review AIP and LTI program design for the coming year | ||
• Receive independent consultant's annual report on executive compensation trends and regulatory trends | ||
Ongoing | ||
• Monitor the company's year-to-date performance in relation to targets | ||
• Review and consider compensation plans, policies and practices in light of company performance, strategy, shareholder feedback and best practices | ||
• Periodic review of the Company’s key talent and employee engagement measures (e.g., attrition, hiring, promotion, employee engagement and representation data) |
Compensation Discussion and Analysis
a whole. The tally sheets summarize the total compensation opportunity, including fixed and variable compensation, perquisites and potential payments upon termination or change of control. In addition, the tally sheets include a summary of historical compensation.
COMPENSATION CONSULTANT
Until 2015, Exequity, LLP served asFor 2022, Meridian Compensation Partners, LLC ("Meridian") was the Compensation Committee’s independent compensation consultant and regularly attended Compensation Committee meetings. In October 2015, Meridian Compensation Partners, LLP became the Compensation Committee’s independent compensation consultant and has regularly attended Compensation Committee meetings since its engagement. Pursuant to the Compensation Committee's charter, during their respective engagements, neither Exequity nor Meridian has not provided services to the companyCompany other than consulting services provided to the Compensation Committee and, with respect to CEO and director compensation, the Board. Each firm has provided market data, analysis, and advice regarding executive and director compensation.
In 2015,2022, following a review of its records and practice guidelines, both Exequity and Meridian provided the Compensation Committee a reportletter that confirmed its conformity with independence factors under applicable SEC rules and the listing standards of the NYSE.
2023 Proxy Statement | 51 |
COMPENSATION MATTERS |
Our Human Resources departmentteam supports the Compensation Committee in the execution of its responsibilities. The Executive Vice President,Our Chief Human Resources supervisesOfficer oversees the development of the materials for each Compensation Committee meeting, including market data, tally sheets,historical compensation and outstanding equity awards, individual and company performance metrics and compensation recommendations for consideration by the Compensation Committee.Committee (in the case of the CEO, by the independent directors). No member of our management team, including the CEO, has a role in determining his or hertheir own compensation.
BENCHMARKING
On an annual basis, the Compensation Committee reviews and considers a number of factors in establishing or recommending a target total compensation opportunity for each individual including, but not limited to, market data, tenuretime in position,role, experience, sustained performance, and internal pay equity. Although the Compensation Committee strives to be at the median,considers competitive market data, it does not target a specific market position. This section describes theThe various sources of compensation information the Compensation Committee uses to determine the competitive market for our executive officers.
2022 Corporate Peer Group Development
The Compensation Committee reviews the peer groupsgroup used for compensation benchmarking (the "Corporate Peer Group") periodically or upon a significant change in business conditions for the companyCompany or its peers. As part of its review, the Compensation Committee considers many factors, including market capitalization, revenues, assets, lines of business and sources and destinations of talent. For 2015,this reason, the Corporate Peer Group differs from the Performance Peer Group described earlier for purposes of the TSR performance measure applicable to performance shares. For 2022, the Compensation Committee did not make any changes to the peer group.
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2015 Corporate Peer Group
Data in millions – as of 12/31/152022(1)
Company Name(2) | Revenues | Assets | Market Cap | ||||||
Aetna Inc. | $ | 60,227 | $ | 53,424 | $ | 37,701 | |||
Allstate Corp (The) | $ | 35,326 | $ | 104,656 | $ | 24,048 | |||
CNA Financial Corp | $ | 9,009 | $ | 55,047 | $ | 9,500 | |||
Chubb Limited(3) | $ | 19,067 | $ | 102,366 | $ | 37,881 | |||
Cigna Corp | $ | 37,876 | $ | 57,088 | $ | 37,695 | |||
Cincinnati Financial Corporation | $ | 5,142 | $ | 18,888 | $ | 9,695 | |||
Lincoln National Corp | $ | 13,484 | $ | 251,937 | $ | 12,438 | |||
Marsh & McLennan Companies, Inc. | $ | 12,856 | $ | 18,216 | $ | 28,925 | |||
MetLife, Inc. | $ | 69,905 | $ | 877,933 | $ | 53,591 | |||
Principal Financial Group, Inc. | $ | 11,799 | $ | 218,686 | $ | 13,168 | |||
Progressive Corp (The) | $ | 20,834 | $ | 29,819 | $ | 18,578 | |||
Prudential Financial Inc | $ | 57,252 | $ | 757,388 | $ | 36,553 | |||
Travelers Companies Inc (The) | $ | 26,800 | $ | 100,184 | $ | 34,334 | |||
Unum Group | $ | 10,731 | $ | 60,590 | $ | 8,104 | |||
Voya Financial, Inc. | $ | 11,341 | $ | 218,250 | $ | 7,948 | |||
W.R. Berkley Corporation | $ | 7,144 | $ | 21,731 | $ | 6,750 | |||
XL Group | $ | 9,236 | $ | 58,683 | $ | 11,666 | |||
25TH PERCENTILE | $ | 10,731 | $ | 53,424 | $ | 9,695 | |||
MEDIAN | $ | 13,484 | $ | 60,590 | $ | 18,578 | |||
75TH PERCENTILE | $ | 35,326 | $ | 218,250 | $ | 36,553 | |||
THE HARTFORD | $ | 18,150 | $ | 228,348 | $ | 17,802 | |||
PERCENT RANK | 55% | 83% | 49% |
Company Name(2) | Revenues | Assets | Market Cap | ||||||||||||||
Allstate Corp. | $ | 51,412 | $ | 97,957 | $ | 35,962 | |||||||||||
American International Group, Inc. | $ | 56,500 | $ | 526,634 | $ | 46,986 | |||||||||||
Berkley (W. R.) Corp. | $ | 11,166 | $ | 33,861 | $ | 19,266 | |||||||||||
Chubb Ltd. | $ | 43,124 | $ | 199,124 | $ | 91,560 | |||||||||||
Cincinnati Financial Corp. | $ | 6,557 | $ | 29,736 | $ | 16,094 | |||||||||||
CNA Financial Corp. | $ | 11,879 | $ | 60,927 | $ | 11,453 | |||||||||||
Hanover Insurance Group, Inc. | $ | 5,469 | $ | 13,997 | $ | 4,806 | |||||||||||
Lincoln National Corp. | $ | 18,784 | $ | 335,437 | $ | 5,198 | |||||||||||
MetLife Inc. | $ | 69,898 | $ | 666,611 | $ | 56,782 | |||||||||||
Principal Financial Group Inc. | $ | 17,492 | $ | 292,240 | $ | 20,534 | |||||||||||
Progressive Corp. | $ | 49,586 | $ | 75,465 | $ | 75,889 | |||||||||||
Travelers Companies Inc. | $ | 36,884 | $ | 115,717 | $ | 43,938 | |||||||||||
Unum Group | $ | 11,991 | $ | 61,435 | $ | 8,163 | |||||||||||
Voya Financial Inc. | $ | 5,922 | $ | 147,652 | $ | 5,975 | |||||||||||
25TH PERCENTILE | $ | 11,345 | $ | 61,054 | $ | 8,985 | |||||||||||
MEDIAN | $ | 18,138 | $ | 106,837 | $ | 19,900 | |||||||||||
75TH PERCENTILE | $ | 47,971 | $ | 268,961 | $ | 46,224 | |||||||||||
THE HARTFORD | $ | 22,362 | $ | 73,022 | $ | 24,121 | |||||||||||
PERCENT RANK | 55% | 37% | 56% |
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(1)Data provided by S&P Global Market Intelligence. The amounts shown in the “Revenues” column reflect adjustments by S&P Global Market Intelligence 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. |
Use of Corporate Peer Group Compensation Data
When evaluating and determining individual pay levels, the Compensation Committee periodically reviews compensation data prepared annually by Aon Hewittthird parties showing the 25th, 50th25th, 50th and 75th75th percentiles of various pay elements for the companies listed above. As noted previously, the Compensation Committee does not target a specific market position in pay. The Corporate Peer Group includes both insurance and financial services companies because the functional responsibilities of most executives are not specific to the insurance industry. Two of our NEOs, our Chief Risk Officer (“CRO”) and our Chief Investment Officer and President of HIMCO and Talcott Resolution, were also benchmarked against similar roles at a broader group of financial services companies within the standard McLagan Risk Management and Investment Management surveys, respectively.
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COMPENSATION MATTERS |
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Compensation Discussion and Analysis
PAY FOR PERFORMANCE
2015 AIP PERFORMANCE
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As described on pages 42-44, we have a three-step process for determining AIP awards.
Compensation Core Earnings for 2015 was $1,645 million measured against an AIP target of $1,605 million. The calculation of Compensation Core Earnings started with 2015 GAAP net income and was adjusted as set forth on Appendix A pursuant to the definition of Compensation Core Earnings approved by the Compensation Committee at the beginning of the performance year. The Compensation Committee approved a definition of Compensation Core Earnings that provides for pre-determined adjustments to ensure that AIP award payments represent the results achieved in the underlying business and are not unduly inflated or deflated due to the effect of items that do not directly reflect company or management performance. As a result, actual Compensation Core Earnings will differ from the earnings numbers provided in our financial statements.
As discussed on page 42, the financial target for 2015 Compensation Core Earnings was set based on our annual operating plan as reviewed by the Board prior to the start of the fiscal year. Highlighted below are the minimum threshold, target and maximum Compensation Core Earnings levels against actual results for 2015. Compensation Core Earnings of $1,645 million against a target of $1,605 million resulted in a formulaic AIP funding level of 116%.
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The Compensation Committee undertook a qualitative review focused on the following:
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The Compensation Committee felt that, while the company performed well in these qualitative criteria, the formulaic AIP funding level of 116% of target appropriately reflected strong 2015 performance. Accordingly, the Compensation Committee concluded that no adjustment to the formulaic AIP funding level was necessary.
2015 Named Executive Officers Compensation and Performance
Christopher Swift
Mr. Swift has served as CEO since July 1, 2014; he was also appointed Chairman on January 5, 2015. For 2015, the independent directors approved a base salary of $1,000,000, an AIP target of $2,100,000, and a 2015 LTI award of $6,400,000 granted in the form of 50% stock options and 50% performance shares on March 3, 2015.
Based on the process outlined beginning on page 49, the independent directors approved an AIP award of $2,450,000 (117% of target), close to the company AIP funding level, taking into account that under Mr. Swift’s leadership, the company:
•
Delivered strong financial performance and exceeded the annual operating plan; improved core earnings and ROE compared to prior year, achieved 7% growth in book value per diluted share (excluding AOCI), and outperformed both the S&P 500 and the S&P 500 Insurance Composite indices on one-year TSR.
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Furthered external engagement with investors, government officials, and distribution partners.
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Continued focus on talent management, diversity, and inclusion, resulting in employee engagement scores that are in the top decile of the market, as measured by the IBM® Kenexa® survey of global companies.
Beth Bombara
Ms. Bombara has served as CFO since July 1, 2014. For 2015, the Compensation Committee approved a base salary of $650,000, an AIP target of $1,000,000, and a 2015 LTI award of $1,650,000 granted in the form of 50% stock options and 50% performance shares on March 3, 2015.
Based on the process outlined beginning on page 49, the Compensation Committee approved an AIP award of $1,200,000 (120% of target), slightly above the company AIP funding level, taking into account that Ms. Bombara:
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Delivered on a capital management plan that reduced debt by $750 million and returned $1.6 billion of capital to our shareholders, while the company received financial strength rating upgrades from A.M. Best, Moody’s and Standard and Poor’s.
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Expanded relationships with key external stakeholders, including investors, rating agencies and bankers.
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Drove improved employee engagement and diversity and inclusion results and retained all key talent within her organization.
Douglas Elliot
Mr. Elliot has served as President of The Hartford since July 1, 2014. For 2015, the Compensation Committee approved a base salary of $900,000, an AIP target of $1,700,000, and a 2015 LTI award of $4,400,000 granted in the form of 50% stock options and 50% performance shares on March 3, 2015.
Based on the process outlined beginning on page 49, the Compensation Committee approved an AIP award of $2,000,000 (118% of target), close to the company AIP funding level, taking into account that Mr. Elliot:
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Exceeded core earnings plans across Commercial Lines, Personal Lines, and Group Benefits and delivered strong combined ratios within the commercial businesses.
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Led the expansion of product, distribution, and underwriting capabilities and investment in technology enhancements to reduce cycle times and enhance the agent and customer experience.
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Significantly strengthened organizational talent through key new hires and led improvement across employee engagement, diversity and inclusion, and talent retention metrics.
Brion Johnson
Mr. Johnson has served as Chief Investment Officer and President of HIMCO since May 16, 2012 and President of Talcott Resolution since August 1, 2014. For 2015, the Compensation Committee approved a base salary of $525,000, an AIP target of $1,200,000 and an LTI award of $1,200,000 granted in the form of 50% stock options and 50% performance shares on March 3, 2015.
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Compensation Discussion and Analysis
Based on the process outlined beginning on page 49, the Compensation Committee approved an AIP award of $1,400,000 (117% of target), close to the company AIP funding level, taking into account that Mr. Johnson:
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Produced strong financial results for HIMCO in a volatile market, resulting in net investment income that exceeded annual operating plan.
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Delivered excellent operational results in Talcott Resolution, outperforming its core earnings plan and reducing expenses.
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Initiated and executed a significant HIMCO organizational restructuring to better position the firm for the future and increased employee engagement results in the midst of restructuring.
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Successfully recruited key strategic external hires and expanded diversity of top leadership.
Robert Rupp
Mr. Rupp has served as Chief Risk Officer since November 2, 2011. For 2015, the Compensation Committee approved a base salary of $600,000, an AIP target of $1,200,000 and an LTI award of $1,400,000 granted in the form of 50% stock options and 50% performance shares on March 3, 2015.
Based on the process outlined beginning on page 49, the Compensation Committee approved an AIP award $1,400,000 (117% of target), close to the company funding level, taking into account that Mr. Rupp:
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Effectively managed market and credit risk during a tumultuous market cycle, partnering with HIMCO on portfolio optimization.
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Increased cyber risk mitigation efforts internally and with vendors, undertaking a thorough assessment.
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Received significant external recognition in 2015, including being named Chief Risk Officer of the Year by Risk magazine, and playing a key role in the company's receipt of the NYSE Governance Services' Leadership Award for best governance, risk and compliance programs at a large-cap company.
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Added key external talent and improved overall scores on employee engagement and diversity and inclusion metrics.
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CERTIFICATION OF PERFORMANCE SHARE AWARDS FOR THE 2013-2015 PERFORMANCE PERIOD
On March 5, 2013, the Compensation Committee granted Senior Executives performance shares tied to relative TSR against a peer group of 10 companies. These performance shares vested as of December 31, 2015, the end of the three-year performance period for the award. The company’s TSR during the performance period ranked ahead of all 10 peer companies. This performance resulted in a payout of 200% of target as certified by the Compensation Committee on February 22, 2016.
Details of the 2013 performance shares are given on page 37 of our 2014 Proxy Statement filed with the Securities and Exchange Commission on April 10, 2014.
COMPENSATION POLICIES AND PRACTICES
STOCK OWNERSHIP AND RETENTION GUIDELINES
Senior Executives are expected to meet or exceed certain levels of stock ownership to align their interests with those of shareholders. The Compensation Committee has established the following ownership guidelines for the CEO and other NEOs:
Level | (As a | ||||
CEO | 6x | ||||
Other NEOs | 4x |
The Compensation Committee reviews ownership levels annually. NEOs are generally expected to meet these ownership guidelines within five years of appointment to position. As of March 21, 2016,20, 2023, the CEO and each of the other NEOs met their respective guideline.
TIMING OF EQUITY GRANTS
Equity grants may be awarded four times per year, on the firstsecond trading day of a quarterly trading window following the filing of our Form 10-Q or 10-K for the prior period. Our practice is to grant annual equity awards duringfollowing the first quarterly trading windowfiling of the year.our Annual Report on Form 10-K. This timing ensures that grants are made at a time when the stock price reflects the most current public data regarding our performance and financial condition as is reasonably possible.
RECOUPMENT POLICY
We have a recoupment policy that allows for the recoupment of any incentive compensation (cash or equity) paid or payable at any time to the extent such recoupment either (i) is required by applicable law or listing standards, or (ii) is determined by the companyCompany to be necessary in accordance with Company policy or business circumstances or appropriate in light of business circumstancesan employee's action, or employee misconduct.
RISK MITIGATION IN PLAN DESIGN
Management has concluded that our compensation policies and practices are not reasonably likely to have a material adverse effect on the company.Company. Our Enterprise Risk Management function performs a risk review of any new incentive compensation plans or any material changes to existing plans annually and completesengages an independent third party to complete a comprehensive review of all incentive compensation plans every five years. In 2015,2022, Enterprise Risk Management conducted its annual review and discussed the results of that review with the Compensation Committee. Enterprise Risk Management concluded that current incentive plans do not promote inappropriate risk-taking or encourage the manipulation of reported earnings.
The following features of our executive compensation program guard against excessive risk-taking:
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Rationale
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 • ◦ ◦ ◦ | ||||
Recoupment | •We have a broad incentive compensation recoupment policy in addition to claw-back provisions under |
HEDGING AND PLEDGING COMPANY SECURITIES
We prohibit all ofhave robust policies prohibiting our employees and directors from engaging in hedging, monetization, derivative, speculative and similar transactions involving company securities. In addition, Directors and Senior Executives are prohibited from holding stock in a margin account or pledging company securities.
POTENTIAL SEVERANCE AND CHANGE OF CONTROL PAYMENTS
The companyCompany does not have individual employment agreements. NEOs are covered under a common severance pay plan that provides severance in a lump sum equal to 2xtwo times the sum of annual base salary plus target bonus,bonus*, whether severance occurs before or after a change of control (no gross-up is provided for any change of control excise taxes that might apply). As a condition to receiving severance, Senior Executives must agree to restrictive covenants covering such items as non-competition, non-solicitation of business and employees, non-disclosure and non-disparagement.
We maintainThe Company maintains change of control benefits to ensure continuity of management and to permit each of these individualsexecutives to focus on his or hertheir responsibilities without undue distraction related to concerns about personal financial security if we arethe Company is confronted with a contest for control. These benefits are also designed to ensure that in any such contest, management is not influenced by events that could occur following a change of control.
OurThe 2014 Incentive Stock Plan providesand the 2020 Stock Incentive Plan provide for “double trigger” vesting on a change of control. If an NEO terminates employment for “Good Reason” or histheir employment is terminated without “Cause” (each term as defined(see definitions on page 68)68) within 2two years following a Change of Control (as defined in the change of control,plan), then any awards that were assumed or replaced with substantially equivalent awards would vest. If the awards were not assumed or replaced with substantially equivalent awards, then they wouldthe awards vest immediately upon the changeChange of control.
*If Ms. Soni is involuntarily terminated, other than for Cause, she would receive twelve months of annual base salary plus an additional month of annual base salary for every year of service, up to a maximum of twenty-four months of annual base salary.
In designing our compensation programs, we consider the tax and accounting impact of our decisions. In doing so, we strive to strike a balance between designing appropriate and competitive compensation programs for our executives, while also maximizing the deductibility of such compensation, and, to the extent reasonably possible, avoiding adverse accounting effects and ensuring that any accounting consequences are appropriately reflected in our financial statements.
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Principal among the tax considerations is the potential impact of Section 162(m) of the Internal Revenue Code, which generally denies a publicly traded company a federal income tax deduction for compensation in excess of $1 million paid to the CEO or any of the next three most highly compensated executive officers (other than the CFO) as determined as of the last day of the applicable year (the “Covered Officers”), unless the amount of such excess is payable based solely upon the attainment of objective performance criteria. For this reason, where applicable, our variable compensation, including 2015 annual incentive awards and performance share payouts, is generally designed to qualify as exempt performance-based compensation. At last year's Annual Meeting, in order to comply with Section 162(m), shareholders approved the material terms of the annual executive bonus program under which the maximum annual bonus that may be paid to any of the Covered Officers for any given year is the lesser of 300% of the annual target bonus in effect for the Covered Officer's position at the beginning of the year, as approved by the Compensation Committee, or $5,000,000. The Compensation Committee may, however, in certain circumstances, approve incentive awards or other payments that do not qualify as exempt performance-based compensation and may not be deductible.
Other taxTax considerations are factored into the design of our compensation programs, including compliance with the requirements of Section 409A of the Internal Revenue Code, which can impose additional taxes on participants in certain arrangements involving deferred compensation, and Sections 280G and 4999 of the Internal Revenue Code, which affect the deductibility of, and impose certain additional excise taxes on, certain payments that are made upon or in connection with a change of control.
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COMPENSATION MATTERS |
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management we haveand has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and in the company’sCompany’s Annual Report on Form 10-K for the year ended December 31, 2015.
Report submitted as of March 23, 201616, 2023 by:
Members of the Compensation and Management Development Committee:
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of the date of this proxy statement, the Compensation and Management Development Committee consists of Messrs. Fetter (Chairman), Renyi and Swygert and Ms. Ruesterholz, all of whom are independent non-management directors. None of the Compensation and Management Development Committee members has served as an officer or employee of The Hartford and none of the The Hartford’s executive officers has served as a member of a compensation committee or board of directors of any other entity that has an executive officer serving as a member of the The Hartford’s Board.
2023 Proxy Statement | 55 |
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COMPENSATION MATTERS |
Compensation Discussion and Analysis
EXECUTIVE COMPENSATION TABLES
The table below reflects total compensation paid to or earned by each NEO.
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 | 2022 | 1,187,500 | — | 5,153,500 | 5,000,000 | 4,440,000 | — | 305,469 | 16,086,469 | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 1,150,000 | — | 5,001,475 | 4,625,000 | 4,740,000 | 8,184 | 299,689 | 15,824,348 | |||||||||||||||||||||||||||||||||||||||||||||
2020 | 1,150,000 | — | 3,740,850 | 4,250,000 | 2,400,000 | 33,824 | 231,521 | 11,806,195 | |||||||||||||||||||||||||||||||||||||||||||||
Beth Costello Executive Vice President and Chief Financial Officer | 2022 | 762,500 | — | 1,288,375 | 1,250,000 | 1,924,000 | — | 66,100 | 5,290,975 | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 725,000 | — | 1,081,400 | 1,000,000 | 2,054,000 | — | 65,800 | 4,926,200 | |||||||||||||||||||||||||||||||||||||||||||||
2020 | 725,000 | — | 814,185 | 925,000 | 1,000,000 | 42,587 | 65,700 | 3,572,472 | |||||||||||||||||||||||||||||||||||||||||||||
Douglas Elliot President | 2022 | 950,000 | — | 2,808,658 | 2,725,000 | 2,812,000 | — | 131,296 | 9,426,954 | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 950,000 | — | 2,946,815 | 2,725,000 | 3,002,000 | 4,363 | 80,515 | 9,708,693 | |||||||||||||||||||||||||||||||||||||||||||||
2020 | 950,000 | — | 2,336,931 | 2,655,000 | 1,520,000 | 14,901 | 65,700 | 7,542,532 | |||||||||||||||||||||||||||||||||||||||||||||
David Robinson Executive Vice President and General Counsel | 2022 | 637,500 | — | 1,030,700 | 1,000,000 | 1,184,000 | — | 66,100 | 3,918,300 | ||||||||||||||||||||||||||||||||||||||||||||
2021 | 600,000 | — | 784,015 | 725,000 | 1,224,500 | 1,489 | 65,800 | 3,400,804 | |||||||||||||||||||||||||||||||||||||||||||||
2020 | 593,750 | — | 572,130 | 650,000 | 580,000 | 25,565 | 54,350 | 2,475,795 | |||||||||||||||||||||||||||||||||||||||||||||
Deepa Soni* Executive Vice President, Head of Operations, Technology, Data & Analytics | 2022 | 637,500 | — | 644,188 | 625,000 | 1,036,000 | — | 57,900 | 3,000,588 | ||||||||||||||||||||||||||||||||||||||||||||
2021 | NA | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||||
2020 | NA | NA | NA | NA | NA | NA | NA | NA |
NEO | 2022 Performance Shares ($) (February 23, 2022 grant date) | 2021 Performance Shares ($) (February 23, 2021 grant date) | 2020 Performance Shares ($) (February 25, 2020 grant date) | ||||||||||||||
C. Swift | 10,000,000 | 9,250,000 | 8,500,000 | ||||||||||||||
B. Costello | 2,500,000 | 2,000,000 | 1,850,000 | ||||||||||||||
D. Elliot | 5,450,000 | 5,450,000 | 5,310,000 | ||||||||||||||
D. Robinson | 2,000,000 | 1,450,000 | 1,300,000 | ||||||||||||||
D. Soni | 1,250,000 | NA | NA |
Name and Principal | Year | Salary | Bonus | Stock | Option | Non-Equity | Change in | All Other | Total | ||||||||||||||||||
Christopher Swift
| 2015 | 1,000,000 |
| 3,289,280 | 3,200,000 | 2,450,000 | 5,764 | 77,375 | 10,022,419 | ||||||||||||||||||
2014 | 912,500 |
| 1,119,030 | 1,100,000 | 2,139,000 | 45,913 | 76,341 | 5,392,784 | |||||||||||||||||||
2013 | 825,000 |
| 3,100,000 | 1,100,000 | 1,850,000 | - | 96,818 | 6,971,818 | |||||||||||||||||||
Beth Bombara | 2015 | 643,750 |
| 848,018 | 825,000 | 1,200,000 | - | 65,300 | 3,582,068 | ||||||||||||||||||
2014 | 560,000 |
| 508,650 | 500,000 | 1,350,000 | 44,171 | 65,200 | 3,028,021 | |||||||||||||||||||
Douglas Elliot
| 2015 | 900,000 |
| 2,261,380 | 2,200,000 | 2,000,000 | 3,101 | 67,006 | 7,431,487 | ||||||||||||||||||
2014 | 825,000 |
| 1,017,300 | 1,000,000 | 1,800,000 | 21,126 | 69,297 | 4,732,723 | |||||||||||||||||||
2013 | 750,000 |
| 3,000,000 | 1,000,000 | 1,700,000 | - | 84,835 | 6,534,835 | |||||||||||||||||||
Brion Johnson | 2015 | 518,750 |
| 616,740 | 600,000 | 1,400,000 | 1,286 | 65,300 | 3,202,076 | ||||||||||||||||||
2014 | 458,333 |
| 559,515 | 550,000 | 1,450,000 | 8,336 | 62,600 | 3,088,784 | |||||||||||||||||||
Robert Rupp | 2015 | 600,000 |
| 719,530 | 700,000 | 1,400,000 | 2,443 | 65,300 | 3,487,273 | ||||||||||||||||||
2014 | 600,000 |
| 712,110 | 700,000 | 1,600,000 | 4,649 | 66,893 | 3,683,652 | |||||||||||||||||||
2013 | 600,000 |
| 1,900,000 | 700,000 | 1,500,000 | 645 | 82,874 | 4,783,519 |
|
|
| NEO | 2015 Performance Shares | 2014 Performance Shares | 2013 Performance Shares | 2013 Special Equity Grant | ||||||||
| Mr. Swift | $ | 6,067,995 | $ | 2,090,738 | $ | 2,200,000 | $ | 2,000,000 | ||||
| Ms. Bombara | $ | 1,564,400 | $ | 950,336 |
|
| ||||||
| Mr. Elliot | $ | 4,171,707 | $ | 1,900,671 | $ | 2,000,000 | $ | 2,000,000 | ||||
| Mr. Johnson | $ | 1,137,710 | $ | 1,045,335 |
|
| ||||||
| Mr. Rupp | $ | 1,327,393 | $ | 1,330,470 | $ | 1,400,000 | $ | 1,200,000 |
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| |||||
| www.thehartford.com |
The amounts shown in this column reflect the full aggregate grant date fair value for the fiscal years ended December 31, 2013, 2014, and 2015 calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote 19 to the company’s audited financial statements for the fiscal year ended December 31, 2013, in footnote 18 to the company’s audited financial statements for the fiscal year ended December 31, 2014 and in footnote 17 to the company’s audited financial statements for the fiscal year ended December 31, 2015, included in the company’s 2013, 2014 and 2015 Annual Reports on Form 10-K, respectively. Amounts in this column are not reduced for estimated forfeitures during the applicable vesting periods.
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SUMMARY COMPENSATION TABLE—ALL OTHER COMPENSATION
(2)This column reflects the aggregate grant date fair value for the fiscal years ended December 31, 2022, 2021 and 2020 calculated in accordance with FASB ASC Topic 718. The followingamounts in this column are not reduced for estimated forfeitures during the applicable vesting periods. Other assumptions used in the calculation of these amounts are included in footnote 19 of the Company's Annual Report on Form 10-K for 2022 and in footnote 20 of the Company's Annual Reports on Form 10-K for 2020 and 2021.
Name | Year | Perquisites | Contributions or other | Total | ||||||||
Christopher Swift | 2015 | 12,075 | (2) | 65,300 | 77,375 | |||||||
Beth Bombara | 2015 | - | 65,300 | 65,300 | ||||||||
Douglas Elliot | 2015 | 1,706 | (3) | 65,300 | 67,006 | |||||||
Brion Johnson | 2015 | - | 65,300 | 65,300 | ||||||||
Robert Rupp | 2015 | - | 65,300 | 65,300 |
Name | Year | Perquisites ($)(1) | Contributions or Other Allocations to Defined Contribution Plans ($)(2) | Total ($) | ||||||||||||||||||||||
Christopher Swift | 2022 | 239,369 | 66,100 | 305,469 | ||||||||||||||||||||||
Beth Costello | 2022 | — | 66,100 | 66,100 | ||||||||||||||||||||||
Douglas Elliot | 2022 | 65,196 | 66,100 | 131,296 | ||||||||||||||||||||||
David Robinson | 2022 | — | 66,100 | 66,100 | ||||||||||||||||||||||
Deepa Soni | 2022 | — | 57,900 | 57,900 |
| 2023 Proxy Statement | 57 |
The amounts shown in this column represent company contributions under the company’s tax-qualified 401(k) plan (The Hartford Investment and Savings Plan) and The Hartford Excess Savings Plan (the “Excess Savings Plan”), a non-qualified plan established to “mirror” the qualified plan to facilitate deferral of amounts that cannot be deferred under the 401(k) plan due to Internal Revenue Code limits. Additional information can be found under the “Excess Savings Plan” section of the Non-Qualified Deferred Compensation Table beginning on page 63.
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Compensation Discussion and Analysis
GRANTS OF PLAN BASED AWARDS TABLE
The followingThis table discloses the actual number of stock options, performance shares and RSUsinformation about equity awards granted to the NEOs in 20152022 pursuant to the 20142020 Stock Incentive Stock Plan and the grant date fair value of these awards.Plan. The table also discloses potential payouts under the AIP and performance share awards.AIP. Actual AIP payouts are reported in the Summary Compensation Table on page 5556 under the heading “Non-Equity Incentive Plan Compensation.” The equityEquity awards have been rounded to the nearest whole share or option.
Name | Plan | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Swift | 2022 AIP | 1,050,000 | 3,000,000 | 9,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/23/2022 | 301,932 | 69.41 | 5,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/23/2022 | 12,606 | 72,036 | 144,071 | 5,153,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. Costello | 2022 AIP | 455,000 | 1,300,000 | 3,900,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/23/2022 | 75,483 | 69.41 | 1,250,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/23/2022 | 3,152 | 18,009 | 36,018 | 1,288,375 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Elliot | 2022 AIP | 665,000 | 1,900,000 | 5,700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/23/2022 | 164,553 | 69.41 | 2,725,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/23/2022 | 6,870 | 39,259 | 78,519 | 2,808,658 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Robinson | 2022 AIP | 280,000 | 800,000 | 2,400,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/23/2022 | 60,386 | 69.41 | 1,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/23/2022 | 2,521 | 14,407 | 28,814 | 1,030,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Soni | 2022 AIP | 245,000 | 700,000 | 2,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/23/2022 | 37,742 | 69.41 | 625,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/23/2022 | 1,576 | 9,004 | 18,009 | 644,188 |
Name | Plan | Grant Date | Estimated Future Payouts Under |
| Estimated Future Payouts Under | All Other | All Other | Exercise | Grant | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||||||
Christopher | 2015 AIP |
| 1,050,000 | 2,100,000 | 4,200,000 |
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Stock Options | 3/3/2015 |
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| 301,887 | 41.25 | 3,200,000 | ||||||||||||||||||||||||||
Performance | 3/3/2015 |
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| 19,394 | 77,576 | 155,152 |
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| 3,289,280 | ||||||||||||||||||||||||||
Beth Bombara | 2015 AIP |
| 500,000 | 1,000,000 | 2,000,000 |
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Stock Options | 3/3/2015 |
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| 77,830 | 41.25 | 825,000 | ||||||||||||||||||||||||||
Performance | 3/3/2015 |
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| 5,000 | 20,000 | 40,000 |
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| 848,018 | ||||||||||||||||||||||||||
Douglas | 2015 AIP |
| 850,000 | 1,700,000 | 3,400,000 |
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Stock Options | 3/3/2015 |
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| 207,547 | 41.25 | 2,200,000 | ||||||||||||||||||||||||||
Performance | 3/3/2015 |
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| 13,333 | 53,333 | 106,666 |
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| 2,261,380 | ||||||||||||||||||||||||||
Brion Johnson | 2015 AIP |
| 600,000 | 1,200,000 | 2,400,000 |
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Stock Options | 3/3/2015 |
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| 56,604 | 41.25 | 600,000 | ||||||||||||||||||||||||||
Performance | 3/3/2015 |
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| 3,636 | 14,545 | 29,090 |
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| 616,740 | ||||||||||||||||||||||||||
Robert | 2015 AIP |
| 600,000 | 1,200,000 | 2,400,000 |
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Stock Options | 3/3/2015 |
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| 66,038 | 41.25 | 700,000 | ||||||||||||||||||||||||||
Performance | 3/3/2015 |
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| 4,243 | 16,970 | 33,940 |
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| 719,530 |
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COMPENSATION MATTERS |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
The followingThis table shows outstanding stock option awards classified as exercisable and unexercisable and the number and market value of any unvested or unearned equity awards outstanding as of December 31, 2015. The value of any unvested or unearned equity awards outstanding as of December 31, 2015 is calculated2022 and valued using a market value of $43.46,$75.83, the NYSE closing price per share of the company’sCompany’s common stock on December 31, 2015.
Name | Option Awards |
| Stock Awards | |||||||||||||||||||||||||||||||||
Grant Date | Number of | Number of | Option | Option | Number | Market | Equity | Equity | ||||||||||||||||||||||||||||
Christopher | 3/1/2011 | 92,937 | - | 28.91 | 3/1/2021 |
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2/28/2012 | 148,448 | - | 20.63 | 2/28/2022 |
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3/5/2013 | 94,258 | 47,130 | 24.15 | 3/5/2023 |
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10/30/2013 |
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| 30,280 | 1,315,969 | 29,248 | 1,271,118 | |||||||||||||||||||||||||||
3/4/2014 | 34,624 | 69,248 | 35.83 | 3/4/2024 |
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| 30,701 | 1,334,265 | |||||||||||||||||||||||||||
3/3/2015 | - | 301,887 | 41.25 | 3/3/2025 |
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| 77,576 | 3,371,453 | |||||||||||||||||||||||||||
Beth | 3/1/2011 | 13,104 | - | 28.91 | 3/1/2021 |
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2/28/2012 | 7,198 | - | 20.63 | 2/28/2022 |
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3/5/2013 | 34,276 | 17,138 | 24.15 | 3/5/2023 |
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10/30/2013 |
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| 18,168 | 789,581 | 17,549 | 762,680 | ||||||||||||||||||||||||||
3/4/2014 | 15,738 | 31,476 | 35.83 | 3/4/2024 |
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| 13,955 | 606,484 | |||||||||||||||||||||||||||
3/3/2015 |
| 77,830 | 41.25 | 3/3/2025 |
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| 20,000 | 869,200 | |||||||||||||||||||||||||||
Douglas | 5/4/2011 | 81,320 | - | 28.05 | 5/4/2021 |
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2/28/2012 | 71,457 |
| 20.63 | 2/28/2022 |
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3/5/2013 | 85,690 | 42,845 | 24.15 | 3/5/2023 |
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10/30/2013 |
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| 30,280 | 1,315,969 | 29,248 | 1,271,118 | |||||||||||||||||||||||||||
3/4/2014 | 31,476 | 62,953 | 35.83 | 3/4/2024 |
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| 27,910 | 1,212,969 | |||||||||||||||||||||||||||
3/3/2015 |
| 207,547 | 41.25 | 3/3/2025 |
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| 53,333 | 2,317,852 | |||||||||||||||||||||||||||
Brion | 3/5/2013 | 38,560 | 19,281 | 24.15 | 3/5/2023 |
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10/30/2013 |
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| 18,168 | 789,581 | 17,549 | 762,680 | |||||||||||||||||||||||||||
3/4/2014 | 17,312 | 34,624 | 35.83 | 3/4/2024 |
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| 15,350 | 667,111 | |||||||||||||||||||||||||||
3/3/2015 |
| 56,604 | 41.25 | 3/3/2025 |
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| 14,545 | 632,126 | |||||||||||||||||||||||||||
Robert | 11/4/2011 | 62,230 | - | 17.83 | 11/4/2021 |
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2/28/2012 | 54,467 | - | 20.63 | 2/28/2022 |
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3/5/2013 | 59,982 | 29,992 | 24.15 | 3/5/2023 |
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10/30/2013 |
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| 18,168 | 789,581 | 17,549 | 762,680 | |||||||||||||||||||||||||||
3/4/2014 | 22,033 | 44,067 | 35.83 | 3/4/2024 |
|
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| 19,537 | 849,078 | |||||||||||||||||||||||||||
3/3/2015 | - | 66,038 | 41.25 | 3/3/2025 |
|
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| 16,970 | 737,516 |
Name | 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 ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | |||||||||||||||||||||||||||||||||||||||||||||
Chris Swift | 3/4/2014 | 103,872 | 35.83 | 3/4/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
3/3/2015 | 301,887 | 41.25 | 3/3/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 294,481 | 43.59 | 3/1/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | 302,908 | 48.89 | 2/28/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | 284,819 | 53.81 | 2/27/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/26/2019 | 352,263 | 49.01 | 2/26/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/25/2020 | 218,452 | 109,227 | 55.27 | 2/25/2030 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2021 | 103,606 | 207,214 | 51.87 | 2/23/2031 | 185,284 | 14,050,086 | |||||||||||||||||||||||||||||||||||||||||||||||
2/23/2022 | 301,932 | 69.41 | 2/23/2032 | 146,561 | 11,113,721 | ||||||||||||||||||||||||||||||||||||||||||||||||
Beth Costello | 3/3/2015 | 77,830 | 41.25 | 3/3/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 72,076 | 43.59 | 3/1/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | 70,679 | 48.89 | 2/28/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | 63,194 | 53.81 | 2/27/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/26/2019 | 75,790 | 49.01 | 2/26/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/25/2020 | 47,545 | 23,773 | 55.27 | 2/25/2030 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2021 | 22,401 | 44,803 | 51.87 | 2/23/2031 | 40,062 | 3,037,901 | |||||||||||||||||||||||||||||||||||||||||||||||
2/23/2022 | 75,483 | 69.41 | 2/23/2032 | 36,640 | 2,778,411 | ||||||||||||||||||||||||||||||||||||||||||||||||
Douglas Elliot | 3/1/2016 | 190,486 | 43.59 | 3/1/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | 201,939 | 48.89 | 2/28/2027 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | 178,012 | 53.81 | 2/27/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/26/2019 | 219,898 | 49.01 | 2/26/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/25/2020 | 204,703 | 55.27 | 2/25/2030 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2021 | 183,132 | 51.87 | 2/23/2031 | 109,168 | 8,278,209 | ||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2022 | 164,553 | 69.41 | 2/23/2032 | 79,876 | 6,056,997 | ||||||||||||||||||||||||||||||||||||||||||||||||
David Robinson | 2/28/2017 | 40,388 | 48.89 | 2/28/2027 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | 39,163 | 53.81 | 2/27/2028 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/26/2019 | 53,373 | 49.01 | 2/26/2029 | ||||||||||||||||||||||||||||||||||||||||||||||||||
2/25/2020 | 33,410 | 16,706 | 55.27 | 2/25/2030 | |||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2021 | 16,241 | 32,482 | 51.87 | 2/23/2031 | 29,045 | 2,202,482 | |||||||||||||||||||||||||||||||||||||||||||||||
2/23/2022 | 60,386 | 69.41 | 2/23/2032 | 29,312 | 2,222,729 | ||||||||||||||||||||||||||||||||||||||||||||||||
Deepa Soni | 2/25/2020 | 6,198 | 469,994 | ||||||||||||||||||||||||||||||||||||||||||||||||||
8/3/2020 | 10,048 | 761,940 | |||||||||||||||||||||||||||||||||||||||||||||||||||
2/23/2021 | 6,720 | 13,441 | 51.87 | 2/23/2031 | 12,018 | 911,325 | |||||||||||||||||||||||||||||||||||||||||||||||
2/23/2022 | 37,742 | 69.41 | 2/23/2032 | 18,320 | 1,389,206 |
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59 |
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Compensation Discussion and Analysis
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OPTION EXERCISES AND STOCK VESTED TABLE
The followingThis table sets forth certainprovides information regarding option awards exercised and stock awards that vested during 2015.2022. The numbers have been rounded to the nearest whole dollar or share.
Name | 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) | ||||||||||||||||||||
Christopher Swift | 141,388 | 7,099,609 | 100,540 | 7,887,349 | |||||||||||||||||||
Beth Costello | 47,214 | 1,763,589 | 21,882 | 1,716,658 | |||||||||||||||||||
Douglas Elliot | 295,080 | 9,591,267 | 62,808 | 4,927,274 | |||||||||||||||||||
David Robinson | 37,068 | 1,181,543 | 15,377 | 1,206,301 | |||||||||||||||||||
Deepa Soni | — | — | 13,564 | 1,012,579 |
Name | Option Awards |
| Stock Awards | ||||||||||||
Number of Shares | Value Realized |
| Number of Shares | Value Realized | |||||||||||
Christopher Swift |
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| 91,098 | 3,871,665 | ||||||||||
Beth Bombara |
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| 33,126 | 1,407,855 | ||||||||||
Douglas Elliot |
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| 82,816 | 3,519,680 | ||||||||||
Brion Johnson |
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| 52,605 | 2,212,101 | ||||||||||
Robert Rupp | 60,000 | 1,308,753 |
| 57,972 | 2,463,810 |
| www.thehartford.com |
The amounts in this column reflect the value realized upon the exercise of vested stock options during 2015. The value realized is the difference between the fair market value of common stock on the date of exercise and the exercise price of the option. For Mr. Rupp, all options were exercised pursuant to a pre-planned trading plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934.
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COMPENSATION MATTERS |
PENSION BENEFITS TABLE
The table below shows the number of years of credited service, the actuarial present value of the accumulated pension benefit, and the actual cash balance account as of December 31, 2015 for each of the NEOs2022 under the company’s retirement plans. Federal tax law limits the amount of benefits that can be paid and compensation that may be recognized under aCompany’s tax-qualified retirement plan. Therefore, the company has both a tax-qualified retirementpension plan (The Hartford Retirement Plan for U.S. Employees, or the “Retirement Plan”) and athe non-qualified retirementpension plan (The Hartford Excess Pension Plan II, or the “Excess Pension Plan”) for paymenteach of those benefits that cannot be paid from the tax-qualified plan (together,NEOs.
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 ($) | ||||||||||||||||||||||||
Christopher Swift | Retirement Plan | 2.83 | 78,513 | 82,258 | — | ||||||||||||||||||||||||
Excess Pension Plan | 2.83 | 436,660 | 457,488 | — | |||||||||||||||||||||||||
Beth Costello | Retirement Plan | 8.67 | 156,813 | 180,783 | — | ||||||||||||||||||||||||
Excess Pension Plan | 8.67 | 194,950 | 224,749 | — | |||||||||||||||||||||||||
Douglas Elliot | Retirement Plan | 1.74 | 55,019 | 57,010 | — | ||||||||||||||||||||||||
Excess Pension Plan | 1.74 | 193,393 | 200,394 | — | |||||||||||||||||||||||||
David Robinson | Retirement Plan | 6.08 | 132,563 | 147,486 | — | ||||||||||||||||||||||||
Excess Pension Plan | 6.08 | 125,425 | 139,545 | — | |||||||||||||||||||||||||
Deepa Soni | Retirement Plan | — | — | — | — | ||||||||||||||||||||||||
Excess Pension Plan | — | — | — | — |
Name | Plan Name | Number of Years | Present Value of | Actual Cash | Payments During | ||||||||
Christopher Swift | Retirement Plan | 2.83 | 59,693 | 65,516 | - | ||||||||
Excess Pension Plan | 2.83 | 331,994 | 364,377 | - | |||||||||
Beth Bombara | Retirement Plan | 8.67 | 123,613 | 143,989 | - | ||||||||
Excess Pension Plan | 8.67 | 153,676 | 179,007 | - | |||||||||
Douglas Elliot | Retirement Plan | 1.74 | 41,657 | 45,407 | - | ||||||||
Excess Pension Plan | 1.74 | 146,425 | 159,608 | - | |||||||||
Brion Johnson | Retirement Plan | 1.24 | 25,737 | 27,990 | - | ||||||||
Excess Pension Plan | 1.24 | 49,568 | 53,907 | - | |||||||||
Robert Rupp | Retirement Plan | 1.16 | 32,483 | 33,109 | - | ||||||||
Excess Pension Plan | 1.16 | 40,101 | 40,873 | - |
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Compensation Discussion"Plan" or together the "Plans") as of December 31, 2012. Benefit accruals ceased as of December 31, 2012 under each Plan. As of December 31, 2022, Messrs. Swift, Elliot, and Analysis
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CASH BALANCE FORMULA
Retirement benefitsRobinson and Ms. Costello were accrued under avested at 100% in their cash balance formulaaccounts under the Plans. Having joined the Company after December 31, 2012, when these Plans were frozen, Ms. Soni does not have a benefit under either Plan.
cash balance formula until December 31, 2012. Effective December 31, 2012, the cash balance formula under the Retirement Plan and the Excess Pension Plan was frozen for all Plan participants, including the NEOs. As a result, employees no longer accrue further benefits under the cash balance formula, except that existing account balances continueInterest continues to accrue interest. Employees also continue to earn service credit under the cash balance formula towards vesting in their benefits.
The interestbe credited on previously accrued amounts, is determined each year to be equal toat a rate of 3.3% or based on the 10-year10 year Treasury rate, determined before the start of the year, whichever is greater. VestedAll Plan participants are currently vested in their account balances, under the cash balance formulawhich they may be receivedelect to receive following termination of employment in the form of a single lump sum payment upon termination of employment or the participant may elect to receive an actuarially-equivalent form of life annuity. An employee is vested upon completion of three years of service.
In the event of a Change of Control, each NEO would automatically receive in a single lump sum of the value of his or hertheir Excess Pension Plan cash balance accountbenefit as of the date of the Change of Control, provided that the Change of Control also constitutes a “change in control” as defined in regulations issued under Section 409A of the Internal Revenue Code.
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NON-QUALIFIED DEFERRED COMPENSATION TABLE
EXCESS SAVINGS PLAN
NEOs, as well as other employees, may contribute to the company’sCompany’s Excess Savings Plan, a non-qualified plan established as a “mirror” to the company’sCompany’s tax-qualified 401(k) Planplan (The Hartford Investment and Savings Plan). The Excess Savings Plan is intended to facilitate deferral of amounts that cannot be deferred under the 401(k) Planplan for employees whose compensation exceeds the Internal Revenue Code limit on compensation that can be recognized byfor the 401(k) Planplan ($265,000305,000 in 2015)2022). When an eligible employee’s annual compensation reaches that Internal Revenue Code limit, the eligible employee can contribute up to six percent (6%) of compensation in excess of that limit to the Excess Savings Plan. Compensation recognized by the Excess Savings Plan, includes base pay, annual bonuses, overtime, shift differentials, commissions and sales incentive payments; there isup to a combined $1 million annual limit on compensation recognized by the 401(k) Plan and the Excess Savings Plan combined.for both plans. The companyCompany makes a matching contribution to the Excess Savings Plan in an amount equal to 100% of the employee’s contribution. Company contributions to the Excess Savings Plan are fully vested. Excess Savings Planvested and plan balances are payable in a lump sum following termination of employment.
2023 Proxy Statement | 61 |
COMPENSATION MATTERS |
Name of Fund | Rate of Return (for the year ended December 31, 2022) | Name of Fund | Rate of Return (for the year ended December 31, 2022) | |||||||||||
The Hartford Stock Fund | 12.28 % | Vanguard Target Retirement 2020 Trust | -14.12 % | |||||||||||
ISP International Equity Fund(1) | -14.73 % | Vanguard Target Retirement 2025 Trust | -15.43 % | |||||||||||
ISP Active Large Cap Equity Fund(2) | -18.26 % | Vanguard Target Retirement 2030 Trust | -16.14 % | |||||||||||
ISP Small/Mid Cap Equity Fund(3) | -15.22 % | Vanguard Target Retirement 2035 Trust | -16.51 % | |||||||||||
State Street S&P 500 Index Non-Lending Series Fund | -18.12 % | Vanguard Target Retirement 2040 Trust | -16.92 % | |||||||||||
Hartford Stable Value Fund | 1.76 % | Vanguard Target Retirement 2045 Trust | -17.32 % | |||||||||||
Hartford Total Return Bond HLS Fund | -14.21 % | Vanguard Target Retirement 2050 Trust | -17.44 % | |||||||||||
SSgA Real Asset Fund | 3.09 % | Vanguard Target Retirement 2055 Trust | -17.41 % | |||||||||||
Vanguard Federal Money Market Fund | 1.55 % | Vanguard Target Retirement 2060 Trust | -17.39 % | |||||||||||
State Street Global All Cap Equity Ex-U.S. Index Non-Lending Series Fund | -16.33 % | Vanguard Target Retirement 2065 Trust | -17.35 % | |||||||||||
State Street Russell Small/Mid Cap® Index Non-Lending Series Fund | -25.46 % | Vanguard Target Retirement 2070 Trust(4) | 2.07 % | |||||||||||
Vanguard Target Retirement Income Trust | -12.70 % |
EXCESS SAVINGS PLAN NOTIONAL INVESTMENT OPTIONS
Name of Fund | Rate of Return | Name of Fund | Rate of Return |
The Hartford Stock Fund | 6.10% | Vanguard Target Retirement 2010 Trust | -0.16% |
ISP International Equity Fund(1) | -4.75% | Vanguard Target Retirement 2015 Trust | -0.39% |
ISP Active Large Cap Equity Fund(2) | 1.88% | Vanguard Target Retirement 2020 Trust | -0.55% |
ISP Small/Mid Cap Equity Fund(3) | -3.22% | Vanguard Target Retirement 2025 Trust | -0.70% |
Hartford Index Fund | 1.40% | Vanguard Target Retirement 2030 Trust | -0.91% |
ISP High Yield Bond Fund | -1.73% | Vanguard Target Retirement 2035 Trust | -1.09% |
Hartford Stable Value Fund | 2.44% | Vanguard Target Retirement 2040 Trust | -1.44% |
Hartford Total Return Bond HLS Fund | -0.59% | Vanguard Target Retirement 2045 Trust | -1.47% |
SSGA Real Asset Fund | -14.11% | Vanguard Target Retirement 2050 Trust | -1.53% |
Vanguard Prime Money Market Fund | 0.11% | Vanguard Target Retirement 2055 Trust | -1.63% |
Vanguard Target Retirement Income Trust | -0.09% | Vanguard Target Retirement 2060 Trust | -1.60% |
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Compensation Discussion and Analysis
NON-QUALIFIED DEFERRED COMPENSATION – EXCESS SAVINGS PLAN
The table below shows the aggregate amount of NEO and company contributions, to the above plan during 2015, the aggregate earnings credited, under this plan during 2015, and the total balance of each NEO’s account under thisthe Excess Savings Plan as of December 31, 2022.
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) | ||||||||||||||||||||||||
Christopher Swift | 41,700 | 41,700 | (220,521) | — | 1,417,366 | ||||||||||||||||||||||||
Beth Costello | 41,700 | 41,700 | 11,716 | — | 981,824 | ||||||||||||||||||||||||
Douglas Elliot | 41,700 | 41,700 | 17,838 | — | 1,047,702 | ||||||||||||||||||||||||
David Robinson | 41,700 | 41,700 | (54,536) | — | 833,502 | ||||||||||||||||||||||||
Deepa Soni | 41,700 | 41,700 | (23,673) | — | 154,802 |
Name | Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||
Christopher Swift | 44,100 | 44,100 | (681 | ) |
| 438,330 | |||||||
Beth Bombara | 44,100 | 44,100 | 6,354 |
| 284,413 | ||||||||
Douglas Elliot | 44,100 | 44,100 | 7,594 |
| 336,495 | ||||||||
Brion Johnson | 44,100 | 44,100 | 587 |
| 203,963 | ||||||||
Robert Rupp | 44,100 | 44,100 | (2,303 | ) |
| 326,016 |
| www.thehartford.com |
The amounts shown in this column reflect executive contributions into the Excess Savings Plan during 2015 with respect to annual cash incentive awards paid in 2015 in respect of performance during 2014. These amounts are included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for 2014.
| COMPENSATION MATTERS |
The amounts shown in this column reflect the company’s matching contributions into the Excess Savings Plan in respect of each NEO’s service in 2015. These amounts are included in the “All Other Compensation” column of the Summary Compensation Table on page 55.
| 2023 Proxy Statement | 63 |
The amounts shown in this column represent investment gains (or losses) on notional investment funds available under the Excess Savings Plan (which mirror investment options available under the 401(k) Plan). No portion of these amounts is included in the Summary Compensation Table on page 55 as the company does not provide above-market rates of return.
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The following section provides information concerning the value of potential payments and benefits as of December 31, 20152022 that would be payable to NEOs following termination of employment under various circumstances or in the event of a Change of Control (as defined on page 68)68). Benefit eligibility and values as of December 31, 20152022 vary based on the reason for termination.
Senior Executive Severance Pay Plan
The NEOs participate in The Hartford Senior Executive Officer Severance Pay Plan or, in the case of Ms Soni, The Hartford Senior Executive Severance Pay Plan (the “Senior Executive Plan”"Severance Plans"), providing for. The Severance Plans provide specified payments and benefits to participants upon termination of employment as a result of severance eligible events. The Senior Executive Plan appliesSeverance Plans apply to Senior Executives, includingthe NEOs whomand other executives that the Executive Vice President,Chief Human Resources Officer (the “Plan Administrator”) approves for participation. As a condition to participate, in the Senior Executive Plan, executivesNEOs must agree to such non-competition, non-solicitation, non-disparagement and other restrictive covenants as are required by the Plan Administrator. TheIn addition to confidentiality and non-disparagement provisions that continue after termination of employment, the NEOs have agreed that, while employed and for a one-year period following a termination of employment, they are subject to a non-competition provision, and that while employed and for a one-year period following a termination of employment, they are subject to non-solicitation provisions. The NEOs are also subject to confidentiality and non-disparagement provisions that continue after termination of employment.
Involuntary Termination (OtherIf an NEO (other than for Cause)
A participant in the Senior Executive Plan whoMs. Soni) is involuntarily terminated, other than for Cause (as defined on page 68)68), the NEO would receive a lump sum severance pay in an amount equal to two times the sum of the executive’stheir annual base salary plusand the target AIP award, both determined as of the involuntary termination date. The severance pay would bedate, payable in a lump sum within 60 days of termination. In addition, a participant(Ms. Soni would be eligible to receive a pro ratatwelve months of annual base salary, payable within 60 days of termination.) Treatment of the AIP award in a discretionary amount, under the company’s AIP for the year in which the termination occurs, payable no later than the March 15 following the calendar year of termination. The participating executive would also vest pro rata in any outstanding and unvested LTI awards and other than the October 2013 special equity awards, provided that at least one full year of the performance or restriction period of an award has elapsedbenefits as of the termination date. The Senior Executive Plan providesdate if an NEO is involuntarily terminated other than for continued health coverageCause (including if the NEO is, or is not, retirement eligible) are described in Footnotes 1, 2, 3 and outplacement services for up5 to twelve months.
Treatment upon a Change of Control
If, within the two year period following a Change of Control (as defined on page 68)68), (1) a participantthe NEO is involuntarily terminated by the companyCompany other than for Cause, or (2) the participantNEO voluntarily terminates employment with the companyCompany for Good Reason (as defined on pages 68-69)page 69), then the participantNEO (other than Ms. Soni) would receive a lump sum severance amount equal to two times the samesum of their annual base salary and the target AIP award. Ms. Soni would receive a lump sum severance pay under the Senior Executive Plan as the participant would have received in the event of involuntary termination before a Change of Control, andamount equal to two times her annual base salary. All NEOs would be eligible for a pro rata AIP award as set forth above,, except that the pro rata AIP award payable would be at least the same percentage of the target level of payout as is generally applicable to executives whose employment did not terminate. In addition, outstanding unvested LTI awards granted prior to October 2013 would be fully vested upon a Change of Control. The special equity awards granted in October 2013, and any subsequent LTI awards would not vest automatically upon a Change of Control so long as the Compensation Committee determines that, upon the Change of Control, the awards would either continue to be honored or be replaced with substantially equivalent alternative awards. If the awards were so honored or replaced, then those awards would fully vest if, within the two year period following the Change of Control, (1) the executiveNEO was involuntarily terminated by the companyCompany other than for Cause, or (2) the executiveNEO voluntarily terminated employment with the companyCompany for Good Reason. No gross-upIf the NEO is terminated for Cause, all unvested options and stock awards would be provided in any event for any excise taxes that apply to an NEO upon a Change of Control.
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Compensation Discussioncancelled and Analysis
Benefits Payable to NEOs upon Termination or Change of Control
The table and further discussion below address benefits thatneither severance nor AIP would be payable to the NEOs as of December 31, 2015 as a result of their termination of employment under various circumstances or in the event of a Change of Control. The benefits discussed below are in addition to (1) the vested pension benefits set forth in the Pension Benefits Table on page 60, (2) the vested stock options set forth in the Outstanding Equity Awards at Fiscal Year-End Table on page 58, (3) the vested performance shares set forth in the Option Exercises and Stock Vested Table on page 60, and (4) the vested benefits set forth in the Non-Qualified Deferred Compensation Table on page 62 (benefits payable from the Excess Savings Plan). paid.
A participant inevent of disability, the AIP who meets the criteria for retirement treatmentNEO would be eligibleentitled to receive a pro rata AIP award,short and long term disability benefits if they were disabled in a discretionary amount, under the company’s AIP for the year in which termination occurs, payable no later than the March 15 following the calendar year of termination. In accordance with the terms of the 2010 Incentive Stock Planapplicable plan. Upon the commencement of long term disability benefits and the 2014 Incentive Stock Plan, suchwhile in receipt of long term disability benefits, each NEO would be eligible to participate in company health benefit and life insurance plans for up to a maximum of three years.
For the 2020, 2021 and 2022 LTI awards, an NEO will receive retirement treatment if they provide written notice three months in advance of their planned retirement date, continue to perform their job responsibilities satisfactorily, and meet the Rule of 65. Ms. Costello and Messrs. Swift, Elliot, and Robinson were eligible to receive retirement treatment for their 2020, 2021 and 2022 LTI awards under the Rule of 65, as described in Footnotes 2 and 3 below.
64 | www.thehartford.com |
COMPENSATION MATTERS |
Payments upon Termination or Change of Control
Payment Type | Christopher Swift | Beth Costello | David Robinson | Deepa Soni | ||||||||||||||||||||||||||||
VOLUNTARY TERMINATION OR RETIREMENT | ||||||||||||||||||||||||||||||||
2022 AIP Award ($)(1) | 4,440,000 | 1,924,000 | 1,184,000 | — | ||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 9,148,958 | 2,046,854 | 1,509,422 | — | ||||||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 12,581,909 | 2,908,143 | 2,212,596 | — | ||||||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | — | ||||||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | — | — | — | — | ||||||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 26,170,867 | 6,878,997 | 4,906,018 | — | ||||||||||||||||||||||||||||
INVOLUNTARY TERMINATION – NOT FOR CAUSE | ||||||||||||||||||||||||||||||||
2022 AIP Award ($)(1) | 4,440,000 | 1,924,000 | 1,184,000 | 1,036,000 | ||||||||||||||||||||||||||||
Cash Severance ($)(4) | 8,400,000 | 4,150,000 | 2,900,000 | 650,000 | ||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 9,148,958 | 2,046,854 | 1,509,422 | 322,046 | ||||||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 12,581,909 | 2,908,143 | 2,212,596 | 535,322 | ||||||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | 1,058,861 | ||||||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | 38,906 | 45,985 | 45,606 | 45,562 | ||||||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 34,609,773 | 11,074,982 | 7,851,624 | 3,647,791 | ||||||||||||||||||||||||||||
CHANGE OF CONTROL/ INVOLUNTARY TERMINATION NOT FOR CAUSE OR TERMINATION FOR GOOD REASON | ||||||||||||||||||||||||||||||||
2022 AIP Award ($)(1) | 4,440,000 | 1,924,000 | 1,184,000 | 1,036,000 | ||||||||||||||||||||||||||||
Cash Severance ($)(4) | 8,400,000 | 4,150,000 | 2,900,000 | 1,300,000 | ||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 9,148,958 | 2,046,854 | 1,509,422 | 564,350 | ||||||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 12,581,909 | 2,908,143 | 2,212,596 | 1,150,286 | ||||||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | 1,231,931 | ||||||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | 38,906 | 45,985 | 45,606 | 45,562 | ||||||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 34,609,773 | 11,074,982 | 7,851,624 | 5,328,129 | ||||||||||||||||||||||||||||
INVOLUNTARY TERMINATION – DEATH OR DISABILITY | ||||||||||||||||||||||||||||||||
2022 AIP Award ($)(1) | 4,440,000 | 1,924,000 | 1,184,000 | 1,036,000 | ||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 9,148,958 | 2,046,854 | 1,509,422 | 564,350 | ||||||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 12,581,909 | 2,908,143 | 2,212,596 | 1,150,286 | ||||||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | 1,231,931 | ||||||||||||||||||||||||||||
Benefits Continuation ($)(5) | 44,111 | 65,350 | 64,213 | 64,080 | ||||||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 26,214,978 | 6,944,347 | 4,970,231 | 4,046,647 |
Payment Type | Christopher | Beth | Douglas | Brion | Robert | ||||||||
VOLUNTARY TERMINATION OR RETIREMENT | |||||||||||||
2015 AIP Award ($)(1) | - | - | - | - | - | ||||||||
Accelerated Stock Option Vesting ($)(2) | - | - | - | - | - | ||||||||
Accelerated Performance Share Vesting ($)(3) | - | - | - | - | - | ||||||||
Accelerated Other LTI Vesting ($)(3) | - | - | - | - | - | ||||||||
TOTAL TERMINATION BENEFITS ($) | - | - | - | - | - | ||||||||
INVOLUNTARY TERMINATION – NOT FOR CAUSE | |||||||||||||
2015 AIP Award ($)(1) | 2,450,000 | 1,200,000 | 2,000,000 | 1,400,000 | 1,400,000 | ||||||||
Cash Severance ($)(4) | 6,200,000 | 3,300,000 | 5,200,000 | 3,450,000 | 3,600,000 | ||||||||
Accelerated Stock Option Vesting ($)(2) | 1,150,820 | 418,786 | 1,005,385 | 449,780 | 655,458 | ||||||||
Accelerated Performance Share Vesting ($)(3) | 2,012,676 | 693,969 | 1,580,901 | 655,420 | 811,920 | ||||||||
Accelerated Other LTI Vesting ($)(3) | - | - | - | - | - | ||||||||
Benefits Continuation and Outplacement ($)(5) | 37,052 | 28,639 | 32,861 | 37,052 | 37,052 | ||||||||
TOTAL TERMINATION BENEFITS ($) | 11,850,548 | 5,641,394 | 9,819,147 | 5,992,252 | 6,504,430 | ||||||||
CHANGE OF CONTROL/ INVOLUNTARY TERMINATION NOT | |||||||||||||
2015 AIP Award ($)(1) | 2,450,000 | 1,200,000 | 2,000,000 | 1,400,000 | 1,400,000 | ||||||||
Cash Severance ($)(4) | 6,200,000 | 3,300,000 | 5,200,000 | 3,450,000 | 3,600,000 | ||||||||
Accelerated Stock Option Vesting ($)(2) | 2,105,613 | 743,101 | 1,766,347 | 761,592 | 1,061,321 | ||||||||
Accelerated Performance Share Vesting ($)(3) | 5,976,837 | 2,238,364 | 4,801,939 | 2,061,916 | 2,349,274 | ||||||||
Accelerated Other LTI Vesting ($)(3) | 1,315,969 | 789,581 | 1,315,969 | 789,581 | 789,581 | ||||||||
Benefits Continuation and Outplacement ($)(5) | 37,052 | 28,639 | 32,861 | 37,052 | 37,052 | ||||||||
TOTAL TERMINATION BENEFITS ($) | 18,085,471 | 8,299,685 | 15,117,116 | 8,500,141 | 9,237,228 |
2023 Proxy Statement | 65 |
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COMPENSATION MATTERS |
(1) 20152022 AIP Award
Voluntary Termination or Retirement. Retirement. Generally, upon a voluntary termination of employment during 2022, the NEOsNEO would not be eligible to receive an AIP award for 20152022 unless the Compensation Committee determined otherwise. However, a retirement-eligiblean NEO who is eligible for retirement treatment for an AIP award would be entitled to receive a pro rata award for 20152022 based on the portion of the year served. Noneserved, payable no later than March 15 following the calendar year of termination. All of the NEOs, wasexcept for Ms. Soni, were eligible for retirement eligible attreatment as of December 31, 2015.
Death or Disability. Disability. Each NEO would receive a 20152022 AIP award comparable to the award that would have been paid had he or shethey been subject to an involuntary termination (not for Cause).
Voluntary Termination or Retirement. For a voluntary termination, all unvested options would be canceled, unless the Compensation Committee determined otherwise. Each NEO would be entitled to exercise stock options to the extent vested as of the date of histheir termination of employment. The number of vested options held by each NEO is shown inemployment within the Outstanding Equity Awards at Fiscal Year-End Table on page 58. The vested options held by the NEOs would need to be exercised within four months ofmonth period following termination of employment. For retirement-eligible employees, unvested stock options would immediately vest as long as the option had been outstanding for at least one year from the date of grant, and vested options would need to be exercised within five years of the applicable retirement dateemployment but not beyond the scheduled expiration date. None
Involuntary Termination – Not For Cause. Each NEO would be entitled to pro rata vesting of outstandingunvested stock options as long as the options had been outstanding for at least one year from the date of grant. The amounts shown include the in-the-money value of accelerated stock option vesting based on $43.46, the NYSE closing price per shareStock options vested as of the company’s commondate of termination of employment would need to be exercised within the four month period following termination of employment but not beyond the scheduled expiration date.
Change Ofof Control. The NEOs would be entitled to the full vesting of outstanding stock options granted prior to 2014. Stock options granted in 2014 and 2015 would not automatically vest upon a Change of Control so long as the Compensation Committee determined that, upon the Change of Control, the awards would either be honored or replaced with substantially equivalent alternative awards. If the 2014 and 2015 stock option awards were so honored or replaced, then vesting of those awards would only be accelerated if the NEO’s employment were to be terminated within two years following the Change of Control without Cause or by the NEO for Good Reason. Stock options, if vested upon the Change of Control, would be exercisable for the remainder of their original term. The amounts shown in the Change of Control section of the table indicateprovide the in-the-money value of accelerated stock option vesting presuming that all options were to vest upon thea Change of Control on December 31, 2022 (i.e., that 2014 and 2015the stock option awards were not honored or replaced, or that the NEOs were terminated at the time of the Change of Control without Cause), based on $43.46, the NYSE closing price per share of the company’s common stock on December 31, 2015.
Involuntary Termination For Cause. All outstandingunvested stock options would be cancelled.
Death or Disability. All outstandingunvested stock options would become fully vested.
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Backvest and would need to Contents
Compensation Discussion and Analysis
(3) Accelerated Vesting of Performance Shares and Other LTI Awards
Voluntary Termination or Retirement. UnvestedFor a voluntary termination, unvested performance shares and RSUs would be cancelledcanceled as of the termination of employment date, unless the Compensation Committee determined otherwise. For retirement-eligibleretirement eligible employees, unvestedperformance share awards granted on February 23, 2021 and February 23, 2022 would vest, subject to the Company's performance against performance measures and the NEO's compliance with a non-competition provision. As of December 31, 2022, all of the NEOs, except for Ms. Soni, were eligible to receive retirement treatment on their outstanding performance share awards, subject to the Company's performance against performance measures and the NEO's compliance with the non-competition provision. The amounts shown included dividend equivalents accrued as of December 31, 2022 on performance awards.
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COMPENSATION MATTERS |
Change Of Control. The performance sharesRSU and RSUs resulting from the October 2013 special equity grant and the performance share awards granted in 2014 and 2015 would not automatically vest upon a Change of Control so long as the Compensation Committee determined that, upon the Change of Control, the awards would either be honored or replaced with substantially equivalent alternative awards. If the October 2013 special equityRSU awards and the 2014 and 2015 performance share awards were so honored or replaced, then vesting of those awards would only be accelerated if the NEO’s employment were to be terminated within two years following the Change of Control without Cause or by the NEO for Good Reason. The amounts shown in the Change of Control section of the table indicate the value of accelerated vesting presuming that all awards were to vest upon the Change of Control (i.e., the October 2013 special equity awards and the 2014 and 2015 performance share awards were not honored or replaced, or that the NEOs were terminated at the time of the Change of Control without Cause)Cause or quit for Good Reason), based on $43.46,$75.83, the NYSE closing stock price per share of the company’s common stock on December 31, 2015,30, 2022, and, in the case of performance shares, a payout at target. (TheThe Compensation Committee could determine that performance share awards would pay out at greater than the target amount).
Involuntary Termination For Cause. All unvested awards would be cancelled.
Death or Disability. ForPerformance share awards other than the October 2013 special equity awards, a prorated portion of outstanding performance sharesgranted in 2021 and 2022 would vest in full at target and be payable at the endwithin 60 days of the applicabletermination date. The 2020 RSUs granted to Ms. Soni would vest in full and be paid out within 90 days of the termination date (or by March 15, if earlier). The amounts shown include dividend equivalents accrued as of December 31, 2022 on February 23, 2021 and February 23, 2022 performance or service period. Performance sharesawards, and RSUs resulting fromon the October 2013 special equity grant would be forfeited, unless the Compensation Committee determined otherwise.
Voluntary Termination or Retirement, Involuntary Termination For Cause, Death or Disability.Disability. No benefits would be payable.
Involuntary Termination - Not For Cause Before or After Aa Change of Control, or Termination For Good Reason Within Two Years Following a Change of Control. Each NEO (other than Ms. Soni) would receive a severance payment calculated as a lump sum equal to two times the sum of base salary and the target AIP award at the time of termination (assumed to be December 31, 20152022 for this purpose). The amounts shown representFor an Involuntary termination not for Cause before a Change of Control, Ms. Soni would receive a severance payment calculated as a lump sum equal to 12 months of her annual base salary at the valuetime of termination (assumed to be December 31, 2022 for this purpose). For an involuntary termination not for Cause or a termination for Good Reason within two years following a Change of Control, Ms. Soni would receive a severance payable in accordance withpayment calculated as a lump sum equal to 24 months of her annual base salary at the Senior Executive Plan. (Intime of termination (assumed to be December 31, 2022 for this purpose).
Voluntary Termination or Retirement. No benefits would be payable. Employeespayable: executive outplacement services would not be provided and health benefit coverage ends. NEOs who terminate employment after attaining age 55 and completing 10 years of service can elect coverage under a company high deductible health plan until age 65 at their own expense.
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Involuntary Termination - Not For Cause, Before or After A Change of Control, or Termination For Good Reason Within Two Years Following a Change of Control. Each NEO would be provided up to one-year of health benefits at the employee cost and up to one-year of executive outplacement services.
The amounts shown represent the estimated employer cost of health coverage continuation and outplacement.
Other BenefitsInvoluntary Termination - Disability or Death. Each NEO would be provided 36 months of life and health benefits continuation from the date of termination due to long term disability. The amounts shown represent the estimated employer cost of life and health coverage continuation for three years.
2023 Proxy Statement | 67 |
COMPENSATION MATTERS |
In addition•Stock options granted on February 23, 2021 accelerated so that the final two tranches of 122,088 options became vested on December 31, 2022, which are included in the Outstanding Equity table on page 59. If exercised on December 31, 2022 (a date on which the stock market was closed) , these options would have had a market value of $2,925,228 based on the stock price on the prior business day ($75.83 on December 30, 2022).
DEFINITIONS
DEFINITIONS
•
priorPrior to a Change of Control, “Cause” is generally defined as termination for misconduct or other disciplinary action.
•
uponUpon the occurrence of a Change of Control, “Cause” is generally defined as the termination of the executive’s employment due toto: (i) a felony conviction; (ii) an act or acts of dishonesty or gross misconduct which result or are intended to result in damage to the company’sCompany’s business or reputation; or (iii) repeated violations by the executive of the obligations of his or hertheir position, which violations are demonstrably willful and deliberate and which result in damage to the company’sCompany’s business or reputation.
“Change of Control” is generally defined as:
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theThe filing of a report with the SEC disclosing that a person is the beneficial owner of 40% or more of the outstanding stock of the companyCompany entitled to vote in the election of directors of the company;
•
aA person purchases shares pursuant to a tender offer or exchange offer to acquire stock of the companyCompany (or securities convertible into stock), provided that after consummation of the offer, the person is the beneficial owner of 20% or more of the outstanding stock of the companyCompany entitled to vote in the election of directors of the company;
•
theThe consummation of a merger, consolidation, recapitalization or reorganization of the companyCompany approved by the stockholders of the company,Company, other than in a transaction immediately following which the persons who were the beneficial owners of the outstanding securities of the companyCompany entitled to vote in the election of directors of the companyCompany immediately prior to such transaction are the beneficial owners of at least 55% of the total voting power represented by the securities of the entity surviving such transaction entitled to vote in the election of directors of such entity in substantially the same relative proportions as their ownership of the securities of the companyCompany entitled to vote in the election of directors of the companyCompany immediately prior to such transaction;
•
theThe consummation of a sale, lease, exchange or other transfer of all or substantially all the assets of the companyCompany approved by the stockholders of the company;Company; or
•
withinWithin any 24 month period, the persons who were directors of the companyCompany immediately before the beginning of such period (the “Incumbent Directors”) cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the company,Company, provided that any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director (A) was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors
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COMPENSATION MATTERS |
“Good Reason” is generally defined as:
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theThe assignment of duties inconsistent in any material adverse respect with the executive’s position, duties, authority or responsibilities, or any other material adverse change in position, including titles, authority or responsibilities;
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aA material reduction in base pay or target AIP award;
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Compensation Discussion and Analysis
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beingBeing based at any office or location more than 50 miles from the location at which services were performed immediately prior to the Change of Control (provided that such change of office or location also entails a substantially longer commute);
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aA failure by the companyCompany to obtain the assumption and agreement to perform the provisions of the Senior Executive Officer Plan by a successor; or
•
aA termination asserted by the companyCompany to be for cause that is subsequently determined not to constitute a termination for Cause.
Value of Initial Fixed $100 Investment Based on:(4) | ||||||||||||||||||||||||||
Year | Summary Compensation Table (SCT) Total for CEO ($)(1) | Compensation Actually Paid (CAP) to CEO ($)(2) | Average SCT Total for Other NEOs ($)(1) | Average CAP to Other NEOs ($)(3) | Company TSR ($) | Peer Group TSR ($) | Net Income ($ in millions) | Compensation Core Earnings ($ in millions) (5) | ||||||||||||||||||
2022 | 16,086,469 | 26,534,011 | 5,409,204 | 8,245,362 | 135 | 145 | 1,815 | 2,561 | ||||||||||||||||||
2021 | 15,824,348 | 38,804,005 | 4,793,726 | 10,351,296 | 120 | 132 | 2,365 | 2,163 | ||||||||||||||||||
2020 | 11,806,195 | (783,220) | 3,927,876 | 524,850 | 83 | 100 | 1,737 | 1,767 |
Year | SCT Total ($) | Less: Change in Pension Value ($) | Less: Stock Awards from SCT and Option Awards from SCT ($) | Year-End Value of Unvested Equity Awards and Applicable Dividend Equivalents Granted in the Year ($) | Change in Value of Unvested Equity Awards and Applicable Dividend Equivalents Granted in Prior Years ($) | Vesting Date Value of Equity Awards and Applicable Dividend Equivalents Granted and Vested in the Year ($) | Change in Value of Equity Awards and Applicable Dividend Equivalents Granted in Prior Years Which Vested in the Year ($) | CAP ($) | ||||||||||||||||||
2022 | 16,086,469 | — | 10,153,500 | 14,890,747 | 5,123,290 | — | 587,005 | 26,534,011 | ||||||||||||||||||
2021 | 15,824,348 | 8,184 | 9,626,475 | 19,016,242 | 9,006,971 | — | 4,591,103 | 38,804,005 | ||||||||||||||||||
2020 | 11,806,195 | 33,824 | 7,990,850 | 6,834,642 | (5,693,269) | — | (5,706,114) | (783,220) |
2023 Proxy Statement | 69 |
COMPENSATION MATTERS |
Year | SCT Total ($) | Less: Change in Pension Value ($) | Less: Stock Awards from SCT and Option Awards from SCT ($) | Year-End Value of Unvested Equity Awards and Applicable Dividend Equivalents Granted in the Year ($) | Change in Value of Unvested Equity Awards and Applicable Dividend Equivalents Granted in Prior Years ($) | Vesting Date Value of Equity Awards and Applicable Dividend Equivalents Granted and Vested in the Year ($) (a) | Change in Value of Equity Awards and Applicable Dividend Equivalents Granted in Prior Years Which Vested in the Year ($) | CAP ($) | ||||||||||||||||||
2022 | 5,409,204 | — | 2,842,980 | 3,231,047 | 1,053,592 | 938,364 | 456,135 | 8,245,362 | ||||||||||||||||||
2021 | 4,793,726 | 1,170 | 2,362,389 | 4,335,398 | 1,972,862 | 340,965 | 1,271,904 | 10,351,296 | ||||||||||||||||||
2020 | 3,927,876 | 21,586 | 2,164,110 | 1,718,080 | (1,391,173) | 132,902 | (1,677,139) | 524,850 |
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COMPENSATION MATTERS |
2023 Proxy Statement | 71 |
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SHAREHOLDER PROPOSAL |
ITEM | SHAREHOLDER PROPOSAL THAT THE COMPANY ADOPT AND DISCLOSE A POLICY FOR THE TIME BOUND PHASE OUT OF UNDERWRITING RISKS ASSOCIATED WITH NEW FOSSIL FUEL EXPLORATION AND DEVELOPMENT PROJECTS | |||||||||
Whereas: The Intergovernmental Panel on Climate Change (IPCC) advises that greenhouse gas (GHG) emissions must reach net-zero by 2050 to limit warming to 1.5 degrees Celsius, thereby averting the worst impacts of climate change. Experts agree that weather-related natural catastrophes are tied to the trend of increasing insured losses. Last year marked the fourth time in five years global insured losses exceeded $100 billion due to weather related disasters. Combined U.S. insured loss from natural catastrophes in 2020 and 2021 was $176 billion; the highest two-year total on record. Despite The Hartford’s goal to achieve net-zero emissions across all business lines by 2050, it continues to underwrite new risks for the fossil fuel industry. This puts it at odds with the scientific consensus that limiting warming to 1.5 degrees Celsius means that the world cannot develop new oil and gas fields or coal mines beyond those already approved for exploration and development. Existing fossil fuel supplies are sufficient to satisfy global energy needs, and developing new oil and gas fields would not produce in time to mitigate energy market turmoil resulting from the Ukraine War. Without a policy to phase out underwriting new fossil fuel exploration and development, The Hartford may be subject to material risk related to: •Climate: Fossil fuel emissions drive stronger and more frequent natural catastrophes challenging insurers’ abilities to cover claims or offer policies in existing markets. •Transition: Without early action toward an orderly transition to a low carbon economy, availability of capital for the insurance industry could drop precipitously. •Competition: Twelve global insurers now restrict underwriting conventional oil and gas projects and/or companies, signaling responsiveness to climate risk. •Reputation: Campaigns targeting US insurers’ climate policies bring negative attention to the Company, and may adversely affect its ability to attract customers and employees. Investors remain concerned that despite its net zero emissions by 2050 goal, the Company’s efforts are not sufficiently aligned with the IPCC’s 1.5 degrees Celsius no/low overshoot pathways, which describe the trajectories of GHG emissions reductions needed to stabilize the global climate. RESOLVED: Shareholders request that the Board of Directors adopt and disclose a policy for the time bound phase out of The Hartford’s underwriting risks associated with new fossil fuel exploration and development projects, aligned with the IPCC’s recommendation to limit global temperature rise to 1.5 degrees Celsius. Supporting Statement: The board and management, in its discretion, should define the scope, time frames and parameters of the policy, with an eye toward: •the well-accepted definition that new fossil fuel exploration and development projects include exploration for and/or development of oil, gas, and coal resources or reserves beyond those fields or mines that have already been permitted; •the pathways and time frames set forth by the International Energy Agency’s Net Zero by 2050 scenario or the IPCC’s low/no overshoot scenarios |
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SHAREHOLDER PROPOSAL |
× |
•The Hartford has established itself as a U.S. insurance industry leader in its commitment to •Proscriptive approaches to address climate change fail to account for the | |||||||
•Recent geopolitical and economic events have underscored the need for insurers to remain pragmatic and flexible in their underwriting approach during the energy transition. •U.S. insurers are operating in an increasingly complex regulatory environment, making a balanced and pragmatic approach to underwriting of •A strong majority and wide variety of
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Compensation Discussion and Analysis
| 2023 Proxy Statement | 73 |
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The Board recommends that shareholders vote for the option of every “1 year” as the frequency with which shareholders are provided an opportunity to vote on named executive officer compensation, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission.
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INFORMATION ON STOCK OWNERSHIP
The following table shows, as of March 21, 2016:20, 2023: (1) the number of shares of our common stock beneficially owned by each director director nominee, and NEO, and (2) the aggregate number of shares of common stock and common stock-based equity (including RSUs, performance shares granted at target and stock options that will not vest or become exercisable within 60 days, as applicable) held by all directors, director nominees,NEOs and Section 16 executive officers as a group.
Neither the common stock
Name of Beneficial Owner | Common Stock(1) |
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Robert B. Allardice, III | 44,566 |
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| 44,566 | ||||||||
Beth Bombara | 149,455 |
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| 378,990 | ||||||||
Douglas Elliot | 516,613 |
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| 1,070,912 | ||||||||
Trevor Fetter | 54,145 |
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| 54,145 | ||||||||
Brion Johnson | 151,104 |
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| 342,939 | ||||||||
Kathryn A. Mikells | 53,417 |
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| 53,417 | ||||||||
Michael G. Morris | 68,549 |
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| 68,549 | ||||||||
Thomas A. Renyi | 50,470 |
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| 50,470 | ||||||||
Julie G. Richardson(3) | 19,219 |
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| 19,219 | ||||||||
Teresa W. Roseborough | 4,734 |
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| 4,734 | ||||||||
Virginia P. Ruesterholz | 15,069 |
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| 15,069 | ||||||||
Robert Rupp | 305,743 |
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| 517,836 | ||||||||
Charles B. Strauss(4) | 55,550 |
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| 55,50 | ||||||||
Christopher J. Swift(5) | 686,246 |
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| 1,466,577 | ||||||||
H. Patrick Swygert | 45,609 |
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| 45,609 | ||||||||
All directors, director nominees and Section 16 executive officers as a group (22 persons) | 2,504,280 |
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| 4,911,684 |
Name of Beneficial Owner | Common Stock(1) | Total(2) | ||||||
Beth Costello | 519,140 | 703,408 | ||||||
Larry De Shon | 10,850 | 10,850 | ||||||
Carlos Dominguez | 22,520 | 22,520 | ||||||
Douglas Elliot | 1,627,558 | 1,722,603 | ||||||
Trevor Fetter(3) | 126,711 | 126,711 | ||||||
Donna James | 6,725 | 6,725 | ||||||
Kathryn A. Mikells(4) | 99,747 | 99,747 | ||||||
Edmund Reese | 2,357 | 2,357 | ||||||
David Robinson | 243,851 | 383,861 | ||||||
Deepa Soni | 38,514 | 137,887 | ||||||
Teresa W. Roseborough | 28,861 | 28,861 | ||||||
Virginia P. Ruesterholz | 43,329 | 43,329 | ||||||
Christopher J. Swift(5) | 2,637,792 | 3,425,527 | ||||||
Matthew E. Winter | 11,562 | 11,562 | ||||||
Greig Woodring(6) | 17,429 | 17,429 | ||||||
All directors, NEOs and Section 16 executive officers as a group (25 persons)(7) | 6,321,164 | 8,233,152 |
| 2023 Proxy Statement | 75 |
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 21, 2016: (i) may be acquired by directors and Section 16 executive officers upon the vesting of stock-settled RSUs or the exercise of stock options exercisable within 60 days after March 21, 2016, (ii) are allocated to the accounts of Section 16 executive officers under the company’s tax-qualified 401(k) plan (The Hartford Investment and Savings Plan), (iii) are held by Section 16 executive officers under The Hartford Employee Stock Purchase Plan and by Mr. Swygert under the Dividend Reinvestment and Cash Payment Plan, or (iv) are owned by a director’s or a Section 16 executive officer’s spouse or minor child. Of the number of shares of common stock shown above, the following shares may be acquired upon exercise of stock options as of March 21, 2016 or within 60 days thereafter by: Ms. Bombara, 129,135 shares; Mr. Elliot, 413,446 shares; Mr. Johnson, 111,333 shares; Mr. Rupp, 272,749 shares; Mr. Swift, 552,650 shares; and all Section 16 executive officers as a group, 1,617,250 shares.
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Information on Stock Ownership
CERTAIN SHAREHOLDERS
The following table shows those persons known to the companyCompany as of February 15, 201614, 2023 to be the beneficial owners of more than 5% of our common stock. In furnishing the information below, we have relied on information filed with the SEC by the beneficial owners.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) | ||||
The Vanguard Group | 34,371,139 | (2) | 8.39 | % | ||
BlackRock Inc. | 33,430,032 | (3) | 8.2 | % | ||
State Street Corporation | 22,853,467 | (4) | 5.6 | %
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| Amount and Nature of Beneficial Ownership |
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Malvern, PA 19355 | 39,535,660(2) | 12.43% | ||||||
BlackRock Inc. 55 East 52nd Street New York, NY 10055 | 24,543,083(3) |
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T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | 24,771,975(4) |
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State Street Corporation One Lincoln Street Boston, MA 02111 | 18,016,967(5) | 5.66% |
(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, 2022.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires our directors and designated Section 16 executive officers, and persons who own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Section 16 executive officers, directors and greater than 10% shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
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INFORMATION ABOUT THE HARTFORD’S ANNUAL MEETING OF SHAREHOLDERS
SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices with respect to two or more shareholders sharing the same address by delivering a single proxy statement or a single notice addressed to those shareholders. This process, which is commonly referred to as “householding,” provides cost savings for companies. Some brokers household proxy materials, delivering a single proxy statement or notice to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice, please notify your broker. You may also call (800) 542-1061 or write to: Householding Department, 51 Mercedes Way, Edgewood, New York 11717, and include your name, the name of your broker or other nominee, and your account number(s). You can also request prompt delivery of copies of the proxy statementNotice of 2023 Annual Meeting of Shareholders, Proxy Statement and Form 10-K for the fiscal year ended December 31, 20152022 Annual Report by writing to Donald C. Hunt, Senior Vice President and Corporate Secretary, The Hartford Financial Services Group, Inc., One Hartford Plaza, Hartford, CT 06155.
The Board of Directors of The Hartford is soliciting shareholders’ proxies in connection with the 20162023 Annual Meeting of Shareholders, and at any adjournment or postponement thereof. The mailing to shareholders of the notice of Internet availability of proxy materials took place on or about April 8, 2016.
Participants in The Hartford Investment and Savings Plan (“ISP”) and The Hartford Deferred Restricted Stock Unit Plan (“Bonus Swap Plan”) may instruct plan trustees as to how to vote their shares using the methods described on page 75.78. The trustees of the ISP and the Bonus Swap Plan will vote shares for which they have not received direction in accordance with the terms of the ISP and the Bonus Swap Plan, respectively.
Participants in The Hartford's Employee Stock Purchase Plan (“ESPP”) may vote their shares using the voting methodsas described on page 75.
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Information about the Meeting
2023 Proxy Statement | 77 |
INFORMATION ABOUT THE MEETING |
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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 | ||||||
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 | ||||||
| To |
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By internet | By telephone | ||||
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Visit 24/7 www.proxyvote.com | Dial toll-free 24/7 | ||||
By mailing your Proxy Card | At the annual meeting | ||||
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Cast your ballot, sign your proxy card and send by mail |
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When voting on any proposal other than Proposal #4,items 1-5, you may vote “for” or “against” the item or you may abstain from voting. When voting on Proposal #4, you may vote for every “1 year,” “2 years,” “3 years” or you may abstain from voting.
Voting Through the Internet or by Telephone.Telephone Prior to the Annual Meeting. Whether you hold your shares directly as the shareholder of record or beneficially in “street name,” you may direct your vote by proxy without attending the Annual Meeting. You can vote by proxy using the Internet or a telephone by following the instructions provided in the notice you received.
Voting by Proxy Card or Voting Instruction Form.Form. Each shareholder, including any employee of The Hartford who owns common stock through the ISP, the Bonus Swap Plan or the ESPP, may vote by using the proxy card(s) or voting instruction form(s) provided to him or her.them. When you return a proxy card or voting instruction form that is properly completed and signed, the shares of common stock represented by that card will be voted as you specified.
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Abstentions are included in the determination of shares present for quorum purposes.
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INFORMATION ABOUT THE MEETING |
If you do not vote shares for which you are the shareholder of record, your shares will not be voted.
2.Giving written notice of revocation to our Senior Vice President and Corporate Secretary; 3.Submitting a subsequently dated and properly completed proxy card; or 4.Entering a new vote during the Annual Meeting at www.virtualshareholdermeeting.com/HIG2023 (your attendance at the Annual Meeting will not by itself revoke your proxy). |
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If you hold shares in “street name,” you may submit new voting instructions by contacting your broker, bank or other nominee. You may also change your vote or revoke your proxy in person atby voting online during the virtual Annual Meeting if you obtain a legal proxy from the record holder (broker, bank or other nominee) giving you the right to vote the shares.
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Information about the Meeting
Corporate Governance page of the investor relations section of our website at http://ir.thehartford.com.
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 |
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| • 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 |
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| • 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
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2023 Proxy Statement | 79 |
INFORMATION ABOUT THE MEETING |
In addition, you may access our Sustainability Highlight Report, which presents our sustainability goals and provides data on our sustainability practices and achievements, as well as our TCFD, SASB, and EEO-1 reports at:https://www.thehartford.com/about-us/corporate-sustainability.
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INFORMATION ABOUT THE MEETING |
OTHER INFORMATION
As of the date of this proxy statement, the Board of Directors has no knowledge of any business that will be properly presented for consideration at the Annual Meeting other than that described above. As to other business, if any, that may properly come before the Annual Meeting, the proxies will vote in accordance with their judgment.
Present and former directors and present and former officers and other employees of the companyCompany may solicit proxies by telephone, telegram or mail, or by meetings with shareholders or their representatives. The companyCompany will reimburse brokers, banks or other custodians, nominees and fiduciaries for their charges and expenses in forwarding proxy material to beneficial owners. The companyCompany has engaged Morrow & Co.,Sodali LLC to solicit proxies for the Annual Meeting for a fee of $73,000,$13,000, plus the payment of Morrow’s out-of-pocket expenses. The companyCompany will bear all expenses relating to the solicitation of proxies.
ThisThe proxy statement, the company’s Form 10-K for the fiscal year ended December 31, 2015, and a letter to shareholders from the company’s Chairmanmaterials are available to you via the Internet. Shareholders who access the company’sCompany’s materials this way get the information they need electronically, which allows us to reduce printing and delivery costs and lessen adverse environmental impacts. The Noticenotice of Internet availability contains instructions as to how to access and review these materials. You may also refer to the Noticenotice for instructions regarding how to request paper copies of these materials.
We hereby incorporate by reference into this proxy statement “Item 10: Directors, and Executive Officers and Corporate Governance of the Registrant”The Hartford” and “Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of the company’sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
By order of the Board of Directors,
Donald C. Hunt
Senior Vice President and Corporate Secretary
Dated: April 7, 2016
SHAREHOLDERS ARE URGED TO VOTE BY PROXY, WHETHER OR NOT THEY EXPECT TO ATTEND THE VIRTUAL ANNUAL MEETING. A SHAREHOLDER MAY REVOKE HIS OR HERTHEIR PROXY AND VOTE IN PERSON IF HE OR SHE ATTENDSAT THE VIRTUAL ANNUAL MEETING (STREET HOLDERS MUST OBTAIN A LEGAL PROXY FROM THEIR BROKER, BANKER OR TRUSTEE TO VOTE IN PERSON AT THE VIRTUAL ANNUAL MEETING).
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2023 Proxy Statement | 81 |
Appendix A
APPENDIX A: RECONCILIATION OF GAAP TO NON-GAAPNON-GAAP FINANCIAL MEASURES
The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures assist users in analyzing the company’s operating performance. Management and the Compensation Committee also utilize theseHartford uses non-GAAP financial measures in making financial,this proxy statement to assist investors in analyzing the Company's operating and planning decisions and in evaluationperformance for the periods presented herein. Because The Hartford's calculation of performance. However, becausethese measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford's non-GAAP financial measures have inherent limitations,to those of other companies. Definitions and calculations of non-GAAP and other financial measures used in this proxy statement can be found below.
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APPENDIX A |
($ in millions) | Year Ended Dec. 31, 2022 | Year Ended Dec. 31, 2021 | |||||||||
Net income available to common stockholders | $ | 1,794 | $ | 2,344 | |||||||
Adjustments to reconcile net income available to common stockholders to core earnings: | |||||||||||
Net realized losses (gains), excluded from core earnings, before tax | 626 | (505) | |||||||||
Restructuring and other costs, before tax | 13 | 1 | |||||||||
Loss on extinguishment of debt, before tax | 9 | — | |||||||||
Integration and other non-recurring M&A costs before tax | 21 | 58 | |||||||||
Change in deferred gain on retroactive reinsurance, before tax | 229 | 246 | |||||||||
Income tax expense (benefit)(1) | (200) | 34 | |||||||||
Core Earnings | $ | 2,492 | $ | 2,178 |
website at http://ir.thehartford.com.
Compensation Core Earnings:As discussed under “Annual Incentive Plan (”AIP“) Awards” on page 42,43, at the beginning of each year, the Compensation Committee starts with GAAP net income and approves a definition of “Compensation Core Earnings” and “Compensation ROE,Earnings,” botha non-GAAP financial measures.measure. Compensation Core Earnings is used to set AIP award targets and threshold levels below which no AIP award is earnedearned. Below are the Compensation Committee’s 2022, 2021 and 2020 definitions of “Compensation Core Earnings” and reconciliations of core earnings to this non-GAAP financial measure.
($ in millions) | Year Ended Dec. 31, 2022 | Year Ended Dec. 31, 2021 | Year Ended Dec. 31, 2020 | ||||||||
Core Earnings as reported | $ | 2,492 | $ | 2,178 | $ | 2,086 | |||||
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 | 44 | 10 | (319) | ||||||||
Prior accident year reserve development associated with asbestos and environmental reserves, net of reinsurance recoveries, included in core earnings | — | — | — | ||||||||
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, litigation and regulatory settlement charges and/or prior/current year non-recurring tax benefits or charges | (24) | (4) | 18 | ||||||||
Total equity method earnings that are below or (above) the annual operating budget from the limited partnership that owns Talcott Resolution | 19 | (21) | |||||||||
Total Hartford Funds earnings that are below or (above) the annual operating budget | 49 | (40) | 3 | ||||||||
Compensation Core Earnings | $ | 2,561 | $ | 2,163 | $ | 1,767 | |||||
2023 Proxy Statement | 83 |
APPENDIX A |
Year Ended Dec. 31, 2022 | ||||||||
Net income margin | 5.0 | % | ||||||
Adjustments to reconcile net income margin to core earnings margin: | ||||||||
Net realized losses before tax | 1.8 | % | ||||||
Integration and other non-recurring M&A costs, before tax | 0.1 | % | ||||||
Income tax benefit | (0.4) | % | ||||||
Core earnings margin | 6.5 | % |
Year Ended Dec. 31, 2022 | Year Ended Dec. 31, 2021 | Year Ended Dec. 31, 2020 | ||||||||||||
Net Income available to common stockholders ROE | 11.6 | % | 13.1 | % | 10.0 | % | ||||||||
Adjustments to reconcile net income ROE to core earnings ROE: | ||||||||||||||
Net realized losses (gains), excluded from core earnings, before tax | 4.1 | (2.8) | 0.1 | |||||||||||
Restructuring and other costs, before tax | 0.1 | — | 0.6 | |||||||||||
Loss on extinguishment of debt, before tax | 0.1 | — | — | |||||||||||
Integration and other non-recurring M&A costs, before tax | 0.1 | 0.3 | 0.3 | |||||||||||
Change in deferred gain on retroactive reinsurance, before tax | 1.5 | 1.4 | 1.8 | |||||||||||
Income tax expense (benefit) on items not included in core earnings | (1.3) | 0.2 | (0.7) | |||||||||||
Impact of AOCI, excluded from denominator of Core Earnings ROE | (1.8) | 0.5 | 0.6 | |||||||||||
Core earnings ROE | 14.4 | % | 12.7 | % | 12.7 | % |
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APPENDIX A |
Belowtargets and threshold levels below which there is no payout. The adjustments described in the left hand column of the table below constitute the Compensation Committee’s 2015 definition of “Compensation Core Earnings” and a reconciliation of this non-GAAP financial measure to 2015 GAAP Net Income.
2015 COMPENSATION CORE EARNINGS
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2015 GAAP Net Income | $ | 1,682 | |
Less adjustments: |
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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 (which are net realized capital gains (losses) directly related to offsetting items included in the income statement, such as net investment income) | (114 | ) | |
The impact of the unlock of estimated gross profits (“DAC Unlock”), after-tax | 52 | ||
Restructuring costs, after-tax | (13 | ) | |
Income tax benefit from reduction in valuation allowance | 94 | ||
Income (losses) associated with discontinued operations, after-tax | 9 | ||
Loss on extinguishment of debt, after-tax | (14 | ) | |
Reinsurance gains (losses) on dispositions, after-tax | 18 | ||
=Core Earnings(1) | $ | 1,650 | |
Adjusted for after-tax: |
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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 2015 catastrophe budget | (90 | ) | |
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 year non-recurring tax benefits or charges | 85 | ||
=Compensation Core Earnings | $ | 1,645 |
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Below is the Compensation Committee’s 20152022 definition of “Compensation Core ROE.” A reconciliation of this non-GAAP financial measureGAAP net income to GAAP Net IncomeCompensation Core ROE for the 2022 performance share awards will not be available until the end of the performance period in 2017.
COMPENSATION CORE ROE
Year Ended Dec. 31, 2022 | Year Ended Dec. 31, 2021 | Year Ended Dec. 31, 2020 | |||||||||
Net income available to common shareholders | $1,794 | $2,344 | $1,716 | ||||||||
Adjustments to reconcile net income available to common stockholders to core earnings: | |||||||||||
Net realized losses (gains) excluded from core earnings, before tax | 626 | (505) | 18 | ||||||||
Restructuring and other costs, before tax | 13 | 1 | 104 | ||||||||
Loss on extinguishment of debt, before tax | 9 | — | — | ||||||||
Integration and other non-recurring M&A costs, before tax | 21 | 58 | 51 | ||||||||
Change in deferred gain on retroactive reinsurance, before tax | 229 | 246 | 312 | ||||||||
Income tax expense (benefit) | (200) | 34 | (115) | ||||||||
Loss (income) from discontinued operations, after tax | — | — | — | ||||||||
Core Earnings as reported | 2,492 | 2,178 | 2,086 | ||||||||
Adjusted for after tax: | |||||||||||
Total catastrophe losses, including reinstatement premiums, state catastrophe fund assessments and terrorism losses that are (below) or above the catastrophe budget.(1) | 60 | 25 | (320) | ||||||||
Total equity method earnings from the limited partnership that owns Talcott Resolution that are below (above) the annual operating budget as set for each year in January 2020 | 13 | 21 | (21) | ||||||||
Total Hartford Funds earnings that are below or (above) the annual operating budget as set for each year in January 2020 | 6 | (40) | 3 | ||||||||
Core Earnings as adjusted | 2,571 | 2,184 | 1,748 | ||||||||
Prior year ending common stockholders' equity, excluding accumulated other comprehensive income (AOCI) | 17,337 | 17,052 | 15,884 | ||||||||
Current year ending common stockholders' equity, excluding AOCI | 17,173 | 17,337 | 17,052 | ||||||||
Average common stockholders' equity, excluding AOCI | 17,255 | 17,194 | 16,468 | ||||||||
Compensation Core ROE | 14.9 | % | 12.7 | % | 10.6 | % | |||||
Average of 2020, 2021 and 2022 Compensation Core ROE = 12.7% |
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.ONE HARTFORD PLAZAMAILSTOP# H0-1-09 HARTFORD PLAZAHARTFORD, CT 06155
VOTE BY INTERNET -www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time on May 17, 2016. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALSIf 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 - 1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Daylight Time on May 17, 2016. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAILMark, 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.
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2023 Proxy Statement | 85 |
APPENDIX A |
Commercial Lines | Personal Lines | |||||||||||||
Combined Ratio | 90.2 | 100.3 | ||||||||||||
Impact of current accident year catastrophes and PYD on combined ratio | (2.0) | (6.7) | ||||||||||||
Underlying Combined Ratio | 88.3 | 93.7 |
Year Ended | |||||||||||||
Net Income available to common stockholders per diluted share | $ | 5.44 | |||||||||||
Adjustments made to reconcile net income available to common stockholders per diluted share to core earnings per diluted share: | |||||||||||||
Net realized losses (gains), excluded from core earnings, before tax | 1.90 | ||||||||||||
Restructuring and other costs, before tax | |||||||||||||
Loss on extinguishment of debt, before tax | 0.03 | ||||||||||||
Integration and other non-recurring M&A costs, before tax | |||||||||||||
Change in deferred gain on retroactive reinsurance, before tax | 0.69 | ||||||||||||
Income tax expense (benefit) on items excluded from core earnings | |||||||||||||
Core earnings per diluted share | 7.56 | ||||||||||||
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The Hartford Financial Services Group, Inc.2016 Annual Meeting of Shareholders
May 18, 2016 at 12:30 P.M.
The Hartford Financial Services Group, Inc.Wallace Stevens TheaterOne Hartford PlazaHartford, CT 06155
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:Proxy Statement, Form 10-K and Chairman's Letter are available atwww.proxyvote.com.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.Annual Meeting of ShareholdersMay 18, 2016 12:30 P.M.
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 theAnnual Meeting of Shareholders of the Company to be held at 12:30 P.M. E.D.T. on May 18, 2016, at the Wallace Stevens Theater at the Company's Home Office, One Hartford Plaza, Hartford, CT 06155, and at any adjournments or postponements thereof, and confers discretionary authority upon each such proxy to vote upon any other matter properly brought before the meeting.
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 16, 2016.
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, "FOR" ITEMS 2 AND 3 AND FOR "1 YEAR" ON ITEM 4. Please sign, date, and return this Proxy, or vote by telephone or through the Internet.
www.thehartford.com |
*** Exercise YourRight to Vote ***Important Notice Regarding the Availability of Proxy Materials for theShareholder Meeting to Be Held on May 18, 2016.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
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 atwww.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.
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The Board of Directors recommends you voteFOR all nominees for election as directors:
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