(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transactions applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
Selective Insurance Group, Inc. 40 Wantage Avenue Branchville, New Jersey 07890 (973) 948-3000 |
1. | Approve amendments to Selective’s Restated Certificate of Incorporation and By-Laws to eliminate the classified Board over a period of three years; |
2. | Elect |
3. | Approve an amendment and restatement of the Selective Insurance Group, Inc. 2005 Omnibus Stock Plan to, among other things, increase the number of shares issuable under such plan, provide that awards may be granted to consultants and service providers of subsidiaries of Selective that are less than 80% owned by Selective, and approve and reapprove the performance goals under the plan for purposes of Section 162(m) of the Internal Revenue Code; |
4. | Approve an amendment and restatement of the Selective Insurance Group, Inc. Cash Incentive Plan and approve and reapprove the performance goals under the plan for purposes of Section 162(m) of the Internal Revenue Code; and |
5. | Ratify the appointment of KPMG LLP as our independent registered public |
PROXY STATEMENT | 2 | |||
2 | ||||
3 | ||||
5 | ||||
5 | ||||
6 | ||||
6 | ||||
INFORMATION ABOUT PROPOSAL 2 | 8 | |||
18 | ||||
18 | ||||
20 | ||||
20 | ||||
20 | ||||
RISK MANAGEMENT | 23 | |||
STOCKHOLDER COMMUNICATIONS | 24 | |||
CODE OF CONDUCT | 24 | |||
25 | ||||
25 | ||||
Summary Compensation Table | 37 | |||
40 | ||||
41 | ||||
Nonqualified Deferred Compensation | 43 | |||
upon Termination or Change of Control | 44 | |||
46 | ||||
47 | ||||
47 | ||||
3 | 48 | |||
53 | ||||
57 | ||||
FEES OF INDEPENDENT REGISTERED PUBLIC | 57 | |||
58 | ||||
59 | ||||
61 |
PROPOSAL 1: | AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION AND THE BY-LAWS |
§ | Vote in favor of Proposal 1; |
§ | Vote against Proposal 1; or |
§ | Abstain from voting. |
PROPOSAL 2. | ELECTION OF DIRECTORS |
§ | Vote in favor of all the nominees; | ||
§ | Withhold your votes as to all nominees; or | ||
§ | Withhold your votes as to specific nominees. |
PROPOSAL 3. | APPROVE THE AMENDMENT AND RESTATEMENT OF THE SELECTIVE INSURANCE GROUP, INC. 2005 OMNIBUS STOCK PLAN TO, AMONG OTHER THINGS, INCREASE THE NUMBER OF SHARES ISSUABLE UNDER SUCH PLAN, PROVIDE THAT AWARDS MAY BE GRANTED TO CONSULTANTS AND SERVICE PROVIDERS TO CERTAIN SUBSIDIARIES OF SELECTIVE, AND TO APPROVE AND REAPPROVE THE PERFORMANCE GOALS SET OUT IN THE PLAN |
§ | Vote in favor of Proposal 3; |
§ | Vote against Proposal 3; or |
§ | Abstain from voting. |
PROPOSAL 4. | APPROVE THE AMENDMENT AND RESTATEMENT OF THE SELECTIVE INSURANCE GROUP, INC. CASH INCENTIVE PLAN AND APPROVE AND REAPPROVE THE PERFORMANCE GOALS SET OUT IN THE CASH INCENTIVE PLAN |
§ | Vote in favor of Proposal 4; |
§ | Vote against Proposal 4; or |
§ | Abstain from voting. |
PROPOSAL 5. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
§ | Vote in favor of Proposal | ||
§ | Vote against Proposal | ||
§ | Abstain from voting. |
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1. | BY | ||
2. | BY | ||
3. | BY | ||
4. | IN |
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· | Amendments to Article Seventh and the deletion of Article Ninth of our Restated Certificate of Incorporation, as amended, with the amendments and revisions all incorporated into an amended and restated Certificate of Incorporation (the “Charter”); and |
· | Amendments to Sections 7A and 7B of our By-Laws to declassify the Board of Directors and phase in annual voting for each Director to serve a one-year term. |
· | Directors of a company with a classified Board structure may only be removed by stockholders for cause unless its certificate of incorporation provides otherwise; and |
· | Directors of a company without a classified Board structure may be removed for cause or without cause unless otherwise provided in the certificate of incorporation. |
· | Directors and management; |
· | Third party search firms that the Corporate Governance and Nominating Committee may engage; and |
· | Stockholders. |
· | Personal and professional ethics, integrity, character, and values; |
· | Professional and personal experience; |
· | Business judgment; |
· | Skills and expertise; |
· | Industry knowledge; |
· | Independence and avoidance or limitation of potential or actual conflicts of interest; |
· | Dedication and commitment to representing the long-term interests of Selective and its stockholders; |
· | Willingness to dedicate and devote sufficient time to Board duties and activities; |
· | Other appropriate and relevant factors, including the qualification and skills of the current members of the Board; and |
· | Diversity. | |
CLASS | Directors Nominated to Continue in Office Until the 2011 Annual Meeting of Stockholders If Proposal 1 is Approved, or Until the 2013 Annual Meeting of Stockholders If Proposal 1 is Not Approved |
Name, Age, Year Elected to Board of Directors | Occupation and Background | ||
W. Marston Becker, 57 Independent Director, 2006 | · | Chairman and Chief Executive Officer, Max Capital Group Ltd., since October 2006; Director, since 2004. | |
· | Chairman and General Partner of West Virginia Media Holdings, since 2001. | ||
· | Chairman and Chief Executive Officer of LaSalle Re Holdings Ltd., 2002 to 2008. In August 2003, LaSalle Re Holdings Limited and its affiliate Trenwick Group Ltd. filed for protection under Chapter 11 of the U.S. Bankruptcy Code. | ||
· | Director, BrickStreet Mutual Insurance Company, since 2008. | ||
· | Director, Dorado Insurance, Ltd., since 2007. | ||
· | Director, Coal Contractors Insurance, Ltd., since 2002. | ||
· | Chairman and Chief Executive Officer, Trenwick Group, Ltd., 2002 to 2005; Director, Trenwick Group, Ltd., 1997 to 2003. | ||
· | Director, Mountain Companies, since 2007. | ||
· | Director, Beazley Group plc, 2006 to 2008. | ||
· | Director, West Virginia University, United Hospital System, 2004 to 2008. | ||
· | Chief Executive Officer, McDonough-Caperton Insurance Group, 1986 to 1994. | ||
· | Advisory Board Member, Conning Funds, since 1997. | ||
· | Advisory Board Member, American Securities Funds, since 1997. | ||
· | Advisory Board Member, International Catastrophe Insurance Managers, LLC (ICAT), 2005 to 2006. | ||
· | Graduate of West Virginia University (B.S. and J.D.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Becker has extensive insurance industry expertise and leadership experience. He is the Chairman and Chief Executive Officer of a publicly-traded insurance and reinsurance group and has held similar senior management and director positions with other insurance groups. Mr. Becker also ran an independent insurance agency, which is our principal distribution channel. He was trained as both an attorney and an accountant and is financially knowledgeable. He is active in a variety of business and public policy issues in his native West Virginia. He also has strong insurance industry contacts and analytical skills. |
CLASS I –Directors Nominated to Continue in Office Until the 2011 Annual Meeting of Stockholders If Proposal 1 is Approved, or Until the 2013 Annual Meeting of Stockholders If Proposal 1 is Not Approved |
Name, Age, Year Elected to Board of Directors | Occupation and Background | ||
Gregory E. Murphy, 54 | · | Chairman, President and Chief Executive Officer of Selective, since May 2000. | |
Employee Director, 1997 | · | President and Chief Executive Officer of Selective, May 1999 to May 2000. | |
· | President and Chief Operating Officer of Selective, 1997 to May 1999. | ||
· | Other senior executive, management, and operational positions at Selective, since 1980. | ||
· | Certified Public Accountant (New Jersey) (Inactive). | ||
· | Director, Newton Memorial Hospital Foundation, Inc., since 1999. | ||
· | Director, Property Casualty Insurers Association of America, since 2008. | ||
· | Director, Insurance Information Institute, since 2000. | ||
· | Director, American Insurance Association (AIA), 2002 to 2006. | ||
· | Trustee, the American Institute for CPCU (AICPCU) and the Insurance Institute of America (IIA), since 2001. | ||
· | Graduate of Boston College (B.S. Accounting). | ||
· | Harvard University (Advanced Management Program). | ||
· | M.I.T. Sloan School of Management. | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Murphy, with 30 years of service at Selective and 11 as Chief Executive Officer, is the Director most knowledgeable about our operations. We consider his service on the Board extremely valuable to informed business and strategic decision-making. He has broad experience and knowledge in the areas of reinsurance, and insurance pricing and industry fundamentals. Mr. Murphy has extensive contacts in the insurance industry and serves as a director of several important industry groups. He is an accountant, served as our Chief Financial Officer prior to assuming other leadership positions, and is extremely financially sophisticated. |
NOMINEES OF THE BOARD OF DIRECTORS |
CLASS I –Directors Nominated to Continue in Office Until the 2011 Annual Meeting of Stockholders If Proposal 1 is Approved, or Until the 2013 Annual Meeting of Stockholders If Proposal 1 is Not Approved |
Name, Age, Year Elected to Board of Directors | Occupation and Background | ||
Cynthia S. Nicholson, 45 | · | Co-Founder, Pup To Go, LLC, since 2009. | |
Independent Director, | · | Principal Strategist and Director, GamesThatGive, Inc., since 2009. | |
2009 | · | Senior Vice President and Chief Marketing Officer of Pepsi-Cola North America, a division of PepsiCo, Inc., 2005 to 2008. | |
· | Various Vice President and Director positions, PepsiCo, Inc., 1997 to 2004. | ||
· | Various Marketing positions, R.J. Reynolds Tobacco Company, 1988 to 1997. | ||
· | Member, Association of National Advertisers Board, 2006 to 2008. | ||
· | Graduate of Kelley School of Business, Indiana University (M.B.A.). | ||
· | Graduate of University of Illinois (B.S.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Ms. Nicholson is a marketing expert and served in a variety of senior marketing positions at Pepsi, which is known for its brand marketing and senior management training. We believe that her marketing expertise is invaluable to us as we explore branding and marketing efforts to address competitive issues in the property and casualty industry and our distribution through independent agents. Ms. Nicholson was appointed to the Board in 2009 after being identified by a third-party firm specializing in diversity director searches, Diversified Search Ray & Berndtson. | ||
· | President and former Executive Vice President, Rue Insurance, general insurance agency, since 1969. | ||
Non-Independent Director, | · | President, Rue Financial Services, Inc., since 2002. | |
1977 | · | Director, 1st Constitution Bank, since 1989, Secretary of the Board, since 2005. | |
· | Director, 1st Constitution Bancorp, since 1999, Secretary of the Board, since 2005. | ||
· | Director, Robert Wood Johnson University Hospital at Hamilton, since 1994. | ||
· | Trustee, Rider University, since 1993. | ||
· | Director, Robert Wood Johnson University Hospital Foundation, since 1999. | ||
· | Member, National Association of Securities Dealers. | ||
· | Member, Council of Insurance Agents & Brokers. | ||
· | Member, Society of CPCU. | ||
· | Member, Professional Insurance Agents Association. | ||
· | President, The Rue Foundation, since 2004. | ||
· | Graduate of Rider College (B.A.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Rue has been one of our independent agents for 41 years, and the chief executive of his agency for 25 years. We believe that, because we distribute our products exclusively through independent agents, it is extremely valuable for informed business and strategic decision-making for the Board to have the feedback and input from an independent agent with strong knowledge of our operations and the competitive landscape. |
CONTINUING DIRECTORS |
CLASS II – Directors Continuing in Office Until the 2012 Annual Meeting of Stockholders |
Name, Age, Year Elected to Board of Directors | Occupation and Background | ||
A. David Brown, 67 | · | Executive Vice President, Urban Brands, Inc., since April 2009. | |
Independent Director, 1996 | · | Senior Vice President, Human Resources, Linens ‘n Things, Inc., 2006 to 2009. In May 2008, Linens and Things, Inc. filed for protection under Chapter 11 of the U.S. Bankruptcy Code. | |
· | Managing Partner, Bridge Partners, LLC, an executive recruiting firm, 2003 to 2006. | ||
Lead Independent Director, 2009 – present | · | Partner, Whitehead Mann, executive recruiters, 1997 to 2003. | |
· | Director, Hanover Direct, 2003 to 2006. | ||
· | Director, Zale Corporation, 1997 to 2006. | ||
· | Director, The Sports Authority, Inc., 1998 to 2003. | ||
· | Trustee, Jackie Robinson Foundation. | ||
· | Trustee, Monmouth University. | ||
· | Graduate of Monmouth University (B.S.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Brown has had a long career in human resources and executive development and leadership. He has run his own business and worked for large corporations. He also has a long commitment to diversity and was the managing director of a search firm specializing in diversity. Mr. Brown has extensive corporate governance experience and has served on several public company boards. He is active in several institutions based in New Jersey, where we are headquartered. Mr. Brown’s strong leadership and inter-personal skills have made him an effective Lead Independent Director. | ||
S. Griffin McClellan III, 72 | · | Retired | |
Independent Director, 1980 | · | Self-employed Consultant, 1994 to 2001. | |
· | Graduate of Harvard University (B.A.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. McClellan is the former Chief Executive Officer of two federal savings banks. He has extensive financial and investment experience and knowledge, particularly in the area of structured products, leading him to be a major contributor to the Finance Committee. After Mr. Rue, Mr. McClellan is the longest tenured director and has an extensive knowledge of our history and challenges. | ||
J. Brian Thebault, 58 | · | Partner, Thebault Associates, since 2007. | |
Independent Director, 1996 | · | Chairman, Earth-Thebault, July 2007 to July 2009. | |
· | Chairman and Chief Executive Officer, L.P. Thebault Company, 1998 to 2007; President and Chief Executive Officer, L.P. Thebault Company, 1984 to 1998. | ||
· | Trustee, The Peck School, since 1994. | ||
· | Trustee, The Delbarton School, 1990 to 2007. | ||
· | Graduate of University of Southern California (B.S.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | For most of his career, Mr. Thebault has run closely-held businesses, which is the structure of many of our commercial customers. Through his career in the printing industry, he has a strong background in sales, marketing, finance matters, and business strategy. |
CONTINUING DIRECTORS |
CLASS III – Directors Continuing in Office Until the 2011 Annual Meeting of Stockholders |
Name, Age, Year Elected to Board of Directors | Occupation and Background | ||
Paul D. Bauer, 66 | · | Retired financial executive. | |
Independent Director, 1998 | Executive Vice President and Chief Financial Officer of Tops Markets, Inc., 1970 to 1993. | ||
Director, Rosina Holdings Inc., since 2002. | |||
· | |||
Director, R.P. Adams Co., 1991 to 2004. | |||
Director, IMC, Inc., 1995 to 2000. | |||
· | Co-founder and President, The Bison Scholarship Fund (formerly named the Buffalo Inner-City Scholarship Opportunity Network), since 1995. | ||
· | Trustee, Holy Angels Academy, since 2005. | ||
Graduate of Boston College (B.S. | |||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Bauer is the former Chief Financial Officer of a publicly-traded company and the Audit Committee’s designated financial expert. Mr. Bauer is very active in the Buffalo community and knowledgeable of Upstate New York, which is an important market for us. | ||
John C. Burville, 62 | Insurance Consultant to the Bermuda Government, 2003 to 2007. | ||
Independent Director, 2006 | Bermuda Insurance Advisory Committee, 1985 to 2003. | ||
Chief Actuary and Senior Rating Agency Manager of ACE Limited, 1992 to 2003. | |||
Graduate of Leicester University in the United Kingdom (BSc and Ph.D.). | |||
Fellow of the Institute of Actuaries. |
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Discussion of individual experience, qualifications, attributes, and skills. | Mr. Burville has extensive insurance industry knowledge and served as chief actuary of one of the world’s largest property and casualty company. He is extremely knowledgeable about reserving and numerous actuarial techniques to calculate ultimate reserve levels. Mr. Burville is looked to as an actuarial subject matter expert on the Board. |
Joan M. Lamm-Tennant, | Vice President, Marsh & McLennan Companies, Inc., since Feb. 2009. | ||
Independent Director, 1993 | · | Global Chief Economist & Risk Strategist, Guy Carpenter & Company, LLC, since | |
Senior Vice President, General Re Corporation, 1997 to | |||
Adjunct Professor, the Wharton School of the University of Pennsylvania, since 2006. | |||
Professor of Finance, Villanova University, 1988 to 2000. | |||
Director, IVANS, Inc., since 2004. | |||
Member, American Risk and Insurance Association. | |||
Member, International Insurance Society. | |||
Member, Association for Investment Management and Research. | |||
Graduate of St. Mary’s University (B.B.A. and M.B.A.). | |||
Graduate of the University of Texas (Ph.D.). | |||
Discussion of individual experience, qualifications, attributes, and skills. | Ms. Lamm-Tennant has extensive insurance industry experience. She is a recognized expert in the fields of enterprise risk management and capital modeling. She is active in several industry associations and a finance professor. Ms. Lamm-Tennant is a financial expert and particularly knowledgeable regarding investments and investment strategies. | ||
President & Chief Executive Officer, International Insurance Society, Inc., 2009 to present. | |||
Independent Director, 2008 | · | Chairman and | |
· | Director, CGA Group, Ltd., 1998 to 2009. | ||
· | President, Chief Operating Officer, Chief Investment Officer and Director, Manhattan Life Insurance Company, 1985 to 1987. | ||
· | Chief Executive Officer, Manhattan Capital Management, 1985. | ||
· | Senior Vice President, Crum & Forster Insurance Group, 1978 to 1983. | ||
· | Chartered Financial Analyst. | ||
· | Graduate of Boston College (B.A.). | ||
· | Graduate of Dartmouth College (M.B.A.). | ||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. Morrissey has 37 years of insurance industry experience. He is the head of an international insurance trade association, previously ran an investment firm specializing in insurance companies, and was president and chief investment officer of an insurance company. Mr. Morrissey is very knowledgeable regarding the investment community, investor relations, and the analysis of strategic transactions. |
Ronald L. O’Kelley, 65 Independent Director, 2005 | · | Chairman and Chief Executive Officer, Atlantic Coast Venture Investments Inc., | |
· | President and Chief Executive Officer, U.S. Shipping Partners, L.P., 2008 to 2009. In April 2009, U.S. Shipping Partners, L.P. filed for protection under Chapter 11 of the U.S. Bankruptcy Code and emerged reorganized as U.S. Shipping Corp in November 2009. | ||
Executive Vice President, | |||
Director, | |||
Director, Refco Inc., 2005 to 2006. | |||
Advisory Director, Donald H. Jones Center for Entrepreneurship, Tepper School of Business, Carnegie Mellon University, since 2003. | |||
Member, National Association of Corporate Directors. | |||
Graduate of Duke University (A.B.). | |||
Graduate of Carnegie Mellon University (M.B.A.). | |||
Discussion of individual experience, qualifications, attributes, and skills. | Mr. O’Kelley is the former Chief Financial Officer of a large multi-national financial services organization and qualifies as a financial expert. He has extensive experience in corporate restructurings for both manufacturing organizations and financial institutions. Mr. O’Kelley has a demonstrated track record for implementing corporate strategy through significant mergers and acquisitions, divestitures, and debt and equity fund raisings. He is active in the trade association for corporate directors and has significant tenure as a director of other public companies. |
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§ | The number of shares of Selective common stock beneficially owned by each | ||
§ | The number of shares of Selective common stock beneficially owned by the directors |
Number of Shares | ||||||||||||||||||||||||||||||||
Options Exercisable | Total Shares | Percent of | Number of Shares | |||||||||||||||||||||||||||||
Name of Beneficial Owner | Common Stock(1) | within 60 days | Beneficially Owned | Class | Common Stock(1) | Options Exercisable Within 60 Days of February 12, 2010 | Total Shares Beneficially Owned | Percent of Class | ||||||||||||||||||||||||
Bauer, Paul D. | 34,413 | 51,269 | 85,682 | * | 44,443 | 66,156 | 110,599 | * | ||||||||||||||||||||||||
Becker, W. Marston | 8,637 | 9,269 | 17,906 | * | 32,667 | (2) | 30,156 | 62,823 | * | |||||||||||||||||||||||
Brown, A. David | 36,895 | 39,269 | 76,164 | * | 44,887 | 60,156 | 105,043 | * | ||||||||||||||||||||||||
Burville, John C. | 5,106 | 9,269 | 14,375 | * | 12,844 | 30,156 | 43,000 | * | ||||||||||||||||||||||||
Connell, Richard F. | 90,073 | 13,480 | 103,553 | * | 52,206 | 21,900 | 74,106 | * | ||||||||||||||||||||||||
Guthrie, Kerry A. | 89,846 | (2) | 55,980 | 145,826 | * | |||||||||||||||||||||||||||
Kearns, William M., Jr. | 194,321 | 51,269 | 245,590 | * | ||||||||||||||||||||||||||||
Lamm-Tennant, Joan M. | 40,376 | 51,269 | 91,645 | * | 51,815 | 60,156 | 111,971 | * | ||||||||||||||||||||||||
Lanza, Michael H. | 5,673 | 11,900 | 17,573 | * | ||||||||||||||||||||||||||||
McClellan, S. Griffin, III | 40,859 | (3) | 21,269 | 62,128 | * | 45,504 | (3) | 42,156 | 87,660 | * | ||||||||||||||||||||||
Morrissey, Michael J. | — | — | — | * | 5,748 | 14,612 | 20,361 | * | ||||||||||||||||||||||||
Murphy, Gregory E. | 252,846 | 73,130 | 325,976 | 1 | % | 122,848 | 74,718 | 197,566 | * | |||||||||||||||||||||||
Ochiltree, Jamie, III | 97,694 | (4) | 55,738 | 153,432 | * | |||||||||||||||||||||||||||
Nicholson, Cynthia S. | 2,008 | 0 | 2,008 | * | ||||||||||||||||||||||||||||
O’Kelley, Ronald L. | 11,232 | 15,269 | 26,501 | * | 20,955 | 36,156 | 57,112 | * | ||||||||||||||||||||||||
Rockart, John F. | 11,837 | 27,269 | 39,106 | * | ||||||||||||||||||||||||||||
Rue, William M. | 408,116 | (5) | 51,269 | 459,385 | 1 | % | 417,671 | (4) | 60,156 | 477,828 | 1% | |||||||||||||||||||||
Thatcher, Dale A. | 95,866 | 13,480 | 109,346 | * | 48,524 | 21,900 | 70,424 | * | ||||||||||||||||||||||||
Thebault, J. Brian | 49,145 | (6) | 57,269 | 106,414 | * | 59,519 | (5) | 60,156 | 119,675 | * | ||||||||||||||||||||||
All executive officers, directors and nominee for director as a group (21 persons) | 1,651,868.63 | 651,679.00 | 2,303,548 | 4 | % | |||||||||||||||||||||||||||
Zaleski, Ronald J. | 29,944 | 45,892 | 75,836 | * | ||||||||||||||||||||||||||||
All directors and executive officers, as a group (19 persons) | 1,086,804 | 704,716 | 1,791,520 | 3% |
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Title of Class | Name & Address of Beneficial Owner | Amount & Nature of Beneficial Ownership | Percentage of Class | |||
Common Stock | Dimensional Fund Advisors LP Palisades West, Building One 6300 Bee Cave Road Austin, TX 78746 | 4,529,210 shares of common stock | ||||
8.53% | ||||||
Common Stock | BlackRock, Inc. 40 East 52nd Street New York, NY 10022 | 4,015,987 shares of common stock | ||||
7.57% |
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· | $75,000 in grants to The Newton Memorial Hospital Foundation (“NMHF”), a charitable organization affiliated with Newton Memorial Hospital. Mr. Murphy serves on the Board of Directors of NMHF. At the end of 2009, there were outstanding annually renewable pledges to NMHF totaling $225,000. |
· | $45,000 in grants to Project Self-Sufficiency of Sussex County (“PSS”), a non-profit, community-based organization dedicated to empowering low-income adults and their children to achieve personal and economic self-sufficiency. Susan Murphy, Mr. Murphy’s wife, serves on the PSS Board of Directors. |
· | $25,000 in grants to the United Way of Sussex County. Richard F. Connell, Senior Executive Vice President and Chief Administrative Officer of Selective, is a member of the Board of Trustees of the United Way of Sussex County. |
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· | Audit | ||
· | Corporate Governance and Nominating | ||
· | Executive | ||
· | Finance | ||
· | Salary and Employee |
Written Charter is available on the Corporate Governance section of www.selective.com | 2009 Meetings: 8 |
· | |||
Review and discuss with Selective’s management and independent auditors Selective’s financial reports and other financial information provided to the public and filed with the SEC. |
Monitor the activities of Selective’s Internal Audit Department and the appointment, replacement, reassignment, or dismissal of the Director of Internal Audit. |
Monitor Selective’s internal controls regarding finance, accounting, and legal compliance. |
Discuss significant financial risk exposures and the steps management has taken to monitor, control, and report such exposures. |
· | Appoint Selective’s independent registered public |
Director Members: | Independent | ||
Paul D. Bauer, Chairperson and | Yes | ||
John C. Burville | Yes | ||
Joan M. Lamm-Tennant | Yes | ||
Ronald L. O’Kelley | Yes | ||
J. Brian Thebault | Yes | ||
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Written Charter is available on the Corporate Governance section of www.selective.com |
Review and assess Selective’s Corporate Governance Guidelines and recommend any changes to the Board. |
Recommend to the Board the directors to serve on the various Board committees and as chairpersons of the respective committees. |
Advise the Board with respect to Board composition, procedures, and committees. |
Review and update Selective’s Code of Conduct and review conflicts of interest or other issues that may arise under the Code of Conduct involving Selective’s officers or directors. |
Oversee the self-evaluations of the Board and each committee of the Board. |
Review, jointly with the Salary and Employee Benefits Committee, CEO and executive staff succession planning and professional development. |
Director Members: | Independent | ||
W. Marston Becker, Chairperson | |||
A. David Brown | Yes | ||
S. Griffin McClellan III | Yes | ||
Cynthia S. Nicholson | Yes | ||
No Charter. Responsibilities defined in By-Laws. | |||
· | |||
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Has the right and authority to exercise all the powers of the Board of Directors on all matters brought before it except matters concerning Selective’s investments. |
Director Members: | ||||||
Gregory E. Murphy, Chairperson | ||||||
Paul D. Bauer | William M. Rue | |||||
A. David Brown | J. Brian Thebault | |||||
Written Charter is available on the Corporate Governance section of www.selective.com | 2009 Meetings: 5 |
· | ||||||
Review investment transactions made on behalf of Selective and review the performance of Selective’s investment portfolio. |
Review matters relating to the investment portfolios of the benefit plans of Selective and its subsidiaries, including the administration and performance of such portfolios. |
Appoint members of Selective’s Management Investment Committee. |
Review and make recommendations to the Board regarding payment of dividends. |
Review Selective’s capital structure and provide recommendations to the Board regarding financial policies and matters of corporate finance. |
Director Members: | ||||||
William M. Rue, Chairperson | S. Griffin McClellan III | |||||
W. Marston Becker | ||||||
Lamm-Tennant | Ronald L. O’Kelley | |||||
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Written Charter is available on the Corporate Governance section of www.selective.com |
Review annually and approve corporate goals and objectives relevant to executive compensation and evaluate performance in light of those goals. |
Review annually and approve Selective’s compensation strategy for employees. |
Review annually and determine the individual elements of total compensation of the CEO and other members of |
Review, jointly with the Corporate Governance and Nominating Committee, CEO and executive staff succession planning and professional development. |
· | Review and approve compensation for non-employee directors. |
Director Members: | Independent | ||
J. Brian Thebault, Chairperson | Yes | ||
A. David Brown | Yes | ||
Paul D. Bauer | Yes | ||
John C. Burville | Yes | ||
Michael J. Morrissey | Yes | ||
Cynthia S. Nicholson | Yes |
· | Presiding at all meetings of independent directors, as appropriate, and providing prompt feedback to the Chairman, President and CEO. |
· | Serving as point of contact for Board members to raise issues that they may not be able to readily address with the Chairman, President and CEO. |
· | Ensuring that matters of importance to the Directors are placed on the Board’s meeting agendas. |
· | Ensuring that the Chairman, President and CEO understand the Board’s view on all critical matters. |
· | Ensuring that the Board understands the Chairman, President and CEO’s views on all critical matters. |
· | Calling executive sessions of the independent directors and serving as chairman of such meetings. |
· | The Audit Committee, to operational, financial, and compliance risks; |
· | The Corporate Governance and Nominating Committee, to governance and certain compliance risk; |
· | The Finance Committee, to investment risk and associated financial risk; and |
· | The Salary and Employee Benefits Committee, to employee, human capital, and compensation strategy risk. |
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· | Base salary; |
· | Annual cash incentive payments under the Annual Cash Incentive Program (“ACIP”); and |
· | Long-term incentive awards in the form of stock options, performance-based restricted stock units, and performance-based cash incentive units. |
· | Measuring Selective’s compensation against the practices in multiple groups helps ensure that it has an ample and robust assessment of Selective’s competitive compensation posture; |
· | Benchmarking provides the SEBC with relevant information to make appropriate compensation decisions that will attract and retain the key talent required to drive Company performance and long-term shareholder value; and |
· | Considering multiple market references offsets inaccuracies inherent in a single market data point and enhances the SEBC’s decisions by allowing it to rely on a fuller set of market-competitive pay measures. |
· | Benchmarking analyses by the Compensation Consultant of annual compensation paid to the NEOs, comparing base salary, annual cash incentives, total cash compensation, long-term incentives, and total compensation that Selective pays versus various external groups; |
· | Benchmarking analyses by Selective’s Human Resources department for our NEOs against a group of 17 property and casualty companies, except for our Executive Vice President & Chief Actuary for which a property and casualty actuarial survey is used; and |
· | Benchmarking analyses by Selective’s Human Resources department of supplemental survey data from multiple survey sources for all NEOs to facilitate a comprehensive understanding of the overall compensation environment. |
Market/Product Group | Peer Size Group | Third-party Vendor Surveys | |||||
Organizations that compete with Selective in the sale of products and services | Companies of similar revenue size | ||||||
· | The Chubb Corporation | · | Arch Capital Group, Ltd. | · | Property and Casualty Insurance | ||
· | Cincinnati Financial Corporation | · | The Hanover Insurance Group, Inc. | Compensation Survey | |||
· | CNA Financial Corporation | · | Max Capital Group Ltd. | ||||
· | EMC Insurance Group Inc. | · | Mercury General Corporation | · | Clear Solutions HR Actuarial Salary | ||
· | The Hanover Insurance Group, Inc. | · | Old Republic International Corporation | Surveys – Property & Casualty | |||
· | Harleysville Group, Inc. | · | Radian Group Inc. | ||||
· | Hartford Financial Services Group | · | Unitrin, Inc. | ||||
· | PMA Capital Corporation | · | Zenith National Insurance Corp. | ||||
· | State Auto Financial Corporation |
NEO | 2009 Base Pay | 2009 ACIP | 2009 LTIP | 2009 Total Compensation | ||||||||||||
Chief Executive Officer | 34.0% | 15.1% | 50.9% | 100% | ||||||||||||
Chief Financial Officer | 40.0% | 24.5% | 35.5% | 100% | ||||||||||||
Other NEOs | 40.1% | 21.2% | 38.7% | 100% |
· | the functional role of the position; | ||
· | the level of responsibility; | ||
· | growth of the executive in the role, including skills and competencies; | ||
· | the contribution and performance of the executive; and | ||
· | the organization’s ability to replace the executive. |
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Statutory Combined | ACIP | |||||||||||
Ratio (%) | Financial (%) | Strategic (%) | Total (%) | |||||||||
102 | 0 | 45 | 45 | |||||||||
101 | 10 | 45 | 55 | |||||||||
100 | 21 | 45 | 66 | |||||||||
99 | 42 | 45 | 87 | |||||||||
98 | 67 | 45 | 112 |
· | With regard to the 2009 ACIP financial performance goal, Selective had a statutory combined ratio of 100.5%, which resulted in the financial measure of the ACIP being funded at 15.5%. |
· | With regard to the six 2009 ACIP strategic performance goals, Selective met four of the goals as shown on the table below, which resulted in the strategic measure of the ACIP being funded 28% for strategic performance. |
· | Therefore, the total 2009 ACIP award pool was established at 43.5% of the funding target. |
2009 Strategic Initiatives | Measures | Value | 2009 Result | ||||
1. Pricing (2 of 3, or 3 of 3) | · | 4 of 5 regions – achieve commercial lines (excluding bonds premium) pure rate target3 | 10 (if 3 goals met) | Not Achieved | |||
· | Company wide – achieve an average pure rate increase of 8% on retained business that performs in the lowest two internal categories of profitability | 7 (if 2 goals met) | |||||
· | Implement 21 rate changes in the auto and home lines of +3% or more in SelectPLUS® in 2009 | ||||||
2. Retention (2 of 3) | · | 3 of 5 regions – achieve their CL (excluding bonds premium) retention target | 7 | Not Achieved | |||
· | Company wide – for the lowest internal category of profitability, achieve retention of 20-points lower than overall retention for all modeled business | ||||||
· | Company wide – for highest internal category of profitability, achieve 90% retention rate or 5-points greater retention than overall retention for all modeled business, whichever is lower |
Achieve total new policy count plan | 7 | Achieved | ||||||
· | Write $157 million of new |
· | 90% of new policy counts (modeled lines) are in the three highest internal category of profitability | ||||||
4.Growth/Profitability (2 of 3) | · | Implement Phases I and II of Company expansion by year-end | 7 | Achieved | |||
· | Implement one and build one additional in-house developed Decision Support Model by year-end | ||||||
· | Generate One & Done® new business of at least $290,000 per average business day | ||||||
5. Financial/Operational | · | Meet or beat the controllable expense budget of $274 million | 7 | Achieved | |||
6. Claims (2 of 3) | · | Creation of centralized claims vendor management process, including completion of an approved vendor panel for all regions and corporate claims by 12/31/09 | 7 | Achieved | |||
· | Completion of the first four Claims Strategy Project plans: document management, automated correspondence, fraud analytics, and recovery analytics | ||||||
· | All regions meet their established litigation management plans |
NEO and Position | Minimum 2009 ACIP Opportunity as % of Base Salary | Maximum 2009 ACIP Opportunity as % of Base Salary | Actual 2009 ACIP as % of Base Salary | % Change in ACIP from 2008 to 2009 | ||||||||||||
Gregory E. Murphy Chairman, President & Chief Executive Officer | 0 | % | 200 | % | 44.4 | % | - 38.5 | % | ||||||||
Dale A. Thatcher Executive Vice President, Chief Financial Officer & Treasurer | 0 | % | 150 | % | 61.3 | % | + 16.5 | % | ||||||||
Richard F. Connell Senior Executive Vice President & Chief Administrative Officer | 0 | % | 175 | % | 54 | % | - 11.7 | % | ||||||||
Michael H. Lanza Executive Vice President & General Counsel | 0 | % | 150 | % | 50.2 | % | + 9.3 | % | ||||||||
Ronald J. Zaleski Executive Vice President & Chief Actuary | 0 | % | 150 | % | 54.6 | % | + 9.3 | % |
· | Had a statutory combined ratio of 100.5% and achieved four of the six strategic ACIP goals; and |
· | Did not meet its investment income budget or beat its performance benchmarks. |
Page 22
· | In-depth analysis and identification of corporate-wide cost-saving opportunities based on third-party benchmarking; |
· | Selection of vendor for XBRL implementation for SEC filed financial statements; |
· | Support efforts to decommission the prior statistical reporting system; and |
· | Request for Proposal (“RFP”) and selection of a reinsurance system solution and begin implementation of outsource or purchase. |
· | Thoughtfully and timely planned and responded to the unprecedented financial market turmoil and general economic situation and allowed Selective to maintain a strong statutory surplus position; |
· | With the Investment Department, developed an enhanced liquidity plan to deal with the unprecedented financial market turmoil by moving all short-term investments into AAA rated instruments, and diversifying the number of banking partners and money market funds; |
· | Played a key role in the successfully negotiated sale of the Selective HR Solutions operations, which was central to the corporate strategy of focusing on Insurance Operations; |
· | Achieved a well-diversified reinsurance program, despite a difficult reinsurance market; and |
· | Enhanced Selective’s existing ERM processes, built new management tools, and supported the Audit Committee Chairman in preparation for a special Audit Committee meeting on ERM that was attended by most of the Directors. |
· | Pricing tier expansion and automation; |
· | Vendor management initiative, including reviewing vendor performance against price, quality, and delivery goals, identifying opportunities for consolidation and replacement, and requiring the use of the competitive bidding process for non-preferred vendors; |
· | Control, compliance and security initiative, including issuing RFPs, selecting vendors, installing products, and piloting and deploying systems; |
· | ITS infrastructure process automation, including issuing RFPs, selecting vendor, installing product, and piloting and deploying products; |
· | Complete basic post-policy acquisition services for customer self-service automation; and |
· | Claims strategy automation, including submitting project proposal to EPMO for the content management and automated correspondence initiatives. |
· | Supporting the selection and implementation of a reinsurance system solution; |
· | Supporting efforts to decommission the prior statistical reporting system; |
· | Installing a new storage array and completing data migration to such array; |
· | Upgrading infrastructure capacity in the Company’s data center; |
· | Negotiating various contracts and agreements yielding approximately $1.5 million in annual savings; and |
· | Negotiating renewal leases for our various leased facilities yielding approximately $700,000 in savings for these locations over five years. |
· | Support Investments in execution of strategies; review the securities lending program; review of alternative investments; and Corporate Secretarial support for Management Investment Committee; |
· | Continue to support Insurance Operations leadership and staff in meeting profitability and growth goals; |
· | Corporate Services: Continue to integrate Internal Audit Division as business partner with operating units; continue work on stockholder matters; support Board of Directors in corporate governance and corporate secretarial matters; and foster a compliance mindset throughout Selective; |
· | Diversified Services: Continue to support the Selective HR Solutions operations in licensing and benefit issues; continue litigation and government affairs support for the Flood area of the Insurance operations; and |
· | Support Claims and Claims Legal operations in efforts to improve Claims processes and reduce legal expenses. |
· | Providing significant legal and government affairs support to Selective’s Insurance Operations in meeting their profitability and growth goals related to product development, rating, and tiering issues; |
· | Making significant contributions to increase the Company’s surplus and liquidity through the design and implementation of several holding company transactions and the admission of two insurance subsidiaries as members of the Federal Home Loan Bank of Indianapolis; and |
· | Supporting the negotiation and closing of the sale of the Selective HR Solutions operations, which was central to the corporate strategy of focusing on Insurance Operations. |
· | Commercial Lines Pricing: Continue development of plan for Company pricing tier expansion and loss cost multiplier consolidation; |
· | Knowledge Management – Predictive Modeling: Assist in implementation of in-house business owners policy, property, and general liability models in accordance with implementation schedule; |
· | Reserving/Capital Modeling: Implement risk-adjusted return on equity analyses across actuarial functions and support Claims Operations’ initiatives with a dedicated resource; and |
· | Financial Planning: Develop internal underwriting staffing models; complete an in-depth analysis and identification of cost-saving opportunities based on third-party benchmarking; and create expense ratios for small, middle, and large risks to better assess profitability by size. |
· | Develop several actuarially based “tools” for use by our field and corporate underwriters that will improve underwriting performance; |
· | Direct and lead our CL and personal lines predictive modeling efforts, including development, implementation, and enhancement of several commercial lines predictive models that continue to drive underwriting improvements and enhance risk selection; |
· | Complete quarterly reserve analyses that include claim frequency and severity trends, tail factors, and loss development factors; |
· | Analyze current uncertainties, identifying key reserve issues that required the development of Claims operations action plans; and |
· | Provide reserve point estimates on a line of business basis and, during the planning process, carefully analyze and make current accident year loss ratio picks. |
Page 23
Performance Period | Restricted Stock/Restricted Stock Unit Performance Measures | Cash Unit Measures | ||
01/01/05 – 12/31/08 | Cumulative return on equity (“ROE”) or cumulative net premiums written (“NPW”) | N/A | ||
01/01/06 – 12/31/08 | Cumulative ROE or cumulative NPW | Total shareholder return (“TSR”)/NPW/statutory combined ratio (“SCR”) | ||
01/01/07 – 12/31/09 | Cumulative ROE or cumulative NPW | TSR/NPW/SCR | ||
01/01/08 – 12/31/10 | Cumulative ROE or cumulative NPW | TSR/NPW/SCR | ||
01/01/09 – 12/31/11 | Cumulative ROE or cumulative growth in policy count | TSR/NPW/SCR |
· | Three-year vesting period; and | ||
· | Achievement at the end of any |
· | Three-year performance period; | ||
· | The value of each cash incentive unit initially awarded increases or decreases to reflect | ||
· | The number of cash incentive units ultimately earned increases or decreases based |
> = 80 percentile | 100 % | 125% | 150% | 175% | 200% | |
55th – 79.9th percentile | 75% | 100% | 125% | 150% | 175% | |
Cumulative 3-Year Statutory Net | 45th – 54.9th percentile | 50% | 75% | 100% | 125% | 150% |
Premium Growth | ||||||
Relative to Peer Index | 35th – 44.9th percentile | 25% | 50% | 75% | 100% | 125% |
< 35th = percentile | 0% | 25% | 50% | 75% | 100% | |
< 35th = percentile | 35th – 44.9th percentile | 45th – 54.9th percentile (Target) | 55th – 79.9th percentile | > = 80 percentile | ||
Cumulative 3-Year Statutory Combined Ratio Relative to Peer Index |
United Fire & Casualty | ||
Liberty Mutual Group Inc. | CNA Financial Corporation | The |
Hanover Insurance Group, Inc. | ||
Cincinnati Financial Corporation | Harleysville Group Inc. | |
State Auto Financial Corporation | Westfield Group |
Performance Metrics | Performance Versus Metrics | Percentage Achieved | ||
2005 Grant Results | ||||
Restricted Stock | ||||
Generate a cumulative fiscal year return on average equity of at least 25% at any time during such period; or achieve a 20% cumulative growth NPW at any time during the period of January 1, 2005 to December 31, 2008 | Achieved 25% cumulative ROE | 100% | ||
2006 Grant Results | ||||
Restricted Stock | ||||
Generate a cumulative fiscal year return on average equity of at least 15% at any time during such period; or achieve a 10% cumulative growth in NPW at any time during the period of January 1, 2006 to December 31, 2008 | Achieved 15% cumulative ROE | 100% | ||
Cash Incentive Units(1) | ||||
TSR over the three-year performance period, and cumulative three-year statutory NPW growth and SCR relative to peer index during the period of January 1, 2006 to December 31, 2008 | Achieved a TSR factor of 91.71%, a SCR of 97.49% and NPW growth of 1.69% | 100% of units at $91.71 |
Page 25
4 x annual retainer | ||
Chairman, President & CEO | 4 x base salary | |
Senior Executive Vice Presidents and Executive Vice Presidents | 2.5 x base salary | |
Senior Vice Presidents | 1.5 x base salary |
· | Shares of Selective common stock currently owned, awards of restricted stock or restricted stock units (included related dividend equivalent units) not yet vested, and shares of Selective common stock held in benefit plan investments (i.e., 401(k) Plan) are counted; |
· | Unexercised stock options are not counted; and |
· | Deferred shares of Selective common stock held in accounts of Directors are counted. |
Page 26
Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compen- sation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | All Other Compen- sation ($)(6) | Total ($) | ||||||||||||||||||||||
Gregory E. Murphy | 2009 | 934,616 | 1,329,413 | 20,602 | 400,000 | 448,515 | 42,525 | 3,175,671 | ||||||||||||||||||||||
Chairman, President & | 2008 | 900,000 | 1,576,973 | 23,139 | 650,000 | 459,931 | 61,071 | 3,671,114 | ||||||||||||||||||||||
Chief Executive Officer | 2007 | 900,000 | 1,775,079 | 24,979 | 900,000 | 85,449 | 133,399 | 3,818,906 | ||||||||||||||||||||||
Dale A. Thatcher | 2009 | 493,269 | 401,589 | 20,602 | 291,300 | 52,350 | 64,041 | 1,323,151 | ||||||||||||||||||||||
Executive Vice | 2008 | 465,769 | 505,484 | 23,139 | 250,000 | 43,062 | 33,370 | 1,320,824 | ||||||||||||||||||||||
President, Chief Financial Officer & Treasurer | 2007 | 405,000 | 590,152 | 24,979 | 300,000 | 13,696 | 29,903 | 1,363,730 | ||||||||||||||||||||||
Richard F. Connell | 2009 | 467,308 | 454,465 | 20,602 | 242,800 | 103,242 | 20,513 | 1,308,930 | ||||||||||||||||||||||
Senior Executive Vice | 2008 | 450,000 | 551,915 | 23,139 | 275,000 | 96,035 | 51,471 | 1,447,560 | ||||||||||||||||||||||
President & Chief Administrative Officer | 2007 | 411,538 | 575,102 | 24,979 | 350,000 | 49,037 | 30,694 | 1,441,350 | ||||||||||||||||||||||
Michael H. Lanza | 2009 | 451,731 | 354,832 | 20,602 | 218,500 | 28,929 | 43,883 | 1,118,477 | ||||||||||||||||||||||
Executive Vice | 2008 | 435,000 | 337,565 | 23,139 | 200,000 | 22,774 | 46,100 | 1,064,578 | ||||||||||||||||||||||
President & General Counsel | 2007 | 359,538 | 415,079 | 24,979 | 225,000 | 10,979 | 27,572 | 1,063,147 | ||||||||||||||||||||||
Ronald J. Zaleski | 2009 | 415,385 | 371,059 | 20,602 | 218,500 | 60,282 | 59,288 | 1,145,116 | ||||||||||||||||||||||
Executive Vice | 2008 | 395,385 | 415,220 | 23,139 | 200,000 | 54,649 | 28,597 | 1,116,990 | ||||||||||||||||||||||
President & Chief Actuary | 2007 | 367,385 | 505,082 | 24,979 | 275,021 | 19,157 | 31,864 | 1,223,488 |
Non-Equity | Change in | ||||||||||||||||||||||||||||||||||||||||||||
Incentive | Pension Value | ||||||||||||||||||||||||||||||||||||||||||||
Plan | and Nonqualified | All Other | |||||||||||||||||||||||||||||||||||||||||||
Name | Stock | Option | Compen- | Deferred | Compen- | ||||||||||||||||||||||||||||||||||||||||
and | Salary | Bonus | Awards | Awards | sation | Compensation | sation | Total | |||||||||||||||||||||||||||||||||||||
Principal Position | Year | ($)(1) | ($) | ($)(2) | ($)(3) | ($)(4) | Earnings ($)(5) | ($)(6) | ($) | ||||||||||||||||||||||||||||||||||||
Gregory E. Murphy | 2007 | 900,000 | 0 | 1,876,425 | 25,633 | 900,000 | 85,449 | 40,989 | 3,828,496 | ||||||||||||||||||||||||||||||||||||
Chairman, President & Chief Executive Officer | 2006 | 876,923 | 0 | 2,460,513 | 28,066 | 1,500,000 | 158,637 | 42,900 | 5,067,039 | ||||||||||||||||||||||||||||||||||||
Dale A. Thatcher | 2007 | 405,000 | 0 | 207,953 | 15,664 | 300,000 | 13,696 | 18,428 | 960,741 | ||||||||||||||||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Treasurer | 2006 | 342,308 | 0 | 242,166 | 17,152 | 420,000 | 14,245 | 17,075 | 1,052,946 | ||||||||||||||||||||||||||||||||||||
Jamie Ochiltree, III | 2007 | 455,385 | 0 | 634,434 | 25,633 | 350,000 | 39,410 | 21,939 | 1,526,801 | ||||||||||||||||||||||||||||||||||||
Senior Executive Vice President, Insurance Operations | 2006 | 423,846 | 0 | 400,384 | 19,561 | 580,000 | 46,900 | 23,727 | 1,494,418 | ||||||||||||||||||||||||||||||||||||
Richard F. Connell | 2007 | 411,538 | 0 | 561,175 | 24,318 | 350,000 | 49,037 | 19,250 | 1,415,318 | ||||||||||||||||||||||||||||||||||||
Senior Executive Vice President and Chief Administrative Officer | 2006 | 375,385 | 0 | 327,237 | 18,351 | 485,000 | 44,406 | 17,755 | 1,268,134 | ||||||||||||||||||||||||||||||||||||
Kerry A. Guthrie | 2007 | 392,615 | 0 | 607,940 | 25,633 | 495,000 | 49,640 | 20,762 | 1,591,590 | ||||||||||||||||||||||||||||||||||||
Executive Vice President & Chief Investment Officer | 2006 | 347,077 | 0 | 338,280 | 20,047 | 400,000 | 59,761 | 18,263 | 1,183,428 | ||||||||||||||||||||||||||||||||||||
· | Mr. Murphy: | ||
· | Mr. Thatcher: | ||
· | Mr. | ||
· | Mr. |
· | Mr. | ||
Grant Date | ||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Equity | Fair Value | |||||||||||||||||||||||||||||||||||||||||||||||||
Incentive Plan Awards(2) | of Cash | |||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Future | Exercise | Incentive | ||||||||||||||||||||||||||||||||||||||||||||||||
Payouts Under Non- | Restricted | or Base | Unit, | |||||||||||||||||||||||||||||||||||||||||||||||
Grant | Equity Incentive Plan | Stock | Option | Price of | Restricted | |||||||||||||||||||||||||||||||||||||||||||||
Name | Date | Awards(1) | Cash Incentive Unit Awards(3) | Awards (#) | Awards (#) | Option | Stock, | |||||||||||||||||||||||||||||||||||||||||||
| Awards | and Option | ||||||||||||||||||||||||||||||||||||||||||||||||
| Minimum | Maximum | Threshold | Target | Maximum | Maximum | Maximum | ($/Sh) | Awards(4) | |||||||||||||||||||||||||||||||||||||||||
($) | ($) | (#) | (#) | (#) | (#) | (#) | | ($) | ||||||||||||||||||||||||||||||||||||||||||
Gregory E. Murphy | 1/30/07 | 0 | 1,800,000 | 2,219 | 4,438 | 8,876 | 48,516 | 3,480 | 27.44 | 1,800,058 | ||||||||||||||||||||||||||||||||||||||||
Dale A. Thatcher | 1/30/07 | 0 | 622,500 | 738 | 1,476 | 2,952 | 16,128 | 3,480 | 27.44 | 615,132 | ||||||||||||||||||||||||||||||||||||||||
Jamie Ochiltree, III | 1/30/07 | 0 | 805,000 | 751 | 1,501 | 3,002 | 16,400 | 3,480 | 27.44 | 625,095 | ||||||||||||||||||||||||||||||||||||||||
Richard F. Connell | 1/30/07 | 0 | 717,500 | 719 | 1,438 | 2,876 | 15,718 | 3,480 | 27.44 | 600,081 | ||||||||||||||||||||||||||||||||||||||||
Kerry A. Guthrie | 1/30/07 | 0 | 600,000 | 719 | 1,438 | 2,876 | 15,718 | 3,480 | 27.44 | 600,081 | ||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts under Equity Incentive Plan Awards(2) | All Other | Grant Date Fair Value | ||||||||||||||||||||||||||||||||||||
Estimated Future Payouts under Non- Equity Incentive Plan Awards(1) | Cash Incentive Unit Awards(3) | Re- stricted Stock Awards (#) | Option Awards: Number of Secur- ities | Exer- cise or Base Price | of Cash Incentive Unit, Restricted Stock, and | |||||||||||||||||||||||||||||||||
Name | Grant Date | Thres- hold ($) | Maximum ($) | Thres- hold (#) | Target (#) | Maximum (#) | Maximum (#) | Under- lying Options (#) | of Option Awards ($/Sh) | Option Awards(4) ($) | ||||||||||||||||||||||||||||
Gregory E. Murphy | 1/30/09 | $ | 0 | $ | 1,800,000 | 2,327 | 4,653 | 9,306 | 56,294 | 6,514 | $ | 15.35 | $ | 1,350,015 | ||||||||||||||||||||||||
Dale A. Thatcher | 1/30/09 | $ | 0 | $ | 712,500 | 752 | 1,503 | 3,006 | 18,183 | 6,514 | $ | 15.35 | $ | 422,191 | ||||||||||||||||||||||||
Richard F. Connell | 1/30/09 | $ | 0 | $ | 787,500 | 796 | 1,591 | 3,182 | 19,242 | 6,514 | $ | 15.35 | $ | 475,067 | ||||||||||||||||||||||||
Michael H. Lanza | 1/30/09 | $ | 0 | $ | 652,500 | 664 | 1,328 | 2,656 | 16,066 | 6,514 | $ | 15.35 | $ | 375,434 | ||||||||||||||||||||||||
Ronald J. Zaleski | 1/30/09 | $ | 0 | $ | 600,000 | 664 | 1,328 | 2,656 | 16,066 | 6,514 | $ | 15.35 | $ | 391,661 |
Page 30
Option Awards | Stock Awards | ||||||||||||||||||||||||||||
Name | No. of Securities Underlying Unexer- cised Options (#) Exercisable | No. of Securities Underlying Unexer- cised Options (#) Unexer- cisable(1) | Option Exer- cise Price ($/Sh)(2) | Option Expiration Date | No. of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(10) | |||||||||||||||||||||
Gregory E. Murphy | 21,062 | 11.1875 | 02/06/2011 | 45,181 | (4) | 743,229 | 4,438 | (7) | 275,777 | ||||||||||||||||||||
10,362 | 10.375 | 02/05/2012 | 58,377 | (5) | 960,302 | 5,520 | (8) | 418,858 | |||||||||||||||||||||
11,394 | 11.6175 | 02/04/2013 | 4,653 | (9) | 345,811 | ||||||||||||||||||||||||
10,000 | 17.395 | 02/03/2014 | |||||||||||||||||||||||||||
10,000 | 22.025 | 02/01/2015 | |||||||||||||||||||||||||||
3,480 | 28.74 | 01/30/2016 | |||||||||||||||||||||||||||
2,320 | 1,160 | 27.44 | 01/30/2017 | ||||||||||||||||||||||||||
1,384 | 2,770 | 24.07 | 02/06/2018 | ||||||||||||||||||||||||||
6,514 | 15.35 | 01/30/2019 | |||||||||||||||||||||||||||
Dale A. Thatcher | 10,000 | 22.025 | 02/01/2015 | 16,128 | (6) | 265,306 | 1,476 | (7) | 91,719 | ||||||||||||||||||||
3,480 | 28.74 | 01/30/2016 | 15,096 | (4) | 248,331 | 1,845 | (8) | 139,999 | |||||||||||||||||||||
2,320 | 1,160 | 27.44 | 01/30/2017 | 18,856 | (5) | 310,178 | 1,503 | (9) | 111,703 | ||||||||||||||||||||
1,384 | 2,770 | 24.07 | 02/06/2018 | ||||||||||||||||||||||||||
6,514 | 15.35 | 01/30/2019 | |||||||||||||||||||||||||||
Richard F. Connell | 10,000 | 22.025 | 02/01/2015 | 15,812 | (4) | 260,112 | 1,438 | (7) | 89,357 | ||||||||||||||||||||
3,480 | 28.74 | 01/30/2016 | 19,954 | (5) | 328,243 | 1,932 | (8) | 146,600 | |||||||||||||||||||||
2,320 | 1,160 | 27.44 | 01/30/2017 | 1,591 | (9) | 118,243 | |||||||||||||||||||||||
1,384 | 2,770 | 24.07 | 02/06/2018 | ||||||||||||||||||||||||||
6,514 | 15.35 | 01/30/2019 | |||||||||||||||||||||||||||
Michael H. Lanza | 3,480 | 28.74 | 01/30/2016 | 11,344 | (6) | 186,609 | 1,038 | (7) | 64,501 | ||||||||||||||||||||
2,320 | 1,160 | 27.44 | 01/30/2017 | 10,082 | (4) | 165,845 | 1,232 | (8) | 93,484 | ||||||||||||||||||||
1,384 | 2,770 | 24.07 | 02/06/2018 | 16,660 | (5) | 274,065 | 1,328 | (9) | 98,697 | ||||||||||||||||||||
6,514 | 15.35 | 01/30/2019 | |||||||||||||||||||||||||||
Ronald J. Zaleski | 9,638 | 10.375 | 02/05/2012 | 12,231 | (4) | 201,206 | 1,263 | (7) | 78,483 | ||||||||||||||||||||
8,606 | 11.6175 | 02/04/2013 | 16,660 | (5) | 274,065 | 1,495 | (8) | 113,441 | |||||||||||||||||||||
5,748 | 17.395 | 02/03/2014 | 1,328 | (9) | 98,697 | ||||||||||||||||||||||||
10,000 | 22.025 | 02/01/2015 | |||||||||||||||||||||||||||
3,480 | 28.74 | 01/30/2016 | |||||||||||||||||||||||||||
2,320 | 1,160 | 27.44 | 01/30/2017 | ||||||||||||||||||||||||||
1,384 | 2,770 | 24.07 | 02/06/2018 | ||||||||||||||||||||||||||
6,514 | 15.35 | 01/30/2019 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||||||||||||||
Plan | ||||||||||||||||||||||||||||||||||||||||
No. of | Awards: | |||||||||||||||||||||||||||||||||||||||
Securities | No. of | Equity | Market or | |||||||||||||||||||||||||||||||||||||
Under- | Securities | Incentive | Payout Value | |||||||||||||||||||||||||||||||||||||
lying | Under- | Plan | of Unearned | |||||||||||||||||||||||||||||||||||||
Unexer | lying | Market Value | Awards: No. of | Shares, Units | ||||||||||||||||||||||||||||||||||||
cised | Unexer- | No. of Shares | of Shares or | Unearned | or Other | |||||||||||||||||||||||||||||||||||
Options | cised | Option | or Units of | Units of Stock | Shares, Units | Rights That | ||||||||||||||||||||||||||||||||||
(#) | Options (#) | Exercise | Option | Stock That | That Have Not | or Other Rights | Have Not | |||||||||||||||||||||||||||||||||
Exercis- | Unexer- | Price | Expiration | Have Not | Vested | That Have Not | Vested | |||||||||||||||||||||||||||||||||
Name | able | cisable(1) | ($/Sh)(2) | Date | Vested (#)(3)(4) | ($) | Vested | ($)(7) | ||||||||||||||||||||||||||||||||
Gregory E. Murphy | 6,832 | 7.594 | 02/03/2010 | 48,516 | 1,115,383 | 10,642 | (5) | 1,911,942 | ||||||||||||||||||||||||||||||||
21,062 | 11.1875 | 02/06/2011 | 4,438 | (6) | 726,856 | |||||||||||||||||||||||||||||||||||
10,362 | 10.375 | 02/05/2012 | ||||||||||||||||||||||||||||||||||||||
11,394 | 11.6175 | 02/04/2013 | ||||||||||||||||||||||||||||||||||||||
10,000 | 17.395 | 02/03/2014 | ||||||||||||||||||||||||||||||||||||||
10,000 | 22.025 | 02/01/2015 | ||||||||||||||||||||||||||||||||||||||
1,160 | 2,320 | 28.74 | 01/30/2016 | |||||||||||||||||||||||||||||||||||||
3,480 | 27.44 | 01/30/2017 | ||||||||||||||||||||||||||||||||||||||
Dale A. Thatcher | 10,000 | 22.025 | 02/01/2015 | 19,333 | 444,466 | 3,142 | (5) | 564,492 | ||||||||||||||||||||||||||||||||
1,160 | 2,320 | 28.74 | 01/30/2016 | 18,979 | 436,327 | 1,476 | (6) | 241,739 | ||||||||||||||||||||||||||||||||
3,480 | 24.77 | 01/30/2017 | 7,290 | 167,597 | ||||||||||||||||||||||||||||||||||||
16,128 | 370,783 | |||||||||||||||||||||||||||||||||||||||
Jamie Ochiltree, III | 7,500 | 9.375 | 11/03/2008 | 16,400 | 377,036 | 3,502 | (5) | 629,169 | ||||||||||||||||||||||||||||||||
7,120 | 7.594 | 02/03/2010 | 1,501 | (6) | 245,834 | |||||||||||||||||||||||||||||||||||
14,000 | 11.1875 | 02/06/2011 | ||||||||||||||||||||||||||||||||||||||
9,638 | 10.375 | 02/05/2012 | ||||||||||||||||||||||||||||||||||||||
14,000 | 11.6175 | 02/04/2013 | ||||||||||||||||||||||||||||||||||||||
1,160 | 2,320 | 28.74 | 01/30/2016 | |||||||||||||||||||||||||||||||||||||
3,480 | 27.44 | 01/30/2017 | ||||||||||||||||||||||||||||||||||||||
Richard F. Connell | 10,000 | 22.025 | 02/01/2015 | 19,333 | 444,466 | 3,292 | (5) | 591,441 | ||||||||||||||||||||||||||||||||
1,160 | 2,320 | 28.74 | 01/30/2016 | 18,979 | 436,327 | 1,438 | (6) | 235,516 | ||||||||||||||||||||||||||||||||
3,480 | 27.44 | 01/30/2017 | 7,638 | 175,598 | ||||||||||||||||||||||||||||||||||||
15,718 | 361,357 | |||||||||||||||||||||||||||||||||||||||
Kerry A. Guthrie | 4,000 | 9.375 | 11/03/2008 | 15,718 | 361,357 | 2,842 | (5) | 510,594 | ||||||||||||||||||||||||||||||||
4,000 | 7.594 | 02/03/2010 | 1,438 | (6) | 235,516 | |||||||||||||||||||||||||||||||||||
4,500 | 11.1875 | 02/06/2011 | ||||||||||||||||||||||||||||||||||||||
10,000 | 10.375 | 02/05/2012 | ||||||||||||||||||||||||||||||||||||||
12,000 | 11.6175 | 02/04/2013 | ||||||||||||||||||||||||||||||||||||||
8,000 | 17.395 | 02/03/2014 | ||||||||||||||||||||||||||||||||||||||
10,000 | 22.025 | 02/01/2015 | ||||||||||||||||||||||||||||||||||||||
1,160 | 2,320 | 28.74 | 01/30/2016 | |||||||||||||||||||||||||||||||||||||
3,480 | 27.44 | 01/30/2017 | ||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards(1) | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | |||||||||||||
on Exercise | on Exercise | on Vesting | on Vesting | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
Gregory E. Murphy | 0 | 0 | 171,135 | 4,216,731 | ||||||||||||
Dale A. Thatcher | 0 | 0 | 17,220 | 443,758 | ||||||||||||
Jamie Ochiltree, III | 7,500 | 129,196 | 62,566 | 1,543,852 | ||||||||||||
Richard F. Connell | 0 | 0 | 17,220 | 443,758 | ||||||||||||
Kerry A. Guthrie | 0 | 0 | 56,747 | 1,399,445 |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting ($)(2) | ||||||||||||
Gregory E. Murphy | 0 | 0 | 10,642 | 975,982 | ||||||||||||
Dale A. Thatcher | 0 | 0 | 28,432 | 676,355 | ||||||||||||
Richard F. Connell | 0 | 0 | 3,292 | 301,911 | ||||||||||||
Michael H. Lanza | 0 | 0 | 17,942 | 458,064 | ||||||||||||
Ronald J. Zaleski | 0 | 0 | 41,240 | 860,817 |
Page 32
1. | If a participant: (i) attained age 50 and completed five years of vesting service on or before July 1, 2002, or (ii) completed at least 25 years of vesting service on or before July 1, 2002, a participant’s benefit is equal to 2% of Average Monthly Compensation, minus 1 3/7% of Primary Social Security Benefits multiplied by years of Benefit Service (up to 35 years), reduced by the annuity contract issued by the AXA Equitable Life Insurance Company (“Equitable”) purchased under a prior plan. |
2. | If a participant: (i) completed at least five years of Vesting Service; and (ii) the sum of a participant’s age and Vesting Service is 55 or more, a participant’s benefit is equal to the sum of: (a) 2% of Average Monthly Compensation, less 1 3/7% of Primary Social Security benefit multiplied by the number of years of Benefit Service through June 30, 2002 (up to a maximum of 35 years) reduced by the monthly amount, if any of retirement annuity payable under the group annuity contract issued by Equitable that was purchased under a prior plan, based on Benefit Service as of June 30, 2002, but including compensation earned after such date; and (b) 1.2% of Average Monthly Compensation multiplied by the number of years of Benefit Service after June 30, 2002. |
3. | If a participant first became eligible for the plan before July 1, 2002, but did not qualify for either 1 or 2 above, the participant’s benefit is equal to the greater of: (i) the benefit accrued as of June 30, 2002 equal to 2% of Average Monthly Compensation less 1 3/7% of Primary Social Security Benefit multiplied by years of Benefit Service (up to 35 years) reduced by the monthly amount, if any of retirement annuity payable under the group annuity contract issued by Equitable that was purchased under a prior plan, based on Benefit Service as of June 30, 2002, but including compensation earned after such date for purposes of determining the participant’s Average Monthly compensation; and (ii) 1.2% of Average Monthly Compensation multiplied by years of Benefit Service. |
4. | If a participant first became a participant in the plan after July 1, 2002, the benefit is equal to 1.2% of Average Monthly Compensation multiplied by years of Benefit Service. |
· | By 1/180th for each complete calendar month for the first 60 months by which the first early retirement benefit payment precedes the attainment of Normal Retirement Age; |
· | By 1/360th for each complete calendar month for the next 60 months by which the first early retirement benefit payments precede Normal Retirement Age; and |
· | By 60% plus 1/600th per month for each month prior to age 55. |
Present Value of | Payments | ||||||||||||||||
Number of Years | Accumulated | During Last | |||||||||||||||
Early Retirement | Credited Service | Benefit | Fiscal Year | ||||||||||||||
Name | Eligible | Plan Name | (#)(1) | ($)(2) | ($) | ||||||||||||
Gregory E. Murphy | Yes | Retirement Income Plan | 26.58 | 438,631 | 0 | ||||||||||||
SERP | 26.58 | 1,248,811 | 0 | ||||||||||||||
Dale A. Thatcher | No | Retirement Income Plan | 6.67 | 52,342 | 0 | ||||||||||||
SERP | 6.67 | 24,762 | 0 | ||||||||||||||
Jamie Ochiltree, III | Yes | Retirement Income Plan | 12.67 | 223,892 | 0 | ||||||||||||
SERP | 12.67 | 206,069 | 0 | ||||||||||||||
Richard F. Connell | No | Retirement Income Plan | 6.33 | 135,484 | 0 | ||||||||||||
SERP | 6.33 | 90,064 | 0 | ||||||||||||||
Kerry A. Guthrie | Yes | Retirement Income Plan | 19.00 | 265,213 | 0 | ||||||||||||
SERP | 19.00 | 119,372 | 0 |
Name | Early Retirement Eligible | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Payments During Last Fiscal Year ($) | |||||||||||
Gregory E. Murphy | Yes | Retirement Income Plan | 28.58 | 641,802 | 0 | |||||||||||
SERP | 28.58 | 1,954,086 | 0 | |||||||||||||
Dale A. Thatcher | No | Retirement Income Plan | 8.67 | 97,942 | 0 | |||||||||||
SERP | 8.67 | 74,574 | 0 | |||||||||||||
Richard F. Connell | Yes | Retirement Income Plan | 8.33 | 235,586 | 0 | |||||||||||
SERP | 8.33 | 189,239 | 0 | |||||||||||||
Michael H. Lanza | No | Retirement Income Plan | 4.42 | 48,729 | 0 | |||||||||||
SERP | 4.42 | 31,820 | 0 | |||||||||||||
Ronald J. Zaleski | Yes | Retirement Income Plan | 9.25 | 152,744 | 0 | |||||||||||
SERP | 9.25 | 96,806 | 0 |
Executive | Selective | Aggregate | Aggregate Balance | |||||||||||||||||
Contributions | Contributions in | Aggregate | Withdrawals/ | at December 31, | ||||||||||||||||
in 2007 | 2007 | Earnings in 2007 | Distributions | 2007 | ||||||||||||||||
Name | ($)(1) | ($)(2) | ($)(3) | ($) | ($)(4) | |||||||||||||||
Gregory E. Murphy | 252,387 | 30,875 | (59,022 | ) | 0 | 728,998 | ||||||||||||||
Dale A. Thatcher | 40,500 | 15,569 | (1,242 | ) | 0 | 216,341 | ||||||||||||||
Jamie Ochiltree, III | 686,410 | 10,645 | 60,994 | 0 | 1,041,822 | |||||||||||||||
Richard F. Connell | 334,249 | 8,650 | 95,019 | 0 | 1,410,176 | |||||||||||||||
Kerry A. Guthrie | 171,200 | 14,790 | 97,973 | 0 | 645,441 |
Page 33
Name | Executive Contributions in 2009 ($)(1) | Selective Contributions in 2009 ($)(2) | Aggregate Earnings in 2009 ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at December 31, 2009 ($)(4) | |||||||||||||||
Gregory E. Murphy | 56,077 | 31,800 | 135,490 | 0 | 794,167 | |||||||||||||||
Dale A. Thatcher | 49,327 | 11,719 | 49,200 | 0 | 277,838 | |||||||||||||||
Richard F. Connell | 14,019 | 9,113 | 195,905 | 0 | 1,266,647 | |||||||||||||||
Michael H. Lanza | 13,552 | 8,809 | 5,993 | 0 | 36,351 | |||||||||||||||
Ronald J. Zaleski | 141,538 | 8,175 | 320,621 | 0 | 1,618,602 |
· | For 2007: Mr. Murphy, $283,262; Mr. Thatcher, $56,069; Mr. Connell, $342,899; Mr. Lanza, $11,988; and Mr. Zaleski, $303,659. |
· | For 2008: Mr. Murphy, $78,375; Mr. Thatcher, $57,695; Mr. Connell, $222,547; Mr. Lanza, $0; and Mr. Zaleski, $253,974. |
· | For 2009: Mr. Murphy, $87,877; Mr. Thatcher, $61,046; Mr. Connell, $23,132; Mr. Lanza, $22,361; and Mr. Zaleski, $149,713. |
Term | Continuation of the prior agreements’ initial three-year term, automatically renewed for additional | ||||
(1) | |||||
Compensation | Base salary. | ||||
(2) | |||||
Benefits | Eligible to participate in incentive compensation plan, stock plan, 401(k) plan, defined benefit pension plan and any other stock option, stock appreciation right, stock bonus, pension, group insurance, retirement, profit sharing, medical, disability, accident, life insurance, relocation plan or policy, or any other plan, program, policy or arrangement of Selective | ||||
Vacation and Reimbursements | Vacation time and reimbursements for ordinary travel and entertainment expenses in accordance with | ||||
Perquisites | Suitable offices, secretarial and other services, and other perquisites to which other | ||||
Severance and Benefits on Termination without Change in Control | · | ||||
· | |||||
· | |||||
o | |||||
o | Medical, dental, vision, disability, and life insurance | ||||
· | |||||
Page 35
Severance and Benefits on Termination after Change in Control | For termination | ||||
· | |||||
· | |||||
· | |||||
· |
Release; | · | |||
Confidentiality and | o | Entry into release of claims; and | ||
Non-Solicitation | ||||
o | ||||
Resignation | |||||||||||||||||||||||||
or | |||||||||||||||||||||||||
Termination | Death or | Termination | Change in | ||||||||||||||||||||||
for Cause | Retirement | Disability | Without Cause | Control | |||||||||||||||||||||
Name | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4)(5) | ||||||||||||||||||||
Gregory E. Murphy | 0 | 1,115,383 | 5,414,550 | 5,440,564 | 9,560,756 | ||||||||||||||||||||
Dale A. Thatcher | 0 | 1,419,173 | 2,518,173 | 2,539,197 | 3,517,212 | ||||||||||||||||||||
Jamie Ochiltree, III | 0 | 377,036 | 1,965,394 | 1,988,860 | 3,335,894 | ||||||||||||||||||||
Richard F. Connell | 0 | 1,417,748 | 2,854,790 | 2,856,772 | 4,093,148 | ||||||||||||||||||||
Kerry A. Guthrie | 0 | 361,357 | 1,448,857 | 1,453,347 | 2,376,925 | ||||||||||||||||||||
Name | Resignation(1) or Termination For Cause ($) | Retirement(2) ($) | Death or Disability ($)(3) | Termination without Cause or Resignation with Good Reason ($)(4) | Change in Control ($)(5) | |||||||||||||||
Gregory E. Murphy | - | 2,751,143 | 6,584,476 | 6,599,888 | 10,021,983 | |||||||||||||||
Dale A. Thatcher | - | 1,174,400 | 2,371,900 | 2,383,402 | 4,241,292 | |||||||||||||||
Richard F. Connell | - | 949,721 | 2,384,731 | 2,386,010 | 4,467,324 | |||||||||||||||
Michael H. Lanza | - | 890,366 | 1,912,866 | 1,928,862 | 3,732,877 | |||||||||||||||
Ronald J. Zaleski | - | 773,057 | 1,805,567 | 1,820,228 | 3,326,286 |
Page 36
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Total ($) | ||||||||||||
Paul D. Bauer | 33,000 | 82,535 | 32,497 | 148,032 | ||||||||||||
W. Marston Becker | 18,006 | 82,535 | 32,497 | 133,038 | ||||||||||||
A. David Brown | 49,506 | 57,536 | 32,497 | 139,539 | ||||||||||||
John C. Burville | 30,500 | 62,534 | 32,497 | 125,531 | ||||||||||||
William M. Kearns, Jr. | 12,488 | 49,000 | 32,497 | 93,985 | ||||||||||||
Joan M. Lamm-Tennant | 15,500 | 82,535 | 32,497 | 130,532 | ||||||||||||
S. Griffin McClellan III | 35,000 | 57,536 | 32,497 | 125,033 | ||||||||||||
Michael J. Morrissey | 39,000 | 57,536 | 32,497 | 129,033 | ||||||||||||
Cynthia S. Nicholson | 1,500 | 18,487 | 0 | 19,987 | ||||||||||||
Ronald L. O’Kelley | 28,000 | 70,030 | 32,497 | 130,527 | ||||||||||||
William M. Rue | 16,000 | 82,535 | 32,497 | 131,032 | ||||||||||||
J. Brian Thebault | 30,500 | 82,535 | 32,497 | 145,532 |
Fees Earned or Paid | ||||||||||||||||
in Cash | Stock Awards | Option Awards | Total | |||||||||||||
Name | ($) | ($)(1) | ($)(2) | ($) | ||||||||||||
Paul D. Bauer | 37,000 | 82,576 | 31,210 | 150,786 | ||||||||||||
W. Marston Becker | 6,000 | 82,576 | 31,210 | 119,786 | ||||||||||||
A. David Brown | 15,000 | 82,576 | 31,210 | 128,786 | ||||||||||||
John C. Burville | 28,000 | 62,610 | 31,210 | 121,820 | ||||||||||||
William M. Kearns, Jr. | 25,000 | 82,576 | 31,210 | 138,786 | ||||||||||||
Joan M. Lamm-Tennant | 17,500 | 82,576 | 31,210 | 131,286 | ||||||||||||
S. Griffin McClellan III | 31,000 | 57,598 | 31,210 | 119,808 | ||||||||||||
Ronald L. O’Kelley | 16,500 | 82,576 | 31,210 | 130,286 | ||||||||||||
John F. Rockart | 45,500 | 57,598 | 31,210 | 134,308 | ||||||||||||
William M. Rue | 16,500 | 82,576 | 31,210 | 130,286 | ||||||||||||
J. Brian Thebault | 37,000 | 82,576 | 31,210 | 150,786 |
Page 37
Type of Compensation | Amount | |||
Annual Retainer Fee | $ | 50,000 | ||
Grant Date Fair Value of Annual Equity Award | $ | 32,500 | ||
Black-Scholes Value of Annual Option Grant | $ | 32,500 | ||
Board Meeting Attendance | $ | 0 | ||
Committee Attendance Fee | ||||
In person | $ | 1,500 | ||
By telephone | $ | 1,000 | ||
Annual Chairperson Fee | ||||
Audit Committee | $ | 12,500 | ||
Corporate Governance and Nominating Committee | $ | 7,500 | ||
Finance Committee | $ | 7,500 | ||
Salary & Employee Benefits Committee | $ | 12,500 | ||
Lead Director Fee | $ | 15,000 | ||
Expenses | Reasonable |
Type of Compensation | Amount | |||
Annual Retainer Fee | $ | 50,000 | ||
Grant Date Fair Value of Annual Equity Award | $ | 32,500 | ||
Black-Scholes Value of Annual Option Grant | $ | 32,500 | ||
Board Meeting Attendance | $ | 0 | ||
Committee Attendance Fee | ||||
In person | $ | 1,500 | ||
By telephone | $ | 1,000 | ||
Annual Chairperson Fee | ||||
Audit Committee | $ | 15,000 | ||
Corporate Governance and Nominating Committee | $ | 7,500 | ||
Finance Committee | $ | 7,500 | ||
Salary and Employee Benefits Committee | $ | 12,500 | ||
Lead Director Fee | $ | 15,000 | ||
Expenses | Reasonable |
Page 38
· | Increase the number of shares of common stock available for issuance under the Omnibus Stock Plan to a maximum of 3,400,000 shares (including any shares available for issuance under the Omnibus Stock Plan as of April 30, 2010); |
· | Increase the maximum number of shares of common stock that can be granted to any participant in the Omnibus Stock Plan in a calendar year from 100,000 to 200,000; |
· | Provide that awards under the Omnibus Stock Plan may be granted to consultants; |
· | Provide that awards under the Omnibus Stock Plan may be provided to employees and consultants to subsidiaries of Selective that are less than 80% owned by Selective; |
· | Limit the circumstances under which a “change in control” will occur under the plan; |
· | Reapprove the performance goals under the plan for purposes of Section 162(m) of the Internal Revenue Code (“Section 162(m)”); |
· | Remove certain provisions relating to the form and deferral of compensation to non-employee directors; and |
· | Make certain other minor changes to the plan. |
· | Average annual number of shares granted = (A + B + C) ÷ 3 expressed as a percentage, where A, B, and C = the Granted Share Percentage (as defined below) for fiscal years 2010, 2011, and 2012, respectively. |
· | The number of shares granted subject to awards under the Omnibus Stock Plan for each fiscal year = X / Y expressed as a percentage (the “Granted Share Percentage”), where X = the sum of the number of common shares granted subject to awards during the fiscal year pursuant to stock options, stock appreciation rights, restricted stock, restricted stock units, stock grants, other stock-based awards, actual performance shares delivered pursuant to long-term incentive plan awards, and earned deferred shares to employees, non-employee directors and consultants (if not otherwise included in one of the previously listed types of awards in the same or a previous year); and Y = the number of weighted average common shares of Selective outstanding for the fiscal year. |
· | The Salary and Employee Benefits Committee ("SEBC") of the Board of Directors. |
· | Grant awards under the Omnibus Stock Plan; |
· | Determine the persons to whom and the time or times at which awards will be granted; |
· | Determine the type and number of awards to be granted, the number of shares to which an award may relate and the terms, conditions, restrictions, and performance criteria relating to any award; |
· | Determine whether, to what extent, and under what circumstances an award may be settled, cancelled, forfeited, exchanged, or surrendered; |
· | Construe and interpret the Omnibus Stock Plan and any award under the Omnibus Stock Plan; |
· | Prescribe, amend, and rescind rules and regulations relating to the Omnibus Stock Plan; |
· | Determine the terms and provisions of the agreements evidencing awards under the Omnibus Stock Plan; and |
· | Make all other determinations deemed necessary or advisable for the administration of the Omnibus Stock Plan, including: |
o | Accelerate the date on which any option or stock appreciation right granted under the Omnibus Stock Plan becomes exercisable; |
o | Waive or amend the operation of Omnibus Stock Plan provisions with respect to |
exercise after termination of employment (provided that the term of an option or stock appreciation right may not be extended beyond ten (10) years from the date of grant); |
o | Accelerate the vesting date, or waive any condition imposed under the Omnibus Stock Plan, with respect to any share of restricted stock, restricted stock unit, stock grant, or other award; and |
o | Otherwise adjust any of the terms applicable to any such award in a manner consistent with the terms of the Omnibus Stock Plan. |
· | Ten (10) years from the Omnibus Stock Plan's effective date of April 1, 2005. |
· | Employees, officers, non-employee directors, and consultants of Selective or any of its subsidiaries and affiliates selected by the SEBC. As of December 31, 2009, approximately 1,900 employees, 11 non-employee directors, and no consultants were eligible to participate in the Omnibus Stock Plan. |
· | Maximum number of common shares reserved for issuance is 3,400,000 (any or all of which may be granted pursuant to options, including “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code), with adjustments based on stock splits, dividends, recapitalizations, and other changes or transactions. The shares may be authorized but unissued Selective common stock or authorized and issued Selective common stock held in Selective's treasury. |
· | Maximum number of shares subject to awards that can be made to one participant in any year is 200,000, subject to adjustments based on stock splits, dividends, recapitalizations, and other changes or transactions. |
· | Shares forfeited, cancelled, exchanged, surrendered, tendered in payment of an exercise price or withheld to satisfy tax obligations, or which are covered by awards settled in cash, are available for future awards. |
· | Stock options (including incentive stock options), provided that: (i) the per share exercise price of each option may not be less than 100% of the fair market value of a share of Selective common stock on the date of grant; and (ii) the term of any option may not exceed ten (10) years; |
· | Stock appreciation rights, which are the rights to receive, upon exercise, an amount in cash or shares of Selective common stock as described in the Omnibus Stock Plan, may be granted either at the time of grant or, with respect to a nonqualified stock option, at any time thereafter during the term of the option, or may be granted unrelated to an option, in which case the term of the right may not exceed ten (10) years; |
· | Restricted stock; |
· | Restricted stock units, which are awards of the right to receive at a future date either shares of Selective common stock, their cash value, or a combination thereof, plus (if provided in the award agreement) an amount in cash or shares of Selective common stock equal to the aggregate cash dividends paid with respect to the number of shares underlying such restricted stock units; |
· | Stock grants; or |
· | Other stock-based awards. |
· | The SEBC may determine that vesting or payment of an award under the Omnibus Stock Plan will be subject to the attainment of one or more performance goals with respect to a fiscal year, including any of the following: |
o | Return on total stockholder equity or operating return on total stockholder equity; |
o | Earnings per share or book value per share of Selective's common stock; |
o | Net income (before or after taxes); |
o | Earnings before all or any interest, taxes, depreciation, and/or amortization; |
o | Return on assets, capital, or investment; |
o | Market share; |
o | Cost reduction goals; |
o | Earnings from continuing operations; |
o | Levels of expense, costs, or liabilities; |
o | Department, division, or business unit level performance; |
o | Operating profit; |
o | Sales or revenues; |
o | Stock price appreciation; |
o | TSR; |
o | Growth in NPW, including, without limitation, policy count; |
o | Combined ratios; |
o | Implementation or completion of critical projects or processes; |
o | Except in the case of a "covered employee", any other performance criteria established by the SEBC; or |
o | Any combination of the foregoing. |
· | Unless otherwise provided by the SEBC, upon termination for any reason other than cause (as defined in the Omnibus Stock Plan), death or disability, the grantee will have one year to exercise all vested nonqualified options and stock appreciation rights, and 90 days to exercise incentive stock options. |
· | Unless otherwise provided by the SEBC, upon termination due to death or disability, the grantee will have one year to exercise all vested options and stock appreciation rights. |
· | Upon a termination for cause, all options and stock appreciation rights, whether or not vested, will be forfeited. |
· | Any unvested options and stock appreciation rights will be forfeited upon any termination of grantee's employment with, or service to, Selective, its affiliates and subsidiaries. |
· | Upon termination for death or disability, any unvested shares of restricted stock, the vesting of which is not subject to the achievement of performance goals, will become fully vested and any unvested shares of restricted stock that are subject to the achievement of performance goals will become vested only if and when such performance goals are satisfied. |
· | Unless otherwise provided by the SEBC, upon termination for any reason other than death or disability, any unvested shares of restricted stock will be forfeited. |
· | Unless otherwise provided by the SEBC, upon termination for any reason, all restricted stock units will be forfeited. |
· | All unvested awards become fully vested and exercisable upon a change in control of Selective. |
· | In the event of a corporate transaction involving shares of Selective's common stock, the SEBC may provide for: (i) assumption by the successor entity of all outstanding awards; (ii) termination upon the occurrence of the transaction of all outstanding awards that are not exercised within a period specified by the SEBC; and/or (iii) cash-out of the outstanding options and stock appreciation rights based on the acquisition price, net of the exercise price of such awards, and the cancellation without compensation of any such awards whose exercise price exceeds the acquisition price. |
· | Unless otherwise determined by the SEBC, awards may be transferred only by will or the laws of descent and distribution or (except in the case of incentive stock options) to an immediate family member. |
· | The Omnibus Stock Plan may, at any time, be terminated, revised, or amended in any respect whatsoever, provided that: (i) approval by Selective's stockholders will be required for any such amendment if and to the extent such approval is required to comply with applicable law or stock exchange listing requirements; (ii) approval by Selective’s stockholders will be required for the repricing of any option or other award; and (iii) no such action may reduce a grantee's rights under an outstanding award without the grantee's consent, except to comply with Section 409A of the Internal Revenue Code. |
· | The following summarizes certain current U.S. federal income tax laws and regulations generally applicable to awards pursuant to the Omnibus Stock Plan, all of which are subject to change (possibly with retroactive effect), and does not address any tax considerations under Section 409A of the Internal Revenue Code, or the laws of any local, state, or foreign jurisdiction. This summary does not purport to be complete. |
o | Incentive Stock Options. |
§ | Not taxable income upon grant. |
§ | Amounts received in excess of the exercise price from the sale of shares received ("Option Shares") that are held for less than one year from receipt or two years from the option grant ("Disqualifying Disposition") are treated as ordinary income in the year of disposition, and Selective is entitled to deduct the same amount as compensation expense. |
§ | Amounts received from the sale of Option Shares in a transaction that is not a Disqualifying Disposition are treated as capital gain or loss, with the basis being the exercise price. The amount by which the fair market value of the Option Shares exceeds the exercise price, however, will constitute an item that increases the participant's "alternative minimum taxable income." |
§ | An incentive stock option generally will not be treated as an incentive stock option if it is exercised more than three months following termination of employment; in which case the option will be treated as a nonqualified stock option. |
o | Nonqualified Stock Options. |
§ | Not taxable income upon grant. |
§ | Amounts in excess of the exercise price at the time of exercise are treated as ordinary income and Selective is entitled to deduct the same amount as compensation expense. |
§ | Amounts received from the sale of Option Shares following exercise are treated as capital gain or loss, with the basis being the exercise price plus the ordinary income incurred upon exercise. |
o | Restricted Stock. |
§ | Generally, not taxable income upon grant. |
§ | Ordinary income is recognized on the date the restrictions are removed in an amount equal to the fair market value of such shares on such date, less any amount paid for the shares, at which time Selective is entitled to deduct the same amount as compensation expense. |
§ | An Internal Revenue Code Section 83(b) election may be made by the grantee within 30 days of receipt to recognize ordinary income in an amount equal to the fair market value on the grant date; but the holder will not be allowed a deduction for shares subsequently forfeited or returned. Amounts received from |
the subsequent sale of the restricted stock are treated as capital gain or loss, with the basis being the amount paid by the holder for the restricted stock, if any, plus the amount included in the income by the holder of the award as a result of the Internal Revenue Code 83(b) election. |
o | Other Types of Awards. |
§ | No taxable income upon grant of a stock appreciation right or restricted stock unit. |
§ | Upon settlement of such a stock appreciation right, restricted stock unit, stock grant, or any other stock-based award, ordinary income is recognized in the aggregate value of the payment received, and Selective is entitled to deduct the same amount as compensation expense. |
· | The SEBC is the Cash Incentive Plan administrator. |
· | Grant awards; |
· | Determine the persons to whom and the time or times at which awards will be granted; |
· | Determine the terms, conditions, restrictions, and performance criteria, including performance goals, and the length of the performance period (which will be no less than one year), relating to any award; |
· | Determine whether, to what extent, and under what circumstances an award may be settled, cancelled, forfeited, or surrendered; |
· | Make adjustments in the performance goals in recognition of unusual or non-recurring events affecting Selective or the financial statements of Selective, or in response to changes in applicable laws, regulations, or accounting principles, or for any other reason; |
· | Construe and interpret the Cash Incentive Plan and any award; |
· | Prescribe, amend, and rescind rules and regulations relating to the Cash Incentive Plan; |
· | Determine the terms and provisions of any award; |
· | Make all other determinations deemed necessary or advisable for the administration of the Cash Incentive Plan; |
· | Delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable; and |
· | Employ one or more persons to render advice with respect to any responsibility the SEBC or delegated party may have under the Cash Incentive Plan. |
· | Officers and other employees of Selective and its subsidiaries in the sole discretion of the SEBC. As of December 31, 2009, approximately 1,900 employees were eligible to participate in the Cash Incentive Plan. |
· | Cash, paid as soon as practicable in the calendar year following the calendar year in which the performance period ends. |
· | Return on total stockholder equity or operating return on total stockholder equity; |
· | Earnings per share or book value per share of Selective's common stock; |
· | Net income (before or after taxes); |
· | Earnings before all or any interest, taxes, depreciation, and/or amortization; |
· | Return on assets, capital, or investment; |
· | Market share; |
· | Cost reduction goals; |
· | Earnings from continuing operations; |
· | Levels of expense, costs, or liabilities; |
· | Department, division, or business unit level performance; |
· | Operating profit; |
· | Sales or revenues; |
· | Stock price appreciation; |
· | TSR; |
· | Growth in NPW, including, without limitation, policy count; |
· | Combined ratios; |
· | Implementation or completion of critical projects or processes; |
· | Except in the case of a "covered employee", any other performance criteria established by the SEBC; or |
· | Any combination of the foregoing. |
· | No participant may receive payments under the Cash Incentive Plan for any performance period in amount of more than the product of: (i) $7.5 million; and (ii) the number of full and partial years of the performance period. |
· | The SEBC may reduce or eliminate any award under the Cash Incentive Plan, but in no event may the SEBC increase the amount of an award payable to a "covered employee" over such amount payable based on the objective criteria established at the outset of the fiscal year for which the award is made. |
· | Participants must be employed by Selective or one of its subsidiaries as of the payment date established for awards relating to the fiscal year for which payment is to be made; provided that, if the participant's employment is terminated prior to such payment date by reason of death, retirement on or after "early retirement age," "normal retirement age" or "total disability," as such terms are defined in SICA's Retirement Income Plan, or for any other reason with the express consent of the SEBC, the SEBC, in its sole discretion, may provide for an award payment to the participant or, if applicable, the participant's designated beneficiary. |
· | Only by will or the laws of descent and distribution. |
· | At any time by the SEBC or Board of Directors; provided that: (i) no amendment that requires stockholder approval in order for the Cash Incentive Plan to continue to comply with Section 162(m) will be effective unless approved by the requisite vote of the stockholders of Selective; and (ii) no amendment may adversely affect any of the rights of any participant, without such participant's consent, under any award previously granted under the Cash Incentive Plan. |
Name and Position | Dollar Amount ($) | |
Gregory E. Murphy Chairman, President & Chief Executive Officer | $0 - $1,800,000 | |
Dale A. Thatcher Executive Vice President, Chief Financial Officer & Treasurer | $0 - $712,500 | |
Richard F. Connell Senior Executive Vice President & Chief Administrative Officer | $0 - $787,500 | |
Michael H. Lanza Executive Vice President & General Counsel | $0 - $652,500 | |
Ronald Zaleski Executive Vice President & Chief Actuary | $0 - $600,000 | |
Current executive officers as a group | $0 - $5,521,250 | |
Current directors who are not executive officers as a group | $0 | |
Non-executive officer employees as a group | $0 – $37,510,144 |
Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
Equity compensation plans approved by security holders | 1,381,350 | 17.90 | 5,843,868 | (1) |
Category | 2009 | 2008 | ||||||
Audit Fees | $ | 1,170,000 | $ | 1,215,000 | ||||
Audit-Related Fees(1) | $ | 287,000 | $ | 497,150 | ||||
Tax Fees | $ | 0 | $ | 0 | ||||
All Other Fees | $ | 0 | $ | 0 | ||||
TOTAL | $ | 1,457,000 | $ | 1,712,150 |
Category | 2007 | 2006 | ||||||
Audit Fees | $ | 1,353,500 | $ | 1,319,500 | ||||
Audit-Related Fees(1) | $ | 164,500 | $ | 132,000 | ||||
Tax Fees | $ | 0 | $ | 0 | ||||
All Other Fees | $ | 0 | $ | 0 | ||||
TOTAL | $ | 1,518,000 | $ | 1,451,500 |
· | Periodically met with and held discussions with management regarding the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in Selective’s financial statements. | ||
· | Reviewed and discussed the audited financial statements for the year ended December 31, | ||
· | Reviewed and discussed with KPMG LLP, Selective’s independent registered public | ||
· | Discussed with KPMG LLP, the independent |
Paul D. Bauer, Chairperson | ||||
John C. Burville, Ph.D. | ||||
Joan M. Lamm-Tennant, Ph.D. | ||||
Ronald L. O’Kelley |
Page 41
J. Brian Thebault |
as to any business that a stockholder proposes to bring before the annual meeting a brief description of the business proposed to be brought before the annual meeting, the reasons for conducting such business at the annual meeting; and any material interest of the stockholder in such business; |
as to each person whom the stockholder proposes to nominate for election as a director, all information relating to each such person as would be required to be disclosed in a solicitation of proxies for the election of such person as a director pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if so elected); | ||
· | the name and address of the stockholder giving the notice, as they appear on our |
· | the name and address of any “Stockholder Associated Person” (as defined below), if any, on whose behalf the proposal is made. A “Stockholder Associated Person” is: (i) any person controlling, controlled by, under common control with, or acting in concert with, the stockholder; (ii) any beneficial owner of | |
· | the class and number of shares which are owned beneficially and of record by the stockholder and any Stockholder Associated Person on whose behalf the |
· | a representation by the stockholder that it is a holder of record of shares of stock of Selective entitled to vote at the annual meeting and, if applicable, intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice or make the proposal to the annual meeting; |
· | a representation that the stockholder will notify Selective in writing of the number and class of shares of stock owned beneficially or of record by the stockholder and any Stockholder Associated Person as of the close of business on the record date for the annual meeting promptly, and in no event later than 10 days, following the later of the record date or the date notice of the record date is first publicly disclosed; |
· | a description of all agreements, arrangements, or understandings between the stockholder and each nominee for director, as applicable, or any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made or the business is to be proposed, and a representation that the stockholder will notify Selective in writing of any such agreement, arrangement, or understanding in effect as of the close of business on the record date for the annual meeting promptly, and in no event later than 10 days, following the later of the record date or the date notice of the record date is first publicly disclosed; and |
· | a description in reasonable detail, with respect to the stockholder or any Stockholder Associated Person, of: (i) any option, warrant, convertible security, stock appreciation right, or other right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to the value of any class or series of shares of Selective stock or with a value derived in whole or in part from the value of any class or series of shares of Selective stock, whether or not such instrument or right is subject to settlement in the underlying class or series of shares of Selective stock or otherwise (“Derivative Instruments”), directly or indirectly beneficially owned by the stockholder or a Stockholder Associated Person, or any other direct or indirect opportunity for the stockholder or Stockholder Associated Person to profit or share in any profit derived from any increase or decrease in the value of shares of stock of Selective; (ii) any interest in shares of stock of Selective or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which the stockholder or Stockholder Associated Person is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and (iii) any hedging or other transaction or series of transactions that has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including, without limitation, any put, short position or any borrowing or lending of shares of stock) that has been made by or on behalf of, a stockholder or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, or manage risk or benefit of stock price changes for, or to increase or decrease the voting power of, the stockholder or any Stockholder Associated Person with respect to any share of stock of Selective (such statement, the “Disclosure of Hedged Positions”), and a representation that the stockholder will notify Selective in writing of any changes in such Disclosure of Hedged Positions as of the close of business on the record date for the meeting promptly, and in no event later than 10 days, following the later of the record date or the date notice of the record date is first publicly disclosed. |
Gregory E. Murphy, |
Chairman, President and |
Chief Executive Officer |
1. | Purpose; Establishment. |
2. | Definitions. |
(a) | “Administrative Actions” shall have the meaning set forth in Section 4(b) hereof. |
(b) | “Affiliate” shall mean any Subsidiary of the Company, and any entity if, at the time of granting of an Award: (i) the Company, directly or indirectly, owns at least 80% of the combined voting power of all classes of stock of such entity or at least 80 percent of the ownership interests in such entity; or (ii) such entity, directly or indirectly, owns at least 80 percent of the combined voting power of all classes of stock of the Company. |
(c) | “Agreement” shall mean the written agreement between the Company and a Participant evidencing an Award or a notice of an Award delivered to a Participant by the Company in hard copy paper form, electronically via the Internet or through other electronic means. |
(d) | “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Stock Grant or Other Award granted pursuant to the terms of the Plan. |
(e) | “Board” shall mean the Board of Directors of the Company. |
(f) | “Cause” shall mean, unless otherwise defined in the Participant’s Agreement, employment agreement, or other written agreement describing the Participant’s terms of employment with the Company or its Affiliates, termination of the Participant’s employment or service by the Company and its Affiliates if, in the reasonable determination of the Company or its applicable Affiliate, the Participant: (i) engages in conduct that violates written policies of the Company or Affiliate; (ii) fails to perform the essential functions of his or her job (except for a failure resulting from a bona fide illness or incapacity); (iii) fails to carry out the Company’s or Affiliate’s reasonable directions, issued through its Chief |
(g) | “Change in Control” shall mean the first occurrence of an event of a nature that would be required to be reported in response to Item 5.01 of a Current Report on Form 8-K, as in effect on the date hereof, pursuant to Sections 13 or 15(d) of the Exchange Act; provided, however, that a Change in Control shall, in any event, conclusively be deemed to have occurred upon the first to occur of any one of the following events: |
(i) | The acquisition by a person or group, including, without limitation, any current stockholder or stockholders of the Company, of securities of the Company resulting in such person or group owning, of record or beneficially, 25 percent or more of any class of voting securities of the Company; |
(ii) | The acquisition by a person or group, including, without limitation, any current stockholder or stockholders of the Company, of securities of the Company resulting in such persons or groups owning, of record or beneficially, 20 percent or more, but less than 25 percent, of any class of voting securities of the Company, if the Board adopts a resolution that such acquisition constitutes a Change in Control; |
(iii) | The sale or disposition of all or substantially all of the assets of the Company; |
(iv) | The reorganization, recapitalization, merger, consolidation or other business combination involving the Company, the result of which is the ownership by those persons who were stockholders of the Company immediately prior to such business combination of less than 80 percent of those voting securities of the resulting or acquired entity having the power to elect a majority of the board of directors of such entity; or |
(v) | A change in the membership of the Board, which, taken in conjunction with any other prior or concurrent changes, results in 50 percent or more of the membership of the Board being persons not nominated by the Board as set forth in the Company’s then most recent proxy statement, excluding changes resulting from substitutions by the |
(h) | “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. |
(i) | “Committee” shall mean the Company’s Salary and Employee Benefits Committee, which shall consist of two or more persons appointed by the Board, each of whom shall qualify as an “outside director” within the meaning of Section 162(m) of the Code, and a “nonemployee director” within the meaning of Rule 16b-3. |
(j) | “Company” shall mean Selective Insurance Group, Inc., a New Jersey corporation. |
(k) | “Company Stock” shall mean the common stock of the Company, par value $2.00 per share. |
(l) | “Consultant” shall mean any consultant, agent, advisor, or independent contractor who renders services to the Company or an Affiliate that: (i) are not in connection with the offer and sale of the Company’s securities in a capital raising transaction; and (ii) do not directly or indirectly promote or maintain a market for the Company’s securities. |
(m) | “Covered Employee” shall mean a “covered employee” within the meaning of Section 162(m) of the Code and regulations and other guidance thereunder. |
(n) | “Directors’ Plan” shall mean the Selective Insurance Group, Inc. Non-Employee Directors’ Deferred Compensation Plan, as effective as of May 1, 2010, as amended and in effect from time to time. |
(o) | “Effective Date” shall mean April 1, 2005, the original effective date of the Plan. |
(p) | “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time. |
(q) | “Fair Market Value” of the Company Stock shall be calculated as follows: (i) if the Company Stock is listed on a national securities exchange or traded on the NASDAQ National Market or the NASDAQ SmallCap Market and sale prices are regularly reported for the Company Stock, then the Fair Market Value shall be the closing selling price for the Company Stock reported on the applicable composite tape or other comparable reporting system on the applicable date, or if the applicable date is not a trading day, on the most recent trading day immediately prior to the applicable date; or (ii) if closing selling prices are not regularly reported for the Company Stock as described in clause (i) above but bid and asked prices for the Company Stock are regularly reported, then the Fair Market Value shall be the arithmetic mean between the closing or last bid and asked prices for the Company Stock on the applicable date or, if the applicable date is not a trading day, on the most recent trading day immediately prior to the applicable date; or (iii) if prices are not regularly reported for the Company Stock as described in clause (i) or (ii) above, then the Fair Market Value shall be such value as the Committee in good faith determines; provided, however, that, for purposes of determining the exercise price of a Nonqualified Stock Option, if prices are not regularly reported for the Company Stock as described in clause (i) or (ii) above, the Fair Market Value of the Company Stock shall be determined in accordance with Section 409A and regulations thereunder. |
(r) | “Immediate Family Member” shall have the meaning set forth in Section 21(c) hereof. |
(s) | “Incentive Stock Option” shall mean an Option that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code, or any successor provision, and which is designated by the Committee as an Incentive Stock Option. |
(t) | “Non-Employee Director” shall mean a member of the Board or a member of the board of directors of an Affiliate who is not an employee of the Company or any Affiliate. |
(u) | “Nonqualified Stock Option” shall mean an Option other than an Incentive Stock Option. |
(v) | “Option” shall mean an option to purchase shares of Company Stock granted pursuant to Section 7 hereof. |
(w) | “Other Award” shall mean an Award granted pursuant to Section 12 hereof. |
(x) | “Participant” shall mean an employee of the Company or any Affiliate, a Non-Employee Director or a Consultant to whom an Award is granted pursuant to the Plan. |
(y) | “Performance Goals” shall mean performance goals based on one or more of the following criteria: (i) return on total stockholder equity or operating return on total stockholder equity; (ii) earnings per share or book value per share of Company Stock; (iii) net income (before or after taxes); (iv) earnings before all or any interest, taxes, depreciation and/or amortization; (v) return on assets, capital or investment; (vi) market share; (vii) cost reduction goals; (viii) earnings from continuing operations; (ix) levels of expense, costs or liabilities; (x) department, division or business unit level performance; (xi) operating profit; (xii) sales or revenues; (xiii) stock price appreciation; (xiv) total stockholder return; (xv) growth in net premiums written, including, without limitation, policy count; (xvi) combined ratios; (xvii) implementation or completion of critical projects or processes; (xviii) except in the case of a Covered Employee, any other performance criteria established by the Committee; or (xix) any combination of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a subsidiary or affiliate, or a division or strategic business unit of the Company or a combination thereof, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may be subject to a threshold level of performance below which no vesting will occur, levels of performance at which specified vesting will occur, and a maximum level of performance above which full vesting will occur. To the extent possible, each of the foregoing Performance Goals shall be determined, as appropriate, in accordance with generally accepted accounting principles or statutory accounting principles and shall be subject to certification by the Committee; provided that the Committee shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any subsidiary or affiliate or the financial statements of the Company or any subsidiary or affiliate, in response to changes in applicable laws or regulations, or to account for items of realized and |
(z) | “Plan” shall have the meaning set forth in Section 1 hereof. |
(aa) | “Prior Plan” shall mean each of the Selective Insurance Stock Option Plan III, the Selective Insurance Group, Inc. Stock Option Plan for Directors and the Selective Insurance Group, Inc. Stock Compensation Plan for Nonemployee Directors, as Amended. |
(bb) | “Prior Plan Awards” shall mean awards outstanding under the Prior Plans as of April 27, 2005. |
(cc) | “Restricted Stock” shall mean a share of Company Stock which is granted pursuant to the terms of Section 9 hereof and which is subject to restrictions as set forth in Section 9(c) and (d) hereof. |
(dd) | “Restricted Stock Unit” shall mean an Award valued by reference to shares of Company Stock (also known as “phantom stock” or a “stock unit”), granted pursuant to Section 10 hereof, which upon or following vesting provides the right to receive either cash or shares of Company Stock. |
(ee) | “Rule 16b-3” shall mean the Rule 16b-3 promulgated under the Exchange Act, as amended from time to time. |
(ff) | “Securities Act” shall mean the Securities Act of 1933, as amended from time to time. |
(gg) | “Stock Appreciation Right” shall mean the right to receive, upon exercise of the right, the applicable amounts as described in Section 8 hereof. |
(hh) | “Stock Grant” shall mean an unrestricted share of Company Stock which is granted pursuant to the terms of Section 11 hereof. |
(ii) | “Subsidiary” shall mean a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code. |
3. | Stock Subject to the Plan. |
(a) | Shares Available for Awards. The maximum number of shares of Company Stock reserved for issuance under the Plan shall be 3,400,000 shares (subject to adjustment as provided herein). Such shares may be authorized but unissued shares of Company Stock or authorized and issued shares of Company Stock held in the Company’s treasury. |
(b) | Individual Limitation; Limitation on Certain Awards; Limitation on Incentive Stock Options. The maximum number of shares of Company Stock to which Awards (including Options and Stock Appreciation Rights) relate that may be granted to any Participant during any calendar year shall not exceed 200,000 shares, subject to adjustment as provided in Section 3(c) hereof. The maximum number of shares of Company Stock to which Options relate that may be granted under the Plan shall be 3,400,000 (subject to adjustment as provided in Section 3(c) hereof), any or all of which may relate to Incentive Stock Options. |
(c) | Adjustment for Change in Capitalization. In the event that any dividend or other distribution is declared (whether in the form of cash, Company Stock, or other property), or there occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange or other similar corporate transaction or event, the Committee shall equitably adjust, in its sole and absolute discretion: (i) the number and type of shares (or other securities or property) with respect to which Awards may be granted; (ii) the number and type of shares (or other securities or property) subject to outstanding Awards; and (iii) the grant or exercise price with respect to any Award. Any adjustment to Incentive Stock Options under this Section 3(c) shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code. Any adjustment to Awards subject to Section 409A of the Code shall conform to the requirements of Section 409A of the Code. Furthermore, with respect to Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code, any adjustments to Awards shall be made only to the extent that the Committee determines that such adjustments may be made without causing the Company to be denied a tax deduction on account of Section 162(m) of the Code. |
(d) | Corporate Transactions. In the event of a proposed corporate transaction, the Committee may provide for any or a combination of the following: |
(i) | provide for the assumption of outstanding Awards by the surviving or successor entity; |
(ii) | terminate all or a portion of any outstanding Award, effective upon the closing of the corporate transaction, if it determines that such termination is in the best interests of the Company (if the Committee decides to terminate outstanding Options or Stock Appreciation Rights, the Committee shall give each participant holding an Option or Stock Appreciation Right to be terminated not less than seven days’ notice prior to any such termination, and any Option or Stock Appreciation Right that is to be so terminated may be exercised (if and only to the extent that it is then exercisable) up to, and including the date immediately preceding, such termination); or |
(iii) | with respect to the outstanding Options and Stock Appreciation Rights, provide for cash payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of: (A) the acquisition price times the number of shares of Company Stock subject to an Option or Stock Appreciation Right (to the extent the exercise price does not exceed the acquisition price), over (B) the aggregate exercise price for all such shares of Company Stock subject to the Option or Stock Appreciation Right, in exchange for the termination of such Option or Stock Appreciation Right; provided, however, that if the acquisition price does not exceed the exercise price of any such Option or Stock Appreciation Right, the Committee may cancel that Option or Stock Appreciation Right without the payment of any consideration therefor prior to or upon the transaction. For this purpose, “acquisition price” means the amount of cash, and the market value of any other consideration, received in payment for a share of Company Stock surrendered in a transaction. |
(e) | Reuse of Shares. For purposes of calculating the number of shares of Company Stock issued under the Plan: |
(i) | Except to the extent that to do so would prevent the grant of Incentive Stock Options hereunder, any shares of Company Stock subject to an Award or a Prior Plan Award that remain unissued upon the cancellation, surrender, exchange or termination of such Award or Prior Plan Award without having been exercised or settled shall again become available for Awards. |
(ii) | To the extent an Award or a Prior Plan Award is paid or settled in cash, the number of shares of Company Stock with respect to which such payment or settlement is made shall again be available for grants of Awards pursuant to the Plan. |
(iii) | If any Option is exercised by delivering previously owned shares of Company Stock in payment of the exercise price therefor, only the net number of shares, that is, the number of shares of Company Stock issued minus the number received by the Company in payment of the exercise price, shall be considered to have been issued pursuant to an Award granted under the Plan. |
(iv) | Any shares of Company Stock reacquired in satisfaction of tax withholding obligations of the Company shall again be available for issuance under the Plan. |
4. | Administration of the Plan. |
(a) | General. The Plan shall be administered by the Committee. The Committee shall have the authority in its sole discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, the authority to: (i) grant Awards; (ii) determine the persons to whom and the time or times at which Awards shall be granted; (iii) determine the type and number of Awards to be granted, the number of shares of Company Stock or cash or other property to which an Award may relate and the terms, conditions, restrictions and performance criteria relating to any Award; (iv) determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; (v) construe and interpret the Plan and any Award; (vi) prescribe, amend and rescind rules and regulations relating to the Plan; (vii) determine the terms and provisions of Agreements; and (viii) make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee may, in its sole and absolute discretion, without amendment to the Plan: (A) accelerate the date on which any Option or Stock Appreciation Right becomes exercisable; (B) waive or amend the operation of Plan provisions respecting exercise after termination of employment (provided that the term of an Option or Stock Appreciation Right may not be extended beyond ten years from the date of grant); (C) accelerate the vesting date, or waive any condition imposed hereunder, with respect to any Award of Restricted Stock, Restricted Stock Units, Stock Grant or Other Award; and (D) otherwise adjust any of the terms applicable to any such Award in a manner consistent with the terms of the Plan. |
(b) | Indemnification. No member of the Committee (or a delegate of the Committee), and no officer of the Company, shall be liable for any action taken or omitted to be taken by such individual or by any other member of the Committee or officer of the Company in connection with the performance of duties under this Plan, except for such individual’s own willful misconduct or as expressly provided by law (the “Administrative Actions”). Further, the Committee (and all delegates of the Committee), in addition to such other rights of indemnification as they may have as members of the Board or officers of the Company or an Affiliate, any individual serving as a Committee member shall be indemnified and held |
5. | Eligibility. |
6. | Awards Under the Plan; Agreement. |
7. | Options. |
(a) | Identification of Options. Each Option shall be clearly identified in the applicable Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. All Options shall be non-transferable, except by will or the laws of descent and distribution or except as otherwise determined by the Committee as provided by Section 21(c) hereof with respect to a Nonqualified Stock Option. |
(b) | Exercise Price. Each Agreement with respect to an Option shall set forth the amount per share (the “option exercise price”) payable by the Participant to the Company upon exercise of the Option; provided, however, in no event shall the option exercise price be less than the Fair Market Value of a share of Company Stock as of the date of grant of such Option. |
(c) | Term and Exercise of Options. |
(i) | Each Option shall become exercisable at the time determined by the Committee and set forth in the applicable Agreement. At the time of grant of an Option, the Committee may impose such restrictions or conditions to the exercisability of the Option as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of one or more Performance Goals. Subject to Section 7(d) hereof, the Committee shall determine the expiration date of each Option, which shall be no later than the tenth anniversary of the date of grant of the Option. |
(ii) | An Option shall be exercised by delivering the form of notice of exercise provided by the Company. Payment for shares of Company Stock purchased upon the exercise of an Option shall be made on the effective date of such exercise by one or a combination of the following means: (A) in cash or by personal check, certified check, bank cashier’s check or wire transfer; (B) in shares of Company Stock owned by the Participant for at least six months prior to the date of exercise; (C) by broker assisted cashless exercise; (D) with the approval of the Committee, by “net exercise,” meaning that upon the exercise of an Option or any portion thereof, the Company shall deliver the greatest number of whole shares of Company Stock having a Fair Market Value on the date of exercise not in excess of the difference between: (x) the aggregate Fair Market Value of the shares of Company Stock subject to the Option (or the portion of such Option then being exercised); and (y) the aggregate exercise price for all such shares of Company Stock under the Option (or the portion thereof then being exercised) plus (to the extent it would not give rise to adverse accounting consequences pursuant to applicable accounting principles) the amount of withholding tax due upon exercise, with any fractional share that would result from such equation to be payable in cash, to the extent practicable, or cancelled; or (E) by any such other methods as the Committee may from time to time authorize; provided, however, that in the case of a Participant who is subject to Section 16 of the Exchange Act, the method of making such payment shall be in compliance with applicable law. Any payment in shares of Company Stock shall be effected by the delivery of such shares to, and in a form approved by, the Secretary of the Company or his or her designee (including by way of electronic delivery), accompanied by any other documents and evidences as the Secretary of the Company or his or her designee shall require. |
(iii) | Shares of Company Stock purchased upon the exercise of an Option shall be issued in book entry form in the name of or for the account of the Participant or other person entitled to receive such shares and shall be entered on the books of the Company’s transfer agent in the name of the Participant or such other person (unless otherwise determined by the Committee), as soon as practicable following the effective date on which the Option is exercised. |
(d) | Provisions Relating to Incentive Stock Options. Incentive Stock Options may only be granted to employees of the Company and its Affiliates, in accordance with the provisions of Section 422 of the Code. The option exercise price for each Incentive Stock Option shall be equal to or greater than the Fair Market Value of a share of Company Stock on the date of grant. To the extent that the aggregate Fair Market Value of shares of Company Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of the Company or a Subsidiary shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of this Section 7(d), Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company unless: (A) the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Company Stock at the time such Incentive Stock Option is granted; and (B) such Incentive Stock Option is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted. |
(e) | Effect of Termination of Employment (or Provision of Services). Unless otherwise provided by the Committee, in the event that the employment of a Participant with the Company and its Affiliates (or the Participant’s service to the Company and its Affiliates) shall terminate for any reason other than Cause, death or disability, then: (i) each Option granted to such Participant, to the extent that it is exercisable at the time of such termination, shall remain exercisable for: (x) in the case of Incentive Stock Options, the 90 day period following such termination, but in no event following the expiration of its term; and (y) in the case of Nonqualified Stock Options, the one year period following such termination, but in no event following the expiration of its term; and (ii) each Option that remains unexercisable as of the date of such a termination shall be terminated at the time of such termination. Unless otherwise provided by the Committee, in the event that the employment of a Participant with the Company and its Affiliates (or the Participant’s service to the Company and its Affiliates) shall terminate on account of the death or disability of the Participant, except as otherwise determined by the Committee, all Options held by the Participant immediately prior to the Participant’s death or disability, as the case may be, to the extent then exercisable, may be exercised by the Participant or by the Participant’s legal representative, executor, administrator or transferee by will or the laws of descent and |
8. | Stock Appreciation Rights. |
(a) | General. A Stock Appreciation Right may be granted in connection with an Option, either at the time of grant or, with respect to a Nonqualified Stock Option, at any time thereafter during the term of the Option, or may be granted unrelated to an Option. At the time of grant of a Stock Appreciation Right, the Committee may impose such restrictions or conditions to the exercisability of the Stock Appreciation Right as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Performance Goals. The term of a Stock Appreciation Right granted without relationship to an Option shall not exceed ten years from the date of grant. |
(b) | Surrender of Option. A Stock Appreciation Right related to an Option shall require the holder, upon exercise, to surrender such Option with respect to the number of shares as to which such Stock Appreciation Right is exercised, in order to receive payment of any amount computed pursuant to Section 8(d). Such Option will, to the extent surrendered, then cease to be exercisable. |
(c) | Timing and Transferability. Subject to Section 8(g) and to such rules and restrictions as the Committee may impose, a Stock Appreciation Right granted in connection with an Option will be exercisable at such time or times, and only to the extent, that a related Option is exercisable, and will not be transferable except to the extent that such related Option may be transferable. |
(d) | Exercise of Stock Appreciation Rights Related to Options. Upon the exercise of a Stock Appreciation Right related to an Option, the holder will be entitled to receive payment of an amount determined by multiplying: |
(i) | the excess of the Fair Market Value of a share of Company Stock on the date of exercise of such Stock Appreciation Right over the option exercise price specified in the related Option; by |
(ii) | the number of shares as to which such Stock Appreciation Right is exercised. |
(e) | Exercise of Stock Appreciation Rights Not Related to Options. A Stock Appreciation Right granted without relationship to an Option will entitle the holder, upon exercise of the Stock Appreciation Right, to receive payment of an amount determined by multiplying: |
(i) | the excess of: (A) the Fair Market Value of a share of Company Stock on the date of exercise of such Stock Appreciation Right; over (B) the greater of the Fair Market Value of a share of Company Stock on the date the Stock Appreciation Right was granted or such greater amount as may be set forth in the applicable Agreement; by |
(ii) | the number of shares as to which such Stock Appreciation Right is exercised. |
(f) | Limitations on Amounts Payable. Notwithstanding subsections (d) and (e) above, the Committee may place a limitation on the amount payable upon exercise of a Stock Appreciation Right. Any such limitation must be determined as of the date of grant and noted in the applicable Agreement. |
(g) | Effect of Termination of Employment (or Provision of Services). Unless otherwise provided by the Committee, in the event that the employment of a Participant with the Company and its Affiliates (or the Participant’s service to the Company and its Affiliates) shall terminate for any reason other than Cause, death or disability, then: (i) each Stock Appreciation Right granted to such Participant, to the extent that it is exercisable at the time of such termination, shall remain exercisable for the one year period following such termination, but in no event following the expiration of its term; and (ii) each Stock Appreciation Right that remains unexercisable as of the date of such a termination shall be terminated at the time of such termination. In the event that the employment of a Participant with the Company and its Affiliates (or the Participant’s service to the Company and its Affiliates) shall terminate on account of the death or disability of the Participant, except as otherwise determined by the Committee, all Stock Appreciation Rights held by the Participant immediately prior to the Participant’s death or disability, as the case may be, to the extent then exercisable, may be exercised by the Participant or by the Participant’s legal representative, executor, administrator or transferee by will or the laws of descent and distribution, at any time within the one year period ending on the first anniversary of the Participant’s |
9. | Restricted Stock. |
(a) | Price. At the time of the grant of shares of Restricted Stock, the Committee shall determine the price, if any, to be paid by the Participant for each share of Restricted Stock subject to the Award. |
(b) | Vesting Date. At the time of the grant of shares of Restricted Stock, the Committee shall establish a vesting date or vesting dates with respect to such shares. The Committee may divide such shares into classes and assign a different vesting date for each class. Provided that all conditions to the vesting of a share of Restricted Stock are satisfied, and subject to Section 9(h), upon the occurrence of the vesting date with respect to a share of Restricted Stock, such share shall vest and the restrictions of Section 9(d) shall lapse. |
(c) | Conditions to Vesting. At the time of the grant of shares of Restricted Stock, the Committee may impose such restrictions or conditions to the vesting of such shares as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Performance Goals. The Committee may also provide that the vesting or forfeiture of shares of Restricted Stock may be based upon the achievement of, or failure to achieve, certain levels of performance and may provide for partial vesting of Restricted Stock in the event that the maximum level of performance is not met if the minimum level of performance has been equaled or exceeded. |
(d) | Restrictions on Transfer Prior to Vesting. Prior to the vesting of a share of Restricted Stock, such Restricted Stock may not be transferred, assigned or otherwise disposed of, and no transfer of a Participant’s rights with respect to such Restricted Stock, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Immediately upon any attempt to transfer such rights, such shares, and all of the rights related thereto, shall be forfeited by the Participant. |
(e) | Voting Rights; Dividends on Restricted Stock. Unless the Committee determines otherwise, a Participant who has been awarded shares of Restricted Stock shall be entitled to vote such shares. The Company shall pay to each Participant, in cash, any dividends paid on Restricted Stock awarded to such Participant. Such payment shall be made on the date that such dividend would be paid to the Company’s stockholders, generally; provided, however, that if the vesting of any shares of Restricted Stock awarded to a Participant is based on achievement of |
(f) | Book Entry. Unless otherwise determined by the Committee, the shares of Company Stock underlying Restricted Stock awards shall be registered by the Company in book entry form, with such notation specifying that such shares are not transferable and are subject to the provisions of the Plan and the restrictions, terms and conditions set forth in the applicable Agreement as the Committee determines to be appropriate. The Committee may, upon such terms and conditions as it determines, provide that a certificate or certificates representing the shares underlying a Restricted Stock award shall be registered in the Participant’s name which shall: (i) bear an appropriate legend specifying that such shares are not transferable and are subject to the provisions of the Plan and the restrictions, terms and conditions set forth in the applicable Agreement; and (ii) shall be held in escrow by the Company on behalf of the Participant until such shares become vested or are forfeited. |
(g) | Consequences of Vesting. Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions of Section 9(d) shall lapse with respect to such share. Following the date on which a share of Restricted Stock vests, the Company shall cause to be entered on the books of the Company's transfer agent an entry reflecting the lapse of such restrictions with respect to such share of Restricted Stock vested in the name of the Participant. |
(h) | Effect of Termination of Employment (or Provision of Services). Unless otherwise provided by the Committee, upon the termination of a Participant’s employment with the Company and its Affiliates for any reason other than death or disability, any and all shares to which restrictions on transferability apply shall be immediately forfeited by the Participant and transferred to, and reacquired by, the Company. In the event of a forfeiture of shares pursuant to this Section 9(h), the Company shall repay to the Participant (or the Participant’s estate) any amount paid by the Participant for such shares. In the event that the Company requires a return of shares, it shall also have the right to require the return of all dividends paid on such shares, whether by termination of any escrow arrangement under which such dividends are held or otherwise. In the event that the employment of a Participant with the Company and its Affiliates (or the Participant’s service to the Company and its Affiliates) shall terminate on account of the death or disability: |
(i) | all shares of Company Stock subject to restrictions on transferability as set forth in Section 9(d), the vesting of which is not subject to the achievement of Performance Goals, shall no longer be subject to any restrictions on transferability; and |
(ii) | all shares of Company Stock subject to restrictions on transferability, the vesting of which is subject to the achievement of Performance Goals, shall continue to be subject to such restrictions on transferability unless and until the conditions of vesting of such Company Stock contained in the |
10. | Restricted Stock Units. |
(a) | Vesting Date. At the time of the grant of an Award of Restricted Stock Units, the Committee shall establish a vesting date or vesting dates with respect to such Restricted Stock Units. The Committee may divide such Restricted Stock Units into classes and assign a different vesting date for each class. Provided that all conditions to the vesting of a Restricted Stock Unit imposed pursuant to Section 10(d) are satisfied, and subject to Section 10(e), upon the occurrence of the vesting date with respect to a Restricted Stock Unit, such Unit shall vest. |
(b) | Settlement of Awards. Following the vesting of a Participant’s Restricted Stock Units, the Participant shall be paid, at such time or times as shall be set forth in the Award Agreement, a number of shares of Company Stock equal to the number of the Restricted Stock Units, or, only if and to the extent set forth in the Award Agreement, the Fair Market Value of an equal number of shares of Company Stock in cash, or a combination thereof. |
(c) | Dividend Equivalents. If so provided in the Award Agreement, following the vesting of a Restricted Stock Unit, the Participant shall also be entitled to dividend equivalents as follows: (i) an amount equal to the aggregate dividends paid with respect to a share of Company Stock during the period commencing on the date on which the Restricted Stock Unit was granted and terminating on the date on which the Participant is entitled to settlement of such Restricted Stock Unit; or (ii) the Fair Market Value of that number of shares of Company Stock that would have been payable had the aggregate dividends paid with respect to a share of Company Stock during the period commencing on the date on which the Restricted Stock Unit was granted and terminating on the date on which the Participant is entitled to settlement of such Restricted Stock Unit been immediately reinvested in Company Stock on the dividend payment date. Any such dividend equivalents shall be payable either in cash or shares of Company Stock, with any fractional shares payable in cash, and at such time or times, as is provided in the applicable Agreement. |
(d) | Conditions to Vesting. At the time of the grant of an Award of Restricted Stock Units, the Committee may impose such restrictions or conditions to the vesting of such Restricted Stock Units as it, in its absolute discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Performance Goals. |
(e) | Effect of Termination of Employment (or Provision of Services). All Restricted Stock Units held by a Participant which are not vested upon the termination of such Participant’s employment with the Company and its Affiliates (or upon |
11. | Stock Grants. |
12. | Other Awards. |
13. | Special Provisions Regarding Certain Awards. |
14. | Change in Control. |
(a) | the Participant’s Restricted Stock that was forfeitable shall thereupon become nonforfeitable; |
(b) | any unexercised Option or Stock Appreciation Right, whether or not exercisable on the date of such Change of Control, shall thereupon be fully exercisable and may be exercised, in whole or in part; and |
(c) | any other Award granted pursuant to the Plan, to the extent not previously vested, shall thereupon become fully vested. |
15. | Rights as a Stockholder. |
16. | No Employment Rights; No Right to Award. |
17. | Securities Matters. |
(a) | Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause its transfer agent to enter in its records the transfer of shares of Company Stock to any person or to be issued or delivered any certificates evidencing shares of Company Stock pursuant to the Plan unless and until the Company is advised by its counsel (which may be the Company’s in-house counsel) that such book entry or such issuance and delivery of certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Company Stock are traded. The Committee may require, as a condition of such book entry or issuance and delivery of certificates evidencing shares of Company Stock pursuant to the terms hereof, that the recipient of such shares make such agreements and representations, and that such book entry contain such notations or that such certificates bear such legends, as the Committee, in its sole discretion, deems necessary or advisable. |
(b) | The transfer of any shares of Company Stock hereunder shall be effective only at such time as counsel to the Company (which may be the Company’s in-house counsel) shall have determined that the issuance and delivery of such shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Company Stock are traded. The Committee may, in its sole discretion, defer the effectiveness of any transfer of shares of Company Stock hereunder in order to allow the issuance of such shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Participant in writing of its decision to defer the effectiveness of a transfer. During the period of such deferral in connection with the exercise of an Option, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto. |
18. | Withholding Taxes. |
19. | Notification of Election Under Section 83(b) of the Code. |
20. | Amendment or Termination of the Plan. |
21. | Nontransferability of Awards. |
(a) | Except as provided below, each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant’s lifetime, or, if permissible under applicable law, by the Participant’s guardian or legal representative. |
(b) | Except as provided below, no Award, and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. |
(c) | To the extent and in the manner permitted by the Committee, and subject to such terms, conditions, restrictions or limitations that may be prescribed by the Committee, a Participant may transfer an Award (other than an Incentive Stock Option) to: (i) a spouse, sibling, parent, stepparent, child, stepchild, grandchild, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships (any of which, an “Immediate Family Member”) of the Participant; (ii) a trust, the primary beneficiaries of which consist exclusively of the Participant or Immediate Family Members of the Participant; or (iii) a corporation, partnership or similar entity, the owners of which consist exclusively of the Participant or Immediate Family Members of the Participant. |
22. | Leaves of Absence. |
23. | Expenses and Receipts. |
24. | Effective Date and Term of Plan. |
25. | Applicable Law. |
26. | Participant Rights. |
27. | Unfunded Status of Awards. |
28. | No Fractional Shares. |
29. | Beneficiary. |
30. | Severability. |
31. | 409A Compliance. |
1. | Purpose. |
2. | Definitions. |
3. | Administration. |