Exhibit 10(iii)(c)
As amended and restated 12/23/96
THE HARTFORD STEAM BOILER INSPECTION
AND INSURANCE COMPANY
SHORT-TERM INCENTIVE PLAN
1. Purpose of Plan
The purposes of this Plan are: (a) to provide an additional incentive
for officers of the Company to make significant contributions to the
performance and growth of the Company, and (b) to attract and retain in
the employ of the Company employees of exceptional ability.
2. Administration
The Plan shall be administered by the Human Resource Committee (the
"Committee") of the Board of Directors. The Committee is authorized to
interpret the Plan and may from time to time adopt such rules and
regulations for carrying out the Plan as it may deem appropriate.
Decisions of the Committee will be final, conclusive and binding upon
all parties concerned, unless otherwise determined by uninterested
members of the Board of Directors.
3. Eligibility
Those employees who are Officers of the Company (other than any
individual expressly excluded by the Committee) on or prior to December
31 of each Plan Year are eligible to participate in the Plan and receive
Incentive Awards pursuant to Section 5 except as provided in Section 7.
The Committee may in its discretion designate other key employees to
participate in the Plan. Eligibility will be determined at the close of
each Plan Year. (Plan years will be based on calendar years.)
4. Basis of Incentive Awards
(a) The basis for determining awards will be the actual percentage of
Annual Budgeted Net Income Per Share (cited in the Business Plan
of the Company) achieved in a given year. ("Net Income" is
defined as after-tax income per share, consolidating all
subsidiaries, inclusive of realized capital gains and losses.)
(b) The Committee reserves the right to modify the basis of the
incentive awards for each Plan Year as it deems equitable in
recognition of extraordinary or non-recurring events experienced
by the Company during the year or in the event of changes in
applicable accounting rules, principles or methods employed by
the Company.
5. Incentive Awards
(a) At the end of each Plan Year the Committee will determine the
incentive award percentages for Senior Officers (defined as
President, Executive Vice President, Senior Vice President,
Corporate Secretary and Treasurer) and Non-Senior Officers for
the Incentive Award Pool from the range of awards provided in
subsection (b) below. The award percentages selected from within
the applicable range for each group will be based upon the
performance of the Company for the Plan Year as compared to the
performance of the insurance industry and/or other appropriate
industries with reference to such performance measures as the
Committee deems appropriate. The applicable incentive award
percentage for Senior Officers shall be multiplied by the sum of
all of the Senior Officers' (with the exception of the
President's) Base Earnings and the applicable award percentage
for Non-Senior Officers shall be multiplied by the sum of all
other eligible participants' Base Earnings and the aggregate of
these two amounts will be the Incentive Award Pool. ("Base
Earnings" shall mean the base annual salary of the participant in
effect on December 31st of the Plan Year for which the award is
being determined, and shall not include amounts payable under
Company benefit, incentive or bonus plans or overseas premiums.)
The Incentive Award Pool will be the maximum amount of awards
available under the plan for participants, other than the
President, for the Plan Year. Awards shall be payable in cash in
accordance with Section 6 hereof. A Senior Officer's, other than
the President's, individual award shall be a percentage between 0
and 100% of his or her Base Earnings. An Officer's (other than a
Senior Officer's) or any other participant's individual award
shall be a percentage between 0 and 60% of his or her Base
Earnings. The amount of any award hereunder, other than the
President's award, shall be determined by, and shall be entirely
within the discretion of, the President and shall be based on the
participant's contributions to the Company during the Plan Year.
Under no circumstances shall a participant who receives a
performance rating that is lower than "Meets Requirements" on his
or her last performance appraisal be considered for an award
hereunder. The President's award shall be determined by the
Committee and shall not exceed 100% of his Base Earnings.
(b) For each Plan Year the incentive award percentage to be used for
determining the Incentive Award Pool shall be based on the
following table:
% of Budgeted Net Income per Share Achieved*
* (rounded up to the next whole percentage point)
121+ 110-120 100-109% 90-99% 75-89%
Senior Officer
Award % 70-100% 60-80% 40-60% 20-40% 0-20%
Non-Senior
Officer
Award % 40-60% 40-60% 30-50% 20-40% 0-20%
(c) Any Participant newly elected by the Board of Directors during
the Plan Year shall receive an Incentive Award calculated in
accordance with Paragraph (a) but such award will be reduced by
any bonuses paid to such officer during the Plan Year except for
bonuses paid during the Plan Year that relate to services
performed during a prior Plan Year.
6. Method and Time of Awards
(a) Distributions of incentive awards, net of amounts withheld for
income tax or other purposes, will be made in January of the year
immediately following the close of the current Plan Year. The
withholding and deduction requirements will be determined in
accordance with the then applicable practices of the Company as
well as reasonable instructions by the participants.
(b) Any participant may, with permission of the Committee, elect to
defer all or a specified part of each incentive award. The
election of the participant must be in writing and submitted to
the Secretary of the Company at least one month prior to the
beginning of the Plan Year. Payment of the award will be deferred
to such future time, not otherwise inconsistent with the Plan, as
the participant will have specified in such notice. The election
of the participant will be irrevocable. Interest shall be
computed on June 30th and December 31st of each year on the
balance in each participant's deferred cash account at a rate
equal to the rate of interest which is in effect on such dates
for 13 week U.S. Treasury Bills.
(c) Nothing contained in this Plan or in any resolution adopted or to
be adopted by the Board of Directors will constitute the granting
of an award hereunder. The granting of an award pursuant to the
Plan will take place only when authorized by the Committee and
the President as provided under Section 5 hereof. No award and no
rights of ownership thereunder will be transferable otherwise
than pursuant to Section 8.
7. Rights on Termination of Employment
(a) If a participant in this Plan dies, becomes disabled or retires
under a retirement plan of the Company or otherwise terminates
his or her employment with the written consent of the Company
prior to the end of any Plan Year in respect of which he or she
may be eligible for an award, the amount of the award, if any,
payable to the participant or his or her beneficiary, shall be at
the sole discretion of the President (or the Committee with
respect to the President).
(b) A participant whose employment terminates by dismissal with or
without cause, or who voluntarily terminates his or her
employment without consent prior to the expiration of a Plan
Year, will not be entitled to receive an award under the Plan.
(c) In no event shall an award or a portion thereof, the payment of
which has been deferred pursuant to Section 6(b) be subject to
forfeiture.
8. Death of a Participant
A participant may file with the Secretary of the Company a designation
of a beneficiary or beneficiaries on a form to be provided by him or
her, which designation may be changed or revoked by the participant's
sole action, provided that the change or revocation is filed with the
Secretary on a form provided by him or her. In case of the death of the
participant, before or after termination of employment, any award to
which he or she is entitled and any deferred portions of a deceased
participant's award shall be delivered to the beneficiary or
beneficiaries so designated or, if no beneficiary has been designated or
survives such participant, will be delivered to, or in accordance with
the directions of, the executor or administrator of such participant's
estate.
9. Effective Date
This Plan will become effective as of January 1, 1982.
10. Change in Control
(a) In the event of a Change in Control of the Company, this Plan
shall continue to be binding upon the Company, any successor in
interest to the Company and all persons in control of the Company
or any successor thereto and no transaction or series of
transactions shall have the effect of reducing or cancelling the
award of a participant that has been declared but not received
unless consented to in writing by such affected participant. The
following definitions shall apply in connection with the
determination of a "Change in Control" under the Plan:
(i) "Affiliate" shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the
Exchange Act.
(ii) "Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
(iii) "Change in Control" shall be deemed to have
occurred if the events set forth in any one of the
following paragraphs shall have occurred:
(A) any Person is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company (not including in
the securities beneficially owned by such
Person any securities acquired directly from
the Company or its affiliates) representing
25% or more of the combined voting power of
the Company's then outstanding securities,
excluding any Person who becomes such a
Beneficial Owner in connection with a
transaction described in clause (i) of
paragraph (C) below; or
(B) the following individuals cease
for any reason to constitute a majority of
the number of directors then serving:
individuals who, on December 23, 1996,
constitute the Board and any new director
(other than a director whose initial
assumption of office is in connection with
an actual or threatened election contest,
including but not limited to a consent
solicitation, relating to the election of
directors of the Company) whose appointment
or election by the Board or nomination for
election by the Company's shareholders was
approved or recommended by a vote of at
least two-thirds (2/3) of the directors then
still in office who either were directors on
December 23, 1996 or whose appointment,
election or nomination for election was
previously so approved or recommended; or
(C) there is consummated a merger
or consolidation of the Company or any
direct or indirect subsidiary of the Company
with any other corporation, other than (i) a
merger or consolidation which would result
in the voting securities of the Company
outstanding immediately prior to such merger
or consolidation continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the
surviving entity or any parent thereof), in
combination with the ownership of any
trustee or other fiduciary holding
securities under an employee benefit plan of
the Company or any subsidiary of the
Company, at least 60% of the combined voting
power of the securities of the Company or
such surviving entity or any parent thereof
outstanding immediately after such merger or
consolidation, or (ii) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or
becomes the Beneficial Owner, directly or
indirectly, of securities of the Company
(not including in the securities
Beneficially Owned by such Person any
securities acquired directly from the
Company or its Affiliates) representing 25%
or more of the combined voting power of the
Company's then outstanding securities; or
(D) the shareholders of the Company approve
a plan of complete liquidation or
dissolution of the Company or there is
consummated an agreement for the sale or
disposition by the Company of all or
substantially all of the Company's assets,
other than a sale or disposition by the
Company of all or substantially all of the
Company's assets to an entity, at least 60%
of the combined voting power of the voting
securities of which are owned by
shareholders of the Company in substantially
the same proportions as their ownership of
the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall
not be deemed to have occurred by virtue of the consummation
of any transaction or series of integrated transactions
immediately following which the record holders of the common
stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.
(iv) "Company" shall mean The Hartford Steam Boiler
Inspection and Insurance Company and, except in determining
under this Plan whether or not any Change in Control of the
Company has occurred, shall include any successor to its
business and/or assets which assumes this Plan by operation
of law, or otherwise.
(v) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(vi)"Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include
(A) the Company or any of its subsidiaries, (B) a trustee or
other fiduciary holding securities under an employee benefit
plan of the Company or any of its Affiliates, (C) an
underwriter temporarily holding securities pursuant to an
offering of such securities, or (D) a corporation owned,
directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of
stock of the Company.
(b) As soon as practicable following a Change in Control, a
Participant shall be paid a lump sum amount in cash equal to the
award payable to the Participant where for purposes of
determining such award, the following are deemed to have
occurred: (i) 100% of the Budgeted Net Income for the Plan Year
in which the Change in Control occurs is achieved and pursuant to
the schedule of awards provided under Section 5(b) a 60%
incentive award for each Senior Officer (including the President)
and a 50% award for each other Officer is awarded and (ii) the
Change in Control occurs on the last day of the Plan Year. This
amount shall be paid in lieu of any other award payable hereunder
for the Plan Year within which the Change in Control occurs.
(c) As soon as practicable following a Change in Control, any awards
previously deferred by a Participant in accordance with Section
6(b) hereof, plus interest accrued thereon up until the date of
payment, shall be paid in full.
11. Unfunded Obligations; Trust Agreement
The Company will pay from its general assets all awards to be made
hereunder. However, the Company may in its discretion establish a trust,
escrow agreement or similar arrangement in order to aid the Company in
meeting its obligations hereunder.
Any assets transferred by the Company into any such arrangement shall
remain at all times assets of the Company and subject to the claims of
the Company's general creditors in the event of bankruptcy or insolvency
of the Company. No security interest in such assets shall be created in
a participant's favor and a participant's rights under this Plan and
under any such arrangement shall be those of a general unsecured
creditor of the Company.
12. Assignment and Alienation
Benefits under this Plan may not be anticipated, assigned (either at law
or in equity), alienated, or subjected to attachment, garnishment, levy,
execution or other legal or equitable process. If any Participant or
beneficiary under this Plan becomes bankrupt or attempts to anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge any benefit
under this Plan, such benefit shall, in the discretion of the Committee,
cease and terminate, in which event the Committee may hold or apply the
same or any part thereof for the benefit of such Participant, his
beneficiary, spouse, children, other dependents or any of such
individuals, in such proportion as the Committee may deem proper.