THE HARTFORD FINANCIAL SERVICES GROUP, INC.
200,000 SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE
_____________________
THE HARTFORD RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
_____________________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THE PROSPECTUS COVERS SUCH ADDITIONAL SECURITIES AS MAY BE ISSUABLE AS
A RESULT OF ANTI-DILUTION PROVISIONS CONTAINED IN THE INSTRUMENTS PURSUANT TO
WHICH SECURITIES COVERED BY THE PROSPECTUS ARE ISSUED.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
FEBRUARY, 2003
TABLE OF CONTENTS
Page
General Information............................................................2
The Hartford Restricted Stock Plan for
Non-Employee Directors................................................3
Federal Tax Treatment.........................................................10
Administration of the Plan....................................................10
Resale Restrictions...........................................................11
Available Information.........................................................11
GENERAL INFORMATION
The Hartford Financial Services Group, Inc. (the "Company") is offering
up to 200,000 shares of its Common Stock, par value $.01 per share (the "Common
Stock"), pursuant to the The Hartford Restricted Stock Plan For Non-Employee
Directors (the "Plan"). Directors of the Company who are not employees of the
Company or any of its subsidiaries are eligible to participate in the Plan. As
more fully set forth in the Plan, a non-employee director's "annual retainer"
(as defined in the Plan) will be paid in the form of annual automatic grants of
shares of restricted Common Stock. The Plan is set forth below.
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THE HARTFORD RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
ARTICLE I -- PLAN ADMINISTRATION AND ELIGIBILITY
1.1 PURPOSE
The purpose of The Hartford Financial Services Group, Inc. Restricted Stock
Plan for Non-Employee Directors (the "Plan") is to attract and retain persons of
ability as directors of The Hartford Financial Services Group, Inc. (the
"Company") and to provide them with a closer identity with the interests of the
Company's stockholders by paying the Annual Retainer in common stock of the
Company subject to certain restrictions as described herein (the "Restricted
Stock").
1.2 ADMINISTRATION
The Plan shall be administered by the Compensation and Personnel Committee
of the Board of Directors (hereinafter referred to as the "Committee"). The
Committee shall have the responsibility of interpreting the Plan and
establishing and amending such rules and regulations necessary or appropriate
for the administration of the Plan. All interpretations of the Plan or any
Restricted Stock awards issued under it shall be final and binding upon all
persons having an interest in the Plan. No member of the Committee shall be
liable for any action or determination taken or made in good faith with respect
to this Plan or any award granted hereunder.
1.3 ELIGIBILITY
Directors of the Company who are not employees of the Company or any of its
subsidiaries shall be eligible to participate in the Plan.
1.4 STOCK SUBJECT TO THE PLAN
(a) The maximum number of shares which may be granted under the Plan shall
be 200,000 shares of common stock, par value $.01 per share, of the Company (the
"Stock").
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(b) If any Restricted Stock is forfeited by a Director in accordance with
the provisions of Section 2.2(c), such shares of Restricted Stock shall be
restored to the total number of shares available for grant pursuant to the Plan.
(c) Upon the grant of a Restricted Stock award the Company may distribute
newly issued shares or treasury shares, reacquired stock, stock purchased in the
open market, or any combination of the foregoing.
ARTICLE II -- RESTRICTED STOCK
2.1 RESTRICTED STOCK AWARDS
Restricted Stock awards shall be made automatically on the date of the
Annual Meeting of Stockholders, to each Director elected at the meeting or
continuing in office following the meeting. The award shall equal the number of
whole shares arrived at by dividing the Annual Retainer that is in effect for
the 12 month period beginning with the date of the Annual Meeting (the "Service
Year") by the Fair Market Value of the Company's common stock. Fractional shares
shall be paid in cash.
(a) "Annual Retainer" shall mean the amount that is payable to a Director
for service on the Board of Directors during the Service Year. Annual Retainer
shall not include fees paid for attendance at any Board or Committee meeting.
(b) "Fair Market Value" shall mean the average of the high and low prices
per share of the Company's common stock on the date of the Annual Meeting, as
reported by the New York Stock Exchange Composite Tape.
2.2 TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS
(a) Written Documentation -- Restricted Stock awards shall be evidenced by
such written notice, agreement or other documentation as the Committee deems
appropriate.
(b) Shares held in Escrow -- The Restricted Stock subject to such award
shall be registered in the name of the Director and held in escrow by the
Committee until the restrictions on such shares lapse as described below.
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(c) Restrictions -- Restricted Stock granted to a Director may not be sold,
assigned, transferred, pledged or otherwise disposed of, except by will or the
laws of descent and distribution, prior to the earliest of the following dates:
(1) The fifth anniversary of the date of grant.
(2) Retirement from the Board at age 72.
(3) A "Change of Control" of the Company. A "Change of Control" shall be
deemed to have occurred if:
(i) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities and Exchange
Act of 1934 (the "Act") disclosing that any Person (within the meaning of
Section 13(d) of the Act), other than the Company or a subsidiary of the
Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company is the Beneficial Owner of twenty percent or more
of the outstanding stock of the Company entitled to vote in the election of
directors of the Company;
(ii) any Person (within the meaning of Section 13(d) of the Act), other
than the Company or a subsidiary of the Company or any employee benefit plan
sponsored by the Company or a subsidiary of the Company shall purchase
shares pursuant to a tender offer or exchange offer to acquire any Stock of
the Company (or securities convertible into stock) for cash, securities or
any other consideration, provided that after consummation of the offer, the
Person in question is the Beneficial Owner (as defined in Section 2.2(f) of
this Plan) of fifteen percent or more of the outstanding stock of the
Company entitled to vote in the election of directors of the Company
(calculated as provided in paragraph (d) of Rule 13d-3 under the Act in the
case of rights to acquire stock);
(iii) the stockholders of the Company shall approve (A) any
consolidation or merger in which the Company is not the continuing or
surviving corporation or pursuant to which shares of stock of the Company
entitled to vote in the election of directors of the Company would be
converted into cash, securities or other property, other than a
consolidation or merger of the Company in which holders of such stock of the
Company immediately prior to the consolidation or merger have the same
proportionate ownership of common stock entitled to vote in the election of
directors of the surviving corporation immediately after the consolidation
or merger as immediately before, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company; or
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(iv) within any 12 month period, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of any successor to
the Company, provided that any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if such
director (A) was elected to the Board by, or on the recommendation of or
with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually or by prior operation of
this clause (iv), and (B) was not designated by a Person who has entered
into an agreement with the Company to effect a transaction described in the
immediately preceding clause (iii).
(4) Death of the Director.
(5) Disability of the Director, as defined in The Hartford Investment and
Savings Plan, as amended from time to time.
(6) Resignation by the Director under cases of special circumstances and
the Committee, in its sole discretion, consents to waive any remaining
restrictions.
(d) Dividends and Voting Rights -- The Director shall, subject to Section
2.2(c), possess all incidents of ownership of the shares of Restricted Stock
including the right to receive dividends with respect to such shares and to vote
such shares.
(e) The Company shall deliver to the Director, or the beneficiary of such
Director, if applicable, unrestricted certificates for all of the shares of
Stock that were awarded to the Director as Restricted Stock (a) immediately
following any lapse of restrictions on such shares pursuant to Section 2.2(c)(3)
hereof, or (b) within 30 days following any lapse of restrictions under the
remaining provisions of Section 2.2(c).
(f) Special Definitions for Change of Control. For purposes of Section
2.2(c)(3), the following special definitions apply:
(i) "Beneficial Owner" means any Person who, directly or indirectly,
has the right to vote or dispose of or has "beneficial ownership"
(within the meaning of Rule 13d-3 under the Act) of any securities of a
company, including any such right pursuant to any agreement,
arrangement or understanding (whether or not in writing), provided
--------
that: (i) a Person shall
----
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not be deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (A)
arising solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the Act and the applicable rules and regulations
thereunder, or (B) made in connection with, or to otherwise participate
in, a proxy or consent solicitation made, or to be made, pursuant to,
and in accordance with, the applicable provisions of the Act and the
applicable rules and regulations thereunder, in either case described
in clause (A) or (B) above, whether or not such agreement, arrangement
or understanding is also then reportable by such Person on Schedule 13D
under the Act (or any comparable or successor report); and (ii) a
Person engaged in business as an underwriter of securities shall not be
deemed to be the Beneficial Owner of any security acquired through such
Person's participation in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
(ii) "Person" has the meaning ascribed to such term in Section 3(a)(9)
of the Act, as supplemented by Section 13(d)(3) of the Act; provided,
however, that Person shall not include (i) the Company, any subsidiary
of the Company or any other Person controlled by the Company, (ii) any
trustee or other fiduciary holding securities under any employee
benefit plan of the Company or of any subsidiary of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of securities of the Company.
(g) In the event of a Change of Control, no amendment, suspension or
termination of the Plan thereafter shall impair or reduce the rights of any
person with respect to any award made under the Plan.
ARTICLE III -- GENERAL PROVISIONS
3.1 AUTHORITY
Appropriate officers of the Company designated by the Committee are
authorized to execute Restricted Stock agreements, and amendments thereto, in
the name of the Company, as directed from time to time by the Committee.
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3.2 ADJUSTMENTS IN THE EVENT OF CHANGE IN COMMON STOCK OF THE COMPANY
In the event of any reorganization, merger, recapitalization, consolidation,
liquidation, stock dividend, stock split, reclassification, combination of
shares, rights offering, split-up, or extraordinary dividend (including a
spin-off) or divestiture, or any other change in the corporate structure or
shares, the number and kind of shares which thereafter may be granted under the
Plan and the number of shares of Restricted Stock awarded pursuant to Section
2.1 with respect to which all restrictions have not lapsed, shall be
appropriately adjusted consistent with such change in such manner as the Board
in its discretion may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, Directors participating
in the Plan. Any fractional shares resulting from such adjustments shall be
eliminated.
3.3 RIGHTS OF DIRECTORS
The Plan shall not be deemed to create any obligation on the part of the
Board to nominate any Director for reelection by the Company's stockholders or
to retain any Director at any particular rate of compensation. The Company shall
not be obligated to issue Stock pursuant to an award of Restricted Stock for
which the restrictions hereunder have lapsed if such issuance would constitute a
violation of any applicable law. Except as provided herein, no Director shall
have any rights as a stockholder with respect to any shares of Restricted Stock
awarded to such Director.
3.4 BENEFICIARY
A Director may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. In the event of the death of a
Director, the Director's beneficiary shall have the right to receive the shares
of Restricted Stock awarded pursuant to the Plan. If no designated beneficiary
survives the Director, the executor or administrator of the Director's estate
shall be deemed to be the Director's beneficiary.
3.5 LAWS AND REGULATIONS
The Committee shall have the right to condition any issuance of shares to
any Director hereunder on such Director's undertaking in writing to comply with
such restrictions on the subsequent disposition of such shares as the Committee
shall deem necessary or advisable as a result of any applicable law or
regulation. The Committee may postpone the delivery of stock following the lapse
of restrictions with respect to awards of Restricted Stock for such time as the
Committee in its discretion may deem necessary, in order to permit the Company
with
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reasonable diligence (i) to effect or maintain registration of the Plan, or the
shares issuable upon the lapse of certain restrictions respecting awards of
Restricted Stock, under the Securities Act of 1933 or the securities laws of any
applicable jurisdiction, or (ii) to determine that such shares and the Plan are
exempt from such registration; the Company shall not be obligated by virtue of
any Restricted Stock agreement or any provision of the Plan to recognize the
lapse of certain restrictions respecting awards of Restricted Stock or issue
shares in violation of said Act or of the law of the government having
jurisdiction thereof.
3.6 AMENDMENT, SUSPENSION AND DISCONTINUANCE OF THE PLAN
The Board may from time to time amend, suspend or discontinue the Plan,
provided that the Board may not, without the approval of the holders of a
majority of the outstanding shares entitled to vote, take any action which would
cause the Plan to no longer comply with Rule 16b-3 under the Act, or any
successor rule or other regulatory requirement.
No amendment, suspension or discontinuance of the Plan shall impair a
Director's right under a Restricted Stock award previously granted to the
Director without the Director's consent.
3.7 GOVERNING LAW
This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Connecticut.
3.8 EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall be effective upon the Distribution Date, subject to the
approval of the Plan by the stockholders of the Company, and shall terminate on
December 31, 2005 (as defined in the Proxy Statement of ITT Corporation dated
August 30, 1995) provided that grants of Restricted Stock made prior to the
termination of the Plan may vest following such termination in accordance with
their terms.
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FEDERAL TAX TREATMENT
Set forth below is a summary of the federal income tax
consequences under the Internal Revenue Code of 1986, as amended (the "Code") of
the grant and vesting of restricted stock awarded to a director of the Company
("Director") under the Plan. The following summary does not include any
discussion of state, local or foreign income tax consequences or the effect of
gift, estate or inheritance taxes, any of which may be significant to a
particular Director eligible to receive an award. In addition, this summary does
not apply to every specific transaction that may occur. Each Director eligible
to receive an award should consult his or her tax advisor for precise advice
pertaining to his or her particular circumstances.
Under the Code, a Director normally will not realize taxable
income and the Company will not be entitled to a deduction upon the grant of
restricted stock. At the time the shares of restricted stock are no longer
subject to a substantial risk of forfeiture (as defined in the Code) or become
transferable, a Director will realize taxable ordinary income in an amount equal
to the fair market value of such number of shares of Common Stock which have
become nonforfeitable or transferable and the Company will be entitled to a
deduction in the same amount, provided the Company complies with applicable tax
withholding requirements. However, a Director may make an income recognition
election under Section 83(b) of the Code (an "83(b) Election") and recognize
taxable ordinary income in the year the shares of restricted stock are awarded
in an amount equal to their fair market value at the time of the award,
determined without regard to the restrictions. In that event, the Company will
be entitled to a deduction in such year in the same amount, provided the Company
complies with applicable tax withholding requirements, and any gain or loss
realized by the employee upon the subsequent disposition of Common Stock will be
capital gain or loss and will not result in any further deduction to the
Company. Any dividends with respect to the shares of restricted stock that are
paid or made available to a Director who has not made an 83(b) Election while
the shares remain forfeitable are treated as additional compensation taxable as
ordinary income to the Director and deductible by the Company when paid. If an
83(b) Election has been made with respect to the restricted stock, the dividends
represent ordinary dividend income to the Director and are not deductible by the
Company. If the Director makes an 83(b) Election and subsequently forfeits the
shares of restricted stock, the Director is not entitled to a deduction as a
consequence of such forfeiture, and the Company must include as ordinary income
the amount it previously deducted in the year of grant with respect to such
shares.
ADMINISTRATION OF THE PLAN
The Plan is not subject to the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The Compensation and Personnel
Committee of the Board of Directors administers the Plan but does not act as a
trustee or in any other fiduciary capacity with respect thereto.
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RESALE RESTRICTIONS
The Plan contains no restrictions on the resale of Common
Stock after the restriction period ends. However, affiliates of the Company,
which may include Directors of the Company, may not reoffer or resell shares of
Common Stock in a transaction which is not registered under the Securities Act
except pursuant to Rule 144 under such Act or another exemption thereunder. Rule
144 requires, among other things, that (1) any sales of Common Stock by a
Director must be through a broker, and (2) SEC Form 144 must be mailed to the
SEC prior to or concurrently with the placing of a sell order with the broker if
the amount sold during any three month period exceeds 500 shares or has an
aggregate sale price of more than $10,000.
AVAILABLE INFORMATION
The Company will provide, without charge, upon the written or oral
request of any person to whom this Prospectus is delivered, a copy of any of the
following documents, all of which are incorporated by reference in this
Prospectus:
(a) The Company's latest annual report filed pursuant to sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(b) All other reports filed by the Company pursuant to sections 13(a),
13(c), 14 and 15(d) of the Exchange Act since the end of the fiscal
year covered by the annual report referred to in (a) above; and
(c) The description of the Common Stock contained in a registration
statement filed under the Exchange Act, and any amendment or report
filed to update such description.
In addition, the Company will provide, without charge, upon the written
or oral request of any person to whom this Prospectus is delivered, the
following documents:
(a) When updating information is furnished, a copy of all
documents previously delivered containing Plan information
that then constitute part of this Prospectus; and
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(b) A copy of whichever of the following was previously
distributed pursuant to Rule 428(b)(2) under the Securities
Act of 1933, as amended (the "Securities Act"):
(i) The Company's annual report to stockholders
containing the information required by Rule 14a-3(b)
under the Exchange Act for its latest fiscal year;
(ii) The Company's annual report on Form 10-K for its
latest fiscal year; or
(iii) The latest prospectus filed pursuant to Rule 424(b)
under the Securities Act that contains audited
financial statements for the Company's latest fiscal
year.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this Prospectus modifies
or supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
All requests for documents, as well as for other information
concerning the Plan and its administrators, should be directed to Phillip
Savage, The Hartford Financial Services Group, Inc., Hartford Plaza, Hartford,
Connecticut 06115, telephone (203) 547-5000.
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