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THE CHUBB CORPORATION
INVESTMENT DEPARTMENT/
CHUBB ASSET MANAGERS, INC.
INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of The Chubb Corporation Investment
Department/Chubb Asset Managers, Inc. Incentive Compensation Plan
(the "Plan") is to provide annual and long-term cash incentives to key
employees of The Chubb Corporation Investment Department and Chubb
Asset Managers, Inc. (the "Company") which are competitive with
similar financial institutions in order to attract, retain and
motivate superior quality investment professionals.
2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective for the
fiscal year commencing January 1, 1987.
3. ADMINISTRATION. The Plan shall be administered by the Chief Financial
Officer and the Compensation Committee of The Chubb Corporation's
Board of Directors ("Compensation Committee") as set forth in the
Plan. Subject to the provisions of the Plan, the Compensation
Committee shall be authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan and
make all other determinations necessary or advisable for the
administration of the Plan. The determination of the Compensation
Committee in the administration of the Plan, as described herein,
shall be final and conclusive. The Compensation Committee may, in its
discretion, delegate its administrative authority as it deems proper
to the Chief Financial Officer, except that it may not delegate its
authority to approve target awards or to approve Award Determinations
which shall in all cases be made by the Compensation Committee.
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4. COVERED EMPLOYEES. Awards under the Plan for any fiscal year of the
Company may be granted to those key employees of the Company
("Participants") who shall be selected by the Chief Financial Officer
of the Company. The Chief Financial Officer will have absolute
discretionary authority to select Participants.
5. TARGET INCENTIVE DETERMINATION. As soon as practicable after the
beginning of each plan year, the Chief Financial Officer shall
designate a list of Participants for such plan year and designate
target awards by salary grade or such other standard as determined by
the Chief Financial Officer. Target Awards shall include an Annual
Segment and a Long-Term Segment which will be determined respectively
by measuring one-year and five-year performance of the Participants
and Company against certain indices which the Chief Financial Officer,
in his sole discretion, shall select. The Target Awards shall be
presented to the Compensation Committee at its March meeting by the
Chief Financial Officer for approval, or such other time during the
fiscal year as deemed appropriate.
6. INDIVIDUAL AWARD DETERMINATION. The Chief Financial Officer, in his
discretion, will recommend individual awards through a comparison of
the individual Participant's and Company's results against the
applicable indices. The individual award recommendations will be
presented to the Compensation Committee at its March meeting for the
preceding one year and five year periods.
a) Annual Award Segment - The Annual Award Segment will be
determined each year by measuring Participant's and Company's
results for the immediately preceding plan year.
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b) Long-Term Award Segment - The Long-Term Award Segment will be
determined each year based upon a comparison of the
Participant's and Company's cumulative results for each
preceding five-year period commencing with the five-year
period ending December 31, 1987. For the five-year periods
ending December 31, 1987, 1988 and 1989, the Long-Term Award
Segment will be phased in over a three-year period. As
measured against the applicable indices and subject to the
Chief Financial Officer's discretion, one-third of the
calculated Long-Term Segment will be recommended to the
Compensation Committee for the five-year period ending
December 31, 1987, two-thirds of the calculated Long-Term
Segment will be recommended to the Compensation Committee for
the five-year period ending December 31, 1988 and one hundred
percent of the calculated Long-Term Segment will be
recommended to the Compensation Committee for the five-year
period ending December 31, 1989.
7. AWARD PAYMENT. Annual award payments and Long-Term Award Payments
shall be made as follows:
a) Annual Award Payment. Individual Annual Award
Payments shall be paid in cash as soon as practicable
after approval by the Compensation Committee.
b) Long-Term Award Payment. Individual Long-Term Award
Payments shall be paid in cash three years following
approval by the Compensation Committee.
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provided, Participants meet all other eligibility requirements set forth in
this Plan.
8. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are
applicable to this Plan:
a) Except in the event of the death of a Participant, the rights
and interests of a Participant under the Plan may not be
assigned, encumbered or transferred.
b) No Participant, employee or other person shall have any claim
or right to be granted an Award under the Plan. Neither the
Plan nor any action taken thereunder shall be construed as
giving any employee or other person any right to continued
employment by the Company or any of its subsidiaries.
c) Payment values shall be treated as compensation under the
Excess Benefit Plan of The Chubb Corporation, Chubb & Son
Inc., and Participating Affiliates, but shall not be deemed
compensation in determining the amount of any entitlement
under any other employee benefit plan of the Company, unless
so provided under the terms of such plan.
d) The Company shall have the right to deduct from all Payments
made under the Plan any taxes required by law to be withheld
with respect to such Payments.
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e) The Plan shall be construed in accordance with and governed by
the laws of the state of New York.
f) Each Participant shall designate in a manner determined by the
Compensation Committee a beneficiary to receive Payments due
hereunder in the event of such Participant's death. If no
designated beneficiary survives the Participant, it shall be
the surviving spouse of the Participant or, if there is no
surviving spouse, it shall be the estate of the Participant.
g) Participants must be employed by the Company or one of its
subsidiaries as of the payment date to be eligible for Award
Payments, provided that if the Participant's employment is
terminated prior to the payment date by reason of death,
retirement on or after the Participant's normal retirement
date under the Company's Pension Plan, disability (as defined
in such Pension Plan), or any other reason with the consent of
the Compensation Committee, the Compensation Committee, in its
sole discretion, may provide for an Award Payment to that
Participant or the Participant's designated beneficiary, if
applicable.
h) For purposes of the Long-Term Segment, termination of
employment for any reason prior to the end of the first year
of a respective five-year period shall result in forfeiture of
all Payments to the terminated Participant for such five-year
period. If prior to the end of an applicable five-year period
but after the end of the first year of the period, a
Participant dies or ceases to be an employee by
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reason of retirement on or after the Participant's Normal Retirement Date under
the Company's Pension Plan, disability (as defined in such Pension Plan), or
for any other reason with the consent of the Compensation Committee, the
Participant, or in the case of death, the Participant's designated beneficiary,
shall be entitled to the Payment in an amount which would have been paid had
the Participant continued to be employed until the payment date for the
applicable five-year period multiplied by a fraction, (1) the numerator of
which shall be the number of full calendar months from the start of the
performance cycle, through the date of such death or termination of employment,
as the case may be, and (2) the denominator of which shall be 60; provided that
the Compensation Committee is authorized to declare that a Participant, or
designated beneficiary, is entitled to receive a greater amount, up to but not
exceeding the payment values which would have been paid had the Participant
continued to be employed for the applicable five-year period and through to the
applicable payment date. An accelerated payment of an Award under this
subsection (h) may be made at such time as the Compensation Committee deems
appropriate.