Exhibit 10.28
THE HANOVER INSURANCE GROUP,
INC.
NON-EMPLOYEE DIRECTOR DEFERRAL
PLAN
ARTICLE 1
NAME AND PURPOSE
The Hanover Insurance Group, Inc.
(the “ Company ”) hereby establishes The
Hanover Insurance Group, Inc. Non-Employee Director Deferral Plan
(the “ Plan ”). The purpose of the Plan
is to provide a means for the elective Deferral of Compensation to
Non-Employee Directors of the Company.
ARTICLE 2
DEFINITIONS
When used in the Plan, the following
terms shall have the definitions set forth in this Article
2:
“ Annual Cash
Retainer ” means the annual fee payable in cash to a
Non-Employee Director in consideration for his or her service to
the Board and its committees. The Annual Cash Retainer shall be
deemed to include any supplemental annual cash retainers paid for
service as a Chairperson of the Board or any of its
committees.
“ Annual Stock
Retainer ” means the annual fee payable in Stock to a
Non-Employee Director in consideration for his or her service to
the Board and its committees.
“ Affiliate
” means any corporation which is included in a controlled
group of corporations (within the meaning of Code
Section 414(b)) which includes the Company and any trade or
business (whether or not incorporated) which is under common
control with the Company (within the meaning of Code
Section 414(c)).
“ Beneficiary
” means the beneficiary or beneficiaries (including any
contingent beneficiary or beneficiaries) designated by the
Participant pursuant to Article 6 hereof.
“ Board ”
means the Board of Directors of the Company.
“ Code ”
means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
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“ Compensation ” means
the Annual Cash Retainer, Annual Stock Retainer, Meeting Fees and
all other compensation payable to a Non-Employee Director for his
or her service to the Board and its committees.
“ Deferrals
” means elective deferrals of Compensation payable to a
Participant, plus all accrued earnings thereon, as described in
Article 5 hereof.
“ Deferral
Accounts ” means the separate Cash Deferral Account
and/or Stock Deferral Account described in Article 7 hereof which
are established under the Plan for each Participant. When used in
the singular, the term shall refer to one of these accounts, as the
context requires.
“ Elected Payment
Date ” means the date set forth on a
Participant’s Election Form indicating when the Participant
will receive a lump sum payment of the Deferral, or in the case of
an installment payment election, the date the installment payments
of the Deferral shall commence. Notwithstanding the foregoing or
any language to the contrary set forth on any Participant’s
Election Form filed on or before December 31, 2007, if a
Participant elected to be paid (or for payments to commence) upon
“Retirement Due to the Attaining of Age 70”,
“Retirement” or “Retirement Pursuant to Board
Policy”, each of those terms shall be interpreted to mean
“Mandatory Retirement Age”, as defined
herein.
“ Mandatory Retirement
Age ” means, for purpose of this Plan only, with
respect to an individual Participant, the date on which the
Participant attains the age of seventy (70); provided ,
however , that if such Participant was initially elected or
appointed to the Board on or after the date on which the
Participant attained the age sixty-five (65), then the term
“Mandatory Retirement Age”, with respect to such
Participant, shall be the date on which such Participant attains
the age of seventy-two (72).
“ Meeting Fees
” means the Board and committee meeting fees payable in
respect of the Non-Employee Director’s attendance at such
meetings.
“ Non-Employee
Director ” means each member of the Board who is not
an employee of the Company or any of its Affiliates.
“ Participant
” means an individual described in Article 4
hereof.
“ Plan
Administrator ” means the Compensation Committee of
the Board or any person or persons, group or entity designated by
the Compensation Committee to perform one or more of the duties of
the Plan Administrator.
“ Plan Year
” means a calendar year.
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“ Stock ” means the
common stock of the Company.
“ Termination of Board
Membership ” means, with respect to a Participant,
and subject to the provisions of Article 8(d), the date on which a
Participant ceases to be a member of the Board, provided ,
however , that such cessation constitutes a separation from
service from the Company and its Affiliates that meets the
requirements of Treasury Regulation
Section 1.409A-1(h).
ARTICLE 3
EFFECTIVE DATE
The Plan is effective as of
January 1, 2005 (the “ Effective Date
”). The terms of the Plan apply to all elective Deferrals of
Compensation made by Non-Employee Directors that were not, as of
December 31, 2004, fully vested and earned. Accordingly, the
provisions of the Plan shall supersede the terms and conditions of
such elective Deferrals, including the terms of any applicable
deferral agreement, to the extent any such terms and conditions are
inconsistent with the provisions of this Plan; provided that, if
the provisions of this Plan would result in the acceleration of any
payment of deferred compensation into 2008, then such payment shall
instead be made during the period beginning on January 1, 2009
and ending January 31, 2009.
All elective deferrals of
Compensation made by Non-Employee Directors that were earned and
vested as of December 31, 2004, shall not be subject to this
Plan and shall be separately accounted for and paid at such time
and in such form as is provided for in accordance with the terms of
the applicable election forms and/or deferral
agreements.
ARTICLE 4
PARTICIPATION
Each Non-Employee Director who is
currently serving or who is hereafter elected or appointed to serve
as a Non-Employee Director, as the case may be, and who makes a
written election to defer Compensation in accordance with the
provisions of Article 5, shall be a Participant in this
Plan.
ARTICLE 5
DEFERRAL ELECTIONS
(a) Pursuant to the terms of this
Plan, a Non-Employee Director may make a written election to defer
all or a portion of (i) the Annual Cash Retainer,
(ii) the Annual Stock Retainer, (iii) Meeting Fees, and
(iv) any other
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compensation payable in respect of the
Non-Employee Director’s service on the Board. A Non-Employee
Director’s written deferral election may apply to one or more
of the foregoing categories of Compensation and may range from 50%
to 100% of such category of Compensation as elected by the
Non-Employee Director. Each deferral election shall be made by the
submission of a written form approved by the Plan Administrator for
this purpose (an “ Election Form ”). The
Election Form shall indicate: (v) the category of Compensation
to be deferred, (w) the amount of the Deferral, (x) if
permitted, whether or not the Deferral of Compensation which is
otherwise payable in cash, is to be deferred and converted into
shares of Stock, (y) the Elected Payment Date, and
(z) the form of the distribution (a lump-sum or in up to ten
(10) annual installments) for the Deferral. If a Non-Employee
Director fails to elect a payment option, an Elected Payment Date,
or elects the annual installment payment option, but does not
specify the period over which such annual installments will be
paid, any amount credited to his or her Cash Deferral Account and
Stock Deferral Account with respect to such deferral election shall
be distributed in accordance with Article 8 hereof. Each deferral
election for the Plan Year to which such election applies shall be
made by the submission of an Election Form as follows:
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(i)
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By not later than
December 31 st , each Non-Employee Director may
submit an Election Form which will be given effect with respect to
Compensation earned by the Non-Employee Director for the subsequent
Plan Year. A separate Election Form must be submitted for each Plan
Year the Non-Employee Director intends to make Compensation
deferrals hereunder. For purposes of any Deferral, Annual Cash
Retainers are deemed “earned and vested” when such
amounts would otherwise be paid, Annual Stock Retainers are deemed
“earned and vested” when such amounts would otherwise
be paid and Meeting Fees are deemed “earned and vested”
in the year in which the meeting occurred.
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(ii)
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Each
Non-Employee Director initially elected or appointed to the Board
during a Plan Year may submit an Election Form for such Plan Year
no later than thirty (30) days after the earlier of
(A) the date of the Non-Employee Director’s election or
appointment, or (B) the date the Non-Employee Director first
becomes eligible to participate in any arrangement for Directors
sponsored by the Company or an Affiliate that is an “elective
account balance plan” as such term is defined for purposes of
Code Section 409A (“ Initial Election
Period ”), which Election Form will be given effect
during such Plan Year with respect to Compensation earned by the
Non-Employee Director after the submission of the Election
Form.
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(iii)
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Any deferral
election made pursuant to subparagraph (i) and/or
(ii) above shall be irrevocable (x) on the last day of
the calendar year immediately preceding the Plan Year as to which
the election applies, or (y) on the last day of the Initial
Election Period, as applicable and shall remain in effect
throughout the Plan Year to which the election applies.
Notwithstanding the foregoing, any such deferral election shall not
apply to any Compensation earned by the Participant after the date
on which the Participant ceases to be a Non-Employee
Director.
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ARTICLE 6
BENEFICIARY
DESIGNATION
Each Participant may, at any time,
designate one or more Beneficiaries to receive amounts credited to
the Participant’s Deferral Accounts in the event of the
Participant’s death. A Participant may make an initial
Beneficiary designation, or change an existing Beneficiary
designation without the consent of the previously designated
Beneficiary, by completing and signing a Beneficiary Designation
Form and submitting it to the Plan Administrator before the
Participant’s death. Upon receipt by the Plan Administrator
of a Participant’s Beneficiary Designation Form, all
Beneficiary designations previously filed by that Participant shall
automatically be canceled.
ARTICLE 7
MAINTENANCE OF DEFERRAL
ACCOUNTS
Compensation may be deferred by a
Non-Employee Director under the Plan in the form of cash and/or
Stock. Compensation deferred by a Non-Employee Director under the
Plan shall be credited to record keeping accounts maintained by the
Company in the Participant’s name as follows:
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(a)
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CASH DEFERRALS.
Deferrals made in cash shall be credited to an account (“
Cash Deferral Account ”) as of the date on
which such Compensation would otherwise have been paid to the
Non-Employee Director. All amounts credited to a Non-Employee
Director’s Cash Deferral Account shall accrue interest from
the time such amounts would otherwise have been paid to the
Non-Employee Director until the date that such amounts cease
accruing interest in connection with a distribution pursuant to
Article 8. The interest rate shall be reset annually and shall
equal the GATT interest rate announced by the Internal Revenue
Service in November of each year for the following calendar year;
provided , however , if the GATT interest rate ceases
to exist, such interest rate shall equal the closing yield on a
U.S. Treasury Note with one-year remaining to maturity as of the
first business day of the calendar year. Interest in a Cash
Deferral Account shall be compounded annually as of the last day of
each Plan Year.
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(b)
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STOCK DEFERRALS. Deferrals made
in Stock or into Stock due to a cash conversion into Stock shall be
credited to an account (“ Stock Deferral
Account ”) as of the date that such Stock or cash
converted into Stock would have been awarded/paid to the
Non-Employer Director but for the election to defer. The value of a
share of Stock (a “ Share ”) as of the
close of trading as reported on the New York Stock
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Exchange on the date such
conversion occurs shall determine the number of Shares credited to
the Participant’s Stock Deferral Account as of such date. No
Participant shall have any rights as a shareholder of the Company
with respect to any Stock credited to his or her Stock Deferral
Account.
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Dividends with respect to any Stock
credited to a Participant’s Stock Deferral Account will be
credited as cash on the dividend payment date to the
Participant’s Cash Deferral Account (“ Deemed
Dividends ”) and shall accrue interest in the same
manner as other amounts credited to such account from such time
until such amounts cease accruing interest in connection with a
distribution pursuant to Article 8. Only whole shares of Stock may
be deferred. Any excess cash remaining after a conversion into
Shares shall be applied to a Participant’s Cash Deferral
Account.
The number of Shares allocated to a
Participant’s Stock Deferral Account shall be adjusted by the
Board, as it deems appropriate, to reflect stock dividends, stock
splits, reclassifications, spinoffs, and other extraordinary
distributions.
ARTICLE 8
METHOD OF DISTRIBUTION OF
DEFERRALS
No distribution of Deferrals may be
made except as provided in this Article 8.
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(i)
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The amount
credited to a Participant’s Cash Deferral Acc
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