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Exhibit
10.34
Conformed Copy
ACE LIMITED 1998
LONG-TERM INCENTIVE
PLAN
(As Amended Through the
Fourth Amendment thereof, effective November 16,
2006)
SECTION 1
GENERAL
1.1. Purpose . The ACE
Limited Long-Term Incentive Plan (the “Plan”) has been
established by ACE Limited (the “Company”) to
(i) attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants, by means of appropriate
incentives, to achieve long-range goals; (iii) provide
incentive compensation opportunities that are competitive with
those of other similar companies; and (iv) further identify
Participants’ interests with those of the Company’s
other shareholders through compensation that is based on the
Company’s ordinary shares of stock; and thereby promote the
long-term financial interest of the Company and the Subsidiaries,
including the growth in value of the Company’s equity and
enhancement of long-term shareholder return.
1.2. Participation .
Subject to the terms and conditions of the Plan, the Committee
shall determine and designate, from time to time, from among the
Eligible Individuals (including transferees of Eligible Individuals
to the extent the transfer is permitted by the Plan and the
applicable Award Agreement), those persons who will be granted one
or more Awards under the Plan, and thereby become
“Participants” in the Plan. In the discretion of the
Committee, a Participant may be granted any Award permitted under
the provisions of the Plan, and more than one Award may be granted
to a Participant. Awards may be granted as alternatives to or
replacement of awards granted or outstanding under the Plan, or any
other plan or arrangement of the Company or a Subsidiary (including
a plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or a Subsidiary).
1.3. Operation,
Administration, and Definitions . The operation and
administration of the Plan, including the Awards made under the
Plan, shall be subject to the provisions of Section 4
(relating to operation and administration). Capitalized terms in
the Plan shall be defined as set forth in the Plan (including the
definition provisions of Section 8 of the Plan).
SECTION 2
OPTIONS AND
SARS
2.1. Definitions
.
| (a) |
The grant of an “Option” entitles the Participant
to purchase shares of Stock at an Exercise Price established by the
Committee. Any Option granted under this Section 2 may be
either an incentive stock option (an “ISO”) or a
non-qualified option (an “NQO”), as determined in the
discretion of the Committee. An “ISO” is an Option that
is intended to satisfy the requirements applicable to an
“incentive stock option” described in section 422(b) of
the Code. An “NQO” is an Option that is not intended to
be an “incentive stock option” as that term is
described in section 422(b) of the Code. |
| (b) |
A stock appreciation right (an “SAR”) entitles the
Participant to receive, in cash or Stock (as determined in
accordance with subsection 2.5), value equal to (or otherwise based
on) the excess of: (a) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee. |
2.2. Exercise Price .
The “Exercise Price” of each Option and SAR granted
under this Section 2 shall be established by the Committee or
shall be determined by a method established by the Committee at the
time the Option or SAR is granted; except that the Exercise Price
shall not be less than 100% of the Fair Market Value of a share of
Stock on the date of grant (or, if greater, the par value of a
share of Stock).
2.3. Exercise . An
Option and an SAR shall be exercisable in accordance with such
terms and conditions and during such periods as may be established
by the Committee.
2.4. Payment of Option
Exercise Price . The payment of the Exercise Price of an Option
granted under this Section 2 shall be subject to the
following:
| (a) |
Subject to the following provisions of this subsection 2.4, the
full Exercise Price for shares of Stock purchased upon the exercise
of any Option shall be paid at the time of such exercise (except
that, in the case of an exercise arrangement approved by the
Committee and described in paragraph 2.4(c), payment may be made as
soon as practicable after the exercise). |
| (b) |
The Exercise Price shall be payable in cash or by tendering, by
either actual delivery of shares or by attestation, shares of Stock
acceptable to the Committee, and valued at Fair Market Value as of
the day of exercise, or in any combination thereof, as determined
by the Committee. |
| (c) |
The Committee may permit a Participant to elect to pay the
Exercise Price upon the exercise of an Option by irrevocably
authorizing a third party to sell shares of Stock (or a sufficient
portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to
pay the entire Exercise Price and any tax withholding resulting
from such exercise. |
2.5. Settlement of
Award . Shares of Stock delivered pursuant to the exercise of
an Option or SAR shall be subject to such conditions, restrictions
and contingencies as the Committee may establish in the applicable
Award Agreement. Settlement of SARs may be made in shares of Stock
(valued at their Fair Market Value at the time of exercise), in
cash, or in a combination thereof, as determined in the discretion
of the Committee. The Committee, in its discretion, may impose such
conditions, restrictions and contingencies with respect to shares
of Stock acquired pursuant to the exercise of an Option or an SAR
as the Committee determines to be desirable.
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SECTION 3
OTHER STOCK
AWARDS
3.1. Definitions
.
| (a) |
A “Stock Unit” Award is the grant of a right to
receive shares of Stock in the future. |
| (b) |
A “Performance Share” Award is a grant of a right
to receive shares of Stock or Stock Units which is contingent on
the achievement of performance or other objectives during a
specified period. |
| (c) |
A “Performance Unit” Award is a grant of a right to
receive a designated dollar value amount of Stock which is
contingent on the achievement of performance or other objectives
during a specified period. |
| (d) |
A “Restricted Stock” Award is a grant of shares of
Stock, and a “Restricted Stock Unit” Award is the grant
of a right to receive shares of Stock in the future, with such
shares of Stock or right to future delivery of such shares of Stock
subject to a risk of forfeiture or other restrictions that will
lapse upon the achievement of one or more goals relating to
completion of service by the Participant, or achievement of
performance or other objectives, as determined by the
Committee. |
3.2. Restrictions on
Awards . Each Stock Unit Award, Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award and
Performance Unit Award shall be subject to the
following:
| (a) |
Any such Award shall be subject to such conditions,
restrictions and contingencies as the Committee shall
determine. |
| (b) |
The Committee
may designate whether any such Award being granted to any
Participant is intended to be “performance-based
compensation” as that term is used in section 162(m) of the
Code. Any such Awards designated as intended to be
“performance-based compensation” shall be conditioned
on the achievement of one or more Performance Measures, to the
extent required by Code section 162(m). The Performance Measures
that may be used by the Committee for such Awards shall be based on
any one or more of the following Company, Subsidiary, operating
unit or division performance measures, as selected by the
Committee: gross premiums written; net premiums written; net
premiums earned; net investment income; losses and loss expenses;
underwriting and administrative expenses; operating expenses; cash
flow(s); operating income; earnings before interest and taxes; net
income; stock price; dividends; strategic business objectives,
consisting of one or more objectives based on meeting specified
cost targets, business expansion goals, and goals relating to
acquisitions or divestitures; or any combination thereof. Each goal
may be expressed on an absolute and/or relative basis, may be based
on or otherwise employ comparisons based on internal targets, the
past performance of the Company and/or the past or current
performance of other companies, and in the case of earnings-based
measures, may use or employ comparisons relating to capital,
shareholders’ equity and/or shares outstanding, investments
or to assets or net assets. For Awards under this
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Section 3 intended to
be “performance-based compensation,” the grant of the
Awards and the establishment of the Performance Measures shall be
made during the period required under Code section
162(m).
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| (c) |
If the right to become vested in a Restricted Stock Award or
Restricted Stock Unit Award granted under this Section 3 is
conditioned on the completion of a specified period of service with
the Company or the Subsidiaries, without achievement of Performance
Measures or other performance objectives being required as a
condition of vesting, and without it being granted in lieu of other
compensation, then the required period of service for full vesting
shall be not less than three years (subject to acceleration of
vesting, to the extent permitted by the Committee, in the event of
the Participant’s death, disability, retirement, change in
control or involuntary termination). |
SECTION 4
OPERATION AND
ADMINISTRATION
4.1. Effective Date .
Subject to the approval of the shareholders of the Company at the
Company’s 1999 annual meeting of its shareholders, the Plan
shall be effective as of November 13, 1998 (the
“Effective Date”); provided, however, that to the
extent that Awards are granted under the Plan prior to its approval
by shareholders, the Awards shall be contingent on approval of the
Plan by the shareholders of the Company at such annual meeting. The
Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Awards under it
are outstanding; provided, however, that no Awards may be granted
under the Plan after the ten-year anniversary of the Effective
Date.
4.2. Shares Subject to
Plan . The shares of Stock for which Awards may be granted
under the Plan shall be subject to the following:
| (a) |
The shares of Stock with respect to which Awards may be made
under the Plan shall be currently authorized but unissued shares,
or shares purchased in the open market by a direct or indirect
wholly-owned subsidiary of the Company (as determined by the
Chairman or any Executive Vice President of the Company). The
Company may contribute to the subsidiary an amount sufficient to
accomplish the purchase in the open market of the shares of Stock
to be so acquired (as determined by the Chairman or any Executive
Vice President of the Company). |
| (b) |
Subject to this subsection 4.2, the number of shares of Stock
available for Awards under the Plan shall be
21,252,007. |
| (c) |
To the extent provided by the Committee, any Award may be
settled in cash rather than Stock. To the extent any shares of
Stock covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or the
shares of Stock are not delivered because the Award is settled in
cash or used to satisfy the applicable tax withholding obligation,
such shares shall not be deemed to have been delivered for purposes
of determining the maximum number of shares of Stock available for
delivery under the Plan. |
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| (d) |
If the exercise price of any Option granted under the Plan is
satisfied by tendering shares of Stock to the Company (by either
actual delivery or by attestation), only the number of shares of
Stock issued net of the shares of Stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares
of Stock available for delivery under the Plan. |
| (e) |
Subject to paragraph 4.2(f), the following additional maximums
are imposed under the Plan: |
(i) The maximum number of
shares of Stock that may be issued by Options intended to be ISOs
shall be 8,000,000 shares.
(ii) The maximum number of
shares that may be covered by Awards granted to any one individual
pursuant to Section 2 (relating to Options and SARs) shall be
6,000,000 shares during any one-calendar-year period.
(iii) The maximum number of
shares of Stock that may be issued in conjunction with Awards
granted pursuant to Section 3 (relating to Other Stock Awards)
shall equal the sum of 2,500,000 shares plus the number of shares
of Stock subject to Awards granted in replacement of awards given
up by persons who became employed by the Company and the
Subsidiaries in connection with the acquisition described in the
acquisition agreement dated as of January 11, 1999 by and
among the Company, CIGNA Corporation, and CIGNA Holdings,
Inc.
(iv) For Stock Unit Awards,
Restricted Stock Awards, Restricted Stock Unit Awards and
Performance Share Awards that are intended to be
“performance-based compensation” (as that term is used
for purposes of Code section 162(m)
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