Exhibit 10.29
THE HANOVER INSURANCE
GROUP
2009 SHORT-TERM INCENTIVE
COMPENSATION DEFERRAL AND CONVERSION PROGRAM
ARTICLE 1
Name, Purpose and Effective
Date
1.01 Name . This Program
shall be known as The Hanover Insurance Group 2009 Short-Term
Incentive Compensation Deferral and Conversion Program (the “
Program ”).
1.02 Purpose . To permit the
Company’s Chief Executive Officer (the “
CEO ”), and such other senior officers of the
Company selected by the CEO (together with the CEO, collectively,
“ Eligible Employees ”), to defer and
convert a portion of their 2009 Annual Short-Term Incentive
Compensation Program (“ 2009 IC Program
”) award, if and when awarded, into a number of restricted
stock units (“ RSUs ”) to be issued
pursuant to The Hanover Insurance Group, Inc. 2006 Long-Term
Incentive Plan (the “ 2006 Plan
”).
1.03 Effective Date . This
Program is effective December 8, 2008.
ARTICLE II
Definitions
Capitalized terms used without
definition herein shall have the meaning set forth in the 2006
Plan.
2.01 “15%
Premium” shall mean a sum equivalent to 15% of the Gross
Employee Deferral.
2.02 “409A Affiliate
” shall mean 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)).
2.03 “ Account ”
shall mean a special memorandum account created by the Company on
its books to reflect the RSUs or other amounts due to the
Participant pursuant to the terms of this Program.
2.04 “ Basic Deferred
Amount ” means the amount remaining after deducting any
applicable taxes from the Gross Employee Deferral.
2.05 “ Beneficiary
” shall mean any person, corporation or trust, or combination
of these, last designated by the Participant, in writing, and filed
with the Company by the Participant during his/her lifetime. Any
such designation or designations shall be revocable at any time or
times, without the consent of any beneficiary, by a written
instrument or nomination of beneficiary made by the Participant and
similarly filed with the Company by him/her during his/her
lifetime. In the absence of living designated beneficiaries, the
RSUs and any other sums due hereunder shall be distributed to the
Participant’s estate pursuant to the terms hereof in one
single distribution.
2.06 “ Deferred Dividend
Equivalent ” shall mean any Dividend Equivalents deferred
hereunder plus interest at the Interest Rate accrued on such
Dividend Equivalents compounded annually.
2.07 “ Dividend
Equivalents ” shall mean an amount equivalent to any
dividends declared in connection with Shares prior to the vesting
of the RSUs and subsequent issuance of the Shares.
2.08” Combined Deferred
Amount ” shall mean the Basic Deferred Amount and the 15%
Premium.
2.09 “ Company ”
The Hanover Insurance Group, Inc., a Delaware
corporation.
2.10 “ IC Payment
Date” shall mean the date the 2009 IC Program award would
otherwise be paid to a Participant had such Participant not elected
to defer and convert such award pursuant to the terms of the
Program.
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2.11 “ Interest ”
shall mean the amount credited to any Dividend Equivalents or
accrued interest payable in connection with amounts payable
pursuant to Section 4.06 of this Program.
2.12 “ Interest Rate
” shall mean the percentage used in determining the amount of
Interest each year. The Interest Rate shall be the annual GATT rate
of interest or a permissible equivalent rate determined by the
Company as set forth in IRS Notice 96-8. The applicable rate shall
be in effect for the succeeding calendar year.
2.13 “ Code ”
shall mean the Internal Revenue Code of 1986 (as
amended).
2.14 “ Gross Employee
Deferral ” shall mean the amount deferred as set forth on
the Participant’s Election Form, subject to the limitations
set forth in Section 3.01.
2.15 Participant ”
shall mean an Eligible Employee who makes a written election to
defer all or a portion of his/her 2009 IC Program award in
accordance with the provisions of Article III.
2.16 “S hares ”
shall mean the Stock issued pursuant to the RSUs.
2.17 “ Stock ”
shall mean the common stock of The Hanover Insurance Group,
Inc.
2.18 “ Termination of
Employment ” shall mean, with respect to a Participant
the date on which the Participant ceases to be employed by the
Company, provided , however , that such cessation
constitutes a separation from service from the Company and its 409A
Affiliates that meets the requirements of Treasury Regulation
Section 1.409A-1(h). A Participant’s employment by
Company or a 409A Affiliate shall be treated as continuing while
the Participant is on military leave, sick leave, or other bona
fide leave of absence, if the period of such leave does not exceed
six months, or if longer, so long as the Participant retains a
right to reemployment with Company or a 409A Affiliate under an
applicable statute or by contract. If the period of leave exceeds
six months and the Participant does not retain a right to
reemployment under an applicable statute or by contract, employment
is deemed to terminate on the first date immediately following such
six-month period. With respect to leave for disability, employment
will be treated as continuing for a period of up to 29 months,
unless otherwise terminated by the Company, a 409A Affiliate, or
the Participant, regardless of whether the Participant retains a
contractual right to reemployment. For this purpose, disability
leave refers to leave due to the Participant’s inability to
perform the duties of his or her position of employment or any
substantially similar position of employment by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than six months.
2.19 “ THG ”
shall mean the Company and 409A Affiliates.
ARTICLE III
DEFERRAL ELECTIONS
3.01 Election. An Eligible Employee
may make a written election to defer all or a portion of his/her
2009 IC Program award (not to exceed the greater of $50,000 or 20%
of base salary) into RSUs in accordance with the terms of the
Program. Each deferral and conversion election shall be made by the
submission of a written form approved by the Company for this
purpose (an “ Election Form ”). The
Election Form shall be irrevocable, shall indicate the amount to be
deferred, and shall be submitted, (i) in the case of the CEO,
by not later than December 31, 2008, and (ii) in the case
of all other Eligible Employees, by not later than June 30,
2009.
3.02 Performance–Based
Compensation. All 2009 IC Program awards are intended to qualify as
performance-based compensation as defined in Code
Section 162(m) , and any potential award issued under
the 2009 IC Program will be substantially at risk at the time the
Participant makes an election to defer and convert a portion of
such award.
2
ARTICLE IV
Deferral and
Conversion
4.01. Conversion. By submission of
the Election Form, the Participant agrees to the conversion of the
Basic Deferral Amount into RSUs. Such conversion shall be made
using the closing price per share of the Stock on the New York
Stock Exchange (“ NYSE ”) on the IC Payment
Date.
4.02 15% Premium. The Company agrees
to add to the Basic Deferred Amount the 15% Premium plus an amount
equal to the amount needed to round any fractional RSU to a whole
RSU. The Participant further agrees to the conversion of the 15%
Premium into RSUs. Such conversion shall be made using the closing
price per share of the Stock on the NYSE on the IC Payment
Date.
4.03 Dividend Equivalents. If any
dividends are declared on the Shares prior to the vesting of the
RSUs and subsequent issuance of the Shares, the Participant shall
be entitled to have Dividend Equivalents credited to his or her
Account. The Company annually, on December 31st of each year
(or, if Deferred Dividend Equivalents are released earlier, on the
date prior to such release), shall credit to the Account an amount
of interest determined by applying the then-prevailing Interest
Rate to the Deferred Dividend Equivalents. However, Deferred
Dividend Equivalents credited during the then current calendar
year, if any, shall be credited with interest only for the amount
of time during the then current calendar year that such Deferred
Dividend Equivalents were credited to the Account.
4.04 Restricted Stock Units. The
RSUs shall be issued on the IC Payment Date. The RSUs will be
subject to the terms of this Program and an RSU agreement to be
executed by the Company and the Participant on the date the RSUs
are issued. Upon vesting, each RSU will be converted into one share
of Stock. To the extent the terms and conditions of the RSU
conflict with the terms of this Program, the terms of this Program
shall govern.
4.05 Vesting and Company’s
Right to a Return of the RSUs .
(a) Vesting . The RSUs shall
be one hundred percent (100%) vested and shall automatically
convert into Shares on the third anniversary of the IC Payment Date
(the “ Vesting Date ”) provided that the
Participant remains an Employee with the Company or one of its 409A
Aff
