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Exhibit 10.3
THE CHUBB CORPORATION LONG-TERM STOCK
INCENTIVE PLAN (2004)
PERFORMANCE SHARE AWARD AGREEMENT
This PERFORMANCE SHARE AWARD AGREEMENT, dated as of
_____________,
2006, is by and between The Chubb Corporation (the "Corporation")
and
[____________] (the "Participant"), pursuant to The Chubb
Corporation Long-Term
Stock Incentive Plan (2004) (the "Plan"). Capitalized terms that
are not defined
herein shall have the same meanings given to such terms in the
Plan. If any
provision of this Agreement conflicts with any provision of the
Plan (as either
may be interpreted from time to time by the Committee), the Plan
shall control.
WHEREAS, pursuant to the provisions of the Plan, the Committee
has
authorized the grant to the Participant of Performance Shares in
accordance with
the terms and conditions of this Agreement; and
WHEREAS, the Participant and the Corporation desire to enter into
this
Agreement to evidence and confirm the grant of such Performance
Shares on the
terms and conditions set forth herein.
NOW THEREFORE, the Participant and the Corporation agree as
follows:
1. Grant of Performance Shares. Pursuant to the provisions of
the
Plan, the Corporation on the date set forth above (the "Grant
Date") has granted
and hereby evidences the grant to the Participant, subject to the
terms and
conditions set forth herein and in the Plan, of an Award of
[__________]
Performance Shares (the "Award").
2. Payment of Earned Performance Shares.
(a) Settlement of Performance Shares. Subject to the provisions
of this Section 2, Section 4 and Section 5, the Payment Value of
each
Performance Share covered by the Award which the Committee
determines, in
writing, to be earned pursuant to Section 3 shall be paid by the
Corporation on
a date (the "vesting date") as soon as administratively practicable
after (but
no later than 2 1/2 months after the calendar year end coincident
with) the end
of the Performance Cycle described in Section 3(a). Payments
hereunder shall be
made in cash, shares of Stock, or a combination thereof, as
determined by the
Committee in its sole discretion. Notwithstanding the
aforementioned, the
vesting date shall be the last day of the Performance Cycle if (i)
the
Participant experiences a Qualifying Termination of Employment on
or after
December 31, 2006 or (ii) the Committee determines, in its
discretion, pursuant
to Section 4(b), that the Participant will not forfeit his or her
rights to
Performance Shares upon his or her termination of employment for
other reasons;
in either case, provided the Committee determines, in writing, that
Performance
Shares are to be awarded hereunder.
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(b) Voluntary Deferral. Notwithstanding the provisions of
Section
2(a), the Participant may elect, by election filed with the
Corporation under
its Key Employee Deferred Compensation Plan (2005) (or any
successor plan or
program) (the "Deferred Compensation Plan"), and on a form
acceptable to the
Committee, not later than June 30, 2008 and subject to such terms
and conditions
as the Committee may specify, to have any payment that may become
due in respect
of Performance Shares covered by the Award deferred until such
later time as
shall be specified in such election (or, if applicable, the date
determined
pursuant to Section 2(c)).
(c) Mandatory Deferral of Payment of Earned Performance Shares.
Notwithstanding anything contained in Section 2(a) or 2(b) to the
contrary
(unless the payment date elected pursuant to Section 2(b) is later
than the
payment date specified herein, in which case Section 2(b) shall
control), if the
Corporation's Ending Average Value is less than the Corporation's
Beginning
Average Value (as such terms are defined in Section 3(c)), no
settlement shall
be made in respect of any Performance Shares earned in accordance
with Section 3
until the earlier of (i) the first date on or before March 10, 2010
on which the
average of the averages of the highest and lowest sales prices of
the Stock
reported for consolidated trading of issues listed on the New York
Stock
Exchange for the 15 trading days prior to such date exceeds the
Beginning
Average Value and (ii) March 10, 2011. Once either of the
conditions described
in the immediately preceding sentence has been satisfied,
settlement shall occur
as soon as practicable thereafter (in the case of condition (i),
not later than
March 15, 2010, and in the case of condition (ii) not later than
April 9, 2011)
in cash, shares of Stock or a combination thereof, as determined by
the
Committee in its sole discretion. If the Participant experiences a
Qualified
Termination of Employment on or after December 31, 2006, or if the
Committee
determines, in its discretion pursuant to Section 4(b), that the
Participant
will not forfeit his or her rights to Performance Shares upon his
or her
termination of employment for other reasons, settlement shall not
occur until
March 10, 2011.
3. Vesting Criteria Applicable to Performance Shares.
(a) Performance Cycle. The Performance Cycle for this Award
shall
commence on May 1, 2006, and shall end on December 31, 2008.
(b) Performance Goal. The Performance Goal for the Performance
Cycle is the total return per share of Stock to the Corporation's
shareholders,
inclusive of dividends paid (regardless of whether paid in cash or
property,
which dividends shall be deemed reinvested in Stock), during the
Performance
Cycle in comparison to the total return per share of stock,
inclusive of
dividends paid (regardless of whether paid in cash or property,
which dividends
shall be deemed reinvested in stock), achieved by the companies (i)
which are in
the Standard & Poors 500 Index (the "S&P 500") on the date
the Performance Cycle
begins and (ii) which continue to file public reports pursuant to
the Act for
the entirety of the Performance Cycle (such companies, the
"Comparison
Companies"). For the avoidance of doubt, a company included in the
S&P 500 on
the date the Performance Cycle commences that is not
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included in the S&P 500 at the conclusion of the Performance
Cycle will be a
Comparison Company as long as it files public reports pursuant to
the Act for
the entire Performance Cycle (and any company first included in the
S&P 500
after the start of the Performance Cycle would not be a Comparison
Company).
(c) Comparison of Total Shareholder Return. Except as provided
in
Section 5, the Performance Shares covered by the Award shall be
deemed earned
based on where the Corporation's total shareholder return during
the Performance
Cycle ranks in relation to the total shareholder returns of the
Comparison
Companies during such period. For purposes of calculating the total
shareholder
return of the Corporation and the Comparison Companies during the
Performance
Cycle, the value of each such company's stock at the beginning and
end of the
Performance Cycle shall be established based on the average of the
averages of
the high and low trading prices of the applicable stock on the
principal
exchange on which the stock trades for the 15 trading days
occurring immediately
prior to the beginning or end of the Performance Cycle, as the case
may be. Such
averages for each such company (including the Corporation) shall be
referred to
herein as the "Beginning Average Value" and the "Ending Average
Value." As soon
as practicable after the completion of the Performance Cycle, the
total
shareholder returns of the Comparison Companies will be calculated
and ranked
from highest to lowest. The Corporation's total shareholder return
will then be
ranked in terms of which percentile it would have placed in among
the Comparison
Companies. In calculating the total shareholder return with respect
to either
the Corporation or any of the Comparison Companies, the Committee
shall make or
shall cause to be made such appropriate adjustments to the
calculation of total
shareholder return for such entity (including, without limitation,
adjusting the
Beginning Average Value) as shall be necessary or appropriate to
avoid an
artificial increase or decrease in such return as a result of a
stock split
(including a reverse stock split), recapitalization or other
similar event
affecting the capital structure of such entity that does not
involve the
issuance of the entity's securities in exchange for money, property
or other
consideration.
(d) Percentage of Performance Shares Earned. The extent to
which
Performance Shares shall become earned on the vesting date
described in Section
2(a) shall be determined according to the following schedule:
<TABLE>
<CAPTION>
RELATIVE PERFORMANCE LEVEL PERCENTILE PERCENT OF PERFORMANCE
SHARES EARNED
-------------------------------------
------------------------------------
<S>
<C>
85th or higher
200%
50th
100%
25th
50%
Under 25th
0%
</TABLE>
To the extent that the Corporation's total shareholder return ranks
in a
percentile between the 25th and the 50th percentile, or between the
50th and the
85th percentile, of comparative performance, then the number of
Performance
Shares earned on the vesting
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date shall be determined by multiplying the relative percentile of
comparative
performance achieved by the Corporation by two (e.g., if the
Corporation's total
shareholder return would have placed in the 40th percentile, then
80% of the
Performance Shares covered by the Award become earned on the
vesting date; if
the Corporation's total shareholder return would have placed in the
75th
percentile, then 150% of the Performance Shares covered by the
Award become
earned on the vesting date).
4. Termination of Employment. Except as provided in this Section 4
or
in Section 5, the Participant shall not have any right to any
payment hereunder
unless the Participant is employed by the Corporation or a
Subsidiary on the
date the Performance Shares subject to this Award are settled
pursuant to
Section 2(a) (or would have been settled without regard to any
other provision
of Section 2).
(a) Qualifying Termination of Employment. If the Participant's
employment terminates by reason of a Qualifying Termination of
Employment on or
after December 31, 2006, the Participant shall be entitled to
receive the same
Payment Values (without pro-ration) in respect of the Performance
Shares covered
by the Award as would have been payable, and at the same time and
subject to the
same conditions, had his or her employment continued until the end
of the
Performance Cycle.
(b) Termination for any Other Reason. Unless otherwise
determined
by the Committee, if the Participant's employment is terminated
prior to the
date on which the Performance Shares subject to this Award are
settled pursuant
to Section 2(a) (or would have been settled without regard to any
other
provision of Section 2) for any reason other than a Qualifying
Termination of
Employment occurring on or after December 31, 2006, all of the
Participant's
rights to Performance Shares covered
