Exhibit 10.1
TRANSATLANTIC HOLDINGS, INC.
EXECUTIVE SEVERANCE PLAN
Transatlantic Holdings,
Inc., a Delaware corporation (the “ Company
”), has adopted this Transatlantic Holdings, Inc.
Executive Severance Plan (the “ Plan ”),
first effective as of May 22, 2008 (the “ Effective Date
”).
I. Purpose
The Plan is maintained for
the purpose of providing severance payments and benefits for
a select group of management or highly compensated employees
covered by this Plan whose employment is terminated under the
circumstances set forth in this Plan.
II. Term
The Plan shall be effective
as of the Effective Date and continue until terminated by the
Compensation Committee of the Board of Directors of the
Company (the “ Compensation
Committee ”) with 12 months’ notice to
Eligible Employees (as defined in Section III below) in
accordance with Section VIII below; provided that
this Plan shall in no event terminate before the second
anniversary of the Effective Date.
III. Eligibility
The
employees eligible to participate in this Plan at any time
(together, the “ Eligible
Employees ”) shall be comprised of each employee
who at the time of the termination of his or her employment is
a participant in the Company’s Partners Plan (the
“ Partners Plan
”) or the Company’s Senior Partners Plan (the
“ Senior Partners
Plan ”); provided that if
an employee has an employment agreement (or other agreement or
arrangement) that provides for payment of severance in
connection with a "Covered Termination" (as defined in Section
IV below), the employee will not be an Eligible
Employee.
For
purposes of this Plan, an employee shall be deemed to be a
participant in the Partners Plan only if such employee
received an award with respect to the most recently commenced
Performance Period of the Partners Plan (as defined
therein).
IV. Severance
An Eligible Employee shall
be entitled to receive the benefits described in this Section
IV if he or she experiences a “Covered
Termination.”
A “ Covered
Termination ” shall
be:
(1) For
all Eligible Employees, an Eligible Employee’s
termination of service during the term of this Plan for any
reason other than the Eligible Employee’s: (a) death;
(b) “Disability” (as defined in Section IV.K
below); (c) resignation (including any resignation that
an Eligible Employee may assert was a constructive discharge);
or (d) termination by the Company or its subsidiaries for
“Cause” (as defined in Section IV.K below);
and
(2) In
the case of the Chief Executive Officer of the Company and
each other Eligible Employee who is both a participant in the
Senior Partners Plan and has a rank of Senior Vice President
or higher of the Company, a Covered Termination shall also
include such Eligible Employee’s termination of service
during the term of this Plan as a result of resignation from
his or her employment for “Good Reason” (as
defined in Section IV.K below).
For
purposes of this Plan, an employee shall be deemed to be a
participant in the Senior Partners Plan only if such employee
has an award outstanding under the Senior Partners Plan with
respect to the Performance Period of the Senior Partners Plan
(as defined therein) ending in the year of
termination. Unless otherwise stated in this Plan,
for purposes of an Eligible Employee’s employment,
“termination” of employment or service shall mean
the date upon which the Eligible Employee ceases to perform
his or her employment duties and responsibilities for the
Company and/or each of its subsidiaries, as such termination
is defined in Section 409A of the Internal Revenue Code
of 1986, as amended (the “ Code
”).
A. Accrued Wages and Expense Reimbursements
If an Eligible Employee
experiences a Covered Termination, the Eligible Employee
shall receive: (1) accrued wages due through the date of
termination in accordance with the Eligible Employee’s
employer’s normal payroll practices; (2) reimbursement
for any unreimbursed business expenses properly incurred by
the Eligible Employee prior to the date of termination in
accordance with Company policy (and for which the Eligible
Employee has submitted proper documentation as may be
required by the Company) and (3) any accrued but unused
vacation pay in a lump sum.
B.
Severance
Installments
If
an Eligible Employee experiences a Covered Termination, the
Eligible Employee shall receive severance equal to the sum of
the following, divided by 12, and then multiplied by the
number of months in the “Severance Period” (as
defined below) applicable to the Eligible
Employee:
(1) Annual
base salary as of the date of termination; plus
(2) The
total of any payments designated as a “supplemental
bonus” or “quarterly cash” that would have
been payable in respect of the year of termination (but not
including any spot bonus or other discretionary bonus);
plus
(3) The
average of the Eligible Employee’s “Annual Cash
Bonuses” (as defined below) awarded and paid with
respect to the three most recently completed calendar years
preceding the calendar year in which termination occurs
(including any year in which the bonus was zero); provided that:
(a) if the date of termination occurs during a calendar year
before the time that Annual Cash Bonuses have generally been
paid out to employees for the prior calendar year's
performance, the average shall be computed based on the
second, third and fourth calendar years prior to the calendar
year in which the termination occurs, (b) if the Eligible
Employee was not employed for all years that would otherwise
be included in the average, the average shall be computed
based on each such year in which the Eligible Employee was
employed and (c) if the Eligible Employee earns or is awarded
no bonus for one of the years that would otherwise be included
in the average as a result of an approved leave of absence,
the average shall be computed by using the three most recently
completed calendar years preceding the calendar year of
termination in which such condition did not
apply. “ Annual Cash Bonus
” means any
performance based, year-end cash bonus or a cash bonus in lieu
of a year-end cash bonus, and the amount of any Annual Cash
Bonus awarded and paid shall include any amount of such bonus
voluntarily deferred by the Eligible Employee.
Such
severance amount shall be paid over the number of months in
the Severance Period in equal weekly, biweekly, or monthly
installments (each, a “ Severance
Installment ”) in accordance with the Eligible
Employee’s employer’s normal payroll
practices. Notwithstanding anything in this Plan to
the contrary, the cash payable and benefits receivable
hereunder, to the extent necessary to avoid duplication of
payments and benefits, shall be reduced by any payments or
benefits which the Eligible Employee receives pursuant to any
other plan, agreement or arrangement providing severance
payments or benefits, including but not limited to,
collectively bargained agreements and any state sponsored,
mandated or similar severance program.
The
“ Severance Period
” shall be:
(1) For
the Chief Executive Officer of the Company, 30
months;
(2) For
Eligible Employees who are both Senior Vice Presidents or
higher of the Company and participants in the Senior
Partners’ Plan (as such participation is set forth in
Section IV above), 24 months; and
(3) For
all other Eligible Employees, one month per year of service
with the Company up to a maximum of 12 months, except that no
Eligible Employee shall have a Severance Period of less than
six months regardless of years of service.
C. Equity and Senior Partners Plan Vesting
If
an Eligible Employee experiences a Covered Termination, the
Eligible Employee’s Severance Period will be treated as
continued employment for the purpose of outstanding restricted
stock units (“ RSUs ”),
Performance RSUs that are earned but unvested under the
Partners Plan (but excluding any performance RSUs for
performance periods ending on or after the year of
termination), Senior Performance RSUs that are earned but
unvested under the Senior Partners Plan (but excluding any
performance RSUs for performance periods ending on or after
the year of termination) and options, in each case that would
otherwise have vested or become exercisable during the
Severance Period had the Eligible Employee’s employment
not terminated. Such awards shall otherwise
continue to be subject to the terms and conditions of the
applicable plan and award agreement, provided that,
for purposes of the commencement and measurement of the
post-termination exercise period (if any as approved in
accordance with the plan and award agreement) applicable to
any stock options held by the Eligible Employee as of the date
of termination, the last day of the Severance Period will be
considered the date of termination. To the extent
an RSU or option does not vest upon the last day of the
Severance Period such award shall be forfeited for no
consideration.
D. Continued Health Coverage and Participation in
Retiree Health
If
an Eligible Employee experiences a Covered Termination, the
Eligible Employee shall be entitled to participate during the
Severance Period in the applicable Company-provided health
plan for active employees in which the Eligible Employee
participated prior to termination by paying on an after-tax
basis the applicable employee contribution charged to active
employees receiving similar coverage. If the
Eligible Employee participates in such plan, the actuarial
cost of such coverage in excess of the applicable employee
contribution paid by the Eligible Employee, as determined by
the Company, shall be imputed as taxable income to the
Eligible Employee. Upon the last day of the
Severance Period, the Eligible Employee shall be treated as
having had a termination event as of the date that the
Severance Period ends for purposes of continuing coverage
requirements under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“ COBRA
”).
If
an Eligible Employee experiences a Covered Termination, the
Eligible Employee’s Severance Period (but not including
any period of coverage under COBRA) shall be treated as a
period of employment service (in connection with both the age
and service requirements) for purposes of determining the
Eligible Employee’s eligibility to participate, in and
to calculate the amount of, the Company contribution towards
any Company retiree health plan. For these
purposes, the Eligible Employee’s deemed period of
employment service shall end as of the last day of the
Severance Period. If the Eligible Employee would
not have satisfied the eligibility requirements to participate
in any Company retiree health plan but for the preceding
treatment of the Severance Period as a period of employment
service, the actuarial cost of such retiree health coverage in
excess of any contribution paid by the Eligible Employee, as
determined by the Company, shall be imputed as income for all
periods in which such retiree health coverage is
provided. If, however, the Eligible Employee
satisfies the eligibility requirements to participate in any
Company retiree health plan on the basis of the Eligible
Employee’s age and years of service on or before the
date of termination, then no such income imputation shall
occur with respect to retiree health coverage.
E . Additional Non-qualified
Pension Credits
If an Eligible Employee
experiences a Covered Termination, the Eligible Employee
shall be entitled to additional service credit and credit for
additional age, in each case in an amount equal to the length
of the Severance Period, for purposes of calculating the
Eligible Employee’s benefit amounts, and determining
vesting and eligibility for retirement (including early
retirement), under the Company’s non-qualified pension
plans (plans that are not intended to be qualified under the
provisions of Code section 401) in which such Eligible
Employee was actively participating immediately prior to his
or her date of termination. For the avoidance of
doubt, no Severance Installments pursuant to Section IV.B of
this Plan shall be included in the calculation of any
benefits of an Eligible Employee under any non-qualified
pension plan of the Company. Eligible Employees
shall commence payments under such non-qualified pension
plans at the time specified in the applicable plan,
determined as if payment of “Qualified Plan Retirement
Income” (as defined in the applicable plan) began to be
paid immediately following the Eligible Employee’s date
of termination.
F. Continued Life Insurance and Participation in Retiree
Life
If an Eligible Employee
experiences a Covered Termination, the Eligible Employee
shall be entitled to participate during the Severance Period
in the group life insurance benefits generally available to
active employees of the Company. The Eligible
Employee shall be required to pay the costs of such coverage
on the same basis as prior to the date of
termination. Any portion of the premium paid by
the Company shall be imputed as taxable income to the
Eligible Employee. If an Eligible Employee
experiences a Covered Termination, the Eligible
Employee’s Severance Period shall be treated as a
period of employment service (in connection with both the age
and service requirements) for purposes of determining the
Eligible Employee’s eligibility to participate in and
to calculate the amount of a Company contribution towards any
Company retiree life insurance coverage. The
Eligible Employee’s deemed period of employment service
shall end as of the close of the Severance
Period. If the Eligible Employee would not have
satisfied the eligibility requirements to participate in any
Company retiree life insurance plan but for the treatment of
the Severance Period as a period of employment service, the
actuarial cost of such retiree life insurance coverage in
excess of any contribution paid by the Eligible Employee, as
determined by the Company, shall be imputed as income for all
periods in which such retiree life insurance coverage is
provided. If, however, the Eligible Employee
satisfies the eligibility requirement to participate in any
Company retiree life insurance plan on the basis of the
Eligible Employee’s age and years of service on or
before the date of termination, no such income imputation
shall occur with respect to retiree life insurance
coverage.
G.
Limitations
on Severance
The amounts described in
Subsections B through F of this Section IV (collectively
referred to as “ Severance
”) are subject to the Eligible Employee’s
continued compliance with any applicable release and/or
restrictive covenant agreement (referred to generically as
the “ Release ”)
that the Company may require under other compensation
arrangements (including but not limited to the
Partners Plan, the Senior Partners Plan and the
Company’s Deferred Compensation Profit Participation
Plan), any applicable employment agreement or the release
pursuant to Section VI below. Failure to execute
or adhere to such a Release by the Eligible Employee shall
result in a forfeiture of all Severance under this
Plan. (For the avoidance of doubt, any Severance
Installment or other Severance benefit due under the terms of
this Plan shall be forfeited to the extent such payment would
have otherwise been due but for the Eligible Employee’s
failure to provide the Company with a duly executed and
effective Release.) Nothing herein shall preclude
the Company in its sole discretion from requiring the
Eligible Employee to enter into other such releases or
agreements as a condition to receiving Severance under this
Plan.
H. Timing of Payments and Delay for Specified
Employees
Severance
Installments shall commence on a payroll date of the Eligible
Employee’s employer within 90 days following the
Eligible Employee’s termination of
employment. For purposes of Code section 409A, each
Severance Installment shall be treated as a separate
payment. If the Plan Administrator determines that
the Eligible Employee is a “specified employee”
for purposes of Code section 409A, any Severance Installment
or other Severance benefit that would otherwise be payable or
due under Section IV of this Plan shall be delayed for six
months to the extent that such Severance is determined to
constitute deferred compensation under Code section 409A
(taking into account any regulatory exceptions that may be
applicable, such as short-term deferral and separation under
Code section 409A). In such case, the Eligible
Employee shall not receive such Severance Installment or
benefit that is subject to the six-month delay until the first
scheduled payroll date that occurs more than six months
following the date of termination (the “ First Payment
Date ”) and, on the First Payment Date, the
Company shall pay the Eligible Employee an amount equal to the
sum of the Severance Installments that would have been payable
in respect of the period preceding the First Payment Date but
for the delay imposed on account of Code section
409A.
I.
Covenants
and for “Cause” Terminations
Notwithstanding anything to
the contrary in this Plan, if at any time (a) the Eligible
Employee breaches any of the provisions of a Release
or (b) the
Plan Administrator determines that grounds existed, on or
prior to the date of termination of the Eligible
Employee’s employment with the Company, including prior
to the Effective Date, for the Company to terminate the
Eligible Employee’s employment for
“Cause”:
(1) No
further payments or benefits shall be due under this Section
IV; and
(2) The
Eligible Employee shall be obligated to repay to the Company,
immediately and in a cash lump sum, the amount of any
Severance Installments and other Severance benefits (other
than any amounts received by the Eligible Employee under
Sections IV.D, E or F) previously received by the Eligible
Employee (which shall, for the avoidance of doubt, be
calculated on a pre-tax basis);
provided that the Eligible Employee shall in all events be
entitled to receive accrued wages, expense reimbursement and
accrued but unused vacation pay as set forth in Section IV.A
above.
J. No
Rights
Other than as provided in
this Section IV, an Eligible Employee shall have no rights to
any compensation or any other benefits under this
Plan. All other benefits, if any, due to the
Eligible Employee following the date of termination shall be
determined in accordance with the plans, policies and
practices of the Company or any subsidiary of the Company.
Whether
the Eligible Employee’s employment has terminated for
purposes of any Company plan or arrangement shall be
determined on the basis of the applicable terms of the plan
or arrangement.
K.
Definitions
“ Cause ”
shall mean, whether occurring prior to, or on or after the
Effective Date:
(1) The
Eligible Employee’s failure to perform substantially his
or her duties with the Company or any subsidiary of the
Company (other than any such failure resulting from the
Eligible Employee’s incapacity due to physical or mental
illness);
(2) The
Eligible Employee’s malfeasance or
misconduct;
(3) The
Eligible Employee’s knowing and material violation of a
provision of the Company’s Code of Conduct or the
Director, Executive Officer and Senior Financial Officer Code
of Business Conduct and Ethics, as such codes of conduct may
be in effect from time to time, or other policies regarding
behavior of employees; or
(4) The
conviction of, or entry of a plea of guilty or no contest by
the Eligible Employee with respect to, a felony or any lesser
crime of which fraud or dishonesty is a material
element.
“ Disability
” shall mean a period of medically determined physical
or mental impairment that is expected to result in death or
last for a period of not less than 12 months during which an
Eligible Employee qualifies for income replacement benefits
under the Company’s long-term disability plan for at
least 3 months, or, if an Eligible Employee does not
participate in such a plan, a period of disability during
which the Eligible Employee is unable to engage in any
substantial gainful activity by reason of any medically
determined physical or mental impairment which can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months.
“ Good Reason
” shall mean:
(1) A
diminution in the Eligible Employee’s duties or
responsibilities such that they are (or the assignment to the
Eligible Employee of any duties or responsibilities that are)
inconsistent in any material and adverse respect with the
Eligible Employee’s then title or offices;
(2) A
diminution in the Eligible Employee’s titles or offices
(including, if applicable, membership on the Board) that is
material and adverse to the Eligible Employee;
(3)
A material reduction by the Company in the Eligible
Employee’s rate of annual base salary; or
(4)
A material reduction by the Company in the Eligible
Employee’s annual target bonus opportunity.
Notwithstanding
the foregoing, a termination for Good Reason shall not have
occurred unless (a) the Eligible Employee gives written notice
to the Company of termination of employment within 30 days
after the Eligible Employee first becomes aware of the
occurrence of the circumstances constituting Good Reason,
specifying in detail the circumstances constituting Good
Reason, and the Company has failed within 30 days after
receipt of such notice to cure the circumstances constituting
Good Reason, and (b) the Eligible Employee’s
“separation from service” (within the meaning of
Code section 409A) occurs no later than two years following
the initial existence of one or more of the circumstances
giving rise to Good Reason.
V. No Duplication/No Mitigation
A. No
Duplication
This Plan is not intended
to, and shall not, result in any duplication of payments or
benefits to any Eligible Employee. The
Compensation Committee shall be authorized to interpret this
Plan to give effect to the preceding sentence.
B. No
Mitigation
In order for an Eligible
Employee to receive the Severance described in this Plan, the
Eligible Employee shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the
Company under this Plan, and there shall be no offset against
any amounts due under this Plan on account of any
remuneration attributable to any subsequent employment that
the Eligible Employee may obtain.
VI. Release and Restrictive Covenant
Agreement
Subject to Section IV.G
above, the Company may require and condition payment of the
Severance on the Eligible Employee’s execution of a
Release in the form attached to this Plan as Exhibit A;
provided ,
however, that such Release must be executed within 60 days
after the date of termination; provided ,
further, that if the local laws of a country or non-U.S.
jurisdiction in which an Eligible Employee works would not
permit all or a portion of the Release to be structured or
executed in the form attached hereto, the General Counsel of
the Company or his or her designee shall have the discretion
to create a release that incorporates as much of the Release
as possible while also complying with such local
laws.
VII. Plan Administration
A .
Compensation
Committee
The Plan shall be
interpreted, administered and operated by the Compensation
Committee, which shall have the complete authority, in its
sole discretion, s
