The Hartford 2011 Annual Report Download - page 224

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-89
18. Stock Compensation Plans (continued)
Share Awards
Share awards are valued equal to the market price of the Company’ s common stock on the date of grant, less a discount for those awards
that do not provide for dividends during the vesting period. Share awards granted under the Stock Plans and outstanding include
restricted stock units, restricted stock and performance shares. Generally, restricted stock units vest at or over three years and restricted
stock vests in three to five years. Performance shares become payable within a range of 0% to 200% of the number of shares initially
granted based upon the attainment of specific performance goals achieved over a specified period, generally three years. The maximum
award of restricted stock units, restricted stock or performance shares for any individual employee in any year under the 2010 Stock
Plan is 500,000 shares or units.
A summary of the status of the Company’ s non-vested share awards as of December 31, 2011, and changes during the year ended
December 31, 2011, is presented below:
Non-vested Shares
Shares
(in thousands)
Weighted-Average
Grant-Date Fair Value
Non-vested at beginning of year
1,889
$
35.83
Granted
3,400
28.22
Decrease for change in estimated performance factors
(232)
—
Vested
(637)
46.00
Forfeited
(256)
34.14
Non-vested at end of year
4,164
$
27.60
The total fair value of shares vested during the years ended December 31, 2011, 2010 and 2009 was $20, $13 and $8, respectively, based
on estimated performance factors. The Company did not make cash payments in settlement of stock compensation during the years
ended December 31, 2011, 2010 and 2009.
Restricted Unit awards
In 2010 and 2009, The Hartford issued restricted units as part of The Hartford’ s 2005 Stock Plan. Restricted stock unit awards under
the plan have historically been settled in shares, but under this award will be settled in cash and are thus referred to as “Restricted
Units”. The economic value recipients will ultimately realize will be identical to the value that would have been realized if the awards
had been settled in shares, i.e., upon settlement, recipients will receive cash equal to The Hartford’ s share price multiplied by the
number of restricted units awarded. Because Restricted Units will be settled in cash, the awards are remeasured at the end of each
reporting period until settlement. Awards granted in 2009 vest after a three year period. Awards granted in 2010 include both graded
and cliff vesting restricted units which vest over a three year period. The graded vesting attribution method is used to recognize the
expense of the award over the requisite service period. For example, the graded vesting attribution method views one three-year grant
with annual graded vesting as three separate sub-grants, each representing one third of the total number of awards granted. The first
sub-grant vests over one year, the second sub-grant vests over two years and the third sub-grant vests over three years.
There were no restricted units awarded for 2011. For the year ended December 31, 2010, 2,983 restricted units were granted, and the
weighted-average grant-date fair value was $24.34. As of December 31, 2011 and 2010, 5,319 and 6,812 were non-vested, respectively.
Deferred Stock Unit Plan
Effective July 31, 2009, the Compensation and Management Development Committee of the Board authorized The Hartford Deferred
Stock Unit Plan (“Deferred Stock Unit Plan”), and, on October 22, 2009, it was amended. The Deferred Stock Unit Plan provides for
contractual rights to receive cash payments based on the value of a specified number of shares of stock. The Deferred Stock Unit Plan
provides for two award types, Deferred Units and Restricted Units. Deferred Units are earned ratably over a year, based on the number
of regular pay periods occurring during such year. Deferred Units are credited to the participants account on a quarterly basis based on
the market price of the Company’ s common stock on the date of grant and are fully vested at all times. Deferred Units credited to
employees prior to January 1, 2010 (other than senior executive officers hired on or after October 1, 2009) are not paid until after two
years from their grant date. Deferred Units credited on or after January 1, 2010 (and any credited to senior executive officers hired on or
after October 1, 2009) are paid in three equal installments after the first, second and third anniversaries of their grant date. Restricted
Units are intended to be incentive compensation and unlike Deferred Units, vest over time, generally three years, and are subject to
forfeiture. The Deferred Stock Unit Plan is structured consistent with the limitations and restrictions on employee compensation
arrangements imposed by the Emergency Economic Stabilization Act of 2008 and the TARP Standards for Compensation and Corporate
Governance Interim Final Rule issued by the U.S. Department of Treasury on June 10, 2009.
There were no deferred stock units awarded in 2011.