The Hartford 2012 Annual Report Download - page 240

Table of Contents
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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 vested 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 2012 or 2011. As of December 31, 2012 and 2011, 832 and 5,319 restricted units were non-vested, respectively.
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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 participant's 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 2012 or 2011.
A summary of the status of the Company’s non-vested awards under the Deferred Stock Unit Plan as of December 31, 2012, is presented below:
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Non-vested at beginning of year 491 24.84
Granted — —
Vested (81)24.12
Forfeited (101)24.66
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In 1996, the Company established The Hartford Employee Stock Purchase Plan (“ESPP”). Under this plan, eligible employees of The Hartford purchase
common stock of the Company at a discount rate of 5% of the market price per share on the last trading day of the offering period. In 2009 and prior years,
eligible employees of The Hartford purchased common stock of the Company at a 15% discount from the lower of the closing market price at the beginning or
end of the offering period. Employees purchase a variable number of shares of stock through payroll deductions elected as of the beginning of the offering
period. The Company may sell up to 15,400,000 shares of stock to eligible employees under the ESPP. As of December 31, 2012, there were 5,773,954
shares available for future issuance. During the years ended December 31, 2012, 2011 and 2010, 688,655, 768,380, and 729,598 shares were sold,
respectively. The weighted average per share fair value of the discount under the ESPP was $ 1.00, $1.03 and $1.24 during the years ended December 31, 2012
, 2011 and 2010, respectively. In 2012, 2011, and 2010, the fair value is estimated based on the 5% discount off the market price per share on the last trading
day of the offering period.
Additionally, The Hartford has established employee stock purchase sub-plans for certain employees of the Company's international subsidiaries. Under these
sub-plans, participants may purchase common stock of The Hartford at a fixed price. The activity under these programs is not material.
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