Travelers 2014 Annual Report Download - page 345

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EXHIBIT B
PERFORMANCE SHARES VESTING GRID
TO TRAVELERS ’ PERFORMANCE SHARES AWARD NOTIFICATION AND AGREEMENT
* For any Performance Period ROE (as defined below) that is at least 8.0%, but falls between two Performance Period ROE performance levels,
the percentage of Performance Shares vested shall be interpolated (for example, if Performance Period ROE is 14.0%, 115% of the Performance
Shares would be vested).
Definitions
:
“
Performance Period ROE ” is defined as the sum of the Adjusted ROE for each of the three years in the Performance Period, divided by three.
“
Adjusted ROE ” is defined as Adjusted Operating Income divided by Adjusted Shareholders ’ Equity.
“
Adjusted Operating Income ” for each year in the Performance Period is defined as the Company ’ s net income from continuing operations as
reported in the Company
’ s financial statements (including accompanying footnotes and management ’ s discussion and analysis), adjusted as set
forth in the immediately following sentence. In calculating Adjusted Operating Income, net income from continuing operations shall be adjusted as
follows: first (A) remove the after
- tax effects of the following items: (i) losses (net of reinsurance) from catastrophes (as designated by the
Insurance Service Office
’ s Property Claims Service Group, the Lloyd ’ s Claim Office, Swiss Reinsurance Company ’ s sigma report, or a comparable
report or organization generally recognized by the insurance industry, and reported by the Company as a catastrophe); asbestos and
environmental reserve charges (or releases); net realized investment gains or losses in the fixed maturities and real estate portfolios; and (ii)
extraordinary items, the cumulative effect of accounting changes and federal income tax rate changes, and restructuring charges, each as defined
by generally accepted accounting principles in the United States, and each as reported in the Company
’ s financial statements (including
accompanying footnotes and management
’ s discussion and analysis); (B) reduced, as to the first year in the Performance Period (20XX), by
$XXXXXX, as to the second year in the Performance Period (20XX), by $XXXXXX times the ratio of: the Company
’ s 20XX consolidated personal
lines homeowners net written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written
premium divided by the Company ’ s 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written
premium plus 50% of commercial lines multi peril net written premium, and as to the third year in the Performance Period (20XX), by $XXXXXX
times the ratio of: the Company
’ s 20XX consolidated personal lines homeowners net written premium plus commercial lines property net written
premium plus 50% of commercial lines multi peril net written premium divided by the Company ’ s 20XX consolidated personal lines homeowners net
written premium plus commercial lines property net written premium plus 50% of commercial lines multi peril net written premium; and (C) reduced
end of the Performance Period. You will have a right to payment under
the Retirement Rule provided that, prior to the time of settlement, you
do not engage in any activities that compete with the business
operations of the Travelers Group (as determined by the Committee or
its designee in its sole discretion), including, but not limited to, working
for another insurance company engaged in the property casualty
insurance business as either an employee or independent contractor.
You are not subject to this non
- compete provision if you are terminated
involuntarily, but you remain subject to Sections 9 and 10 of the Award
Agreement, and the POE Agreement.
When called for under the above rules, as a condition to receiving
payment, you will be
required to certify to the Company that you have not engaged in any
activities that compete with the business operations of the Travelers
Group since your Termination Date, and provide such other evidence of
your compliance with the Retirement Rule as the Company may require.
Performance Period ROE*
% of Performance Shares Vested
> 16.0%
150% (Maximum)
15.5
140
15.0
130
14.5
120
13.5
110
10.0
100
8.5
75
8.0
50 (Threshold)
<8.0
0