The Hartford 2010 Annual Report Download - page 219

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-91
18. Stock Compensation Plans (continued)
Restricted Unit awards
In 2010 and 2009, The Hartford issued awards under the 2005 Stock Plan that will ultimately be settled in cash. As a result, these
awards are referred to as “Restricted Units,” and the awards are remeasured at the end of each reporting period until settlement. 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. 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.
For the years ended December 31, 2010 and 2009, 2,983 and 4,963 restricted units were granted, respectively. The weighted-average
grant-date fair value was $24.34 and $7.07 at December 31, 2010 and 2009, respectively. As of December 31, 2010 and 2009, 6,812
and 4,613 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.
A summary of the status of the Company’ s non-vested awards under the Deferred Stock Unit Plan as of December 31, 2010, is
presented below:
Non-vested Units
Deferred Units
(in thousands)
Weighted-Average
Grant-Date Fair
Value
Restricted Units
(in thousands)
Weighted-Average
Grant-Date Fair
Value
Non-vested at beginning of year — $ — 137 $ 24.12
Granted 265 26.12 625 24.76
Vested (265) 26.12 — —
Forfeited — — (114) 24.29
Non-vested at end of year — $— 648 $ 24.70