The Hartford 2013 Annual Report Download - page 235

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F-99
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 2013 or 2012. As of December 31, 2013 and 2012, 27 thousand and 832 thousand restricted
units were outstanding, 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 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 2013 or 2012.
A summary of the status of the Company’s non-vested awards under the Deferred Stock Unit Plan as of December 31, 2013, is presented
below:
Non-vested Units Restricted Units (in
thousands) Weighted-Average
Grant-Date Fair Value
Non-vested at beginning of year 309 25.08
Granted — —
Vested (306) 25.04
Forfeited (3) 28.99
Non-vested at end of year $
Subsidiary Stock Plan
In 2013 The Hartford established a subsidiary stock-based compensation plan similar to The Hartford 2010 Incentive Stock Plan except
that it awards non-public subsidiary stock as compensation. The Company recognized stock-based compensation plans expense of $1 in
the year ended December 31, 2013 for the subsidiary stock plan. Upon employee vesting of subsidiary stock, the Company will
recognize a noncontrolling equity interest. Employees will be restricted from selling vested subsidiary stock to other than the Company
and the Company will have discretion on the amount of stock to repurchase. Therefore the subsidiary stock will be classified as equity
because it is not mandatorily redeemable.
Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
19. Stock Compensation Plans (continued)