Summary
This Form 8-K filing from The Hartford Financial Services Group, Inc. (HIG) on August 14, 2009, details the company's adherence to the U.S. Department of the Treasury's Troubled Asset Relief Program (TARP) Capital Purchase Program compensation restrictions. Specifically, the non-management Board of Directors approved modifications to the compensation of two named executive officers (NEOs), Lizabeth H. Zlatkus (CFO) and John C. Walters (President and Chief Operating Officer, Life Operations). The primary focus of these changes is to comply with Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA) and its interim final rule regarding compensation for TARP recipients. These modifications result in a significant reduction in overall target compensation and a shift towards TARP-compliant stock-based compensation, with reduced potential for immediate cash bonuses and incentives.
Key Highlights
- 1The Hartford is modifying executive compensation for its CFO and COO of Life Operations to comply with TARP/EESA regulations.
- 2The modifications are effective August 16, 2009, and are a direct result of the company's participation in the TARP Capital Purchase Program.
- 3Overall annual target total compensation for the affected executives has been reduced by 28%.
- 4Prohibited cash bonuses and certain incentive compensation are eliminated; compensation will be primarily in the form of TARP-compliant restricted stock units and deferred stock units.
- 5A significant portion of compensation will now be deferred stock units, with settlement in cash two years after crediting.
- 6Long-term restricted stock unit awards are designed to vest over an additional two years post-employment and are tied to the repayment of TARP funds.
- 7The Hartford Deferred Stock Unit Plan is filed as an exhibit, outlining the structure of the new compensation arrangements.