8-KLeadership ChangesMaterial Agreements

TRAVELERS COMPANIES, INC. 8-K Report, Material Agreement (Sep 30, 2005)

Filed September 30, 2005For Securities:TRV

Summary

The St. Paul Travelers Companies, Inc. filed an 8-K report on September 30, 2005, detailing two significant events: the adoption of an executive severance plan and the resignation of a director. The new executive severance plan, effective immediately for prospective terminations, provides cash payments to executive employees (VP and above) whose employment is involuntarily terminated without cause. The severance benefit is tiered based on the executive's level and years of service, ranging from 6 to 24 months of total cash compensation. Additionally, the report disclosed the resignation of Charles W. Scharf as a director, effective September 29, 2005. Mr. Scharf's resignation was attributed to other commitments and not to any disagreements with the company. These events are important for investors to understand the company's executive compensation policies and any potential changes in its board composition.

Key Highlights

  • 1Adoption of a new Executive Severance Plan effective immediately for prospective terminations.
  • 2The plan provides severance benefits for executive employees (Vice President and above) involuntarily terminated without cause.
  • 3Severance amounts are based on executive level and years of service, ranging from 6 to 24 months of total cash compensation.
  • 4The plan aims to harmonize severance practices from the prior St. Paul Companies and Travelers Property Casualty Corp.
  • 5Severance benefits are contingent upon the employee signing a separation agreement with restrictive covenants (non-solicitation/hiring).
  • 6The plan was not adopted in anticipation of a change of control transaction.
  • 7Director Charles W. Scharf resigned on September 29, 2005, citing other commitments.

Frequently Asked Questions

The new Executive Severance Plan was adopted to harmonize the prior severance practices of The St. Paul Companies, Inc. and Travelers Property Casualty Corp. It provides a standardized severance benefit for executive employees at the vice president level and above who are involuntarily terminated without cause.

Severance benefits are calculated based on the executive's position level (Executive Vice President and Above, Senior Vice President, Vice President) and their years of service with the company (0-5 Years, 5-10 Years, 10+ Years). The benefit is expressed as a number of months of total cash compensation, ranging from 6 months for a Vice President with 0-5 years of service to 24 months for an Executive Vice President and Above with 10+ years of service.

Eligible executives must sign a separation agreement that includes restrictive covenants, such as a 12-month restriction on soliciting or hiring the company's employees and soliciting the company's customers. Compliance with this agreement is a condition for receiving the severance payments.

Mr. Scharf resigned as a director due to other commitments and not as a result of any disagreement with the company. While any change in board composition can be noted, the stated reason suggests it is not indicative of internal company issues or a dispute.