THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 22 2018 Pay Decisions During 2018, we maintained our commitment to “pay for performance,” and continued to emphasize variable compensation over fixed pay. To that end, during 2018: VariableCompensationOpportunity-Asdescribed in "2018NEOPayMix"below:VariableCompensationOpportunity-Asdescribed in "2018NEOPayMix"below:NEOVariableCompensation=nearly72%of total target compensationpackage Approx.65%of variable compensation is long-termequity tied to stockperformanceApprox.35%of variable compensation is cash tied toperformanceShort– term IncentivePlan -Asdescribed in "Short-Term IncentiveCompensation"below, strongunderlyingperformanceandachievementof strategicobjectives resulted in the funding levelat100%of targetPBRSUPayout– three total shareholder returnof43.6% (assuming reinvestmentofdividends) resulted inperformance in the58 th percentileas compared toapre-identified setofpeersandaccordinglyourperformancebased restricted stockunits (“PBRSUs”) for the2016 -2018periodbeingearnedatapproximately115%of target threshold (25%) target(100%)maximum(150%)0%payout(115%) (150%) Our compensation decisions reflect, in part, the overwhelming support our shareholders have expressed by approving our “say on pay” proposals. In each year since we began holding an annual “say on pay” vote, more than 95% of the shares cast on these proposals have been voted in favor of our executive pay programs and practices. PBRSU Payout – Three-year total shareholder return of 43.6% (assuming reinvestment of dividends) resulted in performance in the 58 th percentile as compared to a pre-identified set of peers, and accordingly, our performance-based restricted stock units (“ PBRSUs ”) for the 2016- 2018 period being earned at approximately 115% of target Short-Term Incentive Plan – As described in “Short-Term Incentive Compensation” below, strong underlying performance and achievement of strategic objectives resulted in funding level at 100% of target Variable Compensation Opportunity – As described in “2018 NEO Pay Mix” below: Threshold (25%) Payout (115%) Target (100%) Maximum (150%) (0%) (150%)