THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 30 After reviewing the Company’s performance in 2018, the Committee determined that the strategic objectives described above had been achieved and based upon consideration of all three performance metrics and other factors, including the Chaucer Sale, determined to fund the Leadership STIP at 100% of target. This funding level was the primary reference point for determining individual NEO awards since the Committee intends that the percentage of target paid to NEOs be comparable, generally, to the percentage paid to participants under the Leadership STIP. NEO individual performance . An important factor in determining the level of payment to our NEOs is the Committee’s evaluation of each NEO’s overall performance within his area of responsibility. Set forth below are various contributions and accomplishments considered by the Committee in its evaluation of the overall individual performance of our NEOs. John C. Roche • Financial metrics, including net income of $391.0 million; operating income of $406.5 million; and 6.7% increase in net premium written; • Management of expenses to self-fund additional technological and other investments; • Successful divestiture of the Chaucer business unit and deployment of the proceeds from the sale; • Transition to the CEO role since November 2017 and successful transition of senior management team; • Support and oversight of longer-term Company investments in technology and innovation, including new digital offerings, sales and service platforms and expanded use of technology and analytics in the claims function, and expansion of product offerings; and • Leadership of the Company’s CARE Values ( C ollaboration, A ccountability, R espect and E mpowerment), including launching inclusion and diversity and other workplace modernization initiatives. Jeffrey M. Farber • Led effective corporate finance, investments, actuarial, risk management, corporate development and financial reporting group; • Instrumental to the successful divestiture of the Chaucer business unit and deployment of the proceeds from the sale; • Led development and expansion of our Enterprise Risk Management strategy and oversight; and • Drove economic capital usage for improved capital allocation with an annual planning process. J. Kendall Huber • Managed legal and compliance organization within budget, and supported various regulatory, compliance, legal and related matters, including settlement of significant litigation matters; • Instrumental to the successful divestiture of the Chaucer business unit; • Provided counsel and advice to the Board and management with respect to leadership transitions and various human resources, corporate, investor relations and finance matters, including serving as interim head of the human resources department through July 2018; and • Advised the Board and management with respect to corporate governance matters. Richard W. Lavey • Led development, execution and re-positioning of Hanover 2021 strategy under new CEO leadership; • Led development of a digital roadmap to include a customer agent digital "journey"; • Led successful launch of new offerings in micro-small commercial and drove key business development activities with agents to identify additional opportunities; and • Led the launch of e-policy delivery in personal lines. Bryan J. Salvatore • Led expense management and structural changes in specialty lines, creating three key vertical integrated units and coordinated specialty sales specialists; • Centralized key functions with home office resources to rationalize expenses and enhance underwriting, risk management, compliance, support and other services; • Implemented rate tiering of renewals in select specialty lines including at AIX, Hanover Professionals, Management Liability and Hanover Specialty Industrial; and • Launched development of Cyber and Financial Institutions as new products within our specialty lines offerings and initiated retail excess and surplus strategy.