THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 33 Prior Plan Year Long-Term Award Pay-Outs During 2018, the PBRSUs (earned at 129% of target) and TBRSUs granted in 2015, and one-third of the stock options granted in each of 2015, 2016, and 2017 (with the exception of Mr. Salvatore’s option award granted on June 12, 2017 that provided for a two- year cliff vesting), vested. In addition, one-third of Mr. Roche’s TBRSU granted on May 15, 2017 vested, and Mr. Salvatore’s TBRSU granted on June 12, 2017 vested in full. For additional information regarding vesting of awards in 2018, please see “Option Exercises and Stock Vested in 2018” on page 46. In February 2019, the PBRSUs (earned at 115% of target based on performance in the 58 th percentile relative to peers) granted in February 2016, and one-third of the stock options granted in February of 2016, 2017 and 2018, vested. Other Compensation and Benefits Our NEOs are eligible to participate in all our employee benefit plans, such as medical, dental, group life, disability and accidental death and dismemberment insurance, our tax-qualified retirement plans, and our employee stock purchase plan, in each case on the same basis as other employees. In addition, certain of our senior employees, including the NEOs, participate in the following programs: Non-Qualified Retirement Savings Plan Our Non-Qualified Retirement Savings Plan provides additional Company contributions comparable to the benefits that are available to employees generally under our 401(k) Plan (see page 47 for additional information), but without regard to the maximum contribution limits under federal tax laws. For the 2018 plan year, the plan provided eligible employees, including each of our NEOs, a 6% employer contribution on total eligible compensation (salary and actual annual short-term incentive compensation, up to target) in excess of federal limits. Such contributions are deferred and credited with interest based on the GATT rate. The amount of total compensation eligible for an employer contribution cannot, however, exceed $1 million minus the limit in effect for our 401(k) Plan under Section 401(a)(17) of the Internal Revenue Code ($275,000 for 2018). We adopted this plan so that all employees will be entitled to employer contributions equal to the same percentage of total eligible compensation, without regard to the limits under federal tax laws applicable to the 401(k) Plan (subject to the limitations described in the paragraph above), and to be consistent with common market practices. This plan applies equally to all employees who have eligible compensation in excess of federal limits. The plan does not currently provide for additional employee contributions. Though the annual employer contributions to the Non-Qualified Retirement Savings Plan were made during the first quarter of 2019, since such contributions were made with respect to compensation paid in 2018, the Summary Compensation Table (see page 39), and Non-Qualified Retirement Savings Plan Table (see page 47) reflect such 2019 contributions. Such amounts are similarly included with respect to prior years. Perquisites The Committee reviews, at least annually, the corporate perquisites made available to our NEOs. The Committee believes corporate perquisites should represent a relatively small component of an NEO’s compensation package. In 2018, perquisites offered to our NEOs were comprised primarily of (i) financial planning services, and (ii) matching contributions (up to $5,000) to eligible tax-qualified charitable organizations. We provide financial planning services to each of our NEOs to minimize distractions and help ensure appropriate focus on Company responsibilities. The cost for such services is treated as taxable income to the participating executives. Our matching charitable contributions program is designed to encourage participation in charitable organizations and is consistent with our general philosophy of good corporate citizenship. Our executives and other Company officers and employees are encouraged to actively participate on boards of directors or in other capacities with local non-profit organizations. For more information regarding perquisites, please see the Summary Compensation Table on page 39. Amended and Restated Employment Continuity Plan (“ CIC Plan ”) The purposes of the CIC Plan are to: • keep key management employees focused on the interests of our shareholders and to secure their continued services and their undivided attention, dedication and objectivity in the event of a possible change in control; • provide job loss protection comparable to the protection provided by competing organizations; and • ensure that participants do not solicit or assist in the solicitation of our employees, agents and/or policyholders for a specified period, or disclose any of our confidential or proprietary information prior to or after a change in control. Additionally, the CIC Plan is designed to protect us and our shareholders, who might be affected adversely if management were to be distracted, or were to depart, in the event a change in control transaction were to be rumored or considered. The CIC