THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 49 Long-Term Equity Incentive Plans Pursuant to the 2014 Plan and the 2006 Plan and certain stock award agreements issued thereunder, holders of stock awards, including the NEOs, may be entitled to pro-rated or full acceleration of vesting of their awards in the event the holder dies or is disabled prior to the vesting date. Disability, for these purposes, is as defined in the Company’s long-term disability plan. Under the terms of the 2018 restricted stock unit and option awards, a participant is entitled to pro-rated vesting upon retirement, which is defined as either termination at age 65 or older or age 60 or older if the participant has had five or more years of continuous service, provided that the participant has given the Company at least six months advanced written notice of retirement. As of December 31, 2018, only Mr. Huber was retirement eligible under the terms of his 2018 restricted stock unit and option awards. Change in Control THG’s CIC Plan outlines the potential benefits certain key executives could receive upon a Change in Control (defined below) of the Company. In the event of a Change in Control of the Company and subsequent involuntary termination of a participant’s employment by the Company or constructive termination of a participant’s employment by the participant within a two-year period following the Change in Control, the CIC Plan authorizes the payment of specified benefits to eligible participants. These include a lump-sum cash payment equal to a multiplier (the “ Multiplier ”) (2x for Mr. Roche and Mr. Farber, 3x for Mr. Huber, and 1.5x for Mr. Lavey and Mr. Salvatore) times the sum of a participant’s applicable base salary and target short-term incentive compensation award opportunity. Additionally, a participant is entitled to a cash payment of an amount equal to the amount that otherwise would have been credited under the Company’s 401(k) Plan and Non-Qualified Retirement Savings Plan for the year in which the employee’s employment was terminated. The CIC Plan also provides for continued coverage for up to one year under the Company’s health plans, payment of an amount equal to the participant’s target short-term incentive compensation award opportunity, pro- rated for service performed in the year of termination, and outplacement services. Mr. Huber, whose benefit has not been changed since the adoption of the CIC Plan in 2008, will also be entitled to a gross-up payment (“ 280G Gross-Up ”) if his change in control payments and benefits become subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, subject to a requirement that the amounts subject to the excise tax exceed a certain amount (the excise tax is a special additional tax applicable to change-in-control payments; the 280G Gross-Up does not apply to ordinary federal and state income taxes that would be payable without regard to the impact of such excise tax and the gross-ups). None of our other NEOs is currently entitled to a 280G Gross-Up benefit. Based on a hypothetical termination as of December 31, 2018, Mr. Huber would not have been entitled to a 280G Gross-Up benefit. Pursuant to the 2006 Plan, the 2014 Plan and the various agreements issued thereunder, in the event of a change in control (defined below), the participant may be entitled to certain accelerated vesting of equity awards if such awards are not assumed by the successor company, or if such participant’s employment is involuntarily or constructively terminated after the change in control. The tables below present the hypothetical values as if such awards are assumed by a successor company and such participant is involuntarily or constructively terminated thereafter. Such hypothetical values would be identical in the event the successor company did not assume the equity grants and instead they were accelerated. As further described in the footnotes and because the tables assume a hypothetical triggering event on December 31, 2018, the values in the tables below include amounts for short-term and long-term incentive compensation awards that vested and were earned by the executives in the first quarter of 2019. Potential Payments Upon Termination or Change in Control* Tables John C. Roche Benefit Death Disability For Cause Voluntary Without Cause For Good Reason Change in Control Cash Severance (1) (2) $ — $ — $ — $ — $ 1,890,000 $ 1,890,000 $ 3,780,000 Cash Incentives (3) — — — — — — 990,000 Equity Unvested Restricted Stock Units (PBRSUs and TBRSUs) (4) 1,382,790 1,824,298 — — — — 2,677,419 Unexercisable Stock Options (5) 801,273 1,054,012 — — — — 1,087,599 Other Benefits Health & Welfare (6) — — — — — — 21,453 Outplacement (7) — — — — — — 30,000 Cash Severance Related to Company’s 401(k) and NQ Retirement Savings Plan (8) — — — — — — 60,000 TOTAL $2,184,063 $2,878,310 $ — $ — $ 1,890,000 $ 1,890,000 $ 8,646,471 See pages 51-53 for footnotes