THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 52 (4) PBRSUs Represents the value of unvested PBRSUs granted in 2016, 2017 and 2018 (see “Outstanding Equity Awards at Fiscal Year-End 2018” on page 44 for more information). Death. In the event of a NEO’s death, a pro-rated portion of the PBRSUs vests and the awards remain subject to the performance-based vesting conditions determined based on the date of the termination event. For Messrs. Roche, Huber and Lavey, values presented for the 2016 PBRSUs are based on the actual payout of 115.38% of target. Since Mr. Farber was hired during 2016, the performance of his 2016 PBRSUs is based on the Company’s achievement of relative total shareholder return from the grant date, October 3, 2016 (his hire date), through December 31, 2018. Based on the Company’s performance for that period, values presented for Mr. Farber’s award are based on payout at 150% of target. For the 2017 award, Messrs. Roche, Farber, Huber and Lavey’s awards are presented at 150% of target. Since Mr. Salvatore was hired during 2017, the performance of his 2017 two-year and three-year PBRSUs is based on the Company’s achievement of a relative total shareholder return from the grant date of June 12, 2017 (his hire date) through December 31, 2018 and December 31, 2019, respectively. Based on Company performance since this grant date, Mr. Salvatore’s awards are both presented at 150% of target. For all applicable NEOs, values for the 2018 PBRSUs are presented at 115.38% of target. Disability. In the event of a NEO’s disability, a pro-rated portion of the PBRSUs vests and the participant is given an additional one-year service credit, and the awards remain subject to the performance-based vesting conditions determined based on the date of the termination event. For Messrs. Roche, Huber and Lavey, values presented for the 2016 PBRSUs are based on the actual payout of 115.38% of target and Mr. Farber’s is based on the actual payout at 150% of target. For all applicable NEOs, values for the 2017 and 2018 PBRSUs are presented at target, with the exception of Mr. Salvatore’s 2017 two-year PBRSU, which is presented at 150% of target. Voluntary. In the event Mr. Huber, who is retirement eligible under the terms of his 2018 PBRSU award, had retired as of December 31, 2018, a pro-rated portion of the 2018 PBRSUs would have vested and the award would remain subject to the performance-based vesting conditions. Therefore, the value for Mr. Huber’s award is presented at target. Without Cause / For Good Reason. The terms of Mr. Farber’s PBRSUs provide that if his employment is terminated without cause (other than as a result of his death, disability, or a change in control), or if he terminates his employment for good reason, then he will be given one additional year’s vesting credit. As a result, Mr. Farber’s 2016 PBRSU award would have been deemed to be vested as of December 31, 2018. The value for this award is based on payout at 150% of target. Change in Control. In the event of a change in control, unless such awards are assumed by the successor entity, 100% of the PBRSUs vest based upon the level of achievement to date. If awards are assumed, then participants are not entitled to any acceleration unless a NEO’s employment is involuntarily or constructively terminated following the change in control. For Messrs. Roche, Huber and Lavey, values for the 2016 award are presented at 115.38% of target and Mr. Farber’s is based on payout at 150% of target. For all NEOs, values for the 2017 awards are presented at 150% of target and values for the 2018 awards are presented at 115.38% of target. TBRSUs Represents the value of unvested TBRSUs granted in 2016 and 2017 (see “Outstanding Equity Awards at Fiscal Year- End 2018” on page 44 for more information). Death and Disability. In the event of a NEO’s death or disability, a pro-rated portion of the TBRSUs vest, plus an additional year in the case of disability. Change in Control. In the event of a change in control, unless such award is assumed by the successor entity, 100% of the TBRSUs vest. If awards are assumed, then participants are not entitled to any acceleration unless the participant’s employment is involuntarily or constructively terminated following the change in control. (5) Non-Qualified Stock Options Represents intrinsic value (difference between fair market value of our Common Stock and the exercise price of the options multiplied by the number of unvested options). Death. In the event an NEO’s employment is terminated by reason of death, for the 2016 and 2017 awards, a pro-rata portion of his or her outstanding stock options automatically vest, and the unvested portion is automatically cancelled and forfeited. For the 2018 awards, any unvested options immediately vest and become exercisable in full upon an NEO’s death. Disability. In the event an NEO’s employment is terminated by reason of disability, for the 2016 and 2017 awards, then a pro-rata portion, based on actual service during the life of the award, plus an additional one-year service credit, of his or her outstanding stock options automatically vest, and the unvested portion is automatically cancelled and forfeited. For the 2018 awards, any unvested options immediately vest and become exercisable in full if an NEO’s employment is terminated by reason of disability. Voluntary. In the event Mr. Huber, who is retirement eligible under the terms of his 2018 option award, had retired as of December 31, 2018, a pro-rated portion of the 2018 option would have vested and become exercisable.