THG 2019 Proxy Statement

PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS TABLE OF CONTENTS PROXY STATEMENT SUMMARY ............................................................................................................................................................................... i QUESTIONS AND ANSWERS ABOUT PROXY MATERIALS AND THE ANNUAL MEETING ......................................................................................... 1 What is included in these proxy materials? ................................................................................................................................................................ 1 What is the purpose of the Annual Meeting?............................................................................................................................................................. 1 Who is entitled to vote at the Annual Meeting? ........................................................................................................................................................ 1 What are the voting rights of the holders of the Company’s common stock? ........................................................................................................... 1 Who is soliciting my vote? .......................................................................................................................................................................................... 1 How does the Board recommend that I vote?............................................................................................................................................................ 1 How many shares are entitled to vote at the Annual Meeting?................................................................................................................................. 1 How many shares must be present to hold the Annual Meeting? ............................................................................................................................. 1 How do I vote?............................................................................................................................................................................................................ 1 How do I vote by proxy? ............................................................................................................................................................................................. 1 Can I change my vote after I submit my proxy?.......................................................................................................................................................... 2 What vote is required to approve each item, and how are abstentions and broker non-votes treated?.................................................................. 2 What happens if a director nominee is not elected at the Annual Meeting?............................................................................................................. 2 How do participants in The Hanover Insurance Group Employee Stock Purchase Plan vote their shares? ............................................................... 2 Who can attend the Annual Meeting?........................................................................................................................................................................ 2 COMPANY STOCK OWNERSHIP ................................................................................................................................................................................ 3 Stock Ownership by the Company’s Directors and Executive Officers ....................................................................................................................... 3 Stock Ownership Guidelines for Named Executive Officers and Directors................................................................................................................. 4 Largest Owners of the Company’s Stock .................................................................................................................................................................... 5 CORPORATE GOVERNANCE ...................................................................................................................................................................................... 6 Director Nominees...................................................................................................................................................................................................... 6 Directors Continuing in Office..................................................................................................................................................................................... 7 Director Independence ............................................................................................................................................................................................... 9 Related-Person Transactions ...................................................................................................................................................................................... 9 Board Leadership Structure ........................................................................................................................................................................................ 10 Board Meetings and Attendance ................................................................................................................................................................................ 10 Board Committees ...................................................................................................................................................................................................... 11 Consideration of Director Nominees .......................................................................................................................................................................... 13 Communicating with the Board .................................................................................................................................................................................. 14 Director Compensation............................................................................................................................................................................................... 14 Board’s Role in Risk Oversight .................................................................................................................................................................................... 15 Director Retirement Policy.......................................................................................................................................................................................... 16 Code of Conduct ......................................................................................................................................................................................................... 16 Shareholder Engagement ........................................................................................................................................................................................... 16 ESG, Sustainability and Corporate Responsibility ....................................................................................................................................................... 16 ITEM I—ELECTION OF DIRECTORS ........................................................................................................................................................................... 17 ITEM II—ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION .............................................................................................. 18 ITEM III—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM .......................................................................................... 19 Fees Incurred from PricewaterhouseCoopers LLP ...................................................................................................................................................... 19 Fees and Pre-Approval Policy...................................................................................................................................................................................... 19 Audit Committee Report............................................................................................................................................................................................. 20 EXECUTIVE COMPENSATION .................................................................................................................................................................................... 21 Compensation Discussion and Analysis ...................................................................................................................................................................... 21 Compensation Committee Report .............................................................................................................................................................................. 38 Summary Compensation Table ................................................................................................................................................................................... 39 Grants of Plan-Based Awards in Last Fiscal Year......................................................................................................................................................... 42 Outstanding Equity Awards at Fiscal Year-End ........................................................................................................................................................... 44 Option Exercises and Stock Vested in 2018 ................................................................................................................................................................ 46 Pension and Retirement Benefits ............................................................................................................................................................................... 46 Potential Payments upon Termination or Change in Control ..................................................................................................................................... 48 CEO Pay Ratio.............................................................................................................................................................................................................. 53 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE ...................................................................................................................... 55 HOUSEHOLDING INFORMATION .............................................................................................................................................................................. 55 ANNUAL REPORT ON FORM 10-K ............................................................................................................................................................................ 55 OTHER MATTERS ...................................................................................................................................................................................................... 55 SHAREHOLDER PROPOSALS ..................................................................................................................................................................................... 55 APPENDIX A—EXCERPT FROM CORPORATE GOVERNANCE GUIDELINES ............................................................................................................... A-1 APPENDIX B—NON-GAAP FINANCIAL MEASURES .................................................................................................................................................. B-1