-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WkNcAHVC2Zv9nLHTxhnNbWccf/To7DCn2O1YJxM7Otf9yAXQBBQ905agFj9rXaMb 8w2HHzD+lgUpbEC+NllPvg== 0000949377-08-000073.txt : 20080508 0000949377-08-000073.hdr.sgml : 20080508 20080508164612 ACCESSION NUMBER: 0000949377-08-000073 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080508 DATE AS OF CHANGE: 20080508 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX COMPANIES INC/DE CENTRAL INDEX KEY: 0001129633 STANDARD INDUSTRIAL CLASSIFICATION: LIFE INSURANCE [6311] IRS NUMBER: 060493340 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16517 FILM NUMBER: 08814624 BUSINESS ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 061025056 BUSINESS PHONE: 8604035000 MAIL ADDRESS: STREET 1: ONE AMERICAN ROW STREET 2: PO BOX 5056 CITY: HARTFORD STATE: CT ZIP: 061025056 10-Q 1 pnx10q.htm THE PHOENIX COMPANIES, INC. 10-Q FORM 10-Q



 


 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

—————————

FORM 10-Q

—————————

 

(MARK ONE)

 

 

þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008


OR

 

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE TRANSITION PERIOD FROM __________ TO __________


Commission File Number: 001-16517

[x002.gif]

THE PHOENIX COMPANIES, INC.

(Exact name of registrant as specified in its charter)


Delaware

06-1599088

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

 

One American Row, Hartford, Connecticut

06102-5056

(Address of principal executive offices)

(Zip Code)

(860) 403-5000

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

YES þ      NO ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

(Do not check if smaller reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

YES ¨      NO þ


On April 30, 2008, the registrant had 114.4 million shares of common stock outstanding.


 


 


TABLE OF CONTENTS

 

Part I

Financial Information

Page

 

 

 

Item 1.

Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

57

Item 4.

Controls and Procedures

58

 

 

 

Part II

Other Information

 

 

 

 

Item 1.

Legal Proceedings

59

Item 1A.

Risk Factors

59

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 3.

Defaults Upon Senior Securities

59

Item 4.

Submission of Matters to a Vote of Security Holders

59

Item 5.

Other Information

60

Item 6.

Exhibits

62

 

 

Signatures

67




2


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE PHOENIX COMPANIES, INC.

Unaudited Interim Consolidated Balance Sheet

($ in millions, except share data)

March 31, 2008 (unaudited) and December 31, 2007

 

 

Mar 31,

 

Dec 31,

 

2008

 

2007

ASSETS:

 

 

 

 

 

Available-for-sale debt securities, at fair value

$

11,617.4 

 

$

11,970.0 

Available-for-sale equity securities, at fair value

 

204.9 

 

 

205.3 

Venture capital partnerships, at equity in net assets

 

195.4 

 

 

173.7 

Policy loans, at unpaid principal balances

 

2,402.9 

 

 

2,380.5 

Other investments

 

430.5 

 

 

507.3 

Fair value option investments

 

112.8 

 

 

— 

 

 

14,963.9 

 

 

15,236.8 

Available-for-sale debt and equity securities pledged as collateral, at fair value

 

185.9 

 

 

219.1 

Total investments

 

15,149.8 

 

 

15,455.9 

Cash and cash equivalents

 

362.3 

 

 

577.7 

Accrued investment income

 

215.8 

 

 

209.6 

Receivables

 

196.4 

 

 

159.7 

Deferred policy acquisition costs

 

2,237.2 

 

 

2,081.2 

Deferred income taxes

 

57.1 

 

 

36.9 

Intangible assets

 

190.5 

 

 

208.2 

Goodwill

 

484.5 

 

 

484.5 

Other assets

 

151.5 

 

 

172.9 

Separate account assets

 

10,344.2 

 

 

10,820.3 

Total assets

$

29,389.3 

 

$

30,206.9 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Policy liabilities and accruals

$

13,803.1 

 

$

13,791.2 

Policyholder deposit funds

 

1,723.3 

 

 

1,808.9 

Indebtedness

 

474.0 

 

 

627.7 

Other liabilities

 

513.1 

 

 

551.0 

Non-recourse collateralized obligations

 

270.5 

 

 

317.9 

Separate account liabilities

 

10,344.2 

 

 

10,820.3 

Total liabilities

 

27,128.2 

 

 

27,917.0 

 

 

 

 

 

 

CONTINGENT LIABILITIES (NOTE 17)

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

Common stock, $.01 par value: 125,695,161 and 125,604,486 shares issued

 

1.3 

 

 

1.3 

Additional paid-in capital

 

2,619.5 

 

 

2,616.1 

Accumulated deficit

 

(31.7)

 

 

(9.8)

Accumulated other comprehensive loss

 

(148.5)

 

 

(138.2)

Treasury stock, at cost: 11,313,564 and 11,313,564 shares

 

(179.5)

 

 

(179.5)

Total stockholders’ equity

 

2,261.1 

 

 

2,289.9 

Total liabilities and stockholders’ equity

$

29,389.3 

 

$

30,206.9 


The accompanying notes are an integral part of these financial statements.



3


THE PHOENIX COMPANIES, INC.

Unaudited Interim Consolidated Statement of Income and Comprehensive Income

($ in millions, except share data)

Three Months Ended March 31, 2008 and 2007

 

 

2008

 

2007

REVENUES:

 

 

 

 

 

Premiums

$

180.2 

 

$

194.7 

Insurance, investment management and product fees

 

178.2 

 

 

150.8 

Mutual fund ancillary and other revenue

 

14.6 

 

 

16.6 

Net investment income

 

248.5 

 

 

276.5 

Net realized investment gains (losses)

 

(47.5)

 

 

24.5 

Total revenues

 

574.0 

 

 

663.1 

 

 

 

 

 

 

BENEFITS AND EXPENSES:

 

 

 

 

 

Policy benefits, excluding policyholder dividends

 

351.6 

 

 

317.3 

Policyholder dividends

 

73.7 

 

 

103.8 

Policy acquisition cost amortization

 

30.0 

 

 

43.5 

Intangible asset amortization

 

7.5 

 

 

7.6 

Intangible asset impairment

 

10.5 

 

 

— 

Interest expense on indebtedness

 

10.2 

 

 

9.5 

Interest expense on non-recourse collateralized obligations

 

3.2 

 

 

4.0 

Other operating expenses

 

117.4 

 

 

106.8 

Total benefits and expenses

 

604.1 

 

 

592.5 

Income (loss) before income taxes

 

(30.1)

 

 

70.6 

Income tax (expense) benefit

 

11.1 

 

 

(20.8)

Income (loss) from continuing operations

 

(19.0)

 

 

49.8 

Income from discontinued operations, net of income taxes

 

— 

 

 

0.8 

Net income (loss)

$

(19.0)

 

$

50.6 

 

 

 

 

 

 

EARNINGS PER SHARE:

 

 

 

 

 

Net earnings (loss) – basic

$

(0.17)

 

$

0.44 

Net earnings (loss) – diluted

$

(0.17)

 

$

0.44 

Basic weighted-average common shares outstanding (in thousands)

 

114,336 

 

 

113,836 

Diluted weighted-average common shares outstanding (in thousands)

 

114,336 

 

 

115,093 

 

 

 

 

 

 

COMPREHENSIVE INCOME:

 

 

 

 

 

Net income (loss)

$

(19.0)

 

$

50.6 

Net unrealized investment gains (losses) (Note 8)

 

(11.8)

 

 

3.1 

Net unrealized foreign currency translation and other losses

 

— 

 

 

(3.7)

Net unrealized derivative instruments gains (losses)

 

(1.4)

 

 

0.6 

Other comprehensive loss

 

(13.2)

 

 

— 

Comprehensive income (loss)

$

(32.2)

 

$

50.6 


The accompanying notes are an integral part of these financial statements.



4


THE PHOENIX COMPANIES, INC.

Unaudited Interim Consolidated Statement of Cash Flows

($ in millions)

Three Months Ended March 31, 2008 and 2007

 

 

2008

 

2007

OPERATING ACTIVITIES:

 

 

 

 

 

Premiums collected

$

196.9 

 

$

197.6 

Insurance, investment management and product fees collected

 

189.5 

 

 

168.4 

Investment income collected

 

228.5 

 

 

232.5 

Policy benefits paid, excluding policyholder dividends

 

(248.8)

 

 

(276.3)

Policyholder dividends paid

 

(82.7)

 

 

(80.4)

Policy acquisition costs paid

 

(142.2)

 

 

(78.0)

Interest expense on indebtedness paid

 

(8.2)

 

 

(7.7)

Interest expense on collateralized obligations paid

 

(1.2)

 

 

(5.3)

Other operating expenses paid

 

(169.1)

 

 

(136.9)

Income taxes paid

 

(6.4)

 

 

(5.8)

Cash from (for) continuing operations

 

(43.7)

 

 

8.1 

Discontinued operations, net

 

(5.5)

 

 

(5.4)

Cash from (for) operating activities

 

(49.2)

 

 

2.7 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Investment purchases

 

(1,144.0)

 

 

(1,180.7)

Investment sales, repayments and maturities

 

1,220.9 

 

 

1,258.8 

Debt and equity securities pledged as collateral sales

 

25.0 

 

 

14.8 

Subsidiary purchases

 

(0.3)

 

 

(0.2)

Premises and equipment additions

 

(5.0)

 

 

(5.1)

Discontinued operations, net

 

11.4 

 

 

15.6 

Cash from investing activities

 

108.0 

 

 

103.2 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

Policyholder deposit fund deposits

 

178.4 

 

 

163.9 

Policyholder deposit fund withdrawals

 

(275.7)

 

 

(265.1)

Indebtedness repayments

 

(153.7)

 

 

(57.2)

Collateralized obligations repayments

 

(23.3)

 

 

(7.1)

Proceeds from stock options exercised

 

0.1 

 

 

0.4 

Cash for financing activities

 

(274.2)

 

 

(165.1)

Change in cash and cash equivalents

 

(215.4)

 

 

(59.2)

Cash and cash equivalents, beginning of period

 

577.7 

 

 

404.9 

Cash and cash equivalents, end of period

$

362.3 

 

$

345.7 


Included in cash and cash equivalents above is cash pledged as collateral of $15.7 million and $9.5 million at March 31, 2008 and 2007, respectively.


The accompanying notes are an integral part of these financial statements.



5


THE PHOENIX COMPANIES, INC.

Unaudited Interim Consolidated Statement of Changes in Stockholders’ Equity

($ in millions, except share data)

Three Months Ended March 31, 2008 and 2007

 

 

Three Months

 

2008

 

2007

COMMON STOCK:

 

 

 

 

 

  Balance, beginning of period

$

1.3 

 

$

1.3 

    Common shares issued

 

— 

 

 

— 

  Balance, end of period

$

1.3 

 

$

1.3 

 

 

 

 

 

 

ADDITIONAL PAID-IN CAPITAL:

 

 

 

 

 

  Balance, beginning of period

$

2,616.1 

 

$

2,600.3 

    Compensation expense recognized on restricted stock units

 

2.4 

 

 

7.3 

    Conversion of restricted stock units to common shares, net

 

(0.4)

 

 

(2.4)

    Stock options awarded as compensation

 

1.3 

 

 

0.7 

    Stock options exercised

 

0.1 

 

 

0.5 

  Balance, end of period

$

2,619.5 

 

$

2,606.4 

 

 

 

 

 

 

RETAINED EARNINGS / ACCUMULATED DEFICIT:

 

 

 

 

 

  Balance, beginning of period

$

(9.8)

 

$

(111.3)

    Adjustment for initial application of SFAS 159 (Note 2)

 

(2.9)

 

 

— 

    Net income (loss)

 

(19.0)

 

 

50.6 

    Adjustment for initial application of FIN 48 (Note 2)

 

— 

 

 

(4.0)

  Balance, end of period

$

(31.7)

 

$

(64.7)

 

 

 

 

 

 

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):

 

 

 

 

 

  Balance, beginning of period

$

(138.2)

 

$

(74.7)

    Adjustment for initial application of SFAS 159 (Note 2)

 

2.9 

 

 

— 

    Other comprehensive loss

 

(13.2)

 

 

— 

  Balance, end of period

$

(148.5)

 

$

(74.7)

 

 

 

 

 

 

TREASURY STOCK, AT COST:

 

 

 

 

 

  Balance, beginning of period

$

(179.5)

 

$

(179.5)

    Common shares contributed to employee savings plan

 

— 

 

 

— 

  Balance, end of period

$

(179.5)

 

$

(179.5)

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ EQUITY:

 

 

 

 

 

  Balance, beginning of period

$

2,289.9 

 

$

2,236.1 

    Change in stockholders’ equity

 

(28.8)

 

 

52.7 

  Stockholders’ equity, end of period

$

2,261.1 

 

$

2,288.8 


The accompanying notes are an integral part of these financial statements.




6


THE PHOENIX COMPANIES, INC.

Notes to Unaudited Interim Consolidated Financial Statements

Three Months Ended March 31, 2008 and 2007




1. Organization and Operations


Our unaudited interim consolidated financial statements include the accounts of The Phoenix Companies, Inc. (the “Company”), its subsidiaries and certain sponsored collateralized obligation trusts as described in Note 11. The Phoenix Companies, Inc. is a holding company and our operations are conducted through subsidiaries, the principal ones of which are Phoenix Life Insurance Company (“Phoenix Life”) and Phoenix Investment Partners, Ltd. (“PXP”). We have eliminated significant intercompany accounts and transactions in consolidating these financial statements.


On February 7, 2008, we announced our intention to spin off our asset management subsidiary, PXP, by way of a dividend of PXP’s stock to our shareholders. The spin-off is intended to be tax free to our shareholders and the spin-off and related transactions are expected to be completed in the third quarter of 2008. The notes to these financial statements include disclosures that reflect our business and organization as currently structured.



2. Basis of Presentation and Significant Accounting Policies


We have prepared these financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which differ materially from the accounting practices prescribed by various insurance regulatory authorities.


Use of estimates


In preparing these financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. We employ significant estimates and assumptions in the determination of deferred policy acquisition costs; policyholder liabilities and accruals; the valuation of intangible assets; the valuation of investments in debt and equity securities and venture capital partnerships; the valuation of deferred tax assets; pension and other postemployment benefits liabilities; and accruals for contingent liabilities. Our significant accounting policies are presented in the notes to our consolidated financial statements in our 2007 Annual Report on Form 10-K.


Our interim consolidated financial statements do not include all of the disclosures required by GAAP for annual financial statements. In our opinion, we have included all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair statement of the results for the interim periods. Financial results for the three-month period in 2008 are not necessarily indicative of the results that may be expected for the year 2008. These consolidated financial statements should be read in conjunction with our consolidated financial statements in our 2007 Annual Report on Form 10-K.


Adoption of new accounting standards


On February 15, 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”), which gives entities the option to measure eligible financial assets, financial liabilities and firm commitments at fair value (i.e., the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a firm commitment. Subsequent changes in fair value must be recorded in earnings. Additionally, SFAS 159 allows for a one-time election for existing positions upon adoption, with the transition adjustment recorded to beginning retained earnings. We adopted SFAS 159 as of January 1, 2008 with no net effect to equity, as further described below.



7


2. Basis of Presentation and Significant Accounting Policies (continued)


We elected to apply the SFAS 159 fair value option to available-for-sale equity securities with a fair value of $74.6 million at January 1, 2008. These securities back our deferred compensation liabilities. Previously, changes in the fair value of the securities were recorded in other comprehensive income while changes in the liability were recorded in earnings. Electing the fair value option resulted in a decrease to accumulated other comprehensive loss and an offsetting increase to accumulated deficit of $2.9 million, net of tax, and allows us to mitigate the associated accounting volatility. Following election of the fair value option, changes in the fair value of these securities are recorded in earnings.


In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS 157 provides guidance on how to measure fair value when required under existing accounting standards. The statement establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels (“Level 1, 2 and 3”). Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets that we have the ability to access at the measurement date. Level 2 inputs are observable inputs, other than quoted prices included in Level 1, for the asset or liability. Level 3 inputs are unobservable inputs reflecting our estimates of the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). Quantitative and qualitative disclosures will focus on the inputs used to measure fair value for both recurring and non-recurring fair value measurements and the effects of the measurements in the financial statements. We adopted SFAS 157 effective January 1, 2008 with no material impact on our financial position and results of operations.


We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on January 1, 2007. As a result of the implementation of FIN 48, we recognized an increase in reserves for uncertain tax benefits through a cumulative effect adjustment of approximately $4.0 million, which was accounted for as an increase to the January 1, 2007 balance of accumulated deficit. Including the cumulative effect adjustment, we had approximately $23.9 million of total gross unrecognized tax benefits as of January 1, 2007. The amount of unrecognized tax benefits at January 1, 2007 that would, if recognized, impact the annual effective tax rate upon recognition was $21.0 million. See Note 13 to these financial statements for more information.


In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140 (“SFAS 156”). SFAS 156 provides guidance on recognition and disclosure of servicing assets and liabilities and is effective beginning January 1, 2007. We adopted this standard effective January 1, 2007 with no material impact on our financial position and results of operations.


In September 2005, the Accounting Standards Executive Committee (“AcSEC”) of the AICPA issued Statement of Position 05-1, Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection With Modifications or Exchanges of Insurance Contracts (“SOP 05-1”). SOP 05-1 provides guidance on accounting by insurance enterprises for deferred policy acquisition costs on internal replacements of insurance and investment contracts other than those specifically described in Statement of Financial Accounting Standards No. 97 (“SFAS No. 97”). The SOP defines an internal replacement as a modification in product benefits, features, rights, or coverages that occurs by the exchange of a contract for a new contract, or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. This SOP is effective for internal replacements occurring in fiscal years beginning after December 15, 2006. We adopted this standard effective January 1, 2007 with no material effect on our financial position and results of operations.


Accounting standards not yet adopted


In December 2007, the FASB issued SFAS No. 141(R), Accounting for Business Combinations (“SFAS 141(R)”). SFAS 141(R) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed and requires the acquirer to disclose all information needed to evaluate and understand the nature and financial effect of the combination and is effective beginning for fiscal years beginning after December 15, 2008. We will adopt this standard effective January 1, 2009 and do not expect it to have a material impact on our financial position and results of operations.



8


2. Basis of Presentation and Significant Accounting Policies (continued)


In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). SFAS 160 requires all entities to report noncontrolling interests in subsidiaries in the same way—as equity in the consolidated financial statements and requires that associated transactions be treated as equity transactions—and is effective beginning for fiscal years beginning after December 15, 2008. We will adopt this standard effective January 1, 2009 and do not expect it to have a material impact on our financial position and results of operations.


In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”). This statement amends and expands the requirement for qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. SFAS 161 will be effective for us on January 1, 2009.



3. Business Combinations and Dispositions


PFG Holdings, Inc.


In 2003, we acquired the remaining interest in PFG Holdings, Inc. (“PFG”), the holding company for our private placement operation. The initial purchase consideration was $16.7 million in addition to a contingent obligation for additional purchase consideration based on the achievement of certain performance targets through 2007 and the appraised value of PFG as of December 31, 2007. Through November 2007, we paid additional consideration of $19.4 million, including $13.4 million, $0.0 million and $3.0 million during 2007, 2006 and 2005 respectively. In November 2007, we amended the original purchase agreement to extend the term of the agreement through the end of 2009 and to establish a more objective mechanism to value PFG and calculate the final amount of contingent consideration. As a result, we may be obligated to make additional cash payments of $17.6 million by June 2010 if certain performance targets are met through December 2009. Since the contingent payments are based on the achievement of performance targets, the actual payments may be lower. If the performance targets are exceeded, the actual payments may be higher, subject to a maximum of $77.1 million. In accordance with EITF 95-8, Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination, a portion of the contingent payments will be accounted for as goodwill, and the amounts related to performance in excess of targets will be expensed, if and when achieved.


EMCO


On December 20, 2007, we sold all of the outstanding stock of Emprendimiento Compartido S.A. (“EMCO”), an Argentine wholly-owned subsidiary. We realized an after-tax loss of $4.8 million on this sale. This loss, as well as EMCO’s results up through the date of sale, are reported in discontinued operations in these financial statements. Prior year results have also been reported in discontinued operations.


Kayne Anderson Rudnick Investment Management, LLC


As a result of a step acquisition completed in 2005, PXP owns 100% of Kayne Anderson Rudnick Investment Management, LLC (“KAR”). In connection with the purchase, we issued promissory notes to the sellers in the amount of $67.0 million to finance the remainder of the acquisition, of which $9.8 million was paid on January 3, 2006. The remainder, plus deferred interest, was paid on January 2, 2007. The interest rate on the notes was 4.75%.


Lombard International Assurance S.A.


On January 11, 2005, we disposed of our interests in Lombard International Assurance S.A. (“Lombard”) for consideration of $59.0 million. In the first quarter of 2007, 2006 and 2005, we realized after-tax gains of $8.9 million, $6.5 million and $9.3 million, respectively, which included earn-out gain consideration received. We are not entitled to any additional consideration related to this sale going forward.




9


4. Business Segments


We have two reportable operating segments—Life and Annuity, and Asset Management. Businesses that are not sufficiently material to require separate disclosure as well as interest expense and indebtedness are included in Corporate and Other.


The Life and Annuity segment includes individual life insurance and annuity products including universal life, variable universal life, term life and fixed and variable annuities. It also includes the results of our Closed Block, which consists primarily of participating whole life products. We allocate capital to our Life and Annuity segment based on risk-based capital for our insurance products. We used 300% of risk-based capital levels for the three-month periods ended March 31, 2008 and 2007. Capital within our life insurance companies that is unallocated is included in Corporate and Other operations.


Within Asset Management, we focus on two customer groups—retail investors and institutional clients. We provide investment management services to retail customers through open-end mutual funds, closed-end funds and managed accounts. Managed accounts include intermediary programs sponsored and distributed by non-affiliated broker-dealers, and direct managed accounts which are sold and administered by us. We also provide transfer agency, accounting and administrative services to our open-end mutual funds.


Through our institutional group, we provide investment management services primarily to corporations, multi-employer retirement funds and foundations, as well as to endowment and special purpose funds. In addition, we manage structured finance products, including collateralized debt obligations backed by portfolios of assets, for example, public high yield bonds, mortgage-backed and asset-backed securities or bank loans. See Note 11 to these financial statements for additional information.


Our investment management services are provided by wholly owned managers as well as unaffiliated managers through sub-advisory agreements. We provide managers with consolidated distribution and administrative support, thereby allowing each manager to focus on investment management. We monitor the quality of the managers’ products by assessing their performance, style consistency and the discipline with which they apply their investment processes.


We allocate capital to our Asset Management segment on the basis of the historical capital within that segment. Excess investment income on debt and equity securities pledged as collateral represent investment advisory fees earned by our asset management subsidiary and are allocated to the Asset Management segment as investment management fees for segment reporting purposes only.


Corporate and Other includes corporate operations that are not allocated to business segments. Corporate operations consist primarily of:

 

·

 

interest expense;

·

 

wind-down businesses which include group pension, guaranteed investment contract business and international operations that do not meet the criteria to be separately disclosed; and

·

 

investment income on debt and equity securities pledged as collateral, as well as interest expense on non-recourse collateralized obligations, both related to two consolidated collateralized obligation trusts we sponsor.


The accounting policies of the reportable operating segments are the same as those described in our Significant Accounting Policies in Note 2 to our financial statements in our 2007 Annual Report on Form 10-K. We allocate net investment income based on the assets allocated to the segments. We allocate certain costs and expenses to the segments based on a review of the nature of the costs, time studies and other methodologies.


In managing our business, we analyze segment performance on the basis of “operating income” which does not equate to “net income” as determined in accordance with GAAP. Rather, it is the measure of profit or loss used by the Company to evaluate performance, allocate resources and manage our operations.


Operating income is calculated by excluding realized investment gains (losses) and certain other items because we do not consider them to be related to the operating performance of our segments. The size and timing of realized investment gains and losses are often subject to our discretion. Certain other items are also excluded from operating income if, in our opinion, they are not indicative of overall operating trends. While some of these items may be significant components of net income in accordance with GAAP, we believe that operating income, and measures that are derived from or incorporate operating income, are appropriate measures that are useful to investors because they identify the earnings attributable to the ongoing operations of the business.


10


4. Business Segments (continued)


The criteria used to identify an item that will be excluded from operating income include: whether the item is infrequent and is material to the segment’s income; or whether it results from a change in regulatory requirements, or relates to other unusual circumstances. Items excluded from operating income may vary from period to period. Because these items are excluded based on our discretion, inconsistencies in the application of our selection criteria may exist. Operating income is not a substitute for net income determined in accordance with GAAP and may be different from similarly titled measures of other companies. However, the Company believes that the presentation of operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of our business.

 

Segment Information on Assets:

Mar 31,

 

Dec 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Segment assets

 

 

 

 

 

Life and annuity segment

$

28,076.7 

 

$

28,680.8 

Asset management segment

 

714.1 

 

 

751.2 

Corporate and other

 

583.4 

 

 

753.9 

Net assets of discontinued operations

 

15.1 

 

 

21.0 

Total assets

$

29,389.3 

 

$

30,206.9 


 

Segment Information on Revenues:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

Segment revenues

 

 

 

 

 

Life and annuity segment

$

565.5 

 

$

573.8 

Asset management segment

 

47.7 

 

 

54.0 

Elimination of inter-segment revenues

 

3.2 

 

 

2.8 

Corporate and other

 

5.1 

 

 

8.0 

Net realized investment gains (losses)

 

(47.5)

 

 

24.5 

Total revenues

$

574.0 

 

$

663.1 


 

Results of Operations by Segment as Reconciled to

Three Months Ended

Consolidated Net Income (Loss):

March 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Life and annuity segment

$

26.2 

 

$

62.9 

Asset management segment

 

(13.3)

 

 

0.6 

Corporate and other

 

(20.6)

 

 

(9.2)

Applicable income tax (expense) benefit

 

3.0 

 

 

(16.9)

Realized investment gains (losses), net of income taxes and other offsets

 

(14.3)

 

 

12.4 

Income from discontinued operations, net of income taxes

 

— 

 

 

0.8 

Net income

$

(19.0)

 

$

50.6 


Life and Annuity Segment

 

Life and Annuity Segment Assets:

Mar 31,

 

Dec 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Investments

$

14,821.1 

 

$

15,103.5 

Cash and cash equivalents

 

266.7 

 

 

289.0 

Accrued investment income

 

214.6 

 

 

203.5 

Receivables

 

126.8 

 

 

105.6 

Deferred policy acquisition costs

 

2,237.2 

 

 

2,081.2 

Goodwill

 

30.1 

 

 

30.1 

Other general account assets

 

36.0 

 

 

47.6 

Separate accounts

 

10,344.2 

 

 

10,820.3 

Total segment assets

$

28,076.7 

 

$

28,680.8 



11


4. Business Segments (continued)

 

Life and Annuity Segment Income:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Premiums

$

180.2 

 

$

194.7 

Insurance, investment management and product fees

 

145.6 

 

 

114.1 

Net investment income

 

239.7 

 

 

265.0 

Total segment revenues

 

565.5 

 

 

573.8 

Policy benefits, including policyholder dividends

 

439.2 

 

 

413.5 

Policy acquisition cost amortization

 

36.0 

 

 

43.8 

Other operating expenses

 

64.1 

 

 

53.6 

Total segment benefits and expenses

 

539.3 

 

 

510.9 

Operating income before income taxes

 

26.2 

 

 

62.9 

Allocated income tax expense

 

(9.7)

 

 

(19.6)

Operating income

 

16.5 

 

 

43.3 

Realized investment gains (losses), net of income taxes and other offsets

 

(12.6)

 

 

0.5 

Net income

$

3.9 

 

$

43.8 


 

Life and Annuity Segment Revenues by Product:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

Premiums

 

 

 

 

 

Non-participating life insurance

$

2.0 

 

$

7.2 

Participating life insurance

 

178.2 

 

 

187.5 

Total premiums

 

180.2 

 

 

194.7 

Insurance, investment management and product fees

 

 

 

 

 

Variable universal life insurance

 

31.0 

 

 

30.4 

Universal life insurance

 

93.2 

 

 

63.5 

Other life insurance

 

1.7 

 

 

1.3 

Total, life insurance

 

125.9 

 

 

95.2 

Annuities

 

19.7 

 

 

18.9 

Total insurance, investment management and product fees

 

145.6 

 

 

114.1 

Net investment income

 

239.7 

 

 

265.0 

Segment revenues

$

565.5 

 

$

573.8 


Asset Management Segment

 

Asset Management Segment Assets:

Mar 31,

 

Dec 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Investments

$

12.7 

 

$

13.5 

Cash and cash equivalents

 

20.8 

 

 

36.5 

Receivables

 

27.2 

 

 

29.6 

Intangible assets

 

190.5 

 

 

208.2 

Goodwill

 

454.4 

 

 

454.4 

Other assets

 

8.5 

 

 

9.0 

Total segment assets

$

714.1 

 

$

751.2 



12


4. Business Segments (continued)

 

Asset Management Segment Income:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Investment management fees

$

32.8 

 

$

36.9 

Mutual fund ancillary fees and other revenue

 

14.6 

 

 

16.6 

Net investment income

 

0.3 

 

 

0.5 

Total segment revenues

 

47.7 

 

 

54.0 

Intangible asset amortization

 

7.5 

 

 

7.6 

Intangible asset impairment

 

10.5 

 

 

— 

Other operating expenses

 

43.0 

 

 

45.8 

Total segment expenses

 

61.0 

 

 

53.4 

Operating income (loss) before income taxes

 

(13.3)

 

 

0.6 

Allocated income tax (expense) benefit

 

4.6 

 

 

(0.9)

Operating loss

 

(8.7)

 

 

(0.3)

Realized investment gains (losses), net of income taxes

 

(0.6)

 

 

0.1 

Net loss

$

(9.3)

 

$

(0.2)



5. Demutualization and Closed Block


In 1999, we began the process of reorganizing and demutualizing our then principal operating company, Phoenix Home Life Mutual Insurance Company. We completed the process in June 2001, when all policyholder membership interests in this mutual company were extinguished and eligible policyholders of the mutual company received shares of common stock of The Phoenix Companies, Inc., together with cash and policy credits, as compensation. To protect the future dividends of these policyholders, we also established a closed block for their existing policies.


Because closed block liabilities exceed assets, we have a net closed block liability at each period-end. This net liability represents the maximum future earnings contribution to be recognized from the closed block and the change in this net liability each period is in the earnings contribution recognized from the closed block for the period. To the extent that actual cash flows differ from amounts anticipated, we may adjust policyholder dividends. If the closed block has excess funds, those funds will be available only to the closed block policyholders. However, if the closed block has insufficient funds to make policy benefit payments that are guaranteed, the payments will be made from assets outside of the closed block.

 

Closed Block Assets and Liabilities:

 

 

 

 

Inception

($ in millions)

Mar 31,

 

Dec 31,

 

(Dec 31,

 

2008

 

2007

 

1999)

 

 

 

 

 

 

 

 

 

Debt securities

$

6,826.5 

 

$

6,919.4 

 

$

4,773.1 

Equity securities

 

122.3 

 

 

134.0 

 

 

— 

Venture capital partnerships

 

174.8 

 

 

157.3 

 

 

— 

Policy loans

 

1,358.8 

 

 

1,357.1 

 

 

1,380.0 

Other investments

 

143.1 

 

 

136.4 

 

 

399.0 

Total closed block investments

 

8,625.5 

 

 

8,704.2 

 

 

6,552.1 

Cash and cash equivalents

 

60.2 

 

 

67.8 

 

 

— 

Accrued investment income

 

115.6 

 

 

112.1 

 

 

106.8 

Receivables

 

44.6 

 

 

44.7 

 

 

35.2 

Deferred income taxes

 

324.7 

 

 

329.3 

 

 

389.4 

Other closed block assets

 

16.0 

 

 

10.0 

 

 

6.2 

Total closed block assets

 

9,186.6 

 

 

9,268.1 

 

 

7,089.7 

Policy liabilities and accruals

 

9,800.7 

 

 

9,811.2 

 

 

8,301.7 

Policyholder dividends payable

 

337.1 

 

 

332.8 

 

 

325.1 

Policyholder dividend obligation

 

149.8 

 

 

246.0 

 

 

— 

Other closed block liabilities

 

59.9 

 

 

49.3 

 

 

12.3 

Total closed block liabilities

 

10,347.5 

 

 

10,439.3 

 

 

8,639.1 

Excess of closed block liabilities over closed block assets

$

1,160.9 

 

$

1,171.2 

 

$

1,549.4 



13


5. Demutualization and Closed Block (continued)

 

Closed Block Revenues and Expenses and Changes in

Cumulative

 

Three Months Ended

Policyholder Dividend Obligations:

from

 

March 31,

($ in millions)

Inception

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Closed block revenues

 

 

 

 

 

 

 

 

Premiums

$

7,760.0 

 

$

175.5 

 

$

182.7 

Net investment income

 

4,580.9 

 

 

140.9 

 

 

150.5 

Net realized investment gains (losses)

 

(89.9)

 

 

(16.5)

 

 

5.4 

Total revenues

 

12,251.0 

 

 

299.9 

 

 

338.6 

Policy benefits, excluding dividends

 

8,325.3 

 

 

209.8 

 

 

217.7 

Other operating expenses

 

80.8 

 

 

1.9 

 

 

1.8 

Total benefits and expenses, excluding policyholder dividends

 

8,406.1 

 

 

211.7 

 

 

219.5 

Closed block contribution to income before dividends and income taxes

 

3,844.9 

 

 

88.2 

 

 

119.1 

Policyholder dividends

 

(3,215.3)

 

 

(73.6)

 

 

(103.6)

Closed block contribution to income before income taxes

 

629.6 

 

 

14.6 

 

 

15.5 

Applicable income tax expense

 

(218.9)

 

 

(4.6)

 

 

(5.4)

Closed block contribution to income

$

410.7 

 

$

10.0 

 

$

10.1 

 

 

 

 

 

 

 

 

 

Policyholder dividend obligation

 

 

 

 

 

 

 

 

Policyholder dividends provided through earnings

$

3,260.5 

 

$

73.6 

 

$

103.6 

Policyholder dividends provided through other comprehensive income

 

(36.5)

 

 

(82.9)

 

 

(7.7)

Additions to (reductions in) policyholder dividend liabilities

 

3,224.0 

 

 

(9.3)

 

 

95.9 

Policyholder dividends paid

 

(3,062.2)

 

 

(82.6)

 

 

(80.2)

Increase (decrease) in policyholder dividend liabilities

 

161.8 

 

 

(91.9)

 

 

15.7 

Policyholder dividend liabilities, beginning of period

 

325.1 

 

 

578.8 

 

 

658.6 

Policyholder dividend liabilities, end of period

 

486.9 

 

 

486.9 

 

 

674.3 

Policyholder dividends payable, end of period

 

(337.1)

 

 

(337.1)

 

 

(336.0)

Policyholder dividend obligation, end of period

$

149.8 

 

$

149.8 

 

$

338.3 



6. Deferred Policy Acquisition Costs

 

Deferred Policy Acquisition Costs:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Policy acquisition costs deferred

$

142.2 

 

$

78.0 

Costs amortized to expenses:

 

 

 

 

 

  Recurring costs

 

(36.0)

 

 

(43.8)

  Net realized investment gains

 

6.0 

 

 

0.3 

Offsets to net unrealized investment (gains) losses included in other comprehensive income

 

43.8 

 

 

(5.4)

Change in deferred policy acquisition costs

 

156.0 

 

 

29.1 

Deferred policy acquisition costs, beginning of period

 

2,081.2 

 

 

1,752.7 

Deferred policy acquisition costs, end of period

$

2,237.2 

 

$

1,781.8 



7. Goodwill and Other Intangible Assets

 

Carrying Amounts of Intangible Assets and Goodwill:

Mar 31,

 

Dec 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Investment management contracts with definite lives

$

305.4 

 

$

305.1 

Accumulated amortization

 

(188.2)

 

 

(170.2)

Net investment management contracts with definite lives

 

117.2 

 

 

134.9 

Investment management contracts with indefinite lives

 

73.3 

 

 

73.3 

Intangible assets

$

190.5 

 

$

208.2 

Goodwill

$

484.5 

 

$

484.5 



14


7. Goodwill and Other Intangible Assets (continued)

 

Activity in Intangible Assets and Goodwill:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

Intangible assets

 

 

 

 

 

Purchases

$

0.3 

 

$

0.2 

Amortization

 

(7.5)

 

 

(7.6)

Impairment

 

(10.5)

 

 

— 

Change in intangible assets

 

(17.7)

 

 

(7.4)

Balance, beginning of period

 

208.2 

 

 

237.5 

Balance, end of period

$

190.5 

 

$

230.1 

 

 

 

 

 

 

Goodwill

 

 

 

 

 

Asset purchases

$

— 

 

$

— 

Change in goodwill

 

— 

 

 

— 

Balance, beginning of period

 

484.5 

 

 

471.1 

Balance, end of period

$

484.5 

 

$

471.1 


During the first quarter of 2008, we recorded a $10.5 million pre-tax impairment on identified intangible assets related to an investment management account. This impairment primarily resulted from the termination of the associated account.



8. Investing Activities


Debt and equity securities


See Note 11 to these financial statements for information on available-for-sale debt and equity securities pledged as collateral.

 

Fair Value and Cost of Debt and Equity Securities:

March 31, 2008

 

December 31, 2007

($ in millions)

Fair Value

 

Cost

 

Fair Value

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency

$

602.3 

 

$

587.1 

 

$

618.8 

 

$

605.2 

State and political subdivision

 

234.3 

 

 

223.0 

 

 

234.3 

 

 

224.7 

Foreign government

 

202.2 

 

 

176.3 

 

 

197.2 

 

 

172.0 

Corporate

 

6,933.9 

 

 

6,999.3 

 

 

7,048.4 

 

 

7,073.2 

Mortgage-backed

 

2,685.9 

 

 

2,799.5 

 

 

2,830.8 

 

 

2,880.2 

Other asset-backed

 

958.8 

 

 

1,089.2 

 

 

1,040.5 

 

 

1,116.0 

Available-for-sale debt securities

$

11,617.4 

 

$

11,874.4 

 

$

11,970.0 

 

$

12,071.3 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts applicable to the closed block

$

6,826.5 

 

$

6,874.9 

 

$

6,919.4 

 

$

6,898.1 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale equity securities

$

204.9 

 

$

188.5 

 

$

205.3 

 

$

173.0 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts applicable to the closed block

$

122.3 

 

$

110.6 

 

$

134.0 

 

$

109.2 



15


8. Investing Activities (continued)

 

Unrealized Gains and Losses from General Account Securities:

March 31, 2008

 

December 31, 2007

($ in millions)

Gains

 

Losses

 

Gains

 

Losses

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency

$

26.2 

 

$

(11.0)

 

$

21.8 

 

$

(8.2)

State and political subdivision

 

12.0 

 

 

(0.7)

 

 

10.9 

 

 

(1.3)

Foreign government

 

25.9 

 

 

— 

 

 

25.3 

 

 

(0.1)

Corporate

 

185.2 

 

 

(250.6)

 

 

161.4 

 

 

(186.2)

Mortgage-backed

 

32.4 

 

 

(146.0)

 

 

39.8 

 

 

(89.2)

Other asset-backed

 

9.7 

 

 

(140.1)

 

 

9.7 

 

 

(85.2)

Debt securities gains (losses)

$

291.4 

 

$

(548.4)

 

$

268.9 

 

$

(370.2)

Debt securities net losses

 

 

 

$

(257.0)

 

 

 

 

$

(101.3)

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities gains (losses)

$

24.9 

 

$

(8.5)

 

$

37.0 

 

$

(4.7)

Equity securities net gains

$

16.4 

 

 

 

 

$

32.3 

 

 

 


 

Aging of Temporarily Impaired

March 31, 2008

Debt and Equity Securities:

Less than 12 months

 

Greater than 12 months

 

Total

($ in millions)

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency

$

34.6 

 

$

(2.0)

 

$

69.9 

 

$

(9.0)

 

$

104.5 

 

$

(11.0)

State and political subdivision

 

10.8 

 

 

(0.1)

 

 

44.3 

 

 

(0.6)

 

 

55.1 

 

 

(0.7)

Foreign government

 

6.8 

 

 

— 

 

 

1.0 

 

 

— 

 

 

7.8 

 

 

— 

Corporate

 

1,170.3 

 

 

(101.4)

 

 

1,668.6 

 

 

(149.2)

 

 

2,838.9 

 

 

(250.6)

Mortgage-backed

 

669.4 

 

 

(66.0)

 

 

838.4 

 

 

(80.0)

 

 

1,507.8 

 

 

(146.0)

Other asset-backed

 

532.7 

 

 

(97.8)

 

 

229.6 

 

 

(42.3)

 

 

762.3 

 

 

(140.1)

Debt securities

 

2,424.6 

 

 

(267.3)

 

 

2,851.8 

 

 

(281.1)

 

 

5,276.4 

 

 

(548.4)

Equity securities

 

79.9 

 

 

(8.5)

 

 

— 

 

 

— 

 

 

79.9 

 

 

(8.5)

Total temporarily impaired securities

$

2,504.5 

 

$

(275.8)

 

$

2,851.8 

 

$

(281.1)

 

$

5,356.3 

 

$

(556.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts inside the closed block

$

1,348.4 

 

$

(142.4)

 

$

1,356.3 

 

$

(119.4)

 

$

2,704.7 

 

$

(261.8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts outside the closed block

$

1,156.1 

 

$

(133.4)

 

$

1,495.5 

 

$

(161.7)

 

$

2,651.6 

 

$

(295.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts outside the closed block that are
  below investment grade

$

98.4 

 

$

(11.6)

 

$

157.4 

 

$

(29.9)

 

$

255.8 

 

$

(41.5)

Total after offsets for deferred policy
 acquisition cost adjustment and taxes

 

 

 

$

(42.7)

 

 

 

 

$

(56.0)

 

 

 

 

$

(98.7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of securities

 

 

 

 

1,332 

 

 

 

 

 

1,164 

 

 

 

 

 

2,496 


Unrealized losses on below investment grade debt securities held outside the closed block with a fair value of less than 80% of the amortized cost of the securities totaled $22.0 million at March 31, 2008 ($6.0 million after offsets for taxes and deferred policy acquisition costs). However, none of this unrealized loss remained more than 20% below amortized cost for greater than 12 months.


Unrealized losses on below investment grade debt securities held in the closed block with a fair value of less than 80% of the securities amortized cost totaled $18.7 million at March 31, 2008 ($0.0 million after offsets for change in policy dividend obligation). However, none of this unrealized loss remained more than 20% below amortized cost for greater than 12 months.


The securities are considered to be temporarily impaired at March 31, 2008 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.


16


8. Investing Activities (continued)

 


In determining that the securities are not other-than-temporarily impaired, we considered and evaluated the factors cited below. In making these evaluations, we must exercise considerable judgment. Accordingly, there can be no assurance that actual results will not differ from our judgments and that such differences may require the future recognition of other-than-temporary impairment charges that could have a material effect on our financial position and results of operations. In addition, the value of, and the realization of any loss on, a debt security or equity security is subject to numerous risks, including interest rate risk, market risk, credit risk and liquidity risk. The magnitude of any loss incurred by us may be affected by the relative concentration of our investments in any one issuer or industry. We have established specific policies limiting the concentration of our investments in any single issuer and industry and believe our investment portfolio is prudently diversified.


At the end of each reporting period, we review all securities for potential recognition of an other-than-temporary impairment. We maintain a watch list of securities in default, near default or otherwise considered by our investment professionals as being distressed, potentially distressed or requiring a heightened level of scrutiny. We also identify securities whose carrying value has been below amortized cost on a continuous basis for zero to six months, six months to 12 months and greater than 12 months. Using this analysis, coupled with our watch list, we review securities to determine if a security is other-than-temporarily impaired.


Our assessment of whether an investment in a debt or equity security is other-than-temporarily impaired includes whether the issuer has:

 

·

 

defaulted on payment obligations;

·

 

declared that it will default at a future point outside the current reporting period;

·

 

announced that a restructuring will occur outside the current reporting period;

·

 

severe liquidity problems that cannot be resolved;

·

 

filed for bankruptcy;

·

 

a financial condition which suggests that future payments are highly unlikely;

·

 

deteriorating financial condition and quality of assets;

·

 

sustained significant losses during the current year;

·

 

announced adverse changes or events such as changes or planned changes in senior management, restructurings, or a sale of assets; and/or

·

 

been affected by any other factors that indicate that the fair value of the investment may have been negatively impacted.


17


8. Investing Activities (continued)

 

Aging of Temporarily Impaired

As of December 31, 2007

General Account Securities:

Less than 12 months

 

Greater than 12 months

 

Total

($ in millions)

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency

$

12.6 

 

$

(0.7)

 

$

133.9 

 

$

(7.5)

 

$

146.5 

 

$

(8.2)

State and political subdivision

 

1.2 

 

 

— 

 

 

47.4 

 

 

(1.3)

 

 

48.6 

 

 

(1.3)

Foreign government

 

0.2 

 

 

— 

 

 

8.9 

 

 

(0.1)

 

 

9.1 

 

 

(0.1)

Corporate

 

1,069.6 

 

 

(68.3)

 

 

2,247.1 

 

 

(117.9)

 

 

3,316.7 

 

 

(186.2)

Mortgage-backed

 

449.7 

 

 

(35.0)

 

 

1,201.8 

 

 

(54.2)

 

 

1,651.5 

 

 

(89.2)

Other asset-backed

 

547.7 

 

 

(59.1)

 

 

249.8 

 

 

(26.1)

 

 

797.5 

 

 

(85.2)

Debt securities

$

2,081.0 

 

$

(163.1)

 

$

3,888.9 

 

$

(207.1)

 

$

5,969.9

 

$

(370.2)

Equity securities

 

50.2 

 

 

(4.7)

 

 

— 

 

 

— 

 

 

50.2 

 

 

(4.7)

Total temporarily impaired securities

$

2,131.2 

 

$

(167.8)

 

$

3,888.9 

 

$

(207.1)

 

$

6,020.1 

 

$

(374.9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts inside the closed block

$

1,083.2 

 

$

(85.4)

 

$

1,880.4 

 

$

(93.0)

 

$

2,963.6 

 

$

(178.4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts outside the closed block

$

1,048.0 

 

$

(82.4)

 

$

2,008.5 

 

$

(114.1)

 

$

3,056.5 

 

$

(196.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts outside the closed block that are
  below investment grade

$

94.7 

 

$

(4.6)

 

$

173.6 

 

$

(21.6)

 

$

268.3 

 

$

(26.2)

Total after offsets for deferred policy
 acquisition cost adjustment and taxes

 

 

 

$

(25.8)

 

 

 

 

$

(39.2)

 

 

 

 

$

(65.0)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of securities

 

 

 

 

1,094 

 

 

 

 

 

1,456 

 

 

 

 

 

2,550 


Unrealized losses of below investment grade debt securities outside the closed block with a fair value of less than 80% of the securities amortized cost totaled $10.6 million at December 31, 2007 ($2.6 million after offsets for taxes and deferred policy acquisition cost amortization). These have been at significant unrealized loss positions on a continuous basis for six months or less.


Unrealized losses of below investment grade debt securities held in the closed block with a fair value of less than 80% of the securities amortized cost totaled $10.0 million at December 31, 2007 ($0.0 million after offsets for change in policy dividend obligation). These have been at significant unrealized loss positions on a continuous basis for six months or less.


The securities are considered to be temporarily impaired at December 31, 2007 as each of these securities has performed, and is expected to perform, in accordance with their original contractual terms, and we have the ability and intent to hold these securities until they recover their value.


Venture capital partnerships

 

Investment Activity in Venture Capital Partnerships:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Contributions

$

18.8 

 

$

23.0 

Equity in earnings of partnerships

 

5.8 

 

 

7.8 

Distributions

 

(2.9)

 

 

(6.4)

Change in venture capital partnerships

 

21.7 

 

 

24.4 

Venture capital partnership investments, beginning of period

 

173.7 

 

 

116.8 

Venture capital partnership investments, end of period

$

195.4 

 

$

141.2 



18


8. Investing Activities (continued)


Net investment income

 

Sources of Net Investment Income:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Debt securities

$

183.3 

 

$

194.0 

Equity securities

 

1.0 

 

 

2.4 

Venture capital partnerships

 

5.8 

 

 

7.8 

Policy loans

 

45.0 

 

 

44.1 

Other investments

 

7.2 

 

 

19.7 

Other income

 

1.9 

 

 

4.6 

Cash and cash equivalents

 

3.6 

 

 

4.9 

Total investment income

 

247.8 

 

 

277.5 

Discontinued operations

 

(0.7)

 

 

(2.7)

Investment expenses

 

(1.8)

 

 

(2.3)

Net investment income, general account investments

 

245.3 

 

 

272.5 

Debt and equity securities pledged as collateral (Note 11)

 

3.2 

 

 

4.0 

Net investment income

$

248.5 

 

$

276.5 

 

 

 

 

 

 

Amounts applicable to the closed block

$

140.9 

 

$

150.5 


Net realized investment gains (losses)

 

Sources and Types of Net Realized Investment Gains (Losses):

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Debt security impairments

$

(32.6)

 

$

(1.0)

Equity security impairments

 

(0.5)

 

 

— 

Other investments impairments

 

(7.3)

 

 

— 

Impairment losses

 

(40.4)

 

 

(1.0)

Debt security transaction gains

 

2.0 

 

 

5.2 

Debt security transaction losses

 

(4.8)

 

 

(1.8)

Equity security transaction gains

 

2.5 

 

 

2.7 

Equity security transaction losses

 

(2.7)

 

 

(1.4)

Affiliate transactions

 

— 

 

 

13.7 

Other investments transaction gains (losses)

 

(1.3)

 

 

5.4 

Real estate transaction gains

 

— 

 

 

1.5 

Debt and equity securities pledged as collateral gains

 

1.3 

 

 

0.2 

Debt and equity securities pledged as collateral losses

 

(0.5)

 

 

— 

Net transaction gains

 

(3.5)

 

 

25.5 

Realized gains (losses) on fair value option investments

 

(3.6)

 

 

- -- 

Net realized investment gains (losses)

$

(47.5)

 

$

24.5 


Debt security impairments during the first quarter of 2008 included $29.8 million related to residential mortgage-backed securities. Based on a projected cash flow analysis that incorporates delinquency levels, foreclosures and expected losses on foreclosures, and indicates that we will not receive our contractual principal from certain investments, we recorded impairment losses on those investments. In addition, we recorded an impairment loss of $7.3 million in a limited partnership investment.


19


8. Investing Activities (continued)


Unrealized investment gains (losses)

 

Sources of Changes in Net Unrealized Investment Gains (Losses):

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Debt securities

$

(155.7)

 

$

2.1 

Equity securities

 

(15.9)

 

 

1.9 

Debt and equity securities pledged as collateral

 

17.3 

 

 

(1.0)

Other investments

 

0.2 

 

 

— 

Net unrealized investment gains (losses)

$

(154.1)

 

$

3.0 

 

 

 

 

 

 

Net unrealized investment gains (losses)

$

(154.1)

 

$

3.0 

Applicable closed block policyholder dividend obligation

 

(82.9)

 

 

(7.7)

Applicable deferred policy acquisition costs (benefit)

 

(43.8)

 

 

5.4 

Applicable deferred income taxes (benefit)

 

(15.6)

 

 

2.2 

Offsets to net unrealized investment losses

 

(142.3)

 

 

(0.1)

Net unrealized investment gains (losses) included in other comprehensive income

$

(11.8)

 

$

3.1 


During the first quarter of 2008, we recorded a correction to the valuation of debt and equity securities pledged as collateral which increased the unrealized gain by $26.1 million. Excluding this adjustment, debt and equity securities pledged as collateral would have had an unrealized loss of $8.8 million for the quarter.



9. Financing Activities


Indebtedness

 

Indebtedness:

March 31, 2008

 

December 31, 2007

($ in millions)

Carrying

 

Fair

 

Carrying

 

Fair

 

Value

 

Value

 

Value

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

7.15% surplus notes

$

174.0 

 

$

178.4 

 

$

174.0 

 

$

179.6 

6.675% senior unsecured bonds

 

— 

 

 

— 

 

 

153.7 

 

 

153.7 

7.45% senior unsecured bonds

 

300.0 

 

 

239.9 

 

 

300.0 

 

 

243.1 

Total indebtedness

$

474.0 

 

$

418.3 

 

$

627.7 

 

$

576.4 


During 2005, we issued $67.0 million of promissory notes in connection with our acquisition of the minority interest in KAR. The first installment of $9.8 million plus interest was paid on January 3, 2006. The remaining installment of $57.2 million plus deferred interest was paid in January 2007. The interest rate on the notes was 4.75%. See Note 3 to these financial statements for more information on our acquisition of KAR.


Our 7.15% surplus notes are an obligation of Phoenix Life and are due December 15, 2034. The carrying value of the 2034 notes is net of $1.0 million of unamortized original issue discount. Interest payments are at an annual rate of 7.15%, require the prior approval of the Superintendent of Insurance of the State of New York and may be made only out of surplus funds which the Superintendent determines to be available for such payments under New York Insurance Law. The notes may be redeemed at the option of Phoenix Life at any time at the “make-whole” redemption price set forth in the offering circular. New York Insurance Law provides that the notes are not part of the legal liabilities of Phoenix Life.


On April 2, 2008, the Company and its subsidiary, Phoenix Life, amended and restated our existing $150 million unsecured senior revolving credit facility (the “Amended and Restated Facility”). The Amended and Restated Facility amends and restates the terms of the original facility dated November 22, 2004 (the “Original Facility”) and the terms of the amendment and restatement of the Original Facility dated June 6, 2006 (the “Amended Facility”).



20


9. Financing Activities (continued)


The financing commitments under the Amended and Restated Facility will terminate on June 6, 2009. The Amended and Restated Facility reflects amendments that, in anticipation of the spin-off of the Company’s wholly-owned subsidiary, PXP, to the Company’s shareholders (the “Spin-off”), (i) release PXP from its obligations under the Amended Facility and provide that PXP is not a borrower under the Amended and Restated Facility effective as of April 2, 2008, and (ii) adjust certain financial covenants of the borrowers upon the consummation of the Spin-off. The adjusted covenants include those related to the minimum consolidated net worth required to be maintained following the Spin-off.


Potential borrowers on the credit line are The Phoenix Companies, Inc. and Phoenix Life. We unconditionally guarantee any loans under this facility to Phoenix Life. Base rate loans will bear interest at the greater of Wachovia Bank, National Association’s prime commercial rate or the federal funds rate plus 0.50%. Eurodollar rate loans will bear interest at LIBOR plus an applicable percentage based on our Standard & Poor’s and Moody’s ratings. There are no current borrowings on the credit facility.


The credit facility contains covenants that require us at all times to maintain a minimum level of consolidated stockholders’ equity, based on GAAP standards in effect on June 6, 2006 and a maximum consolidated debt-to-capital ratio of 30%. In addition, Phoenix Life must maintain a minimum risk-based capital ratio of 250% and a minimum A.M. Best financial strength rating of “A-”. Borrowings under the facility are not conditioned on the absence of a material adverse change.


We were in compliance with all of our credit facility covenants at March 31, 2008.


In December 2002, we issued 6,147,500 of 7.25% equity units in a public offering at $25 per unit for gross proceeds of $153.7 million (net proceeds of $149.1 million). Each equity unit consisted of an unsecured, subordinated note and a purchase contract (equity forward on our common stock collateralized by the note). On November 7, 2005, the notes were remarketed as senior unsecured obligations and the interest rate was reset to 6.675% at that time. The holders of the purchase contracts have been paid a contract adjustment payment at a rate of 0.65% per year. The present value of the future contract adjustment payments of $2.8 million was recorded as a charge to paid-in capital at inception. On February 16, 2006, these holders purchased 17,423,839 shares of our common stock in aggregate as part of the settlement of the original transaction. On February 19, 2008, the $153.7 million of senior unsecured obligations matured and were paid in full.


Our senior unsecured bonds were issued in December 2001 for gross proceeds of $300.0 million (net proceeds of $290.6 million) and mature in January 2032. We pay interest at an annual rate of 7.45%. We may redeem any or all of the bonds from January 2007 at a redemption price equal to 100% of principal plus accrued and unpaid interest to the redemption date.


We have recorded indebtedness at unpaid principal balances of each instrument net of issue discount. We have determined the fair value of indebtedness based on contractual cash flows discounted at market rates for surplus notes and on quoted market prices for bonds and equity units. The Phoenix Companies, Inc. and its subsidiaries may, from time to time, purchase its bond securities in the open market subject to considerations including, but not limited to, market conditions, relative valuations, capital allocation and the continued determination that it is in the best interest of the company and its stakeholders.


Future minimum annual principal payments on indebtedness as of March 31, 2008 are: in 2032, $300.0 million and in 2034, $175.0 million.


Common stock dividends


On May 2, 2008, we declared a dividend of $0.16 per share, payable on July 11, 2008 to shareholders of record on June 13, 2008. In the prior year, we declared a dividend of $0.16 per share on April 26, 2007 to our shareholders of record on June 13, 2007; we paid that dividend on July 11, 2007.


On March 19, 2008, the Phoenix Life Board of Directors declared a dividend of $25.0 million to its sole shareholder, The Phoenix Companies, Inc., which was paid in April 2008. During 2007, the Phoenix Life Board of Directors paid total dividends of $92.2 million to its sole shareholder, The Phoenix Companies, Inc.




21


10. Separate Accounts, Death Benefits and Other Insurance Benefit Features


Separate account products are those for which a separate investment and liability account is maintained on behalf of the policyholder. Investment objectives for these separate accounts vary by fund account type, as outlined in the applicable fund prospectus or separate account plan of operations. Our separate account products include variable annuities and variable life insurance contracts. The assets supporting these contracts are carried at fair value and reported as Separate account assets with an equivalent amount reported as Separate account liabilities. Amounts assessed against the policyholder for mortality, administration, and other services are included within revenue in insurance, investment management and product fees. During the three-month periods ended March 31, 2008 and 2007, there were no gains or losses on transfers of assets from the general account to a separate account.


Many of our variable contracts offer various guaranteed minimum death, accumulation, withdrawal and income benefits. These benefits are offered in various forms as described in the footnotes to the table below. We currently reinsure a significant portion of the death benefit guarantees associated with our in-force block of business. We establish policy benefit liabilities for minimum death and income benefit guarantees relating to certain annuity policies as follows:

 

·  

 

Liabilities associated with the guaranteed minimum death benefit (“GMDB”) are determined by estimating the expected value of death benefits in excess of the projected account balance and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating the liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.

·  

 

Liabilities associated with the guaranteed minimum income benefit (“GMIB”) are determined by estimating the expected value of the income benefits in excess of the projected account balance at the date of annuitization and recognizing the excess ratably over the accumulation period based on total expected assessments. The assumptions used for calculating such guaranteed income benefit liabilities are generally consistent with those used for amortizing deferred policy acquisition costs.


The GMDB and GMIB guarantees are recorded in policy liabilities and accruals on our balance sheet. Changes in the liability are recorded in policy benefits, excluding policyholder dividends, on our statement of operations. In a manner consistent with our policy for deferred policy acquisition costs, we regularly evaluate estimates used and adjust the additional liability balances, with a related charge or credit to benefit expense if actual experience or other evidence suggests that earlier assumptions should be revised.


We also offer certain variable products with a guaranteed minimum withdrawal benefit (“GMWB”), a guaranteed minimum accumulation benefit (“GMAB”) and a guaranteed pay-out annuity floor (“GPAF”).


The GMWB rider guarantees the policyholder a minimum amount of withdrawals and benefit payments over time, regardless of the investment performance of the contract, subject to an annual limit. Optional resets are available. In addition, we introduced a feature for these contracts, beginning in the fourth quarter of 2005, which allows the policyholder to receive the guaranteed annual withdrawal amount for as long as they are alive.


The GMAB rider provides the contract holder with a minimum accumulation of their purchase payments deposited within a specific time period, adjusted for withdrawals, after a specified amount of time determined at the time of issuance of the variable annuity contract.


The GPAF rider provides the policyholder with a minimum payment amount if the variable annuity payment falls below this amount on the payment calculation date.


The GMWB, GMAB and GPAF represent embedded derivatives in the variable annuity contracts that are required to be reported separately from the host variable annuity contract. They are carried at fair value and reported in policyholder deposit funds. The fair value of the GMWB, GMAB and GPAF obligation is calculated based on actuarial and capital market assumptions related to the projected cash flows, including benefits and related contract charges, over the lives of the contracts, incorporating expectations concerning policyholder behavior. As markets change, mature and evolve and actual policyholder behavior emerges, management continually evaluates the appropriateness of its assumptions.



22


10. Separate Accounts, Death Benefits and Other Insurance Benefit Features (continued)


As of March 31, 2008 and December 31, 2007, 100% of the aggregate account value with the GMWB, GMAB and GPAF features was not reinsured. In order to minimize the volatility associated with the unreinsured liabilities, we have established an alternative risk management strategy. We began hedging our GMAB exposure in 2006 and GMWB exposure during the fourth quarter of 2007 using equity options, equity futures and swaps. These investments are included in other investments on our balance sheet. As of March 31, 2008 and December 31, 2007, the embedded derivative for GMWB, GMAB and GPAF was immaterial. Benefit payments for the GMWB, GMAB and GPAF during the three-month periods ended March 31, 2008 and 2007 were immaterial.


For those guarantees of benefits that are payable in the event of death, the net amount at risk is generally defined as the current guaranteed minimum death benefit in excess of the current account balance at the balance sheet date. For guarantees of benefits that are payable upon annuitization, the net amount at risk is generally defined as the present value of the minimum guaranteed annuity payments available to the policy holder determined in accordance with the terms of the contract in excess of the current account balance. For guarantees of accumulation balances, the net amount at risk is generally defined as the guaranteed minimum accumulation balance minus the current account balance.

 

Additional Insurance Benefits:

 

 

Net Amount

 

Average

($ in millions)

Account

 

At Risk After

 

Attained Age

 

Value

 

Reinsurance

 

of Annuitant

 

 

 

 

 

 

 

 

 

GMDB return of premium(1)

$

1,369.3 

 

$

18.6 

 

 

59

GMDB step up(2)

 

1,835.5 

 

 

111.3 

 

 

60

GMDB earnings enhancement benefit (EEB)(3)

 

70.9 

 

 

0.1 

 

 

60

GMDB greater of annual step up and roll up(4)

 

38.2 

 

 

6.1 

 

 

63

Total GMDB at March 31, 2008

$

3,313.9 

 

$

136.1 

 

 

 

 

 

 

 

 

 

 

 

 

GMIB

$

659.7 

 

 

 

 

 

59

GMAB

 

398.3 

 

 

 

 

 

55

GMWB

 

282.9 

 

 

 

 

 

61

GPAF

 

31.0 

 

 

 

 

 

74

Total at March 31, 2008

$

1,371.9 

 

 

 

 

 

 

_______

(1)

Return of premium: The death benefit is the greater of current account value or premiums paid (less any adjusted partial withdrawals).

(2)

Step Up: The death benefit is the greater of current account value, premiums paid (less any adjusted partial withdrawals) or the annual step up amount prior to the eldest original owner attaining a certain age. On and after the eldest original owner attains that age, the death benefit is the greater of current account value or the death benefit at the end of the contract year prior to the eldest original owner’s attaining that age plus premium payments (less any adjusted partial withdrawals) made since that date.

(3)

EEB: The death benefit is the greater of the premiums paid (less any adjusted partial withdrawals) or the current account value plus the EEB. The EEB is an additional amount designed to reduce the impact of taxes associated with distributing contract gains upon death.

(4)

Greater of Annual Step Up and Annual Roll Up: The death benefit is the greater of premium payments (less any adjusted partial withdrawals), the annual step up amount, the annual roll up amount or the currant account value prior to the eldest original owner attaining age 81. On and after the eldest original owner attained age 81, the death benefit is the greater of current account value or the death benefit at the end of the contract year prior to the eldest original owner’s attained age of 81 plus premium payments (less any adjusted partial withdrawals) made since that date.


Liabilities for universal life are generally determined by estimating the expected value of losses when death benefits exceed revenues and recognizing those benefits ratably over the accumulation period based on total expected assessments. The assumptions used in estimating these liabilities are consistent with those used for amortizing deferred policy acquisition costs. A single set of best estimate assumptions is used since these insurance benefits do not vary significantly with capital markets volatility. At March 31, 2008 and December 31, 2007, we held additional universal life benefit reserves of $41.2 million and $34.7 million, respectively.




23


11. Investments Pledged as Collateral and Non-recourse Collateralized Obligations


We are involved with various entities in the normal course of business that are deemed to be variable interest entities and, as a result, we may be deemed to hold interests in those entities. In particular, we serve as the investment advisor to 10 collateralized obligation trusts. These 10 collateralized obligation trusts are investment trusts with aggregate assets of $2.6 billion that are primarily invested in a variety of fixed income securities acquired from third parties. These collateralized obligation trusts, in turn, issued tranched collateralized obligations and residual equity securities to third parties, as well as to our principal life insurance subsidiary’s general account. The collateralized obligation trusts reside in bankruptcy remote special purpose entities for which we provide neither recourse nor guarantees. Accordingly, our sole financial exposure to these collateralized obligation trusts stems from our life insurance subsidiary’s general account direct investment in certain debt or equity securities issued by these collateralized obligation trusts and our investment management fee revenues related to our asset management affiliates’ advisory services. Our maximum exposure to loss with respect to our life insurance subsidiary’s direct investment in the 10 collateralized obligation trusts is $9.7 million at March 31, 2008 (none of which relates to trusts that are consolidated). Of that exposure, $9.7 million relates to investment grade debt securities.


We consolidated two collateralized obligation trusts as of March 31, 2008 and December 31, 2007. As of March 31, 2008, our direct investment in these two consolidated collateralized obligation trusts was zero. We recognized investment income on debt and equity securities pledged as collateral, net of interest expense on collateralized obligations and applicable minority interest of $0.1 million and $0.2 million for the quarters ended March 31, 2008 and 2007, respectively, related to the consolidated collateralized obligation trusts.


Assets pledged as collateral are comprised of available-for-sale debt and equity securities at fair value of $185.9 million and $219.1 million at March 31, 2008 and December 31, 2007, respectively. In addition, cash and accrued investment income of $16.5 million and $13.4 million are included in these amounts at March 31, 2008 and December 31, 2007, respectively.

 

Fair Value and Cost of  Debt and Equity Securities

March 31, 2008

 

December 31, 2007

Pledged as Collateral:

Fair Value

 

Cost

 

Fair Value

 

Cost

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities pledged as collateral

$

185.9 

 

$

170.7 

 

$

219.1 

 

$

219.3 

Equity securities pledged as collateral

 

— 

 

 

0.1 

 

 

— 

 

 

0.1 

Total debt and equity securities pledged as collateral

$

185.9 

 

$

170.8 

 

$

219.1 

 

$

219.4 


Non-recourse collateralized obligations are comprised of callable collateralized obligations of $259.1 million and $307.2 million at March 31, 2008 and December 31, 2007, respectively, and non-recourse derivative cash flow hedge liabilities of $11.4 million (notional amount of $210.7 million with a maturity of June 2009) and $10.7 million (notional amount of $211.1 million with a maturity of June 1, 2009) at March 31, 2008 and December 31, 2007, respectively.

 

Gross and Net Unrealized Gains and Losses from

March 31, 2008

 

December 31, 2007

Debt and Equity Securities Pledged as Collateral:

Gains

 

Losses

 

Gains

 

Losses

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities pledged as collateral

$

21.1 

 

$

(5.9)

 

$

29.0 

 

$

(29.2)

Equity securities pledged as collateral

 

— 

 

 

(0.1)

 

 

— 

 

 

(0.1)

Total

$

21.1 

 

$

(6.0)

 

$

29.0 

 

$

(29.3)

Net unrealized gains (losses)

$

15.1 

 

 

 

 

 

 

 

$

(0.3)


Gross unrealized losses related to debt securities pledged as collateral whose fair value is less than the security’s amortized cost total $5.9 million at March 31, 2008. Debt securities with a fair value less than 80% of the security’s amortized cost total $4.1 million at March 31, 2008. The majority of these debt securities are investment grade issues that continue to perform to their original contractual terms at March 31, 2008.


We recognized no charge to earnings in the quarters ended March 31, 2008 and 2007, respectively, related to the other-than-temporary impairment of debt securities pledged as collateral.



24


11. Investments Pledged as Collateral and Non-recourse Collateralized Obligations (continued)


The effect of the method of consolidation of the collateralized debt obligation trusts was to increase our net income by $0.8 million and $0.2 million for the three months ended March 31, 2008 and 2007, respectively, and to decrease our stockholders’ equity by $68.0 million and $85.4 million as of March 31, 2008 and December 31, 2007, respectively. The impact to net income and stockholders’ equity primarily relate to realized and unrealized investment and derivative cash flow gains and losses within the collateralized obligation trusts, which will ultimately be borne by third-party investors in the non-recourse collateralized obligations. Accordingly, these gains and losses and any future gains or losses under this method of consolidation will ultimately reverse upon the deconsolidation, maturity or other liquidation of the non-recourse collateralized obligations.


GAAP requires us to consolidate all the assets and liabilities of these collateralized obligation trusts, which results in the recognition of realized and unrealized losses even though we have no legal obligation to fund such losses in the settlement of the collateralized obligations.


The amount of derivative cash flow hedge ineffectiveness recognized on these collateralized obligation trusts for the three months ended March 31, 2008 and 2007 decreased realized gains by $0.4 million and $1.1 million, respectively.



12. Fair Value


SFAS No. 157 (“SFAS 157”) defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.


SFAS 157 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels, from highest to lowest, are defined as follows:

 

·

 

Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 1 securities include highly liquid government bonds, mortgage products, exchange-traded equities and exchange-traded corporate debt.

·

 

Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Examples of such instruments include certain collateralized mortgage and debt obligations and certain high-yield debt securities.

·

 

Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement. Securities classified within Level 3 include broker quoted investments, certain residual interests in securitizations and other less liquid securities. Most valuations that are based on brokers’ prices are classified as Level 3 due to a lack of transparency in the process they use to develop prices.


A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.



25


12. Fair Value (continued)


The following table presents the financial instruments carried at fair value as of March 31, 2008, by SFAS 157 valuation hierarchy (as described above).

 

Assets and Liabilities at Fair Value:

As of March 31, 2008

($ in millions)

Level 1

 

Level 2

 

Level 3

 

Total

Assets

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale debt securities

$

42.4 

 

$

10,401.9 

 

$

1,230.3 

 

$

11,674.6 

Available-for-sale equity securities

 

160.7 

 

 

13.6 

 

 

30.6 

 

 

204.9 

Derivative assets

 

— 

 

 

47.1 

 

 

— 

 

 

47.1 

Separate account assets

 

9,919.7 

 

 

424.5 

 

 

— 

 

 

10,344.2 

Debt and equity securities pledged as collateral

 

— 

 

 

178.6 

 

 

7.3 

 

 

185.9 

Fair value option investments

 

70.8 

 

 

42.0 

 

 

— 

 

 

112.8 

Total assets

$

10,193.6 

 

$

11,107.7 

 

$

1,268.2 

 

$

22,569.5 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Embedded derivative liabilities

$

— 

 

$

— 

 

$

12.0 

 

$

12.0 

Total liabilities

$

— 

 

$

— 

 

$

12.0 

 

$

12.0 


Available-for-sale debt securities are reported net of $57.2 million of investments included in other assets on our balance sheet because they are allocated to discontinued reinsurance operations. See Note 17 to these financial statements for further information.


Fair value option investments at March 31, 2008 include $70.8 million of available-for-sale equity securities backing our deferred compensation liabilities. Prior to our adoption of SFAS 159, changes in the fair value of the securities were recorded in other comprehensive income while changes in the deferred compensation liability were recorded in earnings. Electing the fair value option allows us to mitigate the associated accounting volatility.


Fair value option investments also include a structured loan asset valued at $42.0 million as of March 31, 2008. We elected to apply the fair value option to this note at the time of its acquisition. We purchased the note to obtain principal protection without sacrificing earnings potential. Election of the fair value option allows current earnings recognition and is more consistent with management’s view of the security’s underlying economics.


We have an established process for determining fair values. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon internally developed models that use primarily market-based or independently-sourced market parameters, including interest rate yield curves, option volatilities and currency rates. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments include amounts to reflect counterparty credit quality, our own creditworthiness, liquidity and unobservable parameters that are applied consistently over time. Of the $1,268.2 million of Level 3 assets, 70% were obtained from independent third-party broker quotes.


Following is a description of our valuation methodologies for assets and liabilities measured at fair value. Such valuation methodologies were applied to all of the assets and liabilities carried at fair value, whether as a result of the adoption of SFAS 159 or previously carried at fair value.


Derivatives


Exchange-traded derivatives valued using quoted prices are classified within Level 1 of the valuation hierarchy. However, few classes of derivative contracts are listed on an exchange; therefore, the majority of our derivative positions are valued using internally developed models that use as their basis readily observable market parameters and are classified within Level 2 of the valuation hierarchy. Such derivatives include basic interest rate swaps, options and credit default swaps.


Fair values for over-the-counter (“OTC”) derivative financial instruments, principally forwards, options, and swaps, represent the present value of amounts estimated to be received from or paid to a marketplace participant in settlement of these instruments (i.e., the amount we would expect to receive in a derivative asset assignment or would expect to pay to have a derivative liability assumed). These derivatives are valued using pricing models based on the net present value of estimated future cash flows and directly observed prices from exchange-traded derivatives or other OTC trades, while taking into account the counterparty’s credit ratings, or our own credit ratings, as appropriate. Determining the fair value for OTC derivative contracts can require a significant level of estimation and management judgment.



26


12. Fair Value (continued)


New and/or complex instruments may have immature or limited markets. As a result, the pricing models used for valuation often incorporate significant estimates and assumptions that market participants would use in pricing the instrument, which may impact the results of operations reported in the consolidated financial statements. For long-dated and illiquid contracts, extrapolation methods are applied to observed market data in order to estimate inputs and assumptions that are not directly observable. This enables us to mark-to-market all positions consistently when only a subset of prices are directly observable. Values for OTC derivatives are verified using observed information about the costs of hedging the risk and other trades in the market. As the markets for these products develop, we will continually refine our pricing models to correlate more closely to the market risk of these instruments.


Retained Interest in Securitization


Retained interests in securitizations do not trade in an active, open market with readily observable prices. Accordingly, we estimate the fair value of certain retained interests in securitizations using discounted cash flow (“DCF”) models.


For certain other retained interests in securitizations (such as interest-only strips), a single interest rate path DCF model is used and generally includes assumptions based upon projected finance charges related to the securitized assets, estimated net credit losses, prepayment assumptions and contractual interest paid to third-party investors. Changes in the assumptions used may have a significant impact on our valuation of retained interests and such interests are therefore typically classified within Level 3 of the valuation hierarchy.


We compare the fair value estimates and assumptions to observable market data where available and to recent market activity and actual portfolio experience.


Private equity investments


The valuation of nonpublic private equity investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such assets. Private equity investments are valued initially based upon transaction price. The carrying values of private equity investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing reviews by senior investment managers. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of the particular investment, industry valuations of comparable public companies, changes in market outlook and the third-party financing environment over time. In determining valuation adjustment s resulting from the investment review process, emphasis is placed on current company performance and market conditions. Nonpublic Private equity investments are included in Level 3 of the valuation hierarchy.


Private equity investments also include publicly held equity investments, generally obtained through the initial public offering of privately held equity investments. Publicly held investments are marked-to-market at the quoted public value less adjustments for regulatory or contractual sales restrictions. Discounts for restrictions are quantified by analyzing the length of the restriction period and the volatility of the equity security. Publicly held investments are primarily classified in Level 2 of the valuation hierarchy.


Beneficial interests issued by consolidated Variable Interest Entities (“VIEs”)


The fair value of beneficial interests issued by consolidated VIEs (beneficial interests) is estimated based upon the fair value of the underlying assets held by the VIEs. The valuation of beneficial interests does not include an adjustment to reflect our credit quality as the holders of these beneficial interests do not have recourse to our general credit. As the inputs into the valuation are generally based upon readily observable pricing information, the majority of beneficial interests used by consolidated VIEs are classified within Level 2 of the valuation hierarchy.


Separate Accounts


Separate account assets are primarily invested in mutual funds but also have investments in fixed maturity and equity securities. The separate account investments are valued in the same manner, and using the same pricing sources and inputs, as the fixed maturity, equity security and short-term investments of the Company. Mutual funds are included in Level 1. Most debt securities and short-term investments are included in Level 2.



27


12. Fair Value (continued)


Valuation of Embedded Derivatives


Embedded derivatives are guarantees that we make on certain variable annuity contracts, including GMAB and GMWB. These embedded derivatives are fair valued using a risk neutral stochastic valuation methodology. The inputs to our fair value methodology include information derived from the asset derivatives market, including the volatility surface and the swap curve. Several additional inputs are not obtained from independent sources, but instead reflect our own assumptions about what market participants would use in pricing the contracts. These inputs are therefore considered “unobservable” and fall into Level 3 of the fair value hierarchy. These inputs include mortality rates, lapse rates and policyholder behavior assumptions. Because there are significant Level 3 inputs included in our fair value methodology for these embedded derivative liabilities, we consider the above-described methodology as a whole to be Level 3.


Level 3 Financial Assets and Liabilities


The following table sets forth a summary of changes in the fair value of our Level 3 financial assets and liabilities. As required by SFAS 157, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. For example, a hypothetical derivative contract with Level 1, Level 2 and significant Level 3 inputs would be classified as a Level 3 financial instrument in its entirety. Subsequently, even if only Level 1 and Level 2 inputs are adjusted, the resulting gain or loss is classified as Level 3. Further, Level 3 instruments are frequently hedged with instruments that are classified as Level 1 or Level 2 and, accordingly, gains or losses reported as Level 3 in the table below may be offset by gains or losses attributable to instruments classified in Level 1 or 2 of the fair value hierarchy.

 

Level 3 Financial Assets and Liabilities:

Three Months Ended

($ in millions, except per share data)

March 31, 2008

 

Assets

 

Liabilities

 

 

 

 

 

 

Balance at January 1, 2008

$

1,518.9 

 

$

(0.3)

Purchases/(sales), net

 

(92.8)

 

 

— 

Net transfers

 

(75.3)

 

 

— 

Realized gains (losses)

 

(25.9)

 

 

(11.7)

Unrealized gains (losses) included in other comprehensive income (loss)

 

(56.8)

 

 

— 

Amortization/accretion

 

0.1 

 

 

— 

Balance at March 31, 2008

$

1,268.2 

 

$

(12.0)

Portion of gain (loss) included in net income  relating to those assets/liabilities still held

$

(31.3)

 

$

(11.7)



13. Income Taxes


For the three months ended March 31, 2008 and 2007, the effective income tax rates applicable to income from continuing operations differ from the 35.0% U.S. federal statutory tax rate. Items giving rise to the differences and the effects are as follows:

 

Analysis of Effective Income Tax Rates:

Three Months Ended

 

March 31,

 

2008

 

2007

 

 

 

 

 

 

Income taxes at statutory rate

 

35.0% 

 

 

35.0% 

Dividend received deduction

 

(2.1%)

 

 

(1.6%)

Low income housing tax credit

 

(2.0%)

 

 

(2.4%)

State income taxes, net of federal tax

 

1.0% 

 

 

0.4% 

Realized losses (gains) on available-for-sale securities pledged as collateral

 

0.9% 

 

 

(0.1%)

Other, net

 

4.1% 

 

 

(2.0%)

Effective income tax rates applicable to continuing operations

 

36.9% 

 

 

29.3% 


28


13. Income Taxes (continued)


Our effective income tax expense rate of 36.9% for the three months ended March 31, 2008 varies from the expected annual effective tax rate applied to ordinary income of 29.2% primarily due to state tax accrual adjustments and deferred tax adjustments relating to reserves. The estimated annual effective income tax rate applied to ordinary income for the three-month period ended March 31, 2007 was 31.3%. Throughout the year, we will re-evaluate our estimated annual effective income tax rate and make adjustments as necessary.


Our federal income tax returns are routinely audited by the IRS and estimated provisions are routinely provided in the financial statements in anticipation of the results of these audits. Unfavorable resolution of any particular issue could result in additional use of cash to pay liabilities that would be deemed owed to the IRS. Additionally, any unfavorable or favorable resolution of any particular issue could result in an increase or decrease, respectively, to our effective income tax rate to the extent that our estimates differ from the ultimate resolution. As of March 31, 2008, we had current taxes payable of $11.7 million.


See Note 2 to these financial statements for information regarding the implementation of FIN 48.



14. Employee Benefits


Pension and other postretirement benefits


We provide our employees with postemployment benefits that include retirement benefits, through pension and savings plans, and other benefits, including health care and life insurance. The components of pension and postretirement benefit costs follow:

 

Components of Pension Benefit Costs:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Service cost

$

2.3 

 

$

3.5 

Interest cost

 

9.7 

 

 

9.2 

Expected return on plan assets

 

(10.3)

 

 

(10.0)

Net loss amortization

 

1.6 

 

 

1.3 

Prior service cost amortization

 

0.2 

 

 

0.2 

Pension benefit cost

$

3.5 

 

$

4.2 


 

Components of Other Postretirement Benefit Costs:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Service cost

$

0.4 

 

$

0.4 

Interest cost

 

1.0 

 

 

1.1 

Prior service cost amortization

 

(0.4)

 

 

(0.4)

Other postretirement benefit cost

$

1.0 

 

$

1.1 


Savings plans


During the three months ended March 31, 2008 and 2007, we incurred costs of $2.7 million and $1.7 million, respectively, for contributions to our employer-sponsored savings plans.


15. Share-based compensation


On January 1, 2006 the Company adopted SFAS 123(R) using the modified prospective method.


29




15. Share-based compensation (continued)


We provide share-based compensation to certain of our employees and non-employee directors, as further described below. The compensation cost that has been charged against income for these plans is summarized in the following table:

 

Share-based Compensation Plans:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Compensation cost charged to income

$

3.7 

 

$

2.6 

Income tax benefit

$

1.3 

 

$

0.6 




We did not capitalize any cost of stock-based compensation during the three-month periods ended March 31, 2008 and 2007.


Stock options


We have stock option plans under which we grant options for a fixed number of common shares to employees and non-employee directors. Our options have an exercise price equal to the market value of the shares at the date of grant. Each option, once vested, entitles the holder to purchase one share of our common stock. The employees’ options vest over a three-year period while the directors’ options vested immediately. The fair values of options granted are measured as the grant date and expensed ratably over the vesting period.

 

Stock Option Activity at

Three Months Ended March 31,

Weighted-Average Exercise Price:

2008

 

2007

 

Common

 

 

 

Common

 

 

 

Shares

 

Price

 

Shares

 

Price

 

 

 

 

 

 

 

 

 

 

Outstanding, beginning of period

4,087,486 

 

$

14.79 

 

4,522,618 

 

$

14.85 

Granted

1,413,832 

 

 

11.38 

 

479,000 

 

 

14.10 

Exercised

(7,224)

 

 

10.21 

 

(89,333)

 

 

9.39 

Canceled

(311,542)

 

 

15.99 

 

— 

 

 

— 

Forfeited

(30,437)

 

 

13.55 

 

(25,838)

 

 

14.51 

Outstanding, end of period

5,152,115 

 

$

13.80 

 

4,886,447 

 

$

14.88 


Options granted during the three months ended March 31, 2008 had a weighted-average fair value of $4.47.


The intrinsic value of stock options exercised during the three months ended March 31, 2008 was less than $0.1 million.


As of March 31, 2008, 3.2 million of outstanding stock options were exercisable, with a weighted-average exercise price of $14.89.


As of March 31, 2008, there was $8.0 million of total unrecognized compensation cost related to unvested stock option grants.


Restricted stock units


We have restricted stock unit (RSU) plans under which we grant RSUs to employees and non-employee directors. Each RSU, once vested, entitles the holder to one share of our common stock when the restriction expires. We recognize compensation expense over the vesting period of the RSUs.

 

RSU Activity at Weighted-Average Grant Price:

Three Months Ended March 31,

 

2008

 

2007

 

RSUs

 

Price

 

RSUs

 

Price

 

 

 

 

 

 

 

 

 

 

Outstanding, beginning of period

1,664,021 

 

$

11.86 

 

1,432,454 

 

$

10.73 

Awarded

749,812 

 

 

11.98 

 

807,003 

 

 

13.35 

Converted to common shares/applied to taxes

(98,604)

 

 

13.81 

 

(483,504)

 

 

12.77 

Canceled

(70,056)

 

 

14.52 

 

(11,606)

 

 

14.60 

Outstanding, end of period

2,245,173 

 

$

11.73 

 

1,744,347 

 

$

11.35 



30


15. Share-based compensation (continued)


The intrinsic value of RSUs converted during the three months ended March 31, 2008 was $1.4 million.


As of March 31, 2008, there was $11.6 million of total unrecognized compensation cost related to unvested RSU grants.


In addition to the RSU activity above, 2.7 million RSUs are subject to future issuance based on the achievement of performance criteria established under certain of our incentive plans. The performance contingencies for these RSUs will be resolved no later than December 31, 2010.


16. Earnings Per Share

 

Shares Used in Calculation of Basic and Diluted Earnings per Share:

Three Months Ended

(in thousands)

March 31,

 

2008

 

2007

 

 

 

 

Weighted-average common shares outstanding

114,336 

 

113,836 

Weighted-average effect of dilutive potential common shares:

 

 

 

  Restricted stock units

1,565 

 

1,091 

  Stock options

93 

 

166 

Potential common shares

1,658 

 

1,257 

Less: Potential common shares excluded from calculation due to operating losses

(1,658)

 

— 

Dilutive potential common share

— 

 

1,257 

Weighted-average common shares outstanding,
  including dilutive potential common shares

114,336 

 

115,093 

 

 

 

 

Stock options excluded from calculation due to anti-dilutive exercise prices

 

 

 

  (i.e., in excess of average common share market prices)

 

 

 

    Stock options

4,552 

 

3,673 



17. Contingent Liabilities


Litigation and Arbitration


We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. The litigation and arbitration naming us as a defendant ordinarily involves our activities as an insurer, employer, investor, investment advisor or taxpayer. It is not feasible to predict or determine the ultimate outcome of all legal or arbitration proceedings or to provide reasonable ranges of potential losses. We believe that the outcomes of our litigation and arbitration matters are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation and arbitration, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operations or cash flows in particular quarterly or annual periods.


Regulatory Matters


State regulatory bodies, the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”) and other regulatory bodies regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, and laws governing the activities of broker-dealers. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted.


For example, in October 2007, the New York State Insurance Department commenced the on-site portion of its routine quinquennial financial and market conduct exam of Phoenix Life and its New York domiciled life insurance subsidiary for the five year period ending December 31, 2007.



31


17. Contingent Liabilities (continued)


In addition, federal and state regulatory authorities from time to time make inquiries and conduct examinations regarding compliance by Phoenix Life and its subsidiaries with securities and other laws and regulations affecting their registered products. We endeavor to respond to such inquiries in an appropriate way and to take corrective action if warranted. There has been a significant increase in federal and state regulatory activity relating to financial services companies, with a number of recent regulatory inquiries focusing on late-trading, market timing and valuation issues. Our products entitle us to impose restrictions on transfers between separate account sub-accounts associated with our variable products.


In 2005, the Boston District Office of the SEC completed a compliance examination of certain of the Company’s affiliates that are registered under the Investment Company Act of 1940 or the Investment Advisers Act of 1940. Following the examination, the staff of the Boston District Office issued a deficiency letter primarily focused on perceived weaknesses in procedures for monitoring trading to prevent market timing activity. The staff requested the Company to conduct an analysis as to whether shareholders, policyholders and contract holders who invested in the funds that may have been affected by undetected market timing activity had suffered harm and to advise the staff whether the Company believes reimbursement is necessary or appropriate under the circumstances. A third party was retained to assist the Company in preparing the analysis. Based on this analysis, the Company advised the SEC that it does not believe that reimbursement is appropriate.


Over the past several years, a number of companies have announced settlements of enforcement actions with various regulatory agencies, primarily the SEC and the New York Attorney General’s Office. While no such action has been initiated against us, it is possible that one or more regulatory agencies may pursue this type of action against us in the future.


Financial services companies have also been the subject of broad industry inquiries by state regulators and attorneys general which do not appear to be company-specific. In May 2005, we received a subpoena from the Connecticut Attorney General’s office and an inquiry from the Connecticut Insurance Department requesting information regarding finite reinsurance. We cooperated fully and have had no further inquiry since responding.


These types of regulatory actions may be difficult to assess or quantify, may seek recovery of indeterminate amounts, including punitive and treble damages, and the nature and magnitude of their outcomes may remain unknown for substantial periods of time. While it is not feasible to predict or determine the ultimate outcome of all pending inquiries, investigations, legal proceedings and other regulatory actions, or to provide reasonable ranges of potential losses, we believe that their outcomes are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these actions and the inherent unpredictability of regulatory matters, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operation or cash flows in particular quarterly or annual periods.


Discontinued Reinsurance Operations


In 1999, we discontinued our reinsurance operations through a combination of sale, reinsurance and placement of certain retained group accident and health reinsurance business into run-off. We adopted a formal plan to stop writing new contracts covering these risks and to end the existing contracts as soon as those contracts would permit. However, we remain liable for claims under contracts which have not been commuted.


For example, we participate in a workers’ compensation reinsurance pool formerly managed by Unicover Managers, Inc. (“Unicover”). The pool ceased accepting new risks in early 1999. Further, we were a retrocessionaire (meaning a reinsurer of other reinsurers) of the Unicover pool. We have been involved in disputes relating to the activities of Unicover. These disputes have been substantially resolved or settled.


Our discontinued group accident and health reinsurance operations also include other (non-Unicover) workers’ compensation reinsurance contracts and personal accident reinsurance contracts, including contracts assumed in the London market. We are engaged in arbitrations, disputes or investigations with several ceding companies over the validity of, or amount of liabilities assumed under, their contracts. These arbitrations, disputes and investigations are in various stages.


We bought retrocessional reinsurance for a significant portion of our assumed reinsurance liabilities. Some of the retrocessionaires have disputed the validity of, or amount of liabilities assumed under, their contracts with us. Most of these disputes with retrocessionaires have been resolved or settled. The remaining arbitrations and disputes are at various stages.



32


17. Contingent Liabilities (continued)


We have established reserves for claims and related expenses that we expect to pay on our discontinued group accident and health reinsurance business. These reserves are based on currently known facts and estimates about, among other things, the amount of insured losses and expenses that we believe we will pay, the period over which they will be paid, the amount of reinsurance we believe we will collect from our retrocessionaires and the likely legal and administrative costs of winding down the business.


We expect our reserves and reinsurance to cover the run-off of the business; however, unfavorable or favorable claims and/or reinsurance recovery experience is reasonably possible and could result in our recognition of additional losses or gains, respectively, in future years. Given the uncertainty associated with litigation and other dispute resolution proceedings, as well as the lack of sufficient claims information, the range of any reasonably possible additional future losses or gains is not currently estimable. However, it is our opinion, based on current information and after consideration of the provisions made in these financial statements, that any future adverse or favorable development of recorded reserves and/or reinsurance recoverables will not have a material adverse effect on our consolidated financial position. Nevertheless, it is possible that future developments could have a material adverse effect on our consolidated results of operations or cash flows in particular quarterly or annual periods.



18. Accounting Adjustment


During the first quarter of 2008, we identified an item related to the collateralized debt obligations that we consolidate under FIN 46-R that required adjustment. We recorded a correction to the valuation of debt and equity securities pledged as collateral which increased the unrealized gain by $26.1 million for the quarter. We evaluated the financial impact of this accounting adjustment and concluded that it was not material to current or prior periods. See Note 8 to these financial statements for additional information on unrealized investment gains and losses.


During the first quarter of 2007, we identified certain items that required adjustment. The adjustments relate primarily to two areas:

 

·  

 

Overaccrual of interest expense. Between 2002 and 2006, interest was accrued on a note payable for more than was owed. The effect was immaterial in any one period and accumulated over several years to an overaccrual of approximately $1.4 million after-tax.

·  

 

Under reporting of realized investment gains. We did not reflect approximately $2.7 million of after-tax realized investment gains associated primarily with the sale of a subsidiary in 1999. Instead, these gains were recognized as unrealized gains and included in accumulated other comprehensive income.


Management has evaluated the financial impact of the previously mentioned accounting adjustments and concluded that the effect both individually and in the aggregate was not material to the current year or any prior period. Accordingly, prior period financial statements have not been restated. Instead, we have recorded a cumulative increase to net income in the three months ended March 31, 2007 of $4.1 million after-tax for these adjustments. Of the $4.1 million after-tax adjustment, $2.7 million was related to net realized investment gains and $1.4 million was related to interest expense on indebtedness.



33


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS


The discussion in this Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These include statements relating to trends in, or representing management’s beliefs about our future strategies, operations and financial results, as well as other statements including, but not limited to, words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may,” “should” and other similar expressions. Forward-looking statements are made based upon management’s current expectations and beliefs concerning trends and future developments and their potential effects on us. They are not guarantees of future performance. Actual results may differ materially from those suggested by forward-looking statements as a result of risks and uncertainties which include, among others: (i) changes in general market and business conditions, interest rates and the debt and equity markets; (ii) the possibility that mortality rates, persistency rates or funding levels may differ significantly from our pricing expectations; (iii) the availability, pricing and terms of reinsurance coverage generally and the inability or unwillingness of our reinsurers to meet their obligations to us specifically; (iv) our dependence on non-affiliated distributors for our product sales, (v) downgrades in our debt or financial strength ratings; (vi) our dependence on third parties to maintain critical business and administrative functions; (vii) the ability of independent trustees of our mutual funds and closed-end funds, intermediary program sponsors, managed account clients and institutional asset management clients to terminate their relationships with us; (viii) our ability to attract and retain key personnel in a competitive environment; (ix) the poor relative investment performance of some of our asset management strategies and the resulting outflows in our assets under management; (x) the possibility that the goodwill or intangible assets associated with our asset management business could become impaired, requiring a charge to earnings; (xi) the strong competition we face in our business from mutual fund companies, banks, asset management firms and other insurance companies; (xii) our  reliance, as a holding company, on dividends and other payments from our subsidiaries to meet our financial obligations and pay future dividends, particularly since our insurance subsidiaries’ ability to pay dividends is subject to regulatory restrictions; (xiii) the potential need to fund deficiencies in our closed block; (xiv) tax developments that may affect us directly, or indirectly through the cost of, the demand for or profitability of our products or services; (xv) other legislative or regulatory developments; (xvi) legal or regulatory actions; (xvii) changes in accounting standards; (xviii) the potential effects of the spin-off of PXP on our expense levels, liquidity and third-party relationships; and (xix) other risks and uncertainties described herein or in any of our filings with the SEC. We undertake no obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.



MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS


This section reviews our consolidated financial condition as of March 31, 2008 as compared to December 31, 2007; our consolidated results of operations for the three months ended March 31, 2008 and 2007; and, where appropriate, factors that may affect our future financial performance. This discussion should be read in conjunction with the unaudited interim financial statements and notes contained in this filing as well as in conjunction with our consolidated financial statements for the year ended December 31, 2007 in our 2007 Annual Report on Form 10-K.


Business Overview and Earnings Drivers


For an overview of our current business and an explanation of the key drivers of our revenues, expenses and overall profitability, please see the “Overview” discussion in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our 2007 Annual Report on Form 10-K.



34


Recent Developments


Spin-Off of Asset Management Business


On February 7, 2008, we announced our intention to spin off our asset management subsidiary, Phoenix Investment Partners, Ltd. (“PXP”), by way of a dividend of PXP’s stock to the Company’s shareholders. The spin-off is intended to be tax free to the Company’s shareholders and the spin-off and related transactions are expected to be completed in the third quarter of 2008. At this point, decisions regarding the capital structure, expense and overhead support structure and other matters are under review and consideration.


Upon completion of the spin-off, our shareholders will have separate, publicly-traded ownership interests in the Company and PXP. PXP will consist of the Company's entire asset management business, with the exception of Goodwin Capital Advisors, Inc., which will remain with the Company and continue to manage the Company's general account assets, as well as third-party assets. The Company and PXP will be independent of each other and have separate boards of directors and management. To facilitate PXP's separation from the Company, each company will continue certain existing arrangements during a transition period following completion of the spin-off.


Recent Acquisitions and Dispositions


See our 2007 Annual Report on Form 10-K for a discussion of our recent acquisitions and dispositions.


Impact of New Accounting Standards


For a discussion of accounting standards, see Note 2 to our consolidated financial statements in this Form 10-Q.


Critical Accounting Estimates


The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Critical accounting estimates are reflective of significant judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.


See our 2007 Annual Report on Form 10-K for a discussion of those critical accounting estimates.



35


Consolidated Results of Operations

 

Summary Consolidated Financial Data:

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

REVENUES:

 

 

 

 

 

 

 

 

 

 

Premiums

$

180.2 

 

$

194.7 

 

$

(14.5)

 

(7%)

Insurance, investment management and product fees

 

178.2 

 

 

150.8 

 

 

27.4 

 

18% 

Mutual fund ancillary fees and other revenue

 

14.6 

 

 

16.6 

 

 

(2.0)

 

(12%)

Net investment income

 

248.5 

 

 

276.5 

 

 

(28.0)

 

(10%)

Net realized investment gains (losses)

 

(47.5)

 

 

24.5 

 

 

(72.0)

 

(294%)

Total revenues

 

574.0 

 

 

663.1 

 

 

(89.1)

 

(13%)

 

 

 

 

 

 

 

 

 

 

 

BENEFITS AND EXPENSES:

 

 

 

 

 

 

 

 

 

 

Policy benefits, excluding policyholder dividends

 

351.6 

 

 

317.3 

 

 

34.3 

 

11% 

Policyholder dividends

 

73.7 

 

 

103.8 

 

 

(30.1)

 

(29%)

Policy acquisition cost amortization

 

30.0 

 

 

43.5 

 

 

(13.5)

 

(31%)

Intangible asset amortization

 

7.5 

 

 

7.6 

 

 

(0.1)

 

(1%)

Intangible asset impairment

 

10.5 

 

 

— 

 

 

10.5 

 

—% 

Interest expense on indebtedness

 

10.2 

 

 

9.5 

 

 

0.7 

 

(7%)

Interest expense on non-recourse collateralized obligations

 

3.2 

 

 

4.0 

 

 

(0.8)

 

(20%)

Other operating expenses

 

117.4 

 

 

106.8 

 

 

10.6 

 

10% 

Total benefits and expenses

 

604.1 

 

 

592.5 

 

 

11.6 

 

2% 

Income (loss) before income taxes

 

(30.1)

 

 

70.6 

 

 

(100.7)

 

(143%)

Income tax (expense) benefit

 

11.1 

 

 

(20.8)

 

 

31.9 

 

(153%)

Income (loss) from continuing operations

 

(19.0)

 

 

49.8 

 

 

(68.8)

 

(138%)

Income from discontinued operations, net of income taxes

 

— 

 

 

0.8 

 

 

(0.8)

 

(100%)

Net income (loss)

$

(19.0)

 

$

50.6 

 

$

(69.6)

 

(138%)


Executive Overview and Outlook


Analysis of Consolidated Results of Operations and Outlook


2008 vs. 2007


Our 2008 first quarter results reflect challenges in the financial markets as well as the inherent variability in our life insurance operations. Consolidated net results decreased in the 2008 period to a loss of $19.0 million, or $0.17 per share, compared with income of $50.6 million in the prior year period.


Net income in our Life and Annuity segment decreased in the first quarter of 2008 to $3.9 million, down from $43.8 million in the first quarter of 2007. This result reflects realized investment losses net of taxes and other offsets of $12.6 million, as well as lower mortality margins and net investment income, partially offset by lower amortization of deferred policy acquisition costs.


Mortality margins in universal life and variable universal life products decreased $12.0 million in the first quarter of 2008, reflecting a $38.2 million increase in net benefits, only partially offset by a $26.2 million increase in cost of insurance fee revenues. Several large claims during the quarter, while reinsured, resulted in a significant increase in GAAP reinsurance liabilities. Net investment income on surplus and assets supporting the open block traditional life products decreased $10.7 million in the first quarter of 2008 as compared to the prior year period, reflecting lower investment yields and lower asset levels in 2008. Also, while there was an increase of $0.6 million in income earned on the assets supporting universal life reserves, this represented a lower yield and was more than offset by a $2.7 million increase in interest credited on the related policyholder fund balances. We also had lower net investment income on our annuity portfolio, mainly driven by the run-off of discontinued products. Non-deferred expenses increased $3.3 million as we invested in new product development and sales growth. Total policy acquisition cost amortization decreased $13.5 million in the first quarter of 2008, compared with the same period in 2007. Lower mortality margins and poor market conditions drove lower amortization expense in universal life and variable universal life. This was partially offset by higher amortization in annuities, driven by negative fund performance and surrender experience.


36


The net loss in our Asset Management segment increased in the first quarter of 2008 to $9.3 million, driven by a non-cash identified intangible asset impairment of $10.5 million ($6.5 million after tax). The impairment primarily related to the termination of certain management contracts and related factors. Average fee-earning assets under management during the quarter ended March 31, 2008 were $42.5 billion compared with $46.2 billion in the prior year period. This decrease was primarily due to net outflows from our managed account, all other mutual fund and institutional products. Asset Management had net outflows of $4.4 billion during the first quarter of 2008, which included the redemption of $3.7 billion related to certain management contracts which triggered the above-mentioned impairment.


We incurred a net loss of $20.6 million in Corporate and Other during 2008, increased from a loss of $9.2 million in the prior year period. During the first quarter of 2008, we announced our intention to spin off our asset management business; in connection with preparations for the spin-off, we incurred expenses of $3.0 million. In addition, in the first quarter of 2008 we incurred proxy solicitation expenses of $4.6 million related to a proxy contest with Oliver Press Partners, LLP. During the second quarter of 2008, we expect to record approximately $5.3 million in additional expenses related to the proxy solicitation. Proxy solicitation expenses in 2007 were $0.3 million.


First quarter results were also lower due to realized investment losses of $47.5 million during 2008, compared with gains of $24.5 million during the 2007 period. The impairments in the first quarter of 2008 included losses on residential mortgage-backed securities of $28.4 million and an impairment of $7.3 million on a limited partnership investment. The first quarter of 2007 included a $13.7 million pre-tax gain related to an earn-out payment of our sale of Lombard International Assurance S.A. (“Lombard”).


Analysis of Consolidated Financial Condition


Stockholders’ equity decreased during the first quarter of 2008 by $28.8 million to $2,261.1 million at March 31, 2008 primarily due to a net other comprehensive loss of $13.2 million and a net loss of $19.0 million during the quarter, partially offset by share-based compensation expense of $3.7 million. Total assets decreased $817.6 million to $29,389.3 million at March 31, 2008, primarily due to lower invested assets and separate account assets related to market performance.


Results of Operations by Segment


In managing our business, we analyze segment performance on the basis of “operating income” which does not equate to “net income” as determined in accordance with GAAP. Rather, it is the measure of profit or loss used by the Company to evaluate performance, allocate resources and manage our operations.


Operating income is calculated by excluding realized investment gains (losses) and certain other items because we do not consider them to be related to the operating performance of our segments. The size and timing of realized investment gains and losses are often subject to our discretion. Certain other items are also excluded from operating income if, in our opinion, they are not indicative of overall operating trends. While some of these items may be significant components of net income in accordance with GAAP, we believe that operating income, and measures that are derived from or incorporate operating income, are appropriate measures that are useful to investors because they identify the earnings attributable to the ongoing operations of the business.



37


The criteria used to identify an item that will be excluded from operating income include: whether the item is infrequent and is material to the segment’s income; or whether it results from a change in regulatory requirements, or relates to other unusual circumstances. Items excluded from operating income may vary from period to period. Because these items are excluded based on our discretion, inconsistencies in the application of our selection criteria may exist. Operating income, and other measures that are derived from or incorporate operating income, are not substitutes for net income determined in accordance with GAAP and may be different from similarly titled measures of other companies. However, the Company believes that the presentation of operating income as measured for management purposes enhances the understanding of results of operations by highlighting the results from ongoing operations and the underlying profitability factors of our business.

 

Results of Operations by Segment

Three Months Ended

as Reconciled to Consolidated Net Income:

March 31,

($ in millions)

2008

 

2007

 

 

 

 

 

 

Life and annuity segment

$

26.2 

 

$

62.9 

Asset management segment

 

(13.3)

 

 

0.6 

Corporate and other

 

(20.6)

 

 

(9.2)

Applicable income tax (expense) benefit

 

3.0 

 

 

(16.9)

Realized investment gains (losses), net of income taxes and other offsets

 

(14.3)

 

 

12.4 

Other costs, net of income taxes

 

— 

 

 

0.8 

Net income (loss)

$

(19.0)

 

$

50.6 


Segment Allocations


We allocate capital to our Life and Annuity segment based on risk-based capital (“RBC”) for our insurance products. We used a 300% risk-based capital ratio for allocations in 2007 and 2008. Capital within our Life Companies that is unallocated is included in Corporate and Other. We allocate capital to our Asset Management segment on the basis of the historical capital within that segment. We allocate net investment income based on the assets allocated to the segments. We allocate tax benefits related to tax-advantaged investments to the segment that holds the investment. We allocate certain costs and expenses to the segments based on a review of the nature of the costs, time studies and other methodologies.


Life and Annuity Segment

 

Summary Life and Annuity Financial Data:

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

Results of operations

 

 

 

 

 

 

 

 

 

 

Premiums

$

180.2 

 

$

194.7 

 

$

(14.5)

 

(7%)

Insurance, investment management and product fees

 

145.6 

 

 

114.1 

 

 

31.5 

 

28% 

Net investment income

 

239.7 

 

 

265.0 

 

 

(25.3)

 

(10%)

Total segment revenues

 

565.5 

 

 

573.8 

 

 

(8.3)

 

(1%)

Policy benefits, including policyholder dividends

 

439.2 

 

 

413.5 

 

 

25.7 

 

6% 

Policy acquisition cost amortization

 

36.0 

 

 

43.8 

 

 

(7.8)

 

(18%)

Other operating expenses

 

64.1 

 

 

53.6 

 

 

10.5 

 

20% 

Total segment benefits and expenses

 

539.3 

 

 

510.9 

 

 

28.4 

 

6% 

Operating income before income taxes

 

26.2 

 

 

62.9 

 

 

(36.7)

 

(58%)

Allocated income tax expense

 

(9.7)

 

 

(19.6)

 

 

9.9 

 

(51%)

Operating income

 

16.5 

 

 

43.3 

 

 

(26.8)

 

(62%)

Realized investment gains (losses), net of income taxes
 and other offsets

 

(12.6)

 

 

0.5 

 

 

(13.1)

 

(2,620%)

Net income

$

3.9 

 

$

43.8 

 

$

(39.9)

 

(91%)


Three months ended March 31, 2008 vs. March 31, 2007


Life and Annuity net income and operating income decreased primarily as a result of lower investment earnings, higher mortality costs, operating expenses and realized losses, partially offset by higher insurance, investment management and product fees and lower policy acquisition cost amortization.



38


Total revenues decreased primarily due to the following:

 

·

 

Net investment income decreased due to lower yields and lower assets levels, particularly in the annuity line of business. Additionally, earnings from venture capital and other invested assets were unusually high in 2007 compared with a low level of income in 2008. Earnings from these asset classes tend to be unevenly distributed throughout the year.

·

 

Traditional premium income decreased primarily due to the fact that we no longer sell participating polices, resulting in a decline in renewal of participating life premiums. The decline in premiums was largely offset by a decrease in policy benefits related to the reduction of in-force policies for traditional life insurance.


Partially offsetting these decreases was an increase in the insurance, investment management and product fees, primarily from higher cost of insurance charges for universal life insurance, reflecting continued growth of the in force block of business.


Total segment benefits and expenses increased primarily due to the following:

 

·

 

Benefit costs increased due to higher mortality costs for universal and variable universal life insurance, reflecting several large claims, and an increase in the liability for guaranteed minimum income benefits for annuities resulting from poor market performance for the quarter. While the large claims were reinsured, the GAAP accounting treatment reduced the current period income statement benefit of that reinsurance, through an increase in the reinsurance liability.

·

 

Other operating expenses, which include non-deferrable policy acquisition costs and general and administrative costs, increased due to higher non-deferred commission, premium taxes and general expenses from higher universal life sales and investment in our alternative products and life solution initiatives. These increases were partially offset by lower incentive compensation expenses.


Partially offsetting these increases was a decrease in policy acquisition cost amortization for universal and variable universal life due to lower mortality margins, and adverse market conditions, for variable universal life. These decreases were partially offset by an increase in policy acquisition cost amortization for annuities resulting from higher surrenders of discontinued products and the effects of negative fund performance.


The decrease in income taxes was primarily due to the decrease in pre-tax operating income.


Realized losses reflect higher impairments for 2008, related primarily to mortgage-backed securities.


Annuity Funds on Deposit

 

Annuity Funds on Deposit:

Three Months Ended

($in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Deposits

$

198.0 

 

$

187.1 

Performance and interest credited

 

(215.8)

 

 

169.6 

Fees

 

(18.6)

 

 

(17.8)

Benefits and surrenders

 

(383.1)

 

 

(280.9)

Change in funds on deposit

 

(419.5)

 

 

58.0 

Funds on deposit, beginning of period

 

9,229.5 

 

 

8,677.6 

Annuity funds on deposit, end of period

$

8,810.0 

 

$

8,735.6 


Three months ended March 31, 2008 vs. March 31, 2007


For the three months ended March 31, 2008 annuity funds on deposit decreased, compared to an increase for the same period in 2007. The decrease for the 2008 period was due to negative fund performance from weaker equity markets, compared to positive fund performance for the 2007. In addition, benefits and surrenders were higher for the 2008 quarter.



39


 

Variable Universal Life Funds on Deposit:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Deposits

$

52.0 

 

$

51.6 

Performance and interest credited

 

(116.9)

 

 

58.1 

Fees and cost of insurance

 

(29.6)

 

 

(27.9)

Benefits and surrenders

 

(35.3)

 

 

(30.0)

Change in funds on deposit

 

(129.8)

 

 

51.8 

Funds on deposit, beginning of period

 

2,696.1 

 

 

2,312.9 

Variable universal life funds on deposit, end of period

$

2,566.3 

 

$

2,364.7 


Three months ended March 31, 2008 vs. March 31, 2007


For the three months ended March 31, 2008 variable universal life funds on deposit decreased, compared to an increase for the same period in 2007. The decrease for the 2008 period was due to negative fund performance, from weaker equity markets, compared to positive fund performance for the 2007.

 

Universal Life Funds on Deposit:

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Deposits

$

179.1 

 

$

92.3 

Interest credited

 

23.8 

 

 

21.0 

Fees and cost of insurance

 

(98.1)

 

 

(64.3)

Benefits and surrenders

 

(28.7)

 

 

(30.2)

Change in funds on deposit

 

76.1 

 

 

18.8 

Funds on deposit, beginning of period

 

2,123.9 

 

 

1,904.1 

Universal life funds on deposit, end of period

$

2,200.0 

 

$

1,922.9 


Three months ended March 31, 2008 vs. March 31, 2007


For the three months ended March 31, 2008 and 2007, universal life funds on deposit increased primarily due to continued sales growth, partially offset by an increase in fees and cost of insurance.

 

Life and Annuity Segment Revenues by Product

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

 

 

 

 

 

 

 

 

 

 

 

Variable universal life insurance

$

33.4 

 

$

32.8 

 

$

0.6 

 

2% 

Universal life insurance

 

123.3 

 

 

94.2 

 

 

29.1 

 

31% 

Other life insurance

 

1.9 

 

 

1.5 

 

 

0.4 

 

27% 

Total core life insurance

 

158.6 

 

 

128.5 

 

 

30.1 

 

23% 

Traditional life insurance

 

367.5 

 

 

399.3 

 

 

(31.8)

 

(8%)

Total life insurance

 

526.1 

 

 

527.8 

 

 

(1.7)

 

—% 

Annuities

 

39.4 

 

 

46.0 

 

 

(6.6)

 

(14%)

Segment revenues

$

565.5 

 

$

573.8 

 

$

(8.3)

 

(1%)


Three months ended March 31, 2008 vs. March 31, 2007


Variable universal life insurance revenue increased modestly with the increase in cost of insurance charges being partially offset by lower surrender charges.


Universal life insurance revenue increased significantly due primarily to higher cost of insurance charges from the growth of in-force business and fees from a higher level of sales in 2008 compared to 2007.


Traditional life insurance revenue decreased due primarily lower premiums resulting from the fact that we no longer sell participating life policies. However, there is an offsetting decrease in policy benefits related to the reduction of in-force policies for traditional life insurance. In addition, investment income declined due to lower earnings on venture capital and other invested assets, which were unusually high in 2007.



40



Annuity revenue decreased primarily due to lower interest earned on general account funds from the run-off of discontinued products, partially offset by an increase in separate account based fees due to higher asset balances.

 

Composition of Life and Annuity Operating Income

Three Months Ended

 

Increase (decrease) and

before Income Taxes by Product:

March 31,

 

percentage change

($ in millions)

2008

 

2007

 

2008 vs. 2007

 

 

 

 

 

 

 

 

 

 

 

Variable universal life insurance

$

6.7 

 

$

8.8 

 

$

(2.1)

 

(24%)

Universal life insurance

 

2.6 

 

 

17.5 

 

 

(14.9)

 

(85%)

Other life insurance

 

(0.5)

 

 

0.4 

 

 

(0.9)

 

(225%)

Total core life insurance

 

8.8 

 

 

26.7 

 

 

(17.9)

 

(67%)

Traditional life insurance

 

22.8 

 

 

29.3 

 

 

(6.5)

 

(22%)

Total life insurance

 

31.6 

 

 

56.0 

 

 

(24.4)

 

(44%)

Annuities

 

(5.4)

 

 

6.9 

 

 

(12.3)

 

(178%)

Operating income before income taxes

$

26.2 

 

$

62.9 

 

$

(36.7)

 

(58%)


Three months ended March 31, 2008 vs. March 31, 2007


Variable universal life pre-tax operating income decreased due to higher mortality costs, partially offset by lower amortization of policy acquisition costs, from lower mortality margins and poor fund performance, and higher cost of insurance charges.


Universal life pre-tax operating income decreased due to higher mortality costs and expenses, including premium taxes and renewal commissions, resulting from higher sales. These increases were partially offset by higher cost of insurance charges, from growth of in-force contracts, and lower amortization of policy acquisition costs, from lower mortality margins.


Traditional life pre-tax operating income decreased primarily due to lower investment income offset by lower expenses.


Annuity pre-tax operating income decreased primarily due to lower asset based fees from negative separate account fund performance, higher benefit costs related to an increase in GMIB reserves, and higher amortization of deferred policy acquisition costs related to the negative separate account performance and higher surrenders in discontinued products.


Asset Management Segment

 

Summary Asset Management Financial Data:

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

Results of operations

 

 

 

 

 

 

 

 

 

 

Investment management fees

$

32.8 

 

$

36.9 

 

$

(4.1)

 

(11%)

Mutual fund ancillary fees and other revenue

 

14.6 

 

 

16.6 

 

 

(2.0)

 

(12%)

Net investment income

 

0.3 

 

 

0.5 

 

 

(0.2)

 

(40%)

Total segment revenues

 

47.7 

 

 

54.0 

 

 

(6.3)

 

(12%)

Intangible asset amortization

 

7.5 

 

 

7.6 

 

 

(0.1)

 

(1%)

Intangible asset impairment

 

10.5 

 

 

— 

 

 

10.5 

 

—% 

Other operating expenses

 

43.0 

 

 

45.8 

 

 

(2.8)

 

(6%)

Total segment expenses

 

61.0 

 

 

53.4 

 

 

7.6 

 

14% 

Operating income (loss) before income taxes

 

(13.3)

 

 

0.6 

 

 

(13.9)

 

(2,317%)

Allocated income tax (expense) benefit

 

4.6 

 

 

(0.9)

 

 

5.5 

 

(611%)

Operating loss

 

(8.7)

 

 

(0.3)

 

 

(8.4)

 

(2,800%)

Realized investment gains (losses), net of income taxes

 

(0.6)

 

 

0.1 

 

 

(0.7)

 

(700%)

Net loss

$

(9.3)

 

$

(0.2)

 

$

(9.1)

 

(4,550%)


Our investment management fees are based on assets under management. Approximately 35% of our investment management fees were based on beginning of quarter assets under management which causes fee revenues to lag behind changes in assets under management. The remaining 65% were based on average daily closing asset values. The following table shows average assets under management.


41


 

Assets Under Management:

As of or for the

($ in millions)

Quarter Ended

 

March 31,

 

2008

 

2007

Average fee earning assets

 

 

 

 

 

Money market mutual funds

$

5,942.2 

 

$

5,813.0 

All other mutual funds

 

15,393.1 

 

 

16,784.1 

Managed accounts

 

5,447.7 

 

 

6,841.1 

Institutional

 

10,458.9 

 

 

12,147.4 

Structured finance products

 

5,246.3 

 

 

4,573.9 

Total

$

42,488.2 

 

$

46,159.5 


Three months ended March 31, 2008 vs. March 31, 2007


Asset Management net income and operating income decreased as a result of an impairment charge that was recorded at one of our asset management subsidiaries. The impairment was primarily the result of the termination of an institutional client. We recorded a non-cash impairment charge of $10.5 million pre-tax against the related identified intangible asset. In connection with this impairment, as required by SFAS 142, we also performed a test for impairment of the operating segment’s goodwill. No impairment of goodwill was deemed necessary. The other key drivers of earnings are explained below:

 

·

 

Investment management fees decreased primarily due to managed account and mutual fund net outflows over the past four quarters of $1.5 billion and $727.0 million, respectively, combined with unfavorable equity market performance over the past two quarters.

·

 

Mutual fund ancillary fees and other revenue decreased due to declines in mutual fund assets under management as well as due to a one-time solicitation fee earned in the prior period related to a collateralized debt obligation issuance. The mutual fund ancillary fees decrease was partially offset by a corresponding decrease in trail payments which are a component of other operating expenses.

·

 

Other operating expenses decreased primarily due to a decrease in employment expenses resulting from lower sales-based and other incentive compensation combined with lower trail payments explained above. These decreases were partially offset by minor increases in portfolio management operational costs.


Corporate and Other

 

Summary Corporate and Other Financial Data:

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

Results of operations

 

 

 

 

 

 

 

 

 

 

Corporate investment income

$

0.9 

 

$

1.5 

 

$

(0.6)

 

(40%)

Investment income from collateralized obligations

 

3.2 

 

 

4.0 

 

 

(0.8)

 

(20%)

Interest expense on indebtedness

 

(10.2)

 

 

(9.5)

 

 

(0.7)

 

7% 

Interest expense on non-recourse collateralized obligations

 

(3.2)

 

 

(4.0)

 

 

0.8 

 

(20%)

Corporate expenses

 

(11.2)

 

 

(2.9)

 

 

(8.3)

 

286% 

Other

 

(0.1)

 

 

1.7 

 

 

(1.8)

 

(106%)

Operating loss before income taxes

 

(20.6)

 

 

(9.2)

 

 

(11.4)

 

124% 

Allocated income tax benefit

 

8.1 

 

 

3.6 

 

 

4.5 

 

125% 

Operating loss

 

(12.5)

 

 

(5.6)

 

 

(6.9)

 

123% 

Realized investment gains (losses), net of income taxes
 and other offsets

 

(1.1)

 

 

11.9 

 

 

(13.0)

 

(109%)

Net income (loss)

$

(13.6)

 

$

6.3 

 

$

(19.9)

 

(316%)


Three months ended March 31, 2008 vs. March 31, 2007


Corporate and other net income and operating income decreased compared to the prior year due primarily to higher expenses, which reflected the costs associated with the proxy solicitation of $4.6 million and the spin-off of our asset management business of $2.9 million. Interest expense increased due to a correction of accrued interest in the prior year. Excluding that correction, interest expense for 2008 would have declined as a result of the pay off of the $153.7 million equity units notes in February 2008. In addition, realized investment gains for the prior year included a final earn-out payment related to the sale of Lombard in 2005.



42



General Account


The invested assets in the Life Companies’ general account are generally of high quality and broadly diversified across asset classes, sectors and individual credits and issuers. Our investment professionals manage these general account assets in investment segments that support specific product liabilities. These investment segments have distinct investment policies that are structured to support the financial characteristics of the related liabilities within them. Segmentation of assets allows us to manage the risks and measure returns on capital for our various businesses and products.


Separate Accounts


Separate account assets are managed in accordance with the specific investment contracts and guidelines relating to our variable products. We generally do not bear any investment risk on assets held in separate accounts. Rather, we receive investment management fees based on assets under management. Assets held in separate accounts are not available to satisfy general account obligations.


Debt and Equity Securities Pledged as Collateral and Non-recourse Collateralized Obligations


Investments pledged as collateral trusts are assets held for the benefit of those institutional clients, which have investments in structured bond products offered and managed by our asset management subsidiary.


See Note 11 to our consolidated financial statements in this Form 10-Q as well as Note 11 to our consolidated financial statements in our 2007 Annual Report on Form 10-K for more information.


Debt and Equity Securities Held in Our General Account


Our general account debt securities portfolios consist primarily of investment-grade publicly traded and privately placed corporate bonds, residential mortgage-backed securities, commercial mortgage-backed securities and asset-backed securities. As of March 31, 2008, our general account held debt securities with a carrying value of $11,617.4 million, representing 77.6% of total general account investments. Public debt securities represented 71.5% of total debt securities, with the remaining 28.5% represented by private debt securities.


We consolidate debt and equity securities on our consolidated balance sheet that are pledged as collateral for the settlement of collateralized obligation liabilities related to two collateralized obligation trusts we sponsor. See Note 11 to our consolidated financial statements in this Form 10-Q for additional information on these debt and equity securities pledged as collateral.



43


 

General Account Debt Securities at Fair Value:

 

 

($ in millions)

 

 

 

 

 

 

 

 

 

 

Total Debt Securities

 

Public Debt Securities

 

Private Debt Securities

SVO

 

S&P Equivalent

 

Mar 31,

 

Dec 31,

 

Mar 31,

 

Dec 31,

 

Mar 31,

 

Dec 31,

Rating

 

Designation

 

2008

 

2007

 

2008

 

2007

 

2008

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

AAA/AA/A

 

$

7,195.3 

 

$

7,473.6 

 

$

5,669.0 

 

$

5,950.6 

 

$

1,526.3 

 

$

1,523.0 

2

 

BBB

 

 

3,502.1 

 

 

3,567.7 

 

 

1,924.1 

 

 

1,997.9 

 

 

1,578.0 

 

 

1,569.8 

Total investment grade

 

 

10,697.4 

 

 

11,041.3 

 

 

7,593.1 

 

 

7,948.5 

 

 

3,104.3 

 

 

3,092.8 

3

 

BB

 

 

572.0 

 

 

604.3 

 

 

483.7 

 

 

507.7 

 

 

88.3 

 

 

96.6 

4

 

B

 

 

225.4 

 

 

227.3 

 

 

159.7 

 

 

179.3 

 

 

65.7 

 

 

48.0 

5

 

CCC and lower

 

 

106.8 

 

 

84.0 

 

 

56.7 

 

 

33.8 

 

 

50.1 

 

 

50.2 

6

 

In or near default

 

 

15.8 

 

 

13.1 

 

 

7.6 

 

 

6.1 

 

 

8.2 

 

 

7.0 

Total debt securities

 

$

11,617.4 

 

$

11,970.0 

 

$

8,300.8 

 

$

8,675.4 

 

$

3,316.6 

 

$

3,294.6 


 

General Account Debt Securities

As of March 31, 2008

by Investment Type:

 

 

 

 

Unrealized Gains (Losses)

($ in millions)

Fair

 

 

 

Gross

 

Gross

 

 

 

Value

 

Cost

 

Gains

 

Losses

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency

$

602.3 

 

$

587.1 

 

$

26.2 

 

$

(11.0)

 

$

15.2 

State and political subdivision

 

234.3 

 

 

223.0 

 

 

12.0 

 

 

(0.7)

 

 

11.3 

Foreign government

 

202.2 

 

 

176.3 

 

 

25.9 

 

 

— 

 

 

25.9 

Corporate

 

6,933.9 

 

 

6,999.3 

 

 

185.2 

 

 

(250.6)

 

 

(65.4)

Mortgage-backed

 

2,685.9 

 

 

2,799.5 

 

 

32.4 

 

 

(146.0)

 

 

(113.6)

Other asset-backed

 

958.8 

 

 

1,089.2 

 

 

9.7 

 

 

(140.1)

 

 

(130.4)

Total debt securities

$

11,617.4 

 

$

11,874.4 

 

$

291.4 

 

$

(548.4)

 

$

(257.0)

Debt securities outside closed block:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Unrealized gains

$

2,176.1 

 

$

2,091.2 

 

$

84.9 

 

$

— 

 

$

84.9 

    Unrealized losses

 

2,614.8 

 

 

2,908.3 

 

 

— 

 

 

(293.5)

 

 

(293.5)

    Total outside the closed block

 

4,790.9 

 

 

4,999.5 

 

 

84.9 

 

 

(293.5)

 

 

(208.6)

Debt securities in closed block:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Unrealized gains

 

4,164.9 

 

 

3,958.4 

 

 

206.5 

 

 

— 

 

 

206.5 

    Unrealized losses

 

2,661.6 

 

 

2,916.5 

 

 

— 

 

 

(254.9)

 

 

(254.9)

    Total in the closed block

 

6,826.5 

 

 

6,874.9 

 

 

206.5 

 

 

(254.9)

 

 

(48.4)

Total debt securities

$

11,617.4 

 

$

11,874.4 

 

$

291.4 

 

$

(548.4)

 

$

(257.0)


We manage credit risk through industry and issuer diversification. Maximum exposure to an issuer is defined by quality ratings, with higher quality issuers having larger exposure limits. Our investment approach emphasizes a high level of industry diversification. The top five industry holdings as of March 31, 2008 in our debt securities portfolios are banking (7.0%), diversified financial services (4.0%), electrical utilities (3.8%), insurance (3.4%) and real estate investment trusts (2.2%).


Residential Mortgage-Backed Securities


The weakness in the U.S. real estate markets, increases in interest rates and the effects of relaxed underwriting standards for mortgages and home equity loans have led to higher delinquency rates for residential mortgage-backed securities, especially those originated in 2006 and 2007 and those designated as sub-prime. In addition, there have been increased concerns in the financial markets about residential mortgage-backed securities designated as Alt-A.


Sub-prime mortgage lending refers to the origination of residential mortgage loans to customers with weak or impaired credit profiles, including, but not limited to, those with the lowest credit scores. Alt-A mortgage lending refers to the origination of residential mortgage loans to customers who are rated above the sub-prime category but below top rated prime borrowers, for reasons including, but not limited to, the election not to provide documentation for items such as income sources.



44



We invest directly in residential mortgage-backed securities through our general account. To the extent these assets deteriorate in credit quality and decline in value for an extended period, we may realize impairment losses. We have been focused on identifying those securities that can withstand significant increases in delinquencies and foreclosures in the underlying mortgage pools before incurring a loss of principal.


Most of our residential mortgage-backed securities portfolio is highly rated. As of March 31, 2008, over 96% of the total residential portfolio was rated AAA or AA. We have $225.9 million of sub-prime exposure, which represents less than 2% of our general account. All of our sub-prime exposure is investment grade, and 86% is AAA rated, with another 3% in AA securities. We have employed a disciplined approach in the analysis and monitoring of our mortgage-backed securities. Our approach involves a monthly review of each security. Underlying mortgage data is obtained from the security’s trustee and analyzed for performance trends. A security-specific stress analysis is performed using the most recent trustee information. This analysis forms the basis for our determination of whether the security will pay in accordance with the contractual cash flows. Our exposure to sub-prime mortgages originated after 2005 is less than 1% of our general account, with 98% of those securities rated AAA. We have no sub-prime exposure through collateralized debt obligations following the impairment of one such security in the fourth quarter of 2007.

 

General Account Residential Mortgage-Backed Securities:

 

 

 

 

 

 

 

 

 

 

 

($ in millions)

As of March 31, 2008

 

Book

 

Market

 

% General

 

 

 

 

 

 

 

 

 

BB and

 

% Closed

 

Value

 

Value

 

Account(1)

 

AAA

 

AA

 

A

 

BBB

 

Below

 

Block

Collateral

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

$

748.4 

 

$

757.9 

 

5.0% 

 

100.0% 

 

0.0% 

 

0.0% 

 

0.0% 

 

0.0% 

 

73.1% 

Prime

 

644.2 

 

 

590.7 

 

3.9% 

 

91.7% 

 

3.7% 

 

0.0% 

 

4.6% 

 

0.0% 

 

37.3% 

Alt-A

 

321.4 

 

 

270.4 

 

1.8% 

 

77.9% 

 

15.6% 

 

4.4% 

 

2.1% 

 

0.0% 

 

32.6% 

Sub-prime

 

253.2 

 

 

225.9 

 

1.5% 

 

86.2% 

 

2.6% 

 

10.1% 

 

1.1% 

 

0.0% 

 

6.4% 

Total

$

1,967.2 

 

$

1,844.9 

 

12.2% 

 

92.4% 

 

3.8% 

 

1.9% 

 

1.9% 

 

0.0% 

 

47.5% 

_______

(1)

Percentages based on Market Value.



45


The following table presents certain information with respect to realized investment gains and losses including those on debt securities pledged as collateral, with losses from other-than-temporary impairment charges reported separately in the table. These impairment charges were determined based on our assessment of factors enumerated below, as they pertain to the individual securities determined to be other-than-temporarily impaired.

 

Sources of Realized Investment Gains (Losses):

Three Months Ended

($ in millions)

March 31,

 

2008

 

2007

 

 

 

 

 

 

Debt security impairments

$

(32.6)

 

$

(1.0)

Equity security impairments

 

(0.5)

 

 

— 

Other investments impairments

 

(7.3)

 

 

— 

Impairment losses

 

(40.4)

 

 

(1.0)

Debt security transaction gains

 

2.0 

 

 

5.2 

Debt security transaction losses

 

(4.8)

 

 

(1.8)

Equity security transaction gains

 

2.5 

 

 

2.7 

Equity security transaction losses

 

(2.7)

 

 

(1.4)

Affiliate transactions

 

— 

 

 

13.7 

Other investments transaction gains (losses)

 

(1.3)

 

 

5.4 

Real estate transaction gains

 

— 

 

 

1.5 

Debt and equity securities pledged as collateral gains

 

1.3 

 

 

0.2 

Debt and equity securities pledged as collateral losses

 

(0.5)

 

 

— 

Net transaction gains (losses)

 

(3.5)

 

 

25.5 

Realized gains (losses) on fair value option investments

 

(3.6)

 

 

— 

Net realized investment gains (losses)

$

(47.5)

 

$

24.5 


Total impairment losses increased to $40.4 million for the 2008 quarter as compared to $1.0 million for the 2007 quarter. Affiliate transactions of $0.0 million in 2008 and $13.7 million in 2007 are attributable to the Lombard earn-out associated with the sale of Lombard that occurred in the first quarter of 2005.


Debt security impairments during the first quarter of 2008 included $29.8 million related to residential mortgage-backed securities. Based on a projected cash flow analysis that incorporates delinquency levels, foreclosures and expected losses on foreclosures, and indicates that we will not receive our contractual principal from certain investments, we recorded impairment losses on those investments. In addition, we recorded an impairment loss of $7.3 million in a limited partnership investment.


There were no realized impairment losses on debt and equity securities pledged as collateral relating to our direct investments in the consolidated collateralized obligation trusts for the three months ended March 31, 2008 and 2007, respectively.



46


 

Gross and Net Unrealized

As of March 31, 2008

Gains (Losses):

Total

 

Outside Closed Block

 

Closed Block

($ in millions)

Gains

 

Losses

 

Gains

 

Losses

 

Gains

 

Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of positions

 

2,505 

 

 

2,496 

 

 

1,580 

 

 

1,779 

 

 

925 

 

 

717 

Unrealized gains (losses)

$

291.4 

 

$

(548.4)

 

$

84.9 

 

$

(293.5)

 

$

206.5 

 

$

(254.9)

Applicable policyholder dividend
 obligation (reduction)

 

206.5 

 

 

(254.9)

 

 

— 

 

 

— 

 

 

206.5 

 

 

(254.9)

Applicable deferred policy acquisition
 costs (benefit)

 

34.3 

 

 

(141.7)

 

 

34.3 

 

 

(141.7)

 

 

— 

 

 

— 

Applicable deferred income taxes (benefit)

 

17.7 

 

 

(53.1)

 

 

17.7 

 

 

(53.1)

 

 

— 

 

 

— 

Offsets to net unrealized gains (losses)

 

258.5 

 

 

(449.7)

 

 

52.0 

 

 

(194.8)

 

 

206.5 

 

 

(254.9)

Unrealized gains (losses) after offsets

$

32.9 

 

$

(98.7)

 

$

32.9 

 

$

(98.7)

 

$

— 

 

$

— 

Net unrealized losses after offsets

 

 

 

$

(65.8)

 

 

 

 

$

(65.8)

 

 

 

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of positions

 

270 

 

 

168 

 

 

136 

 

 

90 

 

 

134 

 

 

78 

Unrealized gains (losses)

$

24.9 

 

$

(8.5)

 

$

6.3 

 

$

(1.6)

 

$

18.6 

 

$

(6.9)

Applicable policyholder dividend
 obligation (reduction)

 

18.6 

 

 

(6.9)

 

 

— 

 

 

— 

 

 

18.6 

 

 

(6.9)

Applicable deferred income taxes (benefit)

 

2.2 

 

 

(0.6)

 

 

2.2 

 

 

(0.6)

 

 

— 

 

 

— 

Offsets to net unrealized gains (losses)

 

20.8 

 

 

(7.5)

 

 

2.2 

 

 

(0.6)

 

 

18.6 

 

 

(6.9)

Unrealized gains (losses) after offsets

$

4.1 

 

$

(1.0)

 

$

4.1 

 

$

(1.0)

 

$

— 

 

$

— 

Net unrealized gains after offsets

$

3.1 

 

 

 

 

$

3.1 

 

 

 

 

$

— 

 

 

 


Total net unrealized gains on debt and equity securities as of March 31, 2008 were $240.6 million (unrealized gains of $316.3 million less unrealized losses of $556.9 million). Of that net amount, net unrealized losses of $203.9 million were outside the closed block ($62.7 million after applicable deferred policy acquisition costs and deferred income taxes) and net unrealized losses of $36.7 million were in the closed block ($0.0 million after applicable policyholder dividend obligation).


At the end of each reporting period, we review all securities for potential recognition of an other-than-temporary impairment. We maintain a watch list of securities in default, near default or otherwise considered by our investment professionals as being distressed, potentially distressed or requiring a heightened level of scrutiny. We also identify securities whose carrying value has been below amortized cost on a continuous basis for zero to six months, six months to 12 months and greater than 12 months. This analysis is provided for investment grade and non-investment grade securities and closed block and outside of closed block securities. Using this analysis, coupled with our watch list, we review all securities whose fair value is less than 80% of amortized cost (significant unrealized loss) with emphasis on below investment grade securities with a continuous significant unrealized loss in excess of six months. In addition, we review securities that had experienced lesser percent age declines in value on a more selective basis to determine if a security is other-than-temporarily impaired.



47


Our assessment of whether an investment in a debt or equity security is other-than-temporarily impaired includes whether the issuer has:

 

·

 

defaulted on payment obligations;

·

 

declared that it will default at a future point outside the current reporting period;

·

 

announced that a restructuring will occur outside the current reporting period;

·

 

severe liquidity problems that cannot be resolved;

·

 

filed for bankruptcy;

·

 

a financial condition which suggests that future payments are highly unlikely;

·

 

deteriorating financial condition and quality of assets;

·

 

sustained significant losses during the current year;

·

 

announced adverse changes or events such as changes or planned changes in senior management, restructurings, or a sale of assets; and/or

·

 

been affected by any other factors that indicate that the fair value of the investment may have been negatively impacted.


The following tables present certain information with respect to our gross unrealized losses with respect to our investments in general account debt securities, both outside and inside the closed block, as of March 31, 2008. In the tables, we separately present information that is applicable to unrealized losses both outside and inside the closed block. We believe it is unlikely that there would be any effect on our net income related to the realization of investment losses inside the closed block due to the current policyholder dividend obligation liability in the closed block. See Note 5 to our consolidated financial statements in this Form 10-Q for more information regarding the closed block. Applicable deferred policy acquisition costs and deferred income taxes further reduce the effect on our comprehensive income.

 

Duration of Gross Unrealized Losses on

As of March 31, 2008

General Account Securities Outside Closed Block:

 

 

0 - 6

 

6 – 12

 

Over 12

($ in millions)

Total

 

Months

 

Months

 

Months

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities outside closed block

 

 

 

 

 

 

 

 

 

 

 

Total fair value

$

2,614.8 

 

$

475.6 

 

$

643.7 

 

$

1,495.5 

Total amortized cost

 

2,908.3 

 

 

502.5 

 

 

748.6 

 

 

1,657.2 

Unrealized losses

$

(293.5)

 

$

(26.9)

 

$

(104.9)

 

$

(161.7)

Unrealized losses after offsets

$

(98.7)

 

$

(8.6)

 

$

(34.1)

 

$

(56.0)

Number of securities

 

1,667 

 

 

340 

 

 

448 

 

 

879 

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(252.0)

 

$

(25.3)

 

$

(94.9)

 

$

(131.8)

Unrealized losses after offsets

$

(85.9)

 

$

(8.0)

 

$

(30.6)

 

$

(47.3)

 

 

 

 

 

 

 

 

 

 

 

 

Below investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(41.5)

 

$

(1.6)

 

$

(10.0)

 

$

(29.9)

Unrealized losses after offsets

$

(12.8)

 

$

(0.6)

 

$

(3.5)

 

$

(8.7)

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities outside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(1.6)

 

$

(1.4)

 

$

(0.2)

 

$

— 

Unrealized losses after offsets

$

(1.0)

 

$

(0.9)

 

$

(0.1)

 

$

— 

Number of securities

 

112 

 

 

92 

 

$

20 

 

 

— 


For debt securities outside of the closed block with gross unrealized losses, 87.0% of the unrealized losses after offsets pertain to investment grade securities and 13% of the unrealized losses after offsets pertain to below investment grade securities at March 31, 2008.



48


The following table represents those securities whose fair value is less than 80% of amortized cost (significant unrealized loss) that have been at a significant unrealized loss position on a continuous basis.

 

Duration of Gross Unrealized Losses on

As of March 31, 2008

General Account Securities Outside Closed Block:

 

 

0 - 6

 

6 – 12

 

Over 12

($ in millions)

Total

 

Months

 

Months

 

Months

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities outside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(131.4)

 

$

(109.9)

 

$

(21.5)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

(43.4)

 

$

(36.8)

 

$

(6.6)

 

$

— 

Number of securities

 

216 

 

 

194 

 

 

20 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(109.4)

 

$

(99.4)

 

$

(10.0)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

(37.4)

 

$

(33.2)

 

$

(4.2)

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Below investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(22.0)

 

$

(10.5)

 

$

(11.5)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

(6.0)

 

$

(3.6)

 

$

(2.4)

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities outside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(0.9)

 

$

(0.8)

 

$

(0.1)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

(0.5)

 

$

(0.5)

 

$

— 

 

$

— 

Number of securities

 

57 

 

 

50 

 

 

 

 

— 


 


49





Duration of Gross Unrealized Losses on

As of March 31, 2008

General Account Securities Inside Closed Block:

 

 

0 - 6

 

6 – 12

 

Over 12

($ in millions)

Total

 

Months

 

Months

 

Months

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities inside closed block

 

 

 

 

 

 

 

 

 

 

 

Total fair value

$

2,661.6 

 

$

591.8 

 

$

713.5 

 

$

1,356.3 

Total amortized cost

 

2,916.5 

 

 

618.5 

 

 

822.3 

 

 

1,475.7 

Unrealized losses

$

(254.9)

 

$

(26.7)

 

$

(108.8)

 

$

(119.4)

Unrealized losses after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

Number of securities

 

610 

 

 

131 

 

 

194 

 

 

285 

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(217.3)

 

$

(23.3)

 

$

(98.5)

 

$

(95.5)

Unrealized losses after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Below investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(37.6)

 

$

(3.4)

 

$

(10.3)

 

$

(23.9)

Unrealized losses after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities inside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses

$

(6.9)

 

$

(5.2)

 

$

(1.7)

 

$

— 

Unrealized losses after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

Number of securities

 

107 

 

 

88 

 

 

19 

 

 

— 


For debt securities in the closed block with gross unrealized losses, 85.2% of the unrealized losses pertain to investment grade securities and 14.8% of the unrealized losses pertain to below investment grade securities at March 31, 2008.



50


The following table represents those securities whose fair value is less than 80% of amortized cost (significant unrealized loss) that have been at a significant unrealized loss position on a continuous basis.

 

Duration of Gross Unrealized Losses on

As of March 31, 2008

General Account Securities Inside Closed Block:

 

 

0 - 6

 

6 – 12

 

Over 12

($ in millions)

Total

 

Months

 

Months

 

Months

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities inside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(98.6)

 

$

(91.3)

 

$

(7.3)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

Number of positions

$

80 

 

$

70 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(79.9)

 

$

(76.2)

 

$

(3.7)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Below investment grade:

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(18.7)

 

$

(15.1)

 

$

(3.6)

 

$

— 

Unrealized losses over 20% of cost after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities inside closed block

 

 

 

 

 

 

 

 

 

 

 

Unrealized losses over 20% of cost

$

(4.0)

 

$

(4.0)

 

$

— 

 

$

— 

Unrealized losses over 20% of cost after offsets

$

— 

 

$

— 

 

$

— 

 

$

— 

Number of positions

$

31 

 

$

30 

 

$

 

$

— 


In determining that the securities giving rise to the previously mentioned unrealized losses were not other-than-temporarily impaired, we considered and evaluated the factors cited above. In making these evaluations, we must exercise considerable judgment. Accordingly, there can be no assurance that actual results will not differ from our judgments and that such differences may require the future recognition of other-than-temporary impairment charges that could have a material effect on our financial position and results of operations. In addition, the value of, and the realization of any loss on, a debt security or equity security is subject to numerous risks, including interest rate risk, market risk, credit risk and liquidity risk. The magnitude of any loss incurred by us may be affected by the relative concentration of our investments in any one issuer or industry. We have established specific policies limiting the concentration of our investments in any single issuer and industry and believe our investment portfolio is prudently diversified.


Lombard International Assurance S.A.


On January 11, 2005, we disposed of our interests in Lombard International Assurance S.A. (“Lombard”) for consideration of $59.0 million. In the first quarter of 2007, 2006 and 2005, we realized after-tax gains of $8.9 million, $6.5 million and $9.3 million, respectively, which included earn-out gain consideration received. We do not expect any further consideration related to this sale going forward.


Liquidity and Capital Resources


In the normal course of business, we enter into transactions involving various types of financial instruments such as debt and equity securities. These instruments have credit risk and also may be subject to risk of loss due to interest rate and market fluctuations.


Liquidity refers to the ability of a company to generate sufficient cash flow to meet its cash requirements. The following discussion includes both liquidity and capital resources as these subjects are interrelated.



51


The Phoenix Companies, Inc. (consolidated)

 

Summary Consolidated Cash Flows:

Three Months Ended

 

Increase (decrease) and

($ in millions)

March 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

Continuing operations

 

 

 

 

 

 

 

 

 

 

Cash from (for) operating activities

$

(43.7)

 

$

8.1 

 

$

(51.8)

 

(640%)

Cash from investing activities

 

96.6 

 

 

87.6 

 

 

9.0 

 

10% 

Cash for financing activities

 

(274.2)

 

 

(165.1)

 

 

(109.1)

 

66% 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

Cash for operating activities

 

(5.5)

 

 

(5.4)

 

 

(0.1)

 

2% 

Cash from investing activities

 

11.4 

 

 

15.6 

 

 

(4.2)

 

(27%)


Three months ended March 31, 2008 vs. March 31, 2007


Cash activity shifted from provided by operations in 2007 to used for operating activities in 2008. This was primarily due to an increase in the first year acquisition costs associated with the higher level of sales in 2008, partially offset by an increase in fees collected.


Cash for financing activities increased due to the increase in indebtedness repayments in 2008. In 2008, the equity unit notes of $153.7 million matured and were repaid, while 2007 promissory notes of $57.2 million were repaid.


See Note 9 to our consolidated financial statements in this Form 10-Q for additional information on financing activities.


The Phoenix Companies, Inc. Sources and Uses of Cash


Our primary sources of liquidity have been dividends from Phoenix Life and interest income received from PXP. Under New York Insurance Law, Phoenix Life can pay stockholder dividends to the holding company in any calendar year without prior approval from the New York Superintendent of Insurance in the amount of the lesser of 10% of Phoenix Life’s surplus to policyholders as of the immediately preceding calendar year or Phoenix Life’s statutory net gain from operations for the immediately preceding calendar year, not including realized capital gains. Phoenix Life is able to pay a dividend of $83.8 million in 2008 under this provision.


On May 2, 2008, we declared a dividend of $0.16 per share, payable on July 11, 2008 to shareholders of record on June 13, 2008. In the prior year, we declared a dividend of $0.16 per share on April 26, 2007 to our shareholders of record on June 13, 2007; we paid that dividend on July 11, 2007.


On March 19, 2008, the Phoenix Life Board of Directors declared a dividend of $25.0 million to its sole shareholder, The Phoenix Companies, Inc., which was paid in April 2008. During 2007, the Phoenix Life Board of Directors paid total dividends of $92.2 million to its sole shareholder, The Phoenix Companies, Inc.


See Note 22 to our consolidated financial statements in our 2007 Annual Report on Form 10-K for more information on Phoenix Life statutory financial information and regulatory matters.


We sponsor postemployment benefit plans through pension and savings plans and postretirement health care and life insurance for employees of Phoenix Life and PXP. Funding of these obligations is provided by Phoenix Life and PXP on a 100% cost reimbursement basis through administrative services agreements with the holding company. See Note 14 to our consolidated financial statements in this Form 10-Q for additional information.


The holding company does not expect to receive dividends from PXP in the near term because this subsidiary will likely use a substantial portion of its cash flows from operations to repay intercompany debt and interest on debt.


On April 2, 2008, the Company and its subsidiary, Phoenix Life, amended and restated our existing $150 million unsecured senior revolving credit facility (the “Amended and Restated Facility”). The Amended and Restated Facility amends and restates the terms of the original facility dated November 22, 2004 (the “Original Facility”) and the terms of the amendment and restatement of the Original Facility dated June 6, 2006 (the “Amended Facility”).



52


The financing commitments under the Amended and Restated Facility will terminate on June 6, 2009. The Amended and Restated Facility reflects amendments that, in anticipation of the spin-off of the Company’s wholly-owned subsidiary, PXP, to the Company’s shareholders (the “Spin-off”), (i) release PXP from its obligations under the Amended Facility and provide that PXP is not a borrower under the Amended and Restated Facility effective as of April 2, 2008, and (ii) adjust certain financial covenants of the borrowers upon the consummation of the Spin-off. The adjusted covenants include those related to the minimum consolidated net worth required to be maintained following the Spin-off.


Potential borrowers on the credit line are the Company and Phoenix Life. The Company unconditionally guarantees any loans under this facility to Phoenix Life. Base rate loans will bear interest at the greater of Wachovia Bank, National Association’s prime commercial rate or the federal funds rate plus 0.50%. Eurodollar rate loans will bear interest at LIBOR plus an applicable percentage based on our Standard & Poor’s and Moody’s ratings. There are no current borrowings on the credit facility.


The credit facility contains covenants that require us at all times to maintain a minimum level of consolidated stockholders’ equity, based on GAAP standards in effect on June 6, 2006 and a maximum consolidated debt-to-capital ratio of 30%. In addition, Phoenix Life must maintain a minimum risk-based capital ratio of 250% and a minimum A.M. Best financial strength rating of “A-”. Borrowings under the facility are not conditioned on the absence of a material adverse change.


We were in compliance with all of our credit facility covenants at March 31, 2008.


Future minimum annual principal payments on indebtedness as of March 31, 2008 are: in 2032, $300.0 million and in 2034, $175.0 million.


The Company and its subsidiaries may, from time to time, purchase our 7.45% Quarterly Interest Bonds, due 2032, in the open market subject to considerations including, but not limited to, market conditions, relative valuations, capital allocation and the continued determination that it is in the best interest of the Company and its shareholders.


Ratings


Rating agencies assign Phoenix Life financial strength ratings and assign us debt ratings based in each case on their opinions of the relevant company’s ability to meet its financial obligations. Ratings changes may result in increased or decreased interest costs in connection with future borrowings. Such an increase or decrease would affect our earnings and could affect our ability to finance our future growth. Downgrades may also trigger defaults or repurchase obligations.


The financial strength and debt ratings as of March 31, 2008 were as follows:

 

 

 

Financial Strength Rating

 

 

 

Senior Debt Rating of

 

 

Rating Agency

 

of Phoenix Life

 

Outlook

 

The Phoenix Companies, Inc.

 

Outlook

 

 

 

 

 

 

 

 

 

A.M. Best Company, Inc.

 

A (“Excellent”)

 

Stable

 

bbb (“Adequate”)

 

Positive

Fitch

 

A+ (“Strong”)

 

Stable

 

Not rated

 

 

Moody’s

 

A3 (“Good”)

 

Stable

 

Baa3 (“Adequate”)

 

Stable

Standard & Poor’s

 

A- (“Strong”)

 

Stable

 

BBB- (“Good”)

 

Stable


These ratings are not a recommendation to buy or hold any of our securities.


See Note 9 to our consolidated financial statements in this Form 10-Q for additional information on financing activities.


See Note 17 to our consolidated financial statements in this Form 10-Q for more information on our contingent liabilities.


Life Companies Sources and Uses of Cash


The Life Companies’ liquidity requirements principally relate to: the liabilities associated with various life insurance and annuity products; the payment of dividends by Phoenix Life to us; operating expenses; contributions to subsidiaries; and payment of principal and interest by Phoenix Life on its outstanding debt obligations. Liabilities arising from life insurance and annuity products include the payment of benefits, as well as cash payments in connection with policy surrenders, withdrawals and loans. The Life Companies also have liabilities arising from the runoff of the remaining group accident and health reinsurance discontinued operations.


53


Historically, our Life Companies have used cash flow from operations and investment activities to fund liquidity requirements. Their principal cash inflows from life insurance and annuities activities come from premiums, annuity deposits and charges on insurance policies and annuity contracts. In the case of Phoenix Life, cash inflows also include dividends, distributions and other payments from subsidiaries. Principal cash inflows from investment activities result from repayments of principal, proceeds from maturities, sales of invested assets and investment income. The principal cash inflows from our discontinued group accident and health reinsurance operations come from our reinsurance, recoveries from other retrocessionaires and investment activities.


See our 2007 Annual Report on Form 10-K for additional information as to liquidity and capital resources related to our Life Companies.


Phoenix Investment Partners, Ltd. (PXP) Sources and Uses of Cash


PXP’s liquidity requirements are primarily to fund operating expenses and pay its debt and interest obligations. PXP also requires liquidity to fund any potential acquisitions. Historically, PXP’s principal source of liquidity has been cash flow from operations. We expect that cash flow from operations will continue to be its principal source of working capital. We believe that PXP’s current and anticipated sources of liquidity are adequate to meet its present and anticipated needs.


See our 2007 Annual Report on Form 10-K for additional information as to liquidity and capital resources related to PXP.



54


Consolidated Financial Condition

 

Consolidated Balance Sheet:

 

 

 

 

Increase (decrease) and

($ in millions)

Mar 31,

 

Dec 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

ASSETS

 

 

 

 

 

 

 

 

 

 

Available-for-sale debt securities, at fair value

$

11,617.4 

 

$

11,970.0 

 

$

(352.6)

 

(3%) 

Available-for-sale equity securities, at fair value

 

204.9 

 

 

205.3 

 

 

(0.4)

 

—% 

Venture capital partnerships, at equity in net assets

 

195.4 

 

 

173.7 

 

 

21.7 

 

12% 

Policy loans, at unpaid principal balances

 

2,402.9 

 

 

2,380.5 

 

 

22.4 

 

1% 

Other investments

 

430.5 

 

 

507.3 

 

 

(76.8)

 

(15%)

Fair value option investments

 

112.8 

 

 

— 

 

 

112.8 

 

—% 

 

 

14,963.9 

 

 

15,236.8 

 

 

(272.9)

 

(2%)

Available-for-sale debt and equity securities pledged as collateral,
  at fair value

 

185.9 

 

 

219.1 

 

 

(33.2)

 

(15%)

Total investments

 

15,149.8 

 

 

15,455.9 

 

 

(306.1)

 

(2%)

Cash and cash equivalents

 

362.3 

 

 

577.7 

 

 

(215.4)

 

(37%)

Accrued investment income

 

215.8 

 

 

209.6 

 

 

6.2 

 

3% 

Receivables

 

196.4 

 

 

159.7 

 

 

36.7 

 

23% 

Deferred policy acquisition costs

 

2,237.2 

 

 

2,081.2 

 

 

156.0 

 

7% 

Deferred income taxes

 

57.1 

 

 

36.9 

 

 

20.2 

 

55% 

Other intangible assets

 

190.5 

 

 

208.2 

 

 

(17.7)

 

(9%)

Goodwill

 

484.5 

 

 

484.5 

 

 

— 

 

—% 

Other assets

 

151.5 

 

 

172.9 

 

 

(21.4)

 

(12%)

Separate account assets

 

10,344.2 

 

 

10,820.3 

 

 

(476.1)

 

(4%)

Total assets

$

29,389.3 

 

$

30,206.9 

 

$

(817.6)

 

(3%)

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Policy liabilities and accruals

$

13,803.1 

 

$

13,791.2 

 

$

11.9 

 

—% 

Policyholder deposit funds

 

1,723.3 

 

 

1,808.9 

 

 

(85.6)

 

(5%)

Indebtedness

 

474.0 

 

 

627.7 

 

 

(153.7)

 

(24%)

Other liabilities

 

513.1 

 

 

551.0 

 

 

(37.9)

 

(7%)

Non-recourse collateralized obligations

 

270.5 

 

 

317.9 

 

 

(47.4)

 

(15%)

Separate account liabilities

 

10,344.2 

 

 

10,820.3 

 

 

(476.1)

 

(4%)

Total liabilities

 

27,128.2 

 

 

27,917.0 

 

 

(788.8)

 

(3%)

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock and additional paid in capital

 

2,620.8 

 

 

2,617.4 

 

 

3.4 

 

—% 

Accumulated deficit

 

(31.7)

 

 

(9.8)

 

 

(21.9)

 

(223%)

Accumulated other comprehensive loss

 

(148.5)

 

 

(138.2)

 

 

(10.3)

 

(7%)

Treasury stock

 

(179.5)

 

 

(179.5)

 

 

— 

 

—% 

Total stockholders’ equity

 

2,261.1 

 

 

2,289.9 

 

 

(28.8)

 

(1%)

Total liabilities and stockholders’ equity

$

29,389.3 

 

$

30,206.9 

 

$

(817.6)

 

(3%)


Three months ended March 31, 2008 vs. December 31, 2007


The fair value of available-for-sale debt securities decreased due to the change in fair value of bonds and funding of annuity withdrawals related primarily to discontinued products.


Venture capital partnerships increased primarily due to additional contributions of $18.8 million, largely in the closed block.


Other investments decreased primarily due to the reclassification of certain investments to the fair value option investments line on the consolidated balance sheet discussed below.


Fair Value Option Investments represent investments for which the fair value option was elected under SFAS 159. See Note 2 to our consolidated financial statements in this Form 10-Q for additional information.


Cash and cash equivalents decreased due to cash used by financing activities of $268.7 million and cash used for operating activities of $49.2 million, partially offset by cash from investing activities of $102.5 million. Cash used for financing activities related to repayment of the equity unit notes of $153.7 million and payments for net withdrawals on policyholder deposit funds of $97.3 million. Cash used for operations primarily related to higher benefit payments and higher first year acquisition costs, partially offset by an increase in fees collected.



55


Receivables increased primarily due to higher reinsurance recoverable balances, which resulted from higher death claims activity in the first quarter of 2008.

 

Composition of Deferred Policy Acquisition Costs by Product:

 

 

 

 

Increase (decrease) and

($ in millions)

Mar 31,

 

Dec 31,

 

percentage change

 

2008

 

2007

 

2008 vs. 2007

 

 

 

 

 

 

 

 

 

 

 

Variable universal life

$

359.1 

 

$

358.9 

 

$

0.2 

 

—% 

Universal life

 

948.4 

 

 

820.8 

 

 

127.6 

 

16% 

Variable annuities

 

327.7 

 

 

310.0 

 

 

17.7 

 

6% 

Fixed annuities

 

11.9 

 

 

14.0 

 

 

(2.1)

 

(15%)

Traditional life

 

590.1 

 

 

577.5 

 

 

12.6 

 

2% 

Total deferred policy acquisition costs

$

2,237.2 

 

$

2,081.2 

 

$

156.0 

 

7% 


Deferred policy acquisition costs increased primarily due to the deferral of $142.2 million in first year acquisitions costs, including $116.2 million related to universal life sales and $14.0 million related to annuity sales. In addition there was an increase of $43.8 million related to offsets for unrealized investment losses. These increases were partially offset by amortization of deferred policy acquisition costs.


Deferred income taxes increased due to changes in the tax basis of assets and liabilities during the first quarter of 2008.


Other intangible assets decreased as a result of the $10.5 million impairment of certain management contract in our asset management business and normal amortization.


Other assets declined due to a decrease in the net assets of discontinued reinsurance operations and generally lower suspense balances.


Policyholder deposit funds decreased due to net outflows, primarily from discontinued annuity products.


Other liabilities decreased due mainly to the lower levels of accruals related primarily to commissions and incentive compensation.


Contractual Obligations and Commercial Commitments


As of March 31, 2008, there were no significant changes to our outstanding contractual obligations and commercial commitments as disclosed in our 2007 Annual Report on Form 10-K.


Commitments Related to Recent Business Combinations


Under the terms of purchase agreements related to certain recent business combinations, we are subject to certain contractual obligations and commitments related to additional purchase consideration and other purchase arrangements as described in our 2007 Annual Report on Form 10-K.


Off-Balance Sheet Arrangements


As of March 31, 2008 and December 31, 2007, we did not have any significant off-balance sheet arrangements as defined by Item 303(a)(4)(ii) of SEC Regulation S-K. See Note 11 to our consolidated financial statements in this Form 10-Q for information on variable interest entities.


Reinsurance


We maintain life reinsurance programs designed to protect against large or unusual losses in our life insurance business. Based on our review of their financial statements, reputations in the reinsurance marketplace and other relevant information, we believe that we have no material exposure to uncollectible life reinsurance.




56


Statutory Capital and Surplus and Risk Based Capital


Phoenix Life’s consolidated statutory basis capital and surplus (including AVR) decreased from $1,055.6 million at December 31, 2007 to $956.9 million at March 31, 2008. The principal factors resulting in this decrease are losses from operations of $33.2 million, net realized losses of $42.1 million, and a $25.0 million dividend to its sole shareholder, The Phoenix Companies, Inc., which was declared in March 2008.


At March 31, 2008, Phoenix Life’s and each of its insurance subsidiaries’ estimated Total Adjusted Capital levels were in excess of 300% of Company Action Level.


On March 19, 2008, the Phoenix Life Board of Directors declared a dividend of $25.0 million to its sole shareholder, The Phoenix Companies, Inc., which was paid in April 2008. During 2007, the Phoenix Life Board of Directors paid total dividends of $92.2 million to its sole shareholder, The Phoenix Companies, Inc.


Net Capital Requirements


Our broker-dealer subsidiaries are each subject to the net capital requirements imposed on registered broker-dealers by the Securities Exchange Act of 1934. Each is also required to maintain a ratio of aggregate indebtedness to net capital that does not exceed 15:1. At March 31, 2008, the largest of these subsidiaries had net capital of approximately $7.1 million, which is $6.1 million in excess of its required minimum net capital of $1.0 million. The ratio of aggregate indebtedness to net capital for that subsidiary was 2.01:1. The ratios of aggregate indebtedness to net capital for each of our other broker-dealer subsidiaries were also below the regulatory ratio at March 31, 2008 and their respective net capital each exceeded the applicable regulatory minimum.


Obligations Related to Pension and Postretirement Employee Benefit Plans


As of March 31, 2008, there were no material changes to our obligations related to pension and postretirement employee benefit plans as described in our 2007 Annual Report on Form 10-K.


See Note 14 to our consolidated financial statements in this Form 10-Q for additional information.


Enterprise Risk Management


We have implemented a comprehensive, enterprise-wide risk management program, overseen by our Chief Risk Officer, who reports to the Chief Financial Officer. We have also established an Enterprise Risk Management Committee, chaired by the Chief Executive Officer, to follow our risk management principles and accomplish our objectives. In addition, we have established several management committees overseeing and addressing issues pertaining to all our major risks—product, market and operations—and capital management.


See our 2007 Annual Report on Form 10-K for more information regarding our enterprise risk management. There were no material changes in our exposure to operational and market risk exposure at March 31, 2008 in comparison to December 31, 2007.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


For information about our management of market risk, see the Enterprise Risk Management section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2007 Annual Report on Form 10-K.



57




ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


We have carried out an evaluation under the supervision and with the participation of our management, including our Principal Executive Officer and our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, these officers have concluded that, as of March 31, 2008, the disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports we file and submit under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.


Changes in Internal Control over Financial Reporting

During the three months ended March 31, 2008, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



58


PART II. OTHER INFORMATION



ITEM 1. LEGAL PROCEEDINGS


We are regularly involved in litigation and arbitration, both as a defendant and as a plaintiff. In addition, various regulatory bodies regularly make inquiries of us and, from time to time, conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, laws governing the activities of broker-dealers and other laws and regulations affecting our registered products. It is not feasible to predict or determine the ultimate outcome of all legal or regulatory proceedings or to provide reasonable ranges of potential losses. We believe that the outcomes of our litigation and regulatory matters are not likely, either individually or in the aggregate, to have a material adverse effect on our consolidated financial condition. However, given the large or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation and regulatory matters, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on our results of operations or cash flows in particular quarterly or annual periods. See Item 1A, “Risk Factors” in our Form 10-K for the year ended December 31, 2007 and Note 17 to our consolidated financial statements in this Form 10-Q for additional information.



ITEM 1A. RISK FACTORS


There are no material changes to our Risk Factors as described in our 2007 Annual Report on Form 10-K.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


(a)

During the three months ended March 31, 2008, we issued 22,483 restricted stock units (“RSUs”) to 12 of our independent directors, without registration under the Securities Exchange Act of 1934 in reliance on an applicable exemption from registration under the Securities Act of 1933. Each RSU is potentially convertible into one share of our common stock.


(b)

Not applicable.


(c)

Not applicable.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES


Not applicable.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


(a)

The Annual Meeting of Shareholders of The Phoenix Companies, Inc. was held on May 2, 2008.


(b)

The following individuals were elected as directors at the meeting for terms expiring in 2011:
Sal H. Alfiero, Martin N. Baily, John H. Forsgren, Jr., John E. Haire and Thomas S. Johnson.


All of the following other individuals continued to serve as directors after the meeting:
Jean S. Blackwell, Peter C. Browning, Arthur P. Byrne, Sanford Cloud, Jr., Gordon J. Davis, Esq.,
Ann Maynard Gray, Jerry J. Jasinowski and Dona D. Young.



59



(c)

The nominees for director were elected based on the following votes:

 

 

 

Number of Shares Voted For

 

Number of Shares Withheld

 

 

 

 

 

Sal H. Alfiero

 

58,129,684

 

2,949,768

Martin N. Baily

 

58,491,800

 

2,225,536

John H. Forsgren, Jr.

 

58,930,658

 

1,347,820

John E. Haire

 

55,824,941

 

7,559,254

Thomas S. Johnson

 

55,804,958

 

7,599,220


The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2008 received the following votes:

 

FOR

 

AGAINST

 

ABSTAIN

 

 

 

 

 

59,485,203

 

284,352

 

472,836


(d)

Please see Part II, Item 5(a) below for a discussion of the settlement between the Company and affiliates of Oliver Press Partners, LLC.



ITEM 5. OTHER INFORMATION


(a)

In lieu of filing this information on Form 8-K, pursuant to Instruction B.3 of Form 8-K and Item 5 of Form 10-Q, we file the following disclosure in this report on Form 10-Q within the filing deadlines set forth in Form 8-K.


Election of Directors


On April 16, 2008, the Company and affiliates of Oliver Press Partners, LLC (collectively, the “OPP Investors”) entered into an agreement (the “Agreement”) terminating the pending proxy contest with respect to the election of directors at the Company’s 2008 Annual Meeting of Shareholders. The terms of the Agreement are set forth in the Company’s Current Report on Form 8-K filed April 16, 2008, and the Agreement is filed as Exhibit 10.55 hereto and is incorporated herein by reference.


Pursuant to the terms of the Agreement, on May 2, 2008, the Company’s Board of Directors (the “Board”) increased the size of the Board from thirteen to fifteen directors, and appointed (i) Augustus Oliver as a director of the Company to the class of directors whose term of office will expire at the Company’s 2009 Annual Meeting of Shareholders and as a member of the Audit and Finance Committees of the Board, and (ii) Art Weinbach as a director of the Company to the class of directors whose term of office will expire at the Company’s 2010 Annual Meeting of Shareholders and as a member of the Compensation and Governance Committees of the Board. Messrs. Oliver and Weinbach will be entitled to participate in the non-management director compensation arrangements provided by the Company, prorated to reflect their length of service on the Board during 2008.


Mr. Oliver serves as a managing member of Oliver Press Partners, LLC. As a managing member of Oliver Press Partners, LLC, Mr. Oliver receives compensation from Oliver Press Partners, LLC and its affiliates and has an equity interest in the OPP Investors. Pursuant to the Agreement, the Company will reimburse the OPP Investors for actual out-of-pocket expenses in connection with their nominations and related filings, up to a maximum amount of $3,000,000. Mr. Weinbach serves as Executive Chairman and Chairman of the Board of Directors of Broadridge Financial Solutions, Inc. (“Broadridge”). Mr. Weinbach receives compensation from Broadridge in connection with his service as an employee of Broadridge. Banks, broker dealers and other registered holders of the Company’s common stock utilize Broadridge to distribute proxy statements and related materials to the beneficial owners of the Company’s common stock. The Company pays fees, and reimburses expenses, to Broadridge related to the distribution of these materials. For 2008, the total fees and expenses paid or reimbursed to Broadridge by the Company are estimated to total approximately $200,000. The Company has determined that both transactions constitute related person transactions. Both related person transactions have been approved by the Audit Committee of the Board pursuant to the Board’s Policy Regarding Transactions with Related Persons. The Board has determined that Messrs. Oliver and Weinbach are independent under the Categorical Independence Standards adopted by the Board and related New York Stock Exchange rules.



60


Compensatory Arrangements of Certain Officers and Directors


(i)

On May 2, 2008, the Compensation Committee (the “Compensation Committee”) of the Board recommended, and the Board approved, the amendment and restatement of the following non-qualified plans and employment agreement to address  the applicable provisions of Internal Revenue Code section 409A, its final regulations and other guidance issued thereunder (“Section 409A”):


The Phoenix Companies, Inc. Stock Incentive Plan, as amended and restated to be effective as of January 1, 2009;

The Phoenix Companies, Inc. Directors Stock Plan, as amended and restated to be effective as of January 1, 2009;

The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan, as amended and restated to be effective as of January 1, 2009;

The Phoenix Companies, Inc. Annual Incentive Plan for Executive Officers, as amended and restated to be effective as of January 1, 2009; and

Second Amended and Restated Employment Agreement dated May 6, 2008 between The Phoenix Companies, Inc. and Dona D. Young.


On May 2, 2008, the Compensation Committee also recommended, and the Board also approved, the following non-qualified plans, which (1) formalize prior practices with respect to director deferrals effected by individual agreements in separate plans pertaining to the deferral of equity awards and cash payments; (2) separate the equity deferral provisions for executive officers into a plan separate from that for cash based deferrals, and (3) address the applicable provisions of Section 409A:


The Phoenix Companies, Inc. Equity Deferral Plan to be effective as of January 1, 2009;

The Phoenix Companies, Inc. Directors Equity Deferral Plan to be effective as of January 1, 2009; and

The Phoenix Companies, Inc. Directors Cash Deferral Plan to be effective as of January 1, 2009.


(ii)

On May 6, 2008, The Phoenix Companies, Inc. Benefit Plans Committee, pursuant to authority delegated by the Board and the Compensation Committee, approved the amendment and restatement of the following non-qualified plans to address the applicable provisions of Section 409A:


The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan to be effective as of January 1, 2009;

The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan to be effective as of January 1, 2009;

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective as of January 1, 2008;

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated effective as of January 1, 2008;

The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated to be effective as of January 1, 2009; and

The Phoenix Companies, Inc. Executive Severance Allowance Plan, as amended and restated to be effective as of January 1, 2009.


Executive officers and directors of the Company are, or could be, participants in, or have received awards under, one or more of the plans set forth immediately above.


Each plan and the employment agreement described above amends, restates and supersedes the existing plan and the employment agreement in its entirety or establishes a new plan with provisions from other plans or individual agreements effective as of, or to be effective as of, the respective effective date. Some of the plans are being amended to take advantage of (1) the exemptions available under Section 409A, such as the utilization of the short-term deferral rule, to the extent possible, or (2) the transition relief provisions that are available generally until December 31, 2008, such as the opportunity to accelerate distributions into 2009. Specifically, the directors and executive officers, including the Chief Executive Officer in the form of a letter agreement amending her employment agreement with the Company, who have vested restricted stock units (“RSUs”) that are scheduled to settle upon Separation from Service will be offered the opportunity to accelerate the settlement of their RSUs to a fixed date of the directors and executive officers election, but in no event prior to January 1, 2009. This election is only available until December 31, 2008, as permitted by Section 409A. The directors and executive officers would be permitted, as of the settlement date, to sell shares necessary to meet their tax liability. The shares received as a result of this acceleration will continue to be subject to the Company’s share ownership guidelines.



61



Plans with awards, benefits or accounts subject to Section 409A are being amended or established to include, as applicable, the following provisions: (A) establish compliant election periods for newly-eligible and existing participants (timing of deferrals; time and form of payments), (B) generally impose a six-month delay upon distributions made by reason of separation from service for all employee participants, thereby reducing the risks associated with the misclassification of specified employees, (C) de-link the time and form of payment elections to the extent previously corresponding to an associated IRS-qualified plan, (D) generally prohibit re-elections other than in accordance with the applicable transitional rules or which may be effected without a delay of the original time of payment, (E) include fixed payment date options and in-service withdrawals, (F) require mandatory distributions of accrued benefits/account balances of less than a certain dollar amount, (G) impose restrictions on the ability to terminate a non-qualified plan covered by Section 409A, and (H) add the definitions of “separation from service” and “specified employee”.


Changes not related to Section 409A are also being made with regard to certain plans set forth above. These changes include: (1) the addition of a lump sum distribution option, payable in three annual installments to avoid any risk of adverse accounting for the Company, under the supplemental executive retirement plans and the excess benefit plan; (2) clarification of the permissible effect of plan amendments or terminations on accrued vested benefits of active participants; (3) adoption of a uniform definition of eligibility in the employee deferred compensation plan and equity deferral plan; (4) inclusion of a uniform definition of “beneficiary”; (5) inclusion of a definition of “compensation” to aid in the determination of eligibility to participate; (6) clarification of what is considered an involuntary termination, what constitutes the health insurance subsidy, and what  benefits are conditioned upon  execution of a general release under the executive severance plan; and (7) elimination of outdated language related to the Company’s demutualization.


The foregoing description of the material terms of the affected plans is qualified in its entirety by reference to the full text of the plans themselves, which are filed as exhibits hereto and incorporated herein by reference.



(b)

No material changes.



ITEM 6. EXHIBITS

 

Exhibit

 

 

 

 

 

3.1

 

Amended and Restated Certificate of Incorporation of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibit 3.1 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No. 333-73896), filed November 21, 2001, as amended)

 

 

 

3.2

 

By-Laws of The Phoenix Companies, Inc., as amended June 5, 2003 (incorporated herein by reference to Exhibit 3.2 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 

4.1

 

Amended and Restated Certificate of Incorporation and By-Laws of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibits 3.1 and 3.2 hereto, respectively)

 

 

 

10.1

 

The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No. 333-55268), filed February 9, 2001)

 

 

 

10.2

 

The Phoenix Companies, Inc. Stock Incentive Plan, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.3

 

Form of Incentive Stock Option Agreement under The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit 10.3 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 

10.4

 

Form of Non-Qualified Stock Option Agreement under The Phoenix Companies, Inc. Stock Incentive Plan (incorporated herein by reference to Exhibit 10.4 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 



62



10.5

 

The Phoenix Companies, Inc. Directors Stock Plan (incorporated herein by reference to Exhibit 10.4 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No. 333-55268), filed February 9, 2001)

 

 

 

10.6

 

The Phoenix Companies, Inc. Directors Stock Plan, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.7

 

The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated effective January 1, 2003 (incorporated herein by reference to Exhibit 10.7 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 

10.8

 

First Amendment to The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated effective January 1, 2003 (incorporated herein by reference to Exhibit 10.8 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 9, 2005)

 

 

 

10.9

 

The Phoenix Companies, Inc. Excess Benefit Plan, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.10

 

The Phoenix Companies, Inc. Non-Qualified Deferred Compensation and Excess Investment Plan, as amended and restated effective as of January 1, 2004 (incorporated herein by reference to Exhibit 10.8 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 

10.11

 

First Amendment to The Phoenix Companies, Inc. Non-Qualified Deferred Compensation and Excess Investment Plan, as amended and restated effective January 1, 2004 (incorporated herein by reference to Exhibit 10.10 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 9, 2005)

 

 

 

10.12

 

Second Amendment to The Phoenix Companies, Inc. Non-Qualified Deferred Compensation and Excess Investment Plan, as amended and restated effective January 1, 2004 (incorporated herein by reference to Exhibit 10.3 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 1, 2007)

 

 

 

10.13

 

The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan to be effective as of January 1, 2009*

 

 

 

10.14

 

The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan to be effective as of January 1, 2009*

 

 

 

10.15

 

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective as of July 1, 2007 (incorporated herein by reference to Exhibit 10.10 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 1, 2007)

 

 

 

10.16

 

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective as of January 1, 2008*

 

 

 

10.17

 

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated effective as of July 1, 2007 (incorporated herein by reference to Exhibit 10.12 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 1, 2007)

 

 

 

10.18

 

The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated effective as of January 1, 2008*

 

 

 

10.19

 

Phoenix Investment Partners, Ltd. Nonqualified Profit-Sharing Plan, as amended and restated effective March 3, 2003 (incorporated herein by reference to Exhibit 10.17 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 9, 2005)

 

 

 

10.20

 

First Amendment to The Phoenix Investment Partners, Ltd. Nonqualified Profit-Sharing Plan, as amended and restated March 3, 2003 (incorporated herein by reference to Exhibit 10.18 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 9, 2005)

 

 

 



63



10.21

 

The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (incorporated herein by reference to Exhibit B to The Phoenix Companies, Inc. 2003 Proxy Statement, filed March 21, 2003)

 

 

 

10.22

 

The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.23

 

Form of Award Letter under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 8, 2006)

 

 

 

10.24

 

Form of Description of Long Term Incentive Cycle under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.2 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 8, 2006)

 

 

 

10.25

 

Form of Restricted Stock Units Agreement of The Phoenix Companies, Inc. (incorporated herein by reference to Exhibit 10.27 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 10, 2006)

 

 

 

10.26

 

Form of Restricted Stock Units Agreement Individual for Performance-Based Incentive Grants (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed February 28, 2007)

 

 

 

10.27

 

Form of Restricted Stock Units Agreement for Cliff Vested Grants (incorporated herein by reference to Exhibit 10.21 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 1, 2007)

 

 

 

10.28

 

Form of Restricted Stock Units Agreement for Performance-Based Grants Tied to Business Line Metrics (incorporated herein by reference to Exhibit 10.22 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 9, 2007)

 

 

 

10.29

 

Form of Restricted Stock Units Agreement for 3-Year Performance-Based Long-Term Incentive Cycles (incorporated herein by reference to Exhibit 10.23 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed May 9, 2007)

 

 

 

10.30

 

The Phoenix Companies, Inc. Executive Severance Allowance Plan (incorporated herein by reference to Exhibit 10.15 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)

 

 

 

10.31

 

First Amendment to The Phoenix Companies, Inc. Executive Severance Allowance Plan (incorporated herein by reference to Exhibit 10.22 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 7, 2005)

 

 

 

10.32

 

Second Amendment to The Phoenix Companies, Inc. Executive Severance Allowance Plan (incorporated herein by reference to Exhibit 10.26 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)

 

 

 

10.33

 

The Phoenix Companies, Inc. Executive Severance Allowance Plan, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.34

 

The Phoenix Companies, Inc. Annual Incentive Plan for Executive Officers (incorporated herein by reference to Exhibit C to The Phoenix Companies, Inc. Proxy Statement filed March 21, 2005)

 

 

 

10.35

 

The Phoenix Companies, Inc. Annual Incentive Plan for Executive Officers, as amended and restated to be effective as of January 1, 2009*

 

 

 

10.36

 

The Phoenix Companies, Inc. Equity Deferral Plan to be effective as of January 1, 2009*

 

 

 

10.37

 

The Phoenix Companies, Inc. Directors Equity Deferral Plan to be effective as of January 1, 2009*

 

 

 



64



10.38

 

The Phoenix Companies, Inc. Directors Cash Deferral Plan to be effective as of January 1, 2009*

 

 

 

10.39

 

Form of Change in Control Agreement (for employees receiving reimbursement for certain excise taxes) (incorporated herein by reference to Exhibit 10.29 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)

 

 

 

10.40

 

Form of Change in Control Agreement (for use in all other instances) (incorporated herein by reference to Exhibit 10.30 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)

 

 

 

10.41

 

Amended and Restated Employment Agreement dated as of May 18, 2005 between The Phoenix Companies, Inc. and Dona D. Young (incorporated herein by reference to Exhibit 10.29 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 9, 2005)

 

 

 

10.42

 

Letter Agreement dated May 6, 2008 between The Phoenix Companies, Inc. and Dona D. Young amending Mrs. Young’s Amended and Restated Employment Agreement dated May 18, 2005*

 

 

 

10.43

 

Second Amended and Restated Employment Agreement dated May 6, 2008 between The Phoenix Companies, Inc. and Dona D. Young*

 

 

 

10.44

 

Amended and Restated Employment Continuation Agreement effective January 1, 2008, between The Phoenix Companies, Inc. and Dona D. Young (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 9, 2007)

 

 

 

10.45

 

Restricted Stock Units Agreement dated as of January 25, 2003, between The Phoenix Companies, Inc. and Dona D. Young (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed August 14, 2003)

 

 

 

10.46

 

Offer Letter dated February 9, 2004 by The Phoenix Companies, Inc. to Philip K. Polkinghorn (incorporated herein by reference to Exhibit 10.50 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 22, 2004)

 

 

 

10.47

 

Discussion of compensation of George R. Aylward (incorporated herein by reference to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 9, 2006)

 

 

 

10.48

 

Discussion of compensation of Peter A. Hofmann (incorporated herein by reference to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 14, 2007)

 

 

 

10.49

 

Discussion of compensation of David R. Pellerin (incorporated herein by reference to The Phoenix Companies, Inc. Current Report on Form 8-K filed November 14, 2007)

 

 

 

10.50

 

Table of Board Compensation for the Directors of The Phoenix Companies, Inc. as adopted on October 29, 2007, effective January 1, 2008 (incorporated herein by reference to Exhibit 10.39 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q filed November 1, 2007)

 

 

 

10.51

 

Stockholder Rights Agreement dated as of June 19, 2001 (incorporated herein by reference to Exhibit 10.24 to The Phoenix Companies, Inc. Registration Statement on Form S-l (Registration No. 333-73896), filed November 21, 2001, as amended)

 

 

 

10.52

 

Technology Services Agreement effective as of July 29, 2004 by and among Phoenix Life Insurance Company, Electronic Data Systems Corporation and EDS Information Services, L.L.C. (incorporated herein by reference to Exhibit 10.49 to The Phoenix Companies, Inc. Quarterly Report on Form 10-Q dated August 9, 2004)

 

 

 

10.53

 

Fiscal Agency Agreement dated as of December 15, 2004 between Phoenix Life Insurance Company and The Bank of New York (incorporated herein by reference to Exhibit 10.38 to The Phoenix Companies, Inc. Annual Report on Form 10-K filed March 11, 2005)



65



 

 

 

10.54

 

First Amended and Restated Credit Agreement dated as of April 2, 2008, by and among The Phoenix Companies, Inc., and Phoenix Life Insurance Company as Borrowers; Wachovia Bank, National Association, as Administrative Agent; The Bank of New York, as Syndication Agent; BMO Capital Markets Financing, Inc., JPMorgan Chase Bank, N.A., and PNC Bank, National Association, as Documentation Agents; and the other Lenders party thereto (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed April 7, 2008)

 

 

 

10.55

 

Agreement, dated as of April 16, 2008, among The Phoenix Companies, Inc. Oliver Press Partners, LLC and certain of its affiliates party thereto (incorporated herein by reference to Exhibit 10.1 to The Phoenix Companies, Inc. Current Report on Form 8-K filed April 16, 2008)

 

 

 

12

 

Ratio of Earnings to Fixed Charges*

 

 

 

31.1

 

Certification of Dona D. Young, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

 

 

31.2

 

Certification of Peter A. Hofmann, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

 

 

 

 

 

32

 

Certification by Dona D. Young, Chief Executive Officer and Peter A. Hofmann, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

 

 

 

 

 

*

 

Filed herewith


We will furnish any exhibit upon the payment of a reasonable fee, which fee shall be limited to our reasonable expenses in furnishing such exhibit. Requests for copies should be directed to: Corporate Secretary, The Phoenix Companies, Inc., One American Row, P.O. Box 5056, Hartford, Connecticut 06102-5056.



66


Signature


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


 

 

THE PHOENIX COMPANIES, INC.

 

 

Date:

May 8, 2008

By:

/s/ Peter A. Hofmann

 

 

Peter A. Hofmann, Senior Executive Vice President

 

 

  and Chief Financial Officer



67


EX-10.2 2 ex102.htm STOCK INCENTIVE PLAN THE PHOENIX COMPANIES, INC

EXHIBIT 10.2








THE PHOENIX COMPANIES, INC.

STOCK INCENTIVE PLAN




As amended and restated as of January 1, 2009










THE PHOENIX COMPANIES, INC.

STOCK INCENTIVE PLAN


ARTICLE I.

PURPOSE


The purpose of the The Phoenix Companies, Inc.  Stock Incentive Plan as it may be amended from time to time (the “Plan”) is to foster and promote the long-term financial success of the Company and materially increase shareholder value by:


(a)  motivating superior performance by means of performance-related incentives,


(b)  encouraging and providing for the acquisition of an ownership interest in the Company by the Company's and its Subsidiaries’ employees and Agents, and


(c)  enabling the Company to attract and retain the services of an outstanding management team upon whose judgment, interest, and special effort the successful conduct of its operations is largely dependent.


ARTICLE II.

DEFINITIONS


2.1 Definitions.  Whenever used herein, the following terms shall have the

respective meanings set forth below:


(a)

“Act” means the Securities Exchange Act of 1934, as amended.


(b) “Agent” means an “insurance agent” as defined in Section 2101of the New

York Insurance Law and who also is treated by the Company as a “statutory employee” as defined under applicable provisions of the Code.


(c) “Approved Retirement” means termination of a Participant's employment (i)

on or after the normal retirement date or (ii) with the Committee’s approval, on or

after any early retirement date established under any retirement plan maintained by the Company or a Subsidiary and in which the Participant participates; provided that in each case, the Committee may require, as a condition to a Participant’s retirement being an “Approved Retirement” for purpose of the Plan, that the Participant enter into a general release of claims, non-solicitation and/or non-competition agreement in form and substance satisfactory to the Company.


(d) “Board” means the Board of Directors of the Company.



2





(e)

“Cause” means


(i)

The willful failure by the Participant to perform substantially his duties as an Employee of the Company (other than due to physical or mental illness) after reasonable notice to the Participant of such failure.


(ii)

The Participant’s engaging in serious misconduct that is injurious to the Company or any Subsidiary in any way, including, but not limited to, by the way of damage to their respective reputations or standings in their respective industries.


(iii)

The Participant’s having been convicted of, or having entered a plea of nolo contendere to, a crime that constitutes a felony or;


(iv)

The breach by the Participant of any written covenant or agreement with the Company or any Subsidiary not to disclose or misuse any information pertaining to, or misuse any property of, the Company or any Subsidiary or not to compete or interfere with the Company or any Subsidiary.

(f) “Change of Control” shall be deemed to have occurred upon the first occurrence of any of the following events:


(i)

the occurrence of such a change in control of the direction and administration of the Company’s business as would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as in effect on the date hereof and any successor provision of the regulations under the Exchange Act, if the Company were required at the time of such occurrence to report under such provisions (whether or not the Company is subject to the reporting provisions of Section 12 of the Exchange Act and to such reporting requirement); or


(ii)

if the individuals who, at the beginning of the period commencing two (2) years earlier, constituted the Company’s Board of Directors cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however that any person who is a Continuing Director (as hereinafter defined) for this purpose shall be deemed to have been a member of the Board of Directors on the first day of such two (2) year period; or


(iii)

the Company or Board of Directors shall approve a sale of all or substantially all of the assets of the Company and such transaction shall have been consummated; or



3





(iv)

if 25% or more of the combined voting power of the Company’s securities are acquired by an individual or entity other than the Company, any Subsidiary or any employee benefit plan sponsored by the Company or a Subsidiary, or


(v)

at any date after the date hereof, the Company is voluntarily or involuntarily dissolved or liquidated or otherwise ceases business operation; or


(vi)

the Company’s Board of Directors shall approve any merger, consolidation or like business combination or reorganization of the Company as the case may be, such transaction shall have been consummated and a majority of the individuals who constituted directors of the Company on the day the Board of Directors approved such transaction cease for any reason, at any time within two (2) years after the consummation of such transaction, to constitute a majority of such Board of Directors or, board of directors of any successor company resulting from such merger, consolidation, or like business combination or reorganization.


(g) “Change of Control Price” means the highest price per share of Common Stock offered in conjunction with any transaction resulting in a Change of Control (as determined in good faith by the Committee if any part of the offered price is payable other than in cash) or, in the case of a Change of Control occurring solely by reason of a change in the composition of the Board, the highest Fair Market Value of the Common Stock on any of the 30 trading days immediately preceding the date on which a Change of Control occurs.


(h) “Code” means the Internal Revenue Code of 1986, as amended.


(i) “Committee” means the Compensation Committee of the Board or such other Committee of the Board as the Board shall designate from time to time, which Committee shall consist of two or more members, each of whom shall be a “Non-Employee Director” within the meaning of Rule 16b-3 (or any successor rule thereto), as promulgated under the Act, and an “outside director” within the meaning of section 162(m) of the Code and the Treasury Regulations promulgated thereunder.


(j) “Common Stock” means the common stock of the Company, par value

$0.01 per share.


(k) “Company” means The Phoenix Companies, Inc., a Delaware corporation, and any successor thereto.


(l)  “Continuing Directors” mean (i) the directors of the Company in office on the date hereof (ii) any successor to any such directors, and (iii) any additional directors, who (A) after the date hereof were nominated or selected by a majority of the Continuing Directors in office at the time of their nomination or selection (other than any such



4




nomination or selection of an individual as a director of the Company or any successor to the Company who were so nominated or selected in connection with the settlement of a threatened or actual proxy contest, a proposed or consummated merger, consolidation or like business combination or reorganization of the Company.


(m) “Demutualization” means the demutualization of Phoenix Home Life Mutual

Insurance Company pursuant to a plan of reorganization approved by the New York State Superintendent of Insurance under Section 7312 of the New York Insurance Law.


(n) “Directors Plan” means the Company's Directors Stock Plan, as the same may be amended from time to time.


(o) “Disability” has the meaning given in the Company's long-term disability insurance policy or program as in effect from time to time.


(p) “Employee” means any officer or other employee of the Company,

Phoenix Life Insurance Company or any Subsidiary (as determined by the Committee in its sole discretion); provided, however, that with respect to Incentive Stock Options, "Employee" means any person who is considered an employee of the Company or any Subsidiary for purposes of Treasury Regulation Section 1.421-7(h).


(q) “Fair Market Value” means, on any date, the closing prices of the Common Stock as reported in the principal consolidated transaction reporting system for the New York Stock Exchange (or on such other recognized quotation system on which the trading prices of the Common Stock are quoted at the relevant time) on such date.  In the event that there are no Common Stock transactions reported on such tape (or such other system) on such date, Fair Market Value shall mean the closing price on the immediately preceding date on which Common Stock transactions were so reported.


 (r) “Family Member” means, as to a Participant, any (i) child, stepchild,

grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), of such Participant, (ii) trust for the exclusive benefit of any of such persons and (iii) other entity owned solely by such persons.


(s) “Initial Public Offering” means the first day as of which sales of Common Stock are made to the public pursuant to the first underwritten public offering of the Common Stock.


(t) “Option” means the right to purchase Common Stock at a stated price for a specified period of time.  For purposes of the Plan, an Option may be either (i) an “Incentive Stock Option” (ISO) within the meaning of Section 422 of the Code or (ii) an option which is not an Incentive Stock Option (a "Nonstatutory Stock Option"(NSO).


(u) “Participant” means any Employee or Agent designated by the Committee to participate in the Plan.




5




(v) “Subsidiary” means any corporation or partnership in which the Company owns, directly or indirectly, 50% or more of the total combined voting power of all classes of stock of such corporation or of the capital interest or profits interest of such partnership.


2.2 Gender and Number.   Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.


ARTICLE III.

ELIGIBILITY AND PARTICIPATION


Participants in the Plan shall be those Employees or Agents selected by the Committee to be granted Options pursuant to Article VI.


ARTICLE IV.

POWERS OF THE COMMITTEE


4.1 Power to Grant.   The Committee shall determine the Participants to whom Options shall be granted and the terms and conditions of any and all such Options.   The Committee may establish different terms and conditions for different Participants and for the same Participant for each Option such Participant may receive, whether or not granted at different times.  


4.2 Certain Rules Relating to Grants.


(a)

Maximum Individual Grants.  During any consecutive five-year period, no individual Participant may be granted Options to acquire more than 5% of the total shares available under the Plan.


(b)  Repricing or Substitution of Options.   The Committee shall not have the right to

reprice outstanding Options or to grant new Options under the Plan in substitution for    

or upon the cancellation of Options previously granted.


4.3 Administration.


(a) Rules, Interpretations and Determinations.   The Plan shall be administered by the Committee.  The Committee shall have full authority to interpret and administer the Plan, to adopt, amend, and rescind rules relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to construe the respective option agreements and to make all other determinations necessary or advisable for the administration and interpretation of the Plan in order to carry out its provisions and purposes.   Determinations, interpretations, or other actions made or taken by the Committee shall be final, binding, and conclusive for all purposes and upon all persons.   


(b) Agents and Expenses.   The Committee may appoint agents (who may be officers or employees of the Company) to assist in the administration of the Plan and may grant authority to such persons to execute agreements or other documents on its behalf.   The Committee may employ such legal counsel, consultants and agents as it may deem



6




desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent.   All expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent, shall be paid by the Company.


4.4 Delegation of Authority.   The Committee may delegate its duties, powers and authorities under the Plan to the Company’s Chief Executive Officer with respect to individuals who are below the position of Senior Vice President (or analogous title), pursuant to such conditions or limitations as the Committee may establish; provided that only the Committee or the Board may select, and grant Options to, Participants who are subject to Section 16 of the Act. Notwithstanding the foregoing, in no event shall the Chief Executive Officer grant (i) Options which, in the aggregate, represent more than 1.5% of the total number of shares authorized for issuance under the Plan or (ii) to any single Participant in any twelve-month period more than 5% of the total number of shares that the Chief Executive Officer is authorized to grant.  The Chief Executive Officer shall report periodically to the Committee regarding the nature and scope of the Options granted pursuant to the authority granted to him or her under this Section 4.4.


ARTICLE V.

STOCK SUBJECT TO PLAN


5.1 Number.


(a) Subject to the provisions of Section 5.3 hereof, with respect to any person who on April 17, 2000 was, or at any time thereafter became or becomes, an officer, director, employee or Agent of the Company and/or any of its Subsidiaries other than Phoenix Investment Partners, Ltd.  (“PXP”)(including, without limitation, any such officer, director, employee or Agent who on April 17, 2000 was also, or at any time thereafter also became or becomes an officer, director or employee of PXP), the aggregate number of shares of Common Stock that are or may be subject to Options under the Plan, when added to the aggregate number of shares of Common Stock that are or may be subject to options or other grants under the Directors Plan, shall not exceed 5% of the total number of shares of Common Stock outstanding immediately after the Initial Public Offering.


(b) Subject to the provisions of Section 5.3 hereof, with respect to any officer or employee of PXP (excluding any such person included in paragraph (a) of this Section 5.1), the aggregate number of shares of Common Stock issuable under the Plan shall not exceed 1% of the total number of Shares outstanding immediately after the Initial Public Offering.   For the avoidance of doubt, no non-employee director of PXP may receive any shares of Common Stock or options under the Plan or the Directors Plan as a consequence of his or her position as a non-employee director of PXP.



7





(c) Without limitation of paragraphs (a) and (b) of this Section 5.1, the terms and conditions of equity compensation granted to officers and employees of PXP under the Plan shall be no more favorable than the terms and conditions of equity compensation previously granted to officers and employees of PXP in the year 2000.


(d) The shares to be delivered under the Plan may consist, in whole or in part, of treasury Common Stock or authorized but unissued Common Stock, not reserved for any other purpose.


5.2 Canceled, Terminated, or Forfeited Options.  Any shares of Common

Stock subject to an Option which for any reason is canceled, terminated or otherwise settled without the issuance of any Common Stock (including, but not limited to, shares

tendered to exercise outstanding Options or shares tendered or withheld for taxes) shall

again be available for Options under the Plan.


5.3 Adjustment in Capitalization.   In the event of any Common Stock dividend or Common Stock split, recapitalization (including, but not limited, to the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to stockholders (other than ordinary cash dividends), exchange of shares, or other similar corporate change, the aggregate number of shares of Common Stock available for Options under Section 5.1 or subject to outstanding Options and the respective exercise prices applicable to outstanding Options shall be appropriately adjusted by the Committee and the Committee’s determination shall be conclusive, unless such determination is inconsistent with or contrary to any determination by the New York State Insurance Department in accordance with this Plan, in which case the Committee’s determination shall be void as of the date of the Department’s determination.   It is hereby provided that, prior to any such determination by the New York State Insurance Department, the Company will be provided with written notice thereof and a reasonable opportunity to respond to such determination by the Department.   It is hereby further provided, however, that no adjustment shall occur by reason of the issuance of Common Stock in accordance with the Demutualization and that any fractional shares resulting from any such adjustment shall be disregarded.


ARTICLE VI.

STOCK OPTIONS


6.1 Grant of Options.   Subject to the provisions of Section 4.1, Options may be granted to Participants at such time or times as shall be determined by the Committee.   Options granted under the Plan may be of two types:  (a) Incentive Stock Options and (b) Nonstatutory Stock Options.  Except as otherwise provided herein, the Committee shall have complete discretion in determining the number of Options, if any, to be granted to a Participant.  Each Option shall be evidenced by an Option agreement that shall specify the type of Option granted, the exercise price, the duration of the Option, the number of shares of Common Stock to which the Option pertains, and such other terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan.  Notwithstanding the foregoing, any Options granted



8




to a Participant who is an Agent shall comply with the provisions of Section 4228 of the New York Insurance Law and any regulations thereunder.   


6.2 Option Price.   Nonstatutory Stock Options and Incentive Stock Options granted pursuant to the Plan shall have an exercise price no less than the Fair Market Value of a share of Common Stock on the date the Option is granted.   


6.3 Exercise of Options.   One third of each Nonstatutory Stock Option or Incentive Stock Option granted pursuant to the Plan shall become exercisable on each of the first three (3) anniversaries of the date such Option is granted; provided that the Committee may at the time of grant establish longer periods of service for Options to become exercisable and may establish performance-based criteria for exercisability.  Subject to the provisions of Article VII, once any portion of any Option has become exercisable it shall remain exercisable for its full term.  The Committee shall determine the term of each Nonstatutory Stock Option or Incentive Stock Option granted, but in no event shall any such Option be exercisable for more than ten (10) years after the date on which it is granted.


6.4 Payment.   The Committee shall establish procedures governing the exercise of Options.   No shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Committee have been made to assure full payment of the Option price therefor.  Without limiting the generality of the foregoing, payment of the Option price may be made (a) in cash or its equivalent, (b) by exchanging shares of Common Stock owned by the optionee which are not the subject of any pledge or other security interest, (c) through an arrangement with a broker approved by the Company whereby payment of the exercise price is accomplished with the proceeds of the sale of Common Stock or (d) by any combination of the foregoing; provided that the combined value of all cash and cash equivalents paid and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to such Option price.  


6.5 Incentive Stock Options.   Notwithstanding anything in the Plan to the contrary, no Option that is intended to be an Incentive Stock Option may be granted after the tenth anniversary of the effective date of the Plan and no term of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of any Participant affected thereby, to disqualify any Incentive Stock Option under such Section 422.


ARTICLE VII.

TERMINATION OF EMPLOYMENT


7.1 Termination of Employment Due to Death.   In the event a Participant’s employment terminates by reason of death, any Options granted to such Participant shall become immediately exercisable in full and may be exercised by the Participant’s designated beneficiary, and if none is named, in accordance with Section 10.2, at any time prior to the expiration of the term of the Options or within five (5) years (or such shorter period as the Committee shall determine at the time of grant) following the Participant’s death, whichever period is shorter.



9





7.2 Termination of Employment Due to Disability or Approved Retirement.   In the event a Participant’s employment terminates by reason of Disability or Approved Retirement, any Options granted to such Participant which are then outstanding shall continue to become exercisable in accordance with Section 6.3 notwithstanding such termination of employment and may be exercised by the Participant or the Participant’s designated beneficiary, and if none is named, in accordance with Section 10.2, at any time prior to the expiration date of the term of the Options or within five (5) years (or such shorter period as the Committee shall determine at the time of grant) following the Participant's termination of employment, whichever period is shorter.


7.3 Certain Divestitures, etc.   In the event that a Participant’s employment is terminated in connection with a sale, divestiture, spin-off or other similar transaction involving a Subsidiary, division or business segment or unit, the Committee may provide at the time of grant or otherwise that all or any portion of any Options granted to such Participant which are then outstanding shall become exercisable in accordance with Section 6.3 notwithstanding such termination of employment and may be exercised by the Participant or the Participant’s designated beneficiary, and if none is named, in accordance with Section 10.2, at any time prior to the expiration date of the term of the Options or within three (3) years (or such shorter period as the Committee shall determine at or following the time of grant) following the Participant’s termination of employment, whichever period is shorter.


7.4 Termination of Employment for Cause.   In the event a Participant’s employment is terminated for Cause, any Options granted to such Participant that are then not yet exercised shall be forfeited.


7.5 Termination of Employment for Any Other Reason.    Unless otherwise determined by the Committee at or following the time of grant, in the event the employment of the Participant shall terminate for any reason other than one described in Section 7.1, 7.2, 7.3 or 7.4, any Options granted to such Participant which are exercisable at the date of the Participant’s termination of employment may be exercised at any time prior to the expiration of the term of the Options or the thirtieth day following the Participant’s termination of employment, whichever period is shorter, and any Options that are not exercisable at the time of termination of employment shall be forfeited.


ARTICLE VIII.

CHANGE OF CONTROL


8.1 Accelerated Vesting and Payment.   Subject to the provisions of Section 8.2, in the event of a Change of Control each Option shall be fully exercisable regardless of the exercise schedule otherwise applicable to such Option and, in connection with such a Change of Control, the Committee may, in its discretion, provide that each Option shall, upon the occurrence of such Change of Control, be canceled in exchange for a payment in an amount equal to the excess, if any, of the Change of Control Price over the exercise price for such Option.




10




8.2 Alternative Awards.   Notwithstanding Section 8.1, no cancellation, acceleration of exercisability, vesting, cash settlement or other payment shall occur with respect to any Option if the Committee reasonably determines in good faith prior to the occurrence of a Change of Control that such Option shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by a Participant’s employer (or the parent or an affiliate of such employer) immediately following the Change of Control; provided that any such Alternative Award must:


(a) be based on stock which is traded on an established securities market, or that the Committee reasonably believes will be so traded within 60 days after the Change of Control;


(b) provide such Participant with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under such Option, including, but not limited to, an identical or better exercise or vesting schedule and identical or better timing and methods of payment;


(c) have substantially equivalent economic value to such Option (determined at the time of the Change of Control); and


(d) have terms and conditions which provide that in the event that the Participant's employment is involuntarily terminated or constructively terminated, any conditions on a Participant's rights under, or any restrictions on transfer or exercisability applicable to, each such Alternative Award shall be waived or shall lapse, as the case may be.


For this purpose, a constructive termination shall mean a termination of employment by a

Participant following a material reduction in the Participant's base salary or a Participant’s incentive compensation opportunity or a material reduction in the Participant’s responsibilities, in either case without the Participant’s written consent.


ARTICLE IX.

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN


The Board at any time may terminate the Plan, and from time to time may amend or modify the Plan; provided, however, that any amendment which would (a) increase the number of shares available for issuance under the Plan, (b) lower the minimum exercise price at which an Option may be granted or (c) extend the maximum term for Options granted hereunder shall be subject to the approval of the Company’s shareholders.   No amendment, modification, or termination of the Plan shall in any manner adversely affect any Option theretofore granted under the Plan, without the consent of the Participant.


ARTICLE X.

MISCELLANEOUS PROVISIONS


10.1 Transferability of Options.   No Options granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by



11




the laws of descent and distribution; provided that the Committee may, in the Option agreement or otherwise, permit transfers of Nonstatutory Stock Options by gift or a domestic relations order to Family Members.


10.2 Beneficiary Designation.   Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his death.   Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when received by the Committee in writing during his lifetime.   In the absence of any such effective designation, benefits remaining unpaid or unexercised at the Participant's death shall be paid to or exercised by (i) the Participant’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.


10.3 No Guarantee of Employment or Participation.    Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's employment or service at any time, nor confer upon any Participant any right to continue in the employ of the Company or any Subsidiary or any other affiliate of the Company. No Employee shall have a right to be selected as a Participant, or, having been so selected, to receive any future Options.


10.4 Tax Withholding.   The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy Federal, state, and local withholding tax requirements on any Option under the Plan, and the Company may defer issuance of Common Stock until such requirements are satisfied.   The Committee may, in its discretion, permit a Participant to elect, subject to such conditions as the Committee shall impose, (a) to have shares of Common Stock otherwise issuable under the Plan withheld by the Company or (b) to deliver to the Company previously acquired shares of Common Stock having a Fair Market Value sufficient to satisfy such withholding tax obligation associated with the transaction.


10.5 Indemnification.   Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be made a party or in which he may be involved by reason of any action taken or failure to act under the Plan (in the absence of bad faith) and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him; provided that he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf.  The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such person may be entitled under the Company’s Certificate of Incorporation or By-Laws, by contract, as a matter of law, or otherwise.



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10.6 Requirements of Law.    The granting of Options and the issuance of shares of Common Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.


10.7 Term of Plan.   The Plan shall continue in effect, unless sooner terminated pursuant to Article IX, until no more shares of Common Stock are available for issuance under the Plan.


10.8 Governing Law.   The Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of New York.  


10.9 No Impact on Benefits.   Except as may otherwise be specifically stated under any employee benefit plan, policy or program, Options shall not be treated as compensation for purposes of calculating an Employee's right under any such plan, policy or program.


10.10 No Constraint on Corporate Action.   Nothing in this Plan shall be construed (a) to

limit, impair or otherwise affect the Company’s right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets or (b) except as provided in Article IX, to limit the right or power of the Company or any of its Subsidiaries to take any action which such entity deems to be necessary or appropriate.  




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EX-10.6 3 ex106.htm DIRECTORS STOCK PLAN                                                                    Exhibit 10

EXHIBIT 10.6 




























THE PHOENIX COMPANIES, INC.

DIRECTORS STOCK PLAN


As amended and restated as of January 1, 2009











 



THE PHOENIX COMPANIES, INC.

DIRECTORS STOCK PLAN


ARTICLE I.

PURPOSE


         The purpose of The Phoenix Companies, Inc. Directors Stock Plan is to enable the Company to attract, retain and motivate well qualified non-employee directors and to enhance a long-term mutuality of interests between the non-employee directors and stockholders of the Company by granting stock and stock options as provided herein.


ARTICLE II.

DEFINITIONS


         2.1 Definitions.   Whenever used herein, the following terms shall have

the respective meanings set forth below:


         (a) "Award" means any Option or Share Award.


(b) “Beneficiary” means the person(s) or entity, including one or more trusts, last designated by a Participant on a form or electronic media and accepted by the Committee or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Participant.  In the absence of any such designation, the Beneficiary shall be (i) the Participant’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.


         (c) "Board" means the Board of Directors of the Company.


(d) "Cash Fees" means the amount of any fees that would, absent an election to receive an Elective Share Award pursuant to the terms of the Plan, be payable by the Company in cash to a Participant for any services to be performed by the Participant.


         (e) "Code" means the Internal Revenue Code of 1986, as amended.


(f) "Common Stock" means the common stock of the Company, par value $0.01 per share.


(g) "Company" means The Phoenix Companies, Inc., a Delaware corporation, and any successor thereto.


(h) "Date of Issuance" means (i) the first day of the calendar quarter with respect


to which the Cash Fees would otherwise have been payable to the



1




Participant in cash for Fee Share Awards, and (ii) for Elective Share Awards, in respect of any Cash Fees which are part of the Participant's annual retainer fees or meeting fees shall be the first day of the calendar quarter with respect to which the related Cash Fees would otherwise have been payable to the Participant, and in respect of any other Cash Fees, unless otherwise determined by the Board, as of the first day of the calendar quarter following the quarter with respect to which such Cash Fees would otherwise have been payable to the Participant.  Notwithstanding the foregoing, if the Date of Issuance determined in the preceding sentence is not a business day, the grant of Shares shall be made on the next following business day.  In no event, however, shall the Date of Issuance and actual issuance be later than March 15 of the calendar year following the calendar year in which the service as a director to which the Cash Fees or the Share Award applies is rendered.     


(i) "Elective Share Award" means any award of Shares made by reason of the


         election of a Participant to receive Shares in lieu of Cash Fees.

         

(j) "Fair Market Value" means, on any date, the closing price of a Share as reported in the principal consolidated transaction reporting system for the New York Stock Exchange (or on such other recognized quotation system on which the trading prices of the Common Stock are quoted at the relevant time on such date). In the event that there are no Common Stock transactions reported on such tape (or other system) on such date, Fair Market Value means the closing price on the immediately preceding date on which Common Stock transactions were so reported.


(k) "Family Member" means, as to a Participant, any (i) child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships), of such Participant, (ii) trust for the exclusive benefit of any of such persons and (iii) other entity owned solely by any such persons.


(l) "Fee Share Award" means any award of Shares made at the direction of the


         Board in lieu of Cash Fees.         


(m) "Initial Public Offering" means the first day as of which sales of Common Stock are made to the public pursuant to the first underwritten public offering of the Common Stock.


(n) "Option" means the right to purchase one (1) Share at a stated purchase price on the terms specified in Article V of the Plan.  The Options are nonstatutory stock options not intended to qualify under Code section 422.


(o) "Participant" means a member of the Board who is not an officer or employee of the Company or any entity controlling, controlled by, or under common control with the Company, and is not the beneficial owner of a controlling interest in the voting stock of the Company or of any entity that holds a controlling interest in the Company's voting stock.



2




(p) "Plan" means The Phoenix Companies, Inc. Directors Stock Plan, as set forth


         herein and as amended from time to time.   


         (q) "Share" means a share of Common Stock.


         (r) "Share Award" means any Elective Share Award or Fee Share Award.     


(s) "Stock Incentive Plan" means The Phoenix Companies, Inc. Stock Incentive Plan, as the same may be amended from time to time.


         2.2 Gender and Number.   Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.


ARTICLE III.

ADMINISTRATION


         3.1 Rules, Interpretation and Determinations.   The Plan shall be administered by the Board.  The Board shall have full authority to interpret and administer the Plan, to establish, amend and rescind rules for carrying out the Plan, to construe the respective option agreements and to make all other determinations and to take all other actions that it deems necessary or advisable for administering the Plan.  Each determination, interpretation or other action made or taken by the Board shall be final and binding for all purposes and upon all persons.


         3.2 Agents and Expenses.   The Board may appoint agents (who may be officers or employees of the Company) to assist in the administration of the Plan and may grant authority to such persons to execute agreements or other documents on its behalf.  The Board may employ such legal counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion from any such counsel or consultant and any computation received from any such consultant or agent.  All expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent, shall be paid by the Company.


ARTICLE IV.

SHARES; ADJUSTMENT UPON CERTAIN EVENTS


         4.1 Source of Shares.   Shares to be issued under the Plan may consist, in whole or in part, of treasury shares or authorized but unissued Shares not reserved for any other purpose.


         4.2 Number of Share Awards.    Subject to the provisions of Section 4.5 hereof, the aggregate number of Shares that may be issued under the Plan as Share Awards under Article VI shall not exceed 500,000 Shares.


         4.3 Number of Options.  Subject to the provisions of Section 4.5 hereof, the



3




aggregate number of Shares issuable under the Plan pursuant to Options shall not exceed 0.5% of the total number of Shares outstanding immediately after the Initial Public Offering.


         4.4 Canceled, Terminated, or Forfeited Options.   In the event Options are for any reason canceled, terminated or otherwise settled without the issuance of any Common Stock (including, but not limited to, shares tendered to exercise outstanding Options or shares tendered or withheld for taxes), the Shares subject to such Options shall again be available for the granting of Options under the Plan and the Stock Incentive Plan.


         4.5 Adjustment in Capitalization.  In the event of any Share dividend or Common Stock split, recapitalization (including, but not limited to, the payment of an extra ordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to stockholders (other than ordinary cash dividends), exchange of shares, or other similar corporate change, the aggregate number of shares of Common Stock available for Awards pursuant to either Section 4.2 or Section 4.3, or subject to outstanding Options, and the respective exercise prices applicable to outstanding Options shall be appropriately adjusted by the Board and the Board's determination shall be conclusive, unless such determination is inconsistent with or contrary to any determination by the New York State Insurance Department in accordance with this Plan, in which case the Board’s determination shall be void as of the date of the Department’s determination.  It is hereby provided that, prior to any such determination by the New York State Insurance Department, the Company will be provided with written notice thereof and a reasonable opportunity to respond to such determination by the Department.  It is hereby further provided however, that any fractional shares resulting from any such adjustment shall be disregarded.


         4.6 Certain Limitations and Restrictions.  The aggregate number of Shares available under Sections 4.2 and 4.3 shall reduce, on a Share for Share basis, the number of Shares available under the Stock Incentive Plan.  Subject to the provisions of Section 4.5 hereof and Section 5.3 of the Stock Incentive Plan, the total number of Shares available under the Plan and the Stock Incentive Plan is as follows: (i) with respect to any person who on April 17, 2000 was, or at any time thereafter became or becomes, an officer, director, employee or agent of the Company and/or any of its Subsidiaries other than Phoenix Investment Partners, Ltd. ("PXP")(including, without limitation, any such officer, director, employee or agent who on April 17, 2000 also was, or at any time thereafter became or becomes an officer, director or employee of PXP), the aggregate number of Shares that are or may be subject to options under the Stock Incentive Plan, when added to the aggregate number of Shares that are or may be subject to Options or other grants under the Plan, shall not exceed 5% of the total number of Shares outstanding immediately after the Initial Public Offering and (ii) with respect to any officer or employee of PXP (excluding any such person included in clause (i) of this Section 4.6), the aggregate number of Shares issuable under the Stock Incentive Plan shall not exceed 1% of the total number of Shares outstanding immediately after the Initial Public Offering. In addition, for the avoidance of doubt, no non-employee director of PXP may receive any Shares or Options under the Plan or any options under the Stock



4




Incentive Plan as a consequence of his or her position as a non-employee director of PXP.


ARTICLE V.

AWARDS AND TERMS OF OPTIONS


         5.1 Grant.  The Board shall determine the Participants to whom Options shall be granted and, subject to Section 5.2, the terms and conditions of any and all Options granted to Participants. In making such determination, the Board shall give due consideration to such factors as it deems appropriate, including, but not limited to, the performance of the Company.


         5.2 Option Agreement.  Options shall be evidenced by a written option agreement embodying the following terms:


(a) Exercise Price.  The exercise price per Share of an Option shall be not less than the Fair Market Value on the date such Option is granted.


(b) Period of Exercisability.  Each Option granted hereunder shall be


   immediately exercisable.  Each Option shall, if not previously exercised in   
   accordance with the terms of the Plan, in all events expire upon the tenth (10th) 
   anniversary of the date of the grant thereof.  If a Participant shall cease to   
   provide services to the Company, such Participant or, in the case of death, the 
   Participant's Beneficiary, may exercise any Option held by the Participant at the
   date his or her service terminates until the earlier of (A) three (3) years from the
   date the Participant ceased to provide services to the Company and (B) the tenth
   anniversary of the date the Option was granted.


(c) Procedure for Exercise.  A Participant electing to exercise one (1) or more Options shall give written notice to the Secretary of the Company (or provide such other notice, electronic or otherwise, in a form satisfactory to the Board) of such election and of the number of Shares he or she has elected to purchase.  No shares shall be delivered pursuant to any exercise of an Option unless arrangements satisfactory to the Board have been made to assure full payment of the option price therefor.  Without limiting the generality of the foregoing, payment of the Option price may be made (i) in cash or its equivalent, (ii) by exchanging shares of Common Stock owned by the optionee (which are not the subject of any pledge or other security interest), (iii) through an arrangement with a broker approved by the Company whereby payment of the exercise price is accomplished with the proceeds of the sale of Common Stock or (iv) by any combination of the foregoing; provided that the combined value of all cash and cash equivalents paid and the Fair Market Value of any such Common Stock so tendered to the Company, valued as of the date of such tender, is at least equal to such Option price. The Company may not make a loan to a Participant to facilitate such Participant's exercise of any of his or her Options.



5





ARTICLE VI.

SHARE AWARDS


         6.1 Fee Share Awards.  With respect to fees payable for services rendered by a Participant as a member of the Board, the Board may require that up to one-half of the Cash Fees otherwise payable to a Participant be payable in Shares, issuable as of the Date of Issuance.  The number of Shares to be issued as a Fee Share Award as of each Date of Issuance shall equal the greatest number of whole Shares derived from the quotient of (i) the dollar amount of the Cash Fees the Board has determined to pay in Shares and (ii) the Fair Market Value on the Date of Issuance.  If, after the application of the preceding formula as of any Date of Issuance, there is a cash remainder, the Company shall pay the Participant the amount of such cash remainder as soon as practicable following such Date of Issuance.


         6.2 Elective Share Awards.  With respect to Cash Fees payable for services rendered by a Participant as a member of the Board, a Participant may elect to have any portion of the fees that would otherwise have been payable to the Participant in cash for services as a director (less any amounts paid as Fee Share Awards) paid in Shares.  The number of Shares to be issued as an Elective Share Award as of each Date of Issuance shall equal the greatest number of whole Shares derived from the quotient of (i) the dollar amount of the Cash Fees elected to be paid in Shares at such Date of Issuance in accordance with the second preceding sentence and (ii) the Fair Market Value on the Date of Issuance. If, after the application of the preceding formula as of any Date of Issuance, there is a cash remainder, the Company shall pay the Participant the amount of such cash remainder as soon as practicable following such Date of Issuance.


6.3 Deferral of Share Awards.  If the Participant is offered the opportunity to defer receipt/conversion of his or her Share Awards, such deferral shall be governed and covered by The Phoenix Companies, Inc. Directors Equity Deferral Plan.  Any deferred Share Awards credited under the Plan on or before May 2, 2008 shall be credited to an account established for the Participant under the Directors Equity Deferral Plan   


ARTICLE VII.

TRANSFERABILITY OF AWARDS


         No Award shall be transferable by the Participant otherwise than by will or under the applicable laws of descent and distribution; provided that the Board may, in the Option agreement or otherwise, permit transfers of Options by gift or a domestic relations order to Family Members.  In addition, no Award shall be assigned, negotiated, pledged or hypothecated in any way (whether by operation of law or otherwise), and no Award shall be subject to execution, attachment or similar process.  Upon any attempt to transfer, assign, negotiate, pledge or hypothecate any Award, or in the event of any levy upon any Award by reason of any attachment or similar process contrary to the provisions hereof, such Award shall immediately become null and void.




6




ARTICLE VIII.

TERMINATION, MODIFICATION AND AMENDMENT


         The Board at any time may terminate the Plan, and from time to time may amend or modify the Plan; provided, however, that any amendment which would (a) increase the number of shares available for issuance under the Plan, (b) lower the minimum exercise price at which an Option may be granted or (c) extend the maximum term for Options granted hereunder shall be subject to the approval of the Company's shareholders.  No amendment, modification, or termination of the Plan shall in any manner adversely affect any Option theretofore granted under the Plan, without the consent of the Participant.


ARTICLE IX.

GENERAL PROVISIONS


         9.1 No Right to Remain as a Director.  The Plan shall not impose any obligations on the Company to retain any Participant as a director nor shall it impose any obligation on the part of any Participant to remain in service to the Company.


         9.2 Investment Representation; Registration.  If the Board determines that the law so requires, the holder of an Option granted hereunder or the recipient of Shares in respect of any Share Award shall execute and deliver to the Company a written statement, in form satisfactory to the Company, representing and warranting that he is purchasing or accepting the Shares then acquired for his own account and not with a view to the resale or distribution thereof, that any subsequent offer for sale or sale of any such Shares shall be made either pursuant to (a) a registration statement on an appropriate form under the Securities Act of 1933, as amended, which Registration Statement shall have become effective and shall be current with respect to the Shares being offered and sold, or (b) a specific exemption from the registration requirements of the Securities Act, and that in claiming such exemption the holder will, prior to any offer for sale or sale of such Shares, obtain a favorable written opinion from counsel approved by the Company as to the availability of such exemption. If at any time the Board shall determine in its discretion that the listing, registration or qualification of the Shares covered by the Plan upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the sale of Shares under the Plan, no Shares will be delivered unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for, free of any conditions not acceptable to the Company.


         9.3 No Right to Specific Assets.  Nothing contained in the Plan and no action taken pursuant to the Plan (including, without limitation, the grant of any Award hereunder) shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company and any Participant, the executor, administrator or other personal representative or designated beneficiary of such Participant, or any other persons. To the extent that any Participant or his executor, administrator, or other personal representative, as the case may be, acquires a right to receive any payment from the Company pursuant



7




to the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.


         9.4 Rights as a Stockholder.  A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until he shall have become the holder of record of such Shares.


         9.5 Headings and Captions.  The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.


         9.6 Controlling Law.  The Plan shall be construed and enforced according to the laws of the State of New York.


         9.7 Indemnification.  Each person who is or shall have been a member of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be made a party or in which he may be involved by reason of any action taken or failure to act under the Plan (in the absence of bad faith) and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him; provided that he shall give prior written consent to the Company and an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such person may be entitled under the Company's Certificate of Incorporation or By-Laws, by contract, as a matter of law, or otherwise.


9.8 Term of Plan.  The Plan shall continue in effect, unless sooner terminated pursuant to Article VIII, until no more shares are available for issuance under the Plan.


                                  




8



EX-10.9 4 ex109.htm EXCESS BENEFIT PLAN Converted by EDGARwiz

EXHIBIT 10.9









THE PHOENIX COMPANIES, INC.
EXCESS BENEFIT PLAN



As amended and restated effective January, 1, 2009




 



ARTICLE I

PURPOSE AND EFFECTIVE DATE


1.1

Purpose   The Phoenix Companies, Inc. Excess Benefit Plan is maintained solely for the purpose of providing benefits for certain participants in The Phoenix Companies, Inc. Employee Pension Plan in excess of the limitations on contributions and benefits imposed by Code section 415.

1.2

Effective Date   The Phoenix Companies, Inc. Excess Benefit Plan was first effective January 1, 1976, was amended and restated effective as of January 1, 2003, and further amended effective as of April 28, 2005.  This amendment and restatement shall be effective as of January 1, 2009.

ARTICLE II

DEFINITIONS

Unless the context otherwise indicates, words and phrases capitalized and not otherwise defined herein are terms defined in the Pension Plan and have the same meaning ascribed to them under the Pension Plan.


2.1

"Accrued Benefit" means, as of the relevant date, the benefit accrued by a Participant in accordance with the terms of this Plan as defined in the Pension Plan.

2.2

“Beneficiary” means the Beneficiary designated under the Pension Plan, except that the Participant may designate a Beneficiary hereunder by delivering to the Plan Administrator a written designation of Beneficiary specifically made with respect to this Plan on a form approved by the Plan Administrator.  Notwithstanding the foregoing, if the Participant also has an accrued benefit under The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan or The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, then the beneficiary designation under such plan, if any, shall apply to this Plan.  

2.3

“Benefit Plans Committee” means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan and its assets.

2.4

“Code” means the Internal Revenue Code of 1986, as amended.

2.5

“Employer” means Phoenix Life Insurance Company and any affiliated employer that adopts the Plan with the consent of the Benefit Plans Committee.  

2.6

“Participant” means an employee of the Employer who is participating in the Pension Plan and whose benefit under the Pension Plan is reduced by reason of the application of Code section 415.


 



2.7

"Participating Employer" means each corporation that has adopted this Plan with the consent of the Benefit Plans Committee in accordance with Article XI.

2.8

“Pension Plan” means The Phoenix Companies, Inc. Employee Pension Plan, a defined benefit pension plan maintained by the Employer, as it may be amended from time to time.

2.9

“Plan” means The Phoenix Companies, Inc. Excess Benefit Plan, as it may be amended from time to time.

2.10

“Plan Administrator” means the Benefit Plans Committee or the person designated as such by the Benefit Plans Committee.

2.11

“Retirement” means termination of service after having satisfied the age and/or service criteria to retire in accordance with the terms of the Pension Plan.

2.12

“Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

 

ARTICLE III

ELIGIBILITY


To receive a benefit under this Plan, a Participant or his Beneficiary must qualify for a benefit under the Pension Plan, the amount of which is reduced by reason of the application of the limitations set forth in Code section 415.  Employees hired by Phoenix Equity Planning Corporation or Phoenix Investment Counsel, Inc. after June 14, 1995 who were not employed by Phoenix Life Insurance Company or its subsidiaries immediately prior to their date of hire by Phoenix Equity Planning Corporation or Phoenix Investment Counsel, Inc. shall not be eligible to participate in this Plan.  


ARTICLE IV

BENEFITS


4.1

Benefits  The benefits under this Plan to which a Participant or the Participant’s Beneficiary shall be entitled, shall be an amount equal to the difference, if any, between (a) and (b) below:  

(a)

The benefit to which the Participant would be entitled under the Pension Plan if such benefit were computed without the restrictions or the limitations imposed by Code section 415, as now or hereafter in effect;




 

-2-

 




less

(b)

The amount of benefit payable under the Pension Plan.

4.2

The amount of benefit so determined shall be subject to such adjustments as the Plan Administrator, from time to time, deems appropriate to reflect changes in the application of the limitations imposed by said Code section 415, which would cause a restriction or limitation of benefits with respect to the computation of benefits under the Pension Plan.

4.3

Benefits accrued under this Plan before March 1, 2003 are subject to cost of living adjustments as described in the Pension Plan.

4.4

To the extent that this Section 4.1 requires the determination of the amount of benefit payable under the Pension Plan, only the benefit payable with respect to Service credited on and after January 1, 1993 shall be taken into account for purposes of calculating the benefit payable under this Plan to a Former Home Life Employee.

4.5

Any benefit payable under the Pension Plan shall be solely in accordance with the terms and provisions thereof, and nothing in this Plan shall operate or be construed in any way to modify, amend or affect the terms and provisions of the Pension Plan.   

  

ARTICLE V

VESTING

No Participant under this Plan shall have a vested (non-forfeitable) interest under this Plan until such Participant’s satisfaction of one of the following conditions:  

(a)

the Participant’s attainment of Early Retirement Age under the Pension Plan;

(b)

the Participant’s attainment of Normal Retirement Age under the Pension Plan;

(c)

the Participant’s becoming Disabled, within the meaning given under the Pension Plan; or

(d)

the Participant’s death.  

Any Participant who terminates employment with the Employer prior to having satisfied one of the foregoing conditions shall have no right to benefits under this Plan.







 

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ARTICLE VI

DISTRIBUTIONS

6.1

Payments in Accordance with Pension Plan   With respect to any Participant whose benefits under the Pension Plan become payable prior to December 31, 2008, payment of a Participant’s Accrued Benefit shall be made in the same form and manner and at the same time as is applicable or elected under the Pension Plan.

6.2

Default Provisions for Payments After 2008  With respect to any Participant whose benefits under the Pension Plan do not become payable prior to December 31, 2008, unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of  a Participant’s Accrued Benefit shall commence at the later  of (i) the earlier of (A) the date the Participant satisfies the age and/or service criteria for Retirement under the Pension Plan, or (B) the date of the Participant’s death and (ii) the Participant’s Separation from Service, and shall be made in the form of a single life annuity.

6.3

Elections of Payment Forms  A Participant who is not described in Section 6.1 may elect (i) at any time prior to December  31, 2008 for Participants in this Plan prior to January 1, 2009, (ii)(1) within 30 days of the date that, or (2) by the end of the year in which, the Participant first becomes eligible for any aggregated plans for Employees who become Participants in this Plan after December 31, 2008, or (iii) if the Participant becomes a participant in the Company’s Supplemental Executive Retirement Plan B, pursuant to the elections the Participant made under that plan, to have payment of his or her Accrued Benefit commence at the first day of any month following the Participant’s (x) satisfaction of Retirement criteria, or (y) death, with such benefits to be payable in whichever of the following forms the Participant shall elect:   

(a)

Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and survivor with 10 years certain;  or

(b)

Lump Sum Short-Term Installments   The Participant may elect to receive payment of his or her Accrued Benefit in a three-year certain annuity (that is, in equal annual payments over a period of three calendar years, with the first payment to be made as of commencement date elected by the Participant and the second and third installments payable on the first and second anniversaries of such commencement date).

6.4

Accrued Benefit Distribution Provisions  Notwithstanding any provision in this Plan to the contrary, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Participant’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) the first day of the month following the Participant’s death, and the amount payable to the Participant under the




 

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form of payment determined in accordance with this Article VI shall be determined as of such postponed commencement date.

6.5

Change in Form of Life Annuity  If a Participant’s Accrued Benefit is payable in the form of a life annuity described in Section 6.3(a), whether pursuant to Section 6.2 or 6.3, at any time prior to the date the Participant’s Accrued Benefits would commence to be paid hereunder, the Participant may elect on a form approved by the Benefit Plans Committee and received by the Benefit Plans Committee prior to the date of the Participant’s death, to change the form of life annuity under which such Accrued Benefit is payable.  

6.6

Mandatory Distributions of Small Accrued Benefits   If the Actuarial Equivalent value of the Participant’s Accrued Benefit under this Plan is equal to $25,000 or less  on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her Accrued Benefit within 90 days after his or her Separation from Service.

6.7

Suspension of Benefits   If a Participant who has incurred a Separation of Service is re-employed or re-hired, any benefits which have commenced to be paid prior to such re-employment or re-hire shall continue to be paid, and any benefits that have not commenced to be paid shall still be paid at the time that they would have been paid, without regard to the change in the Participant’s employment status.

 

ARTICLE VII

CLAIMS FOR BENEFITS

7.1

Claims Procedure  

Claims for benefits under the Plan may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty (180) days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial ninety (90)-day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  A claimant must request a review of a denied claim in accordance with the procedures described in the following paragraph and exhaust all remedies under the Plan before the claimant is permitted to bring a civil action for benefits.




 

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Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied a benefit, in whole or in part, by a decision of the Plan Administrator shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than sixty (60) days after receipt of the notification provided above.  If such request is so filed, the claimant or his representative may submit written comments, documents, records and other information relating to the claim to the Plan Administrator within sixty (60) days after receipt of the notification provided above.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant or his representative with written or electronic notice of the final decision as to the allowance of the claim within sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days if special circumstances requires an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or his representative within the initial sixty (60)-day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) and a statement that the claimant or his beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.

7.2

Full Satisfaction, Release, Special Payment Rules   Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Plan, shall be in full satisfaction of all claims hereunder against the Employer. The Plan Administrator may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine.  If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator that any payee under this Plan is a minor, or is legally, physically, or mentally incompetent to receive and to give valid release for any payment due him or her under this Plan, any such payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be paid by the Plan Administrator to such payee’s spouse, child, parent or other blood relative, or to any person, persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect of such payee.  If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by the parties concerned.  Subject to the immediately preceding sentence, if the responsible party/payee does




 

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not execute the receipt and release within 60 days of the distribution trigger date, the Accrued Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.3

If any benefits payable under this Plan to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15th day of the third calendar month following the date specified under the Plan after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Employer.   

ARTICLE VIII

AMENDMENT AND TERMINATION


8.1

Amendment   The Benefit Plans Committee shall have the right to amend this Plan at any time and from time to time, including a retroactive amendment, by resolution adopted by it at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Any such amendment shall become effective upon the date stated therein, and shall be binding on all Participants and Beneficiaries, except as otherwise provided in such amendment; provided, however that, except with respect to an amendment described in Article X, no amendment (i) shall result in or cause an acceleration of payments or benefits under the Plan or (ii) shall, without the express written consent of such Participant, reduce or otherwise adversely affect the Participant Accrued Benefit as of the date of such amendment.  

8.2

Termination of the Plan  

The Employer has established this Plan with the bona fide intention and expectation that from year to year it will deem it advisable to continue it in effect.  However, the Employer, in its sole discretion, reserves the right to terminate the Plan in its entirety at any time without the consent of any Participant; provided, however, that no such termination shall (i) result in or cause an acceleration of payments or benefits under this Plan, unless the termination satisfies the Code section 409A safe harbor summarized in the last sentence of this Section 8.2, or (ii) without the express written consent of such Participant, reduce or otherwise adversely affect the Participant’s Accrued Benefit as of the date of such termination.  Any such termination shall be accomplished by resolution of the Benefit Plans Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Payments under this Plan may be accelerated upon plan termination only if:

(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating Plan under the Code section 409A final regulations);

(ii)

all payments to the Participants as a result of the Plan termination are not made until at least twelve (12) months after action taken to terminate the Plan is




 

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taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and

(iii)

 no similar successor plan can be established within three (3) years following the date the action to terminate the Plan was taken.


ARTICLE IX


SOURCE OF BENEFIT PAYMENTS


No special or separate fund shall be established by the Employer and no segregation of assets shall be made to assure the payment of benefits under the Plan. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Employer.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Employer and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Employer.


ARTICLE X


CODE SECTION 409A MISCELLANEOUS PROVISIONS

10.1

Interpretation Consistent with Code Section 409A   The intent is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith.  If any provision of this Plan would cause the Participant to incur any additional tax or interest under Code section 409A, the Benefit Plans Committee, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Plan without violating the provisions of Code section 409A.

ARTICLE XI


GENERAL


11.1

Benefits Non-Alienable   To the extent permitted by law, the right of any Participant or Beneficiary to any benefit or payment hereunder shall not be subject in any manner to attachment or other legal process, and no such benefit or payment shall be subject to anticipation, alienation, sale, transfer, assignment, or encumbrance.  

11.2

Plan Administration   The Plan shall be operated and administered by the Plan Administrator or its duly authorized representative.  The Plan Administrator shall have sole discretionary authority to determine all questions arising under the Plan, to interpret the provisions of the Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Plan to make all determinations in connection with the




 

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Plan as may be necessary or advisable.  All such actions of the Plan Administrator shall be conclusive and binding on all persons.

11.3

Governing Law   This Plan shall be governed by and construed in accordance with the laws of the State of Connecticut other than and without reference to any provisions of such laws regarding choice of laws or conflict of laws, to the extent such laws are not pre-empted by the Employee Retirement Income Security Act of 1974, as amended.

11.4

No Right to Continued Employment   The establishment of this Plan shall not be construed as giving to any Participant, employee or any person whomsoever, any legal, equitable or other rights against the Employer, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any interest in the assets or business of the Employer or giving any employee the right to be retained in the employment of the Employer.  All employees and Participants shall be subject to discharge to the same extent they would have been if this Plan had never been adopted.  

11.5

Tax Withholding   The Employer may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payments and such sums as the Employer may reasonably estimate are necessary to cover taxes for which the Employer may be liable and which may be assessed with regard to such payment.

11.6

Severability   The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.



ARTICLE XII


PARTICIPATING EMPLOYERS


12.1

Adoption of Plan by Other Employers  With the consent of the Benefit Plans Committee, any other corporation may adopt the Plan and all of the provisions hereof and participate herein as a Participating Employer by a properly executed document evidencing said intent and will of such Participating Employer.

12.2

Requirements of Participating Employers

(a)

Benefits payable under the Plan to employees of the Participating Employer are funded through the Participating Employer’s general assets. The Participating Employer agrees to pay and assumes all liability with respect to all benefits payable under the Plan to past, present and future employees of the Participating Employer, their spouses and other dependents and beneficiaries in accordance with the terms of the Plan. Notwithstanding the foregoing, Phoenix Life Insurance Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc. shall pay and assume liability for benefits payable under the Plan to




 

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Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc. with respect to service completed before January 1, 1996.  

(b)

The Plan Administrator shall keep separate books and records concerning the contributions and benefits payable under the Plan with respect to the Participating Employer and the employees of the Participating Employer.

(c)

The Participating Employer shall pay to Phoenix Life Insurance Company  its proportionate share of any administrative expenses of the Plan which are to be paid by the Employer.

12.3

Designation of Agent   Each Participating Employer shall be deemed to have designated irrevocably the Benefit Plans Committee and the Plan Administrator as its agents.

12.4

Delegation of Power to Amend   Each Participating Employer hereby delegates to the Employer the right at any time to amend the Plan in accordance with the terms of the Plan, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Plan.  If an amendment could affect the Participating Employer’s share of the cost of the Plan, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.  

12.5

Withdrawal of a Participating Employer  Subject to Section 8.2, a Participating Employer may terminate its participation in the Plan by giving the Benefit Plans Committee prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Benefit Plans Committee, unless such withdrawal is not permitted under the law wherein such notice of withdrawal will not be honored or the Benefit Plans Committee shall have waived its right to such notice.  The Benefit Plans Committee may terminate a Participating Employer’s participation in the Plan as of any termination date by giving the Participating Employer prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.  Notwithstanding the foregoing provisions of this Section 12.5, in no event shall the withdrawal by, or the termination of the participation of, any such Participating Employer result in an acceleration of the timing of distributions under this Plan, unless (and solely to the extent) permitted under Code section 409A or the regulations and interpretations thereunder.  

12.6

Plan Administrator’s Authority   The Plan Administrator shall have all of the duties and responsibilities authorized by the Plan and shall have the authority to make any and all rules, regulations and decisions necessary or appropriate to effectuate the terms of this Plan, which shall be binding upon each Participating Employer and all Participants.





 

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EX-10.13 5 ex1013.htm NON-QUALIFIED DEFERRED COMPENSATION PLAN Converted by EDGARwiz



EXHIBIT 10.13









THE PHOENIX COMPANIES, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN



As amended and restated effective as of January 1, 2009



 






THE PHOENIX COMPANIES, INC.
NON-QUALIFIED DEFERRED COMPENSATION PLAN

ARTICLE I
PURPOSE AND EFFECTIVE DATE

1.01

Purpose.  The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan is intended to provide Employees with a plan to defer receipt of Annual Incentive and/or Long Term Incentive cash compensation.   The Plan is intended to be an unfunded plan under the Employee Retirement Income Security Act of 1974, as amended, that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

1.02

Effective Date .  The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan was first effective January 1, 1988, was amended and restated effective as of March 3, 2003, was amended and restated effective as of January 1, 2004, was amended effective as of April 28, 2005, and was amended effective as of July 1, 2007.  This amendment and restatement shall be effective as of January 1, 2009.

ARTICLE II
DEFINITIONS

Wherever used in this Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

2.01

“Annual Incentive” means an annual incentive award under The Phoenix Companies, Inc. Performance Incentive Plan and/or any successor incentive plan or such other annual incentive plans or arrangements as the Plan Administrator or Chief Executive Officer may designate from time to time.

2.02

“Beneficiary” means the person, persons or entity, including one or more trusts, last designated by a Participant on a form or electronic media and accepted by the Plan Administrator or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Participant.  In the absence of any such designation, the Beneficiary shall be (i) the Participant’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.

2.03

"Benefit" means the amount equal to the Participant's Deferred Compensation Benefit.


 






2.04

 “Benefit Plans Committee” means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan and its assets.

2.05

“Code” means the Internal Revenue Code of 1986, as amended.

2.06

“Company” means Phoenix Life Insurance Company and any Participating Employer.

2.07

“Deferred Compensation Benefit” means the amount determined in accordance with the provisions of Article IV of this Plan.

2.08

Deferred Compensation Investment Account means the book account established on behalf of a Participant under Article VII of this Plan.

2.09

“Deferred Compensation Investment Account Balance” means a Participant’s Deferred Compensation Investment Account Balance, if any, accrued and vested after December 31, 2004.

2.10

"Deferred Compensation Plan Deferral Election" means a Participant's election to defer a portion of Annual Incentive and/or Long-Term Incentive Compensation as set forth in Section 5.01.

2.11

"Deferred Compensation Plan Distribution Election" means a Participant’s election regarding the time and form of payment of his or her Benefit as set forth in Section 5.02.

2.12

“Disabled”  means that a Participant is:


(a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or


(b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering Employees of the Participant’s employer.


2.13

“Earnings” shall have the meaning provided under the Savings and Investment Plan; provided, however, that such Earnings shall not be subject to the limit set forth in Code section 401(a)(17).

2.14

“Employee” means any person who is employed by the Company on an hourly or salaried basis other than a Non-Benefits Employee, but shall not include leased employees within the meaning of Code sections 414(n)(2) and 414(c)(2).

2.15

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



2



2.16

“Investment Funds” means the funds designated by the Benefit Plans Committee as available investment options under the Plan, as the same may, from time to time, be changed by action of the Benefit Plans Committee.

2.17

“Long-Term Incentive” means a long-term incentive award payable in cash under The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan and/or any successor incentive plan or such other eligible long-term incentive plans or arrangements as the Plan Administrator or Chief Executive Officer may designate from time to time.

2.18

“Non-Benefits Employee” means any Employee who has signed an employment agreement, independent contractor agreement or other personal services contract with the Company stating that he or she is not eligible to participate in the Plan and any worker that the Employer treats as an independent contractor, during the period that the worker is so treated, regardless of whether such individual may be determined to be an Employee by administrative, judicial or other decision.  A worker is treated as an independent contractor if payment for his services is memorialized on a Form 1099, and not on a Form W-2.

2.19

“Participant” means an Employee who meets the eligibility requirements of Article III and elects to participate in the Plan.

2.20

“Participating Employer” means each corporation that has adopted the Plan with the consent of the Benefit Plans Committee in accordance with Article X.

2.21

“Plan” means The Phoenix Companies, Inc. Non-Qualified Deferred Compensation Plan, as it may be amended from time to time.

2.22

“Plan Administrator” means the Benefit Plans Committee or the person designated as such by the Benefit Plans Committee.

2.23

“Plan Year” means the calendar year.

2.24

Separation from Service shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.25

“Target Compensation” means an active Employee’s salary, target annual bonus and target long-term incentive for the applicable calendar year

ARTICLE III
         PARTICIPATION

3.01

Eligibility.  With respect to any Plan Year, unless otherwise determined by the Chief Executive Officer pursuant to a delegation from the Committee, any active Employee with Target Compensation in excess of the annual compensation limit set forth in Code section 401(a)(17) shall be eligible to participate in this Plan.



3



3.02

Commencement of Participation.  Each eligible Employee shall become a Participant in the Plan as of the date he or she meets the above requirement and completes a Deferred Compensation Plan Deferral Election as described in Section 5.01.

3.03

Termination of Participation. An individual shall cease to be a Participant as of the date such individual ceases to meet all of the requirements of Section 3.01 above; provided, however, that benefits accrued by the individual as of such date shall not be reduced and shall be paid as provided herein.

ARTICLE IV

DEFERRED COMPENSATION BENEFIT

4.01

Deferred Compensation Benefit.  Participant’s Deferred Compensation Benefit shall be equal to any cash amounts deferred by the Participant under Section 5.01 and credited to a Deferred Compensation Investment Account established for such Participant.  

ARTICLE V

 DEFERRAL AND DISTRIBUTION ELECTIONS

5.01

Deferral Elections.  Each Annual Incentive and/or Long-Term Incentive award will be treated separately for purposes of making Deferred Compensation Deferral Elections.  


(a)

Time and Amount of Deferral Election.


(i)

Performance-Based Awards.  


(A)

A Participant may elect to defer between 1% and 100% of his or her Annual Incentive and/or Long-Term Incentive for a Plan Year, which is a performance-based award, by making a Deferred Compensation Plan Deferral Election.  A Participant’s Deferred Compensation Plan Deferral Election for a Plan Year must be made by the earlier of:


(1)

at least six months prior to the end of the relevant performance period that is applicable to the Annual Incentive and/or Long-Term Incentive award; or


(2)

the date the amount to be paid becomes readily ascertainable.  


All deferral elections become irrevocable upon the earlier of (1) or (2).

 



4

 




(B)

For a Participant (including a newly eligible Participant) to be eligible to make a deferral election in accordance with this subparagraph (i), the Participant must have performed services continuously from the later of:


(1)

the beginning of the performance period for the performance-based compensation; or


(2)

the date upon which the performance criteria with respect to the performance-based compensation are established, through the date on which the Participant makes the deferral election.  In addition, in no event may a deferral election under this subparagraph be made after the performance-based compensation has become readily ascertainable within the meaning of Treasury Regulation §1.409A-2(a)(8).   


(ii)

Non-Performance-Based Awards (time vested or guaranteed incentives/bonuses).  


(A)

A Participant may elect to defer between 1% and 100% of his or her Annual Incentive and/or Long-Term Incentive for a Plan Year, which is not a performance-based award, by making a Deferred Compensation Plan Deferral Election.  A Participant’s Deferred Compensation Plan Deferral Election must be made by:  


 

(1)

the end of the Participant’s taxable year immediately preceding the taxable year in which the services underlying the compensation are to be performed; or


(2)

for certain forfeitable rights, if the Participant has a legally binding right to a payment in a subsequent year that is subject to a condition requiring the service provider to provide services for a period of at least 12 months from the date that the Participant obtains the legally binding right to avoid forfeiture of the payment, on or before the 30th day after the Participant obtains a legally binding right to the compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse.  


(B)

To the extent later than the time an election is required under Section 5.01(a)(ii)(A), a newly eligible Participant must make an election within 30 days of initial eligibility (based on the plan

 



5

 



 

aggregation rules) and such election applies only to compensation on and after the election date.


(b)

Effective Date of Deferral Elections.  A Participant’s Deferred Compensation Plan Deferral Election shall become effective immediately following the receipt of the election by the Plan Administrator; provided, however, that such election shall not have retroactive effect.

(c)       Carryover of Deferral Elections.  Unless otherwise determined by the Plan
Administrator, a Participant’s initial Deferred Compensation Plan Deferral Election with respect to an Annual Incentive or a Long-Term Incentive will be carried over in respect of the same type of award from year to year unless the Participant makes an affirmative election to modify or terminate the election, as described in Section 5.01(e).


(d)

Modification/Termination of Deferral Elections.  A Participant may modify or terminate a Deferred Compensation Plan Deferral Election effective as of the first day of the next applicable period immediately following the Plan Administrator’s receipt of such modification or termination.  Any modification or termination of a Deferred Compensation Plan Deferral Election shall not have retroactive effect and shall remain in force until modified or revoked.


(e)

Irrevocability of Deferral Elections.  Subject to Section 5.01(a)(i), all Deferred Compensation Plan Deferral Elections become irrevocable as of the first day of the next applicable period to which the election applies.


5.02

Distribution Elections.  Each Annual Incentive and/or Long-Term Incentive award is treated as a “class year award,” which means awards that, absent a deferral election, would be paid in different calendar years will be treated separately for purposes of making Deferred Compensation Distribution Elections as provided under Section 5.02(a) and (b).  For the purpose of a distribution election, deferrals from January 1, 2005 through December 31, 2008 will be treated as one class year award.

(a)

Date of Distribution.

(i)

Election of Fixed Payment Date.

For each deferral class year, a Participant may elect a fixed date to commence payment of any Annual Incentive or Long-Term Incentive credited to a class year under his or her Deferred Compensation Investment Account Balance by making a Deferred Compensation Plan Distribution Election.  A Participant’s Deferred Compensation Plan Distribution Election must be made in accordance with the procedures established by the Plan Administrator and within the time frames set forth in Section 5.01(a)(i) or (ii), as applicable.

 



6



(ii)

Separation from Service.  

For each deferral class year, a Participant may elect to commence payment of his or her Deferred Compensation Investment Account Balance after Separation from Service by making a Deferred Compensation Plan Distribution Election in accordance with the procedures established by the Plan Administrator and within the time frames set forth in Section 5.01(a)(i) or (ii), as applicable.  

If a Participant fails to make a distribution election for any deferral class year, he or she shall be deemed to have elected Separation from Service as the date of distribution for account balances attributable to such class year.   

 (b)

Form of Distribution.  For each deferral class year, each Participant may make a Deferred Compensation Plan Distribution Election in respect of Annual Incentive or Long-Term Incentive for any class year and elect to receive the amount allocable to such compensation for such class year in either a lump sum payment or in annual installment payment over a period not to exceed 10 years.  In the event a Participant fails to make a Deferred Compensation Plan Distribution Election, the Participant shall be deemed to have elected a lump sum distribution of his or her Benefit for account balances attributable to such class year.


(a)

409A Transition Relief Provision.  Notwithstanding any other provision to the contrary in this Plan, Participants may be permitted to make elections in respect of any class year commencing prior to January 1, 2009 in accordance with the transition rules in effect under Code section 409A.

5.03

Distribution of Account Balances.

(a)

Date of Distribution.

(i)

If a Participant elects a fixed payment date under Section 5.02(a)(i) as to an identified class year, the payment will commence on the earlier of (1) such fixed payment date, and (2) within 90 days after the date six months following Separation from Service.

(ii)

If a Participant elects Separation from Service for any deferral class year, the payment for account balances attributable to such class year will commence within 90 days of the date six months following Separation from Service.

(iii)

Notwithstanding Sections 5.03(a)(ii) and (iii), if payment for any deferral class year has not commenced as of the date of the Participant’s death, payment of the account balance attributable to such class year will commence on the first day of the month following the Participant’s death.

(b)

Form of Distribution.

 



7

 




(i)

Subject to Sections 5.03(b)(iii), a Participant’s account balance will be distributed in the form(s) elected by the Participant for any deferral class year pursuant to Section 5.02.


(ii)

If the annual installment method is elected for any deferral class year, the Company, in its sole discretion, may elect that all amounts notionally held in the Participant’s Deferred Compensation Investment Account attributable to such class year be withdrawn therefrom up to thirty 30 days prior to the first installment payment date and be deemed applied to purchase a period certain annuity in the name of the Company, and the amount payable to the Participant will be equivalent to the amounts payable under such annuity and in accordance with the installment payment schedule elected.


(iii)

If the value of the Participant’s account balances under this Plan are equal to $25,000 or less on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her account balances within 90 days after his or her Separation from Service.


(c)

Amount of Distribution.


(i)

The amount of each lump sum distribution payable under this Plan in respect of any class year shall be equal to the single sum cash value of the Participant’s subaccount corresponding to such class year under the Deferred Compensation Investment Account as of the date of determination.


(ii)

The amount of each installment distribution in respect of any class year shall be equal to the balance of the Participant’s subaccount corresponding to such class year under the Deferred Compensation Investment Account as of the determination date, multiplied by a fraction, the numerator of which is one and the denominator of which is the number of years remaining over which installments are to be paid.


(d)

Suspension of Benefits upon Reemployment. Upon reemployment or rehire, the benefits payable under this Plan cannot be suspended pursuant to Code section 409A, the regulations and guidance promulgated thereunder.


(e)

Death Benefit.  Within 90 days following the death of a Participant, the value of the Participant’s Benefit, determined as of the date of distribution, will be distributed to the Participant’s Beneficiary in the manner specified in the Participant’s Deferred Compensation Plan Distribution Election.



8



5.04

Hardship Withdrawals.


(a)

Eligibility.  A Participant may request a withdrawal from his or her Deferred Compensation Investment Account at any time of the amount necessary to satisfy an unforeseeable emergency (within the meaning of Code section 409A, including taxes assessed on this withdrawal, and taking into account the cancellation of the Participant’s Deferral Election under Section 5.04(c).  Such an unforeseeable emergency withdrawal shall only be available upon a determination by the Plan Administrator based on the relevant facts and circumstances of each case that the Participant has suffered a severe financial hardship resulting from a sudden and unexpected illness or accident of the Participant or the Participant’s spouse, beneficiary, or dependent, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, including the loss of the Participant’s property due to casualty.  The purchase of a home or the payment of tuition or other education expenses does not constitute an unforeseeable emergency under this Section 5.04.  A Participant who desires to receive such a withdrawal must submit a written request to the Plan Administrator in such form as it may specify.

(b)

Repayment.  Any withdrawals under this Section 5.04 cannot be repaid to the Plan.

(c)

Cancellation of Deferral Election.  No further deferrals shall be made to the Plan following the date of the Plan Administrator’s approval of a hardship withdrawal and each Deferred Compensation Plan Deferral Election to which the Participant is then a party shall be of no further effect.  To the extent permitted under Code section 409A, such Participant may enter into a new Deferred Compensation Plan Deferral Election in any Plan Year following the Plan Year in which the Participant received the hardship withdrawal.  



ARTICLE VI

INVESTMENT AND FUNDING

6.01

Investment Accounts. All compensation deferred under Section 5.01 shall be credited to the Participant’s Deferred Compensation Investment Account on the date that the Annual Incentive and/or Long-Term Incentive would have otherwise been received by the Participant.   Such deferred compensation shall be deemed to be invested in the Investment Fund(s) designated by the Participant in such manner as may be specified by the Plan Administrator, or, if no such designation is made, in the  default Investment Fund designated from time to time by the Benefit Plans Committee. Each Participant’s Deferred Compensation Investment Account will be adjusted on a daily basis by an amount equal to the amount of any adjustment that would have been made had the Participant’s deferred compensation been allocated and invested as herein provided; reduced, however, at the Company’s discretion, by an amount equal to the estimated



9



income taxes, if any, payable by the Company on such adjustment, based on the Company’s highest tax rate on its net taxable income for the Plan Year in which such adjustment is made. The Company reserves the right to reduce the interest or earnings on deferred compensation amounts for any federal or state taxes which it may incur as a result of interest or earnings on amounts held under this Plan.

6.02

Company Retains Control of Deemed Investments.  The election to designate deemed investments, as described above, shall be subject to restrictions as to minimum and maximum amounts as announced from time to time by the Benefit Plans Committee. Both initial and subsequent investment allocations must be made in one percent (1%) increments.  The Company shall have the right at any time to add new deemed investment options, cease to offer any or all of the deemed investment options, and alter or adjust the basis or method of calculating any interest or earnings for any of the investment options outlined above.  The Company shall be under no obligation to actually make any investment as described above.  Reference to any such investment shall be solely for the purpose of aiding the Company in measuring and meeting its liabilities under the terms of this Plan. In any event, if any investments are made, the Company shall be named the sole owner and shall have all of the rights and privileges conferred by any instrument evidencing such investments.

6.03

Funding.  No special or separate fund shall be established by the Company and no segregation of assets shall be made to assure the payment of benefits under the Plan. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Company.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.

ARTICLE III
CLAIMS FOR BENEFITS

7.01

Claims Procedure.  Claims for benefits under the Plan may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application is filed (or within 180 days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial 90 day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section



10



502(a) following an adverse benefit determination on review.  A claimant must request a review of a denied claim in accordance with Section 8.02 and exhaust all remedies under the Plan before the claimant is permitted to bring a civil action for benefits.

7.02

Claims Review Procedure.  Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied either in whole or in part a benefit by a decision of the Plan Administrator pursuant to Section 7.01 shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the notification provided for in Section 7.01.  If such request is so filed, the claimant or his representative may submit written comments, documents, records and other information relating to the claim to the Plan Administrator within 60 days after receipt of the notification provided for in Section 7.01.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant or his representative with written or electronic notice of the final decision as to the allowance of the claim within 60 days of receipt of the request for review (or within 120 days if special circumstances require an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or his representative within the initial 60 day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) and a statement that the claimant or his beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.

7.03

Receipt and Release for Payments.  Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Plan, shall be in full satisfaction of all claims hereunder against the Company.  The Plan Administrator may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as the Plan Administrator shall determine.  If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator that any payee under this Plan is a minor, or is legally, physically, or mentally incompetent to receive and to give valid release for any payment due him or her under this Plan, any such payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a duly appointed



11



executor, administrator, guardian, committee, or other legal representative of such payee, be paid by the Plan Administrator to such payee’s spouse, child, parent or other blood relative, or to any person, persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect of such payee.  If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by the parties concerned.  Subject to the immediately preceding sentence, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Deferred Compensation Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.04

Lost or Unknown Participants.  If any benefits payable under this Plan to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (a) the last day of the calendar year in which the payment was due and (b) the 15th day of the third calendar month following the date specified under the Plan, after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Company.

ARTICLE VIII
MISCELLANEOUS


8.01

Non-Guarantee of Employment.  Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Participant or Employee, or as a right of any such Participant or Employee to be continued in the employment of the Company, or as a limitation on the right of the Company to deal with any Participant or Employee, as to their hiring, discharge, layoff, compensation, and all other conditions of employment in all respects as though this Plan did not exist. Furthermore, this Plan does not guarantee any Annual Incentive or Long-Term Incentive award to the Participant or in any way obligate the Company to grant such incentive awards.  Any amounts deferred hereunder shall be contingent on the actual granting of such incentive awards.

8.02

Amendment and Termination.   

(a)

Amendment/Modification/Termination.  The Plan may be amended, modified or terminated at any time by the Company, subject to Section 8.02(b) below and except that, without the consent of any Participant or Beneficiary, if applicable, no such amendment, modification or termination shall reduce or diminish the Benefit of any Participant accrued prior to the date of such amendment, modification or termination.  However no amendment, modification or termination shall result or cause an acceleration of payments or benefits under the Plan, unless the termination satisfies the Code section 409A safe harbor summarized in Section 8.02(b).  Further, at its sole discretion, the Company may elect, upon termination of this Plan to distribute in one lump sum to the

 



12

 



 

Participant or any beneficiary, as the case may be, the value of the Benefit or the commuted value of any remaining installment payments.


 

(b)

Plan Termination under Code section 409A.  Plan Termination under Code section 409A. Generally, payments may be accelerated upon plan termination only if:


(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating Plan under the Code section 409A final regulations);


(ii)

all payments to the Participants as a result of the Plan termination are not made until at least 12 months after action taken to terminate the Plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and


(iii)

no similar successor plan can be established within three years following the date the action to terminate the Plan was taken.


8.03

Nonassignability.  The benefits payable under this Plan shall not be subject to alienation, assignment, garnishment, execution or levy of any kind and any attempt to cause any benefits to be so subjected shall not be recognized, except to the extent required by applicable law; provided, however, that a Participant or Beneficiary may assign his or her entire interest in their Benefit to the Participant’s or Beneficiary’s spouse, former spouse or domestic partner, as the case may be, under a divorce or separation instrument described in subparagraph (A) of Code section 71(b)(2).

8.04

Plan Administration.  The Plan shall be operated and administered by the Plan Administrator or its duly authorized representative.  The Plan Administrator shall have sole discretionary authority to determine all questions arising in connection with the Plan, to interpret the provisions of the Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Plan and to make all determination in connection with the Plan as may be necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all persons.

8.05

Interpretation Consistent with Code Section 409A.   The intent of the parties is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith.  If any provision of this Plan would cause the Employee to incur any additional tax or interest under Code section 409A, the Company, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Plan without violating the provisions of Code section 409A.



13



8.06

Successor Company.  In the event of the dissolution, merger, consolidation or reorganization of the Company, provision may be made by which a successor to all or a major portion of the Company’s property or business shall continue the Plan, and the successor shall have all of the power, duties and responsibilities of the Company under the Plan.

8.07

Governing Law.  This Plan shall be construed and enforced in accordance with, and governed by, the laws of the State of Connecticut, without giving effect to the conflict of law provisions thereof.

8.08

Tax Withholding.  The Company may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payments and such sums as the Company may reasonably estimate are necessary to cover taxes for which the Company may be liable and which may be assessed with regard to such payment.

8.09

Illegality of Particular Provision.  The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE IX
PARTICIPATING EMPLOYERS

9.01

Adoption of Plan by Other Employers.  With the consent of the Benefit Plans Committee, any other affiliated corporation may adopt the Plan and all of the provisions hereof and participate herein as a Participating Employer by a properly executed document evidencing said intent and will of such Participating Employer.

9.02

Requirements of Participating Employers.

(a)

Funding and Liability.  Benefits payable under the Plan to employees of the Participating Employer are funded through the Participating Employer’s general assets.  The Participating Employer agrees to pay and assumes all liability with respect to all benefits payable under the Plan to past, present and future employees of the Participating Employer, their spouses and other dependents and beneficiaries in accordance with the terms of the Plan.  Notwithstanding the foregoing, Phoenix Life Insurance Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc. shall pay and assume liability for benefits payable under the Plan to Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc. with respect to service completed before January 1, 1996.

(b)

Books and Records.  The Plan Administrator shall keep separate books and records concerning the contributions and benefits payable under the Plan with respect to the Participating Employer and the Employees of the Participating Employer.



14



 

(c)

Expenses.  Each Participating Employer shall pay to the Company its proportionate share of any administrative expenses of the Plan which are to be paid by such employer.

9.03

Designation of Agent.  Each Participating Employer shall be deemed to have designated irrevocably the Benefit Plans Committee and the Plan Administrator as its agents.

9.04

Plan Amendment.

(d)

Company’s Right to Amend.  Subject to the provisions of paragraph (b) hereof, each Participating Employer hereby delegates to the Company the right at any time to amend the Plan in accordance with the terms of the Plan, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Plan.  If an amendment could affect the Participating Employer’s share of the cost of the Plan, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.  Any such amendment shall be adopted by the Participating Employer’s Benefit Plans Committee unless such amendment could significantly affect the Participating Employer’s share of the cost of the Plan, as determined by the Participating Employer’s Benefit Plans Committee, in which case such amendment shall be adopted by the Participating Employer’s Board of Directors in accordance with the Participating Employer’s Articles of Incorporation, Bylaws and applicable law and shall become effective as provided therein upon its execution.

(e)

Effective Date of Amendment.  No amendment to the Plan shall be effective with respect to a Participating Employer until 45 days after a copy of the amendment shall have been delivered to the Participating Employer, unless the Participating Employer shall have waived its right to receive such advance copy of the amendment.

9.05

Withdrawal of a Participating Employer.  Subject to Section 8.02, a Participating Employer may terminate its participation in the Plan by giving the Benefit Plans Committee prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Benefit Plans Committee, unless the Benefit Plans Committee shall have waived its right to such notice.  The Benefit Plans Committee may terminate a Participating Employer’s participation in the Plan as of any termination date by giving the Participating Employer prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.

9.06

Administrator’s Authority.  The Plan Administrator shall have all of the duties and responsibilities authorized by the Plan and shall have the authority to make any and all rules, regulations and decisions necessary or appropriate to effectuate the terms of the Plan, which shall be binding upon each Participating Employer and all Participants.

15

 

EX-10.14 6 ex1014.htm NON-QUALIFIED EXCESS INVESTMENT PLAN




EXHIBIT 10.14









THE PHOENIX COMPANIES, INC.
NON-QUALIFIED EXCESS INVESTMENT PLAN



As amended and restated to be effective as of January 1, 2009







THE PHOENIX COMPANIES, INC.
NON-QUALIFIED EXCESS INVESTMENT PLAN

ARTICLE I
PURPOSE AND EFFECTIVE DATE

1.01

Purpose.  The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan is intended to provide Employees with contributions lost due to restrictions on defined contribution plans under Code sections 401(a)(17), 401(k), 401(m), 402(g) and 415, which primarily affect higher-paid Employees.  The intent is to provide Employees with allocations that, when added to such Employee’s contributions under The Phoenix Companies, Inc. Savings and Investment Plan, will be similar to contributions other Employees can receive under such plan.   The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan is intended to be an unfunded plan under the Employee Retirement Income Security Act of 1974, as amended, that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

1.02

Effective Date.   The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan was first effective January 1, 1988, was amended and restated effective as of March 3, 2003, was amended and restated effective as of January 1, 2004, was amended effective as of April 28, 2005, and was amended effective as of July 1, 2007.  This amendment and restatement shall be effective as of January 1, 2009.

ARTICLE II
DEFINITIONS

Wherever used in this Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

2.01

“Beneficiary” means the person, persons or entity, including one or more trusts, last designated by a Participant on a form or electronic media and accepted by the Plan Administrator or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Participant.  In the absence of any such designation, the Beneficiary shall be (a) the Participant’s surviving spouse or domestic partner, (b) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (c) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.

2.02

 “Benefit Plans Committee” means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan and its assets.


2.03

“Code” means the Internal Revenue Code of 1986, as amended.

1


2.04

“Company” means Phoenix Life Insurance Company and any Participating Employer.

2.05

“Contributions” shall have the meaning provided under the Savings and Investment Plan.

2.06

“Disabled”  means that a Participant is:

(a)

unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12

months; or


(b)

by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees of the Participant’s employer.

2.07

“Earnings” shall have the meaning provided under the Savings and Investment Plan; provided, however, that such Earnings shall not be subject to the limit set forth in Code section 401(a)(17).

2.08

“Employee” means any person who is employed by the Company on an hourly or salaried basis other than a Non-Benefits Employee, but shall not include leased employees within the meaning of Code sections 414(n)(2) and 414(c)(2).

2.09

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.10

“Excess Earnings” means the excess of a Participant’s Earnings over the limit set forth in Code section 401(a)(17).

2.11

 “Excess Investment Account” means the book account established on behalf of a Participant under Article VII of this Plan.

2.12

“Excess Investment Benefit” means the amount determined in accordance with the provisions of Article IV of this Plan.

2.13

“Excess Investment Credits” means the amounts determined in accordance with the provisions of Section 4.02 of this Plan.

2.14

"Excess Investment Plan Deferral Election" means a Participant's election to defer a portion of Excess Earnings as set forth in Section 5.01.

2.15

“Excess Investment Plan Distribution Election” means a Participant’s election regarding the form of payment of his or her Excess Investment Benefit as set forth in Section 5.02.

2.16

"Grandfathered Participant" means a Participant designated as a "Grandfathered Participant" under the Savings and Investment Plan.

2


2.17

“Investment Funds” means the funds designated by the Benefit Plans Committee as available investment options under the Plan, as the same may, from time to time, be changed by action of the Benefit Plans Committee.

2.18

“Matching Contributions” means the amount the Company contributes to the Savings and Investment Plan in accordance with Section 3.01(b) of the Savings and Investment Plan.

2.19

“Non-Benefits Employee” means any Employee who has signed an employment agreement, independent contractor agreement or other personal services contract with the Company stating that he or she is not eligible to participate in the Plan and any worker that the Employer treats as an independent contractor, during the period that the worker is so treated, regardless of whether such individual may be determined to be an Employee by administrative, judicial or other decision.  A worker is treated as an independent contractor if payment for his services is memorialized on a Form 1099, and not on a Form W-2.

2.20

“Participant” means an Employee who meets the eligibility requirements of Article III and elects to participate in the Plan.

2.21

“Participating Employer” means each corporation that has adopted the Plan with the consent of the Benefit Plans Committee in accordance with Article VIII.

2.22

“Plan” means The Phoenix Companies, Inc. Non-Qualified Excess Investment Plan, as it may be amended from time to time.

2.23

“Plan Administrator” means the Benefit Plans Committee or the person designated as such by the Benefit Plans Committee.

2.24

“Plan Year” means the calendar year.

2.25

“Savings and Investment Plan” means The Phoenix Companies, Inc. Savings and Investment Plan, a tax-qualified retirement plan maintained by the Company that includes a cash or deferred arrangement under Code section 401(k).

2.26

“Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.27

“Years of Service” means the number of Years of Service credited to a Participant, as defined in the Savings and Investment Plan.


3



ARTICLE III
PARTICIPATION

3.01

Eligibility.  With respect to any Plan Year, any Employee of the Company whose Contributions to the Savings and Investment Plan for such Plan Year are expected to be limited by the maximum amount of Earnings permitted to be taken into account under Code section 401(a)(17) shall be eligible to participate in this Plan.

3.02

Commencement of Participation.  Each eligible Employee shall become a Participant in the Plan as of the January 1 or July 1 next following the date he or she meets the eligibility requirements in Section 3.01 and completes an Excess Investment Plan Deferral Election as described in Section 5.01.

3.03

Termination of Participation. An individual shall cease to be a Participant as of the date such individual ceases to meet all of the requirements of Section 3.01 above; provided, however, that benefits accrued by the individual as of such date shall not be reduced and shall be paid as provided herein.

ARTICLE IV
EXCESS INVESTMENT BENEFIT

4.01

Excess Investment Benefit. A Participant’s Excess Investment Benefit shall be equal to the sum of (a) the Participant’s accrued and vested account balance under the Plan as of December 31, 2004, (b) the Participant’s Excess Investment Credits determined pursuant to Section 4.02, and (c) and any adjustments to the Participant’s Excess Investment Account determined pursuant to Article VII.

4.02

Excess Investment Credits.  A Participant’s Excess Investment Credits for any Plan Year shall consist of the sum of the following amounts:

(a)

The percentage of the Participant’s Excess Earnings for such Plan Year, from 1% to 60%, that the Participant has elected to defer;

(b)

For periods prior to July 1, 2003, for each Plan Year with respect to which a Participant has a deferral election in effect under this Plan, a matching Company credit equal to, for Employees of the Company or any Participating Employer other than Phoenix Investment Partners, Ltd., an amount equal to 50% of their contributions which do not exceed 6% of their Excess Earnings; and for Employees of Phoenix Investment Partners, Ltd. an amount equal to 100% of their contributions which do not exceed 3% of their Excess Earnings;

(c)

For the period from July 1, 2003 through June 30, 2007, and continuing thereafter for Grandfathered Participants only, for each Plan Year with respect to which a Participant has a deferral election in effect under this Plan, a matching Company credit equal to 100% of such Participant’s contributions, to the extent that such

4



contributions do not exceed 3% of Excess Earnings, plus 50% of such Participant’s contributions, to the extent that such contributions exceed 3% but do not exceed 5% of Excess Earnings; and

(d)

Effective July 1, 2007, for each Plan Year (including, for 2007, only the period from July 1, 2007 through December 31, 2007) with respect to which a Participant, other than a Grandfathered Participant, has a deferral election in effect under this Plan, a matching Company credit equal to the amounts set forth below:

Years of Service (determined in whole years as of January 1 of each Plan Year)

Percentage Match on First 3% of Excess Earnings Deferred by a Participant (i.e., 1%-3%)

Percentage Match on Next 3% of Excess Earnings Deferred by a Participant
(i.e., 4%-6%)

0-4

100%

50%

5-9

100%

100%

10-14

100%

150%

15+

150%

150%



ARTICLE V

DEFERRAL AND DISTRIBUTION ELECTIONS


5.01

Deferral Elections.  


(a)

Time and Amount of Election.  Prior to the end of each Plan Year, a Participant may make an Excess Investment Plan Deferral Election to defer between 1% and 60% of his or her Excess Earnings attributable to services that will be performed in the following Plan Year.


(b)

Newly Eligible Participants.  Notwithstanding Section 5.01(a), for the Plan Year in which an individual first becomes an eligible Participant, such Participant may make an Excess Investment Plan Deferral Election within 30 days of initial eligibility (based on the plan aggregation rules) and such election applies only to compensation paid on and after the later of (i) the election date, or (ii) the applicable participation commencement date as described in Section 3.02.


(c)

Effective Date of Deferral Elections.  A Participant’s Excess Investment Plan Deferral Election shall become effective on the January 1st immediately following the receipt of the Excess Investment Plan Deferral Election by the Plan Administrator (and, in the case of a newly eligible Participant, on the later of the


5



election date and the applicable participation commencement date as described in Section 3.02); provided, however, that such election shall not have retroactive effect.  


(d)

Carryover of Deferral Elections.  Unless otherwise determined by the Plan Administrator, a Participant’s initial Excess Investment Plan Deferral Election will be carried over from year to year unless the Participant makes an affirmative election to modify or terminate the election as described in Section 5.01(e).


(e)

Modification/Termination of Deferral Elections.  A Participant may modify or terminate an Excess Investment Plan Deferral Election effective as of the first day of the Plan Year immediately following the Plan Administrator’s receipt of such modification or termination.  Any modification or termination of an Excess Investment Plan Deferral Election shall not have retroactive effect and shall remain in force until modified or revoked.


(f)

Irrevocability of Deferral Elections.  All Excess Investment Deferral Plan Elections become irrevocable as of (i) the first day of the Plan Year to which the election applies, or (ii) in the case of newly eligible Participant, on the later of the election date and the applicable participation commencement date as described in Section 3.02.  


5.02

Distribution Elections.


(a)

Form of Distribution Election.  Prior to commencing participation under the Plan, each Participant may make an Excess Investment Plan Distribution Election in respect of any amounts to be credited to the Participant’s Excess Investment Account and elect to receive such portion of his or her Excess Investment Benefit in either a lump sum payment or in annual installment payments over a period not to exceed 10 years.  In the event a Participant fails to make an Excess Investment Plan Distribution Election, his or her Excess Investment Benefit will be paid in the form of a lump sum.


(b)

Effective Date of Distribution Elections.  A Participant’s Excess Investment Plan Distribution Election shall become effective immediately following the receipt of the Excess Investment Plan Distribution Election by the Plan Administrator; provided, however, that such election shall not have retroactive effect.  


(c)

Irrevocability of Distribution Elections.  All Excess Investment Distribution Elections become irrevocable as of the first day of the Plan Year to which the election applies.


(d)

409A Transition Relief Provision.  Notwithstanding any other provision to the contrary in this Plan, Participants may be permitted to make elections prior to January 1, 2009 in accordance with the transition rules in effect under Code section 409A.


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(e)

One-Time Changes to Distribution Elections. Notwithstanding Sections 5.02(c) and (d), a Participant may make a one-time election to change his or her Excess Investment Plan Distribution Election, provided that:


(i)

the Participant’s subsequent Excess Investment Plan Distribution Election pursuant to this Section 5.02(e) election must not take effect until at least 12 months after the date on which subsequent Excess Investment Plan Distribution Election is made; and


(ii)

the payment with respect to which the Participant’s subsequent Excess Investment Plan Distribution Election is made must be deferred for a period of not less than five years from the date such payment was initially to be paid pursuant to the Participant’s initial Excess Investment Plan Distribution Election.



ARTICLE VI
DISTRIBUTIONS AND WITHDRAWALS


6.01

Distribution of Account Balances.


(a)

Eligibility for Distribution.  A Participant is eligible to receive a distribution of his or her Excess Investment Benefit upon the Participant’s Separation from Service.  


(b)

Date of Distribution.


(i)

Prior to January 1, 2009, if a lump sum payment is elected as to an identified portion of the Participant’s Excess Investment Account, the lump sum payment will be paid within 90 days of the Participant’s Separation from Service.


(ii)

Prior to January 1, 2009, if the annual installment method is elected as to an identified portion of the Participant’s Excess Investment Account, installment payments will be made on a fixed schedule as specified in the Participant’s election, with the first installment to be paid within 90 days of the Participant’s Separation from Service.  


(iii)

Effective January 1, 2009, distributions will commence within the 90-day period following the earlier to occur of (A) the six month anniversary of the Participant’s Separation from Service and (B) the first day of the month following the Participant’s death.  Upon the expiration of the six-month period, all payments and benefits delayed pursuant to this Section (whether they would have otherwise been payable in a lump sum or in installments in the absence of such delay) will be paid or reimbursed to the Participant in a lump sum, and any remaining payments and benefits due


7



under this Plan will be paid or provided in accordance with the normal payment dates specified for them herein.


(c)

Form of Distribution.  


(i)

Subject to Sections 6.01(b)(iii), a Participant’s Excess Investment Benefit will be distributed in the form elected by the Participant pursuant to Section 5.02.


(ii)

If the annual installment method is elected, the Company, in its sole discretion, may elect that all amounts notionally held in the Excess Investment Account be withdrawn therefrom up to thirty 30 days prior to the first installment payment date and be deemed applied to purchase a period certain annuity in the name of the Company, and the amount payable to the Participant will be equivalent to the amounts payable under such annuity and in accordance with the installment payment schedule elected.


(iii)

If the value of the Participant’s Excess Investment Account is equal to or less than $25,000 on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her Excess Investment Account within 90 days after such distribution date.


(iv)

If the value of the Participant’s account balance under this Plan is equal to $25,000 or less on his or her distribution date, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her account balance within 90 days after such distribution date.  


(d)

Amount of Distribution.


(i)

The amount of each lump sum distribution payable under this Plan shall be equal to the single sum cash value of the Participant’s Excess Investment Benefit as of the date of determination that is distributable in such form.


(ii)

The amount of each installment distribution shall be equal to the balance of the Participant’s Excess Investment Benefit as of the determination date that is distributable in such form, multiplied by a fraction, the numerator of which is one and the denominator of which is the number of years remaining over which installments are to be paid.


(e)

Suspension of Benefits upon Reemployment. Upon reemployment or rehire, the benefits payable under this Plan cannot be suspended pursuant to Code section 409A, the regulations and guidance promulgated thereunder.


8



(f)

Death Benefit. Within 90 days following the death of a Participant, the value of the Participant’s Excess Investment Benefit, determined as of the date of distribution, will be distributed to the Participant’s Beneficiary in the manner specified in the Participant’s Excess Investment Plan Distribution Election.


6.02

Hardship Withdrawals.


(a)

Eligibility.  A Participant may request a withdrawal from his or her Excess Investment Account at any time of the amount necessary to satisfy an unforeseeable emergency within the meaning of Code section 409A, including taxes assessed on this withdrawal, and taking into account the cancellation of the Participant’s Excess Investment Plan Deferral Election under Section 6.02(c).  A hardship withdrawal shall only be available upon a determination by the Plan Administrator based on the relevant facts and circumstances of each case that the Participant has suffered a severe financial hardship resulting from a sudden and unexpected illness or accident of the Participant or the Participant’s spouse, beneficiary, or dependent, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, including the loss of the Participant’s property due to casualty.  The purchase of a home or the payment of tuition or other education expenses does not constitute an unforeseeable emergency under this Section 6.02.  A Participant who desires to receive such a hardship withdrawal must submit a written request to the Plan Administrator in such form as it may specify.

(b)

Repayment.  Any withdrawals under this Section 6.02 cannot be repaid to the Plan.

(c)

Cancellation of Deferral Election.  No further deferrals shall be made to the Plan following the date of the Plan Administrator’s approval of a hardship withdrawal and each Excess Investment Plan Deferral Election to which the Participant is then a party shall be of no further effect.  To the extent permitted under Code section 409A, such Participant may enter into a new Excess Investment Plan Deferral Election in any Plan Year following the Plan Year in which the Participant received the hardship withdrawal.  


 


9




ARTICLE VII
INVESTMENT AND FUNDING

7.01

Investment Accounts. All Excess Investment Credits under Section 4.02 shall be credited to the Participant’s Excess Investment Account as of the end of each payroll period. Such Excess Investment Credits shall be deemed to be invested in the Investment Fund(s) designated by the Participant in such manner as may be specified by the Plan Administrator, or, if no such designation is made, in the default Investment Fund designated from time to time by the Benefit Plans Committee. Each Participant’s Excess Investment Account will be adjusted on a daily basis by an amount equal to the amount of any adjustment that would have been made had the Participant’s credits been allocated and invested as herein provided; reduced, however, at the Company’s discretion, by an amount equal to the estimated income taxes, if any, payable by the Company on such adjustment, based on the Company’s highest tax rate on its net taxable income for the Plan Year in which such adjustment is made.   The Company reserves the right to reduce the interest or earnings on deferred compensation amounts for any federal or state taxes which it may incur as a result of interest or earnings on amounts held under this Plan.


7.02

Company Retains Control of Deemed Investments.  The election to designate deemed investments, as described above, shall be subject to restrictions as to minimum and maximum amounts as announced from time to time by the Benefit Plans Committee.  Both initial and subsequent investment allocations must be made in 1% increments.  The Company shall have the right at any time to add new deemed investment options, cease to offer any or all of the deemed investment options, and alter or adjust the basis or method of calculating any interest or earnings for any of the investment options outlined above. The Company shall be under no obligation to actually make any investment as described above. Reference to any such investment shall be solely for the purpose of aiding the Company in measuring and meeting its liabilities under the terms of this Plan. In any event, if any investments are made, the Company shall be named the sole owner and shall have all of the rights and privileges conferred by any instrument evidencing such investments.


7.03

Funding.  No special or separate fund shall be established by the Company and no segregation of assets shall be made to assure the payment of benefits under the Plan. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Company.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.


ARTICLE VIII
CLAIMS FOR BENEFITS

8.01

Claims Procedure.  Claims for benefits under the Plan may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice


10




of the disposition of a claim shall be furnished to the claimant within 90 days after the application is filed (or within one 180 days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial 90 day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  A claimant must request a review of a denied claim in accordance with Section 8.02 and exhaust all remedies under the Plan before the claimant is permitted to bring a civil action for benefits.

8.02

Claims Review Procedure.  Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied either in whole or in part a benefit by a decision of the Plan Administrator pursuant to Section 8.01 shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the notification provided for in Section 8.01.  If such request is so filed, the claimant or his representative may submit written comments, documents, records and other information relating to the claim to the Plan Administrator within 60 days after receipt of the notification provided for in Section 8.01.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant or his representative with written or electronic notice of the final decision as to the allowance of the claim within 60 days of receipt of the request for review (or within 120 days if special circumstances requires an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or his representative within the initial 60 day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) and a statement that the claimant or his beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.


11



8.03

Receipt and Release for Payments.  Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Plan, shall be in full satisfaction of all claims hereunder against the Company.  The Plan Administrator may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as the Plan Administrator shall determine.  If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator that any payee under this Plan is a minor, or is legally, physically, or mentally incompetent to receive and to give valid release for any payment due him or her under this Plan, any such payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be paid by the Plan Administrator to such payee’s spouse, child, parent or other blood relative, or to any person, persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect of such payee.  If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by the parties concerned.  Subject to the immediately preceding sentence and Section 6.01, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Excess Investment Benefit shall be forfeited at the end of the 60th day and shall not be eligible for reinstatement.

8.04

Lost or Unknown Participants.  If any benefits payable under this Plan to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (a) the last day of the calendar year in which the payment was due and (b) the 15th day of the third calendar month following the date specified under the Plan, after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Company.


12



ARTICLE IX
MISCELLANEOUS


9.01

Non-Guarantee of Employment.  Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Participant or Employee, or as a right of any such Participant or Employee to be continued in the employment of the Company, or as a limitation on the right of the Company to deal with any Participant or Employee, as to their hiring, discharge, layoff, compensation, and all other conditions of employment in all respects as though this Plan did not exist.

9.02

Rights Under Savings and Investment Plan.  Nothing in this Plan shall be construed to limit, broaden, restrict, or grant any right to a Participant, Employee, surviving spouse, domestic partner or any Beneficiary thereof under the Savings and Investment Plan, nor to grant any additional rights to any such Participant, Employee, surviving spouse, domestic partner or Beneficiary thereof under the Savings and Investment Plan, nor in any way to limit, modify, repeal or otherwise affect the Company’s right to amend or modify the Savings and Investment Plan.

9.03

Amendment and Termination.  

 

(a)

Amendment/Modification/Termination.  The Plan may be amended, modified or terminated at any time by the Company, subject to Section 9.03(b) below and except that, without the consent of any Participant or Beneficiary, if applicable, no such amendment, modification or termination shall reduce or diminish the Excess Investment Benefit of any Participant accrued prior to the date of such amendment, modification or termination.  However no amendment, modification or termination shall result or cause an acceleration of payments or benefits under the Plan, unless the termination satisfies the Code section 409A safe harbor summarized in Section 9.03(b).  Further, at its sole discretion, the Company may elect, upon termination of this Plan to distribute in one lump sum to the Participant or any beneficiary, as the case may be, the value of the Benefit or the commuted value of any remaining installment payments.


(b)

Plan Termination under Code section 409A. Generally, payments may be accelerated upon plan termination only if:


(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);


(ii)

all payments to the Directors as a result of the plan termination are not made until at least 12 months after action taken to terminate the plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and


13



(iii)

no similar successor plan can be established within three years following the date the action to terminate the plan was taken.


9.04

Nonassignability.  The benefits payable under this Plan shall not be subject to alienation, assignment, garnishment, execution or levy of any kind and any attempt to cause any benefits to be so subjected shall not be recognized, except to the extent required by applicable law; provided, however, that a Participant or Beneficiary may assign his or her entire interest in their Excess Investment Benefit to the Participant’s or Beneficiary’s spouse or former spouse, as the case may be, under a divorce or separation instrument described in subparagraph (A) of Code section 71(b)(2).

9.05

Plan Administration.  The Plan shall be operated and administered by the Plan Administrator or its duly authorized representative.  The Plan Administrator shall have sole discretionary authority to determine all questions arising in connection with the Plan, to interpret the provisions of the Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Plan and to make all determination in connection with the Plan as may be necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all persons.

9.06

Interpretation Consistent with Code Section 409A.   The intent of the parties is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith. If any provision of this Plan would cause the Employee to incur any additional tax or interest under Code section 409A, the Company, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Plan without violating the provisions of Code section 409A.

9.07

Successor Company.  In the event of the dissolution, merger, consolidation or reorganization of the Company, provision may be made by which a successor to all or a major portion of the Company’s property or business shall continue the Plan, and the successor shall have all of the power, duties and responsibilities of the Company under the Plan.

9.08

Governing Law.  This Plan shall be construed and enforced in accordance with, and governed by, the laws of the State of Connecticut, without giving effect to the conflict of law provisions thereof.

9.09

Tax Withholding.  The Company may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payments and such sums as the Company may reasonably estimate are necessary to cover taxes for which the Company may be liable and which may be assessed with regard to such payment.


14



9.10

Illegality of Particular Provision.  The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE X
PARTICIPATING EMPLOYERS

10.01

Adoption of Plan by Other Employers.  With the consent of the Benefit Plans Committee, any other affiliated corporation may adopt the Plan and all of the provisions hereof and participate herein as a Participating Employer by a properly executed document evidencing said intent and will of such Participating Employer.

10.02

Requirements of Participating Employers.

(a)

Funding and Liability.  Benefits payable under the Plan to employees of the Participating Employer are funded through the Participating Employer’s general assets.  The Participating Employer agrees to pay and assumes all liability with respect to all benefits payable under the Plan to past, present and future employees of the Participating Employer, their spouses and other dependents and beneficiaries in accordance with the terms of the Plan.  Notwithstanding the foregoing, Phoenix Life Insurance Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc. shall pay and assume liability for benefits payable under the Plan to Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc. with respect to service completed before January 1, 1996.

(b)

Books and Records.  The Plan Administrator shall keep separate books and records concerning the contributions and benefits payable under the Plan with respect to the Participating Employer and the Employees of the Participating Employer.

(c)

Expenses. Each Participating Employer shall pay to the Company its proportionate share of any administrative expenses of the Plan which are to be paid by such employer.

10.03

Designation of Agent.  Each Participating Employer shall be deemed to have designated irrevocably the Benefit Plans Committee and the Plan Administrator as its agents.

10.04

Plan Amendment.

(a)

Company’s Right to Amend Plan.  Subject to the provisions of paragraph (b) hereof, each Participating Employer hereby delegates to the Company the right at any time to amend the Plan in accordance with the terms of the Plan, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Plan.  If an amendment could affect the Participating Employer’s share of the cost of the Plan, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.  Any such amendment shall be adopted by the Participating


15



Employer’s benefit plans committee unless such amendment could significantly affect the Participating Employer’s share of the cost of the Plan, as determined by the Participating Employer’s benefit plans committee, in which case such amendment shall be adopted by the Participating Employer’s Board of Directors in accordance with the Participating Employer’s Articles of Incorporation, Bylaws and applicable law and shall become effective as provided therein upon its execution.

(b)

Effective Date of Amendment.  No amendment to the Plan shall be effective with respect to a Participating Employer until 45 days after a copy of the amendment shall have been delivered to the Participating Employer, unless the Participating Employer shall have waived its right to receive such advance copy of the amendment.

10.05

Withdrawal of a Participating Employer.  Subject to Section 9.03, a Participating Employer may terminate its participation in the Plan by giving the Benefit Plans Committee prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Benefit Plans Committee, unless the Benefit Plans Committee shall have waived its right to such notice.  The Benefit Plans Committee may terminate a Participating Employer’s participation in the Plan as of any termination date by giving the Participating Employer prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.

10.06

Administrator’s Authority.  The Plan Administrator shall have all of the duties and responsibilities authorized by the Plan and shall have the authority to make any and all rules, regulations and decisions necessary or appropriate to effectuate the terms of the Plan, which shall be binding upon each Participating Employer and all Participants.



16



EX-10.16 7 ex1016.htm NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THE PHOENIX COMPANIES, INC

EXHIBIT 10.16







THE PHOENIX COMPANIES, INC.
NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As amended and restated effective January 1, 2008




ARTICLE I.  PURPOSE AND EFFECTIVE DATE

1.1

Purpose  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan is intended to provide retirement benefits for certain employees which are not provided under The Phoenix Companies, Inc. Employee Pension Plan by reason of (a) the exclusion of Incentive Compensation under an Incentive Compensation plan designated in Section 2.10 hereof from the definition of Earnings; (b) the limitation on Earnings that may be taken into account under The Phoenix Companies, Inc. Employee Pension Plan as set forth in Code section 401(a)(17); or (c) the exclusion of amounts deferred under any other deferred compensation program of the Employer from the definition of Earnings.  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (see Article IX).

1.2

Effective Date  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan was first effective January 1, 1989, was amended and restated effective as of January 1, 2004, was further amended effective as of April 28, 2005, and was amended and restated effective as of July 1, 2007.  This amendment and restatement shall be effective as of January 1, 2008.

ARTICLE II.  DEFINITIONS

Unless the context otherwise indicates, words and phrases capitalized and not otherwise defined herein are terms defined in the Pension Plan and have the same meaning ascribed to them under the Pension Plan.

2.1

"Accrued Benefit" means, as of the relevant date, the benefit accrued by a Participant in accordance with the terms of this Supplemental Plan as defined in the Pension Plan.

2.2

"Beneficiary" means the Beneficiary designated under the Pension Plan, except that the Participant may designate a Beneficiary hereunder by delivering to the Plan Administrator a written designation of Beneficiary specifically made with respect to this Plan on a form approved by the Plan Administrator.

2.3

"Benefit Plans Committee" means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan.

2.4

"Code" means the Internal Revenue Code of 1986, as amended.

2.5

"Earnings" means earnings as defined in the Pension Plan.

2.6

"Employer" means the Phoenix Life Insurance Company and any affiliated employer that adopts the Plan with the consent of the Benefit Plans Committee.



1




2.7

"Excess Benefit Plan" means The Phoenix Companies, Inc. Excess Benefit Plan, a plan maintained by the Employer for the purpose of providing benefits for certain Employees in excess of the limitations imposed by Code section 415.

2.8

"Final Average Earnings" means the average earnings as defined in the Pension Plan.

2.9

"Grandfathered Participant" means a Participant designated as a "Grandfathered Participant" under the Pension Plan.

2.10

"Incentive Compensation" means compensation payable under Performance Incentive Plan, the Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive plan or such other incentive compensation arrangements as may be designated from time to time by the Compensation Committee of the Board of Directors of The Phoenix Companies, Inc., the Chief Executive Officer, or the Benefit Plans Committee.

2.11

"Participant" means an employee who meets the eligibility requirements of Article III under this Supplemental Plan.

2.12

"Participating Employer" means each corporation that has adopted this Supplemental Plan with the consent of the Benefit Plans Committee in accordance with Article XII.

2.13

"Pension Equity Benefits" means the benefits provided under Appendix V of the Pension Plan.

2.14

"Pension Plan" means The Phoenix Companies, Inc. Employee Pension Plan, a defined benefit pension plan maintained by the Employer, as it may be amended from time to time.

2.15

"Plan Administrator" means the Benefit Plans Committee or the person designated as such by the Benefit Plans Committee.

2.16

"Rehired Participant" has the meaning ascribed thereto in Section 4.3.

2.17

“Retirement” means termination of service after having satisfied the age and/or service criteria to be entitled to retire in accordance with the terms of the Pension Plan.

2.18

“Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.19

"Supplemental Plan" means The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as set forth in this document and as amended from time to time.



2




ARTICLE III.  ELIGIBILITY

Eligibility for this Supplement Plan is limited to persons who were Participants under this Plan on August 1, 2004.  On and after July 1, 2007, an individual who was a Participant in this Supplemental Plan and who has been rehired following his or her termination or transfer shall not be eligible to re-commence participation in this Supplemental Plan.

ARTICLE IV.  BENEFITS

4.1

Actively At Work on or After August 1, 2004  The amount of benefits provided under this Supplemental Plan effective July 1, 2007 for Participants actively at work on August 1, 2004 and thereafter shall be the excess of (a) over (b) where:

(a)

is the sum of:

(i)

the amount of benefit that would have been provided under the Pension Plan, excluding any Pension Equity Benefits, if the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings and the limitation set forth in Code section 401(a)(17) did not apply; provided, however, that in determining the amount of a Participant’s Final Average Earnings, the amount of Incentive Compensation which shall be taken into account shall be equal to such annual Incentive Compensation received by the Participant averaged over any three (3) years within the last seven (7) consecutive years that produces the highest average; and

(ii)

the amount of Pension Equity Benefits, if any, that would have been provided under the Pension Plan if the exclusion of deferred compensation from the calculation of the Pension Equity Benefits, if applicable, and the limitation set forth in Code section 401(a)(17) did not apply.

(b)

is the amount of benefits payable under the Pension Plan, including any Pension Equity Benefits.

4.2

Not Actively At Work on or After August 1, 2004  The amount of monthly benefit provided under this Supplemental Plan for Participants who were not actively at work on August 1, 2004 and thereafter shall be the excess of (a) over (b) where:

(a)

is the amount of monthly benefit that would have been provided under the Pension Plan if the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings, limitation of benefits due to Section 415 and the limitation on Earnings set forth in Code section 401(a)(17) did not apply; provided, however, that in determining the amount of a Participant’s Final Average Earnings, the amount of Incentive Compensation which shall be taken into account shall be equal to such annual Incentive Compensation received by the

3




Participant averaged over any three (3) years within the last five (5) consecutive years that produces the highest average; and

(b)

is the amount of monthly benefit payable under the Pension Plan.

4.3

Rehired Participant  Notwithstanding Section 4.1 to the contrary, in the event any Participant, including a Grandfathered Participant, terminates employment with or is no longer employed by  (i.e., transfers to a non-Participating Employer) the Employer or a Participating Employer and is rehired by the Employer or a Participating Employer following such termination or transfer (a "Rehired Participant"), for purposes of Sections 4.1(a)(i), the determination, if applicable, of the Rehired Participant's Final Average Earnings, including the amount of Incentive Compensation, shall be made as of the date of the Rehired Participant's initial termination or transfer.

4.4

Benefits Not to Exceed What Could Have been Paid Under Pension Plan But for Limitations  Notwithstanding Section 4.1 or 4.2 to the contrary, the amount of benefits payable to a Participant under this Supplemental Plan shall be reduced to the extent that the aggregate benefits payable to the Participant under the Pension Plan, the Excess Benefit Plan, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B, as amended and restated effective January 1, 2008 (and as may be further amended thereafter), and this Supplemental Plan exceeds the amount of benefits that would have been provided under the Pension Plan if the exclusion of Incentive Compensation and deferred compensation from the definition for Earnings, to the extent applicable, the limitation set forth in Code section 401(a)(17) and the limitation imposed by Code section 415 did not apply.

4.5

Special Rules for Subsidiary Employees  The following special rules apply with respect to certain subsidiary employees:

(a)

To the extent that Section 4.1 or 4.2 requires the determination of the amount of benefits payable under the Pension Plan, only the benefit payable with respect to Service credited on and after January 1, 1993 shall be taken into account for purposes of calculating the benefit payable under this Supplemental Plan to a Former Home Life Employee.

(b)

The amount of benefits payable under Section 4.1 or 4.2 to an Employee of PIC, PEPCO or PXP who was ineligible to participate in the Pension Plan for the period January 1, 1997, through December 31, 1999, shall be computed to include an additional amount equal to the difference between the benefit such Employee actually accrued under the Pension Plan as of his or her Annuity Commencement Date and the benefit such Employee would have accrued had he or she not been excluded from participation in the Pension Plan for such period.

4.6

Plant Closing Benefits  In addition to the benefit payable pursuant to Section 4.1 or 4.2 and notwithstanding the provisions of Section 4.5 to the contrary, this Supplemental Plan shall also pay to each Pension Plan Participant identified in Section 2.05 of the Pension Plan as not being a Plant Closing Eligible Employee, the Plant Closing Benefit that would have been payable to such Pension Plan Participant under Section 3.08 of the Pension Plan


4



had such Pension Plan Participant not been excluded from the definition of Plant Closing Eligible Employee.

4.7

Timing of Inclusion of Incentive Compensation   For purposes of Sections 4.1(a)(i) and 4.2 above, Incentive Compensation shall be deemed Earnings with respect to the year in which such Incentive Compensation is actually paid or deferred.

4.8

Cost of Living Adjustment for Pre- March 1, 2003 Benefits Benefits accrued under this Supplemental Plan before March 1, 2003 are subject to cost of living adjustments as described in the Pension Plan.

4.9

No Modification of Pension Plan Any benefit payable under the Pension Plan shall be solely in accordance with the terms and provisions thereof, and nothing in this Supplemental Plan shall operate or be construed in a way to modify, amend or affect the terms and provisions of the Pension Plan.

4.10

Death Benefits  If the spouse or domestic partner of a Participant in the Supplemental Plan is entitled to a death benefit under the Pension Plan, said spouse or domestic partner shall be entitled to receive from the Employer a death benefit under this Supplemental Plan equal to the difference between (a) the death benefit that would be payable under the Pension Plan as of the date of the Participant’s death if such benefit were calculated based on the benefit described in this Article IV; and (b) the death benefit actually payable under the Pension Plan as of the date of the Participant’s death, calculated in accordance with the terms of the Pension Plan.  No death benefit other than that set forth in this Section 4.10 shall be payable under this Supplemental Plan if a Participant dies prior to the commencement of benefit payments under this Supplemental Plan.  Following the commencement of payments under this Supplemental Plan, death benefits shall only be payable to the extent the Participant is receiving benefits in the form of a survivor benefit or an annuity or installments that has a period certain component and the minimum payment period has not lapsed.

ARTICLE V.  VESTING

Employees eligible to participate in this Supplemental Plan on or before July 31, 2004, and except for Pension Plan Participants to whom a Plant Closing Benefit is payable under Section 4.6 of this Supplemental Plan who shall be fully vested in said Plant Closing Benefit, and except for Participants who are Employees of Phoenix American Life Insurance Company ("PAL"), a participating Employer in this Supplemental Plan, whose failure to meet the conditions for payment of benefits hereunder is by reason of PAL’s termination of participation in this Supplemental Plan on account of its sale by the Employer, a Participant shall have a vested interest in his or her Supplemental Plan benefits upon the earliest to occur of (i) such Participant’s attainment of Normal Retirement Age under the Pension Plan, (ii) termination of the Participant’s employment by death or disability as defined in the Pension Plan or (iii) upon completion of five (5) Years of Vesting Service, as defined under the Pension Plan.

ARTICLE VI.     DISTRIBUTIONS

6.1        Payments in Accordance with Pension Plan   Except as otherwise expressly provided in Section 6.7, with respect to any Participant whose benefits under the Pension Plan



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become payable prior to December 31, 2008, payment of a Participant’s Accrued Benefit shall be made in the same form and manner and at the same time as is applicable or elected under the Employee Pension Plan.

6.2

Default Provisions for Payments After 2008  With respect to any Participant whose benefits under the Pension Plan do not become payable prior to December 31, 2008, unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of  a Participant’s Accrued Benefit shall commence at the later of (i) the date the Participant attains age 55 (or, with respect to a Participant who dies prior to age 55, the date the Participant would have attained age 55) or (ii) the date the Participant incurs a Separation from Service, and shall be made in the form of a single life annuity.

6.3

Elections of Payment Forms Prior to 2009  A Participant who is not described in Section 6.1 may elect at any time prior to December  31, 2008 to have payment of his or her Accrued Benefit commence at  the first day of any month following the later of the Participant’s (i) Separation from Service  (including a Separation from Service after a disability or plant closing), and (ii) having attained age 55, with such benefits to be payable in whichever of the following forms the Participant shall elect:   

(a)

Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and survivor with 10 years certain;  or

(b)

Lump Sum Short-Term Installments   The Participant may elect to receive payment of his or her Accrued Benefit in a three-year certain annuity (that is, in equal annual payments over a period of three calendar years, with the first payment to be made as of commencement date elected by the Participant and the second and third installments payable on the first and second anniversaries of such commencement date).

6.4

Accrued Benefit Distribution Provisions  Notwithstanding any provision in
this Supplemental Plan to the contrary, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Participant’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) the first day of the month following the Participant’s death, and the amount payable to the Participant under the form of payment determined in accordance with this Article VI shall be determined as of such postponed commencement date.

6.5

Change in Form of Life Annuity  If a Participant’s Accrued Benefit is payable in the form of a life annuity described in Section 6.3(a), whether pursuant to Section 6.2 or 6.3, at any time prior to the date the Participant’s Accrued Benefits would commence to be paid hereunder, the Participant may elect on a form approved by the Benefit Plans Committee and received by the Benefit Plans Committee prior to the date of the Participant’s death, to change the form of life annuity under which such Accrued Benefit is payable.



6


6.6

Mandatory Distributions of Small Accrued Benefits   If the Actuarial Equivalent value of the Participant’s Accrued Benefit under this Supplemental Plan is equal to $25,000 or less on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will receive a lump sum payment of his or her Accrued Benefit within 90 days after his or her Separation from Service.

6.7

Suspension of Benefits   If a Participant who has incurred a Separation of Service is re-employed or re-hired, any benefits which have commenced payment prior to such re-employment or re-hire shall continue to be paid, and any benefits that have not commenced to be paid shall still be paid at the time that they would have been paid, without regard to the change in the Participant’s employment status.


ARTICLE VII.

CLAIMS FOR BENEFITS

7.1

Claims Procedure   Claims for benefits under the Supplemental Plan may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty (180) days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial ninety (90)-day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Supplemental Plan on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Supplemental Plan's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  A claimant must exhaust the claims procedure under this Supplemental Plan and request a review of a denied claim in accordance with the procedures described in the following paragraph before the claimant is permitted to bring a civil action for benefits.

Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied a benefit, in whole or in part, by a decision of the Plan Administrator shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than sixty (60) days after receipt of the notification provided for above. If such request is so filed, the claimant or his representative may submit written comments, documents, records and other information relating to the claim to the Plan Administrator within sixty (60) days after receipt of the notification provided for above.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard



7


to whether such information was submitted or considered in the initial benefit determination. The Plan Administrator shall provide the claimant or his representative with written or electronic notice of the final decision as to the allowance of the claim within sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days if special circumstances requires an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or his representative within the initial sixty (60)-day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Supplemental Plan provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) and a statement that the claimant or his Beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Supplemental Plan and that Supplemental Plan provisions have been applied consistently with respect to similarly situated claimants.

7.2

Full Satisfaction, Release, Special Payment Rules Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Supplemental Plan, shall be in full satisfaction of all claims hereunder against the Employer.  The Plan Administrator may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine.  If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator that any payee under this Supplemental Plan is a minor, or is legally, physically, or mentally incompetent to receive and to give valid release for any payment due him or her under this Supplemental Plan, any such payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be paid by the Plan Administrator to such payee’s spouse, child, parent or other blood relative, or to any person, persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect of such payee.  If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by the parties concerned. Subject to the immediately preceding sentence, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Accrued Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.3

If any benefits payable under this Supplemental Plan to a Participant, or to
such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15th day of the third calendar month following the date specified under the Plan after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Employer.



8


ARTICLE VIII.

AMENDMENT AND TERMINATION

8.1

Amendment   The Benefit Plans Committee shall have the right to amend this Supplemental Plan at any time and from time to time, including a retroactive amendment, by resolution adopted by it at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Any such amendment shall become effective upon the date stated therein, and shall be binding on all Participants and Beneficiaries, except as otherwise provided in such amendment; provided, however that, except with respect to an amendment described in Section 10.1, no amendment (i) shall result in or cause an acceleration of payments or benefits under the Plan or (ii) shall, without the express written consent of such Participant, reduce or otherwise adversely affect the Participant Accrued Benefit as of the date of such amendment.  

8.2

Termination   The Employer has established this Supplemental Plan with the bona fide intention and expectation that from year to year it will deem it advisable to continue it in effect.  However, the Employer, in its sole discretion, reserves the right to terminate the Supplemental Plan in its entirety at any time without the consent of any Participant; provided, however, that no such termination shall (i) result in or cause an acceleration of payments or benefits under this Supplemental Plan, unless the termination satisfies the Code section 409A safe harbor summarized in the last sentence of this Section 8.2, or (ii) without the express written consent of such Participant, reduce or otherwise adversely affect the Participant’s Accrued Benefit as of the date of such termination.  Any such termination shall be accomplished by resolution of the Benefit Plans Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Payments under this Supplemental Plan may be accelerated upon plan termination only if:

(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);

(ii)     all payments to the Directors as a result of the plan termination are not made until at least twelve (12) months after action taken to terminate the plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and

(iii)

no similar successor plan can be established within three (3) years following the date the action to terminate the plan was taken.

 

ARTICLE IX.     SOURCE OF BENEFIT PAYMENTS

9.1

Unfunded Plan   No special or separate fund shall be established by the Employer and no segregation of assets shall be made to assure the payment of benefits under the Supplemental Plan.  No Participant shall have any right, title, or interest whatsoever in any specific asset of the Employer.  Nothing contained in this Supplemental Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a


9



fiduciary relationship, between the Employer and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Supplemental Plan, such right shall be no greater than the right of an unsecured general creditor of the Employer.

ARTICLE X.    CODE SECTION 409A MISCELLANEOUS PROVISIONS

10.1

Interpretation Consistent with Code Section 409A   The intent is that payments and benefits under this Supplemental Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Supplemental Plan shall be interpreted to be in compliance therewith.  If any provision of this Supplemental Plan would cause the Participant to incur any additional tax or interest under Code section 409A, the Benefit Plans Committee, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Supplemental Plan without violating the provisions of Code section 409A.

ARTICLE XI.     GENERAL

11.1

Benefits Non-Alienable   To the extent permitted by law, the right of any Participant or Beneficiary to any benefit or payment hereunder shall not be subject in any manner to attachment or other legal process, and no such benefit or payment shall be subject to anticipation, alienation, sale, transfer, assignment, or encumbrance.

11.2

Plan Administration   The Supplemental Plan shall be operated and administered by the Benefits Plans Committee.  The Benefits Plan Committee may delegate any or all of its administrative authority to any officer or employee or committee of officers or employees as it shall designate.  The Benefits Plans Committee or such other committee as it shall designate shall be the Plan Administrator.  The Plan Administrator shall have sole discretionary authority to determine all questions arising in connection with the Supplemental Plan, to interpret the provisions of the Supplemental Plan and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Supplemental Plan and to make all determination in connection with the Supplemental Plan as may be necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all persons.

11.3

Governing Law   This Supplemental Plan shall be governed by and construed
in accordance with the laws of the State of Connecticut other than and without reference to any provisions of such laws regarding choice of laws or conflict of laws, to the extent such laws are not pre-empted by the Employee Retirement Income Security Act of 1974, as amended.

11.4

No Right to Continued Employment   The establishment of this Supplemental Plan shall not be construed as giving to any Participant, employee or any person whomsoever, any legal, equitable or other rights against the Employer, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any interest in the assets or

 

10


 

business of the Employer or giving any employee the right to be retained in the employment of the Employer.  All employees and Participants shall be subject to discharge to the same extent they would have been if this Supplemental Plan had never been adopted.

11.5

Tax Withholding   The Employer may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payments and such sums as the Employer may reasonably estimate are necessary to cover taxes for which the Employer may be liable and which may be assessed with regard to such payment.

11.6

Severability   The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE XII.    PARTICIPATING EMPLOYERS

12.1

Adoption of Supplemental Plan by Other Employers   With the consent of the Benefit Plans Committee, any other corporation may adopt the Supplemental Plan and all of the provisions hereof and participate herein as a Participating Employer by a properly executed document evidencing said intent and will of such Participating Employer.

12.2

Requirements of Participating Employers

(a)

Benefits payable under the Supplemental Plan to employees of the Participating Employer are funded through the Participating Employer’s general assets.  The Participating Employer agrees to pay and assumes all liability with respect to all benefits payable under the Supplemental Plan to past, present and future employees of the Participating Employer, their spouses and other dependents and beneficiaries in accordance with the terms of the Supplemental Plan.  Notwithstanding the foregoing, Phoenix Life Insurance Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc. shall pay and assume liability for benefits payable under the Supplemental Plan to Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc. with respect to service completed before January 1, 1996.

(b)

The Plan Administrator shall keep separate books and records concerning the contributions and benefits payable under the Supplemental Plan with respect to the Participating Employer and the employees of the Participating Employer.

(c)

The Participating Employer shall pay to Phoenix Life Insurance Company its proportionate share of any administrative expenses of the Supplemental Plan, which are to be paid by the Employer.



11


12.3

Designation of Agent   Each Participating Employer shall be deemed to have designated irrevocably the Benefit Plans Committee and the Plan Administrator as its agents.

12.4

Delegation of Power to Amend   Each Participating Employer hereby
delegates to the Benefit Plans Committee the right at any time to amend the Supplemental Plan in accordance with the terms of the Supplemental Plan, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Supplemental Plan.  If an amendment could significantly affect the Participating Employer’s share of the cost of the Supplemental Plan, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.  

12.5

Withdrawal of a Participating Employer   Subject to Section 8.2, a Participating Employer may terminate its participation in the Supplemental Plan by giving the Benefit Plans Committee prior written notice specifying a termination date which shall be the last day of a month at least 30 days (or such lesser period as the Benefits Plans Committee shall specify) subsequent to the date such notice is delivered to the Benefit Plans Committee. The Benefit Plans Committee may terminate a Participating Employer’s participation in the Supplemental Plan as of any termination date by giving the Participating Employer prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.  Notwithstanding the foregoing provisions of this Section 12.5, in no event shall the withdrawal by, or the termination of the participation of, any such Participating Employer result in an acceleration of the timing of distributions under this Plan, unless (and solely to the extent) permitted under Code Section 409A or the regulations and interpretations thereunder.

12.6

Plan Administrator’s Authority   The Plan Administrator shall have all of the duties and responsibilities authorized by the Supplemental Plan and shall have the authority to make any and all rules, regulations and decisions necessary or appropriate to effectuate the terms of the Supplemental Plan, which shall be binding upon each Participating Employer and all Participants.

 

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EX-10.18 8 ex1018.htm NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THE PHOENIX COMPANIES, INC


EXHIBIT 10.18








THE PHOENIX COMPANIES, INC.
NONQUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN B

As amended and restated effective January 1, 2008

 


ARTICLE I.  PURPOSE AND EFFECTIVE DATE

1.1

Purpose  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B is intended to provide retirement benefits for certain employees which are not provided under The Phoenix Companies, Inc. Employee Pension Plan by reason of (a) the exclusion of Incentive Compensation under an Incentive Compensation plan designated in Section 2.10 hereof from the definition of Earnings; (b) the limitation on Earnings that may be taken into account under The Phoenix Companies, Inc. Employee Pension Plan as set forth in Code section 401(a)(17); or (c) the exclusion of amounts deferred under any other deferred compensation program of the Employer from the definition of Earnings.  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees (see Article IX).

1.2

Effective Date  The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B was first effective August 1, 2004, was amended effective as of April 28, 2005, and was amended and restated effective as of July 1, 2007.  This amendment and restatement shall be effective as of January 1, 2008.

ARTICLE II.

DEFINITIONS

Unless the context otherwise indicates, words and phrases capitalized and not otherwise defined herein are terms defined in the Pension Plan and have the same meaning ascribed to them under the Pension Plan.

2.1

"Accrued Benefit" means, as of the relevant date, the benefit accrued by a Participant in accordance with the terms of this Supplemental Plan B as defined in the Pension Plan.

2.2

"Beneficiary" means the Beneficiary designated under the Pension Plan, except that the Participant may designate a Beneficiary hereunder by delivering to the Plan Administrator a written designation of Beneficiary specifically made with respect to this Plan on a form approved by the Plan Administrator.

2.3

"Benefit Plans Committee" means the committee, which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or
any other person(s) designated by the Chief Executive Officer, to administer and manage the Plan.

2.4

"Code" means the Internal Revenue Code of 1986, as amended.

2.5

"Earnings" means earnings as defined in the Pension Plan.

2.6

"Employer" means Phoenix Life Insurance Company and any affiliated employer that adopts the Supplemental Plan B with the consent of the Benefit Plans Committee.



1




2.7

"Excess Benefit Plan" means The Phoenix Companies, Inc. Excess Benefit Plan, a plan maintained by the Employer for the purpose of providing benefits for certain Employees in excess of the limitations imposed by Code section 415.

2.8

"Final Average Earnings" means the average earnings as defined in the Pension Plan.

2.9

"Grandfathered Participant" means a Participant designated as a "Grandfathered Participant" under the Pension Plan.

2.10

"Incentive Compensation" means compensation payable under Performance Incentive Plan, the Mutual Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive plan or such other incentive compensation arrangements as may be designated from time to time by the Compensation Committee of the Board of Directors of The Phoenix Companies, Inc., the Chief Executive Officer, or the Benefit Plans Committee.

2.11

"Participant" means an employee who meets the eligibility requirements of Article III under the Supplemental Plan B.

2.12

"Participating Employer" means each corporation that has adopted this Supplemental Plan B with the consent of the Benefit Plans Committee in accordance with
Article XII.

2.13

"Pension Equity Benefits" means the benefits provided under Appendix V of the Pension Plan.

2.14

"Pension Plan" means The Phoenix Companies, Inc. Employee Pension Plan, a defined benefit pension plan maintained by the Employer, as it may be amended from time to time.

2.15

"Plan Administrator" means the Benefit Plans Committee or the person designated as such by the Benefit Plans Committee.

2.16

"Rehired Participant" has the meaning ascribed thereto in Section 4.2.

2.17

“Retirement” means termination of service after having satisfied the age and/or service criteria to retire in accordance with the terms of the Pension Plan.

2.18

“Separation from Service” shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.19

"Supplemental Plan B" means The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan B as set forth in this document and as amended from time to time.



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ARTICLE III.

ELIGIBILITY

3.1

Individuals who do not participate and are not eligible to participate in, or are no longer eligible to participate in, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2008, will be eligible
to participate in this Supplemental Plan B in accordance with Section 3.2.

3.2

On or after August 1, 2004, any Highly Compensated Employee, as defined under the Pension Plan, of the Employer or any Participating Employer, that has been approved by the Chief Executive Officer of the Employer, whose retirement benefits under the Employee Pension Plan are limited by reason of the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings or the limitation set forth in Code section 401(a)(17) shall be eligible for benefits under this Supplemental Plan B effective as of the date so approved.

ARTICLE IV.

BENEFITS

4.1

Actively At Work on or After August 1, 2004  The amount of benefits provided under this Supplemental Plan B effective July 1, 2007 for Participants actively at work on August 1, 2004 or thereafter shall be the excess of (a) over (b) where:

(a)

is the sum of:

(i)

the amount of benefit that would have been provided under the Pension Plan, excluding any Pension Equity Benefits, if the exclusion of Incentive Compensation or deferred compensation amounts from the definition of Earnings and the limitation set forth in Code section 401(a)(17) did not apply; provided, however, that in determining the amount of a Participant’s Final Average Earnings, the amount of Incentive Compensation which shall be taken into account shall be equal to such annual Incentive Compensation received by the Participant averaged over any three (3) years within the last seven (7) consecutive years that produces the highest average; and

(ii)

the amount of Pension Equity Benefits, if any, that would have been provided under the Pension Plan if the exclusion of deferred compensation from the calculation of the Pension Equity Benefits, if applicable, and the limitation set forth in Code section 401(a)(17) did not apply.

(b)

is the amount of benefits payable under the Pension Plan, including any Pension Equity Benefits.

4.2

Rehired Participant  Notwithstanding Section 4.1 to the contrary, in the event
any Participant, including a Grandfathered Participant, terminates employment with or is no longer employed by (i.e., transfers to a non-Participating Employer) the Employer or a Participating Employer and is rehired by the Employer or a Participating Employer following such termination or transfer (a "Rehired Participant"), for purposes of Sections 4.1(a)(i), the



3


 

determination, if applicable, of the Rehired Participant's Final Average Earnings, including the amount of Incentive Compensation, shall be made as of the date of the Rehired Participant's initial termination or transfer.  Any Rehired Participant (including former Grandfathered Participants and former participants in The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2008) who has been re-nominated and re-approved pursuant to Section 3.2 shall accrue benefits on and after his or her rehire date solely under Section 4.1(a)(ii).

4.3

Benefits Not to Exceed What Could Have been Paid Under Pension Plan But for Limitations

(a)

Rehired or Transferred Participants. Notwithstanding Section 4.1 to the contrary, the amount of benefits payable to a Participant under this Supplemental Plan B shall be reduced to the extent that the aggregate benefits payable to the Participant under the Pension Plan, the Excess Benefit Plan, The Phoenix Companies, Inc. Nonqualified Supplemental Executive Retirement Plan, as amended and restated effective January 1, 2008, and this Supplemental Plan B exceeds the amount of benefits that would have been provided under the Pension Plan if the exclusion of Incentive Compensation and deferred compensation from the definition for Earnings, to the extent applicable, the limitation set forth in Code section 401(a)(17) and the limitation imposed by Code section 415 did not apply.

(b)

Newly Eligible Grandfathered Participants After June 30, 2007. If a Grandfathered Participant becomes a Participant in this Supplemental Plan B after June 30, 2007, such Grandfathered Participant shall only accrue Pension Equity Benefits under Section 4.1(a)(ii) of this Supplemental Plan B.

4.4

Special Rules for Subsidiary Employees  The following special rules apply with respect to certain subsidiary employees:

(a)

To the extent that Section 4.1 requires the determination of the amount of benefits payable under the Pension Plan, only the benefit payable with respect to Service credited on and after January 1, 1993 shall be taken into account for purposes of calculating the benefit payable under this Supplemental Plan B to a Former Home Life Employee.

(b)

The amount of benefits payable under Section 4.1 to an Employee of PIC, PEPCO or PXP who was ineligible to participate in the Pension Plan for the period January 1, 1997, through December 31, 1999, shall be computed to include an additional amount equal to the difference between the benefit such officer actually accrued under the Pension Plan as of his or her Annuity Commencement Date and the benefit such officer would have accrued had he or she not been excluded from participation in the Pension Plan for such period.

 

4


4.5

Timing of Inclusion of Incentive Compensation   For purposes of Section 4.1(a)(i) above, Incentive Compensation shall be deemed Earnings with respect to the year in which such Incentive Compensation is actually paid or deferred.

4.6

No Modification of Pension Plan   Any benefit payable under the Pension Plan shall be solely in accordance with the terms and provisions thereof, and nothing in this Supplemental Plan B shall operate or be construed in a way to modify, amend or affect the
terms and provisions of the Pension Plan.

4.7

Death Benefits  If the spouse or domestic partner of a Participant in the Supplemental Plan B is entitled to a death benefit under the Pension Plan, said spouse or domestic partner shall be entitled to receive from the Employer a death benefit under this Supplemental Plan B equal to the difference between (a) the death benefit that would be payable under the Pension Plan as of the date of the Participant’s death if such benefit were calculated based on the benefit described in this Article IV; and (b) the death benefit actually payable
under the Pension Plan as of the date of the Participant’s death, calculated in accordance with the terms of the Pension Plan.  No death benefit other than that set forth in this Section 4.7 shall
be payable under this Supplemental Plan B if a Participant dies prior to the commencement of benefit payments under this Supplemental Plan B.  Following the commencement of payments under this Supplemental Plan B, death benefits shall only be payable to the extent the
Participant is receiving benefits in the form of a survivor benefit or an annuity or installments that has a period certain component and the minimum payment period has not lapsed.

ARTICLE V.

VESTING

Employees eligible to participate in this Supplemental Plan B on or after August 1, 2004,  shall have a vested interest in his or her Supplemental Plan B benefits upon such Participant’s attainment of Normal Retirement Age under the Pension Plan or on earlier termination of employment by death or disability as defined in the Pension Plan.  Prior to any such occurrence, the Participant shall have a vested interest in his or her benefits under this Supplemental Plan B in accordance with the following schedule:  

Service at selection

Vesting Schedule

                Full Vesting

into SERP

_________________________________________________________________________________________________________________________

 

Less than 5 years

    0% immediate, 50% cliff at 5 years, then 10% per year

                10 years for full vesting

5 years but less than 6

  10% immediate, then 10% per year        

 9 years for full vesting

6 years but less than 7

  20% immediate, then 10% per year        

 8 years for full vesting

7 years but less than 8

  30% immediate, then 10% per year       

 7 years for full vesting

8 years but less than 9

  40% immediate, then 10% per year        

 6 years for full vesting

9 years but less than 20

  50% immediate, then 10% per year       

 5 years for full vesting

20 years or more

100% immediate vesting


ARTICLE VI.

DISTRIBUTIONS

6.1

Payments in Accordance with Pension Plan  Except as otherwise expressly provided in Section 6.7, with respect to any Participant whose benefits under the Pension Plan

 

5


 

become payable prior to December 31, 2008, payment of a Participant’s Accrued Benefit shall be made in the same form and manner and at the same time as is applicable or elected under the Employee Pension Plan.

6.2

Default Provisions for Payments After 2008  With respect to any Participant whose benefits under the Pension Plan do not become payable prior to December 31, 2008, unless a Participant otherwise elects in accordance with the procedures set forth in this Article VI, payment of  a Participant’s Accrued Benefit shall commence at the later of (i) the date the Participant attains age 55 (or, with respect to a Participant who dies prior to age 55, the date the Participant would have attained age 55) or (ii) the date the Participant incurs a Separation from Service, and shall be made in the form of a single life annuity.

6.3

Elections of Payment Forms  A Participant who is not described in Section 6.1 may elect (i) at any time prior to December  31, 2008 for Participants in this Supplemental Plan B prior to January 1, 2009, or (ii) within 30 days of the date that the Participant first becomes eligible for this Supplemental Plan B (or any other plans aggregated with this Supplemental Plan B in accordance with Code section 409A) after December 31, 2008, to have payment of his or her Accrued Benefit commence at  the first day of any month following the Participant’s (x) satisfaction of Retirement criteria, or (y) death, with such benefits to be payable in whichever of the following forms the Participant shall elect:

(a)

Life Annuity   The Participant may elect to receive payment in one of the following actuarially equivalent optional forms of life annuities:  straight life annuity; joint and 50%, 66 2/3%, 75% or 100% survivor annuity, straight life annuity with 10 years certain, and joint and survivor with 10 years certain;  or

(b)

Lump Sum Short-Term Installments  The Participant may elect to receive payment of his or her Accrued Benefit in a three-year certain annuity (that is, in equal annual payments over a period of three calendar years, with the first payment to be made as of commencement date elected by the Participant and the second and third installments payable on the first and second anniversaries of such commencement date).

6.4

Accrued Benefit Distribution Provisions Notwithstanding any provision in this Supplemental Plan B to the contrary, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Participant’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) the first day of the month following the Participant’s death, and the amount payable to the Participant under the form of payment determined in accordance with this Article VI shall be determined as of such postponed commencement date.

6.5

Change in Form of Life Annuity  If a Participant’s Accrued Benefit is payable in the form of a life annuity described in Section 6.3(a), whether pursuant to Section 6.2 or 6.3, at any time prior to the date the Participant’s Accrued Benefits would commence to be paid hereunder, the Participant may elect on a form approved by the Benefit Plans Committee and received by the Benefit Plans Committee prior to the commencement date or the date of the

 

6


 

Participant’s death, to change the form of life annuity under which such Accrued Benefit is payable.

6.6

Mandatory Distributions of Small Accrued Benefits   If the Actuarial
Equivalent value of the Participant’s Accrued Benefit under this Supplemental Plan B is equal
to $25,000 or less on his or her Separation from Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant will
receive a lump sum payment of his or her Accrued Benefit within 90 days after his or her Separation from Service.

6.7

Suspension of Benefits   If a Participant who has incurred a Separation of
Service is re-employed or re-hired, any benefits which have commenced payment prior to such re-employment or re-hire shall continue to be paid, and any benefits that have not commenced to be paid shall still be paid at the time that they would have been paid, without regard to the change in the Participant’s employment status.


ARTICLE VII. CLAIMS FOR BENEFITS

7.1

Claims Procedure   Claims for benefits under the Supplemental Plan B may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty (180) days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial ninety (90)-day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Supplemental Plan B on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Supplemental Plan B's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  A claimant must exhaust the claims procedure under this Supplemental Plan B and request a review of a denied claim in accordance with the procedures described in the following paragraph before the claimant is permitted to bring a civil action for benefits.

Any Employee, former Employee, or authorized representative or Beneficiary of either, who has been denied a benefit, in whole or in part, by a decision of the Plan Administrator shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than sixty (60) days after receipt of the notification provided for above.  If such request is so filed, the claimant or his representative may submit written comments, documents, records and

 

7


 

other information relating to the claim to the Plan Administrator within sixty (60) days after receipt of the notification provided for above.  The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant or his representative with written or electronic notice of the final decision as to the allowance of the claim within sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days if special circumstances requires an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or his representative within the initial sixty (60)-day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Supplemental Plan B provisions on which the decision is based, a statement of the claimant or his representative’s right to bring a civil action under ERISA section 502(a) and a statement that the claimant or his Beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Supplemental Plan B and that Supplemental Plan B provisions have been applied consistently with respect to similarly situated claimants.

7.2

Full Satisfaction, Release, Special Payment Rules   Any payment to any Participant, or to such Participant’s legal representative or Beneficiary, in accordance with the provisions of this Supplemental Plan B, shall be in full satisfaction of all claims hereunder against the Employer.  The Plan Administrator may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine.  If the Plan Administrator shall receive evidence satisfactory to the Plan Administrator that any payee under this Supplemental Plan B is a minor, or is legally, physically, or mentally incompetent to receive and to give valid release for any payment due him or her under this Supplemental Plan B, any such payment, or any part thereof, may, unless claim therefor shall have been made to the Plan Administrator by a duly appointed executor, administrator, guardian, committee, or other legal representative of such payee, be paid by the Plan Administrator to such payee’s spouse, child, parent or other blood relative, or to any person, persons or institutions deemed by the Plan Administrator to have incurred expense for or on behalf of such payee, and any payment so made shall, to the extent thereof, be in full settlement of all liability in respect of such payee.  If a dispute arises as to the proper recipient of any payments, the Plan Administrator in its sole discretion may withhold or cause to be withheld such payments until the dispute shall have been determined by a court of competent jurisdiction or shall have been settled by the parties concerned.  Subject to the immediately preceding sentence, if the responsible party/payee does not execute the receipt and release within 60 days of the distribution trigger date, the Accrued Benefit shall be forfeited at the end of the sixtieth day and shall not be eligible for reinstatement.

7.3

If any benefits payable under this Supplemental Plan B to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15th day of the third calendar month following the date specified under the Plan

 

8


 

after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Employer.


ARTICLE VIII. AMENDMENT AND TERMINATION

8.1

Amendment   The Benefit Plans Committee shall have the right to amend this Supplemental Plan B at any time and from time to time, including a retroactive amendment,
by resolution adopted by it at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Any
such amendment shall become effective upon the date stated therein, and shall be binding on
all Participants and Beneficiaries, except as otherwise provided in such amendment; provided, however that, except with respect to an amendment described in Section 10.1, no amendment
(i) shall result in or cause an acceleration of payments or benefits under the Plan or (ii) shall, without the express written consent of such Participant, reduce or otherwise adversely affect
the Participant Accrued Benefit as of the date of such amendment.

8.2

Termination   The Employer has established this Supplemental Plan B with the bona fide intention and expectation that from year to year it will deem it advisable to continue
it in effect.  However, the Employer, in its sole discretion, reserves the right to terminate the Supplemental Plan B in its entirety at any time without the consent of any Participant;
provided, however, that no such termination shall (i) result in or cause an acceleration of payments or benefits under this Supplemental Plan B, unless the termination satisfies the
Code section 409A safe harbor summarized in the last sentence of this Section 8.2, or (ii)
without the express written consent of such Participant, reduce or otherwise adversely affect
the Participant’s Accrued Benefit as of the date of such termination.  Any such termination shall be accomplished by resolution of the Benefit Plans Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws and applicable law.  Payments under this Supplemental Plan B may be accelerated upon plan termination only if:

(i)

the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);

(ii)      all payments to the Directors as a result of the plan termination are not made until at least twelve (12) months after action taken to terminate the plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and


 

 

 

(iii)     no similar successor plan can be established within three (3) years following the date the action to terminate the plan was taken.



 

 

9



ARTICLE IX. SOURCE OF BENEFIT PAYMENTS

9.1

Unfunded Plan  No special or separate fund shall be established by the
Employer and no segregation of assets shall be made to assure the payment of benefits under the Supplemental Plan B. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Employer.  Nothing contained in this Supplemental Plan B and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Employer and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Supplemental Plan B,
such right shall be no greater than the right of an unsecured general creditor of the Employer.

ARTICLE X. CODE SECTION 409A MISCELLANEOUS PROVISIONS

10.1

Interpretation Consistent with Code Section 409A The intent is that payments and benefits under this Supplemental Plan B comply with Code section 409A and, accordingly, to the maximum extent permitted, this Supplemental Plan B shall be interpreted to be in compliance therewith.  If any provision of this Supplemental Plan B would cause the Participant to incur any additional tax or interest under Code section 409A, the Benefit Plans Committee, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent of the applicable provision of this Supplemental Plan B without violating the provisions of Code section 409A.  

ARTICLE XI. GENERAL

11.1

Benefits Non-Alienable   To the extent permitted by law, the right of any Participant or Beneficiary to any benefit or payment hereunder shall not be subject in any manner to attachment or other legal process, and no such benefit or payment shall be subject to anticipation, alienation, sale, transfer, assignment, or encumbrance.

11.2

Plan Administration   The Supplemental Plan B shall be operated and administered by the Plan Administrator or its duly authorized representative.  The Plan Administrator shall have sole discretionary authority to determine all questions arising in connection with the Supplemental Plan B, to interpret the provisions of the Supplemental Plan
B and to construe all of its terms, to adopt, amend and rescind rules and regulations for the administration of the Supplemental Plan B and to make all determination in connection with the Supplemental Plan B as may be necessary or advisable. All such actions of the Plan Administrator shall be conclusive and binding on all persons.

11.3

Governing Law   This Supplemental Plan B shall be governed by and construed in accordance with the laws of the State of Connecticut other than and without reference to any provisions of such laws regarding choice of laws or conflict of laws, to the extent such laws are not pre-empted by the Employee Retirement Income Security Act of 1974, as amended.

11.4

No Right to Continued Employment   The establishment of this Supplemental Plan B shall not be construed as giving to any Participant, Employee or any person

 

10


 

whomsoever, any legal, equitable or other rights against the Employer, or its officers, directors, agents or shareholders, or as giving to any Participant or Beneficiary any interest in the assets or business of the Employer or giving any Employee the right to be retained in the employment of the Employer.  All Employees and Participants shall be subject to discharge to the same extent they would have been if this Supplemental Plan B had never been adopted.

11.5

Tax Withholding   The Employer may withhold from a payment any federal,
state or local taxes required by law to be withheld with respect to such payments and such sums as the Employer may reasonably estimate are necessary to cover taxes for which the Employer may be liable and which may be assessed with regard to such payment.

11.6

Severability   The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

ARTICLE XII. PARTICIPATING EMPLOYERS

12.1

Adoption of Supplemental Plan B by Other Employers  With the consent of the Benefit Plans Committee, any other corporation may adopt the Supplemental Plan B and all of the provisions hereof and participate herein as a Participating Employer by a properly executed document evidencing said intent and will of such Participating Employer.

12.2

Requirements of Participating Employers

(a)

Benefits payable under the Supplemental Plan B to employees of the Participating Employer are funded through the Participating Employer’s general assets.  The Participating Employer agrees to pay and assumes all liability with respect to all benefits payable under the Supplemental Plan B to past, present and future employees of the Participating Employer, their spouses and other dependents and beneficiaries in accordance with the terms of the Supplemental Plan B.  Notwithstanding the foregoing, Phoenix Life Insurance Company and not Phoenix Equity Planning Corporation nor Phoenix Investment Counsel, Inc. shall pay and assume liability for benefits payable under the Supplemental Plan B to Employees of Phoenix Equity Planning Corporation and Phoenix Investment Counsel, Inc. with respect to service completed before January 1, 1996.

(b)

The Plan Administrator shall keep separate books and records concerning the contributions and benefits payable under the Supplemental Plan B with respect to the Participating Employer and the employees of the Participating Employer.

(c)

The Participating Employer shall pay to Phoenix Life Insurance Company its proportionate share of any administrative expenses of the Supplemental Plan B which are to be paid by the Employer.



11


12.3

Designation of Agent   Each Participating Employer shall be deemed to have designated irrevocably the Benefit Plans Committee and the Plan Administrator as its agents.

12.4

Delegation of Power to Amend   Each Participating Employer hereby delegates to the Employer the right at any time to amend the Supplemental Plan B in accordance with the terms of the Supplemental Plan B, provided that any such amendment could not affect the Participating Employer’s share of the cost of the Supplemental Plan B.  If an amendment could significantly affect the Participating Employer’s share of the cost of the Supplemental Plan B, then such amendment shall not be effective with respect to the Participating Employer until approved by the Participating Employer.

12.5

Withdrawal of a Participating Employer  Subject to Section 8.2, a Participating Employer may terminate its participation in the Supplemental Plan B by giving the Benefit
Plans Committee prior written notice specifying a termination date which shall be the last day
of a month at least 30 days subsequent to the date such notice is delivered to the Benefit Plans Committee, unless such withdrawal is not permitted under the law wherein such notice of withdrawal will not be honored or the Benefit Plans Committee shall have waived its right to such notice.  The Benefit Plans Committee may terminate a Participating Employer’s participation in this Supplemental Plan B as of any termination date by giving the Participating Employer prior written notice specifying a termination date which shall be the last day of a month at least 30 days subsequent to the date such notice is delivered to the Participating Employer, unless the Participating Employer shall have waived its right to such notice.  Notwithstanding the foregoing provisions of this Section 12.5, in no event shall the withdrawal by, or the termination of the participation of, any such Participating Employer result in an acceleration of the timing of distributions under this Plan, unless (and solely to the extent) permitted under Code section 409A or the regulations and interpretations thereunder.

12.6

Plan Administrator’s Authority   The Plan Administrator shall have all of the duties and responsibilities authorized by this Supplemental Plan B and shall have the authority to make any and all rules, regulations and decisions necessary or appropriate to effectuate the
terms of this Supplemental Plan B, which shall be binding upon each Participating Employer
and all Participants.



12


EX-10.22 9 ex1022.htm 2003 RESTRICTED STOCK, RESTRICTED STOCK UNIT AND LONG-TERM INCENTIVE PLAN THE PHOENIX COMPANIES, INC

EXHIBIT 10.22























THE PHOENIX COMPANIES, INC.

2003 RESTRICTED STOCK, RESTRICTED STOCK UNIT

AND

LONG-TERM INCENTIVE PLAN




As amended and restated effective as of January 1, 2009














 


THE PHOENIX COMPANIES, INC.

2003 RESTRICTED STOCK, RESTRICTED STOCK UNIT

AND

LONG-TERM INCENTIVE PLAN


ARTICLE I.  PURPOSES


Section 1.1 General Purpose.  The purpose of THE PHOENIX COMPANIES, INC. 2003 RESTRICTED STOCK, RESTRICTED STOCK UNIT AND LONG-TERM INCENTIVE PLAN is to foster and promote the long-term financial success of the Company by: (a) motivating superior performance by means of performance-related incentives; (b) enabling the Company to attract and retain the services of an outstanding management team upon whose judgment, interest, and special effort the successful conduct of its operations is largely dependent; and (c) encouraging and providing for the acquisition of a long-term ownership interest in the Company by the Company's and its Subsidiaries' Employees and non-employee directors.


ARTICLE II.  DEFINITIONS


Section 2.1 Definitions.  Whenever used herein, the following terms shall have the respective meanings set forth below:


(a)

"Adjustment Event" means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Stock or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below Fair Market Value, or other similar event affecting the Common Stock of the Company.


(b)

"Agent" means an "insurance agent" as defined in Section 2101 of the New York Insurance Law and who also is treated by the Company as a "statutory employee" as defined under applicable provisions of the Code.


(c)

"Approved Retirement" means termination of a Participant's employment (i) on or after normal retirement age (age 65 or age 62 with 10 years of service) or (ii) with the Committee's approval, on or after any early retirement date established under any retirement plan or other special retirement programs or arrangements maintained by the Company or a Subsidiary and in which the Participant participates; provided that in each case, the Committee may require, as a condition to a Participant's retirement being an "Approved Retirement" for purpose of the Plan, that the Participant enter into a general release of claims, non-solicitation and/or non-competition agreement in form and substance satisfactory to the Company.


(d)

"Award" means the award of a Restricted Unit, Restricted Stock, or Long-Term Performance Unit under the Plan.


(e)

"Board" means the Board of Directors of the Company.


(f)

"Change of Control" means the first occurrence of any of the following events:


 

1



 (i) any person acquires "beneficial ownership" (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined Voting Power of the Company's securities;


(ii) within any 24-month period, the persons who were directors of the Company at the beginning of such period (the "Incumbent Directors") shall cease to constitute at least a majority of the Board or the board of directors of any successor to the Company; provided that any director elected or nominated for election to the Board by a majority of the Incumbent Directors then still in office shall be deemed to be an Incumbent Director for purposes of this subclause 2(f)(ii);


(iii) the effective date of any merger, consolidation, share exchange, division, sale or other disposition of all or substantially all of the assets of the Company which is consummated (a "Corporate Event"), if immediately following the consummation of such Corporate Event the stockholders of the Company immediately prior to such Corporate Event do not hold, directly or indirectly, a majority of the Voting Power, in substantially the same proportion as prior to such Corporate Event, of (x) in the case of a merger or consolidation, the surviving or resulting corporation or (y) in the case of a division or a sale or other disposition of assets, each surviving, resulting or acquiring corporation which, immediately following the relevant Corporate Event, holds more than 25% of the consolidated assets of the Company immediately prior to such Corporate Event;


(iv) the approval by stockholders of the Company of a plan of liquidation with respect to the Company; or


(v) any other event occurs which the Board declares to be a Change of Control.


(g)

"Code" means the Internal Revenue Code of 1986, as amended.


(h)

"Committee" means the Compensation Committee of the Board or such other Committee of the Board as the Board shall designate from time to time.


(i)

"Common Stock" means the common stock of the Company, par value $0.01 per share.


(j)

"Company" means The Phoenix Companies, Inc., a Delaware corporation, and any successor thereto.


(k)

"Disability" has the meaning given in the Company's long-term disability insurance policy or program as in effect from time to time; provided that a Participant shall not be treated as having incurred a Disability unless he qualifies for disability benefits under such policy or program.



2


(l)

"Dividend Equivalents" means an amount equal to the cash dividends paid by the Company on one share of Common Stock for each Restricted Unit awarded to a Participant in accordance with the Plan.


(m)

"Effective Date" means the date this Plan is approved by the stockholders of
the Company in accordance with the requirements, if any, of applicable law.


(n)

"Employee" means any officer or other employee of the Company or any Subsidiary (as determined by the Committee in its sole discretion).


(o)

"Exchange Act" means the Securities Exchange Act of 1934, as amended.


(p)

"Fair Market Value" means, on any date, the closing price of the Common Stock as reported in the principal consolidated transaction reporting system for the New York Stock Exchange (or on such other recognized quotation system on which the trading prices of the Common Stock are quoted at the relevant time) on such date. In the event that there are no Common Stock transactions reported on such tape (or such other system) on such date, Fair Market Value shall mean the closing price on the immediately preceding date on which Common Stock transactions were so reported.


(q)

"Long-Term Performance Unit" means the unit of measurement for an Award under the Plan subject to achievement of Performance Goals during a Performance Cycle, which, at any given time, shall be equal in value to the current Fair Market Value of one share of Common Stock.


(r)

"Participant" means any Employee, Agent or non-employee director designated by the Committee to participate in the Plan.


(s)

"Performance Cycle" means the period(s) selected by the Committee during which the performance of the Company or any Subsidiary or unit thereof or any individual is measured for the purpose of determining the extent to which an Award of Long-Term Performance Units subject to achievement of Performance Goals has been earned.  Unless otherwise determined by the Committee, a Performance Cycle shall be three years and may consist of one or more calendar year segments.


(t)

"Performance Goals" means the objectives for the Company, any Subsidiary or unit or business segment thereof or individual established by the Committee for a Performance Cycle with respect to any performance-based Awards contingently awarded under the Plan. The Performance Goals for Awards that are intended to constitute "performance-based" compensation within the meaning of Section 162(m) of the Code shall be based on one or more of the following measures: sales, revenues, earnings per share, net income, operating income, cash flow, stock price, return on equity, cash operating income, risk-based capital ratio, debt to capital ratio, operating margin, assets under management, claims paying ability or debt rating. Performance Goals may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group or other external measure.




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(u)

"Plan" means The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan, as set forth herein and as the same may be amended from time to time.


(v)

"Restricted Period" means the period during which Awards are subject to forfeiture or restrictions on transfer (if applicable) pursuant to the Plan.


(w)

"Restricted Stock" means Common Stock awarded to a Participant which is subject to forfeiture and restrictions on transferability in accordance with Article VI of the Plan.


(x)

"Restricted Unit" means a Participant's right to receive one share of Common Stock at the end of a specified period of time, which right is subject to forfeiture and restrictions on transferability in accordance with the Plan.


(y)

"Subsidiary" means any corporation or partnership in which the Company
owns, directly or indirectly, equity interests entitling the Company to exercise 50% or more of the total combined Voting Power of all classes of stock of such corporation or to receive 50% or more of the capital interest or profits interest of such partnership.


(z)

"Voting Power" means such number of Voting Securities as shall enable the holders thereof to cast all the votes which could be cast in an annual election of directors of a company.


(aa)

"Voting Securities" means all securities entitling the holders thereof to vote in an annual election of directors of a company.


Section 2.2 Gender and Number.  Except when otherwise indicated by the context, words in the masculine gender used in the Plan shall include the feminine gender, the singular shall include the plural, and the plural shall include the singular.


ARTICLE III.  ELIGIBILITY AND PARTICIPATION


Participants in the Plan shall be those Employees and non-employee directors selected by the Committee to participate in the Plan.  


ARTICLE IV.  ADMINISTRATION


Section 4.1 Power to Grant and Establish Terms of Awards.  The Committee shall have the authority, subject to the terms of the Plan, to determine the Participants to whom Awards shall be granted and the terms and conditions of any and all Awards, including, but not limited to, the number of shares of Common Stock to be covered by such Awards, the time or times at which Awards shall be granted, the terms and provisions of the instruments by which Awards shall be evidenced, the period of time during which restrictions on Awards shall remain in effect, and the Performance Goals applicable to such Awards. The terms and conditions of each Award shall be determined by the Committee at the time of grant, and such terms and conditions shall not be subsequently changed in a manner which would be adverse to the

 

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Participant without the consent of the Participant to whom such Award has been granted.  The Committee may establish different terms and conditions for different Participants and for the same Participant for each Award such Participant may receive, whether or not granted at different times. The grant of any Award to any Participant shall neither entitle such Participant to, nor disqualify him from, the grant of any other Award.


Section 4.2 Administration.  The Committee shall be responsible for the administration of the Plan.  Any Award granted by the Committee may be subject to such conditions, not inconsistent with the terms of the Plan, as the Committee shall determine.  The Committee, by majority action thereof, is authorized to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to interpret the Plan and to make all other determinations necessary or advisable for the administration and interpretation of the Plan to carry out its provisions and purposes.  Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all persons.  The Committee may consult with legal counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.


Section 4.3 Delegation by the Committee.  Notwithstanding anything else contained in the Plan to the contrary, the Committee may delegate, subject to such terms and conditions or guidelines as it shall determine, to any officer of the Company or to a committee of officers of the Company any portion of its authority and powers under the Plan in respect of Participants who are not subject to the reporting requirements of Section 16(a) of the Exchange Act.


ARTICLE V.  STOCK SUBJECT TO PLAN


Section 5.1 Number.  Subject to the provisions of Section 5.3, the number of shares of Common Stock available for issuance pursuant to Awards under the Plan shall be 6,000,000. The shares to be delivered under the Plan may consist, in whole or in part, of Common Stock held in treasury or authorized but unissued Common Stock, not reserved for any other purpose.


Section 5.2 Canceled, Terminated, or Forfeited Awards.  Any shares of Common Stock subject to an Award which for any reason expires, or is canceled, terminated or otherwise settled without the issuance of any Common Stock shall again be available under the Plan.


Section 5.3 Adjustment Due to Change in Capitalization.  In the event of any Adjustment Event, the aggregate number of shares of Common Stock available for Awards to be granted under this Plan or subject to outstanding Restricted Units or Long-Term Performance Units and any performance vesting criteria applicable to outstanding Restricted Stock, Restricted Units or Long-Term Performance Units shall be proportionately adjusted to reflect, as deemed equitable and appropriate by the Committee, such Adjustment Event.  To the extent deemed equitable and appropriate by the Committee, subject to any required action by stockholders, in any merger, consolidation, reorganization, liquidation, dissolution, or other similar transaction, any Restricted Unit granted under the Plan shall pertain to the securities and other property to which a holder of the number of shares of Common Stock covered by the Restricted Unit would



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have been entitled to receive in connection with such event.  Any shares of stock (whether Common Stock, shares of stock into which shares of Common Stock are converted or for which shares of Common Stock are exchanged or shares of stock distributed with respect to Common Stock) or cash or other property received with respect to any Award granted under the Plan as a result of any Adjustment Event or any distribution of property or other similar transaction shall, except as otherwise provided by the Committee at or after the date an Award is made by the Committee, be subject to the same terms and conditions, including restrictions on transfer, as are applicable to such Award.


ARTICLE VI.  RESTRICTED STOCK AND RESTRICTED UNITS


Section 6.1 Grant of Awards.  Except as otherwise delegated as provided in Section 4.3, the Committee may make awards in the form of Restricted Stock or Restricted Units.  Any Award made hereunder shall be subject to the terms and conditions of the Plan and to any other terms and conditions not inconsistent with the Plan as shall be prescribed by the Committee in its sole discretion (including in the case of an Award of Restricted Stock, requiring the Participant to pay the Company an amount equal to the par value per share for each share of Restricted Stock awarded).  As determined by the Committee, with respect to an award of Restricted Stock, the Company shall either (a) transfer or issue to each Participant to whom an award of Restricted Stock has been made the number of shares of Restricted Stock specified by the Committee or (b) hold such shares of Restricted Stock for the benefit of the Participant for the Restricted Period. In the case of Restricted Units, no shares of Common Stock shall be issued to Participants at the time an Award of Restricted Units is made, and the Company shall not be required to set aside a fund for the payment of such Award.


Section 6.2 Restrictions on Transferability.  Restricted Units and shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by the Participant during the Restricted Period, except as hereinafter provided.  Notwithstanding the foregoing, the Committee may permit (on such terms and conditions as it shall establish) Restricted Units and shares of Restricted Stock to be transferred during the Restricted Period by the Participant to a member of the Participant's immediate family or to a trust or similar vehicle for the benefit of such immediate family members, provided that any Restricted Units or shares of Restricted Stock so transferred shall remain subject to the provisions of this Article VI.


Section 6.3 Rights as a Shareholder.  Except for the restrictions set forth herein and unless otherwise determined by the Committee, the Participant shall have all the rights of a shareholder with respect to such shares of Restricted Stock, including but not limited to, the right to vote and the right to receive dividends.  In respect of Restricted Units, a Participant shall not have any right to vote on any matter submitted to the Company's stockholders or to dispose of the shares of Common Stock underlying such Restricted Units, nor shall a Participant have any beneficial ownership in respect of any shares of Common Stock underlying Restricted Units, until such time as the shares of Common Stock underlying such Restricted Units have been issued (including, at the discretion of the Committee, issuance to a trust for purposes of hedging or funding Restricted Unit obligations).  At the discretion of the Committee, a Participant's Restricted Unit account may be credited with Dividend Equivalents during the Restricted Period.




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Section 6.4 Restricted Period.  Unless the Committee shall otherwise determine at or after the date an Award is made to the Participant by the Committee, the Restricted Period shall commence upon the date of grant and shall lapse with respect to the Award in three approximately equal installments on each of the first three anniversaries of the date of grant, unless sooner terminated as otherwise provided herein.


Section 6.5 Legend.  Each certificate issued to a Participant in respect of shares of Restricted Stock shall be registered in the name of the Participant and shall bear the following (or similar) legend: "The shares of stock represented by this certificate are subject to the terms and conditions contained in The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan and may not be sold, pledged, transferred, assigned, hypothecated or otherwise encumbered in any manner (except as provided in Section 6.2 of the Plan) until _________."


Section 6.6 Death, Disability or Approved Retirement.  Unless the Committee shall otherwise determine at the date of grant, if a Participant ceases to be employed by the Company or any Subsidiary by reason of death, Disability or Approved Retirement, the Restricted Period will lapse as to a pro rated portion of the shares of Restricted Stock and Restricted Units transferred or issued to such Participant under the Plan based on the number of days the Participant actually worked since the date the Awards were granted (or in the case of Awards which becomes vested in installments, since the date, if any, on which the last installment of such Awards became vested). Any Awards as to which the Restricted Period has not lapsed at the date of a Participant's termination of employment by reason of death, Disability or Approved Retirement shall automatically be cancelled upon such Participant's termination of employment.


Section 6.7 Termination of Employment.  Unless the Committee shall otherwise determine at or after the date of grant, if a Participant ceases to be employed by the Company or any Subsidiary for any reason other than those specified in Section 6.6 at any time prior to the date when the Restricted Period lapses, all Restricted Stock held by the Participant shall revert back to the Company and all Restricted Units and any Dividend Equivalents credited to such Participant shall be forfeited upon the Participant's termination of employment.


Section 6.8 Issuance of New Certificates; Settlement of Restricted Units.  Upon the lapse of the Restricted Period with respect to any shares of Restricted Stock, such shares shall no longer be subject to the restrictions imposed under Section 6.2 and the Company shall issue or have issued new share certificates without the legend described in Section 6.5 in exchange for those previously issued.  Upon the lapse of the Restricted Period with respect to any Restricted Units, the Company shall deliver, not later than 60 days after the lapse, to the Participant, or the Participant's beneficiary, as provided in Section 9.1, one share of Common Stock for each Restricted Unit as to which restrictions have lapsed and any Dividend Equivalents credited with respect to such Restricted Units and any interest thereon.  The Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu of delivering only Common Stock for Restricted Units.  If a cash payment is made in lieu of delivering Common Stock, the amount of such cash payment for each share of Common Stock to which a Participant is entitled shall be equal to the Fair Market Value of the Common Stock on the date on which the Restricted Period lapsed with respect to the related Restricted Unit.

 


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Section 6.9 Accelerated Vesting and Payment.  In the event of a Change of Control, the Restricted Period with respect to each Award shall lapse on the date of such Change of Control.


ARTICLE VII.  LONG-TERM PERFORMANCE UNITS


Section 7.1 Eligibility.  Except as otherwise delegated as provided in Section 4.3, the Committee in its sole discretion shall select those Participants to receive Long-Term Performance Units under the Plan.  Long-Term Performance Units shall relate to pre-established Performance Goals over a Performance Cycle, as determined by the Committee.  A Participant may be selected to receive Long-Term Performance Units in respect of more than one Performance Cycle.


Section 7.2 Grant of Long-Term Performance Units.  Prior to the beginning of the first year of a Performance Cycle (or such later date selected by the Committee consistent with the requirements of Section 162(m) of the Code), the Committee shall allocate a target number of Long-Term Performance Units ("Target Units") to any Participant designated by the Committee to be eligible to earn such Award in respect of such Performance Cycle.  An allocation of Target Units shall be evidenced by such documentation deemed appropriate by the Committee.  Such documentation may contain terms and conditions relating to the Award, including, without limitation, the number of Target Units and the threshold and maximum number of Long-Term Performance Units that may be earned pursuant to the Award or any portion thereof, the Performance Goals applicable in respect of such Award, and such other terms and conditions, not inconsistent with this Plan, as the Committee may in its sole discretion determine.  Long-Term Performance Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by the Participant during the Performance Cycle.


Section 7.3 Performance Goals.  Prior to the beginning of the Performance Cycle or the beginning of each segment in such Performance Cycle (or such later date selected by the Committee consistent with the requirements of Section 162(m) of the Code), the Committee shall determine the Performance Goals applicable to the Long-Term Performance Units that may be earned by the Participant for such Performance Cycle or segment thereof.  The Committee shall specify the formula for determining the percentages of the Performance Goals that must be achieved for the Participant to earn the Target Units or less than or more than the target number of Long-Term Performance Units allocated to the Participant if actual performance is equal to, less than or greater than the target Performance Goals.  The Committee may, in its sole discretion, provide that Long-Term Performance Units shall be earned by a Participant in respect of achievement of Performance Goals in each segment of the Performance Cycle and/or on a cumulative basis for the Performance Cycle.  The Committee may, in its sole discretion, provide that no Long-Term Performance Units shall be earned by a Participant in respect of a Performance Cycle unless a threshold level of the Performance Goals is satisfied.  The Committee may, at any time and from time to time, adjust the Performance Goals applicable to Long-Term Performance Units; provided that no such adjustment shall be made in the case of Long-Term Performance Units that may be earned by a Participant who is a Covered Employee (within the meaning of Section 162(m) of Code) at any time during the Performance Cycle,



8


unless such adjustment can be made without causing the Award to cease to qualify as other performance-based compensation under Section 162(m) of the Code. Following the end of each Performance Cycle, the Committee shall determine the number of Long-Term Performance Units actually earned by a Participant for such Performance Cycle calculated in accordance with the Performance Goals applicable to such Performance Cycle.  Participants shall not receive any payment with respect to Long-Term Performance Units until the Committee certifies the results of the Performance Goals.  Notwithstanding anything else in this Plan to the contrary, subject to Section 5.3, the maximum number of Long-Term Performance Units that may be earned by a Participant (and the maximum number of shares that may be issued pursuant to such earned Long-Term Performance Units) in a Performance Cycle shall not exceed 600,000.


Section 7.4 Distribution of Awards.  In the Committee's sole discretion, the Participant shall be entitled to receive one share of Common Stock or Restricted Unit in exchange for each earned Long-Term Performance Unit.  Any shares of Common Stock or Restricted Units granted in exchange for earned Long-Term Performance Units shall be granted as soon as reasonably practicable after the end of the Performance Cycle for which the Long-Term Performance Units were earned, but no later than the March 15 of the calendar year following the end of the Performance Cycle.  Restricted Units shall be subject to the terms and conditions applicable to Restricted Units granted under Article VI; provided that the Committee may not elect to pay cash or part cash and part Common Stock in lieu of delivering only Common Stock for Restricted Units.  If the Participant is offered the opportunity to defer receipt/conversion of his or her Restricted Units, such deferral shall be governed  and covered by either The Phoenix Companies, Inc. Equity Deferral Plan or The Phoenix Companies, Inc. Directors Equity Deferral Plan.   


(a) Death, Disability or Approved Retirement.  Unless the Committee shall otherwise determine at the date of grant, if a Participant ceases to be employed by the Company or any Subsidiary by reason of death, Disability or Approved Retirement during a Performance Cycle, the Participant shall be entitled to a pro-rated number of Long-Term Performance Units determined by prorating the percentage of the award actually earned based on the applicable Performance Goals according to the number of months the Participant was actively at work during the Performance Cycle.  Any Long-Term Performance Units earned by such Participant shall be paid at the same time as those for active Participants of the Plan, but no later than the March 15 of the calendar year following the end of the Performance Cycle.  Unless otherwise determined by the Committee, any Long-Term Performance Units that are not earned in accordance with this Section 7.4(a) at the date of a Participant's termination of employment by reason of death, Disability or Approved Retirement shall automatically be cancelled upon such Participant's termination of employment.


(b) Termination of Employment.  Unless the Committee shall otherwise determine at or after the date of grant, if a Participant ceases to be employed by the Company or any Subsidiary for any reason other than those specified in Section 7.4(a) at any time during a Performance Cycle, such Participant shall not receive any payment in respect of any Long-Term Performance Units outstanding as of the Participant's termination of employment.



9


(c) Accelerated Vesting and Payment.  In the event of a Change of Control, the Participant shall earn a prorated number of Long-Term Performance Units in respect of each outstanding Performance Cycle determined by prorating the percentage of the award earned according to the number of completed months prior to the Change of Control.  Any Long-Term Performance Units that are not earned in accordance with this Section 7.4(c) at the date of the Change of Control shall automatically be cancelled upon such Change of Control.  


ARTICLE VIII.  AMENDMENT, MODIFICATION,

AND TERMINATION OF PLAN


The Board at any time may terminate the Plan, and from time to time may amend or modify the Plan.  No amendment, modification, or termination of the Plan shall in any manner adversely affect any Award theretofore granted under the Plan, without the consent of the Participant.


ARTICLE IX.  MISCELLANEOUS PROVISIONS


Section 9.1 Beneficiary Designation.  Each Participant under the Plan may from time to time name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid or by whom any right under the Plan is to be exercised in case of his death.  Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during his lifetime.  In the absence of any such designation, Restricted Units outstanding at the Participant's death shall be paid to  (i) the Participant’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.


Section 9.2 No Guarantee of Employment or Participation.  Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate any Participant's employment or services at any time, nor confer upon any Participant any right to continue in the employ or services of the Company or any Subsidiary or affiliate. No Employee, Agent, or non-employee director shall have a right to be selected as a Participant, or, having been so selected, to receive any future Awards.


Section 9.3 Tax Withholding.  The Company shall have the power to withhold, or require a Participant to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy federal, state and local withholding tax requirements with respect to any Award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Stock until such requirements are satisfied. The Committee may, in its discretion, permit a Participant to elect, subject to such conditions as the Committee shall impose (a) to have Common Stock otherwise issuable or deliverable under the Plan withheld by the Company or (b) to deliver to the Company previously acquired shares of Common Stock, in each case, having a Fair Market Value sufficient (either alone or with the application of any cash



10


withheld) to satisfy not more than the Participant's statutory minimum federal, state and local tax obligation associated with the transaction.


Section 9.4 Indemnification.  Each person who is or shall have been a member of the Committee or of the Board shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him in connection with or resulting from any claim, action, suit, or proceeding to which he may be made a party or in which he may be involved by reason of any action taken or failure to act under the Plan (in the absence of bad faith) and against and from any and all amounts paid by him in settlement thereof, with the Company's approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding against him; provided that he shall give the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such person may be entitled under the Company's Certificate of Incorporation or By-Laws, by contract, as a matter of law, or otherwise.


Section 9.5 No Limitation on Compensation.  Nothing in the Plan shall be construed to limit the right of the Company to establish other plans or to pay compensation to its employees in cash or property, in a manner which is not expressly authorized under the Plan.


Section 9.6 Requirements of Law.  The granting of Awards and the issuance of shares of Common Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.


Section 9.7 Governing Law.  The Plan, and all Awards made and actions taken thereunder, shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to the conflicts of law provisions thereof.


Section 9.8 Impact On Benefits.  Unless otherwise determined by the Committee, awards granted under the Plan are not compensation for purposes of calculating an Employee's rights under any employee benefit plan.


Section 9.9 Securities Law Compliance  Instruments evidencing Awards may contain such other provisions, not inconsistent with the Plan, as the Committee deems advisable, including a requirement that the Participant represent to the Company in writing, when an Award is granted or when he receives shares with respect to such Award (or at such other time as the Committee deems appropriate) that he is accepting such Award, or receiving or acquiring such shares (unless they are then covered by a Securities Act of 1933 registration statement), for his own account for investment only and with no present intention to transfer, sell or otherwise dispose of such shares except such disposition by a legal representative as shall be required by will or the laws of any jurisdiction in winding up the estate of the Participant. Such shares shall be transferable only if the proposed transfer shall be permissible pursuant to the Plan and if, in the opinion of counsel satisfactory to the Company, such transfer at such time will be in compliance with applicable securities laws.




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Section 9.10 Term of Plan.  The Plan shall be effective upon approval by the Board and by the stockholders of the Company.  The Plan shall continue in effect, unless sooner terminated pursuant to Article VIII, until no more shares of Common Stock are available for issuance under the Plan.


Section 9.11 No Constraint on Corporate Action.  Nothing in this Plan shall be construed (a) to limit, impair or otherwise affect the Company's right or power to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets, or (b) except as provided in Section 4.1 or Article VIII, to limit the right or power of the Company or any of its Subsidiaries to take any action which such entity deems to be necessary or appropriate.



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EX-10.33 10 ex1033.htm EXECUTIVE SEVERANCE ALLOWANCE PLAN THE PHOENIX COMPANIES, INC

EXHIBIT 10.33










THE PHOENIX COMPANIES, INC.


EXECUTIVE SEVERANCE ALLOWANCE PLAN



As amended and restated effective as of January 1, 2009







 















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ARTICLE 1 - PURPOSE; AMENDMENT AND RESTATEMENT


The Phoenix Companies, Inc. adopted, effective as of January 1, 2005, this Executive Severance Allowance Plan to provide for benefits to certain executives of Phoenix Life Insurance Company and other affiliates of the Sponsor, who meet the eligibility requirements set forth in the Plan when their employment is involuntarily terminated by the Employer.  


As of January 1, 2005 and thereafter, this Plan supersedes and replaces all prior severance policies, plans, or practices maintained by the Employer with respect to the “Executives” of Employer, as defined in Article 2, except any individual agreements that may exist between the Employer, Sponsor or Affiliated Employer and the Executive.


The Plan was amended effective January 1, 2005 and was further amended effective January 1, 2008.  This amendment and restatement is effective as of January 1, 2009.  


ARTICLE 2 - DEFINITIONS


For purposes of this Plan, the following terms shall have the meanings set forth below.


2.01

“Affiliate” means, as to any specified person, each other person directly or indirectly controlling, controlled by or under direct or indirect common control with that specified person.  For the purposes of this definition, “control”, when used with respect to any specified person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, or by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.  Notwithstanding the foregoing, any investment company registered under the Investment Company Act of 1940, as amended, shall not be deemed an Affiliate of any specified person.


2.02

“Affiliated Employer” means any Affiliate of the Sponsor which has been designated to participate in the Plan by action of the Plan Administrator.


2.03

“Annual Incentive Award” means the compensation payable under the Performance Incentive Plan, the Annual Incentive Plan, the Investment Incentive Plan, and/or any successor incentive plan or such other incentive compensation arrangements as the Employer may designate from time to time as approved by the Committee or the Chief Executive Officer.


2.04

“Base Salary” means the Executive’s annual salary, determined as of the last day of the month immediately preceding the Executive’s Separation Date.  The following items shall not be included in determining Base Salary:  overtime pay; distributions from a plan of deferred compensation; commissions; bonuses and incentive compensation.  In determining this annual salary, however, the following items shall be included:  any amount contributed as deferred compensation to a cash or deferred arrangement maintained by the Employer pursuant to Code section 401(k); any salary reduction contributions made on behalf of the Executive to a plan maintained by the Employer



2



under Code section 125 or Code section 132(f)(4) , and any amounts deferred by the Executive under a nonqualified plan of deferred compensation.


2.05

“Cause” means any conduct by the Executive which is detrimental to the interests of the Employer or any of Affiliated Employer, including but not limited to: (a) the Executive’s conviction or plea of nolo contendere to a felony or to a lesser crime involving fraud or moral turpitude; (b) an act of misconduct (including, without limitation, a  violation of the Sponsor’s Code of Conduct or any code of ethics of any of its affiliates) on Executive’s part with regard to the Employer or any Affiliated Employer; (v) unsatisfactory performance; or (d) the Executive’s failure to attempt or refusal to perform legal directives of the Board or executive officers of the Employer. "Cause" is to be determined in the sole discretion of the Employer.


2.06

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, and the regulations and guidance published thereunder.


2.07

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and guidance published thereunder.


2.08

“Committee” means the Compensation Committee of The Phoenix Companies, Inc. Board of Directors.


2.09

“Effective Date” means January 1, 2009, the date that the provisions of the Plan as contained in this document shall become effective.


2.10

“Employee” means any common law employee of the Employer who is actively at work at the time of termination and is a regular (versus temporary) full-time employee working at least 40 hours per week or part-time employee working at least 19 ¼ hours per week.


2.11

“Employer” means Phoenix Life Insurance Company and any other Affiliated Employer that has adopted this Plan with the approval of the Plan Administrator.


2.12

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations and guidance published thereunder.


2.13

“Executive” means (a) an Employee of the Employer who is a Senior Vice President or above and (b) any other Employee (Vice Presidents or other key personnel) the Chief Executive Officer of the Sponsor has determined to be integral to the formulation or execution of the business strategy of the Employer.


2.14

“Plan” means The Phoenix Companies, Inc. Executive Severance Allowance Plan, as amended from time to time.


2.15

“Plan Administrator” means the Benefit Plans Committee of the Employer or the person designated as such by the Benefit Plans Committee.


2.16

“Plan Year” means the calendar year.




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2.17

“Separation Date” means the last day of an Executive’s active service with the Employer.


2.18

“Severance Agreement and Release” means an agreement to be signed by the Executive in a form acceptable to the Employer containing a general release and restrictive covenants, as well as any other clauses the Employer may require.


2.19

“Severance Amount” means the benefit payable under the provisions of Section 3.03.


2.20

“Severance Service” means the years of service used to determine the Severance Amount


in Section 3.03 based on an Executive’s Severance Tier and based on the Executive’s full  years of employment with the Employer, as adjusted for any applicable breaks-in-service, and considering full and fractional years accumulated as of the Executive’s Separation Date, rounded up to the next full year.


2.21

“Severance Tier” means the applicable severance benefit level under Severance Tier 1 or


Severance Tier 2, determined based on an Executive’s position level and the Sponsor Chief Executive Officer’s discretion.  


2.22

“Severance Tier 1” means an Executive, who is a Senior Vice President or higher on the


Separation Date, and any other Executive designated by the Sponsor’s Chief Executive Officer, including all Executives as of December 31, 2007, will be credited with at least nine years if the Executive has fewer than nine years of Severance Service, but no more than 18, even if the Executive has more than 18 years of Severance Service.  


2.23

“Severance Tier 2” means any Executive that is not in Severance Tier 1, who is a selected Vice President or other key employee and not a Senior Vice President or higher on the Separation Date, will be credited with at least six years if the Executive has fewer than six years of Severance Service, but no more than 12, even if the Executive has more than 12 years of Severance Service.


2.24

“Sponsor” means The Phoenix Companies, Inc.


ARTICLE 3 - SEVERANCE ALLOWANCE BENEFIT


3.01

Qualification:  An Executive whose employment is (a) involuntarily terminated by the Employer for any reason, including but not limited to: reduction in force, facility closing, reorganization, consolidation, elimination of position, or (b) terminated voluntarily or involuntarily by resignation at the request of the Employer, shall be qualified for benefits under this Plan, unless the termination is due to a disqualifying event identified in Section 3.02.


3.02

Disqualifying Events:  An Executive who might otherwise be qualified for benefits under this Plan shall be disqualified for such benefits by any one of the following events and circumstances:


(a)

The Executive fails to continue in the employ of the Employer, satisfactorily performing the Executive’s assigned duties, until the date actually set for the Executive’s termination by the Employer.



4




(b)

The Employee works for a division, sub-division, unit, subsidiary or other identifiable entity that is sold or the assets of which are transferred to an owner other than the Employer, if the Executive is offered employment by the new owner that is substantially comparable to the employment engaged in by the Executive immediately prior to the sale or transfer.


(c)

The Executive is terminated for Cause.


(d)

The Executive’s employment is terminated by reason of early retirement, resignation (not at the request of the Employer), death, or during or at the conclusion of a leave of absence taken or granted on account of any reason, including permanent or temporary disability.


(e)

The Executive refuses to accept a transfer to an assigned job or location, provided the new position is within two pay grades or one band, as applicable of the current position held by the Executive.


(f)

The Plan Administrator determines that under the facts and circumstances relating to the Executive’s termination, or because of the Executive’s conduct subsequent to termination, it would be inappropriate to commence or continue severance payments.


(g)

The Executive receives or is entitled to receive from the Employer benefits under any severance plan, any severance agreement, or any agreement providing for the payment of severance benefits, including any Change in Control Agreement between the Employer and the Executive, other than this Plan, on account of the Executive’s termination of employment by the Employer.


3.03

Severance Benefits:   With respect to any Executive whose employment is terminated for a reason identified in Section 3.01, the following Severance Amount shall be payable, subject to the disqualification provisions of Section 3.02 and Section 3.09, and not any other benefit, except for outplacement services as provided in Section 3.10 and certain employee welfare benefits as provided in Section 3.11:


The Severance Amount equals Base Severance plus Pro-Rata Incentive, where:


Base Severance  =  [S x ((a plus b)/12)], where:


a   =

A cash amount equal to the Executive’s annual Base Salary
            as of the Separation Date.  


b   =

A cash amount equal to the average of the Executive’s


            actually earned and paid (even if one or both is $0) Annual             Incentive Awards for the prior two (2) fiscal years.


S   =

Severance Service, which is derived from the Severance


            Tier that the Executive qualifies for.   



5




And


Pro-Rata Incentive  =  A cash amount equal to a pro-rata portion of the Executive’s actually earned Annual Incentive Award for the fiscal year in  which the Executive’s Separation Date occurs.  The pro-rata portion of such Annual Incentive Award shall be determined by multiplying the amount actually earned times a fraction, the numerator of which is the number of days during the performance period applicable to such award prior to the Separation Date and the denominator of which is the number of days in the performance period applicable to such award.  

 

3.04

Time and Form of Payment:   Except as otherwise provided herein or in Article 5, the Executive will receive payment of the Base Severance payable under this Plan either in a lump sum payment or approximately equal periodic installments based on the Employer’s pay schedule commencing, as soon as practicable after the Separation Date (but in no event earlier than after the execution of, and the expiration of any revocation period related to, any required release).  If the release is not executed within the required execution period, the Severance Amount and any other benefits under this Plan shall be forfeited.  In no event however, shall any lump sum payment or any installment be paid later than March 15 in the year next succeeding the year in which the involuntary termination occurred.  Any Pro-Rata   Incentive for the fiscal year in which the Executive’s Separation Date occurs will be   payable after the Pro-Rata Incentive for that fiscal year is calculated and approved by the   Employer.  In no event, however, shall any Pro-Rata Incentive payment be paid later than March 15 in the year next succeeding the year in which the involuntary termination occurred.  


3.05

Death:  If an Executive terminates employment and dies before having received

the


entire amount of benefits to which the Executive is entitled under this Plan, the balance of such benefits will be paid to (a) the Executive’s surviving spouse or domestic partner, (b) if there is no surviving spouse or domestic partner, the Executive’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Executive’s estate.


3.06

Reemployment by the Employer: In the event that an Executive becomes reemployed


by the Employer after having received any benefit pursuant to this Plan or any predecessor or successor to this Plan, such Executive will be required to reimburse the Employer for any benefits received before the Executive’s reemployment.  


3.07     Integration with Other Benefits: To the extent that a federal, state or local law may require the Employer to make a payment to an Executive because of that Executive’s involuntary termination, the Severance Amount payable under this Plan shall be applied towards any such payment and not paid in addition to such required payment. Nothing in this Plan shall be used to extend or modify benefits under this Plan because of payments under any state unemployment insurance laws.




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3.08

Withholding:  The Employer shall have the right to take such action as it deems necessary or appropriate to satisfy any requirement under federal, state or other law to withhold or to make deductions from any benefit payable under this Plan.

3.09     Pre-conditions for Receipt of Benefits:  The payment of any benefit under this Plan, including but not limited to Sections 3.03, 3.10 and 3.11, is conditioned upon the Executive complying with all of the following:

(a)  refraining from directly or indirectly interfering in any manner with the operations, management or administration of any Employer office, agent or employee and refraining from making any disparaging remarks concerning the Employer, its representatives, agents and employees;

(b)   refraining from encouraging, soliciting or suggesting to any and all employees, agents, representatives and/or clients of the Employer that they terminate or alter their current relationship with the Employer;

(c)    returning all Employer property provided or developed during the course of employment including, but not limited to: computers, software, cell phones, files, records, identification card, credit cards and Employer manuals;

(d)  complying with a continuing obligation to maintain the confidentiality of proprietary  information subsequent to termination of employment;


(e)

executing a Severance Agreement and Release within the required execution period.


Upon the failure of the Executive to comply with any of the conditions set forth above and in this Plan, all payments hereunder shall immediately cease and the Executive shall immediately reimburse the Employer for all payments previously made hereunder.


3.10

Outplacement Services:   An Executive entitled to payment of a Severance Amount as provided in Section 3.03 of this Plan shall be eligible to receive and the Employer shall provide outplacement services, with a firm chosen by the Employer, at a level commensurate with the Executive’s position for a one-year   period beginning on the Separation Date, but in no event later than December 31 of the second calendar year following the calendar year in which the involuntary termination occurred.


3.11

Continuation of Benefits: The Executive (and, to the extent applicable, the Executive’s dependents) shall be entitled to continue participation in all of the  employee plans providing medical and dental benefits that the Executive participated in prior to the Separation Date in accordance with COBRA; provided, however, that the Executive shall continue to pay the active participant rate monthly for up to the first 12 months of the COBRA period following the Executive’s Separation Date.    


ARTICLE 4 - ADMINISTRATION


4.01

The Plan Administrator: The Plan Administrator shall have the sole discretionary authority to interpret the Plan and all questions thereunder, including, without limitation,



7



all questions relating to eligibility to participate in and receive benefits under the Plan. All such actions of the Plan Administrator shall be conclusive and binding on all persons.


4.02

Notification to Executives: The Plan Administrator shall notify an Executive when and if such Executive becomes eligible for benefits under this Plan.


4.03

Claims by Executives: Claims for benefits under the Plan may be filed with the Plan Administrator.  Written notice of the disposition of a claim shall be furnished to the claimant within 90 days after the application is filed.  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language reasonably calculated to be understood by the claimant, pertinent provisions of the Plan shall be cited, and, where appropriate, an explanation as to how the claimant can perfect the claim will be provided.  In addition, the claimant shall be furnished with an explanation of the Plan’s claims review procedures and the time limits applicable to such procedures, including a statement that the claimant has a right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review, if the claimant has exhausted all remedies under the Plan.  If notice of the denial of a claim is not furnished to an Executive in accordance with this section within a reasonable period of time, such Executive’s claim shall be deemed denied.  The Executive will then be permitted to proceed to the review stage described in Section 4.04.


4.04

Claims Review Procedure: Any Executive, former Executive, or authorized representative or beneficiary of either, who has been denied a benefit either in whole or in part by a decision of the Plan Administrator pursuant to Section 4.03 shall be entitled to request the Plan Administrator to give further consideration to his claim by filing with the Plan Administrator a written request for review.  Such request, together with a written statement of the reasons why the claimant believes his claim should be allowed, shall be filed with the Plan Administrator no later than 60 days after receipt of the written notification provided for in Section 4.03.  The claimant may submit written comments, documents, records and other information relating to the claim to the Plan Administrator. The claim for review shall be given a full and fair review that takes into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant with written or electronic notice of the decision on review within 60 days after the request for review is received by the Plan Administrator (or within 120 days if special circumstances require an extension of time for processing the claim and if notice of such extension and circumstances is provided to the claimant within the initial 60-day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement that the claimant has a right to bring a civil action under ERISA section 502(a) and that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that



8



Plan provisions have been applied consistently with respect to similarly situated claimants.



ARTICLE 5 - AMENDMENT AND TERMINATION


The Board of Directors of the Employer has delegated to the Benefit Plans Committee the right at any time, whether in an individual case or more generally, to amend this Plan from time to time without advance notice and to terminate this Plan at any time.  No consent of any Executive is required to terminate, modify, amend or change the Plan generally or in an individual case.  Any such amendment or termination of this Plan generally shall be accomplished by resolution of the Benefit Plans Committee adopted at a meeting duly called or by unanimous written consent in accordance with the Employer’s Articles of Incorporation, Bylaws, and applicable law.  Any amendment or termination of this Plan on an individual basis shall be accomplished by the written action of the Plan Administrator.  


ARTICLE 6 - SEVERANCE PAY PLAN LIMITATIONS UNDER ERISA


The Employer intends that this Plan constitute a “severance pay plan” under ERISA and any ambiguities in this Plan shall be construed to effect that intent.  As a severance pay plan, notwithstanding any other provision of this Plan: payments hereunder shall not be contingent directly or indirectly, upon the retirement of any Executive or offset by any retirement benefit payable; the total amount of severance payments made and the value of other benefits provided under this Plan to any Executive shall not exceed twice the Executive’s annual compensation during the year immediately preceding the termination of such Executive’s service; and all payments to an Employee under this Plan shall be paid within 24 months after the termination of the Executive’s service.


ARTICLE 7 - MISCELLANEOUS


7.01

Right to Terminate Employment:   The fact that a former Executive has failed to qualify for a benefit under this Plan shall not rescind or otherwise affect in any manner whatsoever the Executive’s termination of employment from the Employer, and such failure to qualify for a benefit shall not establish any right of any kind whatsoever (a) to a continuation or to a reinstatement of employment with the Employer or (b) to receive any payment from the Employer in lieu of such benefit.


7.02

Source of Benefits:   All benefits paid to a terminated Executive under this Plan shall be paid from the general assets of the Employer, and the status of the claim of a person to any benefit shall be the same as the status of a claim against the Employer by any general unsecured creditor.  No person shall look to, or have any claim against, any officer, director, employee or agent of the Employer in his individual capacity for the payment of any benefits under this Plan.


7.03

No Assignment; Binding Effect:   No interest of any Executive eligible to receive benefits under this Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a benefit be taken, either voluntarily or involuntarily,



9



for the satisfaction of the debts of, or other obligations or claims against, such person, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.  The provisions of this Plan shall be binding on each Executive (and on each person who claims a benefit under such person) and on the Employer, their successors and assigns.


7.04

Indebtedness:   Indebtedness or obligations of the Executive to the Employer existing at the time of termination or arising during the one year period beginning on the Separation Date shall be set off against any benefit payable under this Plan.


7.05

Construction:   This Plan shall be construed in accordance with the law of the State of Connecticut to the extent not preempted by federal laws.  Headings and subheadings have been added only for convenience of reference and have no substantive effect whatsoever. All references to sections shall mean sections of this Plan.


7.06

Usage:   Whenever applicable, the singular shall include the plural, the masculine shall include the feminine and vice versa when used in this Plan.







10


EX-10.35 11 ex1035.htm ANNUAL INCENTIVE PLAN FOR EXECUTIVE OFFICERS Exhibit C

EXHIBIT 10.35

















THE PHOENIX COMPANIES, INC.

ANNUAL INCENTIVE PLAN FOR EXECUTIVE OFFICERS



As amended and restated effective as of January 1, 2009




























THE PHOENIX COMPANIES, INC.

ANNUAL INCENTIVE PLAN FOR EXECUTIVE OFFICERS



ARTICLE 1.  INTRODUCTION


   The purposes of The Phoenix Companies, Inc. Annual Incentive Plan for Executive Officers (the "Plan") are (a) to foster and promote the financial success of The Phoenix Companies, Inc. (the " Company") and its majority-owned subsidiaries (each, a "Subsidiary" and collectively, the "Subsidiaries") by motivating superior performance through use of performance-related annual incentives and (b) to enable the Company and its Subsidiaries to attract, motivate and retain the services of talented individuals whose efforts will make a significant contribution to the success of the Company and its Subsidiaries.  This Plan is hereby amended and restated effective as of January 1, 2009.


ARTICLE II.  ELIGIBILITY AND PARTICIPATION


   The Board of Directors of the Company (the "Board "), the Compensation Committee or such other committee(s) consisting of two or more members of the Board meeting the standard for "outside directors " under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") as may be appointed by the Board to administer this Plan (the "Committee") shall determine which officers of the Company are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (each, an "Executive Officer " and collectively, the "Executive Officers") shall participate in the Plan.


ARTICLE III.  ADMINISTRATION


   Section 3.1.  Powers of the Committee.  The Committee shall have the authority, subject to the terms of this Plan, to determine the terms and conditions of any and all incentive compensation opportunities made available under the Plan including, but not limited to, (a) the target and maximum amount that may become payable, (b) the applicable performance goals and (c) any additional restrictions that must be satisfied prior to an employee having a right to receive payment of any such incentive compensation.  The Committee may establish different terms and conditions for different Executive Officers and for the same Executive Officer for each opportunity such Executive Officer may receive hereunder.  The opportunities made available hereunder shall be evidenced by documentation deemed appropriate by the Committee, which may contain such terms and conditions as the Committee may determine.


   Section 3.2.  Interpretation of the Plan.  The Committee is authorized to prescribe, amend and rescind rules and regulations relating to the Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company, to interpret the provisions of the Plan and to make all other determinations necessary or advisable for the administration and interpretation of the Plan to carry out its provisions and purposes.  



1




Determinations, interpretations or other actions made or taken by the Committee shall be final, binding and conclusive for all purposes and upon all persons.


   Section 3.3.  Limitation of Changing Terms and Conditions.  The terms and conditions of any incentive compensation opportunity made available to an Executive Officer shall be determined by the Committee at the time the applicable performance criteria are established, and such terms and conditions shall not be subsequently changed in a manner which would (a) be adverse to the Executive Officer without the consent of the Executive Officer to whom such incentive compensation opportunity has been made available or (b) increase, directly or indirectly, the amount payable in respect of any incentive compensation opportunity for any Executive Officer.


ARTICLE IV.  EXECUTIVE OFFICERS' INCENTIVES


   Section 4.1.  Executive Officers' Incentives.  The incentive compensation opportunities made available to Executive Officers under this Plan (each, an "Executive Officer's Incentive ") are intended to qualify as performance-based compensation under Section 162(m) of the Code, and shall be administered in a manner consistent with that intention. By such date as is determined pursuant to Section 162(m) of the Code and the regulations promulgated thereunder, the Committee shall establish the performance goals upon which such an Executive Officer's Incentive shall be payable, if at all, with respect to such fiscal year's performance.  Any Executive Officer's Incentive shall be earned based upon the Company's performance relative to a pre-established targeted level of return on equity, which if specified by the Committee at the time that the award is made, may be determined based on such adjustments as the Committee shall determine and specify; provided, however, the Committee may select one or more different (or additional) criteria from among those listed in the next succeeding sentence as to all or any portion of the incentive opportunity made available hereunder to any Executive Officer. Should the Committee wish to employ different or additional performance criteria with respect to all or any portion of the incentive opportunity made available to any Executive Officer, such criteria shall be based on measures relating to one or more of the following: sales; revenues; earnings per share; net income; operating income; cash flow; stock price; cash operating income; risk-based capital ratio; debt to capital ratio; operating margin; assets under management; market capitalization; net assets; or any rating by a nationally recognized statistical rating organization. The performance criteria applicable to any Executive Officer's Incentive may relate to the performance of the Company, any Subsidiary , or any unit or business segment of the Company or any Subsidiary and may be measured by absolute performance or a relative comparison of entity performance to the performance of a peer group or other external measure.  At the time the performance criteria applicable to any Executive Officer's Incentive are established, the Committee shall specify the formula for determining the amount of compensation that may be earned if actual performance is less than, equal to or greater than the applicable targeted level of performance.


   Section 4.2.  Maximum Amount Payable.  The maximum amount payable to any Executive Officer in respect of an Executive Officer's Incentive shall be established by



2




the Committee at the time at which the performance targets are established under Section 4.1, provided that in no event shall such amount exceed $5,000,000.  Notwithstanding the preceding sentence, nothing in this Section 4.2 or elsewhere in the Plan shall preclude the Committee from exercising discretion to lower the amounts payable under any Executive Officer's Incentive from the amount allowed to be paid hereunder, on any bases determined by the Committee.


ARTICLE V. GENERALLY APPLICABLE PROVISIONS


   Section 5.1.  Termination of Employment.  Payment of any incentive compensation under the Plan shall be conditioned on the continuous employment of the Executive Officer by the Company and/or one of its Subsidiaries through the date such compensation is paid, unless otherwise determined by the Committee or as specified in accordance with any applicable termination plan, policy, practice or contract of the Company or any Subsidiary.


   Section 5.2.  Payment.  If, following the end of a fiscal year, the Committee determines that the relevant performance criteria for such fiscal year have been satisfied, in whole or in part, and certifies that result, the Company shall make payment to each Executive Officer of the amount specified for such Executive Officer pursuant to the formula established with respect to such Executive Officer's Incentive (or such lesser amount as the Committee shall determine to be appropriate) no later than March 15 of the year following the end of such fiscal year .. Payment of any amount earned under the Plan shall be made in cash, unless the Committee directs that such obligation be satisfied, in whole or in part, in the form of a grant of an equity award under another plan maintained by the Company (subject to applicable law and the approval of the administrator of the applicable equity plan), but, unless the terms of such equity component are set at the time a Participant is afforded a legally binding right (within the meaning of Code section 409A) to participate in an Executive Officer Incentive under the Plan for a given fiscal year, no such equity award may be in a form that constitutes deferred compensation under Code section 409A.


   Section 5.3.  Term; Termination and Amendment.  This Plan shall be effective upon approval by the Board, provided that no amount may be paid to an Executive Officer unless the stockholders of the Company approve the Plan.  Except as expressly provided herein, the Board may terminate or amend the Plan in any respect at any time, provided that, solely to the extent required to continue to qualify Executive Officer's Incentives as other performance-based compensation for purposes of Section 162(m) of the Code, any amendment to the Plan shall be subject to the approval of the stockholders of the Company.


   Section 5.4.  No Limitation to Corporate Action.  Nothing in this Plan shall preclude the Committee, as it shall deem necessary or appropriate, from authorizing the payment to any Executive Officer of compensation outside the parameters of this Plan, including, without limitation, base salaries, awards under any other plan of the Company and/or its Subsidiaries (whether or not approved by stockholders), any other bonuses (whether or



3




not based on the attainment of performance objectives) and retention or other special payments.


   Section 5.5.  Tax Withholding.  The Company and any of its Subsidiaries (as appropriate) shall have the power to withhold an amount sufficient to satisfy Federal, state and local withholding tax requirements on any award under this Plan, and the Company, or any of its Subsidiaries, as appropriate, may defer the payment of any such award until such requirements are satisfied.


   Section 5.6.  Inalienability of Interests.  No Executive Officer's interests under this Plan shall be subject to alienation, assignment, garnishment, execution or levy of any kind, and any attempt to cause any benefits to be so subjected shall not be recognized. This Plan is an unfunded plan and participants in this Plan shall have the status of unsecured creditors of the Company with respect to this Plan.


   Section 5.7.  Limited Effect.  Neither the establishment of this Plan nor participation in this Plan shall give an Executive Officer the right to remain in the employ of the Company or any of its Subsidiaries.  The adoption of this Plan shall have no effect on awards made or to be made or compensation paid or to be paid pursuant to other plans, policies, practices or contracts covering employees of the Company or its Subsidiaries.


   Section 5.8.  Governing Law.  All questions pertaining to the construction, validity and effect of this Plan, or to the rights of any person under this Plan, shall be determined in accordance with the laws of the State of New York, without giving effect to the conflicts of law provisions thereof.


   







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EX-10.36 12 ex1036.htm EQUITY DEFERRAL PLAN BOARD OF DIRECTORS

EXHIBIT 10.36







THE PHOENIX COMPANIES, INC.

EQUITY DEFERRAL PLAN


Effective as of January 1, 2009




















ARTICLE I

PURPOSE AND EFFECTIVE DATE


1.01

Purpose The Phoenix Companies, Inc. Equity Deferral Plan is intended to provide Employees with a plan to defer receipt of equity awards and act as a repository for deferrals of Restricted Stock Units.  The Phoenix Companies, Inc. Equity Deferral Plan is intended to be an unfunded plan under the Employee Retirement Income Security Act of 1974, as amended, that is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

1.02

Effective Date The Phoenix Companies, Inc. Equity Deferral Plan is effective as of January 1, 2009.

ARTICLE II

DEFINITIONS


2.01

"Adjustment Event" means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

2.02

"Award" means the award of a Restricted Stock Unit under

The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan.


2.03

“Beneficiary” means the person(s) or entity, including one or more trusts, last designated by an Employee on a form or electronic media and accepted by the Committee or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Employee.  In the absence of any such designation, the Beneficiary shall be (i) the Employee’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Employee’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Employee’s estate.  


2.04

“Board of Directors” means the board of directors of the Company.

2.05

“Code” means the Internal Revenue Code of 1986, as amended.

2.06

“Committee” means the Compensation Committee of the Board of Directors or such other committee of the Board of Directors as the Board of Directors shall designate from time to time.

2.07

“Common Shares” means the common stock of the Company, par value $0.01 per share.

2.08

“Company” means The Phoenix Companies, Inc. and any successor thereto.

2.09

“Crediting Period” means August 1 of one calendar year to July 31 of the subsequent calendar year (or, if earlier, the date on which final distribution is made hereunder).

1


2.10     “Disability” means that a Participant is:

(a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

(b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering Employees of the Company.

2.11

"Dividend Equivalent" means an amount equal to the cash dividends paid by the Company on a Common Share.

2.12

"Employee" means any person who is employed by the Company on an hourly or salaried basis, but shall not include leased employees within the meaning of Code sections 414(n)(2) and 414(c)(2).

2.13

“Equity Account” means the account established for the deposit/delivery of RSUs deferred under Section 4.01 (which RSUs will be converted to Common Shares pursuant to Section 6.05), as well as any Dividend Equivalents credited under Section 6.03 and interest credited under Section 6.04.  

2.14

"Participant" means any Employee designated by the Committee (or the Chief Executive Officer pursuant to a delegation from the Committee) to participate in the Plan that elects to defer RSUs pursuant the terms of the Plan.

2.15

“Plan” means The Phoenix Companies, Inc. Equity Deferral Plan as is set forth in this document as it may be amended from time to time.

2.16

"Restricted Period" means the period during which RSU awards are subject to forfeiture or restrictions on transfer (if applicable) pursuant to The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan.

2.17

"Restricted Stock Unit" or “RSU” means an Employee’s right to receive one Common Share at the end of a specified period of time, which right is subject to forfeiture and restrictions on transferability, in accordance with The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan.

2.18

“RSU Deferral Date” means the date that an RSU would have converted into Common Shares pursuant to The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan had the receipt of such Common Shares not been deferred pursuant to an election under Section 5.01.


2.19

Separation from Service shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.20

“Target Compensation” means an active Employee’s salary, target annual bonus and target long-term incentive for the applicable calendar year.

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ARTICLE III
PARTICIPATION


3.01

Eligibility Unless otherwise determined by the Chief Executive Officer pursuant to a delegation from the Committee, any active Employee with Target Compensation in excess of the annual compensation limit set forth in Code section 401(a)(17) shall be eligible to participate in this Plan.

3.02

Commencement of Participation Each eligible Employee shall become a Participant in the Plan as of the date he or she meets the above requirement and elects to defer RSUs as described in Section 4.01.

3.03

Termination of Participation An Employee shall cease to be a Participant as of the date such Employee ceases to meet all of the requirements of Section 3.01 above; provided, however, that benefits accrued by the Employee as of such date shall not be reduced and shall be paid as provided herein.

ARTICLE IV
RESTRICTED STOCK UNITS


4.01

RSU Deferrals An eligible Employee may elect to defer between 1% and 100% of the RSUs that the Company has awarded to the Employee.  


4.02

Conversion into Common Shares  RSUs are not convertible into Common Shares until the Employee’s Separation from Service or the fixed date elected by the Employee under Section 5.02(b), subject to the settlement rules provided in Section 6.05.

ARTICLE V

ELECTIONS TO DEFER


5.01

Elections to Defer Under Section 4.01


(a) Performance-Based Awards.  Deferral elections made by Participants, who are Employees at the beginning of the applicable performance period or the date that the performance criteria are established, must be made by the earlier of:


(i) at least six (6) months prior to the end of the relevant performance period that is applicable to the incentive compensation; or


(ii) the date the amount to be paid becomes readily ascertainable.


All deferral elections become irrevocable upon the earlier of (i) or (ii) above.

     

For a Participant (including a newly eligible Participant) to be eligible to make a deferral election in accordance with this subparagraph (a), the Participant must have performed services continuously from the later of (A) the beginning of the performance period for the performance-based compensation or (B) the date upon which the performance criteria with respect to the performance-based compensation are established, through the date on which the Participant makes the deferral election.  In addition, in no event may a deferral election under this subparagraph be made after the


3


­

performance-based compensation has become readily ascertainable within the meaning of Treasury Regulation § 1.409A-2(a)(8).   


(b) Non-Performance Based Awards (time vested).  Deferral elections must be made:


(i)  by the end of the Participant’s taxable year immediately preceding the taxable year in which the services underlying the compensation are to be performed; or


(ii)  for certain forfeitable rights, if the Participant has a legally binding right to a payment in a subsequent year that is subject to a condition requiring the service provider to provide services for a period of at least 12 months from the date that the Participant obtains the legally binding right to avoid forfeiture of the payment, on or before the 30th day after the Participant obtains a legally binding right to the compensation, provided that the election is made at least 12 months in advance of the earliest date at which the forfeiture condition could lapse.  


A newly eligible Participant must make an election within 30 days of initial eligibility (based on the plan aggregation rules) and such election applies only to compensation on and after the election date.


(c) Unless determined otherwise by the Committee, deferral elections will be carried over from year to year until the Participant makes an affirmative election to modify or terminate the election within the permitted time frames.


5.02

Time and Form of Payment


(a) The Participant has no election rights as to the form of payment of any Equity Account.  The form of payment is a lump sum, as set forth in Section 6.05.  


(b) Except as provided in Section 5.03, any distribution from a Participant’s Equity Account will always commence upon the earlier of:


(i)

The six month anniversary of Separation from Service, or


(ii)

Fixed date (“in-service withdrawal” date).


A Participant has the right to elect whether he or she wants a distribution to be made upon (i) the six month anniversary of Separation from Service or (ii) the earlier of the six month anniversary of Separation from Service and a fixed date.  A Participant who fails to make such an election shall be deemed to have elected the six month anniversary of Separation from Service as the time of payment.


A Participant may make a different time of payment election for the deferrals on each Award.  These elections must be made within the time frames set forth in Section 5.01.  Initial elections will be carried over from year to year until the Participant makes an affirmative election to modify or terminate the election within the permitted time frames.

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5.03

Payment on Death If any amounts are payable under the Employee’s RSU award after the Employee dies, the Company will pay them to the Employee’s Beneficiary within 90 days of the Director’s date of death.


5.04

409A Transition Relief Provision Notwithstanding any other provision to the contrary in this Plan, Participants may be permitted to make elections prior to January 1, 2009 in accordance with the transition rules in effect under Code section 409A.  



ARTICLE VI
RIGHTS AND SETTLEMENT


6.01

Rights as a Shareholder Except as provided in Section 6.07, the Employee’s RSUs will not give the Employee any right to vote on any matter submitted to the Company's stockholders.  The Employee will have voting rights with respect to the Common Shares that underlie the Employee’s RSUs only after the shares have actually been issued to the Employee.

6.02

Restrictions on Transferability The Employee will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber the Employee’s RSUs.  The Employee will not have any right to reallocate or transfer the Employee’s RSUs deferred under the terms of this Plan to different investment options or funds.  Any attempt to affect any of the preceding in violation of this Section 6.02, whether voluntary or involuntary, will be void.

6.03

Dividend Equivalents Unless otherwise determined by the Committee, the Company will credit each of the Employee’s RSUs with Dividend Equivalents, either in cash or in kind, from the RSU Deferral Date to the date RSUs are converted into Common Shares pursuant to Section 4.02 of this Plan.  Dividend Equivalents shall be credited to a book entry account on the Employee’s behalf at the time the Company pays any cash dividend on its Common Shares.

6.04

Interest Credits  Unless otherwise determined by the Committee, interest will be credited on such Dividend Equivalents credited in cash for each Crediting Period during the period from the RSU Deferral Date for each such grant of RSUs until distribution hereunder at the mid-term Applicable Federal Rate (as determined under Code section 1274(d)), in effect on the first day of such Crediting Period, provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.

6.05

Settlement of RSUs/Conversion to Shares  Subject to Section 5.03, within 90 days after the six month anniversary of the Participant’s Separation from Service or the date elected by the Participant under Section 5.02(b) the Company will deliver to the Participant his or her Equity Account.

6.06

Adjustment Due to Change in Capitalization If any Adjustment Event occurs before the Employee’s RSUs are distributed in accordance with Section 6.05, the number of Common Shares underlying each RSU will be proportionately adjusted accordingly, as deemed equitable and appropriate by the Board of Directors.  In any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each RSU shall pertain to the securities and other property to which a holder of the number of Common Shares underlying the RSU would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, the Employee’s RSUs represent the right to receive cash


5


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in whole or in part (other than as a result of Dividend Equivalents and interest credits), then the Company will   promptly pay the Employee such cash on the date specified in Section 6.05.


6.07

Funding.  The Company shall be under no obligation to maintain a special or separate fund or segregate assets or actually make any investment of any kind to assure the payment of benefits under the Plan. Reference to any such investment shall be solely for the purpose of aiding the Company in measuring and meeting its liabilities under the terms of this Plan.  In the event any such investments are made by the Company, unless otherwise determined by the Committee, the Company shall be named the sole owner and shall have all of the rights and privileges conferred by any instrument evidencing such investments.  Unless otherwise determined by the Committee, such investments shall not be segregated, set aside or held in trust or escrow and shall at all times remain the unrestricted assets of the Company subject to the claim of its general creditors.

ARTICLE VII
ADMINISTRATION

7.01

Administration  The Committee is authorized to reasonably interpret in good faith the Employee’s RSU award and this Plan and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of the Employee’s RSU award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company with respect to senior management under other similar equity compensation plans.  Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of this Plan shall be final, binding and conclusive for all purposes and upon all persons.  The Company or the Committee may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.

7.02

Amendment and Termination  


(a) The Plan may be amended, modified or terminated at any time by the Company, subject to Section 7.02(b) below and except that, without the consent of any Employee or Beneficiary, if applicable, no such amendment, modification or termination shall reduce or diminish the Equity Account of any Employee accrued prior to the date of such amendment, modification or termination.  However no amendment, modification or termination shall result or cause an acceleration of payments or benefits under the Plan, unless the termination satisfies the Code section 409A safe harbor summarized in Section 7.02(b).  Further, at its sole discretion, the Company may elect, upon termination of this Plan to deliver to the Employee or any Beneficiary, as the case may be, the number of Common Shares then underlying the Employee’s RSUs.  Notwithstanding the foregoing to the contrary, the Company may amend this Plan as it deems necessary or desirable to comply with the requirements of Code section 409A, as amended, and the regulations and pronouncements thereunder, regardless of whether any such amendment shall cause a reduction or cessation of the Equity Account prior to the adoption of such amendment.


(b) Plan Termination under Code section 409A.  Generally, payments may be accelerated upon Plan termination only if:


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(i)  the Employer is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);


(ii) all payments to the Employees as a result of the Plan termination are not made until at least twelve (12) months after action taken to terminate the Plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and


(iii) no similar successor plan can be established within three (3) years following the date the action to terminate the Plan was taken.  


ARTICLE VIII
MISCELLANEOUS

8.01

Interpretation Consistent with Code Section 409A The intent of the parties is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith.  If any provision of this Plan would cause the Employee to incur any additional tax or interest under Code section 409A, the Company, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Plan without violating the provisions of Code section 409A.

8.02

Tax Withholding If, and solely to the extent required by applicable law, the Company will have the power to withhold, or require the Employee to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to the Employee’s award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit the Employee to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of the Employee’s RSU award withheld by the Company or (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy the Employee’s statutory minimum Federal, state and local tax obligation associated with the transaction.

8.03

Common Shares Subject to an Award The Common Shares to be delivered in connection with the Employee’s award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.

8.04

Successor The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, if the Employee’s RSUs remain outstanding, to unconditionally assume the obligations of the Company with respect to the Employee’s RSUs in writing and will provide a copy of the assumption to the Employee.

8.05

Requirements of Law The granting and deferral of the Employee’s RSU award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

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8.06

Instrument and Securities Law Compliance The Company shall have the authority to determine the instruments by which the Employee’s award shall be evidenced.  Instruments evidencing the Employee’s RSU award may contain such other provisions as the Company deems advisable.  In addition, any Common Shares issued in connection with the Employee’s RSU award shall be registered with the United States Securities and Exchange Commission at the expense of the Company for resale on or before the first day on which the Employee may transfer the shares under the RSU award (or such later date as the Employee requests that is in compliance with the law and permissible under the applicable Company plan) unless such shares are eligible for sale by the Employee pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of the Employee’s counsel, which registration shall be in   a form reasonably acceptable to the Employee, shall be subject to the Employee’s reasonable prior review   and comments, shall remain effective until all Common Shares subject to the RSU award have been sold (but need not be effective for more than 365 days after first day on which the Employee may transfer the Common Shares subject to the Employee’s RSU award or, if applicable, such later date as to which the   Employee shall have requested effectiveness) and the Company and the Employee shall, prior to the effectiveness of the registration, enter into a customary registration rights which will contain provisions, among other things, requiring the Company to indemnify the Employee and any third persons reasonably requested by the Employee in connection with the sale of any Common Shares and reimburse the Employee   for the Employee’s reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of the Employee’s death, or other permitted private transfer of the Common Shares, all of the Employee’s rights under this Section 8.06 shall be transferred to the Employee’s Beneficiary.

8.07

Governing Law The validity, interpretation, construction and performance of this Plan and the Employee’s RSU award shall be governed by the laws of the State of Connecticut.


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EX-10.37 13 ex1037.htm DIRECTORS EQUITY DEFERRAL PLAN BOARD OF DIRECTORS

 EXHIBIT 10.37




THE PHOENIX COMPANIES, INC.

DIRECTORS EQUITY DEFERRAL PLAN


Effective as of January 1, 2009


















ARTICLE I

PURPOSE AND EFFECTIVE DATE


1.01

Purpose.  The Phoenix Companies, Inc. Directors Equity Deferral Plan is intended to provide current, duly-elected non-employee members of The Phoenix Companies, Inc. Board of Directors with a plan to act as a repository for all mandatory deferrals of Restricted Stock Units and for the voluntary deferral of all or a portion of the Director’s Compensation into Restricted Stock Units in lieu of cash.  It is the Company’s desire to have the benefit of the Director’s continued loyalty, service and counsel and also to assist the Director in planning for retirement and certain other contingencies.   The Phoenix Companies, Inc. Directors Equity Deferral Plan is intended to be an unfunded plan under the Employee Retirement Income Security Act of 1974, as amended.

1.02

Effective Date.  The Phoenix Companies, Inc. Directors Equity Deferral Plan is effective as of January 1, 2009.

ARTICLE II

DEFINITIONS


2.01

"Adjustment Event" means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

2.02

“Beneficiary” means the person(s) or entity, including one or more trusts, last designated by a Director on a form or electronic media and accepted by the Committee or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Director.  In the absence of any such designation, the Beneficiary shall be (i) the Director’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Director’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Director’s estate.  


2.03

“Board of Directors” means the board of directors of the Company.

2.04

“Code” means the Internal Revenue Code of 1986, as amended.

2.05

“Committee” means the Compensation Committee of the Board of Directors of the Company.

2.06

“Common Shares” means the common stock of the Company, par value $0.01 per share.

2.07

“Company” means The Phoenix Companies, Inc., a Delaware corporation, and any successor
            thereto.

2.08

“Compensation” means the cash portion of the Director’s annual cash retainer, committee fees, meeting fees and any other cash payments that a Director may receive attributable to service as a member of the Board of Directors.



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2.09

“Crediting Period” means August 1 of one calendar year to July 31 of the subsequent calendar
            year (or, if earlier, the date on which final distribution is made hereunder).

2.10

"Deferred Share" means a contractual right to receive one (1) Common Share (which was originally awarded as a Share Award) on a deferred basis in accordance with the terms of this Plan.

2.11

“Director” means a member of the Board of Directors of the Company or any of its subsidiaries.

2.12

“Disability” means that a Director is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.13

"Dividend Equivalent" means an amount equal to the cash dividend payable per Common
            Share.

2.14

“Equity Account” means the account established for the deposit and delivery of RSUs under Section 3.01 (Mandatory RSUs), Section 3.02 (Voluntary RSUs) and/or Deferred Shares under Section 3.03 (which RSUs and/or Deferred Shares will be converted to Common Shares pursuant to Section 5.05 upon a Director’s Separation from Service), as well as any Dividend Equivalents credited under Section 5.03 and interest credited under Section 5.04.  

2.15

“Plan” means The Phoenix Companies, Inc. Directors Equity Deferral Plan as is set forth in this document as it may be amended from time to time.

2.16

"Restricted Period" means the period during which RSU awards are subject to forfeiture or restrictions on transfer (if applicable) pursuant to The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan.

2.17

"Restricted Stock Unit" or “RSU” means the right to receive one Common Share, subject to The Phoenix Companies, Inc. 2003 Restricted Stock, Restricted Stock Unit and Long-Term Incentive Plan.

2.18

“RSU Award Date” means the first day of each calendar quarter (for retainers applicable for such calendar quarter and for fees earned during the immediately preceding calendar quarter), or such other day or dates as may be established by the Board of Directors, on which Mandatory or Voluntary RSUs are granted.  For a Director’s initial quarter, the RSU Award Date shall be established by the Board of Directors.

2.19

“Mandatory RSUs” means the number of RSUs attributable to the portion of a Director’s annual retainer, committee fees, meeting fees and any other payments that a Director may receive attributable to service as a member of the Board of Directors that is required to be awarded by the Company in RSUs.  This required portion is determined and communicated periodically by the Board of Directors.

2.20

“Retirement” means mandatory retirement from the Board of Directors pursuant to the Company’s mandatory retirement policy for Directors.    



2



2.21

Separation from Service shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.22

"Share Award" means any Elective Share Award or Fee Share Award under The Phoenix Companies, Inc. Directors Stock Plan, where:

(a)  "Elective Share Award" means any award of Shares made by reason of the election of a
Director to receive Shares in lieu of cash fees; and

(b)  "Fee Share Award" means any award of Shares made at the direction of the Board of Directors in  lieu of cash fees.


2.23

“Specified Employee” means, for a non-employee Director who becomes an officer of the Company, a Director who, as of the date of the Director’s Separation from Service, is a key employee of the Company whose stock is publicly traded on an established securities market or otherwise.  A Director is a key employee if the Director meets the requirements of Code section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding Code section 416(i)(5)) at any time during the 12-month period ending on a Specified Employee identification date.  If a Director is a key employee as of a Specified Employee identification date, the Director is treated as a key employee (and therefore a Specified Employee) for the entire 12-month period beginning on the Specified Employee effective date.  For any nonqualified deferred compensation plan of the Company that is subject to Code section 409A, the Specified Employee identification date is December 31 of the preceding calendar year, and the Specified Employee effective date is April 1 of the current calendar year.


2.24

“Voluntary RSUs” means the number of RSUs attributable to the amount of Compensation, if any, that the Director voluntarily elects to have awarded by the Company instead of cash.

ARTICLE III
RESTRICTED STOCK UNITS AND DEFERRED SHARES


3.01

Annual Retainer Paid in RSUs.  Annually, the Company shall award a Director Mandatory RSUs, which are immediately vested, but the conversion of which are required to be deferred until the Director incurs a Separation from Service from the Company as a Director .  The Mandatory RSUs will be granted on the designated RSU Award Date and determined in accordance with the following procedure:   

Quarterly                      Pro-Rata

          

     

        RSUs

     

 
            Compensation     X       Factor*          =       Earmarked         ÷     Stock       =      for    
            Earmarked                    (if applicable)          Compensation          Price**             Quarter

for RSUs                                                                                                                  (share


                                                                                                                                             units)


*   Pro-rata factor equals (1) number of days of service in quarter, based on effective date of Board of Director appointment, divided by (2) number of days in quarter.



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**  Stock Price equals the closing stock price of Common Shares on the New York Stock Exchange (1) on the RSU Award Date, or (2) if a new member of the Board, on the effective date of Board of Director appointment.


3.02

Voluntary RSU Deferrals  If a Director so elects, the Company shall award the Director Voluntary RSUs, which are immediately vested, but the conversion of which is required to be deferred until the Director has a Separation from Service.  The Voluntary RSUs will be granted on the designated RSU Award Date and determined in accordance with the procedures set forth in Section 3.01.

3.03

Deferred Shares  A Director may elect to defer receipt of any Common Shares issuable to the Director in respect of any Share Award under The Phoenix Companies, Inc. Directors Stock Plan or any other Director plan until the Director’s Separation from Service.

3.04

Conversion into Common Shares   RSUs and/or Deferred Shares are not convertible into Common Shares until the Director’s Separation from Service or death, subject to the settlement rules provided in Section 5.05.


ARTICLE IV

VOLUNTARY ELECTIONS TO DEFER

AND

ELECTION AS TO TIME AND FORM OF PAYMENT


4.01

Elections to Defer Under Sections 3.02 and 3.03.


(a) Deferral elections must be made by the end of the Director’s taxable year immediately
                 preceding the taxable year in which the services underlying the Compensation are to be
                 performed. A newly eligible Director must make an election within 30 days of initial 
                 eligibility (based on the plan aggregation rules) and such election applies only to
                 Compensation on and after the election date.

            (b) Deferral elections will be carried over from year to year until the Director makes an
                  affirmative election to modify or terminate the election within the permitted time frames.

4.02

Time and Form of Payment.  The Director has no election rights as to the time and form of payment of his or her Equity Account balance.  Subject to Section 4.03, a distribution will always be made within 90 days of the Director’s Separation from Service.  All payments and benefits shall be paid or reimbursed to the Director in a lump sum.


4.03

Equity Account Distribution Provisions.  Notwithstanding any provision to the contrary in this Plan, for a Director who is a Specified Employee, the commencement date of any benefit that would otherwise have occurred prior to the six month anniversary of the Director’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) within 90 days of the Director’s death.  Upon the expiration of the six-month period, all payments and benefits shall be paid or reimbursed to the Director in a lump sum.



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4.04

Payment on Death.  If any amounts are payable under the Director’s Equity Account after the Director dies, the Company will pay them to the Director’s Beneficiary within 90 days of the Director’s date of death.


4.05

409A Transition Relief Provision.  Notwithstanding any other provision to the contrary in this Plan, Participants may be permitted to make elections prior to January 1, 2009 in accordance with the transition rules in effect under Code section 409A.


ARTICLE V
RIGHTS AND SETTLEMENT

5.01

Rights as a Shareholder.   Except as provided in Section 5.07, the Director’s RSUs and/or Deferred Shares will not give the Director any right to vote on any matter submitted to the Company's stockholders.  The Director will have voting rights with respect to the Common Shares that underlie the Director’s RSUs and/or Deferred Shares only after the shares have actually been issued to the Director.

5.02

Restrictions on Transferability.  The Director will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber the Director’s RSUs and/or Deferred Shares.  The Director will not have any right to reallocate or transfer the Director’s RSUs and/or Deferred Shares under this Plan to different investment options or funds.  Any attempt to effect any of the preceding in violation of this Section 5.02, whether voluntary or involuntary, will be void.

5.03

Dividend Equivalents.  Unless otherwise determined by the Committee, the Committee will credit each of the Director’s RSUs and Deferred Shares with Dividend Equivalents, either in cash or in kind or in RSUs or such other security as the Committee determines, from the date the Director’s award is granted to the date RSUs and Deferred Shares are converted into Common Shares pursuant to Section 3.04 of this Plan.  Dividend Equivalents shall be credited to a book entry account on the Director’s behalf at the time the Company pays any cash dividend on its Common Shares.

5.04

Interest Credits.  Unless otherwise determined by the Committee, interest will be credited on such Dividend Equivalents credited in cash for each Crediting Period during the period from the RSU Award Date for each such grant of RSUs and the Deferred Share award date until distribution hereunder at the mid-term Applicable Federal Rate (as determined under Code section 1274(d)), in effect on the first day of such Crediting Period, provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.

5.05

Settlement of RSUs and Deferred Shares  Subject to Section 4.03, within 90 days after the date the Director has a Separation from Service, the Company will deliver to the Director his or her Equity Account.

5.06

Adjustment Due to Change in Capitalization  If any Adjustment Event occurs before the Director’s RSUs and/or Deferred Shares are distributed in accordance with Section 5.05, the number of Common Shares underlying each RSU and/or Deferred Share will be proportionately adjusted accordingly, as deemed equitable and appropriate by the Board of Directors.  In any



5



merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each RSU and/or Deferred Share shall pertain to the securities and other property (including cash) to which a holder of the number of Common Shares underlying the RSU and/or Deferred Share would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, the Director’s RSUs and/or Deferred Shares represent the right to receive cash in whole or in part (other than as a result of Dividend Equivalents and interest credits), then the Company will promptly pay the Director such cash on the date specified in Section 5.05.

5.07

Funding.  No special or separate fund shall be established by the Company and no segregation of assets shall be made to assure the payment of benefits under the Plan. No   Participant shall have any right, title, or interest whatsoever in any specific asset of the Company.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.


ARTICLE VI
ADMINISTRATION

6.0.1

Administration.  The Committee is authorized to reasonably interpret in good faith the Director’s RSU award and this Plan and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of the Director’s RSU award and/or Deferred Share award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company.  Determinations, interpretations or other actions made or taken by the Committee pursuant to the provisions of this Plan shall be final, binding and conclusive for all purposes and upon all persons.  The Company or the Committee may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.  

6.02

Amendment and Termination.  


(a) The Plan may be amended, modified or terminated at any time by the Company, subject to Section 6.02(b) below and except that, without the consent of any Director or Beneficiary, if applicable, no such amendment, modification or termination shall reduce or diminish the Equity Account of any Director accrued prior to the date of such amendment, modification or termination.  However no amendment, modification or termination shall result or cause an acceleration of payments or benefits under the Plan, unless such action complies with the Code section 409A.  Further, at its sole discretion, the Company may elect, upon termination of this Plan to deliver to the Director or any Beneficiary, as the case may be, the number of Common Shares then underlying the Director’s RSUs and/or Deferred Shares. Notwithstanding the foregoing to the contrary, the Company may amend this Plan as it deems necessary or desirable to comply with the requirements of Code section 409A, as amended, and the regulations and pronouncements thereunder, regardless of whether any such amendment shall cause a reduction or cessation of the Equity Account prior to the adoption of such amendment.



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(b) Plan Termination under Code section 409A. Generally, payments may be accelerated upon Plan termination only if:

    (i)

the Company is terminating an entire category of aggregated plans, that is, all other plans of a similar type (i.e., that are required to be aggregated with the terminating plan under the Code section 409A final regulations);

 

(ii)

all payments to the Directors as a result of the Plan termination are not made until at least twelve (12) months after action taken to terminate the Plan is taken, that is, all payments must be made between 13 and 24 months after the date such action is taken; and


(iii)

no similar successor plan can be established within three (3) years following the date the action to terminate the Plan was taken.  


ARTICLE VII
MISCELLANEOUS

7.01

Interpretation Consistent with Code Section 409A.  The intent is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith.  If any provision of this Plan would cause the Director to incur any additional tax or interest under Code section 409A, the Company, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall be made in good faith and shall, to the extent reasonably possible, maintain the original intent of the applicable provision of this Plan without violating the provisions of Code section 409A.

7.02

Tax Withholding.  If, and solely to the extent required by applicable law, the Company will have the power to withhold, or require the Director to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to the Director’s award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit the Director to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of the Director’s RSU award and/or Deferred Share award withheld by the Company or   (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy the Director’s statutory minimum Federal, state and local tax obligation associated with the transaction.

7.03

Common Shares Subject to an Award.  The Common Shares to be delivered in connection with the Director’s award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.



7



7.04

Successor.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, if the Director’s RSUs and/or Deferred Shares remain outstanding, to unconditionally assume the obligations of the Company with respect to the Director’s RSUs and/or Deferred Shares in writing and will provide a copy of the assumption to the Director.

7.05

Requirements of Law.  The granting of the Director’s RSU award and/or Deferred Share award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

7.06

Instrument and Securities Law Compliance.  The Company shall have the authority to determine the instruments by which the Director’s award shall be evidenced.  Instruments evidencing the Director’s RSU award and/or Deferred Share award may contain such other provisions as the Company deems advisable.  In addition, any Common Shares issued in connection with the Director’s RSU award and/or Deferred Share award shall be registered with the United States Securities and Exchange Commission at the expense of the Company for resale on or before the first day on which the Director may transfer the shares under the RSU award and/or Deferred Share award (or such later date as the Director requests that is in compliance with the law and permissible under the applicable Company plan) unless such shares are eligible for sale by the Director pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of the Director’s counsel, which registration shall be in a form reasonably acceptable to the Director, shall be subject to the Director’s reasonable prior review and comments, shall remain effective until all Common Shares subject to the RSU award and/or Deferred Share award have been sold (but need not be effective for more than 365 days after first day on which the Director may transfer the Common Shares subject to the Director’s RSU award and/or Deferred Share award or, if applicable, such later date as to which the Director shall have requested effectiveness) and the Company and the Director shall, prior to the effectiveness of the registration, enter into a customary registration rights which will contain provisions, among other things, requiring the Company to indemnify the Director and any third persons reasonably requested by the Director in connection with the sale of any Common Shares and reimburse the Director for the Director’s reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of the Director’s death, or other permitted private transfer of the Common Shares, all of the Director’s rights under this Section 7.06 shall be transferred to the Director’s Beneficiary.

7.07

Governing Law.  The validity, interpretation, construction and performance of this Plan and the Director’s RSU award and/or Deferred Share award shall be governed by the laws of the State of Connecticut.

 



8


EX-10.38 14 ex1038.htm DIRECTORS CASH DEFERRAL PLAN





EXHIBIT 10.38







THE PHOENIX COMPANIES, INC.
DIRECTORS CASH DEFERRAL PLAN



Effective as of January 1, 2009


 





THE PHOENIX COMPANIES, INC.
DIRECTORS CASH DEFERRAL PLAN

ARTICLE I

PURPOSE AND EFFECTIVE DATE

1.01

Purpose.   The Phoenix Companies, Inc. Directors Cash Deferral Plan is intended to provide current, duly-elected non-employee members of The Phoenix Companies, Inc. Board of Directors with a plan to defer all or a portion of the cash portion of the Directors’ compensation.  It is the Company’s desire to have the benefit of the Director’s continued loyalty, service and counsel and also to assist the Director in planning for retirement and certain other contingencies.  The Phoenix Companies, Inc. Directors Cash Deferral Plan is intended to be an unfunded plan under the Employee Retirement Income Security Act of 1974, as amended.

1.02

Effective Date.   The Phoenix Companies, Inc. Directors Cash Deferral Plan is effective as of January 1, 2009.

ARTICLE II

DEFINITIONS

Wherever used in this Plan, unless the context clearly indicates otherwise, the following terms shall have the following meanings:

2.01

“Beneficiary” means the person(s) or entity, including one or more trusts, last designated by a Participant on a form or electronic media and accepted by the Plan Administrator or its duly authorized representative as a beneficiary, co-beneficiary, or contingent beneficiary to receive benefits payable under the Plan in the event of the death of the Participant.  In the absence of any such designation, the Beneficiary shall be (i) the Participant’s surviving spouse or domestic partner, (ii) if there is no surviving spouse or domestic partner, the Participant’s children (including stepchildren and adopted children) per stirpes, or (iii) if there is no surviving spouse or domestic partner and/or children per stirpes, the Participant’s estate.  

2.02

"Benefit" means the amount equal to a Participant's Deferred Compensation Benefit.

2.03

“Benefit Plans Committee” means the committee which shall be composed of the Chief Executive Officer, the Chief Financial Officer and the Chief Investment Officer, or any other person(s) designated by the Chief Executive Officer.

2.04

“Board of Directors” means the board of directors of the Company or any of its subsidiaries.

2.05

“Code” means the Internal Revenue Code of 1986, as amended.

2.06

“Company” means The Phoenix Companies, Inc.





2.07

“Compensation” means the cash portion of the Director’s annual cash retainer, committee fees, meeting fees and any other cash payments that a Director may receive attributable to service as a member of the Board of Directors.

2.08

“Deferred Compensation Benefit” means the amount determined in accordance with the provisions of Article IV of this Plan.

2.09

“Deferred Compensation Credit” means the amount determined in accordance with the provisions of Section 4.02 of this Plan.

2.10

“Deferred Compensation Plan Election” means a Participant’s election to defer a portion of Compensation as set forth in Section 4.03.

2.11

“Deferred Compensation Investment Account” means the book account established on behalf of a Participant under Article VI of this Plan.

2.12

“Director” means a current, duly-elected non-employee member of the Company’s
Board of Directors.

2.13

“Disability” means that a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.14

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

2.15

“Governing Body” means the Board of Directors, or any committee designated to act in such capacity by the Board of Directors.

2.16

“Investment Funds” means the funds designated by the Benefit Plans Committee as available investment options under the Plan, as the same may, from time to time, be changed by action of the Benefit Plans Committee.

2.17

“Participant” means a Director who meets the eligibility requirements of Article III and elects to participate in the Plan.

2.18

“Plan” means The Phoenix Companies, Inc. Directors Cash Deferral Plan as is set forth in this document as it may be amended from time to time.

2.19

“Plan Administrator” means the Benefit Plans Committee, designated to administer and manage the Plan and its deemed investments.

2.20

“Plan Year” means the calendar year.

2.21

“Retirement” means mandatory retirement from the Board of Directors pursuant to the Company’s mandatory retirement policy for Directors.

2




2.22

Separation from Service shall have the meaning set forth and described in the final regulations promulgated under Code section 409A.

2.23

“Specified Employee” means, for a non-employee Director who becomes an officer of the Company, a Director who, as of the date of the Director’s Separation from Service, is a key employee of the Company whose stock is publicly traded on an established securities market or otherwise.  A Director is a key employee if the Director meets the requirements of Code section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the regulations thereunder and disregarding Code section 416(i)(5)) at any time during the 12-month period ending on a Specified Employee identification date.  If a Director is a key employee as of a Specified Employee identification date, the Director is treated as a key employee (and therefore a Specified Employee) for the entire 12-month period beginning on the Specified Employee effective date.  For any nonqualified deferred compensation plan of the Company that is subject to Code section 409A, the Specified Employee identification date is December 31 of the preceding calendar year, and the Specified Employee effective date is April 1 of the current calendar year.

ARTICLE III

PARTICIPATION


3.01

Eligibility.  With respect to any Plan Year, any current, duly-elected non-employee Director of the Company who has elected to defer at least a portion of the Director’s Compensation shall be eligible to participate in this Plan.

3.02

Commencement of Participation.   Each eligible Director shall become a Participant in the Plan as of the date he or she meets the above requirement and completes a Deferred Compensation Plan Election as described in Section 4.03.

3.03

Termination of Participation.  A Director shall cease to be a Participant as of the date such Director ceases to meet all of the requirements of Section 3.01 above; provided, however, that benefits accrued by the Director as of such date shall not be reduced and shall be paid as provided herein.

ARTICLE IV

DEFERRED COMPENSATION


4.01

Deferred Compensation Benefit.  A Participant’s Deferred Compensation Benefit shall be equal to any amounts deferred by the Participant and credited to a Deferred Compensation Investment Account established for such Participant.

4.02

Deferred Compensation Credit.  A Participant’s Deferred Compensation Credits for any Plan Year shall consist of an amount the Participant elected to defer pursuant to Section 4.03.

4.03

Deferred Compensation Plan Election.  Each year prior to the beginning of the calendar year in which such Compensation would otherwise be paid, the Participant may make an


3




irrevocable election to defer between one percent (1%) and one-hundred percent (100%) of such Participant’s Compensation for a Plan Year.

ARTICLE V

ELECTION TO DEFER AND ELECTION AS TO TIME AND FORM OF PAYMENT


5.01

Elections to Defer Under Section 4.03.


(a)

Deferral elections must be made by the end of the Participant’s taxable year immediately preceding the taxable year in which the services underlying the compensation are to be performed.  All such deferral elections become irrevocable as of the last day of the immediately preceding taxable year.


A newly eligible Participant must make an election within 30 days of initial eligibility (based on the plan aggregation rules) and such election applies only to Compensation on and after the election date, but shall be effective for the remaining portion of the calendar year in which the Participant is elected.  All such deferral elections become irrevocable as of the 30th day.


(b)

Deferred Compensation Elections will be carried over from year to year until the Participant makes an affirmative election to modify or terminate the election within the permitted time frames.


5.02

Elections – Time and Form of Payment.  The Participant must elect pursuant to the procedure established by the Plan Administrator within the time frames set forth in Section 5.01, the form of payment of the Deferred Compensation Investment Account hereunder.


(a)

Time of Payment – subject to Section 5.03, a distribution will always commence upon the Participant’s Separation from Service.


(b)

Form of Payment – the Participant may elect, as set forth above in this Article V, to receive his or her Benefit in one of the following forms of payment:


(i)

lump sum; or

(ii)

annual installments over a period not exceeding ten (10) years.


A Participant who fails to make such an election shall be deemed to have elected a lump sum distribution of the Participant’s Deferred Compensation Investment Account.  Any lump sum payment will be paid within 90 days of the Separation from Service.  Any installment payments will be made on a fixed schedule as specified in the Participant’s election, with the first installment to be paid within 90 days of the Participant’s Separation from Service.

If the annual installment method is elected, the Company, in its sole discretion, may elect that all amounts notionally held in the Deferred Compensation

4




Investment Account be withdrawn therefrom up to thirty (30) days prior to the first installment payment date and be deemed applied to purchase a period certain annuity in the name of the Company, and the amount payable to the Participant will be equivalent to the amounts payable under such annuity and in accordance with the installment payment schedule elected.

All distribution elections made pursuant to this Section 5.02 become irrevocable upon acceptance by the Plan Administrator.

5.03

Deferred Compensation Investment Account Distribution Provisions.  Notwithstanding any provision to the contrary in this Plan, for a Director who is a Specified Employee, the commencement date of any payment or the provision of any benefit from the Deferred Compensation Investment Account that would otherwise have occurred prior to the six month anniversary of the Director’s Separation from Service shall be postponed until the earlier to occur of (i) such six month anniversary and (ii) within 90 days following the Director’s death.  Upon the expiration of the six-month period, all payments and benefits delayed pursuant to this Section (whether they would have otherwise been payable in a lump sum or in installments in the absence of such delay) shall be paid or reimbursed to the Participant in a lump sum, and any remaining payments and benefits due under this Plan shall be paid or provided in accordance with the normal payment dates specified for them herein.

5.04

Payment of Benefit.  Payment of a Participant’s Deferred Compensation Investment Account shall be made or commence in accordance with the manner elected not later than 90 days after the applicable distribution event, as described in Section 5.02.

5.05

Death Benefit.  Within 90 days following the death of a Participant, the value of the Participant’s Deferred Compensation Investment Account, determined as of the date of distribution, shall be distributed to the Participant’s Beneficiary in the manner specified in the Participant’s distribution election.

5.06

Mandatory Distributions of Account Balances of $25,000 or Less.   If the value of the Participant’s Deferred Compensation Investment Account under this Plan is equal to $25,000 or less on his or her Separation of Service, then, notwithstanding anything else contained herein to the contrary, including the Participant’s elections, the Participant shall receive a lump sum payment of his or her Deferred Compensation Investment Account within 90 days after his or her Separation from Service.  

5.07

409A Transition Relief Provision.  Notwithstanding any other provision to the contrary in this Plan, Participants may be permitted to make elections prior to January 1, 2009 in accordance with the transition rules in effect under Code section 409A.

5.08

Suspension of Benefits Upon Re-Election.  Upon re-election, the benefits payable under this Plan cannot be suspended pursuant to Code section 409A, the regulations and guidance promulgated thereunder.

5




ARTICLE VI

INVESTMENT OF THE ACCOUNTS

6.01

Investment Accounts.  All Deferred Compensation Credits under Section 4.02 shall be made to the Participant’s Deferred Compensation Investment Account on the date that the Compensation would have otherwise been received by the Participant.  Such Deferred Compensation Credits shall be deemed to be invested in the Investment Fund(s) designated by the Participant in such manner as may be specified by the Plan Administrator, or, if no such designation is made, in the default Investment Fund designated from time to time by the Benefit Plans Committee.  Each Participant’s Deferred Compensation Investment Account will be adjusted on a daily basis by an amount equal to the amount of any adjustment that would have been made had the Participant’s credits been allocated and invested as herein provided; reduced, however, at the Company’s discretion, by an amount equal to the estimated income taxes, if any, payable by the Company on such adjustment, based on the Company’s highest tax rate on its net taxable income for the Plan Year in which such adjustment is made.  The Company reserves the right to reduce the interest or earnings on deferred compensation amounts for any federal or state taxes which it may incur as a result of interest or earnings on amounts held under this Plan.

6.02

Company Retains Control of Deemed Investments.  The election to designate deemed investments, as described above, shall be subject to restrictions as to minimum and maximum amounts as determined from time to time by the Plan Administrator.  Both initial and subsequent investment allocations must be made in one percent (1%) increments.  The Company shall have the right at any time to add new deemed investment options, cease to offer any or all of the deemed investment options, and alter or adjust the basis or method of calculating any interest or earnings for any of the investment options outlined above.  The Company shall be under no obligation to actually make any investment as described above.  Reference to any such investment shall be solely for the purpose of aiding the Company in measuring and meeting its liabilities under the terms of this Plan.  In any event, if any investments are made, the Company shall be named the sole owner and shall, except as otherwise determined by the Plan Administrator, have all of the rights and privileges conferred by any instrument evidencing such investments.  Such investments shall not be segregated, set aside or held in trust or escrow and shall at all times remain the unrestricted assets of the Company subject to the claim of its general creditors.

6.03

Value of Benefit.  The value of any benefit under this Plan at any point in time shall be equal to the value of the Deferred Compensation Investment Account as of the date of determination.

 

6




ARTICLE VII

FUNDING

7.01

Funding.  No special or separate fund shall be established by the Company and no segregation of assets shall be made to assure the payment of benefits under the Plan. No Participant shall have any right, title, or interest whatsoever in any specific asset of the Company.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.

ARTICLE VIII

CLAIMS FOR BENEFITS

8.01

Claims Procedure.  Claims for benefits under the Plan may be filed with the Plan Administrator on forms supplied by the Plan Administrator.  Written or electronic notice of the disposition of a claim shall be   furnished to the claimant within ninety (90) days after the application is filed (or within one hundred eighty (180) days if special circumstances require an extension of time for processing the claim and if written notice of such extension and circumstances are communicated to the claimant within the initial ninety (90) day period).  In the event the claim is wholly or partially denied, the reasons for the denial shall be specifically set forth in the notice in language calculated to be understood by the claimant, pertinent provisions of the Plan on which the decision is based shall be cited, and, where appropriate, a description of any additional material or information necessary to perfect the claim, and an explanation of why such material or information is necessary, will be provided.  In addition, the claimant shall be furnished with an explanation of the Plan's claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review.  A claimant must request a review of a denied claim in accordance with Section 8.02 and exhaust all remedies under the Plan before the claimant is permitted to bring a civil action for benefits.

8.02

Claims Review Procedure.  Any Director, former Director, or authorized representative or Beneficiary of either, who has been denied, either in whole or in part, a benefit by a decision of the Plan Administrator pursuant to Section 8.01 shall be entitled to request the Plan Administrator to give further consideration to his or her claim by filing with the Plan Administrator (on a form which may be obtained from the Plan Administrator) a request for review.  Such request, together with a written statement of the reasons why the claimant believes his or her claim should be allowed, shall be filed with the Plan Administrator no later than sixty (60) days after receipt of the notification provided for in Section 8.01.  If such request is so filed, the claimant or an authorized representative may submit written comments, documents, records and other information relating to the claim to the Plan Administrator within sixty (60) days after receipt of the notification provided for in Section 8.01.  The claim for review shall be given a full and fair review that takes

7




into account all comments, documents, records and other information submitted that relates to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The Plan Administrator shall provide the claimant or an authorized representative with written or electronic notice of the final decision as to the allowance of the claim within sixty (60) days of receipt of the request for review (or within one hundred twenty (120) days if special circumstances requires an extension of time for processing the request and if written notice of such extension and circumstances is given to the claimant or an authorized representative within the initial sixty (60) day period).  Such communication shall be written in a manner calculated to be understood by the claimant and shall include specific reasons for the decision, specific references to the pertinent Plan provisions on which the decision is based, a statement of the claimant or an authorized representative’s right to bring a civil action under ERISA section 502(a)  and a statement that the claimant or his or her Beneficiary is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant to the claim for benefits.  A document is relevant to the claim for benefits if it was relied upon in making the determination, was submitted, considered or generated in the course of making the determination or demonstrates that benefit determinations are made in accordance with the Plan and that Plan provisions have been applied consistently with respect to similarly situated claimants.

8.03

Lost or Unknown Participants.  If any benefits payable under this Plan to a Participant, or to such Participant’s legal representative or Beneficiary, cannot be paid by reason that such person cannot be located by the later of (i) the last day of the calendar year in which the payment was due and (ii) the 15th day of the third calendar month following the date specified under the Plan, after reasonable efforts have been made to locate such person, such benefits shall be forfeited and returned to the Company.

ARTICLE IX

ADMINISTRATION OF THE PLAN


9.01

Powers and Duties of the Plan Administrator.  The Plan Administrator shall be responsible for the administration of the Plan (including but not limited to complying with reporting and disclosure requirements, and establishing and maintaining Plan records).  Any authority exercised by the Plan Administrator under the Plan shall be exercised by the Plan Administrator in its sole and absolute discretion.  Subject to the terms of the Plan, the Plan Administrator is authorized to determine all questions arising in connection with the Plan, to determine the eligibility of individuals for benefits, to interpret the provisions of the Plan and to construe all of its terms, to prescribe, amend and rescind rules and regulations relating to the administration of the Plan, and to make all other determinations and take all other actions necessary or advisable for the administration and interpretation of the Plan or to carry out its provisions and purposes. Determinations, interpretations or other actions made or taken by the Plan Administrator pursuant to the provisions of the Plan shall be final, binding and conclusive for all purposes and upon all persons.

8




9.02

Agents.  The Plan Administrator may engage such legal counsel, certified public accountants and other advisers and service providers, who may be advisers or service providers for the Company, and make use of such agents and clerical or other personnel, as it shall require or may deem advisable for purposes of the Plan.  The Plan Administrator may rely upon the written opinion of any legal counsel or accountants engaged by the Plan Administrator, and may delegate to any such agent its authority to perform any act hereunder, including, without limitation, those matters involving the exercise of discretion, provided that such delegation shall be subject to revocation at any time at the discretion of the Plan Administrator.

9.03

Reports to Governing Body.  The Plan Administrator shall report to the Governing Body or to a committee of the Governing Body designated for that purpose, as frequently as the Governing Body or such committee shall specify, with regard to the matters for which the Plan Administrator is responsible under the Plan.

9.04

Instructions for Payments.  All requests of or directions for payment, disbursement or settlement shall be managed by the Plan Administrator or such other person(s) as the Plan Administrator may from time to time designate in writing, including third-party record keepers and administrators.  This person shall cause to be kept full and accurate accounts of payments, disbursements and settlements under the Plan.

9.05

Hold Harmless.  To the maximum extent permitted by law, no person serving as the Plan Administrator shall be personally liable by reason of any contract or other instrument executed by such person or on such person’s behalf in such person’s capacity as the Plan Administrator nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless, each such person and each other officer, employee, or director to whom any duty or power relating to the administration or interpretation of the Plan against any cost or expense (including counsel fees) or liability arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud or bad faith.

9.06

Service of Process.  The Secretary of the Company or such other person designated by the Governing Body shall be the agent for service of process under the Plan.

ARTICLE X

MISCELLANEOUS


10.01

Amendment and Termination.


(a)

The Plan may be amended, modified or terminated at any time by the Company, at its sole discretion, subject to Section 10.01(b) below and except that, without the consent of any Participant or Beneficiary, if applicable, no such amendment, modification or termination shall affect, reduce or diminish any rights or benefits of any Participant accrued or in pay status as of the date of such amendment, modification or termination.  However no amendment, modification or termination shall result or cause an acceleration of payments or benefits under the


 

9




Plan, unless the termination satisfies the Code section 409A safe harbor summarized in Section 10.01(b).  Further, at its sole discretion, the Company may elect, upon termination of this Plan, to distribute in one (1) lump sum to the Participant or any Beneficiary, as the case may be, the value of the Deferred Compensation Investment Account or the commuted value of any remaining installment payments.  Notwithstanding the foregoing to the contrary, the Company may amend this Plan as it deems necessary or desirable to comply with the requirements of Code section 409A, as amended, and the regulations and pronouncements thereunder, regardless of whether any such amendment shall cause a reduction or cessation of the benefit prior to the adoption of such amendment.


(b)

Plan Termination under Code section 409A. Generally, payments may be accelerated upon Plan termination only if:

 

(i)     the Company is terminating an entire category of aggregated plans, that is,
         all other plans of a similar type (i.e., that are required to be aggregated with
         the terminating plan under the Code section 409A final regulations);

 

(ii)    all payments to the Directors as a result of the Plan termination are not
        made until at least twelve (12) months after action taken to terminate the
        Plan is taken, that is, all payments must be made between 13 and 24 
        months after the date such action is taken; and


(iii)

no similar successor plan can be established within three (3) years following the date the action to terminate the Plan was taken.


10.02

Nonassignability.  The benefits payable under this Plan shall not be subject to alienation, assignment, garnishment, execution or levy of any kind and any attempt to cause any benefits to be so subjected shall not be recognized, except to the extent required by applicable law; provided, however, that at the sole discretion of the Plan Administrator, a Participant or Beneficiary may assign his or her entire interest in his or her Deferred Compensation Investment Account to the Participant’s or Beneficiary’s spouse or former spouse, as the case may be, under a divorce or separation instrument described in subparagraph (A) of Code Section 71(b)(2).  Furthermore, except by will or the laws of descent or distribution, the Participant and any Beneficiary may not anticipate the benefits provided hereunder by assignment, pledge, sale or similar act.

10.03

Other Rights.  This Plan creates no rights in the Participant to continue the Participant's affiliation with the Company, if any, for any length of time, nor does it create any rights in the Participant or obligations in the part of the Company other than those set forth herein.

10.04

Interpretation Consistent with Code Section 409A.  The intent of the parties is that payments and benefits under this Plan comply with Code section 409A and, accordingly, to the maximum extent permitted, this Plan shall be interpreted to be in compliance therewith.  If any provision of this Plan would cause the Participant to incur any

 

10




additional tax or interest under Code section 409A, the Company, to the extent feasible, shall reform such provision to try to comply with Code section 409A through good faith modifications to the minimum extent reasonably appropriate to conform to Code section 409A.  To the extent that any provision hereof is modified to comply with Code section 409A, such modification shall, to the extent reasonably possible, maintain the original intent of the applicable provision without violating the provisions of Code section 409A.

10.05

Successor Company.  In the event of the dissolution, merger, consolidation or reorganization of the Company, provision may be made by which a successor to all or a major portion of the Company’s property or business shall continue the Plan, and the successor shall have all of the power, duties and responsibilities of the Company under the Plan.

10.06

Governing Law.  This Plan shall be construed and enforced in accordance with, and governed by, the laws of the State of Connecticut, without giving effect to the conflict of law provisions thereof.

10.07

Tax Withholding.  The Company may withhold from a payment any federal, state or local taxes required by law to be withheld with respect to such payments and such sums as the Company may reasonably estimate are necessary to cover taxes for which the Company may be liable and which may be assessed with regard to such payment.

10.08

Illegality of Particular Provision.  The illegality of any particular provision of this document shall not affect the other provisions and the document shall be construed in all respects as if such invalid provision were omitted.

11


EX-10.42 15 ex1042.htm LETTER AGREEMENT

EXHIBIT 10.42



May 6, 2008




Mrs. Dona D. Young

Chairman, President and Chief Executive Officer

The Phoenix Companies, Inc.

One American Row

Hartford, CT 06102-5056


Dear Mrs. Young:


This letter (“Letter Agreement”) serves to memorialize our understanding with respect to the modification of the distribution dates in respect of the restricted stock units (“RSUs”) referenced in the below table (the “Outstanding Award Table”).  Because Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), has substantially limited the parties’ ability to modify the distribution provisions in the future, were that determined to be appropriate, the parties have agreed to provide you the opportunity to modify the distribution dates in respect of your RSUs by written election delivered on or before December 31, 2008.


For the avoidance of doubt, the changes set forth herein with respect to the distribution dates of the RSUs do not in any way amend, modify or waive your obligation to comply with the company’s stock ownership guidelines, as currently in effect and as the same may be amended from time to time.


The currently effective payment terms for each of the RSU awards are specified below.  


Award
Type

Award
Date

Number of RSUs

Vested

Status

Payment
Date

Employment Agreement

December 31, 2002

394,736.842

Vested

Termination

Employment Agreement

May 18, 2005

  90,901.000

Will vest
May 18, 2008

Termination


As set forth below, we have agreed to a modification of the payment terms for the above-referenced RSUs as permitted by the transitional relief provided with respect to Section 409A under Notice 2007-86.  However, if a Separation from Service, as defined in Section 409A, or any other event that would entitle you to receive payment in respect of your referenced RSUs in 2008, occurs in 2008, then distribution shall be made to you in respect of such RSUs pursuant to the terms in effect prior to the date of this Letter Agreement and without regard to any election that you may make pursuant to this Letter Agreement.





2




Employment Agreement RSUs



As described in the Outstanding Award Table, you were awarded 394,736.842 RSUs (the “2003 Employment RSUs”) pursuant to Exhibit A of your Executive Employment Agreement, dated January 1, 2003, and 90,901.000 RSUs (the “2005 Employment RSUs”) pursuant to Annex A of your Amended and Restated Employment Agreement, dated May 18, 2005 (the “2005 Employment Agreement”).  Pursuant to Section 4(c)(i) of the 2005 Employment Agreement, and Section 1.4 of Annex A of the 2005 Employment Agreement, respectively, the 2003 Employment RSUs and the 2005 Employment RSUs are scheduled to be paid six months and one day following your termination of employment.  We have agreed that, notwithstanding these previously specified distribution provisions, you have the opportunity to elect, in writing, on or before December 31, 2008, to have the 2003 Employment RSUs convert into and settle in common shares of company stock on a fixed date or dates on or after January 1, 2009 and that, if you elect such a fixed distribution date or dates with respect to such 2003 Employment RSUs, the dividend equivalents associated with the RSUs being settled on any such date, and any interest accrued thereon, will be paid in cash on such date.  We have also agreed that, notwithstanding these previously specified distribution provisions, but subject to such 2005 Employment RSUs becoming vested in accordance with their otherwise applicable terms, you have the opportunity to elect, in writing, on or before December 31, 2008, to have the 2005 Employment RSUs convert into and settle in common shares of company stock on a fixed date or dates on or after January 1, 2009 and that, if you elect such a fixed distribution date or dates with respect to such 2005 Employment RSUs, the dividend equivalents associated with the RSUs being settled on any such date, and any interest accrued thereon, will be paid in cash on such date.  This Letter Agreement constitutes an amendment to Section 4(c)(i) and Section 1.4 of Annex A of the 2005 Employment Agreement.


We have also agreed that, if you elect a settlement at a fixed date or dates in respect of any of your 2003 Employment RSUs or 2005 Employment RSUs, you will be permitted to have the least number of whole shares of common stock otherwise distributable to you having a value, on the date of such settlement, equal to the minimum amount required to be withheld at law in respect of such distribution of shares withheld by the Company to satisfy such minimum required withholding obligation.


If you agree that the above terms properly reflect our agreement and understanding with respect to the opportunity for you to modify the time at which the RSUs listed in the Outstanding Award Table shall be distributed to you, please countersign both copies of this Letter Agreement and return one copy to me.








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THE PHOENIX COMPANIES, INC.



/s/ Bonnie J. Malley                              


Date:

5/6/08                                      




DONA D. YOUNG


/s/ Dona D. Young                                


Date:

5-6-08                                      



EX-10.43 16 ex1043.htm SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

EXHIBIT 10.43


SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT


SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of May 6, 2008 (the “Second Restatement Date”), by and between The Phoenix Companies, Inc., a Delaware corporation (the “Company”) and Dona D. Young (the “Executive”).

WITNESSETH

WHEREAS, prior to the Second Restatement Date the Executive served the Company and Phoenix Life Insurance Company (“PLIC”) as the Chief Executive Officer and Chairman and served on the Boards of Directors of the Company  and PLIC (collectively, the “Board”);

WHEREAS, the Company and the Executive entered into an Amended and Restated Employment Agreement as to the terms of her continuing employment dated as of May 18, 2005 (the “Restatement Date”);

WHEREAS, the Company and the Executive desire to enter into the Agreement to bring the Amended and Restated Employment Agreement into compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”); and

WHEREAS, except as otherwise expressly provided herein, this Agreement shall supersede any prior written agreement entered into between the Executive and the Company prior to the Second Restatement Date with respect to the subject matter hereof, including, without limitation, the agreement dated January 1, 2003 and the Amended and Restated Employment Agreement.

NOW THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.

POSITION/DUTIES.

(a)

During the Employment Term (as defined in Section 2 below), the Executive shall serve as the Chief Executive Officer and Chairman of the Company and PLIC.  In this capacity the Executive shall have such duties, authorities and responsibilities commensurate with the position of Chief Executive Officer and any other position she may then hold; in addition, the Executive shall have such other duties and responsibilities as the Board shall designate that are consistent with the Executive’s position.  The Executive shall report directly to the Board. During the Employment Term, the Company shall use its best efforts to cause the Executive to be re-nominated by the Company to be a member of the Board as necessary so that her membership on the Board may continue uninterrupted during the Employment Term.

(b)

During the Employment Term, the Executive shall devote substantially all of her business time to the performance of her duties with the Company and its affiliates and use good




 



faith efforts to discharge her duties.  However, so long as the following activities do not (individually or in the aggregate) materially interfere with the performance of the Executive’s duties with the Company and are conducted in compliance with the Company’s Code of Conduct (as in effect from time to time), the Executive may (i) participate in charitable, civic, educational, professional, community or industry affairs or serve on the boards of directors or advisory boards of other companies; provided, however, that the Executive shall not serve as a director on more than three (3) boards of directors or advisory boards of other for-profit companies without the prior written approval of the Board, and (ii) manage her and her family’s personal investments.

2.

EMPLOYMENT TERM.  Subject to earlier termination as provided in this Section 2 or in Section 6, the Executive’s term of employment under this Agreement shall be for the period commencing on the Second Restatement Date and ending on December 31, 2008; provided, however, that, the term of this Agreement shall automatically extend for successive one-year periods without further action by either party hereto on December 31, 2008 and each anniversary thereof, unless either party shall give the other party written notice, at least 90 days prior to the date on which the term would otherwise extend pursuant to this proviso, that she or it does not want the term to so extend.  In no event, however, shall the term of Executive’s employment under this Agreement extend beyond any mandatory retirement date at or after age 65 applicable to the Executive under the Company’s policies and established in a manner consistent with applicable law (the “Mandatory Retirement Date”).  The term of this Agreement, as the same may be extended pursuant to the second preceding sentence, shall hereafter be referred to as the “Employment Term.”

3.

BASE SALARY.  The Company agrees to pay the Executive a base salary (the “Base Salary”) at an annual rate of not less than $950,000, payable in accordance with the regular payroll practices of the Company.  The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof) and may be increased, but not decreased, from time to time by the Board.  Once increased, the Executive’s Base Salary may not be decreased below such increased amount.  No increase in Base Salary shall be used to offset or otherwise reduce any obligations of the Company to the Executive hereunder or otherwise.  The Base Salary as increased from time to time shall constitute the “Base Salary” for purposes of this Agreement.

4.

INCENTIVE COMPENSATION.

(a)

SHORT-TERM BONUS.  During the Employment Term, the Executive shall have the opportunity to earn an annual bonus under the Performance Incentive Plan (or a successor or supplemental annual bonus plan, including, without limitation, any short-term plan referenced in Section 4(f) hereof) (“PIP”), with a target amount not less than 160% of the Executive’s Base Salary, based upon the satisfaction of generally applicable financial criteria (as determined in good faith by the Board or a committee thereof after consultation with the Executive), with a higher or lower amount received for higher or lower achievement (the “PlP Bonus”).

(b)

LONG-TERM INCENTIVE COMPENSATION.  During the Employment Term, the Executive shall have the opportunity to earn long-term incentive compensation, in such form and manner as the Board, or a duly authorized committee of the Board, shall determine, including in cash, Company stock or other Company equity, under the Company’s Long Term



2

 



Incentive Plan (or a successor or supplemental long-term incentive compensation plan) (“LTIP”), with a target amount for the three (3) year cycle starting in such year not less than the percentage of the Executive’s Base Salary determined below, and based upon the satisfaction of generally applicable financial criteria (as determined in good faith by the Board or a committee thereof after consultation with the Executive), with a higher or lower amount received for higher or lower achievement (the “LTIP Awards”).  The percentage of Base Salary referenced in the immediately preceding sentence shall be (i) 225%, with respect to the cycle commencing in calendar year 2005, (ii) 235%, with respect to the cycle commencing in calendar year 2006, and (iii) 250%, with respect to the cycle commencing in each calendar year during the Employment Term after 2006.  For the avoidance of doubt, no portion of the awards referenced in Section 4(c) or 4(d) shall be treated as being made in respect of the Company’s obligations under this Section 4(b).

(c)

RESTRICTED STOCK UNITS.  

(i)

2003 Grant.  Notwithstanding that this Agreement supersedes the employment agreement between the Executive and the Company dated as of January 1, 2003, the terms and conditions of that agreement related to the grant to the Executive of restricted stock units (the “Initial RSUs”) as set forth in Exhibit A thereto shall continue in full force and effect, except that the distribution date referenced in Section 1.4 of such Exhibit A shall be changed to the earlier of (1) six months and one day following Executive’s “separation from service,” as such term is defined under Section 409A or (2) the Executive’s date of death, and the distribution date specified in Section 2.4 of such Exhibit A shall be the distribution date specified in such Section 1.4.


 

(ii)

2005 Grant.  The Executive was also granted in the Amended and Restated Employment Agreement an additional award of restricted stock units (the “Supplemental RSUs”) in respect of the greatest number of whole units (excluding fractions) equal to or less than the quotient of (x) $1,000,000 and (y) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding the Restatement Date (the “Average Value”).  The Supplemental RSUs shall vest at the conclusion of the three (3) year period commencing on the Restatement Date, and was issued in accordance with and subject to the terms and conditions set forth in, Annex A hereto, which shall be amended to comply with Section 409A as provided in the amended Annex A hereto.

(d)

PERFORMANCE BASED RESTRICTED STOCK UNITS.  The Executive was also granted in the Amended and Restated Employment Agreement an award of performance based restricted stock units in respect of the greatest number of whole units (excluding fractions) equal to or less than the quotient of (x) $500,000 and (y) the Average Value (the “Performance Based RSUs”).  If the performance criteria established with respect to performance based restricted stock unit awards granted to other employees of the Company for the long-term incentive plan 2005-07 performance period (the “2007 PSUs”) are satisfied (i) at a level that enables a payment in respect of such 2007 PSUs at or above target levels, the Performance Based RSUs shall vest in full, (ii) at threshold, one-half of the Performance Based RSUs shall vest or (iii) at a level above threshold, but below target, the number of Performance Based RSUs that



3

 



shall vest shall be determined based on the actual performance achieved, using calculated pro rata between threshold and target levels (e.g., if the actual performance is mid-way between the threshold level and the target level of performance, 75% of the Performance Based RSUs shall vest).  The remaining terms and conditions of the Performance Based RSUs shall be as specified in Annex B hereto, which shall be amended to comply with Section 409A as provided in the amended Annex B hereto.

(e)

FUTURE EQUITY GRANTS.  The Board (or a duly authorized committee thereof) shall have the authority, in its sole discretion (but subject to the Company’s governing documents, the terms of any applicable plan, the rules of the New York Stock Exchange and applicable law), but no obligation, to make such additional grants or opportunities available on such terms and conditions, in such form and in such amounts as the Board (or such committee) shall determine.

5.

EMPLOYEE BENEFITS.

(a)

BENEFIT PLANS.  The Executive shall be entitled to participate in any employee benefit plan of the Company and PLIC, including, but not limited to, equity, pension, thrift, profit sharing, medical coverage, education, or other retirement or welfare benefits that the Company or PLIC has adopted or may adopt, maintain or contribute to, for the benefit of its senior executives, at a level commensurate with her position within the Company.

(b)

VACATIONS.  The Executive shall be entitled to annual paid vacation, holidays and floating days in accordance with the Company’s policy applicable to senior executives, but in no event less than the Executive’s paid vacation, holidays and floating days in effect prior to the Second Restatement Date, which vacation may be taken at such times as the Executive elects with due regard to the needs of the Company.

(c)

PERQUISITES.  The Company shall provide to the Executive, at the Company’s cost, all perquisites to which other senior executives of the Company generally are (or become) entitled, and such other perquisites as are suitable to the character of the Executive’s position with the Company and adequate for the performance of her duties hereunder, subject to such specific limits on such perquisites as may from time to time be imposed by the Board.  To the extent legally permissible, the Company shall not treat such amounts or any of the following amounts or benefits as income to the Executive.  In any event, the Executive shall be entitled to receive the following during the Employment Term:

(i)

During the Employment Term, the Executive shall receive all perquisites the Executive was entitled to receive as Chief Executive Officer of the Company immediately prior to the Second Restatement Date; provided that any amount of expenses eligible for reimbursement, or benefits to be provided, during Executive’s taxable year shall not affect the expenses eligible for reimbursement, or benefits to be provided, in any other of Executive’s taxable years; and provided further that the reimbursement of any eligible expense is made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.  



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(ii)

Subject to the ability of the Company to be able to continue to insure such obligations through the purchase of policies from one or more reputable insurers, the Company shall provide Executive supplemental disability insurance benefits which are substantially the same as those provided to the Executive immediately prior to the Second Restatement Date.

(d)

BUSINESS AND ENTERTAINMENT EXPENSES.  Upon presentation of appropriate documentation, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy for all reasonable business and entertainment expenses incurred in connection with the performance of her duties hereunder.

6.

TERMINATION.  The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

(a)

DISABILITY.  Upon 30 days’ written notice by the Company to the Executive of termination due to Disability, provided that the Executive has not returned to full-time employment within such 30-day period.  For purposes of this Agreement, “Disability” shall mean that by reason of physical or mental illness or incapacity the Executive (i) has been unable to carry out her material duties pursuant to this Agreement for 180 days or more during any 365-day period and (ii) has qualified for long-term disability and health coverage under the terms of the Company’s applicable long-term disability program.

(b)

DEATH.  Automatically on the date of death of the Executive.

(c)

CAUSE.  Immediately upon written notice by the Company to the Executive of a termination for Cause, provided that such notice is given within 90 days after the Chairman of the Executive Committee or the Audit Committee has actual knowledge of the Cause event. “Cause” shall mean (i) the willful misconduct of the Executive (including, without limitation, a willful material violation of the Code of Conduct) with regard to the Company that is materially injurious to the Company (including, without limitation, material financial or reputational harm); provided, however, that no act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive not in good faith or without reasonable belief that her action or omission was not adverse to the best interests of the Company; (ii) the willful and continued failure of the Executive to attempt in good faith to substantially perform the Executive’s duties with the Company (other that any such failure resulting from incapacity due to physical or mental illness), which failure is not remedied within 15 business days after written notice from the Company specifying the details thereof; or (iii) the conviction of the Executive of (or the plea by the Executive of guilty or nolo contendere to) any (A) felony or (B) criminal misdemeanor involving fraud, false statements or misleading omissions, embezzlement, bribery, counterfeiting, extortion or an intentional wrongful taking, other than in the case of both (A) and (B), traffic-related offenses or as a result of vicarious liability for acts in which the Executive, except when acting on advice of counsel, had no direct involvement and no actual knowledge; provided that the Executive may be suspended with full compensation and benefits as if she remained in active service during any period prior to a conviction and after an indictment for such a felony or misdemeanor; or (iv) the Executive’s disqualification or bar by any governmental or self-regulatory authority from serving as Chief Executive Officer of the Company, Chairman of the Board or member of the Board, in each case,



5

 



as a result of disciplinary or similar action and after the conclusion of an appeal from a final administrative determination to a court of first impression; provided that the Executive may be suspended with full compensation and benefits as if she remained in active service during any period prior to the conclusion of such appeal and after such disqualification or bar.

Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause without (i) advance written notice, provided to the Executive not less than five business days prior to the date of termination, setting forth the Company’s intention to consider terminating the Executive, including a statement of the date of termination and the specific basis for such consideration for Cause; (ii) an opportunity for the Executive, together with her counsel, to be heard before the Board before termination and after such notice; (iii) a duly-adopted resolution of the Board, after such opportunity, stating that in accordance with the provisions of the next to last sentence of tins Section 6(d), the actions of the Executive constituted Cause and the basis thereof; and (iv) a written determination provided by the Board setting forth the acts and omissions that form the basis of such termination.  The failure to include any fact in such written determination that contributes to a showing of Cause does not preclude the Company from asserting that fact in enforcing its rights under this Agreement, provided that such fact is generally within the category (of categories (i)-(iv) enumerated in the definition of “Cause” above) specified as the basis for the Cause termination in the written determination and provided, further, in the case of assertions within category (ii) of the definition of “Cause” above, that such later assertion shall not be valid to the extent that, prior to the Cause termination, the Executive had not been given, with respect to such assertion, the required notice and right to effect a remedy.  Any determination by the Board hereunder shall be made by the affirmative vote of at least a two-thirds majority of the members of the Board (other than the Executive).  Any purported termination of employment of the Executive by the Company that does not meet all substantive and procedural requirements of this Section 6 shall be treated for all purposes under this Agreement as a termination without Cause.

(d)

WITHOUT CAUSE.  Upon written notice by the Company to the Executive of an involuntary termination without Cause, other than for death or Disability or on account of the Executive attaining her Mandatory Retirement Date.  

(e)

GOOD REASON.  Upon written notice by the Executive to the Company of a termination for Good Reason, provided that such notice is given within 90 days after the Executive has knowledge of the Good Reason event.  The failure to include any fact in such written notice that contributes to a showing of Good Reason does not preclude the Executive from asserting that fact in enforcing her rights under this Agreement, provided that such later assertion shall not be valid to the extent that, prior to the Good Reason termination, the Company had not been given, with respect to such assertion, the required notice and right to correct set forth in the following sentence.  “Good Reason” shall mean, without the express written consent of the Executive, the occurrence of any of the following events unless such events are fully corrected in all material respects by the Company within 30 days following written notification by the Executive to the Company that she intends to terminate her employment hereunder for one of the reasons set forth below:

(i)

any reduction or diminution (except temporarily during any period of physical or mental illness or incapacity) of the Executive’s title as Chief Executive



6

 



Officer, or a material reduction or diminution of the Executive’s then authorities, duties or responsibilities or reporting requirements with the Company;

(ii)

anyone other than the Executive is elected as the Chairman of the Board, unless service by the Executive as Chairman is prohibited by applicable law, regulation, or listing requirements;

(iii)

the assignment to the Executive of duties or responsibilities that are materially inconsistent with, and adverse to, her position;

(iv)

a material breach by the Company of any provision of this Agreement, including, but not limited to, any reduction in Base Salary and target levels with respect to the PIP Bonus (other than any reductions therein expressly permitted under Section 4(a) of this Agreement) or LTIP Awards, or any failure timely to pay any part of Executive’s compensation (including Base Salary and any bonus, if any) when due or to provide the benefits or perquisites contemplated herein;

(v)

the failure of the Company to obtain and deliver to the Executive a reasonably satisfactory written agreement from any successor to the Company to assume and agree to perform this Agreement;

(vi)

the Company giving Executive notice pursuant to Section 2 hereof that it does not want to extend the Employment Term as provided in such Section;

(vii)

the giving of a notice of non-renewal or non-extension by the Company of, or failure of the Company to elect to extend, after the agreement would otherwise expire, the change in control agreement then existing between the Company and the Executive, which event the Executive may treat as a Good Reason Event either at the time of the giving of the notice or upon the expiration of such change in control agreement; or

(viii)

the Executive’s no longer serving as a member of the Board unless (a) she resigned from the Board or (b) service by the Executive as a member of the Board is prohibited by applicable law, regulation, or listing requirements.

Suspension of the Executive with full compensation and benefits (in accordance with clause (iii) or (iv) of the definition of “Cause” set forth in the first paragraph of Section 6(c)) and termination of Executive’s employment on account of her attaining her Mandatory Retirement Date shall not constitute a basis for a Good Reason termination.

(f)

WITHOUT GOOD REASON.  Upon not less than 10 days’ advance written notice by the Executive to the Company of the Executive’s voluntary termination of employment without Good Reason, provided that the Company may, in its sole discretion, elect to make such termination effective earlier than as of the date that is specified in such notice.




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7.

CONSEQUENCES OF TERMINATION.

(a)

DISABILITY.  In the event the Executive’s employment is terminated as a result of Disability, the Company shall pay or provide the Executive (i) any unpaid Base Salary through the date of termination and any accrued but unused vacation; (ii) any unpaid bonus as declared or, if not then declared, as determined by the Board in good faith, with respect to any year or years ending prior to the date of termination, including the PIP Bonus and any LTIP Award for any completed performance period, which unpaid bonus shall be paid when it would otherwise be paid in such year of termination; (iii) reimbursement for any unreimbursed expenses (in accordance with Section 5(d)) incurred through the date of termination; and (iv) all other payments, benefits or fringe benefits to which the Executive may be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement, in accordance with the terms thereof (collectively, “Accrued Benefits”).  In addition, after the Executive’s termination of employment as a result of Disability, the Executive shall receive: (y) a cash payment equal to the PIP Bonus for the year in which termination occurs, based on the target level payable, at such time in the following year as the PIP Bonus would otherwise have been paid; provided, however, that any amount above actual earned level shall not be paid prior to six months and one day following the date of the Executive’s termination of employment (or the date of Executive’s death, if earlier); and (z) full payment of any LTIP Award granted under this Agreement (or any similar award made prior to the Second Restatement Date) that is payable upon the achievement of performance criteria (other than stock price) over a pre-determined performance period, including, without limitation, the Performance Based RSUs awarded pursuant to Section 4(d) and any other performance share award (each such LTIP Award and similar previously granted award, a “Performance-Based LTIP Award”), calculated based on target levels, with payment for each performance period determined as if the Executive were a participant for the full term of each of applicable performance period and paid at target levels at such times as provided in the Executive’s applicable award agreement.  All of the Initial RSUs referenced in Section 4(c) and all of the Supplemental RSUs referenced in Section 4(d) and any other outstanding unvested equity awards (other than any Performance-Based LTIP Awards, which are addressed above) held by the Executive shall immediately vest upon the Executive’s termination as a result of Disability and shall be paid out in accordance with the terms of the applicable plan or award agreement, and all vested stock options held by the Executive shall remain exercisable for a period of two (2) years thereafter, but in no event longer than the stated term of such options (the “Post-Termination Exercise Period”).

(b)

DEATH.  In the event the Executive’s employment is terminated as a result of the Executive’s death, the Executive’s estate or legal representative shall receive the same payments and benefits as if the Executive’s employment were terminated as a result of Disability (except that she will receive death benefits instead of disability benefits).

(c)

TERMINATION FOR CAUSE, WITHOUT GOOD REASON OR ON ACCOUNT OF MANDATORY RETIREMENT.  If the Executive’s employment should be terminated (i) by the Company for Cause, (ii) by the Executive without Good Reason or (iii) on account of the Executive attaining her Mandatory Retirement Date, the Company shall pay to the Executive any Accrued Benefits.  



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(d)

TERMINATION WITHOUT CAUSE OR FOR GOOD REASON.  If the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason, the Company shall pay or provide the Executive with the following payments and benefits:

(i)

the Accrued Benefits;

(ii)

subject to Section 22(b), an immediate lump sum cash payment equal to two (2) times the sum of:

(A)

the Base Salary; and

(B)

the PIP Bonus, based on the greater of (1) the stated target bonus for the year of termination and (2) the average of the PIP Bonuses (or, for years prior to 2005, the management incentive bonuses) earned by the Executive in the last two full fiscal years completed prior to termination.

(iii)

at such time as PIP Bonuses are paid to other executives generally in the following year, a pro-rata portion of the PIP Bonus the Executive would have earned for the year of her termination of employment (determined by multiplying the amount of said actual earned bonus by a fraction, the numerator of which is the number of days during the applicable year of termination that the Executive was employed by the Company and the denominator of which is 365);

(iv)

except as expressly provided in subclause (v) below, at such time as provided in the applicable plan or award agreement, in respect of any Performance-Based LTIP Award, at least a pro-rata portion of such Performance-Based LTIP Award, equal to the product of (x) (1) for any performance period ending in the year of termination, the actual bonus that would have been earned for that performance period, and (2) for each other performance period, the target amount payable in respect of such Performance-Based LTIP Award, and (y) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the applicable performance period and the denominator of which is the number of days in such performance period;

(v)

all of the Initial RSUs referenced in Section 4(c)(i), all of the Supplemental Units referenced in Section 4(c)(ii) and all of the Performance Based RSUs referenced in Section 4(d) shall immediately vest upon the Executive’s termination and be payable in accordance with the terms of the applicable plan or agreement and, with regard to all other equity grants (other than any Performance-Based LTIP Awards other than the Performance Based RSUs, each of which is addressed in Section 7(d)(iv)), pro rata vesting of the next tranche, to be vested based upon the relative number of days employed from the prior vesting date (or grant date if no prior vesting) to the next vesting date and the Post-Termination Exercise Period and paid in accordance with the terms of the applicable plan or agreement;

(vi)

for a period of two (2) years after such termination, the Company, at its sole expense, shall provide the Executive (and her dependents) with health insurance coverage under the Company’s group health insurance plan, provided that coverage for



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the period after the end of the eighteen (18)-month period following the Executive’s termination shall be deemed to be monthly in-kind payments.  To the extent the plan is a “self-insured medical reimbursement plan” under Section 105(h) of the Code and such coverage would be discriminatory thereunder, the premiums (both during and after the eighteen (18)-month period) shall be treated as taxable income to the Executive and the Executive shall be grossed-up therefor on a monthly basis at the same time as the premium is deemed paid, such that the Executive shall have no after-tax cost therefor or for the gross-up; provided further that any gross-up that would be paid within the Delay Period (as defined in Section 22 hereof) shall not be paid during such period, but shall be paid immediately thereafter.  The Company’s obligation hereunder shall cease upon the Executive’s becoming eligible for the health plan of another employer of Executive;

(vii)

subject to Section 22(b), an amount equal to the lump sum value (based on the actuarial assumptions used under the respective plan) of two years of additional service and age credit for pension purposes under any qualified or nonqualified defined benefit type pension plan or arrangement of the Company (with the Base Salary used as the salary component of “final average earnings” for purposes of this calculation), which payments shall be made as soon as practicable after termination of employment;

(viii)

subject to Section 22(b), an amount equal to two (2) years of the maximum Company matching contribution (assuming the Executive deferred the maximum amount and continued to earn her then current Base Salary) under any type of qualified or nonqualified deferred compensation plan sponsored by the Company, which amount shall be paid as soon as practicable after termination of employment;

(ix)

notwithstanding the terms and conditions of any such plan, program or arrangement, if at the time of her termination of employment the Executive shall not have attained the age generally required to be treated as a retiree (it being recognized that her service to date is sufficient to meet any service condition to such status and that it is expected she would attain such age were her employment to continue for the initial term of this Agreement), the Executive shall be deemed to have met any and all conditions to qualify for all rights and benefits available as a retiree under any such plan, program or arrangement (other than any plan qualified under Section 401(a) of the Code), and shall be treated as having met the conditions to qualify for retirement for all purposes under each such plan, program or arrangement (other than any plan qualified under Section 401(a) of the Code).  Subject to Section 22(b), the benefits that the Executive would have been able to receive from the Company’s Section 401(a) plan had she qualified to retire at the date of her termination will be paid to Executive on a non-qualified basis from the Company’s general assets until such time as Executive is eligible to receive such benefits from the Section 401(a) plan.  If the Executive is eligible for retiree status under the Company’s medical reimbursement plan by reason of this Section 7(d)(ix) (and not otherwise) and if it is self-insured, the Company shall, instead of providing coverage for the Executive thereunder for any period after the Executive’s right to continued coverage under COBRA expires, purchase for the benefit of Executive an insurance policy that provides the Executive with medical benefits coverage as close as reasonably available from a reputable provider the coverage to which she would have been provided to her under the Company’s self-insured plan; and



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(x)

outplacement services at a level commensurate with the Executive’s position for up to two (2) years after such termination of employment.  For a period of six (6) months after the Executive’s termination, the Company shall make available to the Executive office space and secretarial support at a level commensurate with the Executive’s position.  The Executive shall pay to the Company the cost of such space and support on a monthly basis.  The Company, at the end of the six month period shall promptly reimburse the Executive for the amounts so paid.

(e)

RETIREMENT.  To the extent the Executive qualifies to be treated as a “retiree” under any plan, program, grant or agreement (or to the extent that the Executive is afforded such status under Section 7(d)(ix)), the Executive shall have the benefit of said classification with regard to a benefit to the extent that it is more favorable to the Executive than the provisions otherwise provided herein.  

8.

RELEASE.  Any and all payments made and benefits provided under this Agreement to the Executive upon termination of employment, including but not limited to, those referenced in Section 7, shall be contingent upon the full execution of a general release of all claims by the Executive against the Company and its affiliates in the form attached hereto as Annex C within sixty (60) days following such termination of employment, provided that the payment of the Accrued Benefits shall not be contingent on the execution of such release.

9.

COVENANTS IN FAVOR OF THE COMPANY.

(a)

CONFIDENTIALITY.  The Executive acknowledges that in her employment hereunder she will occupy a position of trust and confidence.  The Executive shall not, except as in good faith deemed necessary or desirable by the Executive to perform her duties hereunder, or as required by applicable law, legal process or governmental inquiry, without limitation in time or until such information shall have become public or known in the Company’s industry other than by the Executive’s unauthorized disclosure, disclose to others or use, whether directly or indirectly, any Confidential Information.  “Confidential Information” shall mean information about the Company, its subsidiaries and affiliates, and their respective employees, clients and customers that is not disclosed by the Company for financial reporting purposes and that was learned by the Executive in the course of her employment by the Company, including (without limitation) any proprietary knowledge, trade secrets, data, formulae, information and client and customer lists and all papers, resumes, and records (including computer records) of the documents containing such Confidential Information.

(b)

NON-SOLICITATION OF EMPLOYEES.  The Executive recognizes that she possesses and will possess confidential information about other employees of the Company relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company.  The Executive recognizes that the information she possesses and will possess about these other employees is not generally known, is of substantial value to the Company in developing its business and in securing and retaining customers, and has been and will be acquired by her because of her business position with the Company.  The Executive agrees that, during the Employment Term and for a one (1) year period thereafter, she will not, directly or indirectly, solicit or recruit any non-administrative or non-clerical employee of the Company whose W-2 earnings for the immediately preceding



11

 



calendar year were $100,000 or above to resign from the Company or to accept employment by her or by any other person or company.  Notwithstanding the foregoing, nothing herein shall prevent the Executive from:  (i) placing general advertisements or otherwise generally advertising for employees or (ii) serving as a reference for an employee of the Company.

(c)

NONDISPARAGEMENT.  During the Employment Term and for a period of one (1) year following the Executive’s termination of employment, neither the Executive, on the one hand, nor the Company formally, its senior executives, or a member of its Board of Directors, on the other hand, shall, directly or indirectly, with willful intent to damage the other, issue or communicate any public statement, or statement likely to become public, that is critical of or damaging to the other (or in the case of communications by the Executive, also any of the Company’s officers, directors or employees, and, if the Executive is working for a competitor or a customer, excluding any statements regarding the Company’s products or services made by such competitor or customer without any direct involvement of the Executive).  The foregoing shall not be violated by truthful responses to legal process or governmental inquiry or by the Executive in carrying out her duties in accordance with this Agreement.  No officer, director or employee of the Company shall be a third party beneficiary of these provisions.  

(d)

EQUITABLE RELIEF AND OTHER REMEDIES.  The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

(e)

REFORMATION.  If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

(f)

SURVIVAL OF PROVISIONS.  Without effect as to the survival of other provisions of this Agreement intended to survive the termination or expiration of the Executive’s employment, the obligations contained in this Section 9 shall survive the termination or expiration of the Executive’s employment with the Company and shall be fully enforceable thereafter.

10.

ATTORNEY’S FEES.  If the Executive asserts any claim in any contest (whether initiated by the Executive or by the Company or any of its affiliates) as to the validity, enforceability or interpretation of arty provision of this Agreement or to collect amounts she asserts are due hereunder, the Company shall pay the Executive’s legal and other professional expenses (or cause such expenses to be paid) incurred in connection with such contest, including, but not limited to, the Executive’s reasonable attorney’s fees, on a quarterly basis, promptly upon presentation of proof of such expenses in a form reasonably acceptable to the Company, which submission shall be made within forty-five (45) days after the end of such quarter, provided that the Executive shall reimburse the Company for such amounts (to the extent permitted under



12

 



applicable law), plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.  The Company shall promptly pay the Executive’s reasonable costs of entering into this Agreement, including the reasonable fees and expenses of her counsel.

11.

ARBITRATION.  Any dispute or controversy arising under or in connection with this Agreement, other than injunctive relief under Section 9, shall be settled exclusively by arbitration, conducted before three arbitrators in Hartford, Connecticut in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect (with the Company and the Executive each being entitled to select one arbitrator and the two arbitrators selecting the third).  The decision of the arbitrators will be final and binding upon the parties hereto.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Nothing herein shall limit either the right of the Company or the Executive to seek injunctive relief in a court of applicable jurisdiction.  The Company shall bear the cost of the arbitration (including, without limitation, arbitrators’ fees) provided that the Executive shall reimburse the Company for one half of such amounts (to the extent permitted tinder applicable law), plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the arbitrator determines that the Executive’s claims were substantially frivolous or brought in bad faith.

12.

INDEMNIFICATION.  In addition to any other rights of indemnification of the Executive, the Company hereby covenants and agrees to promptly indemnify the Executive (or, in the event of her death, her heirs, executors, administrators or legal representatives) and hold her harmless, in each case to the fullest extent permitted by law, against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including attorney’s fees), penalties, fines, settlements, losses, and damages resulting from, or in connection with, the Executive’s employment with the Company, including but not limited to as an officer and director of any subsidiary or parent or as a fiduciary of any employee benefit plan.  The Company, within 10 days of presentation of invoices, shall advance to the Executive reimbursement of all legal fees and disbursements reasonably incurred by the Executive in connection with any potentially indemnifiable matter; provided, however, that to the extent required by applicable law, in order to receive such advanced fees and disbursements, the Executive must first sign an undertaking reasonably satisfactory to the Company that she will promptly repay to the Company all advanced fees and disbursements in the event it is finally determined in accordance with law that the Executive cannot be indemnified for the matter at issue under applicable law.  The burden of proving that indemnification of the Executive is not permissible at law shall be on the Company.

13.

LIABILITY INSURANCE.  The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists (but no less than six (6) years), after the termination or expiration of this Agreement in the same amount and to the same extent, if any, as the Company covers its other officers and directors.

14.

FULL SETTLEMENT.  Except as set forth in this Agreement, the obligation of the Company to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation,



13

 



set-off counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In no event shall the Executive be obliged to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by the Executive as a result of employment by another employer (except as expressly set forth herein with respect to health benefits).

15.

SURVIVAL.  The respective rights and obligations of the parties hereunder, including, without limitation, Sections 7, 9, 10, 11, 12 and 13 hereof, shall survive the termination of the Executive’s employment to the extent necessary to the agreed preservation of such rights and obligations.

16.

NO ASSIGNMENTS.

(a)

This Agreement is personal to each of the parties hereto.  Except as provided in subsection (b) below, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto and any assignment in contravention of this Section 16(a) shall be void.

(b)

The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Agreement, the “Company” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(c)

This Agreement shall inure to the benefit of and be enforceable by the Executive and her personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amount would still be payable to her hereunder had she continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to her estate.

17.

NOTICE.  For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered by hand, (ii) on the date of transmission, if delivered by confirmed facsimile, (iii) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (iv) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

At the address (or to the facsimile number) shown on the records of the Company




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If to the Company:

The Phoenix Companies, Inc.
One American Row
Hartford, CT 06102
Attention:  General Counsel

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

18.

REPRESENTATIONS.

(a)

The Company represents and warrants that there is no legal or other impediment or limitation to the Company’s performance of its obligations.

(b)

The Executive represents and warrants to the Company that she has the legal right to enter into this Agreement and to perform all of the obligations on her part to be performed hereunder in accordance with its terms and that she is not a party to any agreement or understanding, written or oral, that could prevent her form entering into this Agreement or performing all of her obligations hereunder.

19.

MISCELLANEOUS.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed, in the case of a modification, by the Executive and the Company, and, in the case of a waiver or discharge, by the party that would have benefited from the provision waived or discharged.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other patty shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Except as otherwise expressly provided in Section 4(c), this Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein, and this Agreement shall supersede any prior written agreement entered into between the parties with respect to the subject matter hereof (including, without limitation, the employment agreement dated January 1, 2003), other than the employment continuation agreement entered into between the Company and the Executive as of the date hereof.  Furthermore, without limiting the generality of the immediately preceding sentence, and except as otherwise expressly provided in Section 4(c), the Executive hereby for herself and for her heirs, executors, administrators, trustees, legal representatives and assigns, forever releases and discharges the Company and its past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, employees and assigns, whether acting on behalf of the Company or in their individual capacities from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which the Executive ever had, now has, or may have pursuant to the employment agreement dated January 1, 2003 and the Amended and Restated Employment Agreement dated May 18, 2005.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set



15

 



forth in this Agreement.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such state.  To the extent determined by the Board from time to time, decisions with respect to the Executive’s compensation (or otherwise with respect to the Executive) that this Agreement provides shall be made by the Board, may alternatively be made by a committee of the Board or by the outside and/or non-employee members of the Board.  The Company may withhold from all payments due to the Executive (or her beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.  To the extent obligations of the Company under this Agreement are fulfilled by a subsidiary of the Company, such obligations shall be treated as fulfilled by the Company.

20.

SECTION HEADINGS.  The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement.

21.

CHANGE OF CONTROL AGREEMENT.  The Company agrees that it shall (i) take no action to revoke or modify the terms of the change of control agreement between the Executive and the Company, dated as of January 1, 2003 (as amended), in a manner that would be adverse to the Executive, unless the Executive otherwise consents in writing, and (ii) make available to the Executive any enhancements to the form of change of control agreement made available to any senior officer of the Company, on terms and conditions no less favorable to the Executive than are available to such other officers.  It is expressly agreed and understood that the Company shall not be in breach of the commitment set forth in the preceding sentence if the terms of any enhancement in the change of control benefits for any senior officer are conditioned upon and otherwise coupled with a reduction in benefits or other concessions and the Executive is offered, but declines to accept, the enhancement on the terms offered.

22.

SECTION 409A.  

(a)

The intent of the parties is that payments and benefits under this Agreement comply with Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith.  If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause the Executive to incur any additional tax or interest under Section 409A, the Company shall, after consulting with the Executive, reform such provision to try to comply with Section 409A through good faith modifications to the minimum extent reasonably appropriate to conform with Section 409A.  To the extent that any provision hereof is modified in order to comply with Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Section 409A.

(b)

Notwithstanding any provision to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is specified as subject to this Section, such payment or benefit shall not be made or provided (subject to the last sentence of this Section 22(b)) prior to the earlier of (i) the



16

 



expiration of the six (6)-month period measured from the date of the Executive’s “separation from service” (as such term is defined under Section 409A), and (ii) the date of Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 22(b) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

23.

SEVERABILITY.  The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

24.

COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instruments.



17

 



IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

THE PHOENIX COMPANIES, INC.

By:

/s/ Bonnie J. Malley                                    
Title:  Executive Vice President, Human
          Resources

/s/ Dona D. Young                                                
Dona D. Young


The undersigned hereby agrees that it is jointly and severally liable with the Company for the Company’s obligations under this Agreement to the extent permitted by applicable law.  To the extent obligations of the Company under this Agreement are fulfilled by the undersigned, such obligations shall be treated as fulfilled by the Company.

PHOENIX LIFE INSURANCE COMPANY

By:

/s/ Bonnie J. Malley                                          
Title:  Executive Vice President, Human
          Resources




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ANNEX A

TERMS OF RESTRICTED STOCK UNITS

This Annex sets forth the terms of Restricted Stock Units to be awarded to you (your “Award”) under your Amended and Restated Employment Agreement, dated May 18, 2005  (the “Agreement”), with The Phoenix Companies, Inc. (the “Company”), as modified by the Second Amended and Restated Employment Agreement dated May 6, 2008.

ARTICLE I
RESTRICTED STOCK UNITS

Section 1.1.

Restricted Stock Unit.  “Restricted Stock Unit” means the right to receive one share of common stock of the Company, par value $0.01 per share (“Common Shares”) subject to the terms of this Annex.  Under the Agreement, the Company is awarding you the greatest number of whole Restricted Stock Units that is equal to or less than the quotient of (i) $1,000,000 divided by (ii) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding May 18, 2005.  The date of your award is May 18, 2005 (the “Grant Date”).

Section 1.2.

Vesting.  Your Restricted Stock Units will vest on the earlier of (a) the conclusion of the three-year period commencing on the Grant Date, (b) the occurrence of a Change in Control (as defined in the Employment Continuation Agreement entered into between you and the Company, dated as of January 1, 2003, or any successor agreement thereto), (c) the termination of your employment as a result of your death or Disability (as defined in the Agreement) or (d) a termination of your employment by the Company without Cause or by you for Good Reason (as each such term is defined in the Agreement).  Any shares of Common Stock issuable in respect of your vested Restricted Stock Units shall be distributed to you at the time following your separation from service specified in Section 1.4.

Section 1.3.

Termination of Employment.  If your employment with the Company terminates for any reason and your Restricted Stock Units do not vest on or before the date of your termination in accordance with Section 1.2, your Restricted Stock Units shall be forfeited and you shall have no rights thereunder or hereunder.

Section 1.4.

Common Shares Issued Upon Separation from Service.  If your Restricted Stock Units vest pursuant to Section 1.2, the Common Shares that underlie your Restricted Stock Units shall be distributed to you upon your “separation from service” (as such term is defined under Section 409A of the Code); provided that if at the time of your “separation from service,” you are a “specified employee” (within the meaning of Section 409A of the Code), the Common Shares that underlie your Restricted Stock Units will be issued on the earlier of (a) six months and one day (or, if such day is not a business day, the next business day) after your “separation from service” with the Company or (b) the date of your death.  The period beginning on the Grant Date and ending on the date specified herein for distribution is referred to in this Annex as the “Restricted Period.”  No Common Shares will be issued at the time your Award is granted, and the Company will not be required to set aside a fund for the payment of your Award.




 





ARTICLE II
RIGHTS AND SETTLEMENT

Section 2.1.

Rights as a Shareholder.  Your Restricted Stock Units will not give you any right to vote on any matter submitted to the Company’s stockholders.  You will have voting rights with respect to the Common Shares that underlie your Restricted Stock Units only after the shares have actually been issued to you.

Section 2.2.

Restrictions on Transferability.  You will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber your Restricted Stock Units.  Any attempt to effect any of the preceding in violation of this Section 2.2, whether voluntary or involuntary, will be void.

Section 2.3.

Dividend Equivalents.  The Company will credit each of your Restricted Stock Units with Dividend Equivalents from the date your Award is granted to the end of the Restricted Period.  A “Dividend Equivalent” is, at the time the Company pays any cash dividend on its Common Shares, an amount equal to the cash dividend per Common Share multiplied by the number of Common Shares then underlying each Restricted Stock Unit.

Section 2.4.

Settlement of Your Restricted Stock Units.

(a)

Promptly after the end of the Restricted Period, the Company will deliver to you the number of Common Shares then underlying your vested Restricted Stock Units, together with any Dividend Equivalents credited to them, with interest on such Dividend Equivalents for each “Crediting Period” during the Restricted Period at the mid-term Applicable Federal Rate (as determined under Section 1274(d) of the Code, in effect on the first day of such Crediting Period.  A Crediting Period shall mean August 1 of one calendar year to July 31 of the subsequent calendar year (or, if earlier, the date on which final distribution is made hereunder in respect of the Restricted Stock Units), provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.  

(b)

For the purpose of assuring that you do not acquire beneficial ownership of any Common Shares within the meaning of Section 7312(w) of the New York Insurance Law, as in effect on the date of the demutualization that occurred on June 25, 2001 of Phoenix Home Life Mutual Insurance Company pursuant to a plan of reorganization approved by the New York State Superintendent of Insurance under Section 7312 of the New York Insurance Law (the “Demutualization”), notwithstanding anything in this Annex to the contrary, in no event will any Common Shares attributable to the Restricted Stock Units granted to you be issued before the fifth anniversary of the Demutualization.

Section 2.5.

Adjustment Due to Change in Capitalization.  If any Adjustment Event occurs from the date your Award is granted to the end of the Restricted Period, the number of Common Shares underlying each Restricted Stock Unit will be proportionately adjusted to reflect, as deemed equitable and appropriate by the Company, the Adjustment Event.  In any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each



2

 





Restricted Stock Unit shall pertain to the securities and other property to which a holder of the number of Common Shares underlying the Restricted Stock Unit would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, your Restricted Stock Units represent the right to receive cash in whole or in part (other than as a result of Dividend Equivalents), then the Company will promptly pay you such cash on the distribution date specified in Section 1.4..  An “Adjustment Event” means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

ARTICLE III
ADMINISTRATION

Section 3.1.

Administration.  The Company is authorized to reasonably interpret in good faith your Award and this Annex and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of your Award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company with respect to senior management under other similar equity compensation plans.  Determinations, interpretations or other actions made or taken by the Company pursuant to the provisions of this Annex shall be final, binding and conclusive for all purposes and upon all persons.  The Company may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.  Notwithstanding anything else contained in this Section 3.1 to the contrary, any determination made under the Agreement regarding whether your employment has been terminated by the Company with or without Cause or by you for Good Reason shall be dispositive for purposes of determining your rights in respect of your Award.

ARTICLE IV
MISCELLANEOUS

Section 4.1.

Payment on Death.  If any amounts are payable under your Award after you die, the Company will pay them to your estate.

Section 4.2.

Tax Withholding.  The Company will have the power to withhold, or require you to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to your Award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit you to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of your Award withheld by the Company or (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy your statutory minimum Federal, state and local tax obligation associated with the transaction.



3

 





Section 4.3.

Common Shares Subject to this Award.  The Common Shares to be delivered in connection with your Award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.

Section 4.4.

Successor.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, if your Restricted Stock Units remain outstanding, to unconditionally assume the obligations of the Company with respect to your Restricted Stock Units in writing and will provide a copy of the assumption to you.

Section 4.5.

Requirements of Law.  The granting of your Award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

Section 4.6.

No Impact on Benefits.  Your Award will not be compensation for purposes of calculating your rights under any employee benefit plan.

Section 4.7.

Instrument and Securities Law Compliance.  The Company shall have the authority to determine the instruments by which your Award shall be evidenced.  Instruments evidencing your Award may contain such other provisions, not inconsistent with this Annex, as the Company deems advisable.  In addition, any Common Shares issued in connection with your Award shall be registered with the SEC at the expense of the Company for resale on or before the first day on which you may transfer the shares under the Award (or such later date as yon request) unless such shares are eligible for sale by you pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of your counsel, which registration shall be in a form reasonably acceptable to you, shall be subject to your reasonable prior review and comments, shall remain effective until all Common Shares subject to the Award have been sold (but need not be effective for more than 365 days after first day on which you may transfer the Common Shares subject to your Award or, if applicable, such later date as to which you shall have requested effectiveness) and the Company and you shall, prior to the effectiveness of the registration, enter into a customary registration rights agreement which will contain provisions, among other things, requiring the Company to indemnify you and any third persons reasonably requested by you in connection with the sale of any Common Shares and reimburse you for your reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of your death, or other permitted private transfer of the Common Shares, all of your rights in this Section 4.7 shall be transferred to your estate or other transferee.

Section 4.8.

Disputes.  This Annex and your Award are subject to the provisions of Section 11 of the Agreement:

Section 4.9.

Governing Law.  The validity, interpretation, construction and performance of this Annex and your Award shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.



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ANNEX B

TERMS OF PERFORMANCE BASED RESTRICTED STOCK UNITS

This Annex sets forth the terms of Performance Based Restricted Stock Units to be awarded to you (your “Award”) under your Amended and Restated Employment Agreement, dated May 18, 2005 (the “Agreement”) with The Phoenix Companies, Inc. (the “Company”).

ARTICLE I
PERFORMANCE BASED RSUS

Section 1.1.

Performance Based RSUs.  “Performance Based RSU” means the right to receive one share of common stock of the Company, par value $0.01 per share (“Common Shares”) subject to the terms of this Annex.  Under the Agreement, the Company is awarding you the greatest number of whole Performance Based RSUs that is equal to or less than the quotient of (i) $500,000 divided by (ii) the average of the closing prices of the Company’s common stock as reported on the New York Stock Exchange Composite Tape on the 10 trading days immediately preceding May 18, 2005.  The date of your award is May 18, 2005 (the “Grant Date”).  To the extent that the Performance Based RSUs shall not have become vested on or before December 31, 2007 as provided in Section 1.2 of this Annex, such Performance Based RSUs shall be forfeited as of that date and you shall no further rights thereunder or hereunder; it being understood, however, that the actual determination as to whether such Performance Based RSUs shall vest on December 31, 2007 pursuant to Section 1.2 (a) will not be made until sometime in the first quarter of 2008 and that such determination shall be given effect as of December 31, 2007 for purposes of this Article I of this Agreement.

Section 1.2.

Vesting.   The Performance Based RSUs awarded hereby shall vest on December 31, 2007 to the extent that the performance criteria applicable for the three-year period 2005-2007 with respect to performance share awards made to other employees of the Company on January 1, 2005 (the “2007 PSUs”) have been achieved, with the number of your Performance Based RSUs that shall vest based on such performance to be determined as provided in the next sentence.  If the applicable performance criteria have been achieved (i) at a level that enables payment in respect of such 2007 PSUs at or above target levels, the Performance Based RSUs shall vest in full, (ii) at threshold, one-half of the Performance Based RSUs shall vest or (iii) at a level above threshold, but below target, the number of Performance Based RSUs that shall vest  shall be determined based on the actual performance achieved, using calculated pro rata between threshold and target levels (e.g., if the actual performance is mid-way between the threshold level and the target level of performance, 75% of the Performance Based RSUs shall vest).  Your Performance Based RSUs will also vest in full on  the occurrence on or before December 31, 2007 of  (i) a Change in Control (as defined in the Employment Continuation Agreement entered into between you and the Company, dated as of January 1, 2003, or any successor agreement thereto) or (ii) the termination of your employment (a) as a result of your death or Disability, (b) by the Company without Cause or (c) by you for Good Reason (as each such term is defined in the Agreement).  Any shares of Common Stock issuable in respect of your vested Performance Based RSUs shall be distributed to you at the time following your separation from service specified in Section 1.4.  




 





Section 1.3.

Termination of Employment.  If your employment with the Company terminates for any reason and your Performance Based RSUs do not vest on or before the date of your termination in accordance with Section 1.2, your Performance Based RSUs shall be forfeited and you shall have no rights thereunder or hereunder.

Section 1.4.

Common Shares Issued Upon Separation from Service.  If your Performance Based RSUs vest pursuant to Section 1.2, the Common Shares that underlie your Performance Based RSUs shall be distributed to you upon your “separation from service” (as such term is defined under Section 409A of the Code); provided that if at the time of your “separation from service,” you are a “specified employee” (within the meaning of Section 409A of the Code), the Common Shares that underlie your Performance Based RSUs will be issued on the earlier of (a) six months and one day (or, if such day is not a business day, the next business day) after your “separation from service” with the Company or (b) the date of your death.  The period beginning on the Grant Date and ending on the date specified herein for distribution is referred to in this Annex as the “Restricted Period.”  No Common Shares will be issued at the time your Award is granted, and the Company will not be required to set aside a fund for the payment of your Award.

ARTICLE II
RIGHTS AND SETTLEMENT

Section 2.1.

Rights as a Shareholder.  Your Performance Based RSUs will not give you any right to vote on any matter submitted to the Company’s stockholders.  You will have voting rights with respect to the Common Shares that underlie your Performance Based RSUs only after the shares have actually been issued to you.

Section 2.2.

Restrictions on Transferability.  You will not have any right to sell, assign, transfer, pledge, hypothecate or otherwise encumber your Performance Based RSUs.  Any attempt to effect any of the preceding in violation of this Section 2.2, whether voluntary or involuntary, will be void.

Section 2.3.

Dividend Equivalents.  The Company will credit each of your Performance Based RSUs with Dividend Equivalents from the date your Award is granted to the end of the Restricted Period.  A “Dividend Equivalent” is, at the time the Company pays any cash dividend on its Common Shares, an amount equal to the cash dividend per Common Share multiplied by the number of Common Shares then underlying each Performance Stock Unit.

Section 2.4.

Settlement of Your Performance Based RSUs.

(a)

Promptly after the end of the Restricted Period, the Company will deliver to you the number of Common Shares then underlying your vested Performance Based RSUs, together with any Dividend Equivalents credited to them, with interest on such Dividend Equivalents for each “Crediting Period” during the Restricted Period at the mid-term Applicable Federal Rate (as determined under Section 1274(d) of the Code), in effect on the first day of such Crediting Period.  A Crediting Period shall mean August 1 of one calendar year to July 31 of the subsequent calendar year (or, if earlier, the date of on which final distribution is made hereunder in respect of the Performance Based



2

 





RSUs), provided that interest shall be credited with respect to each Dividend Equivalent only from the date it is first credited hereunder.

(b)

For the purpose of assuring that you do not acquire beneficial ownership of any Common Shares within the meaning of Section 7312(w) of the New York Insurance Law, as in effect on the date of the demutualization that occurred on June 25, 2001 of Phoenix Home Life Mutual Insurance Company pursuant to a plan of reorganization approved by the New York State Superintendent of Insurance under Section 7312 of the New York Insurance Law (the “Demutualization”), notwithstanding anything in this Annex to the contrary, in no event will any Common Shares attributable to the Performance Based RSUs granted to you be issued before the fifth anniversary of the Demutualization.

Section 2.5.

Adjustment Due to Change in Capitalization.  If any Adjustment Event occurs from the date your Award is granted to the end of the Restricted Period, the number of Common Shares underlying each Performance Stock Unit will be proportionately adjusted to reflect, as deemed equitable and appropriate by the Company, the Adjustment Event.  In any merger, consolidation, reorganization, liquidation, dissolution or other similar transaction, each Performance Stock Unit shall pertain to the securities and other property to which a holder of the number of Common Shares underlying the Performance Stock Unit would have been entitled to receive in connection with such event.  If, as a result of any Adjustment Event, your Performance Based RSUs represent the right to receive cash in whole or in part (other than as a result of Dividend Equivalents), then the Company will promptly pay you such cash on the distribution date specified in Section 1.4.  An “Adjustment Event” means any stock dividend, stock split or share combination of, or extraordinary cash dividend on, the Common Shares or recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Shares at a price substantially below fair market value, or other similar event affecting the Common Shares.

ARTICLE III
ADMINISTRATION

Section 3.1.

Administration.  The Company is authorized to reasonably interpret in good faith your Award and this Annex and to make all other reasonable determinations in good faith necessary or advisable for the administration and interpretation of your Award to carry out its provisions and purposes, provided that such interpretation or determination shall be consistent with the interpretation or determination made by the Company with respect to senior management under other similar equity compensation plans.  Determinations, interpretations or other actions made or taken by the Company pursuant to the provisions of this Annex shall be final, binding and conclusive for all purposes and upon all persons.  The Company may consult with legal counsel, who may be regular counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.  Notwithstanding anything else contained in this Section 3.1 to the contrary, any determination made under the Agreement regarding whether your employment has been terminated by the Company with or without Cause or by you for Good Reason shall be dispositive for purposes of determining your rights in respect of your Award.



3

 





ARTICLE IV
MISCELLANEOUS

Section 4.1.

Payment on Death.  If any amounts are payable under your Award after you die, the Company will pay them to your estate.

Section 4.2.

Tax Withholding.  The Company will have the power to withhold, or require you to remit to the Company promptly upon notification of the amount due, an amount sufficient to satisfy Federal, state and local withholding tax requirements with respect to your Award (or settlement thereof), and the Company may defer payment of cash or issuance or delivery of Common Shares until such requirements are satisfied.  The Company may, in its discretion, permit you to elect, subject to such conditions as the Company shall impose (a) to have Common Shares deliverable in respect of your Award withheld by the Company or (b) to deliver to the Company previously acquired Common Shares, in each case, having a fair market value sufficient to satisfy your statutory minimum Federal, state and local tax obligation associated with the transaction.

Section 4.3.

Common Shares Subject to this Award.  The Common Shares to be delivered in connection with your Award may consist, in whole or in part, of Common Shares held in treasury or authorized but unissued Common Shares, not reserved for any other purpose.

Section 4.4.

Successor.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, if your Performance Based RSUs remain outstanding, to unconditionally assume the obligations of the Company with respect to your Performance Based RSUs in writing and will provide a copy of the assumption to you.

Section 4.5.

Requirements of Law.  The granting of your Award and the issuance of Common Shares will be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

Section 4.6.

No Impact on Benefits.  Your Award will not be compensation for purposes of calculating your rights under any employee benefit plan.

Section 4.7.

Instrument and Securities Law Compliance.  The Company shall have the authority to determine the instruments by which your Award shall be evidenced.  Instruments evidencing your Award may contain such other provisions, not inconsistent with this Annex, as the Company deems advisable.  In addition, any Common Shares issued in connection with your Award shall be registered with the SEC at the expense of the Company for resale on or before the first day on which you may transfer the shares under the Award (or such later date as yon request) unless such shares are eligible for sale by you pursuant to Rule 144 (k) of the Securities Act of 1933 (or any successor provision) in the opinion of your counsel, which registration shall be in a form reasonably acceptable to you, shall be subject to your reasonable prior review and comments, shall remain effective until all Common Shares subject to the Award have been sold (but need not be effective for more than 365 days after first day on which you may transfer the Common Shares subject to your Award or, if applicable, such later date as to which you shall have requested effectiveness) and the Company and you shall, prior to the effectiveness of the



4

 





registration, enter into a customary registration rights agreement which will contain provisions, among other things, requiring the Company to indemnify you and any third persons reasonably requested by you in connection with the sale of any Common Shares and reimburse you for your reasonable out-of-pocket expenses (other than underwriting discounts) in connection therewith and will contain customary black-out periods.  In the event of your death, or other permitted private transfer of the Common Shares, all of your rights in this Section 4.7 shall be transferred to your estate or other transferee.

Section 4.8.

Disputes.  This Annex and your Award are subject to the provisions of Section 11 of the Agreement:

Section 4.9.

Governing Law.  The validity, interpretation, construction and performance of this Annex and your Award shall be governed by the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.



5

 





ANNEX C

AGREEMENT AND GENERAL RELEASE

Agreement and General Release (“Agreement”), by and between Dona D. Young (“Employee” or “you”) and The Phoenix Companies, Inc. (the “Company”).

1.

As soon as practicable following the Effective Date of this Agreement and in exchange for your waiver of claims against the Company Entities (as defined below) and compliance with other terms and conditions of this Agreement, the Company agrees to provide you with the payments and benefits provided in Section 7 of your Second Amended and Restated Employment Agreement with the Company, dated May 6, 2008 (the “Employment Agreement”).

2.

(a)

In consideration for the payments and benefits to be provided to you pursuant to paragraph 1 above, you, for yourself and for your heirs, executors, administrators, trustees, legal representatives and assigns (hereinafter referred to collectively as “Releasors”), forever release and discharge the Company and its past, present and future parent entities, subsidiaries, divisions, affiliates and related business entities, successors and assigns, assets, employee benefit plans or funds, and any of its or their respective past, present and/or future directors, officers, fiduciaries, agents, trustees, administrators, employees and assigns, whether acting on behalf of the Company or in their individual capacities (collectively the “Company Entities”) from any and all claims, demands, causes of action, fees and liabilities of any kind whatsoever, whether known or unknown, which you ever had, now have, or may have against any of the Company Entities by reason of any act, omission, transaction, practice, plan; policy, procedure, conduct, occurrence, or other matter related to your employment by (including, but not limited to, termination thereof) the Company Entities up to and including the date on which.  you sign this Agreement, except as provided in subsection (c) below.

(b)

Without limiting the generality of the foregoing, this Agreement is intended to and shall release the Company Entities from any and all claims, whether known or unknown, which Releasors ever had, now have, or may have against the Companies Entities arising out of your employment or termination thereof, including, but not limited to:  (i) any claim under the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974 (excluding claims for accrued, vested benefits under any employee benefit or pension plan of the Company Entities subject to the terms and conditions of such plan and applicable law), and the Family and Medical Leave Act; (ii) any claim under the Connecticut Human Rights Law, the Connecticut Discriminatory Employment Practices Act and the Connecticut Family Medical Leave Law and Rules; (iii) any other claim (whether based on federal, state, or local law, statutory or decisional) relating to or arising out of your employment, the terms and conditions of such employment, the termination of such employment, including, but not limited to, breach of contract (express or implied), wrongful discharge, detrimental reliance, defamation, emotional distress or compensatory or punitive damages; and (iv) any claim for attorneys’ fees, costs, disbursements and/or the like.

(c)

Notwithstanding the foregoing, nothing in this Agreement shall be a waiver of claims:  (1) that may arise after the date on which you sign this Agreement; (2) with respect to




 





your right to enforce your rights that survive termination under the Employment Agreement or any other written agreement entered into between you and the Company (including, any equity grants or agreements); (3) regarding rights of indemnification, receipt of legal fees and directors and officers liability insurance to which you are entitled to under the Employment Agreement, Company’s Certificate of Incorporation, By-laws or otherwise with regard to your service with the Company, (4) relating to any benefit or perquisites under any plan or program of the Company, including, without limitation, any amounts that may become due to you under any employment continuation agreement or other change-in-control arrangement; or (5) as a stockholder of the Company.

3.

(a)

This Agreement is not intended, and shall not be construed, as an admission that any of the Company Entities has violated any federal, state or local law (statutory or decisional), ordinance or regulation, breached any contract or committed any wrong whatsoever against you.

(b)

Should any provision of this Agreement require interpretation or construction, it is agreed by the parties that the entity interpreting or constructing this Agreement shall not apply a presumption against one party by reason of the rule of construction that a document is to be construed more strictly against the party who prepared the document.

4.

This Agreement is binding upon, and shall inure to the benefit of, the parties and their respective heirs, executors, administrators, successors and assigns.

5.

This Agreement shall be construed and enforced in accordance with the laws of the State of Connecticut applicable to agreements made and to be performed entirely within such State.

6.

You acknowledge that you:  (a) have carefully read this Agreement in its entirety; (b) have had an opportunity to consider for at least twenty-one (21) days the terms of this Agreement; (c) are hereby advised by the Company in writing to consult with an attorney of your choice in connection with this Agreement; (d) fully understand the significance of all of the terms and conditions of this Agreement and have discussed them with your independent legal counsel, or have had a reasonable opportunity to do so; (e) have had answered to your satisfaction by your independent legal counsel any questions you have asked with regard to the meaning and significance of any of the provisions of this Agreement; and (f) are signing this Agreement voluntarily and of your own free will and agree to abide by all the terms and conditions contained herein.

7.

You understand that you will have at least twenty-one (21) days from the date of receipt of this Agreement to consider the terms and conditions of this Agreement.  You may accept this Agreement by signing it and returning it to the Company’s General.  Counsel at One American Row, Hartford, CT 06102 on or before.  After executing this Agreement, you shall have seven (7) days (the “Revocation Period”) to revoke this Agreement by indicating your desire to do so in writing delivered to the General Counsel at the address above by no later than 5:00 p.m. on the seventh (7th) day after the date you sign this Agreement.  The effective date of this Agreement shall be the eighth (8th) day after you sign the Agreement (the “Effective Date”). If the last day of the Revocation Period falls on a Saturday, Sunday or holiday, the last day of the



2

 





Revocation Period will be deemed to be the next business day.  In the event you do not accept this Agreement as set forth above, or in the event you revoke this Agreement during the Revocation Period, this Agreement, including but not limited to the obligation of the Company to provide the payments and benefits provided in paragraph 1 above, shall be deemed automatically null and void.

Print Name:   Dona D. Young

Date:  

 

 

 

 

Signature:______________________________

 

Employee

 

 

 

The Phoenix Companies, Inc.

 

 

 

By:____________________________________

 

Name:

 

Title:

 





3

 


EX-12 17 ex12.htm RATIO OF EARNINGS TO FIXED CHARGES STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

EXHIBIT 12







STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

 

 

 

 

 

($ amounts in millions)

 

 

 

 

 

Three Months Ended March 31, 2008 and 2007

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

2007

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

$

(30.1)

 

$

70.6 

 

 

 

 

 

 

Less:

Equity in earnings (losses) of venture capital partnership investments

 

(0.3)

 

 

(0.5)

 

 

 

 

 

 

Add:

Distributed earnings of venture capital partnership investments

 

0.1 

 

 

0.1 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and equity in

 

 

 

 

 

  undistributed earnings of venture capital partnership investments

$

(29.7)

 

$

71.2 

 

 

 

 

 

 

Fixed Charges:

 

 

 

 

 

  Interest expense on indebtedness (1)

$

10.2 

 

$

9.5 

  Rental expense

 

0.3 

 

 

0.3 

Fixed charges, exclusive of interest credited on policyholder contract balances

 

10.5 

 

 

9.8 

  Interest credited on policyholder contract balances

 

39.1 

 

 

39.7 

Total fixed charges, inclusive of interest credited on policyholder contract balances

$

49.6 

 

$

49.5 

 

 

 

 

 

 

Income from continuing operations before income taxes, equity in undistributed

 

 

 

 

 

  earnings of venture capital partnership investments and fixed charges

$

19.9 

 

$

120.7 

 

 

 

 

 

 

Ratio of earnings to fixed charges

 

0.4 

 

 

2.4 

 

 

 

 

 

 

Additional earnings required to achieve 1:1 ratio coverage

$

29.7 

 

$

-- 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL RATIO(2) — ratio of earnings to fixed charges exclusive of

 

 

 

 

 

interest credited on policyholder contract balances:

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and equity in

 

 

 

 

 

  undistributed earnings of venture capital partnership investments

$

(29.7)

 

$

71.2 

 

 

 

 

 

 

Fixed Charges:

 

 

 

 

 

  Total fixed charges, as above

$

10.5 

 

$

9.8 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes and equity in

 

 

 

 

 

  undistributed earnings of venture capital partnership investments and fixed charges

$

(19.2)

 

$

81.0 

 

 

 

 

 

 

Ratio of earnings to fixed charges

 

(1.8)

 

 

8.3 

 

 

 

 

 

 

Additional earnings required to achieve 1:1 ratio coverage

$

29.7 

 

$

-- 

 

 

 

 

 

 

 

(1) Interest expense on collateralized obligations is not included as these are non-recourse liabilities to Phoenix and

    the interest expense is solely funded by assets pledged as collateral consolidated on our balance sheet.

 

(2) This ratio is disclosed for the convenience of investors and may be more comparable to the ratios disclosed by

    other issuers of fixed income securities.




EX-31.1 18 ex311.htm CERTIFICATION CERTIFICATION

EXHIBIT 31.1


CERTIFICATION


I, the Chairman, President and Chief Executive Officer of The Phoenix Companies, Inc. (the “registrant”), certify that:


1.

I have reviewed this Quarterly Report on Form 10-Q of the registrant;


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:  May 8, 2008

/s/ Dona D. Young

 

Name:

Dona D. Young

 

Title:

Chairman, President and Chief Executive Officer











EX-31.2 19 ex312.htm CERTIFICATION CERTIFICATION

EXHIBIT 31.2


CERTIFICATION


I, the Chief Financial Officer of The Phoenix Companies, Inc. (the “registrant”), certify that:


1.

I have reviewed this Quarterly Report on Form 10-Q of the registrant;


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:  May 8, 2008

 

/s/ Peter A. Hofmann

 

 

Name:

Peter A. Hofmann

 

 

Title:

Senior Executive Vice President and

  Chief Financial Officer











EX-32 20 ex32.htm CERTIFICATION CERTIFICATION

EXHIBIT 32


CERTIFICATION


The undersigned hereby certify that the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2008 of The Phoenix Companies, Inc. (the “Company”) filed with the Securities and Exchange Commission on the date hereof fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.



/s/ Dona D. Young

 

/s/ Peter A. Hofmann

Name:

Dona D. Young

 

Name:

Peter A. Hofmann

Title:

Chairman, President and

 

Title:

Senior Executive Vice President

  Chief Executive Officer

 

  and Chief Financial Officer

Date:

May 8, 2008

 

Date:

May 8, 2008



A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Phoenix Companies, Inc. and will be retained by The Phoenix Companies, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.





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