UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 27, 2013
| THE CHUBB CORPORATION |
| (Exact name of registrant as specified in its charter) |
| New Jersey | 1-8661 | 13-2595722 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 15 Mountain View Road Warren, New Jersey |
07059 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code (908) 903-2000
| Not Applicable |
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
| (e) | 2013 Annual Incentive Compensation Award Criterion. On February 27, 2013, the Organization & Compensation Committee (the Compensation Committee) of The Chubb Corporation (Chubb) determined that the performance goal to be used for calculating 2013 annual incentive compensation awards will be Chubb’s 2013 operating income, subject to adjustments (i) to account for the reduction in investment income attributable to Chubb’s repurchase of shares of common stock and (ii) to limit the impact of catastrophes to within specific minimum and maximum levels. |
Salary Actions. On February 27, 2013, the Compensation Committee approved the 2013 base salaries for the following named executive officers: John D. Finnegan, Richard G. Spiro, Paul J. Krump, Dino E. Robusto and Harold L. Morrison, Jr. A schedule of the salaries of Chubb’s named executive officers is filed herewith as Exhibit 10.1 and is incorporated by reference into this Item 5.02. The new salaries are effective as of April 1, 2013.
Form of Restricted Stock Unit Agreement. On February 27, 2013, the Compensation Committee approved a form of restricted stock unit agreement under The Chubb Corporation Long-Term Incentive Plan (2009), which form of agreement is filed herewith as Exhibit 10.2 and is incorporated by reference into this Item 5.02.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| 10.1 | Schedule of Salary Actions for Named Executive Officers |
| 10.2 | Form of Restricted Stock Unit Agreement under The Chubb Corporation Long-Term Incentive Plan (2009) |
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 CHUBB CORPORATION | ||||||||
| Date: March 1, 2013 | By: | /s/ W. Andrew Macan | ||||||
| Name: | W. Andrew Macan | |||||||
| Title: | Vice President and Secretary | |||||||
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
FILED ON MARCH 1, 2013
| Exhibit No. | Description | |
| 10.1 | Schedule of Salary Actions for Named Executive Officers | |
| 10.2 | Form of Restricted Stock Unit Agreement under The Chubb Corporation Long-Term Incentive Plan (2009) | |
Exhibit 10.1
Schedule of Salary Actions for Named Executive Officers
| Name |
Current Salary |
Increase ($) | Increase (%) | New Salary* | ||||||||||||
| John D. Finnegan |
$ | 1,325,000 | — | — | $ | 1,325,000 | ||||||||||
| Richard G. Spiro |
851,681 | $ | 38,319 | 4.5 | % | 890,000 | ||||||||||
| Paul J. Krump |
735,000 | 35,000 | 4.8 | 770,000 | ||||||||||||
| Dino E. Robusto |
735,000 | 35,000 | 4.8 | 770,000 | ||||||||||||
| Harold L. Morrison, Jr. |
630,000 | 30,000 | 4.8 | 660,000 | ||||||||||||
| * | Effective as of April 1, 2013 |
Exhibit 10.2
THE CHUBB CORPORATION
LONG-TERM INCENTIVE PLAN (2009)
Restricted Stock Unit Agreement
This RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”), dated as of [ ], is by and between The Chubb Corporation (the “Corporation”) and [ ] (the “Participant”), pursuant to The Chubb Corporation Long-Term Incentive Plan (2009) (the “Plan”). Capitalized terms that are not defined herein shall have the same meanings given to such terms in the Plan. If any provision of this Agreement conflicts with any provision of the Plan (as either may be interpreted from time to time by the Committee), the Plan shall control.
WHEREAS, pursuant to the provisions of the Plan, the Committee has authorized the grant to the Participant of Restricted Stock Units in accordance with the terms and conditions of this Agreement, subject to the acceptance of its terms by the Participant; and
WHEREAS, the Participant and the Corporation desire to enter into this Agreement to evidence and confirm the grant of such Restricted Stock Units on the terms and conditions set forth herein.
NOW, THEREFORE, the Participant and the Corporation agree as follows:
1. Grant of Restricted Stock Units. Pursuant to the provisions of the Plan, the Corporation on the date set forth above (the “Grant Date”) has granted and hereby evidences the grant to the Participant, subject to the terms and conditions set forth herein and in the Plan, of an award of [ ] Restricted Stock Units (the “Award”).
2. Vesting and Rights as a Shareholder. It is understood and agreed that the grant of the Award evidenced hereby is subject to the following conditions:
(a) Restrictions on Transfer. Until settlement of the Restricted Stock Units in accordance with Section 6, the Restricted Stock Units may not be sold, assigned, hypothecated, pledged or otherwise transferred or encumbered in any manner except (i) by will or the laws of descent and distribution or (ii) to a “Permitted Transferee” (as defined in Section 11(c) of the Plan) with the permission of, and subject to such conditions as may be imposed by, the Committee.
(b) Restriction Period. The Restriction Period applicable to the Restricted Stock Units covered by the Award shall begin on the date hereof and, except as otherwise provided in Section 3 or 4, shall lapse on the third anniversary of the Grant Date (such date to be hereafter referred to as the “Vesting Date”); provided that the Participant remains continuously employed by the Corporation or any of the Subsidiaries from the Grant Date through the Vesting Date.
(c) No Rights as a Shareholder. Until shares of Stock are issued, if at all, in satisfaction of the Corporation’s obligations under this Award, in the time and manner provided in Section 6, the Participant shall have no rights as a shareholder.
(d) Dividend Equivalents. Without limiting the generality of the foregoing, until the earlier to occur of (i) the settlement of the Restricted Stock Units in accordance with Section 6 and (ii) the forfeiture or cancellation of the Restricted Stock Units in accordance with the terms hereof, as soon as practicable after cash dividends are paid on the Stock, the Participant shall be paid an amount in cash equal to the amount of dividends paid on that number of shares of the Stock as is equal to the number of the Participant’s Restricted Stock Units. In any event, such payments shall be made on or prior to March 15 of the calendar year immediately following the calendar year in which the actual dividends are paid on shares of Stock.
3. Termination of Employment.
(a) Qualifying Termination. If the Participant’s employment terminates by reason of a Qualifying Termination during the Restriction Period, the Restriction Period shall, as of the date of such termination, lapse as to (and there shall become vested and non-forfeitable) that number of Restricted Stock Units equal to the product of (i) the number of Restricted Stock Units covered by the Award and (ii) a fraction, the numerator of which is the number of full calendar months during the Restriction Period that the Participant was employed by the Corporation or any of the Subsidiaries and the denominator of which is 36. The remainder of the Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination.
(b) Termination for any Other Reason. If the Participant’s employment terminates for any reason other than a Qualifying Termination during the Restriction Period, all of the unvested Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date of such termination. For purposes of the Award, the term “Retirement” shall mean a termination of the Participant’s employment other than for Cause at or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan of The Chubb Corporation or its successor (the “Pension Plan”). Accordingly, all of the unvested Restricted Stock Units covered by the Award shall be forfeited and canceled without further action by the Corporation or the Participant as of the date the Participant’s employment is terminated for Cause, whether prior to, on, or after the Participant’s normal retirement age or earliest retirement date, in each case as specified in the Pension Plan.
(c) Transfers between the Corporation and Subsidiaries; Leaves, Other Absences and Suspension. Transfer from the Corporation to a Subsidiary, from a Subsidiary to the Corporation, or from one Subsidiary to another shall not be considered a termination of employment. Any question regarding whether the Participant’s employment has terminated in connection with a leave of absence or other absence from active employment shall be determined by the Committee, in its sole discretion, taking into account the provisions of applicable law and the Corporation’s generally applicable employment policies and practices. The Committee also may suspend the operation of the termination of employment provisions of this Agreement for such period and upon such terms and conditions as it may deem necessary or appropriate to further the interests of the Corporation.
4. Change in Control. Notwithstanding anything in Section 6 to the contrary, Section 9 of the Plan shall apply in the event of a Change in Control.
5. Adjustment in Capitalization. In the event that the Committee shall determine that any stock dividend, stock split, share combination, extraordinary cash dividend, recapitalization,
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reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Stock at a price substantially below fair market value, or other similar corporate event affects the Stock such that an adjustment is required in order to preserve, or to prevent the enlargement of, the benefits or potential benefits intended to be made available under this Award, then the Committee shall, in such manner as the Committee may deem equitable (in its sole discretion), adjust any or all of the number and kind of units subject to this Award and/or, if deemed appropriate, make provision for a cash payment to the person holding this Award; provided, however, that, unless the Committee determines otherwise, the number of Restricted Stock Units subject to this Award always shall be a whole number.
6. Settlement of Restricted Stock Units. Subject to the provisions of Section 4 and this Section 6, the Corporation shall deliver to the Participant (or, if applicable, the Participant’s Designated Beneficiary or legal representative) that number of shares of Stock as is equal to the number of Restricted Stock Units covered by the Award that have become vested and nonforfeitable within 90 days after the earliest of (i) the Participant’s death, (ii) the Participant’s Disability, (iii) the Participant’s Separation from Service, and (iv) the Vesting Date.
Notwithstanding the foregoing, if the Participant is (or is reasonably expected to be) a “covered employee” within the meaning of Section 162(m) of the Code for the calendar year in which delivery of Stock would ordinarily be made to the Participant, the Corporation shall delay delivery to the Participant of that portion of the shares of Stock for which the Corporation reasonably believes that Section 162(m) of the Code will preclude the Corporation from taking a compensation expense deduction until the Participant’s Separation from Service.
Delivery of shares upon a Separation from Service under this Section shall be subject to the six-month delay rule in Section 6(d) of the Plan, if applicable.
In accordance with terms and conditions established by the Committee, the Participant may be eligible to defer delivery of shares under the terms of the Corporation’s Key Employee Deferred Compensation Plan (2005) (or any successor plan or program) (the “Deferred Compensation Plan”).
7. Notice. Any notice given hereunder to the Corporation shall be addressed to The Chubb Corporation, Attention: Secretary, 15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615, and any notice given hereunder to the Participant shall be addressed to the Participant at the Participant’s address as shown on the records of the Corporation.
8. Restrictive Covenants. As a condition to the receipt of the Award made hereby, the Participant agrees to be bound by the terms and conditions hereof and of the Plan, including the following restrictive covenants:
(a) Non-Disclosure. The Participant shall not, without prior written authorization from the Committee, disclose to anyone outside the Corporation, or use (other than in the Corporation’s or any of the Subsidiaries’ business), any confidential information or material relating to the business of the Corporation or any of the Subsidiaries that is acquired by the Participant either during or after employment with the Corporation or any of the Subsidiaries.
(b) Non-Solicitation. Unless the Participant has received prior written authorization from the Committee, the Participant shall not during his or her employment or service with the Corporation or any of the Subsidiaries and for a period of one year following any termination of such employment or service relationship (the “Restricted Period”):
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(i) Directly or indirectly, employ, solicit, persuade, encourage, or induce any individual employed by the Corporation or any of the Subsidiaries to become employed by or associated with any person or entity other than the Corporation or any of the Subsidiaries; or
(ii) Directly or indirectly, solicit business on behalf of a Competitive Business from any Customer with whom the Participant has had, or employees reporting to the Participant have had, personal contact or dealings with on behalf of the Corporation or any of the Subsidiaries during the one-year period preceding the Restricted Period.
[(c) Non-Competition. Unless the Participant has received prior written authorization from the Committee, the Participant shall not, whether during his or her employment or service with the Corporation or any of the Subsidiaries or during the Restricted Period, directly or indirectly compete with the business of the Corporation or any of the Subsidiaries by becoming an officer, agent, employee, consultant, partner or director of a Competitive Business, or otherwise render services to or assist or hold an interest (except as a less than one percent shareholder of a public company) in any Competitive Business. Notwithstanding the foregoing, it shall not be a violation of this Section 8(c) for the Participant to serve as a director for any entity which would otherwise be a Competitive Business if the Participant was serving as a director for such entity at the time of his or her termination of employment in compliance with the Corporation’s Policy Statement on Conflict of Interest.]
“Customer” shall mean a person or entity to which the Corporation or any of the Subsidiaries is at the time providing services (which includes the provision of insurance or any other contractual obligation under any products of the Corporation or any of the Subsidiaries). For the avoidance of doubt, it is understood and agreed that the term “Customer” includes any broker, agent, or other third party acting for or on behalf of such broker or agent.
“Competitive Business” shall mean any person or entity (including any joint venture, partnership, firm, corporation or limited liability company) that engages, directly or indirectly, in the property and casualty insurance business, including, but not limited to, commercial insurance, personal insurance, specialty insurance, surety, excess and surplus lines, and/or reinsurance, and/or any other business that is a significant business of, the Corporation and the Subsidiaries as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries; provided, however, that a business set forth above shall not be considered a “Competitive Business” in the event that, as of the date of the Participant’s termination of employment or service with the Corporation or any of the Subsidiaries, such business is no longer a business of the Corporation or any of the Subsidiaries.
(d) Inventions. The Participant shall disclose promptly and assign to the Corporation all right, title, and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Corporation or any of the Subsidiaries, relating in any manner to the actual or anticipated business, research or development work of the Corporation or any of the Subsidiaries and shall do anything reasonably necessary to enable the Corporation or any of the Subsidiaries to secure a patent, copyright or any other intellectual property rights where appropriate in the United States and in foreign countries.
[(e) Disclosure during Restricted Period. The Participant agrees that, prior to accepting other employment or any other service relationship during the Restricted Period, the
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Participant shall provide a copy of this Section 8 to any recruiter who assists the Participant in obtaining other employment or any other service relationship and to any employer or other person with whom the Participant discusses potential employment or any other service relationship.]
[(f)] Relief with Respect to Violations of Covenants. Failure to comply with the provisions of this Section 8 at any point before the Restricted Stock Units covered by the Award are settled in accordance with Section 6 of this Agreement shall cause such Restricted Stock Units to be canceled and rescinded without any payment therefor. For the avoidance of doubt, following a failure to comply with this Section 8, all shares of Stock in respect of any portion of the Restricted Stock Units covered by the Award for which delivery has been deferred under the Deferred Compensation Plan in accordance with Section 6 hereof shall be forfeited, and accordingly the Participant shall have no further right to delivery or payment in respect of any such shares. In the event that all or any portion of the Restricted Stock Units covered by this Award shall have been settled in accordance with the terms of this Agreement within twelve months of the date on which any breach by the Participant of any of the provisions of this Section 8 shall have first occurred, the Committee may require that the Participant repay (with appreciation (if any), determined up to the date repayment is made), and the Participant shall promptly repay, to the Corporation the Fair Market Value of any Stock conveyed to the Participant within such period in respect of such Restricted Stock Units. Additionally, the Participant agrees that the Corporation shall be entitled to an injunction, restraining order or such other equitable relief restraining the Participant from committing any violation of the covenants or obligations contained in this Section 8. These rescission rights and injunctive remedies are cumulative and are in addition to any other rights and remedies the Corporation may have at law or in equity. The Participant acknowledges and agrees that the covenants and obligations in this Section 8 relate to special, unique and extraordinary matters and that a violation or threatened violation of any of the terms of such covenants or obligations will cause the Corporation and the Subsidiaries irreparable injury for which adequate remedies are not available at law.
[(g)] Reformation. The Participant agrees that the provisions of this Section 8 are necessary and reasonable to protect the Corporation in the conduct of its business. If any restriction contained in this Section 8 shall be deemed to be invalid, illegal or unenforceable by reason of the extent, duration, or geographical scope hereof, or otherwise, then the court making such determination shall have the right to reduce such extent, duration, geographical scope, or other provisions hereof, and in its reduced form such restriction shall then be enforceable in the manner contemplated hereby.
9. Withholding. At the Committee’s discretion, the Participant shall be required to either pay to the Corporation the amount of any taxes required by law to be withheld as may be necessary in the opinion of the Corporation to satisfy tax withholding required under the laws of any country, state, province, city, or other jurisdiction with respect to Stock deliverable hereunder or, in lieu thereof, the Corporation shall have the right to retain (or the Participant may be offered the opportunity to elect to tender) the number of shares of Stock whose Fair Market Value equals such amount required to be withheld.
10. Committee Discretion; Delegation. Notwithstanding anything contained in this Agreement to the contrary, the Committee, in its sole discretion and in accordance with the terms of the Plan, may take any action that is authorized under the terms of the Plan that is not contrary to the express terms hereof, including accelerating the lapse of the Restriction Period with respect to all or any portion of the Restricted Stock Units covered by the Award, at such times
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(including, without limitation, upon or in connection with the Participant’s termination of employment) and upon such terms and conditions as the Committee shall determine. Nothing in this Agreement shall limit or in any way restrict the power of the Committee, consistent with the terms of the Plan, to delegate any of the powers reserved to it hereunder to such person or persons as it shall designate from time to time.
11. No Right to Continued Employment. Neither the execution and delivery hereof nor the granting of the Award shall constitute or be evidence of any agreement or understanding, express or implied, on the part of the Corporation or any of the Subsidiaries to employ or continue the employment of the Participant for any period.
12. Governing Law. The Award and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of New Jersey (without reference to the principles of conflicts of law).
13. Signature in Counterpart. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. This Agreement may be accepted by the Participant by means of an electronic acceptance.
14. Binding Effect; Benefits. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Participant and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the Corporation or the Participant or their respective successors or permitted assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.
15. Amendment. The Committee may affirmatively act to amend, modify, or terminate this Agreement at any time or from time to time prior to payment in any manner not inconsistent with the terms of the Plan. Any such action by the Committee shall be subject to the Participant’s consent if the Committee determines that such action would have a materially adverse effect on the Participant’s rights under the Award, whether in whole or in part. Notwithstanding the foregoing, the Committee, in its sole discretion, may amend the Award if it determines such amendment is necessary or advisable for the Corporation to comply with applicable law (including Section 409A), regulation, rule, or accounting standard. As soon as is administratively practicable following the date of any such amendment to this Agreement, the Corporation shall notify the Participant of the amendment; provided, however, that failure to provide such notice shall not invalidate or otherwise impair the enforceability of such amendment.
16. Section 409A of the Code. To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the date hereof (collectively, “Section 409A”). Without limiting the generality of Section 15, and notwithstanding any provision of the Plan or this Agreement to the contrary, if at any time the Committee determines that the Award may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify the Participant or any other person for failure to do so) (a) to adopt such amendments to the Plan or this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it
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determines are necessary or appropriate to preserve the intended tax treatment of the benefits provided with respect to the Award, to preserve the economic benefits thereof or to avoid less favorable accounting or tax consequences for the Corporation or any of the Subsidiaries and/or (b) to take any other actions that it determines are necessary or appropriate to exempt the Award from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder. Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Participant or any other person to the Corporation or any of its Affiliates, employees or agents.
17. Sections and Other Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, the Corporation, by its duly authorized officer, and the Participant have executed this Agreement in duplicate as of the day and year first above written.
| THE CHUBB CORPORATION | ||
| By: | ||
| By: | ||
| Participant | ||
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