EXHIBIT 10.33

 

TRAVELERS
PERFORMANCE SHARE AWARD NOTIFICATION AND AGREEMENT

 

(THIS AWARD MUST BE ACCEPTED AND RETURNED BY THE END OF BUSINESS ON XXXXX, OR IT
WILL BE FORFEITED.
 REFER BELOW TO SECTION 17.)

 

Participant:

 

Jay S. Fishman

 

Grant Date:

 

XXXXXX

Number of Performance Shares:

 

XXXXXXX to XXXXXXX

 

 

 

 

 

1.                                      Grant of Performance Shares. This
performance share award is granted pursuant to The Travelers Companies, Inc.
Amended and Restated 2004 Stock Incentive Plan (the “Plan”), by The Travelers
Companies, Inc. (the “Company”) to you as an employee of the Company or an
affiliate of the Company (together, the “Travelers Group”). The Company hereby
grants to the Participant as of the Grant Date an award (“Award”) for the
initial number of Performance Shares set forth above, pursuant to the Plan, as
it may be amended from time to time, and subject to the terms, conditions, and
restrictions set forth herein, including, without limitation, the conditions set
forth in Section 7.

 

2.                                      Terms and Conditions. The terms,
conditions, and restrictions applicable to the Award are specified in the Plan,
this grant notification and agreement, including Exhibits A and B (the “Award
Agreement”), and the prospectus dated January 29, 2010 (titled “Travelers Equity
Awards”) and any applicable prospectus supplement (together, the “Prospectus”).
The terms, conditions and restrictions in the Plan and the Prospectus include,
but are not limited to, provisions relating to amendment, vesting, cancellation
and settlement, all of which are hereby incorporated by reference into this
Award Agreement to the extent not otherwise set forth herein.

 

By accepting the Award, the Participant acknowledges receipt of the Prospectus
and that he or she has read and understands the Prospectus.

 

The Participant understands that the Award and all other incentive awards are
entirely discretionary and that no right to receive an award exists absent a
prior written agreement with the Company to the contrary. The Participant also
understands that the value that may be realized, if any, from the Award is
contingent, and depends on the future financial performance of the Company,
among other factors. The Participant further confirms his or her understanding
that the Award is intended to promote employee retention and stock ownership and
to align employees’ interests with those of shareholders, is subject to
performance conditions and will be cancelled if the performance conditions are
not satisfied. Thus, the Participant understands that (a) any monetary value
assigned to the Award in any communication regarding the Award is contingent,
hypothetical, or for illustrative purposes only, and does not express or imply
any promise or intent by the Company to deliver, directly or indirectly, any
certain or determinable cash value to the Participant; (b) receipt of the Award
or any incentive award in the past is neither an indication nor a guarantee that
an incentive award of any type or amount will be made in the future, and that
absent a written agreement to the contrary, the Company is free to change its
practices and policies regarding incentive awards at any time; and
(c) performance may be subject to confirmation and final determination by the
Company’s Board of Directors or its Compensation Committee (the “Committee”)
that the performance conditions have been satisfied.  The Participant shall have
no rights as a stockholder of the Company with respect to any shares covered by
the Award unless and until the Award is vested and settled in shares of Common
Stock.

 

3.                                      Performance Period. For purposes of the
Award, the Performance Period shall be defined as the three-year period
commencing                        , 20     and ending                          ,
20    , or such shorter period as provided in the Addendum.

 

4.                                      Vesting.  The Award shall vest in full
on the last day of the Performance Period, provided the Participant remains
continuously employed within the Travelers Group.  If the Participant has a
termination of, or break in, employment prior to the last day of the Performance
Period, the Participant’s rights are determined under the Award Rules of
Exhibit A, or if applicable, the Addendum.

 

5.                                      Settlement of Award.  The number of
Performance Shares vested (which shall include any additional Performance Shares
credited to the Participant’s account pursuant to Section 6) shall be calculated
based on the Performance Share Vesting Grid set forth in Exhibit B. The Company
shall

 

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deliver to the Participant, subject to any certification of satisfaction of the
performance goal as required by the Plan in order to comply with
Section 162(m) of the Internal Revenue Code, a number of shares of Common Stock
equal to the number of vested Performance Shares on January 1 of the year
following the end of the Performance Period or as soon as administratively
practicable thereafter (but no later than March 15 of the year following the end
of the Performance Period), except as provided in the Addendum. The number of
shares of Common Stock delivered to the Participant shall be reduced by a number
of shares of Common Stock having a Fair Market Value on the date of delivery
equal to the tax withholding obligation, unless the Plan administrator is
notified in advance of the Award settlement and the Participant elects another
method for tax withholding.

 

6.                                      Dividend Equivalents. The Participant
shall be entitled to receive additional Performance Shares with respect to any
cash dividends declared by the Company. The number of additional Performance
Shares shall be determined by multiplying the number of Performance Shares
credited to the Participant’s account (which shall include the number of
Performance Shares set forth above, plus any Performance Shares credited in
connection with dividend payments under this Section 6), times the dollar amount
of the cash dividend per share of Common Stock, and then dividing by the Fair
Market Value of the Common Stock as of the dividend payment date. The
Participant’s right to any Performance Shares credited to the Participant’s
account in connection with dividends shall vest in the same manner described in
Section 4.  As described in Section 5, such additional Performance Shares shall
be included in the total number of Performance Shares credited to the
Participant’s account for purposes of applying the Performance Share Vesting
Grid.

 

7.                                      Grant Conditioned on Principles of
Employment Agreement.

 

(a)  Notwithstanding any contrary provision in this grant notification and
agreement, the grant of the Award shall not be effective and shall be null and
void unless the Participant has agreed, in the manner prescribed by the Company
and no later than the date immediately preceding the Grant Date, to be bound by
the Company’s Principles of Employment Agreement in effect on the date
immediately preceding the Grant Date (the “POE Agreement”), as published on the
Company’s intranet site or previously distributed in hard copy to Participant.

 

(b)  By accepting the Award, the Participant agrees that the POE Agreement shall
supersede and replace the form of Principles of Employment Agreement contained
or referenced in any prior equity award made by the Company to the Participant,
and, accordingly, such prior equity award shall become subject to the terms and
conditions of the POE Agreement.

 

8.                                      Acceptance of Exhibit A — Award Rules.
 The Participant agrees to be bound by the terms of the Award Rules set forth in
Exhibit A (“Award Rules”).

 

9.                                      Acceptance of Non-Solicitation
Conditions.   The Participant agrees to be bound by the following conditions
(the “Non-Solicitation Conditions”):

 

(a)                                  The Company and the Participant understand,
intend and agree that the Non-Solicitation Conditions of this Section 9 are
intended to protect the Travelers Group against the Participant raiding its
employees and/or its business during the twelve (12) month period (the
“Restricted Period”) following the date of the conclusion of the Participant’s
employment with the Travelers Group (whether voluntary or involuntary) as
reflected on the books and records of the Travelers Group (the “Termination
Date”), while recognizing that after the Termination Date, the Participant is
still permitted to freely compete with the Travelers Group, except to the extent
“Confidential Information” (which means any technical or business information
developed by, for, or at the expense of the Travelers Group, or assigned or
entrusted to the Travelers Group, unless such information is generally known
outside of the Travelers Group) is used in such solicitation and subject to
certain restrictions set forth below. Further, nothing in this Section 9 is
intended to grant or limit any rights or claims as to any future employer of the
Participant.

 

(b)                                 During the Restricted Period, the
Participant will not seek to recruit or solicit, or assist, participate in or
promote the recruiting or solicitation of, interfere with, attempt to influence
or otherwise affect the employment of any person who was or is employed by the
Travelers Group at any time during the last three months of the Participant’s
employment or during the Restricted Period. Further, the Participant shall not,
on behalf of himself or herself or any other person, hire, employ or engage any
such

 

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person. The Participant shall not directly engage in the aforesaid conduct
through a third party for the purpose of colluding to avoid the restrictions in
this Section 9. However, the Non-Solicitation Conditions do not preclude the
Participant from directing a third party (including but not limited to employees
of his/her subsequent employer or a search firm) to broadly solicit, recruit,
and hire individuals, some of whom may be employees of the Travelers Group,
provided that the Participant does not specifically direct such third party
specifically to target employees of the Travelers Group generally or specific
individual employees of the Travelers Group.

 

(c)                                  If, after the Termination Date, the
Participant accepts a position as an employee, consultant or contractor with a
direct competitor of the Company, then, during the Restricted Period, the
Participant will not use Confidential Information to seek to recruit or solicit,
or assist, participate in or promote the recruiting or solicitation of,
interference with, attempt to influence or otherwise affect any person or entity
who is a client, customer, policyholder, or agent of the Travelers Group, to
discontinue business with the Travelers Group, and/or move that business
elsewhere.  The Participant also agrees not to be directly and personally
involved in the negotiation, competition for, solicitation or execution of any
individual book roll over(s) or other book of business transfer arrangements
involving the transfer of business away from Travelers Group, at any time after
the Termination Date, even if Confidential Information is not involved.  The
Participant may, at any time after the Termination Date, direct a third party
(including but not limited to employees of his/her subsequent employer) to
negotiate, compete for, solicit and execute such book roll over(s) or other book
of business transfer arrangements, provided that (i) Confidential Information is
not involved, (ii) the Participant is not personally and directly involved in
such activities, and (iii) the Participant does not direct such third party
specifically to target agents of Travelers Group.

 

(d)                                 Subject to the non-competition obligations
in the Award Rules that apply to Participants meeting the “Retirement Rule,” at
any time after the Termination Date, the Participant may otherwise freely
compete with the Travelers Group, including but not limited to competing on an
account by account or deal by deal basis, to the extent that he or she does not
violate the provisions of subsection (c) above.

 

10.                               Forfeiture of Performance Share Award.

 

(a)                                The Participant acknowledges and agrees as
follows:

 

(i)                                        The Participant acknowledges that the
receipt of the Award constitutes good, valuable and independent consideration
for the Participant’s acceptance of and compliance with the provisions of the
Award Agreement, including the forfeiture and recapture provision below, and the
Non-Solicitation Conditions.

 

(ii)                                     The Participant acknowledges that his
or her rights with respect to the Award are conditioned on his or her timely
acceptance of the POE Agreement and his or her compliance with the POE Agreement
at all times thereafter.

 

(b)                              The Participant agrees that, during the term of
his or her employment with the Travelers Group and during the Restricted Period,
if the Participant breaches the Non-Solicitation Conditions and/or the POE
Agreement, in addition to all rights and remedies available to the Company at
law and in equity (including without limitation those set forth in the Award
Rules for involuntary termination), the Participant will immediately forfeit any
award issued pursuant to this Award Agreement that has not yet been paid,
exercised or vested.  The Company may also recapture from the Participant any
and all compensatory value that the Participant received for the last twelve
(12) months of his or her employment and through the end of the Restricted
Period from any such award (including without limitation the amount of any cash
payment made to the Participant upon exercise or settlement of the award, and/or
the amount included as compensation in the taxable income of the Participant
upon vesting or exercise of the award). The Participant will promptly pay the
full amount due upon demand by the Company, in the form of cash or shares of
Common Stock at current fair market value.

 

(c)                               The forfeiture and recapture remedies under
paragraph (b) shall not limit or modify the Company’s rights and remedies with
respect to any breaches of the Award Agreement at any time after the end of the
Restricted Period.

 

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(d)                                 The Award Rules provide a right to payment,
subject to certain conditions, following the Participant’s Termination Date if
the Participant meets the Retirement Rule which, among other conditions, may
require that the Participant not engage in any activities that compete with the
business operations of the Travelers Group through the settlement date of the
Award (such non-compete condition may extend beyond the Restricted Period).  The
remedies for a violation of such non-compete conditions are specified in the
Award Rules and are in addition to any remedies of the Travelers Group under
this Section 10.

 

(e)                                  Except to the extent prohibited by law, an
outstanding Award may be forfeited, and the compensatory value received under
the Award may be subject to recoupment by the Company, in accordance with the
policies of the Company in effect from time to time with respect to forfeiture
and recoupment of bonus payments, retention awards, cash or stock-based
incentive compensation or awards, or similar forms of compensation, and the
terms of any such policy, while it is in effect, are incorporated herein by
reference.

 

11.                               Consent to Electronic Delivery.  In lieu of
receiving documents in paper format, the Participant agrees, to the fullest
extent permitted by law, to accept electronic delivery of any documents that the
Company may be required to deliver (including, but not limited to, prospectuses,
prospectus supplements, grant or award notifications and agreements, account
statements, annual and quarterly reports, and all other agreements, forms and
communications) in connection with this and any other prior or future incentive
award or program made or offered by the Company or its predecessors or
successors. Electronic delivery of a document to the Participant may be via a
Company e-mail system or by reference to a location on a Company intranet site
to which the Participant has access.

 

12.                               Administration. In administering the Plan, or
to comply with applicable legal, regulatory, tax, or accounting requirements, it
may be necessary for a member of the Travelers Group to transfer certain
Participant data to another member of the Travelers Group, or to its outside
service providers or governmental agencies. By accepting the Award, the
Participant consents, to the fullest extent permitted by law, to the use and
transfer, electronically or otherwise, of his or her personal data to such
entities for such purposes.

 

13.                               Entire
Agreement/Amendment/Survival/Assignment. The terms, conditions and restrictions
set forth in the Plan, this Award Agreement and the Prospectus, constitute the
entire understanding between the parties hereto regarding the Award and
supersede all previous written, oral, or implied understandings between the
parties hereto about the subject matter hereof.  This Award Agreement may be
amended by a subsequent writing (including e-mail or electronic form) agreed to
between the Company and the Participant.  Section headings herein are for
convenience only and have no effect on the interpretation of this Award
Agreement.  The provisions of the Award Agreement that are intended to survive
the Termination Date of a Participant shall survive such date.  The Company may
assign this Award Agreement and its rights and obligations hereunder to any
current or future member of the Travelers Group.

 

14.                               No Right to Employment.  The Participant
agrees that nothing in this Award Agreement constitutes a contract of employment
with the Company for a definite period of time.  The employment relationship is
“at will,” which affords the Participant or the Travelers Group the right to
terminate the relationship at any time for any reason or no reason not otherwise
prohibited by applicable law.  The Travelers Group retains the right to decrease
the Participant’s compensation and/or benefits, transfer or demote the
Participant or otherwise change the terms or conditions of the Participant’s
employment with the Travelers Group.

 

15.                               Transfer Restrictions. The Participant may not
sell, assign, transfer, pledge, encumber or otherwise alienate, hypothecate or
dispose of the Award or his or her right hereunder to receive any Performance
Shares, except as otherwise provided in the Prospectus.

 

16.                               Conflict.  In the event of a conflict between
the Plan, the Award Agreement and/or the Prospectus, the documents shall control
in that order (that is, the Plan, the Award Agreement and the Prospectus).

 

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17.                               Acceptance and Agreement by the Participant;
Forfeiture upon Failure to Accept.  By signing below after the Addendum to Award
Agreement, the Participant accepts the Award and agrees to be bound by the
terms, conditions, and restrictions set forth in the Award Agreement. The
Participant’s rights under the Award will lapse on XXXXXXX, and the Award will
be forfeited on such date if the Participant does not accept the Award by
signing below and mailing the agreement with a postmark date no later than
XXXXXXX, or by hand delivery no later than XXXXXXX, to                         ,
Compensation, One Tower Square-2MN, Hartford, CT 06183. This grant is null and
void if the Participant has not by the date immediately preceding the Grant Date
agreed to be bound by the POE Agreement. For the avoidance of doubt, the
Participant’s failure to accept the Award Agreement shall not affect his or her
continuing obligations under any other agreement between the Company and the
Participant.

 

18.                               Governing Law.  The Award Agreement shall be
legally binding and shall be executed and construed and its provisions enforced
and administered in accordance with the laws of the State of Minnesota.

 

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EXHIBIT A—Award Rules

To Travelers’ Performance Share Award Notification and Agreement

 

WHEN YOU LEAVE THE COMPANY

 

References to “you” or “your” are to the Participant.  “Termination Date” is
defined in Section 9(a) of the Award Agreement and means the date of the
conclusion of your employment with the Travelers Group (whether voluntary or
involuntary) as reflected on the books and records of the Travelers Group.

 

If you terminate your employment or if there is a break in your employment, your
Award may be cancelled before the end of the Performance Period and the vesting
and settlement of your Award may be affected.

 

The provisions in the chart below apply to Awards granted under the Plan.
Special rules apply for vesting and settlement of your Award in cases of
termination of employment if you satisfy certain age and years of service
requirements (“Retirement Rule”), as set forth in “Retirement Rule” below.

 

If You:

 

Here’s What Happens to Your Award:

 

 

 

Resign (but do not meet the Retirement Rule)

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

 

 

Become disabled (as defined under the Company’s applicable long-term disability
plan)

 

You will be entitled to receive the number of shares of Common Stock you would
have received, if any, if your employment had not terminated due to disability,
multiplied by a fraction equal to the number of days from the first day of the
Performance Period to the Termination Date, divided by the total number of days
in the Performance Period. Any such shares will be received at the time of
settlement of the Performance Shares after the end of the Performance Period.

 

 

 

Take an approved personal leave of absence

 

Your rights under the Award continue when you are on such leave of absence for
up to three months. Once your approved leave of absence exceeds three months,
your rights under the Award are suspended until you return to work and remain
actively employed for 30 calendar days, after which your rights under the Award
will be restored retroactively. If you terminate employment during the leave for
any reason, the termination of employment provisions will apply. If your
personal leave of absence exceeds one year, your rights under the Award are
cancelled, and your right to the Performance Shares is forfeited.

 

 

 

Are on an approved family leave, medical leave, dependent care leave, military
leave, or other statutory leave of absence

 

Your rights under the Award continue when you are on such leave of absence.

 

 

 

Die while employed or following employment while your Award is outstanding

 

Your estate will be entitled to receive a number of shares of Common Stock equal
to the initial number of Performance Shares set forth at the beginning of the
Award, plus any Performance Shares credited as dividend equivalents in
connection with the dividends paid or payable as of the date of your death),
multiplied by a fraction equal to the number of days in the Performance Period
from the first day of the Performance Period to your date of death, divided by
the total number of days in the Performance Period. Any such shares will be
delivered as soon as administratively possible following your death. No
Performance Shares shall be credited with respect to any cash dividends paid by
the Company after the date of the Participant’s death but prior to the
distribution with respect to Performance Shares already credited to the
Participant’s account.

 

 

 

Are terminated involuntarily for gross misconduct or for

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

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cause*

 

 

 

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*                                     The Committee, in its sole discretion,
determines what constitutes “gross misconduct” and “cause.”

 

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If You:

 

Here’s What Happens to Your Award:

 

 

 

Are terminated involuntarily other than for gross misconduct or for cause
(including under the Company’s applicable separation pay plan or any successor
or comparable arrangement)

 

Your rights under the Award are cancelled, and your right to the Performance
Shares is forfeited.

 

 

 

While employed and at any time during the Restricted Period, breach the
Non-Solicitation Conditions and/or the POE Agreement

 

As set forth in Section 10 of the Award Agreement, in addition to all rights and
remedies available to the Company at law and in equity (including the above
rights and remedies relating to involuntary termination), you will immediately
forfeit any award to you under the Award Agreement that has not yet been paid,
exercised or vested. The Company may also recapture from you any and all
compensatory value that you received for the last 12 months of your employment
and through the end of the Restricted Period from any such award (including the
amount of any cash payment made to you upon settlement of the Award, and/or the
amount included as compensation in your taxable income upon settlement of the
Award). You will promptly pay the full amount due upon demand, in the form of
cash or shares of Common Stock at current fair market value.

 

Retirement Rule

 

If, as of your Termination Date, you are at least (i) age 65, (ii) age 62 with
one or more full years of service, or (iii) age 55 with 10 or more full years of
service, then you meet the “Retirement Rule.”  If you are terminated under the
Company’s applicable separation pay plan or any successor or comparable
arrangement, if any, your Termination Date for purposes of determining whether
you qualify under the Retirement Rule is your last day of active employment with
the Company.

 

The Retirement Rule does not apply if you were involuntarily terminated for
gross misconduct or for cause. If you retire and do not meet the Retirement
Rule, you will be considered to have resigned.

 

If you are terminated under the Company’s applicable separation pay plan or
successor or comparable arrangement, if any, your Termination Date for purposes
of determining whether you qualify under the Retirement Rule is your last day of
active employment with the Company.

 

If you:

 

 

 

 

 

Meet the Retirement Rule

 

You will be entitled to receive a number of shares of Common Stock equal to the
shares you would have received, if any, if your employment had not terminated
due to retirement in accordance with the Retirement Rule, multiplied by a
fraction equal to the number of days from the first day of the Performance
Period to the Termination Date, divided by the total number of days in the
Performance Period. Any such shares will be received at the time of settlement
of the Performance Shares after the end of the Performance Period. You will have
a right to payment under the Retirement Rule provided that, prior to the time of
settlement, you do not engage in any activities that compete with the business
operations of the Travelers Group, including, but not limited to, working for
another insurance company engaged in the property casualty insurance business as
either an employee or independent contractor. You are not subject to this
non-compete provision if you are terminated involuntarily, or if you are
employed in any state where state law prohibits such non-compete provisions, but
you remain subject to Sections 9 and 10 of the Award Agreement, and the POE
Agreement.

 

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When called for under the above rules, as a condition to receiving payment, you
will be required to certify to the Company that you have not engaged in any
activities that compete with the business operations of the Travelers Group
since your Termination Date, and provide such other evidence of your compliance
with the Retirement Rule as the Company may require.

 

EXHIBIT B—Performance Share Vesting Grid

To Travelers’ Performance Share Award Notification and Agreement

 

Performance Period
ROE*

 

% of Performance Shares Vested

 

 

 

> 16.0

%

 

150%

(Maximum)

15.5

 

 

140

 

15.0

 

 

130

 

14.5

 

 

120

 

13.5

 

 

110

 

12.0

 

 

100

 

10.0

 

 

75

 

8.0

 

 

50

(Threshold)

< 8.0

 

 

0

 

 

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* For any Performance Period ROE (as defined below) that is at least 8.0%, but
falls between two Performance Period ROE performance levels, the percentage of
Performance Shares vested shall be interpolated (for example, if Performance
Period ROE is 14.0%, 115% of the Performance Shares would be vested).

 

Definitions:

 

“Performance Period ROE” is defined as the sum of the Adjusted ROE for each of
the three years in the Performance Period, divided by three.

 

“Adjusted ROE” is defined as Adjusted Operating Income divided by Adjusted
Shareholders’ Equity.

 

“Adjusted Operating Income” for each year in the Performance Period is defined
as the Company’s net income from continuing operations as reported in the
Company’s financial statements (including accompanying footnotes and
management’s discussion and analysis), adjusted as set forth in the immediately
following sentence. In calculating Adjusted Operating Income, net income from
continuing operations shall be adjusted as follows: first (A) remove the
after-tax effects of the following items: (i) losses (net of reinsurance) from
catastrophes (as designated by the Insurance Service Office’s Property Claims
Service Group, the Lloyd’s Claim Office, Swiss Reinsurance Company’s sigma
report, or a comparable report or organization generally recognized by the
insurance industry, and reported by the Company as a catastrophe); asbestos and
environmental reserve charges (or releases); net realized investment gains or
losses in the fixed maturities and real estate portfolios; and (ii) 
extraordinary items, the cumulative effect of accounting changes and federal
income tax rate changes, and restructuring charges, each as defined by generally
accepted accounting principles in the United States, and each as reported in the
Company’s financial statements (including accompanying footnotes and
management’s discussion and analysis); (B) reduced, as to the first year in the
Performance Period (20XX), by $                  , as to the second year in the
Performance Period (20XX), by $                   times the ratio of: the
Company’s 20XX consolidated personal lines homeowners net written premium plus
commercial lines property net written premium plus 50% of commercial lines multi
peril net written premium divided by the Company’s 20XX consolidated personal
lines homeowners net written premium plus commercial lines property net written
premium plus 50% of commercial lines multi peril net written premium, and as to
the third year in the Performance Period (20XX), by $                   times
the ratio of: the Company’s 20XX consolidated personal lines homeowners net
written premium plus commercial lines property net written premium plus 50% of
commercial lines multi peril net written premium divided by the Company’s 20XX
consolidated personal lines homeowners net written premium plus commercial lines
property net written premium plus 50% of commercial lines multi peril net
written premium; and (C) reduced by an amount intended, as of the date of this
award, to approximate historical levels of credit losses (on an after-tax basis)
associated with the Company’s fixed income investments, determined by
(i) multiplying a fixed factor, expressed as 2.25

 

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basis points, by the amortized cost of the Company’s fixed maturity investment
portfolio at the beginning of each quarter during the relevant year in the
Performance Period and (ii) adding the sum of the amounts resulting from (i) for
such year in the Performance Period.

 

“Adjusted Shareholders’ Equity” for each year in the Performance Period is
defined as the sum of the Company’s total common stockholders’ equity as
reported in the Company’s balance sheet as of the beginning and end of the year
(excluding net unrealized appreciation or depreciation of investments and
adjusted as set forth in the immediately following sentence), divided by two. In
calculating Adjusted Shareholders’ Equity, the Company’s total common
shareholders’ equity as of the beginning and end of the year shall be adjusted
to remove the cumulative after-tax impact of the following items during the
Performance Period: (i) discontinued operations and (ii) the adjustments and
reductions made in calculating Adjusted Operating Income.

 

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ADDENDUM TO AWARD AGREEMENT

– Special Rules Applicable to Jay S. Fishman

 

The special rules set forth in this Addendum will modify, and form part of, the
Award Agreement for Jay S. Fishman (the “Participant”) for his Performance Share
Award granted                      , 20    .  Reference is made in this Addendum
to the letter agreement between the Company and the Participant dated
December 19, 2008, governing certain terms and conditions of the Participant’s
employment with the Company (the “Letter Agreement”).

 

The special rules set forth in the Addendum will apply if the Participant’s
Termination Date occurs at any time during the period starting
                       , 20     and ending                        , 20     due
to his death, his Disability (as defined in the Letter Agreement), action by the
Company without Cause (as defined in the Letter Agreement), or action by him for
Good Reason (as defined in the Letter Agreement) (each, a “Good Leave
Termination”).

 

1.                                      Performance Period and Performance
Period ROE.

 

In the event of a Good Leave Termination, the Performance Period under the Award
Agreement shall be as follows:

 

(a)                                  If the Good Leave Termination occurs before
                       , 20    , the Performance Period shall be the one-year
period starting                        , 20     and ending                   
    , 20    .

 

(b)                                 If the Good Leave Termination occurs during
the year commencing                        , 20     and ending
                       , 20    , the Performance Period shall be the two-year
period starting                        , 20     and ending                   
    , 20    .

 

To determine the Participant’s percentage under the Performance Share Vesting
Grid set forth in Exhibit B, the “Performance Period ROE” shall be the sum of
the Adjusted ROE for each of the years in the Performance Period, divided by the
number of years in the Performance Period.

 

2.                                      Settlement of Award.

 

In the event of a Good Leave Termination, the number of Performance Shares
(including Performance Shares granted in this Award, plus any additional
Performance Shares credited as dividend equivalents under Section 6 of the Award
Agreement) vesting pursuant to the Performance Share Vesting Grid set forth in
Exhibit B shall be delivered to Participant as soon as administratively
practicable (but no later than 20 days) following the later of (a) certification
of the performance results after the end of the Performance Period (which
certification shall occur between January 1 and March 15 of the year following
the end of the Performance Period, as determined in 1. of this Addendum), or
(b) the first day of the seventh (7th) month following his separation from
service (as defined in the Letter Agreement) (or, if the Participant’s
Termination Date occurs due to his death, as soon as administratively
practicable (but no later than 20 days) following his Termination Date).

 

The Participant shall remain subject to the Non-Solicitation Conditions and the
Principals of Employment Agreement that form part of the Award Agreement
(including the forfeiture provisions in Section 10 of the Award Agreement). 
However, if the Good Leave Termination otherwise falls under the “Retirement
Rule” set forth in Exhibit A, the Participant shall not be subject to the
non-compete requirements otherwise attendant to the Retirement Rule. 
Notwithstanding any contrary provision of this Award Agreement (including the
Award Rules of Exhibit A), the number of Performance Shares due to the
Participant shall not be prorated in the event of a Good Leave Termination.

 

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3.                                      Minimum Number of Shares in Event of
Death or Disability.

 

In the event of a Good Leave Termination due to the Participant’s death or
Disability (as defined in the Letter Agreement), the number of Performance
Shares vested shall not be less than one hundred percent (100%) of the number of
Performance Shares granted in this Award, plus any additional Performance Shares
credited as dividend equivalents under Section 6 of the Award Agreement.

 

THE TRAVELERS COMPANIES, INC.

 

PARTICIPANT’S SIGNATURE DATE

 

 

 

 

 

 

 

 

 

By: John P. Clifford, Jr.

 

Jay S. Fishman

Executive Vice President, Human Resources

 

 

 

 

 

 

 

 

 

 

 

Received By

 

Date

 

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