Exhibit 10.42


 


THE TRAVELERS COMPANIES, INC.

POLICY REGARDING EXECUTIVE INCENTIVE COMPENSATION RECOUPMENT


 


The
Board of Directors (the “Board”) of The Travelers Companies, Inc.
(the “Company”) believes that it is appropriate to have a policy
regarding the recoupment of incentive compensation from any Covered Executive
(as defined below) in certain situations involving fraud or willful misconduct
resulting in a financial restatement. The Company’s policy reads as follows:


 


It is
the Company’s policy that, subject to the terms of this policy, the Company
will require reimbursement and/or cancellation of all or a portion of any incentive
cash bonus or equity-based incentive compensation awarded to a Covered
Executive after February 1, 2010 where the Compensation Committee of the
Board has determined that all of the following factors are present: (a) the
award and/or payout thereof was predicated upon the achievement of certain
financial results that were subsequently the subject of a restatement, (b) the
Covered Executive engaged in fraud or willful misconduct that was a significant
contributing factor in causing the restatement and (c) a lower award
and/or payout thereof would have been made to the Covered Executive based upon
the restated financial results.


 


Incentive
compensation shall be granted subject to the policy that, in each such instance
described above, the Company will, to the extent permitted by applicable law
and subject to the discretion and approval of the Compensation Committee of the
Board, taking into account such facts and circumstances as it deems
appropriate, including the costs and benefits of doing so, seek to recover the Covered
Executive’s cash incentive bonus award and/or equity-based incentive compensation
paid or issued to the Covered Executive in excess of the amount that would have
been paid or issued based on the restated financial results (the “Excess Amount”).


 


Any
recoupment under this policy shall be in addition to, and shall not preclude,
any other remedies that may be available to the Company.  Accordingly, the remedies provided for under
this policy shall be in addition to, and shall not be preclude, any remedies
against the Covered Executive for fraud or misconduct, whether or not there is
a restatement.  If the Board learns of
any misconduct by a Covered Executive that contributed to the Company having to
restate all or a portion of its financial statements, it shall take such action
as it deems necessary to remedy the misconduct, prevent its recurrence and, if
appropriate, based on all relevant facts and circumstances, take remedial
action against the wrongdoer in a manner it deems appropriate.


 


Notwithstanding
the foregoing, if the Compensation Committee determines (taking into account
such factors and circumstances as it deems appropriate, which may include costs
to the Company of doing so and any fines, penalties or legal or other expenses
which were or may be incurred by the Covered Executive) that, after recovery of
an Excess Amount from a Covered Executive, the Covered Executive is nonetheless
unjustly enriched, it may seek recovery of more than such Excess Amount up to
the entire amount of the incentive compensation.


 


For
purposes of this policy, the term “Covered Executive” means (a) any member
of the Management Committee of the Company and (b) any other “officer” of
the Company, as defined in Rule 16a-1(f) under the Securities
Exchange Act of 1934, as amended, including the principal accounting officer.  “Management Committee” means the most senior
policy setting group of executives within the Company.