Exhibit 10.23


 


ONEBEACON’S 2005 MANAGEMENT INCENTIVE PLAN


 


Purpose


The Management Incentive
Plan (MIP) is an integral part of the total compensation program for senior
Home Office and Field Office management. Its primary purpose is to focus
attention on 2005 profitability goals and to reward eligible participants for
the achievement of those goals.


 


Eligibility


The Plan is limited to
home office and field office senior staff who have a significant impact on
OneBeacon’s operating results.


 


Target Awards


Target awards for all
participants, expressed as a percent of salary, will be set and approved by the
Board of OneBeacon Corporation.


 


Performance
Measure


The Corporate
MIP pool will be established based upon achievement of a 94% combined ratio for
total OneBeacon operations, computed on an adjusted calendar year basis.
This measurement will be used to establish a pool of money to be allocated to
business units and Home Office departments. At a corporate combined ratio of 94%,
the plan will fund an amount equal the sum of each of the plan’s participant’s
potential award at their target bonus percentage. The OneBeacon Board of
Directors may adjust the size of the pool based on under or over achievement of
the company’s target combined ratio and other objectives that will be
communicated during first quarter, 2005.


 


Individual
Awards


Each
business unit will be judged against a number of metrics including, where
appropriate, a combined ratio result target, agreed to in advance with the
President of OneBeacon. Generally
these targets will relate to the aggregate financial plan rolled up by branch
and line of business, but the targets will not always match the plan (in many
cases, the targets are more aggressive). If the combined ratio target is
achieved, in conjunction with other business metrics, the business may be
awarded 100% of its indicated share of the corporate pool. Businesses failing
to reach target may or may not, at the discretion of the President, receive a
reduced, partial allocation of the pool. Businesses exceeding objectives may
receive greater than 100% of indicated allocation. In no event will the sum of
the performance adjusted business unit pools be greater than the performance
adjusted company pool.


 


Within
each business, it will be the prerogative of the business leader, with guidance
from and after consultation with the company President, to further allocate the
business’s pool amount to the constituent branches, lines of business and
individuals, based upon performance against targets established within the business.
It will be the responsibility of the business leader, with guidance from the President,
to establish appropriate targets for the constituent branches, lines of
business, departments, or individuals at the outset of the MIP year.


 

















 


For
corporate or administrative functions that support all or multiple regions or businesses,
MIP individuals will receive allocations from the corporate pool based upon
attainment of their department and individual MIP goals for 2005.


 


Review and evaluation of
performance will be conducted during the first quarter following the end of the
plan year. Incentive payments will be paid once plan year results have been
produced and evaluated.


 


The salary used to
determine the amount of the individual awards will be that in effect at the end
of the plan year (12/31/05).


 


Plan
Participation for New Hires


Employees hired during
the plan year are eligible to participate in the MIP. Awards will be pro-rated
specifically based on date of hire.


 


Special
Circumstances


The OneBeacon Board of
Directors may, in its sole discretion, also recognize extraordinary conditions
or circumstances in determining payment levels.


 


In the event of
termination prior to the payment of awards, no incentive payments will be made.
However, in the event of retirement or reduction in force after the end of the
plan year, but before payment is made, incentive payments may be made if
approved by the senior business leader. These exceptions will be made on a case
by case basis. In the event of death or disability, the plan participant or
beneficiary may be considered for a partial award payment.


 


Effect
on Benefit Plans


Amounts paid under the terms of
this plan will not be counted for purposes of determining compensation under
any employee benefit plan sponsored by OneBeacon.


 


Plan
Continuation


Notwithstanding any of the
aforementioned, the plan may be amended or terminated, in whole or in part, at
any time, by the Board of Directors.


 


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