Exhibit 10.16
ONEBEACON PERFORMANCE UNIT PLAN
1.
PURPOSE OF THE PLAN.
THE PURPOSE OF THE PLAN IS TO ADVANCE THE INTERESTS OF
THE COMPANY AND ITS MEMBERS BY PROVIDING INCENTIVES IN THE FORM OF PERFORMANCE
UNITS TO CERTAIN SELECTED EXECUTIVES AND KEY EMPLOYEES OF THE COMPANY AND ITS
SUBSIDIARIES.
2.
DEFINITIONS.
THE FOLLOWING CAPITALIZED TERMS USED IN THE PLAN HAVE THE
RESPECTIVE MEANINGS SET FORTH IN THIS SECTION.
(A)
ACTUAL UNITS.
THE NUMBER OF TARGET UNITS MULTIPLIED BY THE APPLICABLE
PERFORMANCE PERCENTAGE.
(B)
ACTUAL VALUE.
THE VALUE OF EACH ACTUAL UNIT DETERMINED BY MULTIPLYING THE
INITIAL VALUE BY THE SUM OF (I) 100% AND (II) THE AGGREGATE STANDARD PRE-TAX
INSURANCE RETURN-ON-EQUITY OF THE COMPANY AND ITS SUBSIDIARIES OVER THE AWARD
PERIOD, AS DETERMINED IN GOOD FAITH BY THE COMMITTEE.
BY WAY OF EXAMPLE, IF THE
STANDARD PRE-TAX INSURANCE RETURN-ON-EQUITY OF THE COMPANY WERE TO BE 22% FOR
EACH YEAR IN A THREE-YEAR AWARD PERIOD, THE AGGREGATE STANDARD PRE-TAX INSURANCE
RETURN-ON-EQUITY OF THE COMPANY AND ITS SUBSIDIARIES OVER THE AWARD PERIOD WOULD
BE 81.6% (I.E., 22% COMPOUNDED ANNUALLY IN EACH OF THE THREE YEARS COMPRISING
THE AWARD PERIOD) AND THE ACTUAL VALUE OF EACH ACTUAL UNIT WOULD BE $181.60
(I.E., $100 X 181.6%).
(C)
ADVERSE CHANGE IN THE PLAN.
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:
(I)
TERMINATION OF THE PLAN;
(II)
AMENDMENT OF THE PLAN THAT MATERIALLY DIMINISHES THE VALUE OF AWARDS THAT
MAY BE GRANTED UNDER THE PLAN, EITHER TO INDIVIDUAL PARTICIPANTS OR IN THE
AGGREGATE, UNLESS THERE IS SUBSTITUTED CONCURRENTLY A PLAN OR ARRANGEMENT
PROVIDING FOR THE GRANT OF LONG-TERM INCENTIVE AWARDS OF COMPARABLE VALUE TO
INDIVIDUAL PARTICIPANTS IN THE PLAN OR IN THE AGGREGATE, AS THE CASE MAY BE; OR
(III)
IN RESPECT OF ANY HOLDER OF AN AWARD, A MATERIAL DIMINUTION IN HIS RIGHTS
HELD UNDER AN AWARD (EXCEPT AS MAY OCCUR UNDER THE TERMS OF THE AWARD AS
ORIGINALLY GRANTED) UNLESS THERE IS SUBSTITUTED CONCURRENTLY A LONG-TERM
INCENTIVE AWARD WITH A VALUE AT LEAST COMPARABLE TO THE LOSS IN VALUE
ATTRIBUTABLE TO SUCH DIMINUTION IN RIGHTS.
(D)
AFFILIATE.
IN RESPECT OF AN ENTITY OR PERSON, ANY ENTITY UNDER THE CONTROL
OF, IN CONTROL OF, OR UNDER COMMON CONTROL WITH, SUCH ENTITY OR PERSON.
(E)
AWARD.
AN AWARD OF PERFORMANCE UNITS GRANTED PURSUANT TO THE PLAN.
(F)
AWARD AGREEMENT.
THE AGREEMENT BETWEEN THE PARTICIPANT AND THE COMPANY
SPECIFYING THE APPLICABLE TERMS OF AN AWARD.
(G)
AWARD PERIOD.
A PERIOD IN RESPECT OF ANY AWARD, COMMENCING AS OF THE
BEGINNING OF THE FISCAL YEAR OF THE COMPANY IN WHICH SUCH AWARD IS MADE.
AN
AWARD PERIOD MAY CONTAIN ANY NUMBER OF PERFORMANCE PERIODS.
(H)
BOARD.
THE BOARD OF MANAGERS OF THE COMPANY.
1
(I)
CHANGE IN CONTROL.
THE OCCURRENCE OF ANY OF THE FOLLOWING EVENTS:
(I)
ANY PERSON OR GROUP (WITHIN THE MEANING OF SECTION 13(D) AND 14(D)(2) OF
THE EXCHANGE ACT), OTHER THAN JOHN J. BYRNE, BERKSHIRE HATHAWAY, INC. OR ONE OF
ITS WHOLLY OWNED SUBSIDIARIES, AN UNDERWRITER TEMPORARILY HOLDING PARENT SHARES
IN CONNECTION