Document:

Exhibit 4.4

 

                                      Approved by Shareholders:  May 21, 2010

AETNA INC.

2010 NON-EMPLOYEE DIRECTOR COMPENSATION PLAN

SECTION 1.     ESTABLISHMENT OF PLAN; PURPOSE.

The Plan is hereby established to permit Eligible Directors of the Company, in recognition of their contributions to the Company, to receive Shares in the manner described below. The Plan is intended to enable the Company to attract, retain and motivate qualified Eligible Directors and to enhance the long-term mutuality of interest between Eligible Directors and stockholders of the Company.

SECTION 2.     DEFINITIONS.

When used in this Plan, the following terms shall have the definitions set forth in this Section:

“Accounts” shall mean an Eligible Director’s Stock Unit Account and Interest Account, as described in Section 9.

“Affiliate” shall mean any corporation or other entity (other than the Company or one of its Subsidiaries) in which the Company directly or indirectly owns at least twenty percent (20%) of the combined voting power of all classes of stock of such entity or at least twenty percent (20%) of the ownership interests in such entity.

“Board of Directors” shall mean the Board of Directors of the Company.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

“Committee” shall mean the Nominating and Corporate Governance Committee of the Board of Directors or such other committee of the Board as the Board shall designate from time to time.

“Company” shall mean Aetna Inc., a Pennsylvania corporation.

“Compensation” shall mean the annual retainer fees earned by an Eligible Director for service as a Director; the annual retainer fee, if any, earned by an Eligible Director for service as a member of a committee of the Board of Directors; and any fees earned by an Eligible Director for attendance at meetings of the Board of Directors and any of its committees.

“Director” shall mean any member of the Board of Directors, whether or not such member is an Eligible Director.

“Disability” shall mean an illness or injury that lasts at least six months, is expected to be permanent and renders an Eligible Director unable to carry out his or her duties.

“Effective Date” shall mean the date on which this Plan is approved by shareholders.

“Eligible Director” shall mean a member of the Board of Directors who is not an employee of the Company.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Fair Market Value” shall mean on any date, with respect to a Share, the closing price of a Share as reported by the Consolidated Tape of the New York Stock Exchange Listed Shares on such date, or if no shares were traded on such Exchange on such date, on the next date on which the Common Stock is traded.

“Government Service” shall mean the appointment or election of an Eligible Director to a position with the federal, state or local government or any political subdivision, agency or instrumentality thereof.

“Grant” shall mean a grant of Units under Section 5, Options under Section 7 and Other Stock-Based Awards under Section 12.

“Interest Account” shall mean the bookkeeping account established to record the interests of an Eligible Director with respect to deferred Compensation that is not deemed invested in Units.

“Option” shall mean the right granted under Section 7 to purchase the number of Shares of Stock specified by the Board of Directors, at a price and for the term fixed by the Board of Directors in accordance with the Plan and subject to any other limitations and restrictions as this Plan and the Board of Directors shall impose.

 

  

 

  

 

“Other Stock-Based Awards” means any right granted under Section 12.

“Retirement” shall mean termination from service as a director after the date established by the Board of Directors as the date for mandatory retirement.

“Section 409A” shall mean Section 409A of the Code and the regulations issued thereunder, as amended from time to time.

“Shares” shall mean shares of Stock.

“Stock” shall mean the common stock, $.01 par value, of the Company.

“Stock Unit Account” shall mean, with respect to an Eligible Director who has elected to have deferred amounts deemed invested in Units, the bookkeeping account established to record such Eligible Director’s interest under the Plan related to such Units.

“Subsidiary” shall mean any entity of which the Company possesses directly or indirectly fifty percent (50%) or more of the total combined voting power of all classes of stock of such entity.

“Unit” shall mean a contractual obligation of the Company to deliver a Share or pay cash based on the Fair Market Value of a Share to an Eligible Director or the beneficiary or estate of such Eligible Director as provided herein.

“Year of Service as a Director” shall mean a period of 12 months of service as a Director, measured from the grant effective date of a Unit.

SECTION 3.     ADMINISTRATION.

The Plan shall be administered by the Board of Directors. The Board of Directors shall have the responsibility of construing and interpreting the Plan and of establishing and amending such rules and regulations as it deems necessary or desirable for the proper administration of the Plan. Any decision or action taken or to be taken by the Board of Directors, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the maximum extent permitted by applicable law, be within its absolute discretion (except as otherwise specifically provided herein) and shall be conclusive and binding upon all Eligible Directors and any person claiming under or through any Eligible Director.

Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Board of Directors by the Plan, the Board of Directors shall have full power and authority to: (i) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Units and Options; (ii) determine the terms and conditions of any Option; (iii) interpret and administer the Plan and any instrument or agreement relating to, or Grant made under, the Plan; (iv) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (v) make any other determination and take any other action that the Board of Directors deems necessary or desirable for the administration of the Plan.

The Plan shall be administered such that awards under the Plan shall be deemed to be exempt under Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act (“Rule 16b-3”), as such Rule is in effect on the Effective Date of the Plan and as it may be subsequently amended from time to time.

SECTION 4.     SHARES AUTHORIZED FOR ISSUANCE.

4.1 Maximum Number of Shares.  The aggregate number of Shares with respect to which Grants may be awarded to Eligible Directors under the Plan shall not exceed 500,000 Shares, subject to adjustment as provided in Section 4.2. If any Unit or Option is settled in cash or is forfeited without a distribution of Shares, the Shares otherwise subject to such Unit or Option shall again be available for Grants hereunder.

4.2 Adjustment for Corporate Transactions.  In the event that any stock dividend, extraordinary cash dividend, recapitalization, 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 event affects the Stock such that an adjustment is required to preserve, or to prevent enlargement of, the benefits or potential benefits made available under the Plan, then the Board of Directors shall adjust the number and kind of Shares which thereafter may be awarded under the Plan and the number of Units and Options and the exercise price thereof that have been, or may be, granted under the Plan. Additionally, the Board of Directors may make provisions for a cash payment to an Eligible Director; to the extent any amount constitutes “deferred compensation” within the meaning of Section 409A, no such provision shall change the timing or form of payment of such amount unless such changes are permitted under Section 409A.

 

  

 

  

 

SECTION 5.     UNIT GRANTS.

5.1 Unit Awards.  Each Eligible Director (other than any Eligible Director who has received an award under the Prior Plan) who is first elected or appointed to the Board of Directors on or after the Effective Date of the Plan shall be awarded a number of Units on such date as the Board shall determine. In addition, on the date of each Annual Meeting of Shareholders of the Company during the term of the Plan an Eligible Director serving as a Director on such date shall be awarded such number of Units as the Board shall determine.

5.2 Delivery of Shares.  Subject to satisfaction of the applicable vesting requirements set forth in Section 6 and except as otherwise provided in Section 8 or in the award agreement, all Shares that are subject to any Units shall be delivered to an Eligible Director and transferred on the books of the Company on the date which is the first business day of the month immediately following the termination of such Eligible Director’s service as a Director. Notwithstanding the foregoing, an Eligible Director may elect that all or a portion of his or her Units shall be payable in cash on the first business day of the month immediately following the termination of such Eligible Director’s service as a Director. Any fractional Shares to be delivered in respect of Units shall be settled in cash based upon the Fair Market Value on the date any whole Shares are transferred on the books of the Company to the Eligible Director or the Eligible Director’s beneficiary. The amount of any cash payment shall be determined by multiplying the number of Units and the number of Units subject to a cash payment election by the Fair Market Value on the last business day preceding the payment date. Upon the delivery of a Share (or cash with respect to a whole or fractional Share) pursuant to the Plan, the corresponding Unit (or fraction thereof) shall be canceled and be of no further force or effect. If an award agreement provides for accelerated payment upon acceptance of a position in Government Service, such acceleration shall be made only to the extent permitted under Section 409A (including those provisions relating to compliance with ethics agreements with the Federal Government, ethics laws and conflict of interest laws).

5.3 Dividend Equivalents.  An Eligible Director shall have no rights as a shareholder of the Company with respect to any Units until Shares are delivered to the Director pursuant to this Section 5; provided that, each Eligible Director shall have the right to receive an amount equal to the dividend per Share for the applicable dividend payment date (which, in the case of any dividend distributable in property other than Shares, shall be the per Share value of such dividend, as determined by the Company for purposes of income tax reporting) times the number of Units held by such Eligible Director on the record date for the payment of such dividend (a “Dividend Equivalent”). Each Eligible Director may elect, prior to any calendar year, whether the Dividend Equivalent will be (i) paid in cash, on each date on which dividends are paid to shareholders with respect to Shares; (ii) treated as reinvested in an additional number of Units determined by dividing (A) the cash amount of any such dividend by (B) the Fair Market Value on the related dividend payment date (in which case, such additional Units shall be payable as provided herein); or (iii) deferred and credited to the Eligible Director’s Interest Account pursuant to Section 9.4.

SECTION 6.     UNIT VESTING.

6.1 Service Requirements.  Except as otherwise provided in the award agreement, this Section 6 or in Section 8, an Eligible Director shall vest in his or her Units as provided in this Section 6.1. If an Eligible Director terminates service prior to the completion of three Years of Service as a Director, the number of Shares to be delivered to such Eligible Director in respect of Units granted upon his or her election to the Board shall equal the amount obtained by multiplying the initial number of units by a fraction, the numerator of which is the number of full months of service completed by such Director from the applicable date of Unit grant (counting any partial month of service as a full month) and the denominator of which is 36. If an Eligible Director terminates service prior to the completion of one Year of Service as a Director from the date of Unit grant with respect to any annual grant of Units made hereunder, the number of Shares to be delivered to such Eligible Director in respect of such Unit grant shall equal the amount obtained by multiplying the number of Units subject to such Unit grant by a fraction, the numerator of which is the number of full months of service completed by such Director from the applicable date of the Unit grant (counting any partial month of service as a full month) and the denominator of which is 12. Notwithstanding the foregoing, and except as provided in Section 6.2, if the Eligible Director terminates service by reason of his/her death, Disability, Retirement, or acceptance of a position in Government Service prior to the completion of the period of service required to be performed to fully vest in any Unit grant, all Shares that are the subject of such Unit grant (or, if elected by the Eligible Director, the value thereof in cash) shall be delivered to such Eligible Director (or the Eligible Director’s beneficiary or estate).

6.2 Distribution on Death.  In the event of the death of an Eligible Director, the Shares corresponding to such Units or, at the election of the Eligible Director’s beneficiary or estate, the Fair Market Value thereof in cash shall be delivered to the beneficiary designated by the Eligible Director on a form provided by the Company, or, in the absence of such designation, to the Eligible Director’s estate.

SECTION 7.     STOCK OPTIONS/STOCK APPRECIATION RIGHTS.

(a) Grant.  Subject to the provisions of the Plan, the Board of Directors shall have the authority to award Options or Stock Appreciation Rights to an Eligible Director and to determine: (i) the number of Shares to be covered by each award; (ii) subject to Section 7(b), the exercise price of the award; and (iii) the conditions and limitations applicable to the exercise of the award.

(b) Exercise Price.  The exercise price of an Option or Stock Appreciation Right shall not be less than 100% of the Fair Market Value on the date of grant.

 

  

 

  

 

(c) Exercise.  Each Option or Stock Appreciation Right shall be exercised at such times and subject to such terms and conditions as the Board of Directors may specify at the time of the award or thereafter. No Shares shall be delivered pursuant to any exercise unless arrangements satisfactory to the Board of Directors have been made to assure full payment of the exercise price therefor. Without limiting the generality of the foregoing, payment of the exercise price may be made in cash or its equivalent or, if and to the extent permitted by the Board of Directors by exchanging Shares owned by the Eligible Director (which are not the subject of any pledge or other security interest) either actually or by attestation, or by a combination of the foregoing, provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company, valued as of the date of such tender, is at least equal to such exercise price.

(d) No Eligible Director shall have any rights as a shareholder with respect to any Shares to be issued pursuant to any Option or Stock Appreciation Right under the Plan prior to the issuance thereof.

SECTION 8.     CHANGE IN CONTROL.

8.1 Immediate Vesting.  Upon the occurrence of a Change in Control, each Eligible Director’s right and interest in Units, Options or Stock Appreciation Rights which have not previously vested shall become vested and nonforfeitable.

8.2 Cash Settlement.  (a) (i) Upon the occurrence of a Change in Control, in lieu of delivering Shares with respect to the Units then held by an Eligible Director, the Company shall pay such Eligible Director, not later than 60 days after the Change in Control occurs, cash in an aggregate amount equal to the product of (x) the number of Shares that are subject to all Units credited to such Eligible Director at the time of the Change in Control multiplied by (y) the Fair Market Value on the date of the Change in Control.

(ii) Upon the occurrence of a Change in Control, the Company shall pay to each Eligible Director cash in an amount equal to the accrued value of such Eligible Director’s Interest Account.

(b) Upon the occurrence of a Change in Control, in lieu of delivering Shares with respect to each Option or Stock Appreciation Rights then held by an Eligible Director, the Company shall pay such Eligible Director, not later than 60 days after the Change in Control occurs, cash in an aggregate amount equal to the product of (i) the number of Shares that are subject to each Option or Stock Appreciation Right held by such Eligible Director at the time of the Change in Control multiplied by (ii) the amount by which the Fair Market Value on the date of the Change of Control exceeds the exercise price of such Option or Stock Appreciation Right.

(c) Notwithstanding (a) and (b) above, payment of any amount that constitutes “deferred compensation” under Section 409A shall vest as provided above but payment shall not be accelerated due to the Change in Control unless the Change in Control also satisfies the broadest definition of change in control permitted under Section 409A.

8.3 Definition.  ”Change in Control” shall mean the occurrence of any of the following events:

(i) When any “person” as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) of the Exchange Act but excluding the Company and any Subsidiary thereof and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of securities of the Company representing 20 percent (20%) or more of the combined voting power of the Company’s then outstanding securities;

(ii) When, during any period of 24 consecutive months the individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority thereof, provided that a Director who was not a Director at the beginning of such 24-month period shall be deemed to have satisfied such 24-month requirement (and be an Incumbent Director) if such Director was elected by, or on the recommendation of or with the approval of, at least two-thirds of the Directors who then qualified as Incumbent Directors either actually (because they were Directors at the beginning of such 24-month period) or by prior operation of this Paragraph (ii); or

(iii) The occurrence of a transaction requiring shareholder approval for the acquisition of the Company by an entity other than the Company or a Subsidiary through purchase of assets, or by merger, or otherwise.

Notwithstanding the foregoing, in no event shall a Change in Control be deemed to have occurred (i) as a result of the formation of a Holding Company, or (ii) with respect to a Director if the Director is part of a “group”, within the meaning of Section 13(a)(3) of the Exchange Act as in effect on the effective date of the Change in Control transaction. In addition, for purposes of the definition of “Change in Control” a person engaged in the business as an underwriter of securities shall not be deemed to be a “beneficial owner” of, or to “beneficially own”, any securities acquired through such person’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

 

  

 

  

 

For purposes of this Section 8.3, the term “Holding Company” means an entity that becomes a holding company for the Company or its business as part of any reorganization, merger, consolidation or other transaction, provided that the outstanding shares of common stock of such entity and the combined voting power of the then outstanding voting securities of such entity entitled to vote generally in the election of directors is, immediately after such reorganization, merger, consolidation or other transaction, beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the outstanding shares of Common Stock and the combined voting power of the outstanding voting securities, respectively, of the Company immediately prior to such reorganization, merger, consolidation or other transaction in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, consolidation or other transaction, of such outstanding voting stock.

SECTION 9.     DEFERRED COMPENSATION PROGRAM.

9.1 Election to Defer.  On or before December 31 of any calendar year, an Eligible Director may elect to defer receipt of all or any part of any Compensation payable in respect of the calendar year following the year in which such election is made, and to have such amounts credited, in whole or in part, to a Stock Unit Account or an Interest Account. Any person who shall become an Eligible Director during any calendar year may elect, not later than the 30th day after his or her term as a Director begins, to defer payment of all or any part of his or her Compensation payable for the portion of such calendar year following such election period.

9.2 Method of Election.  A deferral election shall be made by written notice filed with the Corporate Secretary of the Company. Such election shall continue in effect (including with respect to Compensation payable for subsequent calendar years) unless and until the Eligible Director revokes or modifies such election by written notice filed with the Corporate Secretary of the Company. Any such revocation or modification of a deferral election shall become effective as of the end of the calendar year in which such notice is given and only with respect to Compensation payable for services rendered thereafter. Amounts credited to the Eligible Director’s Stock Unit Account prior to the effective date of any such revocation or modification of a deferral election shall not be affected by such revocation or modification and shall be distributed only in accordance with the otherwise applicable terms of the Plan. An Eligible Director who has revoked an election to defer Compensation under the Plan may file a new election to defer Compensation payable for services to be rendered in the calendar year following the year in which such election is filed.

9.3 Investment Election.  At the time an Eligible Director elects to defer receipt of Compensation pursuant to Section 9.1, the Eligible Director shall designate in writing the portion of such Compensation, stated as a whole percentage, to be credited to the Interest Account (or such other account as may be established from time to time by the Committee) and the portion to be credited to the Stock Unit Account. If an Eligible Director fails to notify the Corporate Secretary as to how to allocate any Compensation between the Accounts, 100% of such Compensation shall be credited to the Interest Account. By written notice to the Corporate Secretary of the Company, an Eligible Director may change the manner in which the Compensation payable with respect to services rendered after the end of such calendar year is allocated among the Accounts.

9.4 Dividend Equivalents.  In addition to the deferral of Compensation permitted under Section 9.1, an Eligible Director may elect, in the manner and at the time described in Section 5.3, to have Dividend Equivalents payable in respect of his or her Units credited to his or her Interest Account in the manner and at the time described in such Section 5.3.

9.5 Interest Account.  Any Compensation allocated to the Interest Account shall be credited to the Interest Account as of the date such Fees would have been paid to the Eligible Director. Any amounts credited to the Interest Account shall be credited with interest at the same rate and in the manner in which interest is credited under the Fixed Investment Fund (or, if such fund no longer exists, the fund with the investment criteria most clearly comparable to that of such Fund) under the Aetna Inc. 401k Plan (or any successor thereto).

9.6 Stock Unit Account.  Any Compensation allocated to the Stock Unit Account shall be deemed to be invested in a number of Units equal to the quotient of (i) such Compensation divided by (ii) the Fair Market Value on the date the Compensation then being allocated to the Stock Unit Account would otherwise have been paid. Fractional Units shall be credited, but shall be rounded to the nearest hundredth percentile, with amounts equal to or greater than .005 rounded up and amounts less than .005 rounded down. Whenever a dividend other than a dividend payable in the form of Shares is declared with respect to the Shares, the number of Units in the Eligible Director’s Stock Unit Account shall be increased by the number of Units determined by dividing (i) the product of (A) the number of Units in the Eligible Director’s Stock Unit Account on the related dividend record date, and (B) the amount of any cash dividend declared by the Company on a Share (or, in the case of any dividend distributable in property other than Shares, the per Share value of such dividend, as determined by the Company for purposes of income tax reporting), by (ii) the Fair Market Value on the related dividend payment date. In the case of any dividend declared on Shares which is payable in Shares, the Eligible Director’s Stock Unit Account shall be increased by the number of Units equal to the product of (i) the number of Units credited to the Eligible Director’s Stock Unit Account on the related dividend record date multiplied by (ii) the number of Shares (including any fraction thereof) distributable as a dividend on a Share.

9.7 Distribution Election.  At the time an Eligible Director makes a deferral election pursuant to Section 9.1, the Eligible Director shall also file with the Corporate Secretary of the Company a written election ( a “Distribution Election”) with respect to whether:

 

  

 

  

 

(i) the aggregate amount, if any, credited to the Interest Account at any time and the value of any Units credited to the Stock Unit Account shall be distributed in cash, in Shares or in a combination thereof at the election of the Director;

(ii) such distribution shall commence on the first business day of the calendar month following the date the Eligible Director ceases to be a Director or on the first business day of any calendar year following the calendar year in which the Eligible Director ceases to be a Director; and

(iii) such distribution shall be in one lump sum payment or in such number of annual installments (not to exceed ten) as the Eligible Director may designate.

The amount of any installment payment shall be determined by multiplying the amount credited to the Accounts of an Eligible Director immediately prior to the distribution by a fraction, the numerator of which is one and the denominator of which is the number of installments (including the current installment) remaining to be paid. An Eligible Director may change the timing or form of distribution under (ii) or (iii) above only if such change: (I) is made at least twelve (12) months before the distribution otherwise would be made, (II) does not take effect until twelve (12) months after it is made, (III) delays commencement of the distribution by at least five (5) years, and (IV) otherwise complies with the requirements of Section 409A.

9.8 Financial Hardship Withdrawal.  If an Eligible Director experiences an “unforeseeable emergency” as defined in Section 409A, the Eligible Director may submit to the Corporate Secretary of the Company a written request for a distribution, including such documentation as the Committee may request. The Committee shall review the request and make a determination approving or denying the requested distribution. If approved, distribution shall be made on the first business day of the month following the approval and shall be limited to such amount as is reasonably necessary to alleviate the Eligible Director’s emergency need, taking into account other assets available to the Director to the extent required by Section 409A.

9.9 Timing and Form of Distributions.  Any distribution to be made hereunder, whether in the form of a lump sum payment or installments, following the termination of an Eligible Director’s service as a Director shall commence in accordance with the Distribution Election made by the Eligible Director pursuant to Section 9.7. If an Eligible Director fails to specify a form of payment for a distribution in accordance with Section 9.7, the distribution from the Interest Account shall be made in cash and the distribution from the Stock Unit Account shall be made in Shares. If an Eligible Director fails to specify in accordance with Section 9.7 a commencement date for a distribution or whether such distribution shall be made in a lump sum payment or a number of installments, such distribution shall be made in a lump sum payment and commence on the first business day of the month immediately following the date on which the Eligible Director ceases to be a Director. In the case of any distribution being made in annual installments, each installment after the first installment shall be paid on the first business day of each subsequent calendar year until the entire amount subject to such Distribution Election shall have been paid.

SECTION 10.     UNFUNDED STATUS.

The Company shall be under no obligation to establish a fund or reserve in order to pay the benefits under the Plan. A Unit represents a contractual obligation of the Company to deliver Shares or pay cash to a Director as provided herein. The Company has not segregated or earmarked any Shares or any of the Company’s assets for the benefit of a Director or his or her beneficiary or estate, and the Plan does not, and shall not be construed to, require the Company to do so. The Director and his or her beneficiary or estate shall have only an unsecured, contractual right against the Company with respect to any Units granted or amounts credited to a Director’s Accounts hereunder, and such right shall not be deemed superior to the right of any other creditor. Units shall not be deemed to constitute options or rights to purchase Stock.

SECTION 11.     AMENDMENT AND TERMINATION.

The Plan may be amended at any time by the Board of Directors, provided that, except as provided in Section 4.2, the Board of Directors may not, without approval of the shareholders of the Company increase the number of Shares which may be awarded under the Plan. The Plan shall terminate on May 21, 2020. Notwithstanding the foregoing, no amendment or termination of the Plan shall materially and adversely affect any rights of any Director under any Grant made pursuant to the Plan. Unless the Board otherwise specifies at the time of such termination, a termination of the Plan will not result in the distribution of the amounts credited to an Eligible Director’s Accounts.

SECTION 12.     OTHER STOCK-BASED AWARDS.

The Board of Directors shall have authority to grant to Eligible Directors an “Other Stock-Based Award”, which shall consist of any right which is (i) not a Grant described in Sections 5 or 7 above and (ii) a Grant of Shares or a Grant denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Board of Directors to be consistent with the purposes of the Plan; provided that any such rights must comply, to the extent 

 

  

 

  

 

deemed desirable by the Board of Directors, with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable award agreement, the Board of Directors shall determine the terms and conditions of any such Other Stock-Based Award.

SECTION 13.     GENERAL PROVISIONS.

13.1 No Right to Serve as a Director.  This Plan shall not impose any obligations on the Company to retain any Eligible Director as a Director nor shall it impose any obligation on the part of any Eligible Director to remain as a Director of the Company.

13.2 Construction of the Plan.  The validity, construction, interpretation, administration and effect of the Plan, and the rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Connecticut.

13.3 No Right to Particular Assets.  Nothing contained in this Plan and no action taken pursuant to this Plan shall create or be construed to create a trust of any kind or any fiduciary relationship between the Company and any Eligible Director, the executor, administrator or other personal representative or designated beneficiary of such Eligible Director, or any other persons. Any reserves that may be established by the Company in connection with Units granted under this Plan shall continue to be treated as the assets of the Company for federal income tax purposes and remain subject to the claims of the Company’s creditors. To the extent that any Eligible Director or the executor, administrator, or other personal representative of such Eligible Director, acquires a right to receive any payment from the Company pursuant to this Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.

13.4 Listing of Shares and Related Matters.  If at any time the Board of Directors shall determine that listing, registration or qualification of the Shares covered by this Plan upon any national securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition of, or in connection with, the delivery of Shares under this Plan, no Shares will be delivered unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained, or otherwise provided for.

13.5 Severability of Provisions.  If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not effect any other provisions hereof, and this Plan shall be construed and enforced as if such provision had not been included.

13.6 Incapacity.  Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of receipting therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge any liability or obligation of the Board of Directors, the Company and all other parties with respect thereto.

13.7 Nontransferability.  No Grant may be assigned or transferred, in whole or in part, either directly or by operation of law (except in the event of an Eligible Director’s death by will or applicable laws of descent and distribution), including, but not by way of limitation, by execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no such right or interest of any Eligible Director in the Plan shall be subject to any obligation or liability of such Eligible Director.

13.8 Headings and Captions.  The headings and captions herein are provided for reference and convenience only, shall not be considered part of this Plan, and shall not be employed in the construction of this Plan.

13.9 409A Compliance.  All awards granted under the Plan are intended to be exempt from the requirements of Section 409A or, if not exempt, to satisfy the requirements of Section 409A and the provisions of the Plan, and any awards granted under the Plan shall be construed in a manner consistent therewith. In addition, notwithstanding any other provision of this Plan or an award agreement to the contrary, the Company will not pay or accelerate the payment of any amount that constitutes “deferred compensation” within the meaning of Section 409A, in violation of Section 409A. To the extent any amount of “deferred compensation” as defined in Section 409A would otherwise vest and become payable upon a Change in Control or upon a Disability, as provided herein or in an award agreement, any such award shall vest as so provided but payment shall not be accelerated unless the Change in Control or the Disability also satisfies the broadest definition of change in control or disability (as the case may be) permitted under Section 409A.

Any amount that constitutes “deferred compensation” within the meaning of Section 409A and is payable under the Plan solely by reason of an Eligible Director’s termination or cessation of service as a Director shall be payable as soon as, and no later than, the Eligible Director experiences a “separation from service” within the meaning of Section 409A.Albert A. Benchimol

6 Wheelock Road

Scarsdale, NY 10583

USA

	
July 28, 2010

 

 

Dear Mr. Benchimol

This Letter Agreement, together with the attachment hereto (collectively, the “Agreement”), reflects our mutual understanding with respect to your separation from employment from PartnerRe Capital Markets Corp. (the “Company”) and PartnerRe Ltd. (“PartnerRe”) and sets forth the payments and benefits that you will be eligible to receive under this Agreement.

1)         Resignation.  You have advised us that you will resign from employment by the Company and from any other position you hold with PartnerRe, Ltd., effective as of the close of business on December 31, 2010 (the “Resignation Date”).  For the period between the date hereof and September 30, 2010, you will continue in your current role, which includes maintaining your Executive Committee position.  For the period between October 1, 2010 and the Resignation Date, you will continue to report to the Chief Executive Officer of PartnerRe but you will relinquish your roles as CEO, Capital Markets Group and CFO PartnerRe Ltd. and cease to be a member of the Executive Committee, it being understood and agreed that you shall not be required to devote your full business time and attention to the business of the Company and PartnerRe during this period and you may elect to resign from employment after October 1, 2010 and before December 31, 2010 to accept other employment without losing any of the payments or benefits set forth in this Agreement, in which case such date shall be considered to be the Resignation Date for purposes of this Agreement.  You will also be entitled to the payments and benefits set forth herein if, before the Resignation Date, your employment is terminated (i) by the Company for a reason other than for Cause (as defined in the Employment Agreement or (ii) due to your death or Disability (as defined in the Employment Agreement).  The effective date of any such termination shall be considered to be the Resignation Date for purposes of this Agreement.

2)         Equity Vesting.  Any unvested outstanding equity awards held by you on the date hereof will fully vest on the date this Agreement is executed by both parties.  All outstanding options and stock appreciation rights shall remain exercisable for the remainder of their original 10-year term notwithstanding your earlier termination of employment.

3)         Payments Through the Resignation Date. (a) Until the close of business on the Resignation Date, for the remainder of 2010 you will be entitled to (i) continued salary at your current annual base salary rate (less applicable withholdings and deductions), paid in accordance with the Company’s payroll practices in the ordinary course and (ii) employee benefits at the level and of the type you currently receive.

 

 

	
PartnerRe Ltd.

Wellesley House South

90 Pitts Bay Road

Pembroke HM 08

Bermuda

	
Phone +1 441 292 0888

Fax +1 441 292 7010

www.partnerre.com

	  

 

  

  

  

 

	

 

 

b)         In addition, if you have executed the General Release (as defined below), you will be paid (x) a cash lump sum of $962,217, which is equal to your Average Annual Incentive (as defined in the Executive Employment Agreement, dated as of January 1, 2009, between the Company and you (the “Employment Agreement”)) with respect to fiscal years 2007, 2008 and 2009 and (y) the cash equivalent of any equity awards that you will be entitled to based on the 2010 performance year.  In calculating the amount described in (y) above, the Company will use the best available information at the time of payment and, in calculating the amount described in (y), will assume that your 2010 equity award will be determined using the same methodology used for determining the 2010 equity grants of other senior executives of the Company, taking into account your roles in the Company on the date hereof; provided that in the event the amount paid to you in 2010 under (y), above, is less than the amount you would otherwise have received in 2011, the balance shall be paid to you no later than March 15, 2011.  Any such balance will be determined after the February 2011 meeting of the compensation committee of PartnerRe’s board of directors, during which time the executive committee awards will be approved.  In the event that the fair market value of your 2010 equity award on the February 2011 grant date, determined based on the closing price of the shares of PartnerRe common stock underlying your award on the New York Stock Exchange on the last trading day before such grant date (the “2011 FMV”), is higher than the 2010 cash equivalent payment under (y), above, which will be based on the closing price of the shares of PartnerRe common stock underlying your award on the New York Stock Exchange on the last trading day before the date of such payment (the “2010 FMV”), the difference will be paid to you in cash.  If the 2011 FMV is lower than the 2010 FMV, no adjustment will be made.

4)         Other Payments and Benefits.  If you sign the General Release in the form attached hereto as Attachment A (“General Release”) on or after the Resignation Date, but in all events prior to January 15, 2011, you will receive the following payments and benefits, subject to the conditions and restrictions and in the manner and time frames described in this Section 4) (it being understood and agreed that the amounts set forth in Section 3)(b) and Section 4)(a)(i) shall be made (i) no later than December 31, 2010 so long as you have executed the General Release on or before such date and (ii) if you execute the General Release after December 31, 2010 and before January 15, 2011, promptly after such date, but in any event by March 15, 2011).  You acknowledge and agree that certain payments and benefits described herein are in excess of the total payments and benefits you would otherwise be eligible to receive upon your termination of employment, absent this Agreement.

a)         We will pay you (i) $3,475,566 in a lump sum on or promptly following the Resignation Date and (ii) an additional $2,524,434 in 2011, with $1,743,325 paid as a lump sum on the first business day of the seventh month following the Resignation Date and the remaining $781,109 paid in equal installments of $130,184.83 in accordance with the Company’s normal payroll practices, commencing with the first payroll in the seventh month following the Resignation Date and ending with the last payroll in the twelfth month following the Resignation Date.  The payments set forth in this Agreement shall not be reduced on account of your subsequent employment by any other person or entity.

b)         You and your dependants shall continue to be eligible to participate in the Company’s health insurance plans as COBRA participants until the end of the 18th month following the Resignation Date, or if sooner, until you become entitled to participate in or receive coverage under health insurance plans of a subsequent employer.  The Company will reimburse you for the costs of premiums for COBRA participation.

 

  

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c)         The Company shall reimburse you up to $25,000 for legal fees incurred in negotiating and executing this Agreement.

d)         Until the earlier of December 31, 2012 and the date you commence full-time employment, you will continue to receive at the Company’s expense the following publications:  IBNR, Wolfe Trahan, Informa’s Insurance news, ISI economic reports and market updates provided by the Company’s equity trader; provided however, that the Company reserves the right to withhold any information from the Company’s equity trader that contains sensitive, proprietary or private information relating to or implicating the Company.

e)         Your continuing entitlement to the payments and benefits described in this Section 4) is subject to your continuing compliance with the provisions of Sections 9) and 11) below.

f)         You hereby acknowledge that, except as specifically provided in this Agreement, you will not be entitled to any cash or non-cash consideration or other benefits of any kind from PartnerRe.

g)         Your entitlement to indemnification under Section 9 of the Employment Agreement for events and conduct prior to the Resignation Date shall continue and the provisions of such section are incorporated by reference herein.

5)         Company 401(k) Plan and Other Plans and Programs.  (a) The Company acknowledges that your account balance under the Company’s 401(k) plan is 100% vested and shall remain unaffected by this Agreement.  Additional information concerning your 401(k) plan benefits will be provided to you under separate cover.

b)         Any other amounts or benefits that are vested benefits or that you are otherwise entitled to receive under any plan, policy, practice or program of the Company or PartnerRe (including expense reimbursements) shall be payable to you in accordance with such plan, policy, practice or program; provided that in no event shall you be entitled to any benefits or payments under any such plan, program, practice or policy that would be duplicative of benefits or payments provided under this Agreement.

6)         Company Credit Card.  You agree to (i) discontinue use of your business credit card not later than the Resignation Date and (ii) pay any unpaid, outstanding balance due on such credit card as soon as practicable following the Resignation Date.

7)         Return of Property.  You agree to deliver to PartnerRe by the Resignation Date all of PartnerRe’s property, in whatever form, including, without limitation, computers, telephones, documents, data, papers, letters, reports, manuals, computer programs, software and other material, including all copies thereof.

8)         Outplacement Assistance.  You will be entitled to outplacement assistance customary for senior executives at our expense, for the period ending on the earlier of December 31, 2011 and the date you commence full-time employment.

9)         Restrictive Covenants.  In consideration of the payments and benefits you will receive under Section 4) of this Agreement, you agree to comply with (i) the confidentiality covenant set 

 

  

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forth under Section 11 of the Employment Agreement perpetually following the Resignation Date and (ii) the non-solicitation covenant set forth under Section 12(b) of the Employment Agreement for two years following the Resignation Date.  The Company agrees that you shall not be subject to any other post-termination restrictive covenant other than Section 11 and Section 12(b) of the Employment Agreement and Section 11) of this Agreement, and that it hereby terminates, and shall cause its affiliates to terminate, any other such covenant.

10)         Claims.  You represent that as of the date you have signed this Agreement, you have not filed, directly or indirectly, nor caused to be filed, any claims, demands, actions, suits, grievances, proceedings, complaints or charges of any type, including but not limited to those arising out of your employment with the Company against PartnerRe or its current or former officers, directors, employees or agents in their capacity as PartnerRe representatives in any forum, including federal, state or local court or in arbitration, or any administrative proceeding with any federal, state or local administrative agency.  You agree that should any administrative agency or third party pursue such claims on your behalf, you waive your right to any monetary or other recovery of any kind.

11)         Non-Disparagement.  (a) Other than in connection with the performance of services with the Company and PartnerRe, you agree not to directly or indirectly make any public statements that disparage or denigrate PartnerRe, the Company or their respective current or former officers, directors, employees or agents, orally or in writing.  PartnerRe and the Company agree that they will not, and will instruct their respective executive officers and directors not to, directly or indirectly make any public statements disparage or denigrate you or your performance as an employee and officer of the Company.

b)         Notwithstanding the foregoing provisions of this Section 11), it shall not be a violation of this Section 11) for any party to make truthful statements when required by order of a court or other body having jurisdiction, or as otherwise may be required by law or under an agreement entered into in connection with pending or threatened litigation pursuant to which the party receiving such information agrees to keep such information confidential.

12)         Remedies.

a)         In the event that you are in breach of a covenant in Sections 9) or Section 11) above, you shall no longer be entitled to the payments and benefits under Section 4) above.  For purposes of this section and the Company's exercise of its remedy hereunder, an inadvertent breach of your obligation of confidentiality or nondisparagement that causes no demonstrable damage to the Company other than that of a trivial or insignificant nature, shall not be considered a breach of such covenants. 

b)         Further, notwithstanding anything to the contrary in this Agreement, and without limiting any remedies at law or in equity that may be available to the Company or you as provided herein or otherwise, you and the Company acknowledge and agree that a remedy at law for any breach or threatened breach of any covenant contained in Section 9) or Section 11) above would be inadequate and monetary damages would be difficult to calculate and that for any such breach or threatened breach, a court of law may award an injunction, restraining order or other equitable relief, restraining you from committing or continuing to commit such breach.

 

  

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c)         It is expressly understood and agreed that if a final determination is made by a court of law that the time or any other restriction contained in Section 9) or Section 11) above is an unenforceable restriction against you, then the provisions of Section 9) or Section 11) above shall not be rendered void but shall be deemed amended to apply as to such maximum time and to such other maximum extent as such court may determine or indicate to be enforceable.  Alternatively, if any such court finds that any restriction contained in Section 9) or Section 11) above is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any other provision of this Agreement.

d)         Except as provided in subparagraph (b), any controversy, dispute or claim arising out of or relating to this Agreement, any other agreement or arrangement between you and the Company, your employment with the Company, or the termination thereof (collectively, “Covered Claims”) shall be resolved by binding arbitration, to be held in New York, New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association.

13)         Partial Invalidity.  Except with respect to the attached General Release, the invalidity or unenforceability of any provision of this Agreement shall have no effect upon, and shall not impair the validity or enforceability of, any other provision of this Agreement.

14)         Voluntary Agreement; Voluntary General Release

a)         You acknowledge and agree that (i) you have read and understand each of the provisions of this Agreement; (ii) you are hereby advised to consult with an attorney prior to signing this Agreement; and (iii) you will sign the General Release on the Resignation Date.

b)         This Agreement, which term in this provision does not include the General Release, will become effective on the date it is executed by both parties.  The General Release will become effective on the date that it is executed by you (“Effective Date”).  If the General Release does not become effective, you will not be eligible to receive the payments and benefits under Section 4) of this Agreement.

15)         Governing Law.  This Agreement shall be governed by the laws of the State of Connecticut (regardless of conflict of laws principles) as to all matters including without limitation validity, construction, effect, performance and remedies, except to the extent that such laws are preempted by federal law.

16)         Notices.  All notices, requests and other communications under this Agreement and the General Release will be in writing (including facsimile or similar writing) to the applicable address (or to such other address as to which notice is given in accordance with this Section 16)).

	
  

	
If to you:

	
Albert A. Benchimol

	
  

	
6 Wheelock Road

Scarsdale, NY 10583

	
  

	
If to the Company

	
  

	
or PartnerRe:

	
PartnerRe Ltd.

	
  

	
Wellesley House South

	
  

	
90 Pitts Bay Road

	
  

	
Pembroke HM 08, Bermuda

 

  

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Attn:  Amanda E. Sodergren

Each such notice, request or other communication will be effective only when received by the receiving party.

17)         Transferability.  This Agreement shall be binding upon any successor to the Company, whether by merger, consolidation, purchase of assets or otherwise.  No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations or liabilities hereunder upon any person or entity, other than the parties hereto and their respective successors and assigns, which in your case will include your heirs and/or your estate.

18)         Counterparts.  This Agreement may be executed in counterparts.

19)         Employment Agreement; Entire Agreement.  (a) This Agreement sets forth the entire agreement and understanding relating to your employment relationship with the Company and PartnerRe; except as set forth in this Section,  supersedes all prior discussions, negotiations, proposed arrangements and agreements concerning your employment with the Company and separation therefrom; and may not be amended except by mutual written agreement.

b)         This Agreement supersedes your Employment Agreement except that Section 9 (Indemnification) and Section 13 (“Property”) of your Employment Agreement and the covenants referred to in Section 9) of this Agreement shall remain in effect in accordance with the respective terms thereof.

c)         In connection with your execution of the General Release, the Company and PartnerRe acknowledge that they currently are aware of no event or circumstance that would give rise to a claim by them against you for fraud, misconduct, breach of fiduciary duty or other malfeasance as an employee or officer of the Company. 

  

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PARTNERRE LTD.

 

 

 

	By: 	 /s/ Patrick A. Thiele	 
	Title: 	Chief Executive Officer	 
	Date:     	July 28, 2010	 

 

 

 

I HAVE READ THIS LETTER AGREEMENT AND UNDERSTAND ALL OF ITS TERMS.  I SIGN AND ENTER THIS LETTER AGREEMENT KNOWINGLY AND VOLUNTARILY, WITH FULL KNOWLEDGE OF WHAT IT MEANS.

 

	 	ALBERT A. BENCHIMOL	 
	 	 	 
	 	 	 
	 	 /s/ Albert A. Benchimol	 
	Date:     	July 28, 2010	 

 

  

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EXECUTION COPY

 

 

ATTACHMENT A

GENERAL RELEASE

In exchange for the benefits and payments provided to me by PartnerRe Capital Markets Corp. (the “Company”) and PartnerRe Ltd. (“PartnerRe”) under the Letter Agreement dated July 28, 2010 (the “Letter Agreement”), which include amounts that I acknowledge I was not entitled to receive in the absence of this General Release:

1.         (a)  On behalf of myself, my agents, assignees, attorneys, heirs, executors, and administrators, I hereby release the Company and PartnerRe and their respective predecessors, successors and assigns, and their current and former parents, affiliates, subsidiaries, divisions and joint ventures, and all of their current and former officers, directors, employees, and agents, in their capacity as representatives of the Company and/or PartnerRe (individually and collectively, “Releasees”) from any and all controversies, claims, demands, promises, actions, suits, grievances, proceedings, complaints, charges, liabilities, damages, debts, taxes, allowances, and remedies of any type, including but not limited to those arising out of my employment with the Company (individually and collectively, “Claims”) that I may have by reason of any matter, cause, act, or omission.  This release applies to Claims that I know about and those I may not know about occurring at any time on or before the date of execution of this General Release.

(b) This General Release includes a release of all rights and Claims under Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Civil Rights Acts of 1866 and 1991, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Equal Pay Act of 1963, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, the Occupational Safety and Health Act of 1970, the Worker Adjustment and Retraining Notification Act of 1989, the Sarbanes-Oxley Act of 2002, the New York State Human Rights Act, and the New York City Human Rights Act, as each such law has been amended to date, as well as any other federal, state, or local statute, regulation, or common law regarding employment, employment discrimination, termination, retaliation, equal opportunity, or wage and hour.  I specifically understand that I am releasing Claims based on age, race, color, sex, sexual orientation or preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories.

(c)  This General Release also includes a release of any Claims for breach of contract (including without limitation the Executive Employment Agreement dated as of January 1, 2009 by and between the Company and me), any tortious act or other civil wrong, attorneys’ fees, and all compensation and benefit claims, including without limitation Claims concerning salary, bonus, and any award(s), grant(s), or purchase(s) under any equity and incentive compensation plan or program.

(d)  In addition, I am waiving my right to pursue any Claims against the Company and Releasees under any applicable dispute resolution procedure, including any arbitration policy.

2.  I acknowledge that this General Release is intended to include, without limitation, all Claims known or unknown that I have or may have against the Company and Releasees through the Effective Date, as hereinafter defined, of this General Release.  Notwithstanding anything herein, I expressly reserve and do not release pursuant to this General Release (and the definition of “Claims” will not include) (i) my rights to the vested benefits (including to 

 

  

  

  

 

reimbursement of expenses) I may have, if any, under any Company employee benefit plans and programs (ii) any claim arising after the Effective Date of this General Release and (iii) my rights under the Letter Agreement.

3.  I acknowledge that I have had more than 30 days business days to consider the terms of this General Release, that I have been advised by the Company to consult with an attorney regarding the terms of this General Release prior to executing it, that I fully understand all of the terms and conditions of this General Release, that I understand that nothing contained herein contains a waiver of claims arising after the date of execution of this General Release, and I am entering into this General Release knowingly, voluntarily and of my own free will.  I further understand that my failure to sign this General Release and return such signed General Release to PartnerRe will render me ineligible for the payments and benefits provided under the Letter Agreement.  This General Release will become effective on the date I sign and return it to the Chief Legal Counsel of PartnerRe (“Effective Date”).

I have read this general release and understand all of its terms.  I sign and enter this general release knowingly and voluntarily, with full knowledge of what it means.

 

	
By:   

	 	 	 	 
	 	
Albert A. Benchimol

	 	
Date

	 

 

 

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