Document:

Exhibit 10.4.2

 

OneBeacon Phantom WTM Share Plan

June 1, 2006

 

1.             THE PLAN

 

This
is the OneBeacon Phantom WTM Share Plan (the “Plan”) of OneBeacon
Insurance Group LLC (the “Company”).

 

2.             ADMINISTRATION

 

The
Plan shall be administered by the board of managers of the Company or a
committee of managers of the Company (references to the “Board” herein shall refer to the board of
managers of the Company or such committee, if any).

 

The
Board shall have exclusive authority to select the employees to be granted awards
under the Plan (“Awards”),
to determine the type, size and terms of the Awards and to
prescribe the form of the instruments embodying Awards. The Board may specify
the terms and conditions applicable to such Awards in an Award agreement, but
at minimum will provide a written grant letter or certificate setting forth the
terms of the Award. The Board shall be authorized to interpret the Plan and the
Awards granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan and to make any other determinations which it
believes necessary or advisable for the administration of the Plan. The Board
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent the Board deems
desirable to carry it into effect. Any decision of the Board in the
administration of the Plan, as described herein, shall be final and conclusive.
The Board may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their number or any officer of the
Company to execute and deliver documents on behalf of the Board. No member of
the Company shall be liable for anything done or omitted to be done by him or
by any other member of the Board in connection with the Plan, except for his
own willful misconduct or as expressly provided by statute.

 

3.             AWARDS

 

(a)           Eligible Participants. Any employee of the Company or any of its
subsidiaries is eligible to receive an Award hereunder. The Board shall select
which eligible employees shall be granted Awards hereunder. No employee shall
have a right to receive an Award hereunder and the grant of an Award to an
employee in one period shall not obligate the Board to continue to grant Awards
to such employee in subsequent periods.

 

1

 

(b)           Type of Award. All Awards under this Plan shall be “Phantom
Share Awards”.

 

4.             PHANTOM SHARES

 

The
grant of a Phantom Share Award to a participant will entitle the participant to
receive, without payment to the Company, all or part of a specified amount (the
“Actual
Value”) determined by the Board, if the terms and conditions
specified herein and in the Award are satisfied. Payment in respect of an Award
shall be made as provided in Section 4(h). Each Award shall be subject to the
following terms and conditions:

 

(a)           Each Phantom Share Award shall consist of a target number of Phantom Shares
as determined by the Board. Phantom Share Awards may be granted in different
classes or series having different terms and conditions.

 

(b)           The Actual Value of a Phantom Share Award shall be the product of (i) the
target number of Phantom Shares subject to the Phantom Share Award, (ii) the
Performance Percentage (as defined below) applicable to the Phantom Share Award
and (iii) the market value of a share (a “Share”) of Common
Stock of White Mountains Insurance Group, Ltd. (“White Mountains”), par value of
$1.00 per share, on the date the Award is paid or becomes payable to the
participant. The “Performance Percentage” applicable
to a Phantom Share Award shall be a percentage of no less than 0% and no more
than 200%, which percentage shall be determined by the Board based on the
extent to which the Performance Objectives (as defined below) established for
such Award are achieved during the Award Period. The method for determining the
applicable Performance Percentage shall also be established by the Board.

 

(c)           At the time each Phantom Share Award is granted to a participant, the Board
shall establish performance objectives (“Performance Objectives”) to be
attained within the Award Period (as defined below) as the means of determining
the Performance Percentage applicable to such Award.

 

(d)           The award period (the “Award Period”) in respect of any
grant of a Phantom Share Award shall be such period as the Board shall
determine. An Award Period may contain a number of performance periods; each performance
period shall commence on or after the first day of the Award Period and shall end
no later than the last day of the Award Period. If the Board does not specify
in a Phantom Share Award agreement or elsewhere the performance periods
contained in an Award Period, each 12-month period beginning with the first day
of such Award Period shall be deemed to be a performance period.

 

2

 

(e)           Except as otherwise determined by the Board, Phantom Shares shall be
canceled without any payment to the participant if the participant’s continuous
employment with the Company or any of its subsidiaries shall terminate for any
reason prior to the end of the Award Period, except by reason of a period of
Related Employment as defined in Section 6, and except as otherwise specified
in this Section 4(e) or in Section 4(f). Notwithstanding the foregoing and
without regard to Section 4(g), if an employee participant shall:

 

(i)            while in such employment, die or become
disabled as described in Section 5 prior to the end of an Award Period, the
Phantom Shares for such Award Period shall be immediately canceled and the
participant, or the participant’s legal representative, as the case may be,
shall receive as soon as administratively feasible a payment in respect of such
canceled Phantom Shares equal to the product of (A) (i) the target number of
Phantom Shares for such Award multiplied by (ii) a fraction, the numerator of
which is equal to the number of full or partial months within the Award Period
during which employee was continuously employed by the Company or its subsidiaries
(including, for this purpose, the month in which the death or disability
occurs), and the denominator of which is equal to the total number of months
within such Award Period, multiplied by (B) the market value of a Share
on the last day of the performance period in which the death or disability
occurred, multiplied by (C) the Performance Percentage determined by the
Board to have been achieved through the end of the performance period in which
the death or disability occurred (but which in no event shall be less than
50%); or

 

(ii)           while in such employment, retire on or after the participant’s 60th
birthday by mutual agreement with the Company prior to the end of the
Award Period, the Phantom Shares shall be immediately canceled and the participant
shall receive as soon as administratively feasible a payment in respect of such
canceled Phantom Shares equal to the product of (A) (i) the target number of
Phantom Shares for such Award multiplied by (ii) a fraction, the numerator of
which is equal to the number of full or partial months within the Award Period
during which employee was continuously employed by the Company or its
subsidiaries (including, for this purpose, the month in which the mutually
agreed retirement occurs), and the denominator of which is equal to the total
number of months within such Award Period, multiplied by (B) the market
value of a Share on the last day of the performance period in which the
retirement occurred, multiplied by (C) the Performance Percentage
determined by the Board to have been achieved through the end of the
performance period in which the retirement occurred.

 

3

 

 

(f)            If after a Change in Control as defined in
Section 7(a):

 

(i)            there is a
Termination Without Cause, as defined in Section 8, of the employment of a
participant;

 

(ii)           there is a
Constructive Termination, as defined in Section 9, of the employment of a
participant; or

 

(iii)          there occurs an Adverse Change in the Plan, as defined in Section 10,
in respect of a participant (any such occurrence under the above clauses (i),
(ii) or (iii), a “Trigger Event”),
then:

 

with
respect to Phantom Share Awards that were granted prior to the Change in
Control for which the Award Period was still outstanding on the date of the
Trigger Event (each, an “Applicable Award”),
each such Applicable Award shall be immediately canceled and, in respect of
each Applicable Award, such participant shall be entitled to receive a cash
payment equal to the product of (A) (i) the target number of Phantom Shares for
such Applicable Award multiplied by (ii) a fraction, the numerator of which is
equal to the number of full months within the Award Period during which the
participant was continuously employed by the Company or its subsidiaries, and
the denominator of which is equal to the total number of months within such
Award Period, multiplied by (B) the greater of (i) the market value of a
Share immediately prior to the Change in Control and (ii) the market value of a
Share on the date the applicable Trigger Event occurs, multiplied by (C)
the greater of (i) the Performance Percentage that would have been calculated
immediately prior to the Trigger Event and (ii) a Performance Percentage equal
to 100%. If following a Change in Control, a Participant’s employment remains
continuous through the end of an Award Period, then the Participant shall be
paid with respect to such Awards for which the participant would have been paid
had there not been a Change in Control and the Actual Value shall be determined
in accordance with Section 4(g) below.

 

(g)           Except as otherwise provided in Section 4(f), as soon as practicable
after the end of the Award Period or such earlier date as the Board in its sole
discretion may designate, the Board shall (i) determine, based on the extent to
which the applicable Performance Objectives have been achieved, the Performance
Percentage applicable to an Award of Phantom Shares, (ii) calculate the Actual
Value of the Phantom Share Award and (iii) cause the Company to cause an amount
equal to the Actual Value of the Phantom Shares earned by the participant to be
paid to the participant or the participant’s beneficiary.

 

(h)           Unless payment is deferred in accordance with an election made by the
participant in accordance with procedures adopted by the Company,

 

4

 

payment
of any amount in respect of the Phantom Shares shall be made by the Company no
later than 2 1/2 months after the end of the Company’s fiscal year in which such
Phantom Shares are earned and shall be made in cash.

 

5.             DISABILITY

 

For
the purposes of this Plan, a participant shall be deemed to be disabled if the
participant has been approved for the payment of benefits under the long-term
disability plan of the Company or its subsidiary.

 

6.             RELATED EMPLOYMENT

 

For
the purposes of this Plan, Related Employment shall mean the employment of a
participant by an employer which is neither the Company nor a subsidiary
provided: (i) such employment is undertaken by the participant and continued at
the request of the Company or a subsidiary; (ii) immediately prior to
undertaking such employment, the participant was an officer or employee of the
Company or a subsidiary, or was engaged in Related Employment as herein defined;
and (iii) such employment is recognized by the Board, in its sole discretion,
as Related Employment for the purposes of this Section 6. The death or
disability of a participant during a period of Related Employment as herein
defined shall be treated, for purposes of this Plan, as if the death or onset
of disability had occurred while the participant was an officer or employee of
the Company.

 

7.             CHANGE IN CONTROL

 

(a)           For purposes of this Plan, a “Change in Control” within the
meaning of this Plan shall occur if:

 

(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, or an
underwriter temporarily holding Shares in connection with a public issuance
thereof or an employee benefit plan of White Mountains or its affiliates,
becomes the beneficial owner (within the meaning of Rule 13d-3 under the
Exchange Act) of thirty-five percent (35%) or more of the then outstanding
White Mountains Shares;

 

(ii)           the Continuing Directors, as defined in Section 7(b), cease for any
reason to constitute a majority of the board of directors of White Mountains;
or

 

(iii)          the business of the Company or the subsidiary
for which the participant’s services are principally performed is disposed of
by White Mountains or the Company pursuant to a sale or other

 

5

 

disposition
of all or substantially all of the business or business-related assets of the
Company or such subsidiary (including the disposition of the stock of the
Company or a subsidiary of the Company).

 

(b)           For the purposes of this Plan, “Continuing Director” shall mean a member
of the board of directors of White Mountains (the “White Mountains Board”) (i)
who is not an employee of White Mountains or its subsidiaries or of a holder
of, or an employee or an affiliate of an entity or group that holds,
thirty-five percent (35%) or more of White Mountains’ Shares and (ii) who
either was a member of the White Mountains Board on March 31, 2006, or who
subsequently became a director of White Mountains and whose election, or
nomination for election, by White Mountains’ shareholders was approved by a
vote of a majority of the Continuing Directors then on the White Mountains
Board (which term, for purposes of this definition, shall mean the whole board
and not any committee thereof).

 

(c)           In the event of a Change in Control, the Board as constituted
immediately prior to the Change in Control shall determine the manner in which “market
value” of Shares will be determined following the Change in Control.

 

(d)           In the event of a Change in Control of a type described in Section
7(a)(iii), the Board may determine, in its sole discretion, to amend the
definition of “Shares” under any or all then outstanding Phantom Share Awards
in order that “Shares” would instead refer to the shares of the acquiring company.
In any such case, the Board would make such adjustments as it deems appropriate
in its sole discretion to affected Phantom Share Awards so that the Award
immediately after the alteration shall be of comparable value to the Award
immediately prior thereto. Such an amendment by the Board will not under any
circumstances constitute an Adverse Change to the Plan or a basis for
Constructive Termination.

 

8.             TERMINATION
WITHOUT CAUSE

 

For
purposes of this Plan, “Termination Without Cause” shall
mean a termination of the participant’s employment with the Company or a
subsidiary by the Company or the subsidiary other than (i) for death or total
permanent disability or (ii) for Cause. “Cause” shall mean (a) an act or
omission by the participant that constitutes a felony or any crime involving
moral turpitude; or (b) willful gross negligence or willful gross misconduct by
the participant in connection with his employment by the Company or by a
subsidiary which causes, or is likely to cause, material loss or damage to the
Company. Notwithstanding anything herein to the contrary, if the participant’s
employment with the Company or one of its subsidiaries shall terminate due to a
Change in Control as described in

 

6

 

Subsection
7(a)(iii), where the purchaser, as described in such subsection, formally
assumes the Company’s obligations under this Plan or places the participant in
a similar or like plan with no diminution of the value of the awards, such
termination shall not be deemed to be a “Termination Without Cause.”

 

9.             CONSTRUCTIVE TERMINATION

 

“Constructive Termination” shall mean a termination of
employment with the Company or a subsidiary at the initiative of the
participant that the participant declares by prior written notice delivered to
the Secretary of the Company to be a Constructive Termination by the Company or
a subsidiary and which follows (a) a material decrease in the participant’s
salary or (b) a material diminution in the authority, duties or
responsibilities of the participant’s position as a result of which the
participant determines in good faith that the he/she cannot continue to carry
out his/her job in substantially the same manner as it was intended to be
carried out immediately before such diminution. Notwithstanding anything herein
to the contrary, Constructive Termination shall not occur within the meaning of
this Section 9 until and unless 30 days have elapsed from the date the Company
receives such written notice from the participant and, during that period, the
Company fails to cure, or cause to be cured, the circumstance serving as the
basis on which the declaration of Constructive Termination is given.

 

10.          ADVERSE CHANGE IN THE PLAN

 

An “Adverse Change
in the Plan” shall mean

 

(a)           termination of the Plan;

 

(b)           amendment of the Plan pursuant to Section 14 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
authority to grant long-term incentive awards of comparable value to individual
participants in the Plan or in the aggregate, as the case may be, or

 

(c)           in respect of any holder of an Award a material diminution in the participant’s
rights held under such 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

 

In
no event shall any amendment of the Plan or any Award contemplated by Section
7(d) or Section 11 be deemed an Adverse Change in the Plan.

 

7

 

11.          DILUTION AND OTHER
ADJUSTMENTS

 

In
the event of any change in the outstanding Shares of White Mountains by reason
of any stock split, stock or extraordinary cash dividend, recapitalization,
merger, consolidation, reorganization, combination or exchange of Shares or
other similar event, and if the Board shall determine, in its sole discretion,
that such change equitably requires an adjustment in the number or kind of
Phantom Shares that may be issued under the Plan pursuant to Section 4, in the
target number of Phantom Shares which have been awarded to any participant, or
in any measure of performance, then such adjustment shall be made by the Board
and shall be conclusive and binding for all purposes of the Plan.

 

In
the event that the Company or one of its subsidiaries were to publicly offer
shares for which a regular and liquid public market existed (the “Liquid
Shares”), the Board may determine, in its sole discretion, to
amend the definition of “Shares” under the Plan, or any or all then outstanding
Phantom Share Awards, in order that “Shares” would instead refer to the Liquid
Shares. In any such case, the Board would make such adjustments as it deems
necessary and appropriate in its sole discretion to affected Phantom Share
Awards so that the Award immediately following the alteration shall be of
comparable value to the Award immediately prior thereto. Such an amendment by
the Board will not under any circumstances constitute an Adverse Change to the
Plan or a basis for Constructive Termination.

 

12.          DESIGNATION OF BENEFICIARY
BY PARTICIPANT

 

A
participant may name a beneficiary to receive any payment to which the
participant may be entitled in respect of Phantom Shares under the Plan in the
event of his/her death, on a form to be provided by the Board. A participant
may change his/her beneficiary from time to time in the same manner. If no
designated beneficiary is living on the date on which any amount becomes
payable to a participant’s executors or administrators, the term “beneficiary”
as used in the Plan shall include such person or persons.

 

13.         MISCELLANEOUS PROVISIONS

 

(a)           No employee or other person shall have any claim or right to be granted
an Award under the Plan. Neither the Plan nor any action taken hereunder shall
be construed as giving an employee any right to be retained in the employ of
the Company or any subsidiary.

 

(b)           A participant’s rights and interest under the Plan may not be assigned
or transferred in whole or in part either directly or by operation of law or otherwise
(except in the event of a participant’s death), including but not

 

8

 

limited
to, execution, levy, garnishment, attachment, pledge, bankruptcy or in any
other manner and no such right or interest of any participant in the Plan shall
be subject to any obligation or liability or such participant.

 

(c)           The Company and its subsidiaries shall have the right to deduct from
any payment made under the Plan any federal, state or local income or other taxes
required by law to be withheld with respect to such payment.

 

(d)           The expenses of the Plan shall be borne by the Company. However, if an Award
is made to an employee of a subsidiary, if such Award results in payment of
cash to the participant, such subsidiary shall pay to the Company an amount
equal to such cash payment.

 

(e)           The Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to assure
the payment of any Award under the Plan.

 

(f)            By accepting any Award or other benefit under
the Plan, each participant and each person claiming under or through him shall
be conclusively deemed to have indicated his/her acceptance and ratification of,
and consent to, any action taken under the Plan by the Company, the Board or any
committee designated by the Board.

 

(g)           The Plan shall be governed by and construed in accordance with the laws
of New York applicable to contracts made and to be performed in the State of
New York.

 

(h)           It is the intent of the Board that the Plan will govern the outstanding
Phantom Share awards that were previously made to OneBeacon employees in 2004,
2005 and 2006.

 

14.          AMENDMENT OR TERMINATION

 

The
Plan may be amended, altered, discontinued or terminated at any time and from
time to time by resolution of the Board but no amendment, alteration,
discontinuation or termination shall be made which would impair any of the
accrued rights or obligations under any Award theretofore granted to a
participant without such Participant’s consent; provided, however, that Board
may amend the Plan in such manner as it deems necessary to permit the granting
of Awards meeting the requirements of the Code or other applicable laws.

 

9Exhibit
10.4.5

 

OneBeacon Insurance

2006 Management Incentive Plan

 

Performance Goals

 

1.                                       Achieve economic combined ratio of 96% or
better

 

2.                                       Be opportunistic on new business / keep our
best renewal business / price it right

 

3.                                       Conform to changing demands to maintain
Claims Loss Triangle at 25.8%

 

4.                                       Integrate reciprocals and other new business
opportunities into OneBeacon including: Lawyers Liability, Community Banking,
Middle Market MGA initiative, AIE conversion and HGIE expansion

 

5.                                       Continue to manage aggregate catastrophic
exposures for wind, earthquake, flood, and terrorism

 

6.                                       Complete transactions that build long term
economic value for OneBeacon

 

 

ONEBEACON’S 2006 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 2006 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 Insurance Group LLC.

 

Performance Measure

The
Corporate MIP pool will be established based upon achievement of a 96% economic
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 96%, 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 Managers 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, 2006.

 

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 2006.

 

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 (12/31/06).

 

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 Managers 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 Managers.

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]