Document:

Exhibit 10.23

 

ONEBEACON’S 2005 MANAGEMENT INCENTIVE PLAN

 

Purpose

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

 

Eligibility

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

 

Target Awards

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

 

Performance
Measure

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

 

Individual
Awards

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

 

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

 

 

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

 

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

 

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

 

Plan
Participation for New Hires

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

 

Special
Circumstances

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

 

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

 

Effect
on Benefit Plans

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

 

Plan
Continuation

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

 

2Exhibit 10.25

 

ONEBEACON PERFORMANCE
PLAN

 

(as Adopted by OneBeacon
Corporation)

 

1.             Purpose of the Plan. The
purpose of the Plan is to advance the interests of the Company and its
stockholders by providing incentives in the form of Performance Shares 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.

 

(1)                                  Act.
The Securities Exchange Act of 1934, as amended, or any

 

successor thereto.

 

(2)           Actual
Shares. A portion or a multiple of the Target Shares, the number of which
is dependent on the level of fulfillment of the established performance goals.

 

(3)           Actual
Value. The Actual Value of each Actual Share shall be the fair market value
of a Share as determined in good faith by the Committee, on the date the Award
is paid.

 

(4)                                  Award.
An award of Performance Shares granted pursuant to the Plan.

 

(5)           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.

 

(6)                                  Board.
The Board of Directors of the Company.

 

(7)           Code.
The Internal Revenue Code of 1986, as amended, or any successor thereto.

 

(8)                                  Committee.
The Human Resources Committee of the Board.

 

(9)           Company.
White Mountains Insurance Group, Ltd., a Bermuda corporation.

 

(10)         Covered
Employee. As such term is defined in Section 162(m) of the Code (or any
successor section thereto).

 

(11)         Participant.
An employee of the Company or any of its Subsidiaries who is selected by the
Committee to participate in the Plan pursuant to Section 4.

 

(12)         Performance
Period. The calendar year or any other period that the Committee, in its
sole discretion, may determine, provided that each Performance Period must
commence on or after the first day of the Award Period and shall end no later
than the last day of the Award Period.

 

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(13)         Performance
Shares. Notional shares which represent the right to receive cash or Shares
with a specified value, without payment to the Company, provided certain
performance goals established by the Committee are satisfied.

 

(14)         Plan.
This White Mountains Insurance Group, Ltd. Executive Incentive Plan, as it may
be amended from time to time. The Plan, as adopted by the OneBeacon Corporation
shall be known as the OneBeacon Performance Plan.

 

(15)         Shares.
Shares of common stock, par value $1.00 per Share, of the Company.

 

(16)         Subsidiary.
A subsidiary corporation, as defined in Section 242(f) of the Code (or any
successor section thereto), or as determined by the Committee.

 

(17)         Target
Shares. The number of Performance Shares awarded to a Participant on the
date of grant with respect to an Award Period provided each of the established
performance goals is fully satisfied.

 

3.             Administration. The Plan
shall be administered by the Committee or such other persons designated by the
Board. The Committee may delegate its duties and powers in whole or in part to
any subcommittee thereof or to the Board of Directors of any Subsidiary that
adopts the Plan in accordance with Section 13. All references to the Committee
hereafter shall be deemed to be references to the Committee and/or the
applicable other persons/or subcommittee(s) to whom administrative duties
and/or powers hereunder have been so delegated. The Committee shall have the
authority to select the employees to be granted Awards, to determine the size
and terms of an Award (subject to the limitations imposed on Awards in
Section 5), to modify the terms of any Award that has been granted, to
determine the time when Awards will be made, to determine the Award Periods and
Performance Periods to which Awards relate, to establish performance goals in
respect of such Performance Periods and to certify whether such performance
goals were attained. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan,
and to make any other determinations that it deems necessary or desirable. Any
decision of the Committee in the interpretation and administration of the Plan,
as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. Determinations
made by the Committee under the Plan need not be uniform and may be made
selectively among Participants, regardless of whether such Participants are
similarly situated. The Committee shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or
other taxes required by law to be withheld with respect to such payment.

 

4.             Eligibility and Participation.
The Committee shall designate those persons who shall be Participants, provided
that current Covered Employees and persons subject to Section 16 of the Act
shall not be permitted to participate in the Plan. Participants shall be
selected from among the employees of the Company and any of its Subsidiaries
who are in a position to have a material impact on the results of the
operations of the Company or of one or more of its Subsidiaries. The
designation of the Participants may be made individually or by groups or
classifications of employees, as the Committee deems appropriate.

 

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5.             Maximum Number of Shares That
May Be Issued. A maximum number of 500,000 Shares, subject to the
adjustment provision provided in Section 12, may be issued under the Plan. Shares
issued pursuant to the Plan may be either authorized but unissued Shares or, to
the extent permitted by the local jurisdiction under which the Company is
organized, reacquired Shares, or both.

 

6.             Awards.

 

1.             Grant.
At the time each Award is made, the Committee shall establish (i) the Target
Shares, (ii) the performance goal(s) to be attained within specified
Performance Periods and (iii) the manner in which the Actual Shares shall be a
portion and/or a multiple of the Target Shares if the performance goals are met
in part or exceeded. The Committee may specify that, for any Award, the Actual
Shares shall be equal to the Target Shares. In determining the amount to be
paid to the Participant, the Committee shall multiply the Actual Value by the number
of Actual Shares.

 

2.             Performance
Goals. The performance goals for any Award shall be based upon one or more
of the following criteria: 
(i) consolidated earnings before or after taxes (including earnings
before interest, taxes, depreciation and amortization); (ii) net income;
(iii) operating income; (iv) earnings per Share; (v) book value
per Share; (vi) return on stockholders’ equity; (vii) expense
management; (viii) return on investment; (ix) improvements in capital
structure; (x) stock price; (xi) combined ratios; (xii) operating ratios;
(xiii) profitability of an identifiable business unit or product;
(xiv) maintenance or improvement of profit margins; (xv) market share;
(xvi) revenues or sales; (xvii) costs; (xviii) cash flow;
(xix) working capital; (xx) return on assets; (xxi) customer
satisfaction; and (xxii) employee satisfaction. The foregoing criteria, as
applicable, may relate to the Company, one or more of its Subsidiaries, one or
more of its divisions, units, partnerships, joint venturers, minority
investments, product lines or products, or to any combination of the foregoing,
and may be applied on an absolute basis and/or be relative to one or more peer
group companies or indices, or any combination thereof, all as the Committee
shall determine. In addition, the performance goals may be calculated without
regard to extraordinary items. The Committee shall determine, no later than the
award date and prior to the commencement of the Performance Period of such
Award, which of the above measurement factor(s) will be the relevant
performance goals for each Award.

 

3.             Payment.
As soon as practicable after the end of the Performance Period or such earlier
date as the Committee in its sole discretion may designate, the Committee shall
determine whether the applicable performance goals have been met with respect
to a given Participant and, if so, shall certify such fact to the Board. At the
end of the Award Period, the Committee shall ascertain the Actual Value and the
number of Actual Shares. The Committee shall cause an amount equal to the
Actual Value multiplied by the number of Actual Shares to be paid to the
Participant or his beneficiary. Payment of any amount in respect of the
Performance Shares may be made in cash, in Shares, or partly in cash and partly
in Shares, as determined by the Committee.

 

7.             Termination of Employment. The
Committee may, at its discretion, provide that if a Participant dies, retires,
is assigned to a different position, or is granted a leave of absence, or if
the Participant’s employment is otherwise terminated, during an Award Period,
then all or a portion of the Participant’s Award, as determined by the
Committee, may be paid to the Participant (or his or her beneficiary) after the
end of the Performance Period in which the such event occurs.

 

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8.             Amendments or Termination. The
Board may amend, alter or discontinue the Plan, but no amendment, alteration or
discontinuation 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 the Committee 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, and the
Board or the Committee may at any time in their sole discretion substitute cash
or other securities for Shares for any or all purposes of the Plan.

 

9.             No Right to Employment. Neither
the Plan nor any action taken hereunder shall be construed as giving any
Participant or other person any right to continue to be employed by, or to
continue to perform services for, the Company or any Subsidiary, and the right
to terminate the employment of or performance of services by any Participant at
any time and for any reason is specifically reserved to the Company and its
Subsidiaries.

 

10.           Nontransferability of Awards. An
Award shall not be transferable or assignable by the Participant otherwise than
by will or by the laws of descent and distribution.

 

11.           Reduction of Awards. Notwithstanding
anything to the contrary herein, the Committee, in its sole discretion (but
subject to applicable law), may reduce any amounts payable to any Participant
hereunder in order to satisfy any liabilities owed to the Company or any of its
Subsidiaries by the Participant.

 

12.           Adjustments Upon Certain Events.
In the event of any change in the outstanding Shares by reason of any Share
dividend or split, reorganization, recapitalization, merger, consolidation,
spin-off, combination or exchange of Shares or other corporate exchange, or any
distribution to stockholders of Shares other than regular cash dividends, the
Committee in its sole discretion and without liability to any person may make
such substitution or adjustment, if any, as it deems to be equitable or
desirable, as to any affected terms of outstanding Awards.

 

13.           Participation of Subsidiaries.
If a Subsidiary wishes to participate in the Plan and its participation shall
have been approved by the Board, the Board of Directors of the Subsidiary shall
adopt a resolution in form and substance satisfactory to the Committee
authorizing participation by the Subsidiary in the Plan. A Subsidiary that
adopts the Plan in accordance with the Section shall be permitted to rename the
Plan under the name of such Subsidiary. A Subsidiary may cease to participate
in the Plan at any time by action of the Board or by action of the Board of
Directors of such Subsidiary, which latter action shall be effective not
earlier than the date of delivery to the Secretary of the Company of a
certified copy of a resolution of the Subsidiary’s Board of Directors taking
such action. Termination of participation in the Plan shall not relieve a
Subsidiary of any obligations thereto fore incurred by it under the Plan. The
Board in its discretion may waive compliance with any provisions in this
section.

 

14.           Miscellaneous Provisions. The
Company is the sponsor and legal obligor under the Plan and shall make all payments
hereunder, other than any payments to be made by any of the Subsidiaries, as
described below (in which case such payments shall be made by such Subsidiary,
as appropriate). If a Subsidiary adopts the Plan in accordance with Section 13,
the Subsidiary shall be responsible for all payments made under the Plan for
Awards granted by the Board of Directors of the Subsidiary (including buying
Shares from the Company and/or on the open market) and (ii) expenses involved

 

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in administering
the Plan at the Subsidiary level. The Plan is unfunded. The Company shall not
be required to establish any special or separate fund or to make any other
segregation of assets to ensure the payment of any amounts under the Plan, and
the Participant’s rights to any payment hereunder shall be no greater than the
rights of the Company’s (or the applicable Subsidiary’s) unsecured creditors. All
references to Sections herein shall be deemed to be references to the specified
sections of this Plan.

 

15.           Choice of Law. The Plan shall
be governed by and construed in accordance with the laws of the Delaware
applicable to contracts made and to be performed in the State of Delaware.

 

16.           Designation of Beneficiary by
Participant. A Participant may name a beneficiary to receive any payment to
which he may be entitled in respect of Performance Shares under the Plan in the
event of his death, on a form to be provided by the Committee. A Participant
may change his 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.

 

17.           Effectiveness of the Plan. The
Plan shall be effective as of May 21, 2001.

 

 

Adopted by the Board of
the Company on May 21, 2001, and authorized for use by

OneBeacon

Corporation on May 21,
2001. The Board further authorized the Board of OneBeacon

Corporation to act on behalf of the Committee in all matters pertaining
to the use of the

Plan by

OneBeacon Corporation by resolution of the Board on May 21, 2001.

 

Adopted by the Board of
OneBeacon Corporation on June 5, 2001.

 

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