DEF 14A 1 hartfordproxy2019.htm DEF 14A Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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The Hartford Financial Services Group, Inc.
 
 
hartfordlogocolor.jpg
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NOTICE OF 2019 ANNUAL MEETING
OF SHAREHOLDERS
 
Date and Time
Wednesday, May 15, 2019
12:30 p.m. EDT

Location
One Hartford Plaza
Hartford, CT 06155

On behalf of the Board of Directors, I am pleased to invite you to attend the Annual Meeting of Shareholders of The Hartford Financial Services Group, Inc. to be held in the Wallace Stevens Theater at our Home Office at 12:30 p.m. EDT.

Voting Items
Shareholders will vote of the following items of business:
 
VOTING
 
 
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By internet
www.proxyvote.com
 
 
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By toll-free telephone 
1-800-690-6903
 
 
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By mail
Follow instructions on your proxy card
 
 
Board
Recommendation
Page Reference
in_person.jpg
In person
At the Annual Meeting
 
1. Elect a Board of Directors for the coming year;
FOR
11
 
 
 
 
2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019;
FOR
33
IMPORTANT INFORMATION IF YOU PLAN TO ATTEND THE MEETING IN PERSON: 
Please remember to bring your ticket and government issued ID! Shareholders can obtain an admission ticket and directions to the meeting by contacting our Investor Relations Department:
Email: InvestorRelations@TheHartford.com
Telephone: (860) 547-2537
Mail: The Hartford
Attn: Investor Relations
One Hartford Plaza (TA1-1)
Hartford, CT 06155
If you hold your shares of The Hartford through a brokerage account (in “street name”), your request for an admission ticket must include a copy of a brokerage statement reflecting stock ownership as of the record date of March 18, 2019.
You can also join our meeting webcast at http://ir.thehartford.com.
 
3. Consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement; and
FOR
35
 
4. Act upon any other business that may properly come before the Annual Meeting or any adjournment thereof.
 
 
 
 
 
Record Date
You may vote if you were a shareholder of record at the close of business on March 18, 2019. The Hartford’s proxy materials are available via the internet, which allows us to reduce printing and delivery costs and lessen adverse environmental impacts.
We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting through other means. For instructions on voting, please refer to page 68 under “How do I vote my shares?”
We urge you to review the proxy statement carefully and exercise your right to vote.

Dated: April 4, 2019

By order of the Board of Directors
 
 
 
 
 
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Donald C. Hunt
 
 
 
Vice President and Corporate Secretary
 
 

 
2019 Proxy Statement
1


LETTER FROM OUR CHAIRMAN & CEO AND LEAD DIRECTOR


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Dear fellow shareholders:

2018 was a year of many significant accomplishments and excellent financial results for The Hartford, despite elevated catastrophe losses. During the year, the Board oversaw the continued integration of the Aetna U.S. group life and disability business; the agreement to acquire The Navigators Group, Inc.; the company’s continued investments in people, processes, and technology; and the separation of Talcott Resolution. As the 2019 Annual Meeting of Shareholders approaches, it is our privilege as Chairman and Lead Director to share details on the Board’s progress in 2018.
Strategy and Culture
Overseeing strategy is a core responsibility of the Board, and throughout the year, the Board remained highly engaged in the company's strategy of expanding its products and services; becoming an easier company to do business with; and attracting, retaining and developing top talent. In 2018, discussions of strategy, profitability and growth occurred at every Board meeting, remaining an intense focus of the enterprise. Equally important, and part of the ongoing dialogue, were discussions on how The Hartford does business. As The Hartford moves forward in its third century, the company believes that having a diverse and inclusive culture and clear expectations for ethical conduct and exceptional performance are integral to maintaining a thriving and sustainable enterprise.
We are proud to have fellow directors who are engaged with employees and committed to supporting the company's culture. Examples that demonstrate the Board's dedication include:
Leadership Accountability. The Compensation and Management Development Committee considers talent management, commitment to ethics and compliance, employee survey results, and success in fostering diversity and inclusion in senior leaders’ performance reviews and compensation decisions.
Engagement with Employees. The Board routinely interacts with employees who have been identified as potential future leaders and directors participate in company events throughout the year, providing opportunities to engage directly with the people driving the company’s results. Board members participated in many events in 2018, including a Professional Women’s Network discussion, an Ethics and Compliance week panel, employee Town Halls, and a dinner for employees who are working on key projects or who participate in the company's nine Employee Resource Groups.
Ethics and Conduct. Employees are encouraged to speak up when they identify an issue or have a concern. The Chief Ethics and Compliance Officer provides the Audit Committee with comprehensive reports of issues and concerns received through various reporting channels, each of which is investigated, and the outcomes of all substantiated issues or concerns.
Acquisitions and Integration. The Board discusses culture during the due diligence and integration phases of any acquisition, recognizing that it is a critical success factor, and strives to be respectful of the acquired business' culture while incorporating beneficial aspects of The Hartford’s culture.
Risk Oversight
Risk oversight is another core Board function and it is particularly relevant in the insurance industry, where risk management is an essential part of the business. The Hartford has understood risk for more than 200 years. In 2018, the Board reviewed and affirmed a revised enterprise risk appetite framework to reflect the changes to the company over the last few years, including from dispositions and acquisitions. This framework, along with a robust Enterprise Risk Management function to assess and model risks, enables management and the Board to make informed judgments on risk and manage the company’s aggregate exposure. Two areas of risk that have been a particular focus for the Board, along with its ongoing assessment of capital markets and the implications on financial risk, are catastrophe risk and cyber-related risks.
As a property and casualty insurer, catastrophe risk oversight is a significant area of focus for the Board. Although The Hartford achieved excellent full-year results, 2018 represented the second consecutive year of severe catastrophe losses above plan. The Board closely oversees management’s continued efforts to evolve The Hartford’s catastrophe risk management strategies based on recent years’ loss events, with increased focus on exposure to wildfires and tornadoes/hail. This oversight includes reviewing management’s loss model refinement, exposure limits, underwriting guidelines and risk transfer arrangements in light of recent and long-term catastrophe experience. The Board is also paying close attention to how climate change may be affecting weather patterns, and devoted time in 2018 to discuss the company’s annual assessment of prevailing science on climate change, and how the company has calibrated its processes to recognize experience and expectations regarding the impact of climate change. While

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the Board and management believe the company’s overall book of business and risk management program performed well given the catastrophe events of 2018, substantial time and resources will continue to be devoted to this aspect of risk management.
In today’s environment, cybersecurity is a concern for all companies. The Hartford’s activities, policies and procedures to prevent, detect and respond to cyber incidents are routinely discussed by the Board. The results of the company’s annual penetration testing, where a third party is hired to play an adversarial role in order to validate the company’s cyber defenses under a number of attack scenarios, both from outside the company and from within, were recently discussed with the Board and management. These tests are invaluable in highlighting what is working well and where there are potential vulnerabilities that can be addressed. The Board also regularly considers cyber risk through the lens of the company’s insurance products. The Board has reviewed how those products would respond to different cyber events and potential exposure to the company. This is a rapidly evolving area, and the Board recognizes the need for expertise, discipline and constant vigilance.
Board Effectiveness
Many of the Board’s strengths - its composition, heightened strategic focus, increased use of competitor data and market analytics, and enhanced communication - are the direct result of its annual self-evaluation process. Like many companies, Board self-evaluation at The Hartford has evolved over the past decade. Several years ago, the Board embarked on a multi-year effort to add rigor to the process, with profound results. For example, in 2016, the Board added individual director interviews to promote more direct, fulsome and candid feedback. The Lead Director meets with each board member between February and May, identifies themes in the feedback received, and leads a discussion on those topics with the full Board in May. This results in feedback for management regarding things like the length and content of Board presentations and Board meeting logistics, as well as formal written goals for the coming Board year.
Last July, the Board took the next step in further improving its evaluation process by adopting triennial third-party Board evaluations beginning in 2019. After considering shareholder feedback and reviewing corporate governance best practices, the Board determined that third-party facilitated evaluations could result in even greater candor, provide a neutral perspective, and allow the Board to benchmark the its practices against other high-performing boards and companies. We hope these steps demonstrate the Board's commitment to continuous improvement.
As always, we are proud to work closely with management and our fellow directors to ensure that The Hartford is a well-governed, shareholder-focused company with an exceptionally strong culture that is positioned to deliver sustainable, long-term growth and profitability. Thank you for your continued support.
Sincerely,
 
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Christopher J. Swift
Trevor Fetter
Chairman and Chief Executive Officer
Lead Director

 
2019 Proxy Statement
3


TABLE OF CONTENTS
PROXY SUMMARY

BOARD AND GOVERNANCE MATTERS

Item 1: Election of Directors

Governance Practices and Framework

Board Composition and Refreshment

Committees of the Board

The Board's Role and Responsibilities
15

Director Compensation

Certain Relationships and Related Party Transactions

Communicating with the Board

Director Nominees

AUDIT MATTERS

Item 2: Ratification of Independent Registered Public Accounting Firm

Fees of the Independent Registered Public Accounting Firm

Audit Committee Pre-Approval Policies and Procedures

Report of the Audit Committee

COMPENSATION MATTERS

Item 3: Advisory Vote to Approve Executive Compensation

Compensation Discussion and Analysis

Executive Summary

Components of the Compensation Program

Process for Determining Senior Executive Compensation (Including NEOs)

Pay for Performance

Compensation Policies and Practices

Effect of Tax and Accounting Considerations on Compensation Design

Compensation and Management Development Committee Interlocks and Insider Participation

Report of the Compensation and Management Development Committee

Executive Compensation Tables

CEO Pay Ratio

INFORMATION ON STOCK OWNERSHIP

Directors and Executive Officers

Certain Shareholders

Section 16(a) Beneficial Ownership Reporting Compliance

INFORMATION ABOUT THE HARTFORD’S ANNUAL MEETING OF SHAREHOLDERS

Householding of Proxy Materials

Frequently Asked Questions

Other Information

APPENDIX A: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES



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PROXY SUMMARY

PROXY SUMMARY
This summary highlights information contained elsewhere in this proxy statement. It does not contain all the information you should consider and you should read the entire proxy statement carefully before voting.
BOARD AND GOVERNANCE HIGHLIGHTS
ITEM 1
ELECTION OF DIRECTORS
Each director nominee has an established record of accomplishment in areas relevant to overseeing our businesses and possesses qualifications and characteristics that are essential to a well-functioning and deliberative governing body.
The Board recommends a vote "FOR" each director nominee
 
Director Nominee, Age(1)
and Present or Most Recent Experience
Independent
Director since
Current
Committees(2)
Other Current
Public Company Boards
allardice.jpg
Robert B. Allardice III, 72
Former regional CEO,
Deutsche Bank Americas
2008
Audit
FIRMCo*
Ellington Residential Mortgage REIT
GasLog Partners
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Carlos Dominguez, 60
President,
Sprinklr
2018
FIRMCo
NCG
Medidata Solutions
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Trevor Fetter,(3) 59
Senior Lecturer,
Harvard Business School
2007
Comp
FIRMCo
 
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Stephen P. McGill, 61
Retired Group President, Aon Plc; Retired Chairman and CEO, Aon Risk Solutions and Aon Benfield
2017
Comp
FIRMCo
 
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Kathryn A. Mikells, 53
Chief Financial Officer
Diageo plc
2010
Audit
FIRMCo
Diageo plc
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Michael G. Morris, 72
Former Chairman, President and CEO,
American Electric Power Company
2004
Audit
FIRMCo
NCG*
Alcoa
L Brands
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Julie G. Richardson, 55
Former Partner,
Providence Equity Partners
2014
Audit*
FIRMCo
UBS
VEREIT
Yext
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Teresa W. Roseborough, 60
Executive Vice President, General Counsel and Corporate Secretary, The Home Depot
2015
Comp
FIRMCo
NCG
 
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Virginia P. Ruesterholz, 57
Former Executive Vice President,
Verizon Communications
2013
Comp*
FIRMCo
NCG
Bed Bath & Beyond
Frontier Communications
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Christopher J. Swift, 58
Chairman and CEO,
The Hartford
 
2014
FIRMCo
 
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Greig Woodring, 67
Retired President and CEO,
Reinsurance Group of America
2017
Audit
FIRMCo
 
* Denotes committee chair
(1)
As of April 4, 2019
(2)
Full committee names are as follows: Audit – Audit Committee; Comp – Compensation and Management Development Committee; FIRMCo – Finance, Investment and Risk Management Committee; NCG – Nominating and Corporate Governance Committee
(3)
Mr. Fetter serves as the Lead Director. For more details on the Lead Director’s role, see page 12

 
2019 Proxy Statement
5

PROXY SUMMARY
 
 

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Nominee Diversity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Female: 4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Male: 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*Average independent nominee tenure as of April 4, 2019: 6.4 years
GOVERNANCE BEST PRACTICES
The Board and management regularly review best practices in corporate governance and modify our governance policies and practices as warranted. Our current best practices are highlighted below.
Independent Oversight
Other than CEO, all directors are independent
Independent key committees (Audit, Compensation, Nominating)
Empowered and engaged independent Lead Director
Engaged Board /Shareholder Rights
All directors elected annually 
Majority vote standard (with plurality carve-out for contested elections)
Proxy access right
Director resignation policy
Over-boarding policy limits total public company boards, including The Hartford, to five for non-CEOs and two for sitting CEOs
Rigorous Board and committee self-evaluation conducted annually; third party Board evaluations conducted triennially
Meaningful Board education and training on recent and emerging governance and industry trends
Annual shareholder engagement focused on governance, compensation and sustainability issues
Good Governance
Board diversity of experience, tenure, age and gender
Mandatory retirement age of 75 and 15-year term limit promote regular Board refreshment
Annual review of CEO succession plan by the independent directors with the CEO
Annual Board review of senior management long-term and emergency succession plans
Stock-ownership guidelines of 6x salary for CEO and 4x salary for other named executive officers
Annual Nominating Committee review of The Hartford's political and lobbying policies and expenditures
Commitment to Sustainability
Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework
Sustainability Governance Committee comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring the full Board is briefed at least annually
SHAREHOLDER ENGAGEMENT
We engage with shareholders and solicit feedback in a number of different ways throughout the year. Management and our investor relations team routinely speak with analysts and investors at investor conferences and other formal events, as well as group and one-on-one meetings. In September 2018, we invited a panel of institutional investors to engage with directors at a Board meeting session, a practice we began in 2011. In addition, since 2011 we have maintained an annual shareholder engagement program focused on governance and compensation issues and, more recently, sustainability. In the fall of 2018, management contacted shareholders representing over 50% of shares outstanding and had discussions with shareholders representing approximately 17% of shares outstanding, as many shareholders opted not to participate in calls, noting that they had no material concerns. As a result

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PROXY SUMMARY

of shareholder feedback received in 2018 and prior years, and an analysis of governance trends and best practices, the Board and management took several important actions in 2018 to enhance the company's corporate governance practices.
What we heard from shareholders
Actions taken
Periodic third-party board evaluations can lead to more candid conversations, provide a neutral perspective and help boards benchmark their corporate governance practices.
Adopted third-party facilitated evaluations every three years commencing in 2019.
Diversity enhances board performance and is critical to effective corporate governance.

Formalized existing company practice by amending our Corporate Governance Guidelines to ensure that diverse candidates are included in the pool from which board candidates are selected.
Pay equity is an area of increasing concern and companies that pay women and people of color fairly are at a competitive advantage in attracting and retaining top talent.
Instituted annual pay equity reporting to the Compensation Committee and committed to enhanced pay equity practices disclosure beginning with the company's 2018 Sustainability Report (expected to be published in summer 2019).

AUDIT HIGHLIGHTS
ITEM 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
As a matter of good corporate governance, the Board is asking shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2019.
The Board recommends a vote "FOR" this item

 
2019 Proxy Statement
7

PROXY SUMMARY
 
 

COMPENSATION HIGHLIGHTS
ITEM 3
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
The Board is asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Our executive compensation program is designed to promote long-term shareholder value creation and support our strategy by (1) encouraging profitable growth consistent with prudent risk management, (2) attracting and retaining key talent, and (3) appropriately aligning pay with short- and long-term performance.
The Board recommends a vote "FOR" this item
2018 FINANCIAL RESULTS
Our 2018 financial results were excellent, despite elevated catastrophe losses for the second consecutive year. Full year net income available to common stockholders was $1,801 million, core earnings* were $1,575 million, and our net income and core earnings return on equity ("ROE)* were 13.7% and 11.6%, respectively, well in excess of our cost of capital. 2018 was also a year of several significant accomplishments, including:
The continued integration of Aetna's U.S. group life and disability business,
The announcement of our agreement to acquire The Navigators Group, Inc. ("Navigators"), a global specialty insurance company, and
The close of the sale of Talcott Resolution.
We also made notable progress on our innovation agenda, including the launch of our Small Business Innovation Lab to design and test new products and business models to meet the changing needs of our small business customers, and the purchase of Y-Risk, a company specializing in the sharing and on-demand economy. During the year we also continued to make investments in our people, processes, data, and technology. As we enter 2019, our strategic priorities remain consistent and we are focused on realizing the full potential of the recent acquisitions. Expanding product capabilities and risk appetite are key pillars of our strategy; with the Group Benefits and Navigators acquisitions, the near-term focus is on successfully integrating the acquisitions and maximizing our combined potential, including deepening our distribution relationships and meeting a broader array of customer needs.

Highlighted below are year-over-year comparisons of our net income and core earnings performance and our three-year ROE and core earnings ROE results. Core earnings is the primary determinant of our annual incentive plan funding, as described on page 40, and average annual Core Earnings ROE over a three-year performance period is the metric used for 50% of performance shares granted to Senior Executives, as described on page 41 (in each case, as adjusted for compensation purposes).
YEAR-OVER-YEAR PERFORMANCE
 
THREE-YEAR PERFORMANCE
net_income2.jpgcore_earnings2.jpgroe2.jpgcore_earningsroe2.jpg





* Denotes a non-GAAP financial measure. For definitions and reconciliations to the most directly comparable GAAP measure, see Appendix A.
Net income ROE represents net income (loss) available to common stockholders ROE.

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PROXY SUMMARY

Total Shareholder Returns

The following chart shows The Hartford's total shareholder return ("TSR") relative to the S&P 500, S&P 500 Insurance Composite and S&P P&C indices. On both a one- and three-year basis, The Hartford's TSR has lagged the broader market and peers. This result has had a direct impact on compensation for our Senior Executives, including both to their personal stock holdings and with no payout on the TSR component of 2016-2018 performance shares, as described on page 49.
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COMPENSATION DECISIONS
The table below reflects the 2018 compensation package (base salary, annual incentive plan ("AIP") award and long-term incentive (“LTI”) award) for each named executive officer ("NEO"). Although this table is not a substitute for the Summary Compensation Table information beginning on page 52, we believe it provides a simple and concise picture of 2018 compensation decisions.
Compensation Component
C. Swift

 
B. Costello

 
D. Elliot

 
B. Johnson

 
W. Bloom

Base Salary Rate
$
1,150,000

 
$
725,000

 
$
950,000

 
$
575,000

 
$
575,000

2018 AIP Award
$
4,800,000

 
$
1,925,000

 
$
3,050,000

 
$
2,250,000

 
$
1,550,000

2018 LTI Award
$
8,000,000

 
$
1,775,000

 
$
5,000,000

 
$
1,600,000

 
$
1,100,000

Total 2018 Compensation Package
$
13,950,000

 
$
4,425,000

 
$
9,000,000

 
$
4,425,000

 
$
3,225,000

2018 Compensation Decision
Rationale
The Compensation Committee approved an AIP funding level of 160% of target.
Performance against pre-established Compensation Core Earnings targets produced a formulaic AIP funding level capped at 200% of target. The Compensation Committee reduced this funding level to 160% following its qualitative review, taking into consideration a second consecutive year of elevated catastrophe losses. (pages 46-47)
The Compensation Committee certified a 2016-2018 performance share award payout at 100% of target.
The company's average annual Compensation Core ROE during the performance period was 10.0%, resulting in a payout of 200% of target for the ROE component (50% of the award). Because the company's TSR during the performance period was below threshold, there was no payout for the TSR component (50% of the award). (page 49)

 
2019 Proxy Statement
9

PROXY SUMMARY
 
 

COMPONENTS OF COMPENSATION AND PAY MIX
Compensation Component
Description
Base Salary
     Fixed level of cash compensation based on market data, internal pay equity, responsibility, expertise and performance.
Annual Incentive Plan
    Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance objectives.
Long-Term Incentive Plan
• Variable awards granted based on individual performance, potential and market data.
• Designed to drive long-term performance, encourage share ownership among senior executives, and foster retention.
• Award mix (50% performance shares and 50% stock options) reflects actual stock price performance, peer-relative stock price and dividend performance and actual operating performance.
Approximately 91% of CEO target annual compensation and approximately 84% of other NEO target annual compensation are variable based on performance, including stock price performance:
Pay Mix — CEO
Salary
9%
Annual Incentive
25%
Long-Term Incentive
66%
 
 
 
 
 
 
 
Variable with Performance: 91%
Pay Mix — Other NEOs
Salary
16%
Annual Incentive
30%
Long-Term Incentive
54%
 
 
 
 
 
 
 
Variable with Performance: 84%
COMPENSATION BEST PRACTICES
Our current compensation best practices include the following:
WHAT WE DO
Compensation heavily weighted towards variable pay
Senior Executives generally receive the same benefits as full-time employees
Double trigger requirement for cash severance and equity vesting upon a change of control*
Cash severance upon a change of control limited to 2x base salary + bonus
Independent compensation consultant
Risk mitigation in plan design and annual review of compensation plans, policies and practices
Prohibition on hedging, monetization, derivative and similar transactions with company securities
Prohibition on Senior Executives pledging company securities
Stock ownership guidelines for directors and Senior Executives
Periodic review of compensation peer groups
Competitive burn rate and dilution for equity program
* In the case of equity, so long as the awards are assumed or replaced with substantially equivalent awards
WHAT WE DON'T DO
û
No tax gross-ups
û
No individual employment agreements
û
No granting of stock options with an exercise price less than the fair market value of our common stock on the date of grant
û
No re-pricing of stock options
û
No buy-outs of underwater stock options
û
No reload provisions in any stock option grant
û
No payment of dividends on unvested performance shares

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BOARD AND GOVERNANCE MATTERS

BOARD AND GOVERNANCE MATTERS
ITEM 1
ELECTION OF DIRECTORS
The Nominating Committee believes the director nominees possess qualifications, skills and experience that are consistent with the standards for the selection of nominees for election to the Board set forth in our Corporate Governance Guidelines described on pages 14-16 and have demonstrated the ability to effectively oversee The Hartford’s corporate, investment and business operations. Biographical information for each director nominee is described beginning on page 26, including the principal occupation and other public company directorships (if any) held in the past five years and a description of the specific experience and expertise that qualifies each nominee to serve as a director of The Hartford.
The Board recommends a vote "FOR" each director nominee
GOVERNANCE PRACTICES AND FRAMEWORK
At The Hartford, we aspire to be an exceptional company celebrated for financial performance, character, and customer value. We believe good governance practices and responsible corporate behavior are central to this vision and contribute to our long-term performance. Accordingly, the Board and management regularly consider best practices in corporate governance and shareholder feedback and modify our governance policies and practices as warranted. Our current best practices include:
Independent Oversight
Other than CEO, all directors are independent
Independent key committees (Audit, Compensation, Nominating)
Empowered and engaged independent Lead Director
Engaged Board /Shareholder Rights
All directors elected annually 
Majority vote standard (with plurality carve-out for contested elections)
Proxy access right
Director resignation policy
Over-boarding policy limits total public company boards, including The Hartford, to five for non-CEOs and two for sitting CEOs
Rigorous Board and committee self-evaluation conducted annually; third party Board evaluations conducted triennially
Meaningful Board education and training on recent and emerging governance and industry trends
Annual shareholder engagement focused on governance, compensation and sustainability issues
Good Governance
Board diversity of experience, tenure, age and gender
Mandatory retirement age of 75 and 15-year term limit promote regular Board refreshment
Annual review of CEO succession plan by the independent directors with the CEO
Annual Board review of senior management long-term and emergency succession plans
Stock-ownership guidelines of 6x salary for CEO and 4x salary for other named executive officers
Annual Nominating Committee review of The Hartford's political and lobbying policies and expenditures
Commitment to Sustainability
Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework
Sustainability Governance Committee comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring the full Board is briefed at least annually
The fundamental responsibility of our directors is to exercise their business judgment to act in what they reasonably believe to be the best interests of The Hartford and its shareholders. The Board fulfills this responsibility within the general governance framework provided by the following documents:
Articles of Incorporation
By-laws
Corporate Governance Guidelines (compliant with the listing standards of the New York Stock Exchange ("NYSE") and including guidelines for determining director independence and qualifications)

 
2019 Proxy Statement
11

BOARD AND GOVERNANCE MATTERS
 
 

Charters of the Board’s four standing committees (the Audit Committee; the Compensation and Management Development Committee ("Compensation Committee"); the Finance, Investment and Risk Management Committee ("FIRMCo"); and the Nominating and Corporate Governance Committee ("Nominating Committee"))
Code of Ethics and Business Conduct
Code of Ethics and Business Conduct for Members of the Board of Directors
Copies of these documents are available on our investor relations website at http://ir.thehartford.com or upon request sent to our Corporate Secretary (see page 70 for details).
DIRECTOR INDEPENDENCE
The Board annually reviews director independence under applicable law, the listing standards of the NYSE and our Corporate Governance Guidelines. In addition, per our Corporate Governance Guidelines, in order to identify potential conflicts of interest and to monitor and preserve the independence, any director who wishes to become a director of another for-profit entity must obtain the pre-approval of the Nominating Committee.
The Board has affirmatively determined that all directors other than Mr. Swift are independent.
BOARD LEADERSHIP STRUCTURE
Board Chair
 
Independent Lead Director
The roles of CEO and Chairman of the Board (“Chairman”) are held by Christopher Swift. Mr. Swift has served as CEO since July 1, 2014, and was appointed Chairman on January 5, 2015. In late 2014, before Mr. Swift assumed the role of Chairman, the Board deliberated extensively on our board leadership structure, seeking feedback from shareholders and considering extensive corporate governance analysis. The Board concluded then, and continues to believe, that our historical approach of combining the roles of CEO and Chairman while maintaining strong, independent board leadership is the optimal leadership structure for the Board to carry out its oversight of our strategy, business operations and risk management.
The Board believes other elements of our corporate governance structure ensure independent directors can perform their role as fiduciaries in the Board’s oversight of management and our business, and minimize any potential conflicts that may result from combining the roles of CEO and Chairman. For example:
• All directors other than Mr. Swift are independent;
• An empowered and engaged Lead Director provides independent Board leadership and oversight; and
• At each regularly scheduled Board meeting, the non-management directors meet in in executive session without the CEO and Chairman present (nine such meetings in 2018).
As part of its evaluation process, the Board has committed to undertaking an annual review of its leadership structure to ensure it continues to serve the best interests of shareholders and positions the company for future success.
 
Whenever the CEO and Chairman roles are combined, our Corporate Governance Guidelines require the independent directors to elect an independent Lead Director. Trevor Fetter was elected our Lead Director in May 2017. The responsibilities and authority of the Lead Director include the following:
     Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;
     Serving as a liaison between the CEO and Chairman and the non-management directors;
     Regularly conferring with the Chairman on matters of importance that may require action or oversight by the Board, ensuring the Board focuses on key issues and tasks facing The Hartford;
     Approving information sent to the Board and meeting agendas for the Board;
     Approving the Board meeting schedules to help ensure that there is sufficient time for discussion of all agenda items;
     Maintaining the authority to call meetings of the independent non-management directors;
     Approving meeting agendas and information for the independent non-management sessions and briefing, as appropriate, the Chairman on any issues arising out of these sessions;
     If requested by shareholders, ensuring that he or she is available, when appropriate, for consultation and direct communication; and
     Leading the Board’s evaluation process and discussion on board refreshment and director tenure.
The Board believes that these duties and responsibilities provide for strong independent Board leadership and oversight.




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ANNUAL BOARD EVALUATION PROCESS
The Nominating Committee oversees the Board's multi-step evaluation process to ensure an ongoing, rigorous assessment of the Board’s effectiveness, composition and priorities. In addition to the full Board evaluation process, the standing committees of the Board undertake separate self-assessments on an annual basis.
In 2018, the Board further augmented its evaluation process with the adoption of third-party facilitated evaluations every three years, commencing in 2019. This was the most recent action in a multi-year effort to enhance the Board’s evaluation process, beginning with the adoption of individual director interviews in 2016. The Board sought and considered shareholder feedback on the merits of third party board evaluation and ultimately concluded that periodic third party board evaluations would promote more candid conversations, provide a neutral perspective, and help the Board benchmark its corporate governance practices.
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Board Evaluation and
Development of Goals
(May)

The Lead Director, or third-party evaluator, leads a Board evaluation discussion in executive session guided by the Board’s self-assessment questionnaire and key themes identified through one-on-one discussions. The Board identifies successes and areas for improvement from the prior Board year and establishes formal goals for the year ahead.
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Annual Corporate Governance Review / Shareholder Engagement Program
(October to December)
The Nominating Committee performs an annual review of The Hartford's corporate governance policies and practices in light of best practices, recent developments and trends. In addition, the Nominating Committee reviews feedback on governance issues provided by shareholders during our annual shareholder engagement program.
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Interim Review of Goals
(December)
The Lead Director leads an interim review of progress made against the goals established during the Board evaluation discussion in May.
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Board Self-Assessment Questionnaires
(February)
The governance review and shareholder feedback inform the development of written questionnaires that the Board and its standing committees use to help guide self-assessment. The Board’s questionnaire covers a wide range of topics, including the Board’s:
• Fulfillment of its responsibilities under the Corporate Governance Guidelines;
• Effectiveness in overseeing our business plan, strategy and risk management;
• Leadership structure and composition, including mix of experience, skills, diversity and tenure;
• Relationship with management; and
• Processes to support the Board’s oversight function.
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One-on-One Discussions
(February to May)
The Lead Director, or third-party evaluator, meets individually with each independent director on Board effectiveness, dynamics and areas for improvement.
When the Lead Director led the Board evaluation session in May 2018, there was agreement that the Board was operating effectively and a number of improvements directly resulting from the Board's 2017-2018 goals were noted. For example, strategy and growth were discussed at every Board meeting, and a regular cadence was established for updates from the company's Chief Strategy & Ventures Officer and business line leaders, as well as sessions devoted to market dynamics. In addition, the Board engaged in more substantive talent management discussions to understand and assess the health of succession planning.

 
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BOARD COMPOSITION AND REFRESHMENT
DIRECTOR SUCCESSION PLANNING
The Nominating Committee is responsible for identifying and recommending to the Board candidates for Board membership. Throughout the year, the Nominating Committee considers the Board’s composition, skills and attributes to determine whether they are aligned with our long-term strategy and major risks. The succession planning process is informed by the results of the Board and committee evaluation processes, as well as anticipated needs in light of The Hartford’s retirement and tenure policies (described below). To assist the Nominating Committee in identifying prospective Board nominees when undertaking a search, the company retains an outside search firm. The Nominating Committee also considers candidates suggested by its members, other Board members, management and shareholders.
The Nominating Committee evaluates candidates against the standards and qualifications set forth in our Corporate Governance Guidelines as well as other relevant factors, including the candidate's potential contribution to the diversity of the Board. In 2018 the Board amended our Corporate Governance Guidelines to ensure that diverse candidates are included in the pool from which board candidates are selected.
The Nominating Committee's most recent director searches, which began in 2016 and culminated in the elections of Greig Woodring and Stephen McGill in October 2017 and Carlos Dominguez in December 2017, illustrate our typical succession planning process, which begins with an assessment the Board's current skills and attributes, and then identifies skills or attributes that are needed, or may be needed in the future, in light of the company's strategy.
Indicative Director Search Process: 2016
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Development of Candidate Specification
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Screening of Candidates
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Meeting With Candidates
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Decision and Nomination
• Developed skills matrix to identify desired skills and attributes

• Targeted two areas of expertise aligned with our strategy: insurance industry experience and digital experience

• Prioritized diversity
 
• Considered three outside search firms and selected one to lead process

• Screened 97 candidates for the insurance specification

• Screened 195 candidates for the digital specification
 
• Top candidates interviewed by Nominating Committee members, other directors, and management

• Finalist candidates underwent background and conflicts checks
 
• Nominating Committee recommendation of candidates and committee assignments to full Board

• Board consideration and adoption of recommendation
DIRECTOR TENURE
The Nominating Committee strives for a Board that includes a mix of varying perspectives and breadth of experience. Newer directors bring fresh ideas and perspectives, while longer tenured directors bring extensive knowledge of our complex operations. As part of its annual evaluation process, the Board assesses its overall composition, including director tenure, and does not believe the independence of any director nominee is compromised due to Board tenure.

In order to promote thoughtful Board refreshment, the Board has adopted the following in our Corporate Governance Guidelines:
Retirement Age. With limited exceptions, an independent director may not be nominated to stand for election or reelection to the Board after his or her 75th birthday.
Tenure Policy. An independent director may not stand for reelection after serving as a director for 15 years.
 
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*Average independent nominee tenure as of 4/4/19: 6.4 years

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The Board believes that these age and tenure policies provide discipline to the Board refreshment process, improve succession planning and support Board independence. Moreover, the policies supplement and strengthen the Board evaluation process as follows:
During the annual Board self-assessment process following an independent director's eighth year of service, the Lead Director (or the Chair of the Nominating Committee in the case of the Lead Director) will review with such independent director his or her independence, outside commitments, future plans and other matters that may impact ongoing service on the Board. 
During the annual Board self-assessment process following an independent director's twelfth year of service and each year thereafter, discussions will also include the timing of the director’s retirement from the Board (i.e., after 15 years or earlier). 
DIRECTOR DIVERSITY
The Board believes a diverse membership with varying perspectives and breadth of experience is an important attribute of a well-functioning board and contributes positively to robust discussion at meetings. The Nominating Committee considers diversity in the context of the Board as a whole and takes into account considerations relating to race, gender, ethnicity and the range of perspectives the directors bring to their Board work. As part of its consideration of prospective nominees, the Board and the Nominating Committee monitor whether the directors as a group meet The Hartford’s criteria for the composition of the Board, including diversity considerations. As part of our continuing efforts to bring diverse perspectives to the Board:
Since 2010 the Board has added four women, two people of color, and one director of non-U.S. origin;
In 2016, Julie Richardson became chair of the Audit Committee and Virginia Ruesterholz became chair of the Compensation Committee, which increased female leadership on the Board; and
In 2018, the Board amended our Corporate Governance Guidelines to ensure that diverse candidates are included in the pool from which board candidates are selected.
Nominee Diversity
 
According to the 2018 Spencer Stuart Board Index:

• Women constituted 24% of all S&P 500 directors, compared to 36% of The Hartford's nominees
• People of color* constituted 17% of directors in the top 200 S&P 500 companies, compared to 18% of The Hartford's nominees
• Directors of non-U.S. origin constituted 8% of directors in the top 200 S&P 500 companies, compared to 9% of The Hartford's nominees
• The average tenure of independent directors on S&P 500 boards is 8.1 years, compared to 6.4 years at The Hartford
• Women chaired 20% of audit committees and 19% of compensation committees at S&P 500 companies; at The Hartford, women chair both committees
* Defined as African-American, Hispanic/Latino and Asian directors.
 
 
 
 
 
 
 
 
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Female: 4
 
 
 
 
 
 
 
 
 
 
 
 
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Male: 7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DIRECTOR ONBOARDING AND ENGAGEMENT
All directors are expected to invest the time and energy required to gain an in-depth understanding of our business and strategy. When new directors join the Board, they receive materials to familiarize them with The Hartford, its strategy, leadership, financial performance and governance. In addition, new directors devote multiple days to orientation with senior management. Sessions vary depending on experience and initial committee assignment, but generally include overviews of director responsibilities; each of the company’s businesses; financial results; operations and technology; and enterprise risk management. At least one Board meeting each year is devoted entirely to the company's strategy, and strategy-focused presentations are planned for each regularly scheduled Board meeting.
Our Board members also participate in other company activities and engage directly with our employees at a variety of events throughout the year. Recent examples include speaking at Professional Women’s Network and Ethics and Compliance Week events, as well as attendance at an annual dinner with employees working on key strategic business priorities or engaged with our employee resource groups.

 
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SHAREHOLDER PROPOSED NOMINEES
The Nominating Committee will consider director candidates recommended by shareholders using the same criteria described above. Shareholders may also directly nominate someone at an annual meeting. Nominations for director candidates are closed for 2019. To nominate a candidate at our 2020 Annual Meeting, notice must be received by our Corporate Secretary at the address below by February 14, 2020 and must include the information specified in our By-laws, including, but not limited to, the name of the candidate, together with a brief biography, an indication of the candidate’s willingness to serve if elected, and evidence of the nominating shareholder’s ownership of our Common Stock.
Pursuant to our proxy access By-law, a shareholder, or group of up to 20 shareholders, may nominate a director and have the nominee included in our proxy statement. The shareholder, or group collectively, must have held at least 3% of our Common Stock for three years in order to make a nomination, and may nominate as many as two directors, or a number of directors equal to 20% of the board, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements in our By-laws. Notice of proxy access director nominees for inclusion in our 2020 proxy statement must be received by our Corporate Secretary at the address below no earlier than November 6, 2019 and no later than December 6, 2019.
In each case, submissions must be delivered or mailed to Donald C. Hunt, Vice President and Corporate Secretary, The Hartford Financial Services Group, Inc., One Hartford Plaza, Hartford, CT 06155.

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COMMITTEES OF THE BOARD
The Board has four standing committees: the Audit Committee; the Compensation Committee; FIRMCo; and the Nominating Committee. The Board has determined that all of the members of the Audit Committee, the Compensation Committee and the Nominating Committee qualify as “independent” under applicable law, the listing standards of the NYSE and our Corporate Governance Guidelines. The current members of the Board, the committees on which they serve and the primary functions of each committee are identified below.
AUDIT COMMITTEE
CURRENT MEMBERS:*
R. Allardice
K. Mikells
M. Morris
J. Richardson (Chair)
G. Woodring
MEETINGS IN 2018: 9
In addition to its annual business and technology risk assessments and review of management’s loss reserve estimates, the Audit Committee devoted substantial time to non-recurring items in 2018, overseeing the accounting impacts resulting from Tax Reform and the final accounting of both the Talcott sale and the 2017 acquisition of Aetna’s U.S. group life and disability business.”
Julie G. Richardson, Committee Chair since 2016
ROLES AND RESPONSIBILITIES
     Oversees the integrity of the company's financial statements 
     Oversees accounting, financial reporting and disclosure processes and the adequacy of management’s systems of internal control over financial reporting
     Oversees the company's relationship with, and performance of, the independent registered public accounting firm, including its qualifications and independence
     Oversees the performance of the internal audit function
     Oversees the company's compliance with legal and regulatory requirements and our Code of Ethics and Business Conduct
     Discusses with management policies with respect to risk assessment and risk management
* The Board has determined that all members are “financially literate” within the meaning of the listing standards of the NYSE and “audit committee financial experts” within the meaning of the SEC’s regulations.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
CURRENT MEMBERS:
T. Fetter
S. McGill
T. Renyi
T. Roseborough
V. Ruesterholz (Chair)

MEETINGS IN 2018: 6
The Committee has taken an active role in support of the company’s commitment to fair pay, particularly for women and people of color.  In 2018, management provided the Committee with a comprehensive review of the company’s process and practices, which include analyzing pay equity three times annually - before, during, and after the annual compensation planning cycle - to identify unexplained pay disparities and provide the opportunity to take appropriate actions if necessary.  The Committee is pleased with the rigor of the process and confident that management has and will continue to take steps to ensure pay equity for women and people of color.  The Committee will receive updates on an annual basis, with report-outs going to the full Board.”
Virginia Ruesterholz, Committee Chair since 2016
ROLES AND RESPONSIBILITIES
     Oversees executive compensation and assists in defining an executive total compensation policy
     Works with management to develop a clear relationship between pay levels, performance and returns to shareholders, and to align compensation structure with objectives
     Has sole authority to retain, compensate and terminate any consulting firm used to evaluate and advise on executive compensation matters
     Considers independence standards required by the NYSE or applicable law prior to retaining compensation consultants, accountants, legal counsel or other advisors
     Meets annually with a senior risk officer to discuss and evaluate whether incentive compensation arrangements create material risks to the company
     Responsible for compensation actions and decisions with respect to certain senior executives, as described in the Compensation Discussion and Analysis beginning on page 36
 

 
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FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE
CURRENT MEMBERS:
R. Allardice (Chair)
C. Dominguez
T. Fetter
S. McGill
K. Mikells
M. Morris
T. Renyi
J. Richardson
T. Roseborough
V. Ruesterholz
C. Swift
G. Woodring
MEETINGS IN 2018: 5
“In 2018, FIRMCo continued to focus on the company’s underwriting discipline, the monitoring of catastrophe risks and the management of the investment portfolio given the volatility in the capital markets. In addition, in light of the company’s strategic transformation, the Committee reviewed the company’s updated risk appetite framework.”
Robert B. Allardice III, Committee Chair since 2016
ROLES AND RESPONSIBILITIES
     Reviews and recommends changes to enterprise policies governing management activities relating to major risk exposures such as market risk, liquidity and capital requirements, insurance risks and cybersecurity
     Reviews the company's overall risk appetite framework, which includes an enterprise risk appetite statement, risk preferences, risk tolerances, and an associated limit structure for each of the company's major risks
     Reviews and recommends changes to financial, investment and risk management guidelines
     Provides a forum for discussion among management and the entire Board of key financial, investment, and risk management matters

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Current Members:
C. Dominguez
M. Morris (Chair)
T. Renyi
T. Roseborough
V. Ruesterholz

Meetings in 2018: 4
In 2018, the Nominating Committee continued its focus on board composition and effectiveness. As a result of Committee recommendations, the Board formalized its commitment to diversity by adopting a policy to ensure that diverse candidates are considered in each director search; and further enhanced its evaluation process by adopting third-party facilitated evaluations every three years, commencing in 2019.”
Michael G. Morris, Committee Chair since 2018
ROLES AND RESPONSIBILITIES
     Advises and makes recommendations to the Board on corporate governance matters
     Considers potential nominees to the Board 
     Makes recommendations on the organization, size and composition of the Board and its committees
     Considers the qualifications, compensation and retirement of directors
     Reviews policies and reports on political contributions
• Oversees the establishment, management and processes related to environmental, social and governance activities
 

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THE BOARD’S ROLE AND RESPONSIBILITIES
BOARD RISK OVERSIGHT
The Board as a whole has ultimate responsibility for risk oversight. We have a formal enterprise Risk Appetite Framework that is reviewed by the Board at least annually. In light of the evolution of the company's business and risk profile, the 2018 review of the Risk Appetite Framework included a revised enterprise risk appetite statement and revised risk preferences, tolerances, and limits.
The Board exercises its oversight function through its standing committees, each of which has primary risk oversight responsibility for all matters within the scope of its charter. Annually, each committee reviews and reassesses the adequacy of its charter and the Nominating Committee reviews all charters and recommends any changes to the Board for approval. The chart below provides examples of each committee’s risk oversight responsibilities.
 
 
 
BOARD OF DIRECTORS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUDIT COMMITTEE
    Financial reporting
    Legal and regulatory compliance
    Operational risk
 
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
• Compensation programs
• Talent acquisition, retention and development
• Succession planning
 
FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE
     Insurance risk
     Market risk
    Liquidity and capital requirements
     Cybersecurity
 
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
    Governance policies and procedures
    Board organization and membership
    Sustainability governance
The Audit Committee discusses with management risk assessment and risk management policies. FIRMCo oversees the investment, financial, and risk management activities of the company and has oversight of all risks that do not fall within the oversight responsibility of any other standing committee. FIRMCo is also briefed on our risk profile and risk management activities.
With respect to cybersecurity risk oversight, senior members of our Enterprise Risk Management, Information Protection and Internal Audit functions provide detailed, regular reports on cybersecurity matters (including assessments conducted by, or in conjunction with, third parties) to the full Board; FIRMCo, which has principal responsibility for oversight of cybersecurity risk; and/or the Audit Committee, which oversees controls for the Company's major risk exposures. The topics covered by these reports include The Hartford's activities, policies and procedures to prevent, detect and respond to cybersecurity incidents, as well as lessons learned from cybersecurity incidents and internal and external testing of our cyber defenses.

For a detailed discussion of management's day-to-day management of risks, including sources, impact and management of specific categories of risk, see Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our annual report on Form 10-K for the year ended December 31, 2018.
BOARD AND SHAREHOLDER MEETING ATTENDANCE
The Board met nine times during 2018 and each of the directors attended 75% or more of the aggregate number of meetings of the Board and the committees on which he or she served. We encourage our directors to attend the Annual Meeting of Shareholders, and all of our directors attended the Annual Meeting of Shareholders held on May 16, 2018.
SHAREHOLDER ENGAGEMENT
Our Board and management value shareholder views and believe engagement with shareholders promotes transparency, accountability, and strong governance practices. We engage with shareholders and solicit feedback in a number of different ways throughout the year. Management and our investor relations team routinely speak with analysts and investors at investor conferences and other formal events, as well as group and one-on-one meetings. In September 2018, we invited a panel of institutional investors to engage with directors at a Board meeting session, a practice we began in 2011. In addition, since 2011 we have maintained an annual shareholder engagement program focused on governance and compensation issues and, more recently, sustainability.

As part of our annual shareholder engagement program, management contacts our largest shareholders in the fall of each year and reports their feedback directly to the Nominating Committee and the Compensation Committee. In the fall of 2018, management contacted shareholders representing approximately 50% of shares outstanding and had discussions with shareholders representing approximately 17% of shares outstanding, as many shareholders opted not to participate in calls, noting that they had no material concerns.

 
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As a result of shareholder feedback received in 2018 and prior years, and an analysis of governance trends and best practices, the Board and management took several important actions in 2018 to enhance The Hartford's corporate governance practices.
What we heard from shareholders
Actions taken
Periodic third-party board evaluations can lead to more candid conversations, provide a neutral perspective and help boards benchmark their corporate governance practices.
Adopted third-party facilitated evaluations every three years commencing in 2019.
Diversity enhances board performance and is critical to effective corporate governance.


Formalized existing company practice by amending our Corporate Governance Guidelines to ensure that diverse candidates are included in the pool from which board candidates are selected.
Pay equity is an area of increasing concern and companies that pay women and people of color fairly are at a competitive advantage in attracting and retaining top talent.

Instituted annual pay equity reporting to the Compensation Committee and committed to enhanced pay equity practices disclosure beginning with the company's 2018 Sustainability Report (expected to be published in summer 2019).
TALENT DEVELOPMENT AND SUCCESSION PLANNING
Talent development and succession planning are important parts of the Board’s governance responsibilities. The CEO and independent directors conduct an annual review of succession and continuity plans for the CEO. Succession planning includes the identification and development of potential successors, policies and principles for CEO selection, and plans regarding succession in the case of an emergency or the retirement of the CEO. In addition, each year, the Compensation Committee reviews succession and continuity plans for the CEO and each member of the executive leadership team that reports to the CEO. The Compensation Committee’s charter requires that it discuss the results of these reviews with the independent directors and/or the CEO. However, given the importance of the topic and the engagement of the full Board on the issue, all directors are invited to these sessions. The full Board routinely meets and interacts with employees who have been identified as potential future leaders of the company.
In recent years, the Board's robust talent development and succession planning efforts have resulted in the seamless and well-managed transition of internal candidates into the company’s most senior roles.
BUSINESS ETHICS AND CONDUCT
“Always act with integrity and honesty, and be accountable in everything you do.”
The Hartford's Code of Ethics and Business Conduct
Striving to do the right thing every day and in every situation is fundamental to our culture, and we are proud that we have been recognized eleven times, including in 2019, by The Ethisphere® Institute as one of the “World’s Most Ethical Companies.” We have adopted a Code of Ethics and Business Conduct, which applies to all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. We have also adopted a Code of Ethics and Business Conduct for Members of the Board of Directors (the “Board Code of Ethics”) and a Code of Ethics and Political Compliance. These codes require that all of our employees and directors engage in honest and ethical conduct in performing their duties, provide guidelines for the ethical handling of actual or apparent conflicts of interest, and provide mechanisms to report unethical conduct. Directors certify compliance with the Board Code of Ethics annually.
We provide our employees with a comprehensive and ongoing educational program, including courses on our Code of Ethics and Business Conduct, potential conflicts of interest, privacy and information protection, marketplace conduct, and ethical decision-making. Hotlines and online portals have been established for employees, vendors, or others to raise ethical concerns and employees are encouraged to speak up whenever they have an ethics-oriented question or problem.
POLITICAL ACTIVITIES
The Nominating Committee reviews the company's political and lobbying policies and reports of political contributions annually. As part of our Code of Ethics and Business Conduct, we do not make corporate contributions to political candidates or parties, and we require that no portion of our dues paid to trade associations be used for political contributions. We do allow the use of corporate resources for non-partisan political activity, including voter education and registration. We have two political action committees (“PACs”), The Hartford Advocates Fund and The Hartford Advocates Federal Fund. The PACs are solely funded by voluntary contributions from eligible employees in management-level roles. The PACs support candidates for federal and state office who are interested in understanding insurance issues and developing public policy to address them. Our website includes information on: (1) contributions made by The Hartford's PACs; (2) our policy on corporate contributions for political purposes; and (3) annual dues, assessments and contributions of $25,000 or more to trade associations and coalitions. To learn more, please access our 2018 Political Activities Report, at https://ir.thehartford.com/corporate-governance/political-engagement.

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SUSTAINABILITY PRACTICES
We believe that having a positive impact on the world is the right thing to do and a business imperative. Fostering and safeguarding human achievement has been our business for over two hundred years, and sustainability considerations are integral to our strategy. We recognize that people want to work for, invest in, and buy from an organization that shares their values. Our sustainability efforts address economic, environmental and social impacts as highlighted in four key areas:
ENVIRONMENT
SOCIAL
GOVERNANCE
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As an insurance company, we understand the risks that environmental challenges present to people and communities. As stewards of the environment, we are committed to mitigating climate change and reducing our carbon footprint incrementally each year.
We help individuals and communities prevail by building safe, strong and successful neighborhoods through targeted philanthropic investments, by partnering with like-minded national and local organizations, and by harnessing the power of our more than 18,500 employees to engage in their communities.
We are committed to building an inclusive and engaging culture where people are respected for who they are, recognized for how they contribute and celebrated for growth and exceptional performance. We value the diversity of our employees' skills and life experiences and invest deeply in their development so they can deliver on our strategy and propel our company forward.
We believe that doing the right thing every day is core to our character, and we are proud of our reputation for being a company that places ethics and integrity above all else.
Our sustainability strategy is built around measurable goals intended to both create long-term shareholder value and contribute positively to society at large. For example, by 2022 some of our goals are to:
Reduce non-biodegradable non-recyclable solid waste by 20% and eliminate the use of Styrofoam;
Reduce our facilities' use of both energy and water by 15%;
Double the percentage of hybrid or electric fleet vehicles, and move to 100% electric for campus shuttles and security vehicles;
Rank in the top quartile in the insurance industry for representation of women and people of color through three levels of reporting to the CEO
Provide one million small business customers and their employees with access to addiction prevention and educational resources to combat the opioid epidemic; and
Bring the total number of children deputized through our signature Junior Fire Marshal® program to more than 115 million.
To learn more, please access our Sustainability Highlight Report, which presents our sustainability goals and provides data on our sustainability practices and achievements, and our Global Reporting Initiative (GRI) G4 Response, which offers greater detail on our sustainability activities at: https://www.thehartford.com/about-us/corporate-sustainability.
ESG Governance
Under our Corporate Governance Guidelines, the full Board has oversight responsibility for The Hartford's corporate reputation and ESG activities. The Board receives a "deep dive" report on an ESG topic annually. The first such report was a deep dive on climate change and severe weather in February 2018, which, among other things, looked at (1) how the company is reducing its environmental impact; (2) how the company helps its customers reduce their environmental impact through its products, services and investments; and (3) how the company's Enterprise Risk Management function monitors and manages the risks associated with climate change and severe weather.
In addition to the Board's oversight responsibility of substantive ESG topics, the Nominating Committee retains oversight of the governance framework and processes related to ESG activities. This includes oversight of the company's Sustainability Governance Committee, a management committee comprised of senior leaders that sets and helps drive execution of the company's sustainability strategy. The Sustainability Governance Committee meets at least four times each year and reports up to the full Board at least annually. In 2018, the Sustainability Governance Committee met six times.

 
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DIRECTOR COMPENSATION
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve on the Board. Members of the Board who are employees of The Hartford or its subsidiaries are not compensated for service on the Board or any of its committees.
For the 2018-2019 Board service year, non-management directors received an annual cash retainer of $100,000 and a $160,000 annual equity grant of restricted stock units (“RSUs”). Annual cash and equity retainer amounts have not increased since 2014.
ANNUAL CASH FEES
Cash compensation for the 2018-2019 Board service year beginning on May 16, 2018, the date of the 2018 Annual Meeting of Shareholders, and ending on May 15, 2019, the date of the 2019 Annual Meeting, is set forth below.
Annual Cash Compensation(1)
Director Compensation Program
Annual Retainer
$100,000
Chair Retainer
$25,000 – Audit
$25,000 – FIRMCO, Compensation
$15,000 – Nominating
Lead Director Retainer
$35,000
(1)
Directors may elect to defer all or part of the annual Board cash retainer and any Committee Chair or Lead Director cash retainer into RSUs, to be distributed as common stock following the end of the director’s Board service.

ANNUAL EQUITY GRANT
In 2018, directors received an annual equity grant of $160,000, payable solely in RSUs pursuant to The Hartford 2014 Incentive Stock Plan.
The RSUs vest and are distributed as common stock at the end of the Board service year, unless the director has elected to defer distribution until the end of Board service. Directors may not sell, exchange, transfer, pledge, or otherwise dispose of the RSUs. Resignation from the Board will result in a forfeiture of all unvested RSUs at the time of such resignation unless otherwise determined by the Compensation Committee.  However, RSUs will automatically vest upon the occurrence of any of the following events: (a) retirement from service on the Board in accordance with our Corporate Governance Guidelines; (b) death of the director; (c) total disability of the director, as defined in the 2014 Incentive Stock Plan; (d) resignation by the director under special circumstances where the Compensation Committee, in its sole discretion, consents to waive the remaining vesting period; or (e) a “change of control,” as defined in the 2014 Incentive Stock Plan. Outstanding RSUs are credited with dividend equivalents equal to dividends paid to holders of our common stock.
OTHER
We provide each director with $100,000 of group life insurance coverage and $750,000 of accidental death and dismemberment and permanent total disability coverage while he or she serves on the Board. We also reimburse directors for travel and related expenses they incur in connection with their Board and committee service.
STOCK OWNERSHIP GUIDELINES AND RESTRICTIONS ON TRADING
The Board has established stock ownership guidelines for each director to obtain, by the third anniversary of the director’s appointment to the Board, an ownership position in our common stock equal to five times his or her total annual cash retainer (including cash retainers paid for committee chair or Lead Director responsibilities). All directors with at least three years of Board service met the stock ownership guidelines as of December 31, 2018.
Our insider trading policy prohibits all hedging activities by directors, and permits directors to engage in transactions involving The Hartford's equity securities only through: (1) a pre-established trading plan pursuant to Rule 10b5-1 of the Securities Exchange Act of 1934; or (2) during “trading windows” of limited duration following the filing with the SEC of our periodic reports on Forms 10-K and 10-Q and following a determination by the company that the director is not in possession of material non-public information. In addition, our insider trading policy grants us the ability to suspend trading of our equity securities by directors.

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BOARD AND GOVERNANCE MATTERS

DIRECTOR SUMMARY COMPENSATION TABLE
We paid the following compensation to directors for the fiscal year ended December 31, 2018.
Name
Fees Earned or
Paid in Cash
($)(1)

 
Stock Awards
($)(2)

 
All Other
Compensation
($)

 
Total
($)

Robert Allardice
125,000

 
160,000

 
2,745

 
287,745

Carlos Dominguez(3)
125,000

 
200,000

 
951

 
325,951

Trevor Fetter
135,000

 
160,000

 
789

 
295,789

Stephen P. McGill(4)
100,000

 
226,700

 
1,253

 
327,953

Kathryn A. Mikells
100,000

 
160,000

 
902

 
260,902

Michael G. Morris
115,000

 
160,000

 
2,745

 
277,745

Thomas Renyi
100,000

 
160,000

 
2,745

 
262,745

Julie G. Richardson
125,000

 
160,000

 
789

 
285,789

Teresa W. Roseborough
100,000

 
160,000

 
1,065

 
261,065

Virginia P. Ruesterholz
125,000

 
160,000

 
789

 
285,789

Greig Woodring(4)
100,000

 
226,700

 
1,797

 
328,497

(1)
Directors Mikells, Renyi and Richardson each elected to receive vested RSUs in lieu of cash compensation. The vested RSUs will be distributed as common stock following the end of the director's Board service.
(2)
These amounts reflect the aggregate grant date fair value of RSU awards granted during the fiscal year ended December 31, 2018.
(3)
Upon appointment to the Board on February 21, 2018, Mr. Dominguez received a pro-rated annual cash retainer of $25,000 which is included with the 2018-2019 cash retainer of $100,000 he received in May 2018. Mr. Dominguez also received a pro-rated restricted stock unit award for the 2017-2018 Board service year valued at $40,000 based on a closing stock price of $53.81 on February 27, 2018; this award vested on May 16, 2018, the last day of the 2017-2018 Board year.
(4)
Mr. McGill and Mr. Woodring each received a pro-rated restricted stock unit award valued at $66,700 on February 27, 2018, the first day of the Company’s scheduled trading window following the filing of the Company’s 2017 annual report on Form 10-K. The number of RSUs subject to the award was determined by dividing the grant value of $66,700 by $53.81, the closing market price per share of The Hartford common stock on the grant date of February 27, 2018. These awards fully vested on May 16, 2018, the last day of the 2017-2018 Board year. Mr. McGill elected to defer receipt of his RSU award until the end of his Board service.

 
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BOARD AND GOVERNANCE MATTERS
 
 

DIRECTOR COMPENSATION TABLE—OUTSTANDING EQUITY
The following table shows the number and value of unvested equity awards outstanding as of December 31, 2018. The value of these unvested awards is calculated using a market value of $44.45, the NYSE closing price per share of our common stock on December31, 2018. The numbers have been rounded to the nearest whole dollar or share.
 
Stock Awards(1) 
Name
Stock
Grant Date
(2)
 
Number
of Shares or
Units of Stock
That Have Not
Vested (#)
(3) 

 
Market Value
of Shares or
Units of Stock
That Have Not
Vested ($)

Robert Allardice 
7/30/2018
 
3,056

 
135,839

Carlos Dominguez
7/30/2018
 
3,056

 
135,839

Trevor Fetter
7/30/2018
 
3,056

 
135,839

Stephen P. McGill
7/30/2018
 
3,056

 
135,839

Kathryn A. Mikells
7/30/2018
 
3,056

 
135,839

Michael G. Morris 
7/30/2018
 
3,056

 
135,839

Thomas Renyi
7/30/2018
 
3,056

 
135,839

Julie G. Richardson
7/30/2018
 
3,056

 
135,839

Teresa W. Roseborough 
7/30/2018
 
3,056

 
135,839

Virginia P. Ruesterholz 
7/30/2018
 
3,056

 
135,839

Greig Woodring
7/30/2018
 
3,056

 
135,839

(1)
Additional stock ownership information is set forth in the beneficial ownership table on page 65.
(2)
The RSUs were granted on July 30, 2018, the first day of the scheduled trading window following the filing of our Form 10-Q for the quarter ended June 30, 2018.
(3)
The number of RSUs for each award was determined by dividing $160,000 by $52.67, the closing price of our common stock as reported on the NYSE on the date of the award. The RSUs will vest on May 15, 2019, and will be distributed at that time in shares of the company’s common stock unless the director had previously elected to defer distribution of all or a portion of his or her annual RSU award until the end of Board service.  Directors Fetter, McGill, Mikells, Renyi and Richardson have made elections to defer distribution of 100% of their RSU award.


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BOARD AND GOVERNANCE MATTERS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has adopted a Policy for the Review, Approval or Ratification of Transactions with Related Persons. This policy requires our directors and Section 16 executive officers to promptly disclose any actual or potential material conflict of interest to the Chair of the Nominating Committee and the Chairman for evaluation and resolution. If the transaction involves a Section 16 executive officer or an immediate family member of a Section 16 executive officer, the matter must also be disclosed to our General Auditor or Director of Compliance for evaluation and resolution.
We did not have any transactions requiring review under this policy during 2018.
COMMUNICATING WITH THE BOARD
Shareholders and other interested parties may communicate with directors by contacting Donald C. Hunt, Vice President and Corporate Secretary of The Hartford Financial Services Group, Inc., One Hartford Plaza, Hartford, CT 06155. The Corporate Secretary will relay appropriate questions or messages to the directors. Only items related to the duties and responsibilities of the Board will be forwarded.
Anyone interested in raising a complaint or concern regarding accounting issues or other compliance matters directly with the Audit Committee may do so anonymously and confidentially by contacting EthicsPoint:
By internet
By telephone
By mail
by_internet.jpg
by_phone.jpg
by_mail.jpg
Visit 24/7
www.ethicspoint.com
1-866-737-6812 (U.S. and Canada)
1-866-737-6850 (all other countries)
The Hartford c/o EthicsPoint
P.O. Box 230369
Portland, Oregon 97281
 

 
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BOARD AND GOVERNANCE MATTERS
 
 

DIRECTOR NOMINEES
Eleven individuals will be nominated for election as directors at the Annual Meeting. The terms of office for each elected director will run until the next annual meeting of shareholders and until his or her successor is elected and qualified, or until his or her earlier death, retirement, resignation or removal from office.
In accordance with our Corporate Governance Guidelines, each director has submitted a contingent, irrevocable resignation that the Board may accept if the director fails to receive more votes “for” than “against” in an uncontested election. In that situation, the Nominating Committee (or another committee comprised of at least three non-management directors) would make a recommendation to the Board about whether to accept or reject the resignation. The Board, not including the subject director, will act on this recommendation within 90 days from the date of the Annual Meeting, and we will publicly disclose the Board's decision promptly thereafter.
If for any reason a nominee should become unable to serve as a director, either the shares of common stock represented by valid proxies will be voted for the election of another individual nominated by the Board, or the Board will reduce the number of directors in order to eliminate the vacancy.
The Nominating Committee believes that each director nominee has an established record of accomplishment in areas relevant to our business and objectives, and possesses the characteristics identified in our Corporate Governance Guidelines as essential to a well-functioning and deliberative governing body, including integrity, independence and commitment. Other experience, qualifications and skills the Nominating Committee looks for include the following:
Experience / Qualification
Relevance to The Hartford
Leadership
Experience in significant leadership positions provides us with new insights, and demonstrates key management disciplines that are relevant to the oversight of our business.
Insurance and Financial Services Industries
Extensive experience in the insurance and financial services industries provides an understanding of the complex regulatory and financial environment in which we operate and is highly important to strategic planning and oversight of our business operations.
Digital/Technology
Digital and technology expertise is important in light of the speed of digital progress and the development of disruptive technologies both in the insurance industry and more broadly.
Corporate Governance
An understanding of organizations and governance supports management accountability, transparency and protection of shareholder interests.
Risk Management
Risk management experience is critical in overseeing the risks we face today and those emerging risks that could present in the future.
Finance and Accounting
Finance and accounting experience is important in understanding and reviewing our business operations, strategy and financial results.
Business Operations and Strategic Planning
An understanding of business operations and processes, and experience making strategic decisions, are critical to the oversight of our business, including the assessment of our operating plan and business strategy.
Regulatory
An understanding of laws and regulations is important because we operate in a highly regulated industry and we are directly affected by governmental actions.
Talent Management
We place great importance on attracting and retaining superior talent, and motivating employees to achieve desired enterprise and individual performance objectives.
The Nominating Committee believes that our current Board is a diverse group whose collective experiences and qualifications bring a variety of perspectives to the oversight of The Hartford. All of our directors hold, or have held, senior leadership positions in large, complex corporations and/or charitable and not-for-profit organizations. In these positions, they have demonstrated their leadership, intellectual and analytical skills and gained deep experience in core disciplines significant to their oversight responsibilities on our Board. Their roles in these organizations also permit them to offer senior management a diverse range of perspectives about the issues facing a complex financial services company like The Hartford. Key qualifications, skills and experience our directors bring to the Board that are important to the oversight of The Hartford are identified and described below.




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BOARD AND GOVERNANCE MATTERS

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ROBERT B. ALLARDICE, III     INDEPENDENT
Professional highlights:
  Consultant to Chairman of Supervisory Board, Deutsche Bank (2002-2006)
• Regional Chief Executive Officer of North and South America, Advisory Director, Deutsche Bank Americas Holding Company (1994-1999)
• Consultant, Smith Barney (1993-1995)
• Founder of Merger Arbitrage Department, Chief Operating Officer of Equity Department, Founding member of Finance Committee, Morgan Stanley & Company (1974-1993)
Director since:  2008
Age:  72
Committees:
• Audit
• FIRMCo (Chair)
Other public company directorships:
   Ellington Residential Mortgage REIT (2013-present)
   GasLog Partners LP (2014-present)
Skills and qualifications relevant to The Hartford:
Mr. Allardice has served as a senior leader for multiple large, complex financial institutions, including as regional chief executive officer of Deutsche Bank Americas Holding Corporation, North and South America. He brings to the Board over 35 years of experience in the financial services industry, including at the senior executive officer level. His experience leading capital markets-based businesses is relevant to the oversight of our investment management company and corporate finance activities. In addition, Mr. Allardice has experience in a highly regulated industry, including interfacing with regulators and establishing governance frameworks relevant to the oversight of our business. He has extensive corporate governance experience from service as a director and audit committee member for several large companies, including seven years as Chairman of The Hartford's Audit Committee. 



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CARLOS DOMINGUEZ     INDEPENDENT
Professional highlights:
• Sprinklr Inc.
President (2015-present)
 Chief Operating Officer (2015-2018)
• Cisco Systems, Inc.
Senior Vice President, Office of the Chairman and Chief Executive Officer (2008-2015)
Senior Vice President, Worldwide Service Provider Operations (2004-2008)
Vice President, U.S. Network Services Provider Sales (1999-2004)
Positions of increasing responsibility in operations and sales (1992-1999)
Director since:  2018
Age:  60
Committees:
• FIRMCo
• Nominating
Other public company directorships:
   Medidata Solutions, Inc. (2008-present)
Skills and qualifications relevant to The Hartford:
Mr. Dominguez has more than 30 years of enterprise technology experience. He brings to the Board extensive and relevant digital expertise as the company focuses on data analytics and digital capabilities to continuously improve the way it operates and delivers value to customers. As President and Chief Operating Officer of Sprinklr Inc., Mr. Dominguez guides strategic direction and leads the marketing, sales, services, and partnerships teams for a leading social media management company. Prior to joining Sprinklr, he spent seven years as a technology representative for the Chairman and CEO of Cisco Systems, Inc. In this role, Mr. Dominguez engaged with senior executives in the Fortune 500 and government leaders worldwide, sharing insights on how to leverage technology to enhance and transform their businesses. In addition, he led the creation and implementation of Cisco's Innovation Academy, which delivered innovation content to Cisco employees globally.

 
2019 Proxy Statement
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BOARD AND GOVERNANCE MATTERS
 
 

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TREVOR FETTER     INDEPENDENT
Professional highlights:
• Senior Lecturer, Harvard Business School (Jan. 2019-present)
• Tenet Healthcare Corporation
Chairman (2015-2017)
Chief Executive Officer (2003-2017)
President (2002-2017)
• Chairman and Chief Executive Officer, Broadlane, Inc. (2000-2002)
• Chief Financial Officer, Tenet Healthcare Corporation (1996-2000)
Director since:  2007
Age:  59
Committees:
• Compensation
• FIRMCo
Other public company directorships:
  Tenet Healthcare Corporation (2003-2017)
Skills and qualifications relevant to The Hartford:
Mr. Fetter has nearly two decades of experience as chief executive officer of multiple publicly traded companies. He has demonstrated his ability to lead the management, strategy and operations of complex organizations. As a Senior Lecturer at Harvard Business School, he teaches leadership and corporate accountability. He brings to the Board significant experience in corporate finance and financial reporting acquired through senior executive finance roles, including as a chief financial officer of a publicly traded company. He has experience navigating complex regulatory frameworks as the president and chief executive officer of a highly-regulated, publicly traded healthcare company. In addition, Mr. Fetter serves as The Hartford's lead director, providing strong independent Board leadership. He also has extensive corporate governance expertise from service as director of large public companies, including four years as Chairman of the Board’s Nominating and Corporate Governance Committee.




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STEPHEN P. McGILL     INDEPENDENT
Professional highlights:
  Aon plc
Group President, Aon plc and Chairman and Chief Executive Officer, Risk Solutions (2012-2017)
Chairman and Chief Executive Officer, Aon Risk Solutions (2008-2012)
Chief Executive Officer, Aon Risk Services, Americas (2007-2008)
Chief Executive Officer, Aon Global (2005-2007)
• Jardine Lloyd Thompson Group plc
Chief Executive Officer (2002-2005)
Deputy Chief Executive Officer (2001-2002)
Director (1997-2001)
Director since:  2017
Age:  60
Committees:
• Compensation
• FIRMCo
Other public company directorships:
   None
Skills and qualifications relevant to The Hartford:
Mr. McGill has over 25 years of insurance industry experience. With his deep understanding of the insurance industry, Mr. McGill brings significant and relevant risk management, regulatory and business expertise to the Board. As the leader of an international risk management and reinsurance brokerage, Mr. McGill is able to provide the Board with insights into complex distribution channels, and what it takes to succeed in the marketplace and profitably grow the company’s businesses. In addition, Mr. McGill brings an international perspective to the Board. He serves on the International Advisory Board of British American Business, and is past president of the Insurance Institute of London. In 2014, Mr. McGill was awarded a Commander of the British Empire (CBE) by Queen Elizabeth II in recognition for his exceptional service to the insurance industry and also for humanitarian services.

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BOARD AND GOVERNANCE MATTERS

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KATHRYN A. MIKELLS     INDEPENDENT
Professional highlights:
• Chief Financial Officer, Diageo plc (2015-present)
• Chief Financial Officer, Xerox Corporation (2013-2015)
• Chief Financial Officer, ADT Security Services (2012-2013)
• Chief Financial Officer, Nalco Company (2010-2011)
• UAL Corporation (parent of United Airlines)
Chief Financial Officer, Executive Vice President (2008-2010)
Head of Investor Relations (2007-2008)
Vice President, Financial Planning and Analysis (2006-2007)
Treasurer (2005-2006)
Director since:  2010
Age:  53
Committees:
• Audit
• FIRMCo
Other public company directorships:
   Diageo plc (2015-present)
Skills and qualifications relevant to The Hartford:
Ms. Mikells has extensive experience in a variety of executive management positions, with a focus on leading the finance function of global organizations. She has significant experience in corporate finance and financial reporting acquired through senior executive roles in finance, including as a chief financial officer of multiple publicly traded companies. Ms. Mikells brings to the Board strong management and transformational skills, demonstrated during ADT’s successful transition into an independent company, as well as significant mergers and acquisitions experience acquired through the sale of Naclo to Ecolab and the merger of United Airlines with Continental Airlines. She has demonstrated risk management skills as a leader responsible for financial and corporate planning for domestic and international organizations. In addition, Ms. Mikells has strong talent development skills acquired through years of leading global finance divisions.




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MICHAEL G. MORRIS     INDEPENDENT
Professional highlights:
• American Electric Power Company, Inc.
Non-Executive Chairman (2012-2014)
Chairman, President and Chief Executive Officer (2004-2011)
• Chairman, President and Chief Executive Officer, Northeast Utilities (1997-2003)

Director since:  2004
Age:  72
Committees:
• Audit
• FIRMCo
• Nominating
Other public company directorships:
   Alcoa Corporation (2002-present)
   American Electric Power Company, Inc. (2004-2014)
   L Brands, Inc. (2012-present)
   Spectra Energy Corp. (2013-2017)
   Spectra Energy Partners GP, LLC (2017-2018)
Skills and qualifications relevant to The Hartford:
Mr. Morris has over two decades of experience as chief executive officer and president of multiple publicly traded companies in the highly regulated energy industry. He brings to the Board significant experience as a senior leader responsible for the strategic direction and management of complex business operations. In addition, he has experience overseeing financial matters in his roles as chairman, president and CEO of AEP, and as chairman, president and CEO of Northeast Utilities. He has proven skills interacting with governmental and regulatory agencies acquired through years of leading various multi-national organizations in the energy and gas industries, serving on the U.S. Department of Energy’s Electricity Advisory Board, the National Governors Association Task Force on Electricity Infrastructure, the Institute of Nuclear Power Operations and as Chair of the Business Roundtable’s Energy Task Force. In addition, he has corporate governance expertise from service as a director and member of the audit, compensation, finance, risk management and nominating/governance committees of various publicly traded companies.






 
2019 Proxy Statement
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BOARD AND GOVERNANCE MATTERS
 
 


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JULIE G. RICHARDSON     INDEPENDENT
Professional highlights:
• Providence Equity Partners LLC
Senior Advisor (2012-2014)
Managing Director and Head of New York Private Equity Team (2003-2012)
• Managing Director and Head of Telecommunications, Media and Technology Investment Banking Group, JPMorgan Chase &Co. (1998-2003)
• Managing Director, Merrill Lynch (1987-1998)
Director since:  2014
Age:  55
Committees:
• Audit (Chair)
• FIRMCo
Other public company directorships:
   VEREIT, Inc. (2015-present);
   Yext, Inc. (2015-present)
   Arconic Inc. (2016-2018);
   UBS Group AG (2017-present)
Skills and qualifications relevant to The Hartford:
Ms. Richardson has over 25 years of financial services experience as a banker and investment professional at some of the world’s largest financial services firms. Previously, she led management of Providence Equity Partners' New York Office as partner and headed JPMorgan's Global Telecommunications, Media and Technology group. In these roles, Ms. Richardson demonstrated skills leading and managing large, global teams. Ms. Richardson has significant experience in financial analysis and capital markets acquired as a senior leader at global financial services institutions. She also has extensive risk management skills acquired through a long and distinguished career as a leader in both private and public financial investment organizations.




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TERESA WYNN ROSEBOROUGH     INDEPENDENT
Professional highlights:
• Executive Vice President, General Counsel and Corporate Secretary, The Home Depot (2011-present)
• Senior Chief Counsel Compliance & Litigation and Deputy General Counsel, MetLife, Inc. (2006-2011)
• Partner, Sutherland, Asbill & Brennan LLP (1996-2006)
• Deputy Assistant Attorney General, Office of Legal Counsel, U.S. Department of Justice (1994-1996)
Director since:  2015
Age:  60
Committees:
• Compensation
• FIRMCo
• Nominating
Other public company directorships:
   None
Skills and qualifications relevant to The Hartford:
Ms. Roseborough has over two decades of experience as a senior legal advisor in government, law firm and corporate settings. She has experience as a senior leader responsible for corporate compliance matters at major publicly traded companies and as an attorney focused on complex litigation matters, including before the U.S. Supreme Court. She brings to the Board extensive regulatory experience acquired as a government attorney providing legal counsel to the White House and all executive branch agencies, as well as corporate governance expertise from service as General Counsel and Corporate Secretary of a publicly-traded company. Ms. Roseborough also has in-depth knowledge of the financial services industry gained through senior legal positions at MetLife, Inc., a major provider of insurance and employee benefits.






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BOARD AND GOVERNANCE MATTERS

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VIRGINIA P. RUESTERHOLZ     INDEPENDENT
Professional highlights:
• Verizon Communications, Inc.
Executive Vice President (Jan. 2012-Jul. 2012)
President, Verizon Services Operations (2009-2011)
President, Verizon Telecom (2006-2008)
President, Verizon Partner Solutions (2005-2006)
• Positions of increasing responsibility in operations, sales and customer service, New York Telephone (1984-2005)
Director since:  2013
Age:  57
Committees:
• Compensation (Chair)
• FIRMCo
• Nominating
Other public company directorships:
   Frontier Communications Corporation (2013-present)
   Bed Bath & Beyond Inc. (2017-present)
Skills and qualifications relevant to The Hartford:
Ms. Ruesterholz has held a variety of senior executive positions, including as Executive Vice President at Verizon Communications and President of the former Verizon Services Operations. As a senior leader of a Fortune 100 company, she has held principal oversight responsibility for key strategic initiatives, navigated the regulatory landscape of large-scale operations, and led an organization with over 25,000 employees. Ms. Ruesterholz brings to the Board vast experience in large-scale operations, including sales and marketing, customer service, technology and risk management. Ms. Ruesterholz also brings to the Board substantial financial and strategic expertise acquired as president of various divisions within Verizon and is currently a Trustee of the Board of Stevens Institute of Technology where she served as Chairman of the Board from 2013-2018.




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CHRISTOPHER J. SWIFT     
Professional highlights:
• The Hartford Financial Services Group, Inc.
Chairman (2015-present)
Chief Executive Officer (2014-present)
Executive Vice President and Chief Financial Officer (2010-2014)
• Vice President and Chief Financial Officer, Life and Retirement Services, American International Group, Inc. (2003-2010)
• Partner, KPMG, LLP (1999-2003)
• Executive Vice President, Conning Asset Management, General American Life Insurance Company (1997-1999)
• KPMG, LLP
Partner (1993-1997)
Auditor (1983-1993)
Director since:  2014
Age:  58
Committees:
• FIRMCo
Other public company directorships:
   None
Skills and qualifications relevant to The Hartford:
Mr. Swift has over 30 years of experience in the financial services industry, with a focus on insurance. As Chairman and CEO of The Hartford, he brings to the Board unique insight and knowledge into the complexities of our businesses, relationships, competitive and financial positions, senior leadership and strategic opportunities and challenges. Mr. Swift leads the execution of our strategy, directs capital management actions and strategic investments, and oversees the continuous strengthening of the company’s leadership pipeline. As Chief Financial Officer, he led the team that developed the company’s go-forward strategy. He is a certified public accountant with experience working at a leading international accounting firm, including serving as head of its Global Insurance Industry Practice.






 
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BOARD AND GOVERNANCE MATTERS
 
 

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GREIG WOODRING     INDEPENDENT
Professional highlights:
• Reinsurance Group of America
President and Chief Executive Officer (1993-2016)
• General American Life Insurance Company
Executive Vice President (1992-1993)
Head of Reinsurance (1986-1992)
Positions of increasing responsibility (1979-1986)
Director since:  2017
Age:  67
Committees:
• Audit
• FIRMCo
Other public company directorships:
  Reinsurance Group of America, Incorporated (1993-2016)
   Sun Life Financial Inc. (Jan. - April 2017)
Skills and qualifications relevant to The Hartford:
Mr. Woodring brings significant and valuable insurance industry and leadership experience to the Board, demonstrated by his more than two decades leading Reinsurance Group of America, Incorporated (RGA), a leading life reinsurer with global operations. During his tenure, RGA grew to become one of the world’s leading life reinsurers, with offices in 26 countries and annual revenues of more than $10 billion. Mr. Woodring has demonstrated skills in areas that are relevant to the oversight of the company, including risk management, finance, and operational expertise. Mr. Woodring serves as Chairman of the International Insurance Society, and is a fellow of the Society of Actuaries and a member of the American Academy of Actuaries. 


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AUDIT MATTERS

AUDIT MATTERS
ITEM 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In accordance with its Board-approved charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the company’s financial statements. The Audit Committee has appointed Deloitte & Touche LLP (“D&T”) as the company’s independent registered public accounting firm for the fiscal year ending December 31, 2019. D&T has been retained as the company’s independent registered public accounting firm since 2002. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.

In selecting D&T for fiscal year 2019, the Audit Committee carefully considered, among other items:
      The professional qualifications of D&T, the lead audit partner and other key engagement partners;
      D&T’s depth of understanding of the company’s businesses, accounting policies and practices and internal control over financial reporting;
      D&T’s quality controls and its processes for maintaining independence; and
      The appropriateness of D&T’s fees for audit and non-audit services.
The Audit Committee oversees and is ultimately responsible for the outcome of audit fee negotiations associated with the company’s retention of D&T. In addition, when a rotation of the audit firm’s lead engagement partner is mandated, the Audit Committee and its chairperson are involved in the selection of D&T’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of D&T to serve as the company’s independent external auditor is in the best interests of the company and its investors.

Although shareholder ratification of the appointment of D&T is not required, the Board requests ratification of this appointment by shareholders. If shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain D&T.

Representatives of D&T will attend the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

The Board recommends that shareholders vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.
FEES OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table presents fees for professional services provided by D&T, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) for the years ended December 31, 2018 and 2017.
 
Year Ended December 31, 2018

 
Year Ended December 31, 2017

Audit fees
$
10,171,000

 
$
13,881,000

Audit-related fees(1)
$
1,576,000

 
$
1,356,000

Tax fees(2)
$
182,000

 
$
184,000

All other fees(3)
$
592,000

 
$

Total
$
12,521,000

 
$
15,421,000

(1)
Fees for the years ended December 31, 2018 and 2017 principally consisted of procedures related to regulatory filings and acquisition or divestiture related services.
(2)
Fees for the years ended December 31, 2018 and 2017 principally consisted of tax compliance services.
(3)
Fees for the year ended December 31, 2018 in this category pertain to an engagement for permissible consulting services with an entity previously used by the company, but acquired by D&T in the interim and reengaged in 2018.
The Audit Committee reviewed the non-audit services provided by the Deloitte Entities during 2018 and 2017 and concluded that they were compatible with maintaining the Deloitte Entities’ independence.

 
2019 Proxy Statement
33


AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has established policies requiring pre-approval of audit and non-audit services provided by the independent registered public accounting firm. These policies require that the Audit Committee pre-approve specific categories of audit and audit-related services annually.
The Audit Committee approves categories of audit services and audit-related services, and related fee budgets. For all pre-approvals, the Audit Committee considers whether such services are consistent with the rules of the SEC and the PCAOB on auditor independence. The independent registered public accounting firm and management report to the Audit Committee on a timely basis regarding the services rendered by, and actual fees paid to, the independent registered public accounting firm to ensure that such services are within the limits approved by the Audit Committee. The Audit Committee’s policies require specific pre-approval of all tax services, internal control-related services and all other permitted services on an individual project basis.
As provided by its policies, the Audit Committee has delegated to its Chair the authority to address any requests for pre-approval of services between Audit Committee meetings, up to a maximum of $100,000. The Chair must report any pre-approvals to the full Audit Committee at its next scheduled meeting.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee currently consists of five independent directors, each of whom is “financially literate” within the meaning of the listing standards of the NYSE and an “audit committee financial expert” within the meaning of the SEC’s regulations. The Audit Committee oversees The Hartford's financial reporting process on behalf of the Board. Management has the primary responsibility for establishing and maintaining adequate internal financial controls, for preparing the financial statements and for the public reporting process. Deloitte & Touche LLP (“D&T”), our independent registered public accounting firm for 2018, is responsible for expressing opinions that (1) our consolidated financial statements present fairly, in all material respects, the financial position, results of operations and cash flows in conformity with generally accepted accounting principles and (2) we maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018.
In this context, the Audit Committee has:
(1)
Reviewed and discussed the audited financial statements for the year ended December 31, 2018 with management;
(2)
Discussed with D&T the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301, Communications with Audit Committees; and
(3)
Received the written disclosures and the letter from D&T required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with D&T the independent accountant’s independence.
Based on the review and discussions described in this report, the Audit Committee recommended to the Board that the audited financial statements should be included in the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 for filing with the SEC.
Report Submitted: February 21, 2019
Members of the Audit Committee:
Julie G. Richardson, Chair
Robert B. Allardice, III
Kathryn A. Mikells
Michael G. Morris
Greig Woodring

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COMPENSATION MATTERS
ITEM 3
ADVISORY APPROVAL OF 2018 COMPENSATION OF NAMED EXECUTIVE OFFICERS
Section 14A of the Securities Exchange Act of 1934, as amended, provides our shareholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with the rules of the SEC. We currently intend to hold these votes on an annual basis.

As described in detail in the Compensation Discussion and Analysis beginning on page 36, our executive compensation program is designed to promote long-term shareholder value creation and support our strategy by: (1) encouraging profitable growth consistent with prudent risk management, (2) attracting and retaining key talent, and (3) appropriately aligning pay with short- and long-term performance. The advisory vote on this resolution is not intended to address any specific element of compensation; rather, it relates to the overall compensation of our NEOs, as well as the philosophy, policies and practices described in this proxy statement. You have the opportunity to vote for, against or abstain from voting on the following resolution relating to executive compensation:

RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion contained in this proxy statement.

Because the required vote is advisory, it will not be binding upon the Board. The Compensation Committee will, however, take into account the outcome of the vote when considering future executive compensation arrangements.
The Board recommends that shareholders vote “FOR” the above resolution to approve our compensation of named executive officers as disclosed in the Compensation Discussion and Analysis, the compensation tables and the narrative discussion contained in this proxy statement.


 
2019 Proxy Statement
35

COMPENSATION MATTERS
 
 

COMPENSATION DISCUSSION AND ANALYSIS
This section explains our compensation philosophy, summarizes our compensation programs and reviews compensation decisions for the Named Executive Officers (“NEOs”) listed below. It also describes programs that apply to the CEO and all of his executive direct reports, other than senior executives directly supporting our Mutual Funds segment who have an independent compensation program (collectively, “Senior Executives”).
Name
Title
Christopher Swift
Chairman and Chief Executive Officer
Beth Costello
Executive Vice President and Chief Financial Officer
Douglas Elliot
President
Brion Johnson
Executive Vice President and Chief Investment Officer; President of HIMCO
William Bloom
Executive Vice President, Operations, Technology & Data
EXECUTIVE SUMMARY

PERFORMANCE HIGHLIGHTS

Our 2018 financial results were excellent, despite elevated catastrophe losses for the second consecutive year. Full year net income available to common stockholders was $1,801 million, core earnings* were $1,575 million, and our net income and core earnings return on equity ("ROE)* were 13.7% and 11.6%, respectively, well in excess of our cost of capital. 2018 was also a year of several significant accomplishments, including:
The continued integration of Aetna's U.S. group life and disability business,
The announcement of our agreement to acquire The Navigators Group, Inc. ("Navigators"), a global specialty insurance company, and
The close of the sale of Talcott Resolution.
We also made notable progress on our innovation agenda, including the launch of our Small Business Innovation Lab to design and test new products and business models to meet the changing needs of our small business customers, and the purchase of Y-Risk, a company specializing in the sharing and on-demand economy. During the year we also continued to make investments in our people, processes, data, and technology. As we enter 2019, our strategic priorities remain consistent and we are focused on realizing the full potential of the recent acquisitions. Expanding product capabilities and risk appetite are key pillars of our strategy; with the Group Benefits and Navigators acquisitions, the near-term focus is on successfully integrating the acquisitions and maximizing our combined potential, including deepening our distribution relationships and meeting a broader array of customer needs.

Highlighted below are year-over-year comparisons of our net income and core earnings performance and our three-year ROE and core earnings ROE results. Core earnings is the primary determinant of our annual incentive plan funding, as described on page 40, and average annual Core Earnings ROE over a three-year performance period is the metric used for 50% of performance shares granted to Senior Executives, as described on page 41 (in each case, as adjusted for compensation purposes).

YEAR-OVER-YEAR PERFORMANCE
 
THREE-YEAR PERFORMANCE
net_income.jpgcore_earnings.jpgroe.jpgcore_earningsroe.jpg


* Denotes a non-GAAP financial measure. For definitions and reconciliations to the most directly comparable GAAP measure, see Appendix A.
Net income ROE represents net income (loss) available to common stockholders ROE.

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COMPENSATION MATTERS



2018 Business Performance

In February 2018, the company provided outlooks for the key business metrics highlighted below. These outlooks were management's estimates for 2018 performance based on business, competitive, capital market, catastrophe and other assumptions, and were tied to the company's 2018 operating plan. When setting the 2018 operating plan, both the Board and management concluded that these key business metrics would only be achievable with strong business performance. As described on page 40, these key business metrics drive core earnings results and meeting or exceeding the outlooks is a major determinant of our annual incentive plan funding level. Excluding catastrophe losses, our business segment metrics were in line or better than our outlooks from February 2018.
Commercial Lines
 
Personal Lines
 
P&C Net
Investment Income
 
Group Benefits
 
 
Combined ratio of 92.6 was better than outlook of 93.0 - 95.5 principally due to favorable prior accident year reserve development, partially offset by higher catastrophe losses.

Underlying combined ratio* of 91.5, which excludes catastrophes and prior year development, was in line with outlook.
 
Combined ratio of 106.3 was worse than outlook of 96.0 - 98.0. Results were negatively impacted by two hurricanes and the largest U.S. wildfire loss in insurance industry history.

Underlying combined ratio of 91.2, which excludes catastrophes and prior year development, was in line with outlook.
 
P&C net investment income of $1.2 billion was better than outlook of $1.125 - $1.175 billion primarily due to higher limited partnership income.

 
Net income of $340 million was significantly better than outlook of $275-$295 million primarily due to better loss and expense ratios, particularly in group disability due to continued favorable incidence and recovery trends, as well as higher limited partnership income.

 
 
 
 
 
 
What is
combined ratio?
 
 
 
 
This ratio measures the cost of claims and expenses for every $100 of earned premiums. If the combined ratio is less than 100, the company is making an underwriting profit.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Denotes a non-GAAP financial measure. For definitions and reconciliations to the most directly comparable GAAP measure, see Appendix A.

Total Shareholder Returns

The following chart shows The Hartford's total shareholder return ("TSR") relative to the S&P 500, S&P 500 Insurance Composite and S&P P&C indices. On both a one- and three-year basis, The Hartford's TSR has lagged the broader market and peers. This result has had a direct impact on compensation for our Senior Executives, including both to their personal stock holdings and with no payout on the TSR component of 2016-2018 performance shares, as described on page 49.
total_return.jpg

 
2019 Proxy Statement
37

COMPENSATION MATTERS
 
 

2018 COMPENSATION HIGHLIGHTS

Our executive compensation program is designed to promote long-term shareholder value creation and support our strategy by: (1) encouraging profitable growth consistent with prudent risk management; (2) attracting and retaining key talent; and (3) appropriately aligning pay with annual and long-term performance.
The table below reflects the 2018 compensation package (base salary, annual incentive plan ("AIP") award and long-term incentive ("LTI") award) for each NEO. Although this table is not a substitute for the Summary Compensation Table information beginning on page 52, we believe it provides a simple and concise picture of 2018 compensation decisions.
Compensation Component
C. Swift

 
B. Costello

 
D. Elliot

 
B. Johnson

 
W. Bloom

Base Salary Rate
$
1,150,000

 
$
725,000

 
$
950,000

 
$
575,000

 
$
575,000

2018 AIP Award
$
4,800,000

 
$
1,925,000

 
$
3,050,000

 
$
2,250,000

 
$
1,550,000

2018 LTI Award
$
8,000,000

 
$
1,775,000

 
$
5,000,000

 
$
1,600,000

 
$
1,100,000

Total 2018 Compensation Package
$
13,950,000

 
$
4,425,000

 
$
9,000,000

 
$
4,425,000

 
$
3,225,000

2018 Compensation Decisions
 
Rationale
The Compensation Committee approved an AIP funding level of 160% of target.
 
Performance against pre-established Compensation Core Earnings targets produced a formulaic AIP funding level capped at 200% of target. The Compensation Committee reduced this funding level to 160% following its qualitative review, taking into consideration a second consecutive year of elevated catastrophe losses. (pages 46-47)
The Compensation Committee certified a 2016-2018 performance share award payout at 100% of target.
 
The company's average annual Compensation Core ROE during the performance period was 10.0%, resulting in a payout of 200% of target for the ROE component (50% of the award). Because the company's TSR during the performance period was below threshold, there was no payout for the TSR component (50% of the award). (page 49)
COMPONENTS OF COMPENSATION AND PAY MIX
NEO compensation is weighted towards variable compensation (annual and long-term incentives), where actual amounts earned may differ from targeted amounts based on company and individual performance. Each NEO has a target total compensation opportunity that is reviewed annually by the Compensation Committee (in the case of the CEO, by the independent directors) to ensure alignment with our compensation objectives and market practice.
Compensation Component
Description
Base Salary
     Fixed level of cash compensation based on market data, internal pay equity, responsibility, expertise and performance.
Annual Incentive Plan
    Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance objectives.
Long-Term Incentive Plan
     Variable awards granted based on individual performance, potential and market data.
     Designed to drive long-term performance, encourage share ownership among senior executives, and foster retention.
     Award mix (50% performance shares and 50% stock options) reflects actual stock price performance, peer-relative stock price and dividend performance and actual operating performance.
Approximately 91% of CEO target annual compensation and approximately 84% of other NEO target annual compensation are variable based on performance, including stock price performance:
Pay Mix — CEO
Salary
9%
Annual Incentive
25%
Long-Term Incentive
66%
 
 
 
 
 
 
 
Variable with Performance: 91%
Pay Mix — Other NEOs
Salary
16%
Annual Incentive
30%
Long-Term Incentive
54%
 
 
 
 
 
 
 
Variable with Performance: 84%

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COMPENSATION MATTERS

COMPENSATION BEST PRACTICES
Our current compensation best practices include the following:
WHAT WE DO
Compensation heavily weighted towards variable pay
Senior Executives generally receive the same benefits as full-time employees
Double trigger requirement for cash severance and equity vesting upon a change of control*
Cash severance upon a change of control limited to 2x base salary + bonus
Independent compensation consultant
Risk mitigation in plan design and annual review of compensation plans, policies and practices
Prohibition on hedging, monetization, derivative and similar transactions with company securities
Prohibition on Senior Executives pledging company securities
Stock ownership guidelines for directors and Senior Executives
Periodic review of compensation peer groups
Competitive burn rate and dilution for equity program
* In the case of equity, so long as the awards are assumed or replaced with substantially equivalent awards
WHAT WE DON'T DO
û
No tax gross-ups
û
No individual employment agreements
û
No granting of stock options with an exercise price less than the fair market value of our common stock on the date of grant
û
No re-pricing of stock options
û
No buy-outs of underwater stock options
û
No reload provisions in any stock option grant
û
No payment of dividends on unvested performance shares
“SAY-ON-PAY” RESULTS

At last year’s Annual Meeting, shareholders voted 96% in favor of our “Say-on-Pay” proposal. The Compensation Committee considered the vote to be an endorsement of The Hartford’s executive compensation programs and policies, and took this strong level of support into account in reviewing those programs and policies. During our annual shareholder outreach program, management also discussed the vote, along with aspects of its executive compensation, sustainability and corporate governance practices, to gain a deeper understanding of shareholders’ perspectives.
 
2018
“Say-On-Pay” Support
96%



 
2019 Proxy Statement
39

COMPENSATION MATTERS
 
 

COMPONENTS OF THE COMPENSATION PROGRAM
Each Senior Executive has a target total compensation opportunity comprised of both fixed (base salary) and variable (annual and long-term incentives) compensation. In addition, Senior Executives are eligible for benefits available to employees generally. This section describes the different components of our compensation program for Senior Executives and lays out the framework in which compensation decisions are made. For a discussion of the 2018 compensation decisions made within this framework, see Pay for Performance beginning on page 46.
1. BASE SALARY
Each Senior Executive’s base salary is reviewed by the Compensation Committee (in the case of the CEO, the independent directors) annually, upon promotion, or following a change in job responsibilities, based on market data, internal pay equity and level of responsibility, expertise and performance.
2. ANNUAL INCENTIVE PLAN AWARDS
Our employees, including the Senior Executives, are eligible to earn cash awards based on annual company and individual performance. Each employee has a target AIP opportunity. The Compensation Committee uses the following process to determine individual Senior Executive AIP awards. Actual results for 2018 are described on pages 46-49.
STEP 1:
Financial Performance Against Target (Primary Criterion) — Produces the formulaic company AIP funding level
The AIP funding level is based primarily on core earnings performance against the annual operating plan reviewed by the Board at the start of the performance/fiscal year. The Compensation Committee selected core earnings because: (1) the Committee believes it best reflects annual operating performance; (2) it is a metric investment analysts commonly look to when evaluating annual performance; (3) it is prevalent among peers; and (4) all employees can impact it.
 
 
Treatment of Catastrophes
 
Certain adjustments are made to core earnings for compensation purposes to ensure employees are held accountable for operating decisions made that year, and are neither advantaged nor disadvantaged by the effect of certain items outside their control. At the beginning of the year, the Compensation Committee approves a definition of "Compensation Core Earnings." The definition lists adjustments that will be made to core earnings at year-end in order to arrive at Compensation Core Earnings, such as accounting changes, catastrophe losses above or below budget, and unusual or non-recurring items. The 2018 definition and a reconciliation from GAAP net income to Compensation Core Earnings are provided in Appendix A.

As illustrated below, target performance (i.e., achievement of the operating plan) results in an AIP funding level of 100% of target. The Compensation Committee also establishes a threshold performance level, below which no AIP awards are earned, as well as a maximum funding level for performance significantly exceeding target.
 
Due to the unpredictability of catastrophe losses (“CATs”), adjustments for, or the exclusion of, CATs from annual award determinations are common among P&C insurers. The AIP design includes an adjustment in the definition of Compensation Core Earnings for CATs above or below budget. The CAT budget represents the estimated CATs included in the company’s operating plan based on the company’s long-term CAT experience, generally over 10 years. The Compensation Committee believes this is an appropriate way to manage the year-to-year volatility that would result from unusually heavy or unusually light CATs in any given year, which would unduly penalize or unduly benefit employees for results outside their control. In its qualitative review under Step 2, the Compensation Committee retains the flexibility to use discretion to make adjustments to AIP funding levels, including as a result of CATs.
Compensation Core Earnings
 
compcoreearningswa04.jpg
 
Target Rigor and Alignment with Shareholders
 
 
 
• Both the Board and management deem our annual fiscal year operating plan and the associated AIP financial target to be achievable only with strong business performance. 
Key business metrics within the plan, such as combined ratios, P&C net investment income, and Group Benefit margins drive core earnings results.
• The outlook for certain of these metrics are announced to investors at the beginning of each year, which helps align the interests of our Senior Executives with our shareholders, as meeting or exceeding the outlooks is a major determinant of the AIP funding level.

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COMPENSATION MATTERS


STEP 2:
Qualitative Review — Produces the final company AIP funding level
To ensure a holistic review of performance, the Compensation Committee also considers a number of qualitative factors, including achievements that cannot be measured formulaically, or are not yet evident in our financial performance. As a result of this qualitative review, the Compensation Committee may decide to adjust the formulaic AIP funding level up or down to arrive at an AIP funding level more commensurate with company performance in light of these additional factors. Among the qualitative factors the Compensation Committee considers are the following broad performance categories:
Performance Criteria and Metrics
Rationale
Quality of Earnings: earnings driven by current accident year activity, including catastrophe losses, policyholder retention, new business, underwriting profitability and expense management
An assessment of how current accident year activity drove financial performance informs current year compensation decisions
Non-Financial and Strategic Objectives: strategic initiatives and transactions, diversity, employee engagement, risk management and compliance
These achievements are critical for long-term success, but impacts may not be reflected in current year-end financials or may result in accounting charges in a particular period
Peer-Relative Performance: performance relative to peers on metrics such as stock price and earnings
How the company performed on a relative basis across the industry is not captured in the quantitative formula
The Compensation Committee believes that grounding the AIP funding level in formulaic financial performance against targets, but retaining the flexibility to adjust the funding level to reflect qualitative factors, allows it to arrive at a final AIP funding level that best reflects holistic performance and is aligned with shareholder interests.
STEP 3:
Individual Performance — Results in the Senior Executive's AIP award
For each Senior Executive, the company AIP funding level multiplied by the Senior Executive’s target AIP opportunity produces an initial AIP award amount. Where appropriate, the Committee (and, in the case of the CEO, the independent directors) may adjust the Senior Executive’s AIP award amount up or down based on his or her performance in leading a business or function.
3. LONG-TERM INCENTIVE AWARDS
The long-term incentive ("LTI") program is designed to drive long-term performance and encourage share ownership among Senior Executives, aligning their interests with those of shareholders. LTI awards are granted on an annual basis following an assessment of individual performance, potential and market data. 2018 LTI awards for Senior Executives consist of performance shares (50% of the award value) and stock options (50% of the award value). This mix provides LTI awards that appropriately blend actual stock price performance, peer-relative stock price and dividend performance and actual operating performance.
Performance Shares (50% of LTI Award)
Performance shares are designed to reward and retain Senior Executives by allowing them to earn shares of our common stock based on pre-determined performance criteria. Performance shares have a three-year performance period and are settled in shares of common stock ranging from 0% to 200% of the number of performance shares granted depending upon the performance achieved on the following metrics:
Performance Metric
Rationale
Compensation Core ROE
(50% weighting)
Important strategic measure that drives shareholder value creation
Peer-relative TSR
(50% weighting)
Important measure of our performance against peers that are competing investment choices in the capital markets
Compensation Core ROE: For 50% of the performance share award, payouts at the end of the performance period, if any, will depend upon achieving a target average annual ROE over a three-year measurement period, as adjusted for compensation purposes. Because of the adjustments made for compensation purposes, Compensation Core ROE will differ from the ROE numbers provided in our financial statements. The Compensation Committee's definition of Compensation Core ROE for 2018 performance share awards is provided in Appendix A.

 
2019 Proxy Statement
41

COMPENSATION MATTERS
 
 

As illustrated in the graph at right, for 2018 performance share awards, the target level of performance is an average annual Compensation Core ROE for 2018, 2019, and 2020 of 11.6%, as reflected in the 2018-2020 operating plan. There is no payout for performance below threshold. The maximum Compensation Core ROE payout of 200% reflects ambitious goals that require performance significantly beyond target. Threshold and maximum reflect a range of +/-20% of target.

2018-2020 Compensation Core ROE
 
roe_target.jpg
 
Peer-Relative TSR: For 50% of the performance share award, payouts, if any, will be based on company TSR performance relative to a Performance Peer Group at the end of the three-year performance period. The Performance Peer Group represents 16 industry specific public companies against which we benchmark performance for compensation purposes.* While there is some overlap, the Performance Peer Group is distinct from the Corporate Peer Group described on page 45, which includes mutual companies where financial data is not publicly available, as well as companies that compete with us for talent. The Compensation Committee believes that the Performance Peer Group should be limited to industry companies that (1) publish results against which to measure our performance and (2) are competing investment choices in capital markets. The Compensation Committee reviews the composition of the Performance Peer Group annually and made the following changes for the 2018 performance share awards:
Added CNA Financial Corp. because it is a competitor in Commercial Lines;
Added MetLife, Inc. because, following our acquisition of the Aetna U.S. group life and disability benefits business, it represents a competitor in group benefits and helps further diversify the Performance Peer Group;
Removed Prudential Financial, Inc., which, following the sale of Talcott Resolution, no longer represents an aligned peer to our current business mix; and
Removed Aon plc, Arthur J. Gallagher & Co., and Marsh & McLennan Companies, Inc., because insurance brokers are not considered direct competitors to our risk-based product businesses.
For each company in the Performance Peer Group, TSR will be measured using a 20-day stock price average at the beginning and the end of the performance period in order to smooth out any volatility. As illustrated in the graph below, there would be no payout for performance below the 30th percentile, 35% payout for performance at the 30th percentile, 100% payout for median performance, and 200% payout for performance at the 85th percentile.
2018 Performance Peer Group
 
Three-Year Relative TSR Ranking
 
Alleghany Corp.
 
tsrperformancechart.jpg
 
Allstate Corp.
 
 
American Financial Group, Inc.
 
 
The Chubb Corp.
 
 
Cincinnati Financial Corp.
 
 
CNA Financial Corp. — NEW
 
 
Everest Re Group, Ltd.
 
 
Hanover Insurance Group
 
 
Markel Corporation
 
 
Mercury General Corp.
 
 
MetLife, Inc. — NEW
 
 
Old Republic International Corp.
 
 
The Progressive Corp.
 
 
The Travelers Companies, Inc.
 
 
Unum
 
 
W.R. Berkley Group
 
 
* While the peer group at the time of the grant consisted of 17 companies, AXA subsequently acquired XL Group Ltd., resulting in a performance peer group of 16 companies for measuring TSR performance.


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COMPENSATION MATTERS

Stock Options (50% of LTI Awards)
The use of stock options directly aligns the interests of our Senior Executives with those of shareholders because options only have value if the price of our common stock on the exercise date exceeds the stock price on the grant date. The stock options are granted at fair market value, vest in three equal installments over three years, and have a 10-year term.
EXECUTIVE BENEFITS AND PERQUISITES
Senior Executives are eligible for the same benefits as full-time employees generally, including health, life insurance, disability and retirement benefits. Non-qualified savings and retirement plans provide benefits that would otherwise be provided but for the Internal Revenue Code limits that apply to tax-qualified benefit plans.
We provide certain additional perquisites to Senior Executives, including reimbursement of costs for annual physicals and associated travel, relocation benefits when a move is required, and occasional use of tickets for sporting and special events previously acquired by the company when no other business use has been arranged and there is no incremental cost to the company. The CEO also has the use of a company car and driver to allow for greater efficiency while commuting.
We own a fractional interest in a corporate aircraft to allow Senior Executives to safely and efficiently travel for business purposes. The corporate aircraft enables Senior Executives to use travel time productively by providing a confidential environment in which to conduct business and eliminating the schedule constraints imposed by commercial airline service. Our aircraft usage policy generally prohibits personal travel via corporate aircraft by Senior Executives except in extraordinary circumstances. On two occasions in January 2018, our CFO and General Counsel determined that extraordinary circumstances existed, permitting our President to travel via corporate aircraft to attend to a family emergency. The Compensation Committee agreed with the finding of extraordinary circumstances and was briefed on each related use of the corporate aircraft.
Following a review of peer company and market practices in February 2018, the Compensation Committee recommended, and the independent directors approved, limited personal use of corporate aircraft by our CEO and President. The independent directors encourage the use of corporate aircraft for the personal travel needs of our CEO and President in order to minimize their personal travel time and increase the time they are available for business purposes. Corporate aircraft also enables them to work more productively while traveling for time-sensitive personal matters. The CEO and President's use of corporate aircraft for personal travel is subject to an annual limit of $160,000 and $90,000, respectively, in aggregate incremental costs to the Company. Fixed costs, which do not change based on usage, are excluded.
From time to time, a Senior Executive’s expenses for a purpose deemed important to the business may not be considered “directly and integrally related” to the performance of the Senior Executive’s duties as required by applicable SEC rules. These expenses are considered perquisites for disclosure purposes. Examples of such expenses may include attendance at conferences, seminars or award ceremonies, as well as attendance of a Senior Executive’s spouse or guest at business events or dinners where spousal or guest attendance is expected.
Whenever required to do so under Internal Revenue Service regulations, we attribute income to Senior Executives for perquisites and the Senior Executive is responsible for the associated tax obligation.

 
2019 Proxy Statement
43

COMPENSATION MATTERS
 
 

PROCESS FOR DETERMINING SENIOR EXECUTIVE COMPENSATION (INCLUDING NEOs)
COMPENSATION COMMITTEE
The Compensation Committee is responsible for reviewing the performance of and approving compensation awarded to those executives who either report to the CEO or who are subject to the filing requirements of Section 16 of the Securities Exchange Act of 1934 (other than the CEO). The Compensation Committee also evaluates the CEO’s performance and recommends his compensation for approval by the independent directors. With this input from the Compensation Committee, the independent directors review the CEO’s performance and determine his compensation level in the context of the established goals and objectives for the enterprise and his individual performance. The Compensation Committee and the independent directors typically review performance and approve annual incentive awards for the prior fiscal year at their February meeting, along with annual LTI awards and any changes to base salary and target bonus. To assist in this process, the Compensation Committee reviews tally sheets for each NEO to understand how each element of compensation relates to other elements and to the compensation package as a whole, including historical compensation and outstanding equity.
COMPENSATION CONSULTANT
Meridian Compensation Partners, LLP ("Meridian") is the Compensation Committee’s independent compensation consultant and has regularly attended Compensation Committee meetings since its engagement. Pursuant to the Compensation Committee's charter, Meridian has not provided services to the company other than consulting services provided to the Compensation Committee and, with respect to CEO and director compensation, the Board.
In 2018, following a review of its records and practice guidelines, Meridian provided the Compensation Committee a letter that confirmed its conformity with independence factors under applicable SEC rules and the listing standards of the NYSE.
ROLE OF MANAGEMENT
Our Human Resources team supports the Compensation Committee in the execution of its responsibilities. Our Executive Vice President and Chief Human Resources Officer supervises the development of the materials for each Compensation Committee meeting, including market data, historical compensation and outstanding equity, individual and company performance metrics and compensation recommendations for consideration by the Compensation Committee. No member of our management team, including the CEO, has a role in determining his or her own compensation.
BENCHMARKING
On an annual basis, the Compensation Committee reviews and considers a number of factors in establishing or recommending a target total compensation opportunity for each individual including, but not limited to, market data, tenure in position, experience, sustained performance, and internal pay equity. Although the Compensation Committee strives for total compensation to be at median, it does not target a specific market position. The various sources of compensation information the Compensation Committee uses to determine the competitive market for our executive officers are described in more detail below.

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COMPENSATION MATTERS

2018 Corporate Peer Group
The Compensation Committee reviews the peer group used for compensation benchmarking (the "Corporate Peer Group") periodically or upon a significant change in business conditions for the company or its peers. As part of its review, the Compensation Committee considers many factors, including market capitalization, revenues, assets, lines of business and sources and destinations of talent. Several non-P&C and life insurance companies are included in the Corporate Peer Group because, due to their geographic footprint and/or organizational complexity, we compete with them for talent. For this reason, the Corporate Peer Group differs from the Performance Peer Group described above for purposes of the TSR performance measure applicable to performance shares. For 2018, the Compensation Committee did not make any changes to the Corporate Peer Group.
Data in millions – as of 12/31/2018(1) 
Company Name(2)
Revenues

 
Assets

 
Market Cap

Aetna Inc.(3)
$

 
$

 
$

Allstate Corp
$
39,815

 
$
112,249

 
$
28,461

Berkley (W. R.) Corp.
$
7,692

 
$
24,896

 
$
9,026

CNA Financial Corp.
$
10,134

 
$
57,152

 
$
11,983

Chubb Ltd.
$
32,679

 
$
167,771

 
$
59,527

Cigna Corp.
$
48,569

 
$
153,226

 
$
72,317

Cincinnati Financial Corp.
$
5,407

 
$
21,935

 
$
12,599

Lincoln National Corp.
$
16,424

 
$
298,147

 
$
10,960

Marsh & McLennan Companies
$
14,950

 
$
21,578

 
$
40,171

MetLife Inc.
$
67,915

 
$
687,538

 
$
40,520

Principal Financial Group Inc.
$
14,237

 
$
243,036

 
$
12,502

Progressive Corp.
$
31,955

 
$
46,575

 
$
35,184

Prudential Financial Inc.
$
63,304

 
$
815,078

 
$
33,680

Travelers Companies Inc.
$
30,282

 
$
104,233

 
$
31,720

Unum Group
$
11,599

 
$
61,876

 
$
6,427

Voya Financial Inc.
$
8,514

 
$
154,682

 
$
6,242

XL Group Ltd.(3)
$

 
$

 
$

25TH PERCENTILE
$
10,866

 
$
51,864

 
$
11,471

MEDIAN
$
16,424

 
$
112,249

 
$
28,461

75TH PERCENTILE
$
36,247

 
$
205,404

 
$
37,678

THE HARTFORD
$
18,955

 
$
62,307

 
$
15,946

PERCENT RANK
51
%
 
36
%
 
44
%
(1)
Peer data provided by S&P Capital IQ. The amounts shown in the “Revenues” column reflect S&P Capital IQ adjustments to facilitate comparability across companies.
(2)
An additional four non-public companies are included in the Corporate Peer Group as they submit data to relevant compensation surveys utilized in determining appropriate pay levels for Senior Executives: Liberty Mutual, MassMutual, Nationwide Financial, and State Farm.
(3)
The 2018 Corporate Peer Group included Aetna Inc., which was acquired by CVS Health Corp. on November 28, 2018, and XL Group Ltd., which was acquired by AXA on September 12, 2018.

2019 Corporate Peer Group
For 2019 compensation purposes, in addition to the deletion of Aetna Inc. and XL Group Ltd. as a result of acquisitions, the Compensation Committee made the following changes to better reflect competitors to the company's risk-based product businesses, its current business mix following the sale of Talcott Resolution, and potential competitors for talent.
 
2018 Corporate
Peer Group
ð
4
Deletions
+
2
Additions
=
2019 Corporate
Peer Group
 
 
 
 
 
ò
 
 
 
ò
 
 
 
 
• Aetna Inc.
 
• American International Group, Inc.
 
 
• Marsh & McLennan Companies, Inc.
• Hanover Insurance Group, Inc.
 
 
• Prudential Financial Inc.
 
 
 
 
 
 
• XL Group Ltd.
 
 
 
 

 
2019 Proxy Statement
45

COMPENSATION MATTERS
 
 

Use of Corporate Peer Group Compensation Data
When evaluating and determining individual pay levels, the Compensation Committee reviews compensation data prepared annually by Aon showing the 25th, 50th and 75th percentiles of various pay elements for the companies listed above. As noted previously, the Compensation Committee does not target a specific market position in pay. One of our NEOs, our Chief Investment Officer and President of HIMCO, was also benchmarked against similar roles at a broader group of financial services companies within the standard McLagan Investment Management survey.
The Compensation Committee also reviews general industry survey data published by third parties as a general indicator of relevant market conditions and pay practices, including perquisites. Neither the Compensation Committee nor management has any input into companies included in these general industry or financial services company surveys.

PAY FOR PERFORMANCE
2018 AIP PERFORMANCE
Based on the assessment of performance described below, the Compensation Committee established an AIP funding level of 160% of target for the 2018 performance year.
STEP 1:
Financial Performance Against Target — Produced formulaic AIP funding level capped at 200%
When setting the 2018 operating plan, which forms the basis for the Compensation Core Earnings target, management and the Board anticipated continued underwriting discipline in Commercial Lines and strong results in Group Benefits, improvement in Personal Lines underwriting results, and rate increases in underperforming areas of the business, partially offset by the elimination of core earnings from Talcott Resolution (as a result of its sale) and lower limited partnership returns relative to the strong returns experienced in 2017.
The 2018 AIP Compensation Core Earnings target was set at $1,593 million, higher than both the 2017 Compensation Core Earnings target of $1,398 million and 2017 actual performance of $1,572 million. The 2018 Compensation Core Earnings target increased despite a significant loss in earnings power resulting from the sale of Talcott Resolution, partially offset by a lower corporate income tax rate in 2018 and earnings from the Aetna U.S. group life and disability business acquisition
Actual Compensation Core Earnings for 2018 were $1,842 million, producing a formulaic AIP funding level capped at 200% of target, reflecting strong underlying financial performance in each of the company’s business units.
Illustrated at right are the minimum threshold, target and maximum Compensation Core Earnings levels against actual results for 2018. As discussed on page 40, Compensation Core Earnings will differ from the earnings numbers provided in our financial statements due to pre-determined adjustments made to ensure the AIP funding level reflects the operating performance within management's control.

2018 Compensation Core Earnings
 
proxyavecompensata02.jpg
 

46
www.thehartford.com

 
 
COMPENSATION MATTERS

STEP 2:
Qualitative Review — Compensation Committee reduced funding level
In assessing overall performance and arriving at the 2018 AIP funding level, the Compensation Committee undertook a qualitative review focused on the following:
Qualitative Criteria
Results Considered
Quality of Earnings
The company's core earnings were above target, driven by favorable non-catastrophe prior year development combined with increased investment income, including strong partnership returns.  Excellent business results in Group Benefits and Mutual Funds also contributed to the performance above target. Lower P&C current accident year results, excluding catastrophes, partially offset these favorable results. Results were negatively impacted by catastrophe losses significantly above operating plan.
Risk & Compliance
The Hartford was again named one of the world’s most ethical companies by Ethisphere Institute in 2018. The Hartford has appeared on the list ten times due to a culture built on a foundation of integrity and respect, backed by a strong ethics and compliance program that emphasizes leadership accountability and preventing ethical lapses and compliance issues
Peer-Relative Performance
The company’s financial performance (core earnings growth and book value growth) compared favorably to peers; however, the company’s stock underperformed the S&P 500, the S&P P&C index and the S&P Insurance index.
Expense Management
Excluding bonus above target and one-time items, expenses were favorable to budget due mainly to managing headcount and IT costs.
Non-Financial and Strategic Objectives
On or ahead of schedule in integrating Aetna’s U.S. group life and disability business, realizing the revenue and earnings growth we expected to date from the deal; successfully completed the sale of Talcott Resolution, improving the core earnings growth profile of the company and generating approximately $1.5 billion in proceeds for deployment; and announced an agreement to acquire The Navigators Group, Inc., which will broaden and deepen our product offerings while greatly enhancing our ability to expand internationally.
As a result of its qualitative review, the Compensation Committee determined that, while strong 2018 results supported AIP funding above target, a second consecutive year of elevated catastrophe losses warranted a decrease in funding from the maximum of 200%. This is consistent with the company's AIP design, described on page 40, which adjusts core earnings for catastrophe losses above or below budget to manage year-to-year volatility, but retains flexibility for the use of Compensation Committee discretion to make adjustments to AIP funding levels. Following a review of the impact of excluding catastrophes above and below budget from Compensation Core Earnings over a multi-year period, the Compensation Committee used its informed discretion to reduce funding to 160%, a level it believed was more commensurate with overall company performance.
2018 NAMED EXECUTIVE OFFICERS' COMPENSATION AND PERFORMANCE
STEP 3:
Individual Performance — Each NEO's 2018 AIP award
Christopher Swift
Mr. Swift has served as CEO since July 1, 2014; he was also appointed Chairman on January 5, 2015. For 2018, the independent directors approved a base salary of $1,150,000, an AIP target of $3,000,000, and a 2018 LTI award of $8,000,000 granted in the form of 50% stock options and 50% performance shares on February 27, 2018.
Based on the process outlined above, the independent directors approved an AIP award of $4,800,000 (160% of target), taking into account that under Mr. Swift’s leadership, the company:
Delivered strong underlying financial results across multiple business segments despite a second consecutive year of elevated catastrophes
Successfully closed the divestiture of Talcott Resolution while simultaneously driving the integration of Aetna’s U.S. group life and disability business and entering into an agreement to acquire Navigators
Continued to focus on innovation, including the launch of our Small Business Innovation Lab, the purchase of Y-Risk, a company specializing in the sharing and on-demand economy, and the enhancement of advanced data and analytic capabilities
Continued to focus on talent management, diversity and inclusion, resulting in employee engagement and enablement scores that are in the top quartile of the market, as measured by the IBM® Kenexa® survey of global companies

 
2019 Proxy Statement
47

COMPENSATION MATTERS
 
 

Beth Costello
Ms. Costello has served as CFO since July 1, 2014. For 2018, the Compensation Committee approved a base salary of $725,000, an AIP target of $1,200,000, and a 2018 LTI award of $1,775,000 granted in the form of 50% stock options and 50% performance shares on February 27, 2018.
Based on the process outlined above, the Compensation Committee approved an AIP award of $1,925,000 (160% of target), taking into account that Ms. Costello:
Co-led the complex closing process for Talcott Resolution while also delivering expense synergy savings on the Aetna acquisition ahead of plan
Delivered a capital management plan that reduced debt by $320 million and successfully launched and priced a $345 million retail preferred stock offering that will fulfill a portion of planned financing needs for 2019, while diversifying the company's capital structure and investor base
Furthered external engagement with investors, rating agencies and bankers
Continued to focus on talent management, diversity and inclusion, resulting in employee engagement and enablement scores that are in the top quartile of the market
Douglas Elliot
Mr. Elliot has served as President of The Hartford since July 1, 2014. For 2018, the Compensation Committee approved a base salary of $950,000, an AIP target of $1,900,000, and a 2018 LTI award of $5,000,000 granted in the form of 50% stock options and 50% performance shares on February 27, 2018.
Based on the process outlined above, the Compensation Committee approved an AIP award of $3,050,000 (161% of target), taking into account that Mr. Elliot:
Delivered record core earnings in Group Benefits and strong Commercial Lines core earnings despite a second consecutive year of elevated catastrophe
Led the continued expansion of product capabilities (including large property, professional liability for Small Commercial and International), which allowed for broader and deeper risk participation
Advanced business intelligence capabilities and predictive modeling in all business segments and the company's Claims organization
Continued to focus on talent management, diversity and inclusion resulting in employee engagement and enablement scores that are in the top quartile of the market
Brion Johnson
Mr. Johnson has served as Chief Investment Officer and President of HIMCO since May 16, 2012. For 2018, the Compensation Committee approved a base salary of $575,000, an AIP target of $1,400,000 and a 2018 LTI award of $1,600,000 granted in the form of 50% stock options and 50% performance shares on February 27, 2018.
Based on the process outlined above, the Compensation Committee approved an AIP award of $2,250,000 (161% of target), taking into account that Mr. Johnson: