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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ITT HARTFORD GROUP. INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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ITT HARTFORD GROUP, INC.
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of the Shareholders of ITT Hartford Group, Inc. (the
"Company") will be held on Friday, May 2, 1997 at 9:30 a.m. at the Sheraton
San Diego Hotel & Marina (West Tower), 1590 Harbor Island Drive, San Diego,
California, for the following purposes:
1. to elect a Board of Directors;
2. to approve a change of the Company's name;
3. to approve certain material terms of the Company's annual executive
bonus program;
4. to approve certain material terms of the Hartford 1995 Incentive
Stock Plan;
5. to approve certain material terms of the 1997 Hartford Life, Inc.
Incentive Stock Plan;
6. to ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31,
1997; and
7. to act upon such other matters as may properly come before the
annual meeting.
Only shareholders of record at the close of business on March 4, 1997 are
entitled to notice of, and to vote at, the annual meeting.
Michael O'Halloran
Vice President
and Secretary
March 25, 1997
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ITT HARTFORD GROUP, INC.
690 ASYLUM AVENUE
HARTFORD, CT 06115
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1997
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GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of ITT
Hartford Group, Inc. (the "Company" or "The Hartford") in connection with the
annual meeting of shareholders of the Company to be held on Friday, May 2,
1997 at 9:30 a.m. at the Sheraton San Diego Hotel & Marina (West Tower), 1590
Harbor Island Drive, San Diego, California, and at any adjournment or
postponement thereof (the "Annual Meeting"). This Proxy Statement and the
accompanying proxy card are first being sent to shareholders on or about
March 28, 1997.
When you return a proxy card that is properly signed, the shares of the
Company's common stock ("Common Stock") represented by the proxy will be voted
as you specify on the proxy card. As to the election of directors, by marking
the appropriate box you may (a) vote for all of the director nominees as a
group except those nominees whose names you specify on the card; or (b)
withhold your vote from all nominees as a group. As to the other items, you
may vote "for" or "against" the item or "abstain" from voting by marking the
appropriate box.
If you properly sign and return your proxy card but do not specify any
choices you will thereby confer authority upon the persons named as proxies to
vote your shares in their discretion. The proxy also confers discretionary
authority on these individuals to vote your shares of Common Stock on (1) any
matter that was not known on the date of this Proxy Statement but is presented
at the Annual Meeting, including voting on the nomination or election of any
person not identified in this Proxy Statement as a nominee for election as a
director; and (2) any shareholder proposal that has been omitted from this
Proxy Statement pursuant to the proxy regulations of the Securities and
Exchange Commission ("SEC") but is presented at the Annual Meeting.
Your vote is important and the Board of Directors urges you to exercise your
right to vote. Whether or not you plan to attend the Annual Meeting, you can
assure that your shares are voted by properly completing, signing, dating and
returning the enclosed proxy card. You may revoke your proxy at any time
before it is exercised by giving written notice thereof to the Secretary of
the Company, by submitting a subsequently dated and properly signed proxy, or
by attending the Annual Meeting and revoking the proxy. Your attendance at the
Annual Meeting will not by itself revoke your proxy.
Shares of Common Stock held in the Company's Investment and Savings Plan
("ISP") are held of record and are voted by the trustee of the ISP, and shares
held in the Company's Employee Stock Purchase Plan ("ESPP") are held of record
by the ESPP's administrator, Dean Witter Trust Company ("Dean Witter"), and
are voted by Dean Witter. Participants in the ISP and the ESPP may direct the
trustee and Dean Witter as to how to vote shares allocated to their ISP and
ESPP accounts by properly signing, completing and returning the enclosed proxy
card. The ISP trustee will vote shares as to which it has not received
direction in accordance with the terms of the ISP.
Only shareholders of record on March 4, 1997 (the "Record Date") are
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, there were 117,850,584 shares of Common Stock issued and outstanding.
Each shareholder is entitled to one vote for each share of Common Stock
registered in that person's name as of the Record Date.
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ITEM 1
ELECTION OF DIRECTORS
A Board of twelve directors is to be elected at the Annual Meeting to serve
until the next annual meeting and until their successors are elected and
qualified. There are currently eleven directors serving on the Board, all of
whom have been nominated for reelection as directors at the Annual Meeting. In
addition, David K. Zwiener, the Company's Executive Vice President and Chief
Financial Officer, has been nominated for election for the first time. Each of
the directors, except for Messrs. Araskog, Ayer, Frahm, Smith and Swygert, was
elected in connection with the Company becoming a separate public company as
part of the spin-off from ITT Corporation ("ITT") that occurred effective
December 19, 1995 (the "Spin-Off"). Messrs. Frahm and Araskog have served on
the Board since 1985, Messrs. Ayer and Smith have served since 1991, and Mr.
Swygert has served since 1996.
Unless there is a contrary indication, shares of Common Stock represented by
valid proxies will be voted for the election of all nominees. The Board has no
reason to believe that any nominee will be unable to serve as a director. If
for any reason a nominee should become unable to serve, the shares represented
by valid proxies will be voted for the election of such other person as the
Board may recommend, or the Board may reduce the number of directors to
eliminate the vacancy.
Set forth below is certain information about each director and nominee for
election as a director, including information regarding his or her background
for at least the past five years.
DIRECTORS AND NOMINEES
BETTE B. ANDERSON
Mrs. Anderson, 68, joined Kelly, Anderson, Pethick & Associates,
[PHOTO Inc., a Washington based management firm, in 1990 and served as
APPEARS President effective January 1, 1991 until January 1996, when she
HERE ] became Vice Chairperson. Mrs. Anderson was formerly a partner in
the public affairs company of Anderson, Benjamin, Read & Haney.
She was Undersecretary of the Treasury from 1977 to 1981. Mrs.
Anderson was affiliated for twenty-seven years with the Citizens
and Southern National Bank of Savannah, having served as a Vice
President until she assumed the Treasury post. Mrs. Anderson is a
director of American Bank Note Corporation, the New ITT
Corporation (defined below), ITT Educational Services, Inc.,
United Payors & Providers, the Miller Foundation at the University
of Virginia and a member of the Advisory Council of Girl Scouts of
America. She attended Georgia Southern and Armstrong State
Colleges and is a graduate of the Stonier Graduate School of
Banking at Rutgers University.
RAND V. ARASKOG
Mr. Araskog, 65, served as an executive officer of ITT until the
[PHOTO Spin-Off. He was Chief Executive officer of ITT since 1979,
APPEARS Chairman since 1980 and President since March 1991. After the
HERE ] Spin-Off, Mr. Araskog became Chairman and Chief Executive of the
new ITT Corporation ("New ITT"), formerly an ITT subsidiary called
ITT Destinations, Inc., a company that owns and operates
hospitality, entertainment and information services businesses. He
is a director of ITT Industries, Inc., Alcatel Alsthom of France,
Dow Jones & Company, Inc., Rayonier Inc., Shell Oil Company and
ITT Educational Services, Inc. He is a member of The Business
Council and the Business Roundtable. Mr. Araskog is a graduate of
the U.S. Military Academy at West Point and attended the Harvard
Graduate School of Arts and Sciences.
(ART)
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RAMANI AYER
Mr. Ayer, 49, became Chairman and Chief Executive Officer of the
[PHOTO Company on February 1, 1997. Prior to that, he served as an
APPEARS Executive Vice President of the Company since the Spin-Off in
HERE ] December 1995. Mr. Ayer has been President and Chief Operating
Officer of Hartford Fire Insurance Company ("Hartford Fire"), the
Company's principal property and casualty insurance subsidiary,
since 1991 and previously served as Executive Vice President of
Hartford Fire from 1990 to April 1991 and Senior Vice President
from 1989 to 1990. Mr. Ayer joined the Company in 1973 as a member
of the operations research department. In 1981 he was appointed
the Secretary and Director of corporate reinsurance. In 1983 he
was named Vice President of HartRe, the Company's reinsurance
subsidiary, and in 1984 he joined the Hartford Specialty Company,
of which he was appointed President in 1986.
ROBERT A. BURNETT
Mr. Burnett, 69, served as Chairman of Meredith Corporation from
[PHOTO 1988 until his retirement in 1992. He served as President and
APPEARS Chief Executive Officer from 1977 and relinquished the latter
HERE ] office in 1989. Mr. Burnett is a director of New ITT, ITT
Industries, Inc., Meredith Corporation, Whirlpool Corporation and
MidAmerican Energy Company. He is a member of the Board of
Trustees of Grinnell College, Grinnell, Iowa. He is also a
director of the Greater Des Moines Committee and the Des Moines
Art Center. Mr. Burnett has a B.A. degree in economics from the
University of Missouri.
DONALD R. FRAHM
Mr. Frahm, 65, served as Chairman, President and Chief Executive
[PHOTO Officer of the Company from April 1988 until his retirement on
APPEARS January 31, 1997. He is a member of the Board of Directors of the
HERE ] Insurance Information Institute and the American Insurance
Association. Mr. Frahm is a director of the Hartford Hospital and
Junior Achievement North Central Connecticut Inc. and the Greater
Hartford Chamber of Commerce. He is also a corporator of
Connecticut Children's Medical Center.
ARTHUR A. HARTMAN
Mr. Hartman, 71, has been Senior Consultant to APCO Associates,
[PHOTO Washington, D.C., since 1989. Previously, he was the U.S.
APPEARS Ambassador to the former Union of Soviet Socialist Republics and
HERE ] France. He is a director of the Dreyfus Fund, Lawter International
Inc. and Ford Meter Box Co., Inc. He is also Chairman of the First
NIS Regional Fund-Barings/ING. Mr. Hartman is the former President
of the Board of Overseers of Harvard University, and he is a
member of a number of foundation boards and advisory councils.
PAUL G. KIRK, JR.
Mr. Kirk, 59, became a partner in the law firm of Sullivan &
[PHOTO Worcester in 1977 and is presently of Counsel to the firm. He
APPEARS served as Chairman of the Democratic Party of the United States
HERE ] from 1985 to 1989 and as Treasurer from 1983 to 1985. Following
his resignation in 1989 as Chairman of the Democratic Party, he
returned to Sullivan & Worcester as a partner in general corporate
practice at the firm's Boston and Washington offices. Mr. Kirk is
a director of New ITT and of Kirk-Sheppard & Co., Inc., of which
he also is Chairman and Treasurer. Mr. Kirk is also a director of
the Bradley Real Estate Corporation and Rayonier Inc. He is Co-
chairman of the Commission on Presidential Debates, Chairman of
the John F. Kennedy Library Foundation Board of Directors,
Chairman of the Board of Directors of the National Democratic
Institute for International Affairs, and a trustee of Stonehill
College and St. Sebastian's School. He is a graduate of Harvard
College and Harvard Law School.
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LOWNDES A. SMITH
Mr. Smith, 57, became Vice-Chairman of the Company on February
[PHOTO 1, 1997 and is the President and Chief Executive Officer of
APPEARS Hartford Life, Inc. He served as an Executive Vice President of
HERE ] the Company since the Spin-Off in December 1995 until his
appointment as Vice-Chairman and served as President and Chief
Operating Officer of the Company's life insurance companies since
1989. Prior to that time, he served as Senior Vice President and
Group Controller for all companies owned or operated by the
Company. Mr. Smith joined the Company in 1968 as a member of the
corporate accounting department. In 1972 he was appointed the
Secretary and Director of corporate accounting. He was elected
Assistant Vice President in 1974, and he was named Controller in
1977. Mr. Smith is a director of the Connecticut Children's
Medical Center and the American Council of Life Insurance.
H. PATRICK SWYGERT
Mr. Swygert, 54, has been President of Howard University,
[PHOTO Washington, D.C., since August 1995. Prior to that, he was
APPEARS President of the University at Albany, State University of New
HERE ] York, since 1990. Mr. Swygert received his undergraduate and law
degrees from Howard University, has been a visiting professor and
lecturer abroad and is the author of numerous articles and
publications on higher education and the law. He is a member of
the Board of Directors of The Victory Funds, Cleveland, Ohio. Mr.
Swygert is Chairman of the Washington, D.C. Area Consortium of
Colleges and Universities, a trustee of the Institute of Public
Administration and a member of the Commission on Women in Higher
Education and the Capital District Martin Luther King, Jr.
Commission.
DEROY C. THOMAS
Mr. Thomas, 71, was a partner of LeBoeuf, Lamb, Greene & MacRae,
[PHOTO a law firm in New York, New York, from 1991 through December 31,
APPEARS 1994. He was President, Chief Operating Officer and a director of
HERE ] ITT from 1988 to 1991, and from 1983 to 1988 he was Vice Chairman
and Chief Operating Officer, ITT Diversified Services, and
Chairman and Chief Executive Officer of the Company. He is a
director of Houghton-Mifflin, Connecticut Health Services and
MedSpan, Inc. He is also a former trustee of Fordham University,
Wheelock College, University of Hartford, Hartford Hospital and CT
Health System. Mr. Thomas is President of Goodspeed Opera House
and the Chairman of the Old State House Association.
GORDON I. ULMER
Mr. Ulmer, 64, is former Chairman and Chief Executive Officer of
[PHOTO the former Connecticut Bank and Trust Company ("CBT") and retired
APPEARS President of the former Bank of New England Corporation, the
HERE ] former holding company of CBT ("BNEC"). He joined CBT in 1957 and
held numerous positions before being elected President and a
director in 1980 and Chairman and Chief Executive Officer in 1985.
In 1988 he was elected President of BNEC, and retired as President
in December 1990. Mr. Ulmer also serves as a director of Rayonier
Inc., and the Old State House Association. He is a graduate of
Middlebury College, the American Institute of Banking and Harvard
Business School Advanced Management Program and attended New York
University's Graduate School of Engineering.
DAVID K. ZWIENER
Mr. Zwiener, 42, has been Executive Vice President and Chief
[PHOTO Financial Officer of the Company since August 1995. He previously
APPEARS served as Executive Vice President and Chief Financial Officer of
HERE ] ITT Financial Corporation from March 1993. From 1987 to February
1993, Mr. Zwiener served as Senior Vice President and Treasurer,
and Executive Vice President--Capital Markets Division, of Heller
International Corporation.
4
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THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors is responsible for establishing broad corporate
policies and for overseeing the overall performance of the Company. The Board
reviews significant developments affecting the Company and acts on matters
requiring Board approval. During 1996, the Board held eleven meetings. The
standing committees of the Board are the Audit, Compensation and Personnel,
Finance, Legal and Public Affairs, and Nominating committees, each of which is
comprised solely of directors who are not officers of, or otherwise employed
by, the Company or any of its subsidiaries. Set forth below is a description
of the duties of each committee and its members.
The Audit Committee recommends the selection of independent auditors for the
Company, reviews and assesses the scope of audits to be performed by such
auditors, reviews audit results and internal accounting and control procedures
and policies, and reviews the fees paid to the Company's independent auditors.
The Committee reviews and recommends approval of the audited financial
statements of the Company and the annual report to shareholders. It also
reviews the expense accounts of senior executives. The members of the Audit
Committee are Messrs. Burnett, Kirk (Chairman), Swygert and Ulmer. During
1996, the Committee held three meetings.
The Compensation and Personnel Committee evaluates senior management
performance and establishes executive compensation policies. Mrs. Anderson and
Messrs. Burnett, Hartman and Ulmer (Chairman) are the members of the
Committee. The Committee held five meetings during 1996.
The Finance Committee is responsible for reviewing capital expenditures and
appropriations and maximizing the effective use of the Company's and its
subsidiaries' assets. This includes directing the investment allocation and
risk management policies of the Company. The members of the Committee are Mrs.
Anderson and Messrs. Araskog, Thomas (Chairman) and Ulmer. During 1996, the
Committee held five meetings.
The Legal and Public Affairs Committee reviews and considers major claims
and litigation, and legal, regulatory, patent and related governmental policy
matters affecting the Company and its subsidiaries. The Committee reviews and
approves management policies and programs relating to compliance with legal
and regulatory requirements, business ethics and environmental matters. The
Committee also reviews and defines the Company's social responsibilities,
including issues of significance to the Company, its shareholders and
employees. The members of the Committee are Mrs. Anderson and Messrs. Hartman
(Chairman), Kirk, Swygert and Thomas. The Committee held four meetings during
1996.
The Nominating Committee makes recommendations concerning the organization,
size, and composition of the Board and its committees, proposes nominees for
election to the Board and its committees and considers the qualifications,
compensation, and retirement of directors. The Committee's members are Messrs.
Araskog, Burnett (Chairman), Hartman and Kirk. During 1996, the Committee held
two meetings. The Nominating Committee will consider nominations of persons
for election as directors that are submitted by shareholders in writing in
accordance with certain requirements set forth in the Company's bylaws.
In 1996, no director failed to attend at least seventy-five percent of all
meetings of the Board of Directors and of the committees of which he or she
was a member.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that directors
and certain executive officers of the Company report their ownership of and
transactions in the Common Stock. During 1996, due to an inadvertent
administrative error by the Company, a report regarding one transaction of
Robert A. Burnett, a director, was filed nine days late.
DIRECTORS' COMPENSATION
STANDARD FEES. Members of the Board of Directors who are employees of the
Company or its subsidiaries are not compensated for service on the Board or
any of its committees. Compensation for non-employee directors
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for 1996 consisted of an annual retainer fee of $30,000 payable solely in
restricted shares of Common Stock pursuant to the ITT Hartford Group, Inc.
1996 Restricted Stock Plan for Non-Employee Directors (the "Non-Employee
Directors Plan") described below, a $1,000 fee for each meeting of the Board
attended and a $1,000 fee for each committee meeting attended. Directors are
also reimbursed for travel and related expenses incurred on behalf of the
Company.
RESTRICTED STOCK PLAN. Under the Non-Employee Directors Plan, non-employee
directors receive grants of shares of restricted Common Stock as payment for
their annual retainer fee. Restricted stock grants are made automatically on
the date of each annual meeting of shareholders to each non-employee director
elected at, or continuing in office following, the annual meeting. The number
of shares of restricted stock is determined by dividing the annual retainer
for the year of the award by the fair market value of the Common Stock as
reported on the New York Stock Exchange as of the date of the award.
Non-employee directors receiving restricted stock may not sell, assign or
otherwise dispose of the stock until the restriction period ends. The
restriction period ends upon the earliest of: (i) five years after the grant
date, (ii) retirement at age seventy-two, (iii) a "change of control" (as
defined in the plan) of the Company (iv) death, (v) disability, or (vi)
resignation under certain circumstances, as set forth in the plan. If a non-
employee director resigns other than under such circumstances before the
restriction period ends, he or she will forfeit his or her restricted shares.
INSURANCE. The Company provides Non-employee directors with $100,000 of
group life insurance coverage and $750,000 of accidental death and
dismemberment and permanent total disability coverage while they are serving
on the Board. Non-employee directors may purchase additional benefits under
these policies.
ITEM 2
APPROVAL OF CHANGE OF THE COMPANY'S NAME
The Board of Directors has adopted a resolution to amend Article First of
the Company's certificate of incorporation to change the Company's name from
"ITT Hartford Group, Inc." to "The Hartford Financial Services Group, Inc."
Shareholder approval of this amendment is required and shareholders will vote
on the resolution at the Annual Meeting. Below is a discussion of the reasons
why the Board of Directors believes the Company's name should be changed.
Prior to the Spin-Off, the Company was a subsidiary of ITT since 1970, and
the Company's corporate name "ITT Hartford Group, Inc." reflected this
affiliation with ITT. On December 19, 1995, the Spin-Off occurred and as a
result, the Company became a separate publicly-traded company. Although no
longer affiliated with ITT, the Company retained the formal corporate name
"ITT Hartford Group, Inc." after the Spin-Off.
During the year after the Spin-Off, the Company's management became aware
that, because "ITT" was part of the Company's name, many of the Company's
customers, independent insurance agents, people in the investment community
and the public in general perceived that the Company was still owned by, or
affiliated with, ITT. Market surveys confirmed this perception and revealed
that there was some confusion regarding the Company's status after the Spin-
Off and the Company's relation to the other two public companies that resulted
from the Spin-Off, both of which have "ITT" as part of their corporate names.
In addition, survey research revealed that customers, agents, the investment
community and the general public strongly associated "The Hartford" brand name
with the Company and its subsidiaries. Therefore, on the first anniversary of
the Spin-Off, the Company announced that it was returning to the use of "The
Hartford" as the Company's brand name, rather than "ITT Hartford."
For these reasons, the Board of Directors believes that the formal corporate
name should be changed. The proposed new name of "The Hartford Financial
Services Group, Inc." not only deletes the "ITT" part of the name, but also
promotes the Company's image as a provider of a broad range of financial
services, including
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insurance. Thus, changing the formal corporate name of the Company should
further the Company's goals of establishing a separate corporate identity and
being perceived as a leading provider of financial services. Certain of the
Company's subsidiaries may, however, continue to use the "ITT Hartford" name
in certain international and other markets where recognition of that name
could be beneficial.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE
THE CHANGE OF THE COMPANY'S NAME.
ITEM 3
APPROVAL OF CERTAIN MATERIAL TERMS OF
THE COMPANY'S ANNUAL EXECUTIVE BONUS PROGRAM
The Company has an annual executive bonus program (the "Bonus Program") that
is intended to provide certain Company executives and key managers with
incentive compensation based upon the achievement of pre-established
performance goals and individual performance. The Bonus Program is intended to
provide an incentive for profitable growth and to motivate participating
executives and key managers toward even higher achievement and operating
results, to tie their goals and interests to those of the Company and its
shareholders and to enable the Company to attract and retain highly qualified
executives and key managers.
Under the Bonus Program, each participating executive and key manager is
assigned a target bonus opportunity based on his or her job grade and
position, expressed as a percentage of the executive's and key manager's year-
end base salary rate. At the end of each year, the aggregate amount of
individual target bonuses is adjusted in accordance with a pre-established
formula to create a bonus pool for the executives and key managers for the
year. The amount of the bonus pool for each year depends upon the Company's
achieving certain pre-established performance goals for the year, such as
achieving a certain net income and return on equity. Individual bonus awards
from the overall bonus pool are determined on a discretionary basis taking
into account specific personal contributions during the year. The Compensation
and Personnel Committee of the Board of Directors (the "Compensation
Committee") administers the Bonus Program with respect to certain senior
executives of the Company. Each year the Compensation Committee reviews and
approves management's suggestions for performance goals of such senior
executives and reviews and approves annual bonus payment levels based on the
achievement of goals by them.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
limits the tax deductibility by the Company of compensation paid to its five
most highly compensated executive officers to $1,000,000. However, if the
shareholders approve four material terms of a compensation plan or program,
and compensation paid pursuant to the plan or program otherwise complies with
Section 162(m), then such compensation is exempted from this limitation and is
fully deductible. The Compensation Committee has approved four material terms
of the Bonus Program as they relate to the five most highly compensated
executive officers of the Company and shareholders are requested to approve
these terms in order to maintain the deductibility of compensation paid to the
five most highly compensated executive officers. For purposes of Section
162(m), the four material terms of the Bonus Program need apply only to the
five most highly compensated executive officers of the Company for any given
year, although the Company may apply the same or similar performance criteria
to other executives.
Set forth below is a description of the four material terms of the Bonus
Program related to Section 162(m), all of which shareholders are asked to
approve:
1. CLASS OF EXECUTIVES. The five most highly compensated executive
officers of the Company and its subsidiaries for any given year.
2. PERFORMANCE CRITERIA. Payment of bonuses pursuant to the Bonus Program
shall be based upon any one or more of the following criteria, which shall
be stated for the five most highly compensated executive officers in terms
of an objective formula or standard as required by Section 162(m), and
which may be (a) determined solely by reference to the Company's
performance, any subsidiary or affiliate of the
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Company or any division or unit of any of the foregoing, or (b) based on
comparative performance of any one or more of the following relative to
other entities: (i) earnings per share, (ii) return on equity, (iii) cash
flow, (iv) return on total capital, (v) return on assets, (vi) economic
value added, (vii) increase in surplus, (viii) reductions in operating
expenses, (ix) increases in operating margins, (x) earnings before income
taxes and depreciation, (xi) total shareholder return, (xii) return on
invested capital, (xiii) cost reductions and savings, (xiv) earnings before
interest, taxes, depreciation and amortization (xv) pre-tax operating
income, (xvi) productivity improvements, or (xvii) an executive's
attainment of personal objectives with respect to any of the foregoing
criteria or other criteria such as growth and profitability, customer
satisfaction, leadership effectiveness, business development, negotiating
transactions and sales or developing long term business goals.
3. MAXIMUM PAYABLE EACH YEAR. The maximum bonus that may be paid to any
of the five most highly compensated executive officers in any given year is
the lesser of (a) 200% of such executive's annual base salary in effect at
the end of such year, or (b) $4,000,000.
4. COMMITTEE CERTIFICATION OF PERFORMANCE GOAL ACHIEVEMENT. At or after
the end of each calendar year, the Compensation Committee is required to
certify in writing whether the pre-established performance goals and
objectives have been satisfied in such year with respect to the five most
highly compensated executive officers. The actual bonus award for any
participant for such year shall then be determined based upon the pre-
established computation formulae or methods. The Compensation Committee has
no discretion to increase the amount of any participant's bonus as so
determined in order for the bonus to be exempt from the Section 162(m)
limitation but may reduce the amount of, or totally eliminate such bonus if
the Compensation Committee determines, in its absolute discretion, that
such a reduction or elimination is appropriate in order to reflect the
participant's performance or unanticipated factors.
Amendments can be made to the Bonus Program that can increase its cost to
the Company and can alter the allocation of benefits among participating
executive officers. In addition, the Compensation Committee generally intends
to take reasonable measures to avoid the loss of a Company tax deduction due
to Section 162(m). However, the Compensation Committee may in certain
circumstances, approve bonus or other payments outside of the Bonus Program
that do not meet the material terms of the Bonus Program described above and
that may not be tax deductible.
During 1996, 1,060 executives and key managers were eligible to participate
in the Bonus Program. The bonuses paid to the Company's Chief Executive
Officer and the other four most highly compensated executive officers for 1996
are included in the Summary Compensation Table under the caption "COMPENSATION
OF EXECUTIVE OFFICERS" below. Aggregate 1996 bonus payments of $1,462,000 and
$23,197,852 were paid to all current executive officers as a group, and all
participating executives and key managers who are not executive officers,
respectively. Since the Bonus Program requires performance goals to be set and
participants to be selected for each year, it is not determinable what
benefits, if any, will be paid to any participating executive or key manager
in the future.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE
MATERIAL TERMS OF THE COMPANY'S ANNUAL EXECUTIVE BONUS PROGRAM.
ITEM 4
APPROVAL OF CERTAIN MATERIAL TERMS OF THE HARTFORD 1995 INCENTIVE STOCK PLAN
Pursuant to the Hartford 1995 Incentive Stock Plan (the "Incentive Stock
Plan"), the Compensation Committee may grant stock options, stock appreciation
rights, restricted stock and performance shares to key employees of the
Company selected by the Compensation Committee. In connection with the Spin-
Off, the shareholders of ITT approved the terms of the Incentive Stock Plan at
a special meeting of ITT shareholders held on September 21, 1995. The terms of
the Incentive Stock Plan approved by the ITT shareholders included four
material terms required by Section 162(m) of the Code in order for
compensation attributable to certain awards to be exempt from the Section
162(m) tax deduction limitation, as described in ITEM 3 above.
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The Compensation Committee has approved additional performance measures that
are included as subitems (xii) through (xvii) in the description of the second
of the material terms described below. The shareholders of the Company must
approve such additional performance measures in order for them to be effective
for purposes of Section 162(m). In addition to approving these additional
performance measures, shareholders are requested to approve all of the four
material terms of the Incentive Stock Plan related to Section 162(m) so that
the Incentive Stock Plan will comply with the requirements of Section 162(m)
for an additional five years, thereby allowing compensation attributable to
certain awards to be exempt from the Section 162(m) tax deduction limitation.
By approving all of the material terms of the Incentive Stock Plan described
below, the Section 162(m) requirements will be met for the years 1997 through
2001, whereas the 1995 approval by ITT's shareholders would extend only
through 1999. For purposes of Section 162(m), the four material terms of the
Incentive Stock Plan need apply only to the Company's five most highly
compensated executive officers, although the same or similar performance
criteria may be applied to others.
Set forth below is a description of the four material terms of the Incentive
Stock Plan related to Section 162(m), including the additional performance
measures, all of which shareholders are asked to approve.
1. CLASS OF EXECUTIVES. The five most highly compensated executive
officers of the Company, its subsidiaries and affiliates for any given year
whose responsibilities and decisions, in the judgment of the Compensation
Committee, directly affect the performance of the Company and its
subsidiaries.
2. PERFORMANCE CRITERIA. Awards (other than certain option grants
described below) may be based on any one or more of the following criteria,
which shall be stated for the five most highly compensated executive
officers in terms of an objective formula or standard as required by
Section 162(m), and which may be (a) determined solely by reference to the
Company's performance, any subsidiary or affiliate of the Company or any
division or unit of any of the foregoing, or (b) based on comparative
performance of any one or more of the following relative to other entities:
(i) earnings per share, (ii) return on equity, (iii) cash flow, (iv) return
on total capital, (v) return on assets, (vi) economic value added, (vii)
increase in surplus, (viii) reductions in operating expenses, (ix)
increases in operating margins, (x) earnings before income taxes and
depreciation, (xi) total shareholder return, (xii) return on invested
capital, (xiii) cost reductions and savings, (xiv) earnings before
interest, taxes, depreciation and amortization, (xv) pre-tax operating
income, (xvi) productivity improvements, or (xvii) an executive's
attainment of personal objectives with respect to any of the foregoing
criteria or other criteria such as growth and profitability, customer
satisfaction, leadership effectiveness, business development, negotiating
transactions and sales or developing long term business goals. Compensation
attributable to stock options granted at 100% of the fair market value of
the Common Stock on the date of grant and subject to individual maximums is
automatically exempt under Section 162(m).
3. LIMIT ON AWARDS TO ANY PARTICIPANT IN ANY YEAR. A participant in the
Incentive Stock Plan may be awarded stock options and stock appreciation
rights in any given year for no more than the lesser of (a) 500,000 shares
or (b) 10% of the Company's total issued and outstanding shares of Common
Stock and treasury shares reported in the Company's Form 10-K with respect
to the previous year. In addition, a participant may be awarded no more
than 100,000 shares of Common Stock in the form of performance shares in
any given year.
4. COMMITTEE CERTIFICATION OF PERFORMANCE GOAL ACHIEVEMENT. At or after
the end of each calendar year, the Compensation Committee is required to
certify in writing whether the pre-established performance goals and
objectives have been satisfied in such year with respect to awards to the
five most highly compensated executive officers that are intended to comply
with Section 162(m).
While shareholders are requested to approve only the four material terms of
the Incentive Stock Plan set forth above, SEC regulations require that the
Company describe the other material terms of the Incentive Stock Plan and
provide certain other information, as set forth below.
The Incentive Stock Plan provides for the grant of incentive stock options
(qualifying under Section 422 of the Code), non-qualified stock options, stock
appreciation rights ("SARs"), performance shares and restricted
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stock, or any combination of the foregoing, as the Compensation Committee may
determine. In addition, under the terms of the Incentive Stock Plan and in
connection with the Spin-Off, the Compensation Committee awarded substitute
stock options and restricted stock to key employees who surrendered previously
awarded options or restricted stock granted by ITT relating to shares of ITT
common stock. The Incentive Stock Plan will expire on December 31, 2005 but
will continue in effect for awards then outstanding for so long as such awards
are outstanding.
The Incentive Stock Plan contains a formula for establishing an annual limit
on the number of shares that may be awarded (or with respect to which non-
stock awards may be made) in any given calendar year (the "Annual Limit"). The
Annual Limit formula is expressed as a percentage of the Company's total
issued and outstanding shares of Common Stock and treasury stock as of the
year end immediately preceding the year of awards ("Plan Year"). Under the
Annual Limit formula, the maximum number of shares of Common Stock for which
awards may be granted under the Incentive Stock Plan in each Plan Year shall
be 1.5% of the total of the issued and outstanding shares of Common Stock and
treasury stock as reported in the Annual Report on Form 10-K of the Company
for the fiscal year ending immediately prior to any Plan Year. Any unused
portion of the Annual Limit for any Plan Year shall be carried forward and be
made available for awards in succeeding Plan Years. In addition to the
foregoing, in no event may more than five million shares of Common Stock be
cumulatively available for awards of incentive stock options, and provided
further, that no more than 20% of the total number of shares available on a
cumulative basis may be available for awards of restricted Common Stock and
awards of performance shares relating to Common Stock.
Subject to the above limitations, shares of Common Stock to be issued under
the Incentive Stock Plan may be made available from the authorized but
unissued Common Stock, treasury stock or from shares purchased on the open
market or any combination of the foregoing. In the event of a reorganization,
merger, stock dividend or other change in the corporate structure of the
Company or the Common Stock described in the Incentive Stock Plan, the number
of shares subject to the Incentive Stock Plan, the number of shares then
subject to awards and the price per share payable on exercise of options may
be appropriately adjusted by the Compensation Committee.
For the purpose of computing the total number of shares of Common Stock
available for awards under the Incentive Stock Plan, there shall be counted
against the foregoing limitations the number of shares of Common Stock subject
to issuance upon exercise or settlement of awards and the number of shares of
Common Stock that equal the value of awards of performance shares, in each
case determined as at the dates on which such awards are granted. If any
awards under the Incentive Stock Plan are forfeited, terminated, expire
unexercised, are settled in cash in lieu of Common Stock or are exchanged for
other awards, the shares of stock which were theretofore subject to such
awards shall again be available for awards under the Incentive Stock Plan to
the extent of such forfeiture, termination, expiration, cash settlement or
exchange of such awards. Further, any shares that are exchanged (either
actually or constructively) by optionees as full or partial payment to the
Company of the purchase price of shares being acquired through the exercise of
a stock option granted under the Incentive Stock Plan may be available for
subsequent awards.
The Compensation Committee, none of whose members may receive any award
under the Incentive Stock Plan, administers the Incentive Stock Plan,
including, but not limited to, making determinations with respect to the
designation of those key employees who shall receive awards, the number of
shares to be covered by options, SARs and restricted stock awards, the
exercise price of options (which may not be less than 100% of the fair market
value of Common Stock on the date of grant), other option terms and
conditions, and the number of performance shares to be granted and the
applicable performance objectives. The Compensation Committee may impose such
additional terms and conditions on an award as it deems advisable, and its
decisions in the administration of the Incentive Stock Plan shall be binding
on all persons for all purposes. The Compensation Committee may in its sole
discretion delegate such administrative powers as it may deem appropriate to
the chief executive officer or other members of senior management, except that
awards to executive officers shall be made solely by the Compensation
Committee subject to compliance with Rule 16b-3 under the Exchange Act.
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STOCK OPTIONS AND RELATED SARS. Incentive stock options and related SARs
granted under the Incentive Stock Plan must expire within ten years after
grant; non-qualified stock options and related SARs will expire not more than
ten years and two days after grant. The exercise price for options must be at
least equal to the fair market value of the Common Stock on the date of grant.
The exercise price for options must be paid to the Company at the time of
exercise and, in the discretion of the Compensation Committee, may be paid in
the form of cash or already-owned shares of Common Stock or a combination
thereof. During the lifetime of a key employee, an option or SAR must be
exercised only by the key employee (or his or her estate or designated
beneficiary) but no later than three months after his or her termination of
employment (or for longer periods as determined by the Compensation
Committee). If termination is caused by retirement, total disability or death,
an option or SAR may be exercised within five years after such termination (or
such other period determined by the Compensation Committee), but in no event
later than the expiration of the original term of the option or SAR. If a key
employee voluntarily resigns or is terminated for cause, the options and SARs
are canceled immediately.
PERFORMANCE SHARES. Performance shares granted under the Incentive Stock
Plan are contingent rights to receive future payments of Common Stock, cash or
a combination thereof, based on the achievement of performance objectives as
prescribed by the Compensation Committee. Such performance objectives will be
determined by the Compensation Committee over a measurement period or periods
of not less than two nor more than five years and related to at least one of
the performance criteria described above. The maximum number of performance
shares that may be granted to any individual key employee in any given year is
100,000. The ultimate payments are determined by the number of shares awarded
and the extent that performance objectives are achieved during the period. In
the event a key employee terminates employment during such a performance
period, the key employee will forfeit any right to payment unless the
Compensation Committee determines otherwise. However, in the case of
retirement, total disability, death or cases of special circumstances, the key
employee may, in the discretion of the Compensation Committee, be entitled to
an award prorated for the portion of the performance period during which he or
she was employed by the Company.
RESTRICTED SHARES. Restricted shares of Common Stock awarded under the
Incentive Stock Plan will be issued subject to a restriction period set by the
Compensation Committee during which time the shares may not be sold,
transferred, assigned or pledged or otherwise disposed of. If an employee
terminates employment during a restriction period, all such shares still
subject to restrictions will be forfeited by the key employee and reacquired
by the Company, except when the Compensation Committee determines otherwise in
special circumstances. The Compensation Committee may provide for the lapse of
restrictions where deemed appropriate and it may also require the achievement
of pre-determined performance objectives in order for such shares to vest. The
recipient, as owner of the awarded shares, shall have all other rights of a
stockholder, including the right to vote the shares and receive dividends and
other distributions during the restriction period. The restrictions may be
waived, in the discretion of the Compensation Committee, in the event of the
awardee's retirement, total disability, death or in cases of special
circumstances.
COMPENSATION UPON CHANGE OF CONTROL. The Incentive Stock Plan provides for
the automatic protection of intended economic benefits for key employees in
the event of a change of control of the Company (i.e., upon the occurrence of
an "Acceleration Event" as defined below). Notwithstanding any other
provisions of the Incentive Stock Plan, upon the occurrence of an Acceleration
Event (a) all options and SARs will generally become immediately exercisable
for a period of 60 calendar days; (b) options and SARs will continue to be
exercisable for a period of seven months in the case of an employee whose
employment is terminated other than for "just cause" (as defined in the
Incentive Stock Plan) or who voluntarily terminates employment because of a
good faith belief that such employee will not be able to discharge his or her
duties; (c) SARs exercised during the 60-day period will be settled fully in
cash based on a formula price generally reflecting the highest price paid for
a share of Common Stock during the 60-day period preceding the date such SARs
are exercised; (d) "limited stock appreciation rights" shall automatically be
granted on all outstanding options not otherwise covered by SARs, which shall
generally be immediately exercisable in full and which shall entitle the
holders to the same exercise period and formula price referred to in clauses
(a), (b) and (c) above; (e) outstanding performance share awards shall
automatically vest, with the valuation of such performance shares based on the
formula price; and (f) restrictions applicable to awards of restricted stock
shall be automatically waived.
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"Acceleration Event" is generally defined in the Incentive Stock Plan as any
of the following events: (i) a report on Schedule 13D shall be filed with the
SEC pursuant to Section 13(d) of the Exchange Act disclosing that any person
(within the meaning of Section 13(d) of the Exchange Act), other than the
Company or a subsidiary of the Company or any employee benefit plan sponsored
by the Company or a subsidiary of the Company is the beneficial owner (as such
term is defined in Rule 13d-3 under the Exchange Act) directly or indirectly
of 20% or more of the outstanding Common Stock (calculated as provided in
paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to
acquire Common Stock); (ii) any person (within the meaning of Section 13(d) of
the Exchange Act), other than the Company or a subsidiary of the Company or
any employee benefit plan sponsored by the Company or a subsidiary of the
Company, shall purchase shares pursuant to a tender offer or exchange offer to
acquire any Common Stock (or securities convertible into such Common Stock)
for cash, securities or any other consideration; provided that after
consummation of the offer, the person in question is the beneficial owner (as
such term is defined in Rule 13d-3 under the Exchange Act) directly or
indirectly of 15% or more of the outstanding Common Stock (calculated as
provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of
rights to acquire Common Stock); (iii) the stockholders of the Company shall
approve (A) any consolidation or merger of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which shares of
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which holders of Common Stock immediately
prior to the merger have the same proportionate ownership of common stock of
the surviving corporation immediately after the merger as immediately before
or (B) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of the
Company; or (iv) there shall have been a change in a majority of the members
of the Board of Directors within a twelve- month period unless the election or
nomination for election by the Company's stockholders of each new director
during such twelve-month period was approved by the vote of two-thirds of the
directors then still in office who were directors at the beginning of such
twelve-month period.
AMENDMENT AND TERMINATION OF THE INCENTIVE STOCK PLAN. The Board of
Directors may amend or discontinue the Incentive Stock Plan at any time and,
specifically, may make such modifications to the Incentive Stock Plan as it
deems necessary to avoid the application of Section 162(m) of the Code and the
United States Treasury regulations issued thereunder. However, stockholder
approval is required for any amendment which may, with respect to the grant of
Incentive Stock Options (i) increase the number of shares reserved for awards
(except as provided in the Incentive Stock Plan with respect to stock splits
or other similar changes), or (ii) materially change the group of employees
eligible for awards.
While any key employee of the Company selected by the Compensation Committee
is eligible to participate in the Incentive Stock Plan, it is anticipated that
awards will be made only to the class of certain executives and key managers
who are considered eligible to participate in the Company's Bonus Program
described above in ITEM 3. The Compensation Committee has not specified all
key employees who may receive awards under the Incentive Stock Plan in the
future. Information regarding the options, performance shares and restricted
stock granted to the Company's Chief Executive Officer and the four other most
highly compensated executive officers during 1996 is set forth in the various
compensation tables included under the caption "COMPENSATION OF EXECUTIVE
OFFICERS" below. During 1996, all current executive officers of the Company as
a group were granted: (i) options to purchase 175,700 shares of Common Stock,
(ii) 38,900 performance shares, and (iii) 5,000 restricted shares. During
1996, all employees of the Company, excluding executive officers of the
Company, were granted: (i) options to purchase 1,255,517 shares of Common
Stock, (ii) 139,720 performance shares, and (iii) no restricted shares. The
closing price of the Common Stock on the New York Stock Exchange on February
28, 1997 was $75.00 per share.
FEDERAL TAX TREATMENT
The following is a brief summary of the current Federal income tax rules
generally applicable to options and related stock appreciation rights.
Options granted under the Incentive Stock Plan may be either non-qualified
options or "incentive stock options" qualifying under Section 422A of the
Code.
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NON-QUALIFIED OPTIONS
An optionee is not subject to Federal income tax upon grant of a non-
qualified option. At the time of exercise, the optionee will realize
compensation income (subject to withholding) to the extent that the then fair
market value of the Common Stock exceeds the option price. The amount of such
income will constitute an addition to the optionee's tax basis in the optioned
stock. Sale of the shares will result in capital gain or loss (long-term or
short-term depending on the optionee's holding period). The Company is
entitled to a Federal tax deduction at the same time and to the same extent
that the optionee realizes compensation income.
INCENTIVE STOCK OPTIONS ("ISOS")
Options under the Incentive Stock Plan denominated as ISOs are intended to
constitute incentive stock options under Section 422A of the Code. An optionee
is not subject to Federal income tax upon either the grant or exercise of an
ISO. If the optionee holds the shares acquired upon exercise for at least one
year after issuance of the optioned shares and until at least two years after
grant of the option, then the difference between the amount realized on a
subsequent sale or other taxable disposition of the shares and the option
price will constitute long-term capital gain or loss. To obtain favorable ISO
tax treatment for an ISO granted prior to 1987, an optionee cannot exercise
any installment of an ISO unless and until all installments of all ISOs
previously granted to the optionee (regardless of their price) have either
been exercised, allowed to expire, or canceled through the exercise of a
related SAR. To obtain favorable tax treatment, an ISO must be exercised
within three months after termination of employment (other than by retirement,
disability, or death) with the Company or a 50% subsidiary. To obtain
favorable tax treatment, an ISO must be exercised within three months of
retirement or within one year of cessation of employment for disability (with
no limitation in the case of death), notwithstanding any longer exercise
period permitted under the terms of the Incentive Stock Plan. The Company will
not be entitled to a Federal tax deduction with respect to the grant or
exercise of the ISO.
If the optionee sells the shares acquired under an ISO before the requisite
holding period, he or she will be deemed to have made a "disqualifying
disposition" of the shares and will realize compensation income in the year of
disposition equal to the lesser of the fair market value of the shares at
exercise or the amount realized on their disposition over the option price of
the shares. However, if the disposition is by gift or by sale to a related
party, the compensation income must be measured by the value of the shares at
exercise over the option price. Any gain recognized upon a disqualifying
disposition in excess of the ordinary income portion will constitute either
short-term or long-term capital gain. In the event of a disqualifying
disposition, the Company will be entitled to a Federal tax deduction in the
amount of the compensation income realized by the optionee.
The option spread on the exercise of an ISO is an adjustment in computing
alternative minimum taxable income. No adjustment is required, however, if the
optionee made a disqualifying disposition of the shares in the same year as he
or she is taxed on the exercise.
STOCK APPRECIATION RIGHTS ("SARS")
SARs may be awarded to with respect to both ISOs and non-qualified options
granted under the Incentive Stock Plan. An optionee is not taxed upon the
grant of SARs. An optionee exercising SARs for cash will realize compensation
income (subject to withholding) in the amount of the cash received. The
Company is entitled to a tax deduction at the same time and to the same extent
that the optionee realizes compensation income.
GOLDEN PARACHUTE TAX PENALTIES
Options, SARs, performance shares or restricted stock which are granted,
accelerated or enhanced upon the occurrence of a takeover (i.e., an
Acceleration Event as defined in the Incentive Stock Plan) may give rise, in
whole or in part, to "excess parachute payments" within the meaning of Section
280G of the Code and, to such extent, will be nondeductible by the Company and
subject to a 20% excise tax to the awardee.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE THE
MATERIAL TERMS OF THE HARTFORD 1995 INCENTIVE STOCK PLAN.
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ITEM 5
APPROVAL OF CERTAIN MATERIAL TERMS OF THE 1997 HARTFORD LIFE, INC. INCENTIVE
STOCK PLAN
On February 10, 1997, Hartford Life, Inc. ("Hartford Life") filed a
registration statement on Form S-1 with the SEC to register the sale of shares
of its Class A common stock ("Class A Common Stock") in an initial public
offering ("IPO"). The Company recently incorporated Hartford Life as a wholly-
owned subsidiary of the Company in order to own and operate all of the life
insurance and other financial services operations currently operated by the
Company's life insurance subsidiaries. If the IPO is consummated, the Company
will own all of Hartford Life's issued and outstanding shares of Class B
common stock, representing approximately 80% of the economic interest in
Hartford Life and in excess of 90% of the combined voting power of Hartford
Life's Class A Common Stock and Class B common stock. The shares of Class A
Common Stock that are anticipated to be sold in the IPO will represent
approximately 20% of the economic interest in Hartford Life and less than 10%
of the combined voting power of both classes of Common Stock.
In connection with the IPO and as more fully described in Hartford Life's
registration statement on Form S-1, the Board of Directors of Hartford Life is
expected to adopt certain benefit plans for Hartford Life's employees,
including the 1997 Hartford Life, Inc. Incentive Stock Plan (the "1997
Incentive Stock Plan"). Both Hartford Life and the Company desire that, if the
IPO is consummated, the terms of the 1997 Incentive Stock Plan comply with the
requirements of Section 162(m) of the Code for the same reasons discussed in
ITEM 4 above with respect to the Company's Incentive Stock Plan. As Section
162(m) requires that the Company's shareholders approve the four material
terms of the 1997 Incentive Stock Plan related to Section 162(m), the
Compensation Committee of the Company has approved such material terms
described below and the Compensation and Personnel Committee of the Board of
Directors of Hartford Life is anticipated to approve such material terms.
Therefore, the Company's shareholders will be requested to approve such
material terms at the Annual Meeting.
Set forth below is a description of the four material terms of the 1997
Incentive Stock Plan related to Section 162(m) of the Code. These material
terms are the same as those described above in ITEM 4 regarding the Company's
Incentive Stock Plan.
1. CLASS OF EXECUTIVES. The five most highly compensated executive
officers of Hartford Life, its subsidiaries and affiliates for any given
year whose responsibilities and decisions, in the judgment of Hartford
Life's Compensation Committee, directly affect the performance of Hartford
Life and its subsidiaries.
2. PERFORMANCE CRITERIA. Awards (other than certain option grants
described below) may be based upon any one or more of the following
criteria, which shall be stated for the five most highly compensated
executive officers in terms of an objective criteria or standard as
required by Section 162(m), and which may be (a) determined solely by
reference to Hartford Life's performance, any subsidiary or affiliate of
Hartford Life or any division or unit of any of the foregoing, or (b) based
on comparative performance of any one or more of the following relative to
other entities: (i) earnings per share, (ii) return on equity, (iii) cash
flow, (iv) return on total capital, (v) return on assets, (vi) economic
value added, (vii) increase in surplus, (viii) reductions in operating
expenses, (ix) increases in operating margins, (x) earnings before income
taxes and depreciation, (xi) total shareholder return, (xii) return on
invested capital, (xiii) cost reductions and savings, (xiv) earnings before
interest, taxes, depreciation and amortization, (xv) pre-tax operating
income, (xvi) productivity improvements, or (xvii) an executive's
attainment of personal objectives with respect to any of the foregoing
criteria or other criteria such as growth and profitability, customer
satisfaction, leadership effectiveness, business development, negotiating
transactions and sales or developing long term business goals. Compensation
attributable to stock options granted at 100% of the fair market value of
the Class A Common Stock on the date of grant and subject to individual
maximums is automatically exempt under Section 162(m).
3. LIMIT ON AWARDS TO ANY PARTICIPANT IN ANY YEAR. Except for awards in
1997, a participant in the 1997 Incentive Stock Plan may be awarded stock
options and stock appreciation rights in any given year for no more than
the lesser of (a) 500,000 shares or (b) 10% of Hartford Life's total issued
and outstanding shares of Class A Common Stock and treasury shares reported
in Hartford Life's Form 10-K
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with respect to the previous year. With respect to such awards made in
1997, the same limits apply except that the 10% limit set forth in (b)
shall be applicable to Hartford Life's issued and outstanding shares of
Class A Common Stock immediately following the completion of the IPO
(excluding shares issued by virtue of the exercise of underwriters' over-
allotments). In addition, a participant may be awarded no more than 100,000
shares of Class A Common Stock in the form of performance shares in any
given year. In addition to the foregoing, Hartford Life may grant options
and other awards in respect of shares of Class A Common Stock in exchange
for options and other awards granted under the Company's Incentive Stock
Plan.
4. COMMITTEE CERTIFICATION OF PERFORMANCE GOAL ACHIEVEMENT. At or after
the end of each calendar year, Hartford Life's Compensation Committee is
required to certify in writing whether the pre-established performance
goals and objectives have been satisfied in such year with respect to
awards to the five most highly compensated executive officers that are
intended to comply with Section 162(m).
The other material terms of the 1997 Incentive Stock Plan are the same as
those described in ITEM 4 above regarding the Company's Incentive Stock
Plan except as follows:
(1) Awards under the 1997 Incentive Stock will be made in respect of
Hartford Life's shares of Class A Common Stock;
(2) Hartford Life will not be required to issue shares of its
authorized but unissued shares of Class A Common Stock in order to
satisfy awards if the issuance would result in the Company's ownership
being less than 80% of the combined voting power of both classes of
Hartford Life's Common Stock and 80% of the total value of the capital
stock of Hartford Life.
(3) The 1997 Incentive Stock Plan provides that a sale of the
Company's interest in Hartford Life will not be considered an
Acceleration Event. The 1997 Incentive Stock Plan also provides that if
an Acceleration Event (as defined above) occurs with respect to the
Company at a time when the Company owns more than 50% of the combined
voting power and value of the capital stock of Hartford Life, then an
Acceleration Event will be deemed to have occurred at such time with
respect to Hartford Life for purposes of the 1997 Incentive Stock Plan.
While any key employee of Hartford Life selected by Hartford Life's
Compensation Committee is eligible to participate in the 1997 Incentive Stock
Plan, it is anticipated that awards will be made only to the approximately 150
employees who are considered eligible to participate in the Company's Bonus
Program described above in ITEM 3. As of the date of this proxy statement, no
employees have been determined to receive awards under the 1997 Incentive
Stock Plan in the future. However, it is anticipated that after the IPO is
completed, certain employees of Hartford Life will exchange options and other
awards granted under the Company's Incentive Stock Plan for options and other
awards granted under Hartford Life's 1997 Incentive Stock Plan. The Federal
income tax consequences of awards under the 1997 Incentive Stock Plan are the
same as those described above under Item 4 with respect to the Company's
Incentive Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE
THE MATERIAL TERMS OF THE 1997 HARTFORD LIFE, INC. INCENTIVE STOCK PLAN.
ITEM 6
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
In accordance with the recommendation of the Audit Committee, the Board of
Directors has appointed Arthur Andersen LLP as independent auditors of the
Company for the fiscal year ending December 31, 1997. Although shareholders'
ratification of this appointment is not required, the Board requests
ratification by the shareholders. If the shareholders do not ratify the
appointment of Arthur Andersen LLP, the selection of other independent
auditors will be considered by the Audit Committee and the Board of Directors.
Arthur Andersen LLP has served as independent auditors of the former ITT
Corporation and most of its subsidiaries, including the Company, for many
years, and Arthur Andersen LLP's long-term knowledge of the Company has
enabled Arthur Andersen LLP to carry out its audits with effectiveness and
efficiency. Representatives of Arthur Andersen LLP 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 OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF THE
COMPANY.
15
<PAGE>
REPORT OF THE COMPENSATION AND PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
This report sets forth the executive compensation policies of the
Compensation and Personnel Committee (the "Committee") of the Company's Board
of Directors and discusses the 1996 compensation of the Company's Chief
Executive Officer and certain other executive officers. Following this report
is a Summary Compensation Table that sets forth all 1996 compensation earned
by, and awarded or paid to, Donald R. Frahm, who served as the Chief Executive
Officer during 1996, and the other Named Executives included in that table.
Other tables following this report provide information on stock option and
other long-term performance grants, and a performance graph compares the
cumulative total return on the Company's Common Stock to the cumulative total
returns of the S&P 500 Index and an index consisting of peer insurance
companies.
COMMITTEE ROLE IN OVERSEEING EXECUTIVE COMPENSATION POLICY
A primary role of the Committee is to determine and oversee the
administration of compensation for the Company's executives, including its
senior executive officers ("Senior Executives"). In this capacity, the
Committee is dedicated to ensuring that the Company's compensation policies
and practices are used effectively to support the achievement of the Company's
short-term and long-term business objectives.
There are several principles that guide the Committee in its decision-making
capacity. The Committee:
. Adheres to a pay-for-performance philosophy, ensuring that aggregate
compensation levels paid to Senior Executives reflect the extent to which
the Company's key operating goals are fulfilled.
. Reinforces the central importance of shareholder value creation by
relying heavily on compensation programs that deliver value to Senior
Executives only when shareholders realize corresponding gains.
. Encourages the acquisition of Company stock by Senior Executives with the
objective of strengthening the common interests of management and
shareholders, thereby promoting the maximization of shareholder value.
. Establishes Senior Executive compensation levels in relation to the pay
rates that are offered at companies with which the Company competes for
senior management talent.
. Maintains a total compensation perspective on Senior Executive pay in
judging the appropriateness of rewards for the Company's Senior
Executives.
DESCRIPTION OF EXECUTIVE COMPENSATION POLICIES
The Committee approved a new compensation program for the Company's Senior
Executives effective January 1, 1996. The new program is characterized by base
salary levels that are targeted somewhat below market rates, a heavy emphasis
on performance-based, variable compensation, which when combined with base
salary, provides above market total compensation for successful performance, a
strong connection between pay and the Company's stock price, and commitment to
promote enhanced share ownership among Senior Executives. Consistent with the
shareholder value orientation of this program, the Committee has authorized
guidelines for Senior Executive share ownership which should serve to further
align the interests of management and investors. The guidelines provide that
within a five-year period Senior Executives should attain an investment
position in the Company's stock that is equal to two or three times their base
salary, depending on the position of the Senior Executive. The Committee
believes that the new compensation program will effectively catalyze Senior
Executive activities in support of the Company's goal achievement and
appropriately recognize the contributions of every Senior Executive.
It is the Company's policy to target Senior Executive compensation levels in
relation to pay rates that are typical at organizations with which the Company
competes for senior management talent. For corporate Senior Executives, the
competitive market generally includes other leading insurance companies,
although general
16
<PAGE>
industry practices are also considered when reviewing pay for certain Senior
Executives whose functional responsibilities are not exclusively insurance
related. For line of business Senior Executives, pay is in line with practices
that are common at leading insurance carriers, as well as other financial
institutions that offer competing insurance products.
Consistent with the Company's pay-for-performance orientation, Senior
Executive salaries are targeted at levels that represent 90 percent of
prevailing market rates. Total compensation is designed to reach 120 percent
of market norms, but only when the Company's challenging performance goals are
fully achieved. Actual compensation levels may lead or lag these goals, but
the terms of the compensation program ensure such variances depend principally
on the Company's stock price appreciation and demonstrated operating success.
The principal elements of the new compensation program are: a base salary
tied to individual value added; an annual incentive opportunity dependent on
operating results and promoting Senior Executive share ownership; stock
options; and long-term compensation tied to earnings growth and stock price
appreciation. Each of these elements is discussed below.
1996 COMPENSATION
1996 BASE SALARY
The Company's compensation policy is to pay base salaries for Senior
Executives at levels that represent 90 percent of the median salaries paid by
organizations with which the Company competes for executive talent. Total
compensation, comprised of base and variable pay, can achieve 120 percent of
the market norm when performance goals are fully met. In assessing a Senior
Executive's salary level each year, the Committee's principal consideration is
the Senior Executive's performance on the job, including his or her
demonstrated contributions to the Company's goal achievement. In considering
salary actions, the Committee also reviews internal compensation equity and
the Senior Executive's level of responsibility, experience, and expertise.
On December 19, 1995, the Spin-Off occurred and the Company became a
separate public company. The Compensation and Personnel Committee of ITT
approved salary increases of $100,000 for each of Messrs. Frahm, Ayer and
Smith effective on December 19, 1995. These increases reflected competing pay
practices at other corporations and, with respect to Mr. Frahm, his
performance during 1995 and his leadership during the Spin-Off transition.
There were no other salary increases for Messrs. Frahm, Ayer and Smith during
1996. The Company's Compensation and Personnel Committee approved a salary
increase of $15,000 for Mr. Gareau, effective January 1, 1996, and a salary
increase of $30,000 for Mr. Zwiener, effective August 1, 1996. These increases
were driven by a combination of the aforementioned policies and
considerations. In addition, Messrs. Ayer and Smith have employment agreements
with the Company that provide for minimum base salaries of $525,000, as
described below under the heading "Employment Agreements."
1996 VARIABLE COMPENSATION
Variable compensation reinforces the Company's pay-for-performance
philosophy and is a key element to the overall compensation program. Variable
compensation includes annual and long-term incentive compensation
opportunities. Annual incentive compensation is designed to deliver about 25
percent of variable compensation, while long-term incentives are designed to
deliver the remaining 75 percent. All variable compensation programs also
facilitate Senior Executives' acquisition of the Company's stock thereby
promoting a coordination of interest between management and shareholders.
ANNUAL INCENTIVES
Each year the Committee reviews management's suggestions for performance
goals, the achievement of which will enhance the Company's value. The
Committee also reviews and approves with respect to each Senior Executive,
annual incentive payment levels payable in the event performance goals are
fully achieved. Actual
17
<PAGE>
annual incentive payments vary with performance relative to such goals. Better
performance generates larger awards; lesser results yield smaller payments.
Ordinarily, corporate or staff Senior Executives earn annual incentives on
the basis of corporate and individual performance. Incentives for line of
business Senior Executives may relate to corporate, line of business, and
individual performance. On occasion, the Committee may approve management's
recommendation for customized annual incentive arrangements where they are
appropriate to address competitive market requirements or business needs.
For 1996, the amounts of annual incentive awards were based on financial
performance for the year compared to annual performance goals established by
the Committee at the beginning of the year. For 1996, such performance goals
were net income compared to budget, cash flow compared to budget, and return
on equity compared to budget for Messrs. Frahm, Ayer, Zwiener and Gareau.
These measures were weighted 65%, 10% and 25%, respectively. The performance
goals for Mr. Smith were net income compared to budget and return on equity
compared to budget with respect to Hartford Life.
The Committee awarded an annual incentive of $500,000, $300,000, $310,000,
$250,000 and $200,000 for Messrs. Frahm, Ayer, Smith, Zwiener and Gareau,
respectively.
Consistent with the Company's interest in promoting a strong alignment
between management and global shareholder interests, Senior Executives may
elect to forego receiving up to half their annual incentives in exchange for
the right to receive shares of Common Stock of the Company ("Stock Units").
Receipt of actual shares of stock is deferred during a three-year restriction
period applicable to the Stock Units. Senior Executives who elect to convert a
portion of their annual incentive payments to Stock Units are rewarded with
additional Stock Units equal to 10 percent of the amount converted, and actual
shares relating to these incremental Stock Units also will be deferred as to
receipt and restricted for a period of three years.
STOCK OPTIONS
For 1996, the Committee expanded eligibility to all executives for grants of
stock options under the terms of the Company's Incentive Stock Plan. Stock
options provide executives with the opportunity to acquire an equity interest
in the Company and to participate in the creation of shareholder value as
reflected in growth in the price of the Company's Common Stock. The option
exercise price equals 100 percent of the fair market value of the Common Stock
on the date of option grant, thereby ensuring that plan participants will
derive benefits only as shareholders realize corresponding gains. To ensure a
long-term perspective, options have a maximum ten-year term.
The Committee believes that the practice of granting stock options annually
reinforces the Company's policy of encouraging stock ownership by executives
in support of building shareholder value. Furthermore, options provide value
to Senior Executives only when shareholders realize positive returns on their
investment in the Company. In this way, stock option grants reward Senior
Executives only in conjunction with value creation for shareholders.
On February 14, 1996, options to purchase an aggregate of 189,300 shares of
Common Stock were granted under the Incentive Stock Plan to Messrs. Frahm,
Ayer, Smith, Zwiener and Gareau at an exercise price of $52 per share (the
closing price of a share of the Common Stock on the New York Stock Exchange on
the February 14, 1996 grant date).
To further align interests of Senior Executives and shareholders, the
options granted to Messrs. Frahm, Ayer, Smith and Zwiener become exercisable
at the earlier of the point at which the Common Stock trades at a price equal
to or exceeding 125 percent of the option exercise price for a period of ten
consecutive trading days, or seven years from the date of option grant.
Specifically, the options became exercisable on December 5, 1996, when the
closing price of the Common Stock remained at or above $65 per share (being
125% of the $52 grant
18
<PAGE>
price) for ten consecutive trading days. Options for other executives become
exercisable at the cumulative rate of one-third per year for the first three
years. Further information regarding option grants for the named Senior
Executives during 1996 is included in the Option tables following this report.
1996 LONG-TERM PERFORMANCE PROGRAM
Beginning in 1996, Senior Executives and other executives were given the
opportunity to earn shares of Common Stock contingent on the Company achieving
certain performance objectives over a three-year period. Under the terms of
these contingent awards made in 1996, there are two equally weighted
performance objectives measured over the 1996-1998 period: (i) cumulative core
earnings per share and (ii) total shareholder return (stock price appreciation
and dividends reinvested) relative to the returns generated by an index of the
Company's competitors. Target level core earnings per share coupled with a
total shareholder return equal to the average of the peer community will
result in the awarding of a target number of shares. Better performance (up to
a maximum of 150 percent) will yield a larger payout; poorer performance (to a
minimum of 75 percent) will mean proportionally smaller payments. If the
minimum threshold is not achieved, no shares will ultimately be awarded.
During 1996, Messrs Frahm, Ayer, Smith, Zwiener and Gareau were granted
contingent performance share awards of 14,400 shares, 8,250 shares, 8,250
shares, 6,100 shares and 5,000 shares, respectively. Additional information
regarding these awards is included below under "1996 Long-Term Incentive Plan
Awards."
In order to provide an additional long-term incentive to Mr. Zwiener, who
joined the Company in 1995, the Committee granted 5,000 shares of restricted
Common Stock to Mr. Zwiener in January 1996. The restricted stock may not be
sold or otherwise transferred until five years after the grant date.
Additional information regarding this grant is set forth in the Summary
Compensation Table.
COMPLIANCE WITH SECTION 162(M)
Section 162(m) of the Code generally denies a publicly-traded company a
Federal income tax deduction for compensation in excess of $1 million paid to
certain of its executive officers unless the amount of such excess is payable
based solely upon the attainment of objective performance criteria. The
Committee believes that tax deductibility of compensation is an important
factor, but not the sole factor, to be considered in setting executive
compensation policy. Accordingly, the Committee generally intends to take such
reasonable steps as are required to avoid the loss of a tax deduction due to
Section 162(m), but reserves the right to pay amounts which are not deductible
in appropriate circumstances.
SUMMARY
The Committee is responsible for reviewing, monitoring, and approving all
compensation decisions affecting Company Senior Executives. The Committee
expects that all compensation paid to Senior Executives will be consistent
with the Company's interest in providing market competitive compensation
opportunities, within the context of a pay-for-performance environment, and in
a manner that is supportive of the Company's business mission. The Committee
will continue to actively monitor the effectiveness of the Company's Senior
Executive compensation plans and assess the appropriateness of Senior
Executive pay levels to assure prudent use of Company resources.
THE COMPENSATION AND PERSONNEL COMMITTEE:
Gordon I. Ulmer, Chairman
Bette B. Anderson
Robert A. Burnett
Arthur A. Hartman
19
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides information regarding the cash and other
compensation of those persons who, during the past year, (i) served as the
Company's Chief Executive Officer and (ii) were the four other most highly
compensated executive officers (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS PAYOUTS
--------------------------- -----------
NAME AND ANNUAL COMPENSATION RESTRICTED SECURITIES ALL OTHER
PRINCIPAL ------------------------ STOCK AWARDS UNDERLYING LTIP COMPENSATION
POSITION YEAR SALARY ($) BONUS($) ($) OPTIONS(#)(4) PAYOUTS (5) ($)(6)
--------- ---- ---------- -------- ------------ ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald R. Frahm......... 1996 700,000 500,000 -- 64,800 -- 38,950
Chairman, President and 1995 603,750 263,300 -- 93,109 720,000 54,174
Chief Executive Officer 1994 565,833 270,000 -- 93,109 -- 21,585
(1)
Ramani Ayer............. 1996 525,000 300,000 -- 37,200 -- 21,956
Executive Vice 1995 428,750 204,800 -- 62,911 375,000 42,214
President; President 1994 333,333 235,000 -- 62,911 -- 13,448
and Chief Operating
Officer--Hartford Fire
Insurance Company (1)
Lowndes A. Smith........ 1996 525,000 310,000 -- 37,200 -- 21,260
Executive Vice 1995 428,750 229,800 -- 62,911 300,000 38,693
President; President 1994 333,333 200,000 -- 62,911 -- 13,448
and Chief Operating
Officer--Hartford Life
Insurance Co. (1)
David K. Zwiener........ 1996 332,500 250,000 241,250(3) 27,600 -- 13,895
Executive Vice 1995 133,333 148,400 -- 42,780 -- 14,051
President and Chief 1994 -- -- -- -- -- --
Financial Officer (2)
Joseph H. Gareau........ 1996 310,800 200,000 -- 22,500 -- 14,648
Executive Vice 1995 300,000 168,200 -- 37,747 150,000 39,268
President and Chief 1994 264,583 140,000 -- 37,747 -- 11,041
Investment Officer
</TABLE>
- -------
(1) Mr. Frahm served as Chairman, President and Chief Executive Officer during
1996, but retired effective January 31, 1997. Effective February 1, 1997,
Mr. Ayer succeeded Mr. Frahm as Chairman, President and Chief Executive
Officer, and Mr. Smith became Vice-Chairman of the Company.
(2) Mr. Zwiener joined the Company in August 1995; therefore, the amounts
above for 1995 relate only to that portion of 1995 during which he served.
(3) Represents the market value of 5,000 shares of restricted Common Stock
granted to Mr. Zwiener on January 10, 1996 based on the closing price of
the Common Stock on the NYSE of $ 48.25 per share on that date. The market
value of such shares was $337,500 on December 31, 1996 based on the NYSE
closing price of $67.50 per share on that date. Dividends are paid on the
shares of restricted Common Stock.
(4) Each of the Named Executives had been granted options to purchase shares
of ITT common stock. After the Spin-Off, each Named Executive elected to
substitute his ITT options for options to purchase shares of the Company's
Common Stock. The options listed in the table above for 1994 and 1995 are
the substituted options.
(5) The amounts in this column are payments made by the Company in 1996
pursuant to an ITT long-term performance plan. Under this plan, contingent
cash awards were made to certain executive officers of ITT and its
subsidiaries, including the Named Executives. The awards were contingent
upon ITT achieving certain levels of return on equity for the three year
period from 1992 to 1995. The plan was amended in 1995 to permit increased
or decreased payments based upon events that may have had a material
impact on ITT's performance.
(6) Amounts shown in this column include company contributions under the
Company's Investment and Savings Plan and the Excess Savings Plan, which
are defined contribution plans. Under these plans, the Company makes a
matching contribution in an amount equal to 50% of an employee's
contribution, such matching contribution not to exceed three percent (3%)
of such employee's salary. The Company also makes a non-matching
contribution equal to one-half of one percent ( 1/2 of 1%) of an
employee's salary. Company contributions under these plans for 1996 were
$24,500, $18,375, $18,375, $11,988 and $11,067 for Messrs. Frahm, Ayer,
Smith, Zwiener and Gareau, respectively. In addition to ordinary company
contributions in 1995, in connection with the Spin-Off, each participant
in the ITT Investment and Savings Plan, including each Named Executive,
received a one-time distribution to his or her account. This distribution
resulted from the termination of the Employee Stock Ownership portion of
the plan, the shares of preferred stock of which were used to repay a loan
and the excess distributed to the accounts of participants. The amount for
Mr. Smith includes $2,885 resulting from his sale back to the Company of
one week of vacation time. The Company provides certain group term life
insurance coverage to employees, and employees may purchase additional
amounts of coverage. For Federal tax purposes, income will be imputed to
an employee who purchases more than $50,000 of coverage to the extent that
the value of the coverage is greater than the premium paid. For 1996,
$14,450, $3,581, $1,907 and $3,581 of income was imputed to Messrs. Frahm,
Ayer, Zwiener and Gareau, and such amounts are included in this column.
20
<PAGE>
STOCK OPTIONS
Under the Incentive Stock Plan, the Compensation Committee of the Board of
Directors selects key employees to receive various awards, including stock
options, stock appreciation rights, shares of restricted Common Stock and
performance shares. The table below provides information regarding grants of
stock options to the Named Executives during 1996.
OPTION GRANTS IN FISCAL YEAR 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION
OPTIONS OPTIONS GRANTED FOR OPTION TERM($)(4)
GRANTED(1) TO EMPLOYEES IN EXERCISE PRICE EXPIRATION ----------------------
NAME (#) 1996(2) ($/SHARE)(3) DATE 5% 10%
---- ---------- --------------- -------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Frahm......... 64,800 4.53 52.00 2/16/06 2,118,960 5,369,976
Ramani Ayer............. 37,200 2.60 52.00 2/16/06 1,216,440 3,082,764
Lowndes A. Smith........ 37,200 2.60 52.00 2/16/06 1,216,440 3,082,764
David K. Zwiener........ 27,600 1.93 52.00 2/16/06 902,520 2,287,212
Joseph H. Gareau........ 22,500 1.57 52.00 2/16/06 735,750 1,864,575
</TABLE>
- --------
(1) The options granted to Messrs. Frahm, Ayer, Smith and Zwiener on February
14, 1996 became fully exercisable on December 5, 1996, when the closing
price of the Common Stock on the NYSE was equal to or greater than $65.00
for ten consecutive trading days. Mr. Gareau's option is exercisable in
three equal annual installments commencing on the first anniversary date
of the grant. The exercisability, payment or vesting of options and other
awards shown in the table may be accelerated upon the occurrence of a
change in control (as defined in the Incentive Stock Plan) of the Company.
(2) Percentages indicated are based on options to purchase a total of
1,431,217 shares of Common Stock granted to 764 employees of the Company
during 1996.
(3) Options were granted at exercise prices that were 100% of the fair market
value of the Common Stock on the date of grant.
(4) At the end of the term of the options granted on February 14, 1996, the
projected price of a share of the Common Stock would be $84.70 and $134.87
at assumed annual appreciation rates of 5% and 10%, respectively.
21
<PAGE>
1996 OPTION EXERCISES AND 1996 YEAR-END OPTION VALUES
The following table provides information on stock options that were
exercised, if any, and the value of unexercised stock options held at December
31, 1996 by the Named Executives:
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
-------------------------------------------------------------------------
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS HELD
ON YEAR-END (#) AT FISCAL YEAR-END ($)(1)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Frahm......... -- -- 319,788 0 8,784,272 0
Ramani Ayer............. -- -- 235,040 0 6,794,936 0
Lowndes A. Smith........ -- -- 241,216 0 7,201,309 0
David K. Zwiener........ -- -- 92,388 0 2,230,690 0
Joseph H. Gareau........ -- -- 91,754 60,248 3,406,350 1,389,088
</TABLE>
- --------
(1) Values are calculated for options "in-the-money" by subtracting the
exercise price per share of the options from the per share NYSE
consolidated trading closing price of $67.50 of the Common Stock on
December 31, 1996.
1996 LONG-TERM INCENTIVE PLAN AWARDS
On February 14, 1996, the Compensation Committee of the Board made
contingent awards of performance shares to certain key employees of the
Company, including the Named Executives. The awards are contingent upon the
Company achieving certain performance objectives described below. To the
extent that the performance objectives are achieved, cash and shares of Common
Stock will be granted to each key employee pursuant to the performance share
provisions of the Incentive Stock Plan.
Under the terms of the awards, there are two equally weighted performance
objectives measured over the 1996-1998 three-year performance period: core
earnings per share of the Company ("Core Earnings") and total shareholder
return ("TSR"). Core Earnings is defined as the Company's net income minus:
(i) net realized capital gains or losses; (ii) income or losses due to changes
in methods of accounting; (iii) the amount of losses from individual
catastrophes in excess of 1% of worldwide property-casualty earned premium for
the year; (iv) the amount of any individual non-catastrophe loss associated
with any non-recurring charge that exceeds $100 million; and (v) the income or
loss associated with allocations resulting from the liability sharing
agreement entered into in connection with the Spin-Off. TSR is measured by the
difference between the price of the Common Stock at the beginning of the 1996-
1998 performance period and the price at the end of the performance period
(assuming the reinvestment of dividends paid), compared with the TSR of the
stock of a group of peer insurance companies.
The Compensation Committee established a target Core Earnings and a TSR to
be achieved in connection with the awards. If the target is achieved, a key
employee will receive 100% of the performance shares awarded (payable one-
third in cash and two-thirds in Common Stock). The Compensation Committee also
established a threshold (minimum) Core Earnings and TSR to be achieved. If the
threshold amounts are not achieved, the key employees will not receive any of
the performance shares awarded. If the Core Earnings and TSR achieved exceeds
the thresholds but falls below the targets, the key employees will receive
awards adjusted downward by interpolation to reflect falling short of the
targets. If the targets are exceeded, the key employees will receive awards
adjusted upward by interpolation subject to a cap established by the
Compensation Committee.
22
<PAGE>
The following table provides information on these long-term performance
share awards made to the Named Executives during 1996:
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
AWARDS OF PERFORMANCE UNDER NON-STOCK
SHARES IN LAST FISCAL YEAR PRICE-BASED PLANS (#)(1)
----------------------------- ------------------------------------
PERIOD UNTIL
NAME # OF SHARES PAYOUT (1) THRESHOLD (#) TARGET (#) MAXIMUM (#)
---- ------------ ------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Donald R. Frahm......... 14,400 3 years 7,200 14,400 28,800
Ramani Ayer............. 8,250 3 years 4,125 8,250 16,500
Lowndes A. Smith........ 8,250 3 years 4,125 8,250 16,500
David K. Zwiener........ 6,100 3 years 3,050 6,100 12,200
Joseph H. Gareau........ 5,000 3 years 2,500 5,000 10,000
</TABLE>
- --------
(1) Each of the Named Executives was granted the number of performance shares
relating to the Common Stock set forth above. The grants are contingent
upon the Company achieving two general performance objectives over a
three-year period ending on December 31, 1998. The performance objectives
and the extent to which a Named Executive may be entitled to a future
payout are described above. The threshold, target and maximum number of
shares that may be awarded as set forth in the table above are based on
the Company equally achieving 75%, 100% and 150% or more, respectively, of
each of the two Core Earnings and TSR performance objectives described
above.
RETIREMENT PROGRAM
The Hartford Fire Insurance Company Retirement Plan covers substantially all
eligible U.S. salaried employees of the Company and its subsidiaries,
including senior executive officers and other executives. An employee's annual
pension will equal two percent of his or her average final compensation for
each of the first thirty years of benefit service, reduced by one and two-
thirds percent of the employee's primary Social Security benefit for each year
of benefit service to a maximum of thirty years; provided that no more than
one-half of an employee's primary Social Security benefit is used for such
reduction. An employee's average final compensation is defined under the plan
as the total of (i) an employee's average annual base salary for the five
calendar years of the last 120 consecutive calendar months of eligibility
service affording the highest such average plus (ii) a member's average annual
compensation not including base salary for the five calendar years of the
member's last 120 consecutive calendar months of eligibility service affording
the highest such average. The plan also provides for undiscounted early
retirement pensions for employees who retire at or after age sixty following
completion of fifteen years of eligibility service. An employee will be vested
in benefits accrued under the plan upon completion of five years of
eligibility service.
Applicable Federal law limits the amount of benefits that can be paid and
compensation which may be recognized under a tax-qualified retirement plan.
Therefore, the Company has non-qualified unfunded retirement plans (the
"Hartford Excess Benefit Plans") for payment of those benefits at retirement
that cannot be paid from the qualified retirement plan. The practical effect
of the Hartford Excess Benefit Plans is to continue calculation of retirement
benefits to all employees on a uniform basis. The Company also maintains an
excess plan trust under which excess benefits under the Hartford Excess
Benefit Plans for certain officers of the Company are funded. Any such
employee may indicate a preference, subject to certain conditions, to receive
any excess benefit in the form of a single discounted lump sum payment. Any
"excess" benefit accrued to any such employee will be immediately payable in
the form of a single discounted lump sum payment upon the occurrence of a
change in corporate control (as defined in the Hartford Excess Benefit Plans).
23
<PAGE>
Based on various assumptions as to remuneration and years of service, before
Social Security reductions, the following table illustrates the estimated
annual benefits payable from the retirement plan at retirement at age 65 that
are paid for by the Company.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
FINAL ------------------------------------------------------------------------------------
COMPENSATION 15 20 25 30
- ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 50,000 $ 15,000 $ 20,000 $ 25,000 $ 30,000
100,000 30,000 40,000 50,000 60,000
300,000 90,000 120,000 150,000 180,000
500,000 150,000 200,000 250,000 300,000
750,000 225,000 300,000 375,000 450,000
1,000,000 300,000 400,000 500,000 600,000
1,500,000 450,000 600,000 750,000 900,000
</TABLE>
The amounts shown under "Salary" and "Bonus" opposite the names of the Named
Executives in the Summary Compensation Table comprise the compensation that is
used for purposes of determining "average final compensation" under the
retirement plan. The years of service with the Company of each of the Named
Executives for eligibility and benefits purposes as of December 31, 1996, were
as follows: Donald R. Frahm, 27.42 years; Ramani Ayer, 23.50 years; Lowndes A.
Smith, 28.75 years; David K. Zwiener, 3.75 years; and Joseph H. Gareau, 23.42
years. Mr. Frahm's years of service include five years that were granted to
him by the Company.
EMPLOYMENT AGREEMENTS
Ramani Ayer and Lowndes A. Smith have employment agreements with the Company
pursuant to which Mr. Ayer is employed as President and Chief Operating
Officer of Hartford Fire Insurance Company and Mr. Smith is employed as
President and Chief Operating Officer of Hartford Life Insurance Company. The
term of each agreement began on December 19, 1995, the effective date of the
Spin-Off, and continues for four years, unless terminated earlier in
accordance with the agreements. The agreements provide, among other things:
(i) base salaries for Messrs. Ayer and Smith of $525,000 per year which may be
increased from time to time, and their participation in the Company's benefit
plans and possible awards under executive incentive bonus and other programs;
(ii) certain payments and benefits if the Company terminates their employment
without "cause" (as defined in the agreements), such that the executive would
receive (a) salary, paid on a regular payroll cycle basis, equivalent in total
to the amount of salary remaining unpaid from the date of termination until
the term of the agreement ends, or at the Company's option, a lump sum payment
if the executive accepts other full-time employment, or (b) a termination
allowance under any severance or termination plan of the Company, if the
amount of such allowance that the executive would be entitled to receive is
greater than the salary remaining under the agreement; and (iii) as long as
salary payments are made after termination without cause, the executives will
be eligible to participate in certain, but not all, of the Company's benefit
plans, such as the employee health, dental and life insurance plans, but if
the executives receive no or reduced benefits because they cannot be treated
as employees under such plans, the Company may either make available other
equivalent benefit programs or pay the executives the amounts they would have
received under the plans had they been eligible to participate. It is
anticipated that these employment agreements will be amended to reflect
Messrs, Ayer's and Smith's promotions that occurred in February 1997.
24
<PAGE>
PERFORMANCE OF THE COMPANY'S COMMON STOCK
The graph below compares the yearly percentage change in cumulative
shareholder return on the Common Stock for the one-year period of December 31,
1995 through December 31, 1996 with (i) the cumulative total return of the
Standard & Poors' 500 Index(R) and (ii) the Standard & Poors Insurance
Composite Index(R). The figures presented below assume the reinvestment of all
dividends into shares of Common Stock on any given dividend payment date and
that $100 was invested in Common Stock and in the Standard & Poors 500 Index
and in the Standard & Poors Insurance Composite Index. Common stock
performance information is provided only for the past year as the Company
became a separate public company following the Spin-Off and regular-way
trading of the Common Stock on the NYSE did not begin until December 20, 1995.
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1995
<TABLE>
<CAPTION>
[LINE GRAPH APPEARS HERE]
- -----------------------------------------------------------------------------
Dec-95 Dec-96
- -----------------------------------------------------------------------------
<S> <C> <C>
ITT Hartford Group $100 $144
- -----------------------------------------------------------------------------
S&P 500(R) $100 $123
- -----------------------------------------------------------------------------
S&P Insurance Composite Index $100 $123
- -----------------------------------------------------------------------------
</TABLE>
25
<PAGE>
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN SHAREHOLDERS
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows as of February 28, 1997 the number of shares of
Common Stock beneficially owned by each director and nominee for election as a
director, by each of the Named Executives, and by the directors and executive
officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NAME OF NATURE OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP (1)(2)
- ----------------- --------------------
<S> <C>
Bette B. Anderson.......................................................... 1,946
Rand V. Araskog............................................................ 375,981
Ramani Ayer................................................................ 265,298
Robert A. Burnett.......................................................... 3,092
Donald R. Frahm............................................................ 379,362
Joseph H. Gareau........................................................... 103,097
Arthur A. Hartman.......................................................... 1,063
Paul G. Kirk, Jr........................................................... 1,873
Lowndes A. Smith........................................................... 263,523
H. Patrick Swygert......................................................... 606
DeRoy C. Thomas............................................................ 26,624
Gordon I. Ulmer............................................................ 2,863
David K. Zwiener........................................................... 113,579
All directors and executive officers as a group (18 persons)............... 1,694,628
</TABLE>
- --------
(1) All shares are owned directly except as otherwise indicated below.
Pursuant to regulations of the SEC, shares (i) that may be acquired by
directors and executive officers upon exercise of stock options
exercisable within sixty days after February 28, 1997, (ii) allocated to
the accounts of certain directors and executive officers under the
Company's Investment and Savings Plan based on a valuation of plan
accounts as of December 31, 1996, (iii) acquired by directors and
executive officers under the Company's Dividend Reinvestment and Cash
Payment Plan through February 28, 1997, (iv) owned by a director's or
executive officer's spouse or minor child, or (v) that have been granted
under the Company's Incentive Stock Plan or the Non-Employee Directors
Restricted Stock Plan and are restricted, but as to which the directors or
executive officers have the right to vote, are deemed to be beneficially
owned by such directors and executive officers as of such date and are
included in the number of shares listed in the table above.
Of the number of shares shown above, the following represent shares that
may be acquired upon exercise of stock options that are exercisable within
sixty days after February 28, 1997 by: Mr. Ayer, 235,040 shares; Mr. Frahm,
319,788 shares; Mr. Gareau, 99,254 shares; Mr. Smith, 241,216 shares; Mr.
Zwiener, 92,388 shares; and all present directors and executive officers as
a group, 1,118,605 shares.
(2) The shares of Common Stock beneficially owned by each person named above
do not exceed one percent of the issued and outstanding shares of Common
Stock. The shares beneficially owned by the group of directors and
executive officers represent approximately 1.4% of the issued and
outstanding shares.
26
<PAGE>
CERTAIN SHAREHOLDERS
The following table shows those persons known to the Company as of February
28, 1997 to be the beneficial owners of more than five percent of the
Company's Common Stock. In furnishing the information below, the Company has
relied on information filed by the beneficial owners with the SEC, and in some
cases, information provided by such owners.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OF BENEFICIAL PERCENT
OWNER OWNERSHIP OF CLASS
- ---------------- ----------------- --------
<S> <C> <C>
FMR Corp. .......................................................... 8,675,306 (1) 7.4%
82 Devsonshire Street Boston, MA 02109
</TABLE>
- --------
(1) FMR Corp. ("FMR"), Edward C. Johnson, 3d and Abigail P. Johnson filed an
amended Schedule 13G with the SEC to report that they were the beneficial
owners of 8,675,306 shares of Common Stock as of December 31, 1996, and
had sole power to dispose of 8,672,306 of such shares. In addition, FMR
had sole voting power for 388,847 shares and Mr. Johnson had sole power to
vote 400 shares, and each of FMR and Mr. Johnson had shared voting power
and shared dispositive power for 3,000 of such shares. FMR is the parent
to various subsidiaries, including Fidelity Management & Research Company,
that serve as investment advisers to various investment companies and to a
unit trust that hold shares of Common Stock, and to entities that serve as
investment managers of institutional accounts. Members of the Edward C.
Johnson, 3d family and trusts established for their benefit own
approximately 49% of the voting stock of FMR, Mr. Johnson is Chairman of
FMR and Abigail P. Johnson is a director of FMR.
REQUIRED VOTES OF SHAREHOLDERS
The presence in person or by proxy of shareholders entitled to cast a
majority of shares of Common Stock will constitute a quorum for the
transaction of business at the Annual Meeting. The nominees for election as
directors receiving the greatest number of votes, up to the number of
directors to be elected, shall be elected directors. Approval of the amendment
of the Company's certificate of incorporation to change the Company's name
will require the affirmative vote of the holders of a majority of all issued
and outstanding shares of Common Stock. Approval of each other item submitted
to a vote of the shareholders will require the affirmative vote of the holders
of a majority of shares of Common Stock present in person or represented by
proxy. Abstentions and broker non-votes will be included in the computation of
the number of shares that are present for purposes of determining the presence
of a quorum but will not be counted as votes cast for or against items
submitted for a vote of shareholders. Accordingly, abstentions and broker non-
votes will have the same effect as a vote against such items.
One or more persons will be appointed to act as the inspector of election at
the Annual Meeting. The bylaws of the Company provide that shareholders shall
be accorded privacy in voting and that the integrity of the balloting process
shall be assured. Among other duties, the inspector of election will certify
as to compliance with such confidentiality provisions.
PROPOSALS OF SHAREHOLDERS
Proposals submitted by shareholders for inclusion in next year's Proxy
Statement must be received by the Company no later than the close of business
on December 5, 1997. Address your proposals to Michael O'Halloran, Vice
President and Secretary, The Hartford, 690 Asylum Avenue, Hartford, CT 06115.
Proposals must comply with all of the requirements of SEC Rule 14a-8 under the
Securities Exchange Act of 1934 and certain requirements set forth in the
Company's bylaws. A copy of the bylaws may be obtained from the Secretary of
the Company.
27
<PAGE>
OTHER INFORMATION
As of the date of this Proxy Statement, the Board of Directors has no
knowledge of any business that will be presented for consideration at the
Annual Meeting other than that described above. As to any other business, if
any, that may properly come before the Annual Meeting, the proxies will vote
in accordance with their judgment.
Present and former officers, directors and other employees of the Company
may solicit proxies by telephone, telegram or mail, or by meetings with
shareholders or their representatives. The Company will reimburse brokers,
banks or other custodians, nominees and fiduciaries for their charges and
expenses in forwarding proxy material to beneficial owners. The Company has
engaged Georgeson & Company, Inc. to solicit proxies for the Annual Meeting
for a fee of $12,500, plus the payment of its out-of-pocket expenses. All
expenses of solicitation of proxies will be borne by the Company.
A copy of the Company's Annual Report to Shareholders for 1996 is either
being sent with this Proxy Statement or was sent previously. If, upon
receiving this Proxy Statement, you have not received the Annual Report to
Shareholders, please write to the Corporate Secretary at the address below to
request a copy. IN ADDITION, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-
K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AS FILED
WITH THE SEC, IS AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO MICHAEL
O'HALLORAN, VICE PRESIDENT AND SECRETARY, THE HARTFORD, 690 ASYLUM AVENUE,
HARTFORD, CT 06115.
By Order of the Board of Directors.
Michael O'Halloran
Vice President and Secretary
Dated: March 25, 1997
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE SELF-ADDRESSED ENVELOPE WHETHER OR NOT THEY EXPECT TO
ATTEND THE MEETING. A SHAREHOLDER MAY NEVERTHELESS VOTE IN PERSON IF HE OR SHE
DOES ATTEND.
28
<PAGE>
PROXY
ITT HARTFORD GROUP, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints J. Richard Garrett, Michael O'Halloran and
Michael S. Wilder, and each of them, as proxies of the undersigned, each
with power to appoint his substitute, and hereby authorizes each or
any of them to vote, as designated on the reverse side of this proxy, all
shares of common stock of ITT Hartford Group, Inc. (the "Company"),
including all shares held in the Company's Dividend Reinvestment and Cash
Payment Plan, the Company's Investment and Savings Plan and in the
Company's Employee Stock Purchase Plan, which the undersigned is entitled
to vote if personally present at the Annual Meeting of Shareholders of the
Company to be held at 9:30 A.M. on May 2, 1997 at the Sheraton San Diego
Hotel & Marina (West Tower), 1590 Harbor Island Drive, San Diego,
California, and at any adjournments or postponements thereof, and confers
discretionary authority upon each such proxy to vote upon any other matter
properly brought before the meeting.
Please specify your choices by marking the appropriate boxes on the reverse side
of this Proxy. The shares represented by this Proxy will be voted as you
designate on the reverse side. If no designation is made, the shares will be
voted for the election as directors of the nominees named in Item 1 and for
Items 2, 3, 4, 5 and 6. The shares of common stock represented by this Proxy
cannot be voted unless you sign and return this Proxy.
SEE REVERSE SIDE
<PAGE>
ITEM 1. Election of Directors
FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS [ ]
listed below [ ] for all nominees listed below [ ]
Director Nominees: Bette B. Anderson, Rand V. Araskog, Ramani Ayer, Robert A.
Burnett, Donald R. Frahm, Arthur A. Hartman, Paul G. Kirk, Jr., Lowndes A.
Smith, H. Patrick Swygert, DeRoy C. Thomas, Gordon I. Ulmer and David K.
Zweiner.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "EXCEPTIONS" box and write that nominee's name in the space provided below.)
*EXCEPTIONS:______________________________________________________________
ITEM 2. Approval of a change of the Company's name.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
ITEM 3. Approval of certain material terms of the Company's annual executive
bonus program.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
ITEM 4. Approval of certain material terms of the Hartford 1995 Incentive
Stock Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
ITEM 5. Approval of certain material terms of the 1997 Hartford Life Inc.
Incentive Stock Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
ITEM 6. Ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MARK THIS BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING [ ]
CHANGE OF ADDRESS AND COMMENTS MARK HERE [ ]
- -------------------------------------- ---------------------,1997
Signature Date
Note: Please add your title if you are signing for a corporation or other
business entry, or as attorney, administrator, executor, guardian, trustee or
in any other representative capacity.
Votes MUST be indicated (X) in black or blue ink. [ ]
