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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(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:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[_] 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:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
1999 Notice of Annual Meeting and Proxy Statement
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March 31, 1999
Dear Shareholder:
I am pleased to invite you to attend the 1999 annual meeting of
shareholders of The Hartford Financial Services Group, Inc. to
be held at 9:00 a.m. on Thursday, May 20, 1999 at The Wadsworth
Atheneum in Hartford, Connecticut. We hope that you will
participate in the annual meeting either by attending and
voting in person or by voting by proxy as promptly as possible.
Your vote is important.
The accompanying notice of annual meeting and proxy statement
provide information about the matters to be acted upon by The
Hartford's shareholders. The proxy statement also contains
information about the role and responsibilities of the Board of
Directors and the committees of the Board and provides
important information about each nominee for election as a
director.
Sincerely yours,
/s/ Ramani Ayer
Ramani Ayer
Chairman, President and
Chief Executive Officer
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders (the "Annual Meeting") of The
Hartford Financial Services Group, Inc. (the "Company") will be held on
Thursday, May 20, 1999 at 9:00 a.m. at The Wadsworth Atheneum, 600 Main
Street, Hartford, Connecticut, for the following purposes:
1. to elect a Board of Directors;
2. to ratify the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31,
1999; and
3. 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 22, 1999 are
entitled to notice of, and to vote at, the Annual Meeting.
Amy Gallent
/s/ AMY GALLENT
Vice President and Corporate Secretary
March 31, 1999
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
690 Asylum Avenue
Hartford, CT 06115
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PROXY STATEMENT
Annual Meeting of Shareholders
May 20, 1999
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GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of The
Hartford Financial Services Group, Inc. (the "Company" or "The Hartford") in
connection with the annual meeting of shareholders of the Company to be held
on Thursday, May 20, 1999 at 9:00 a.m. at The Wadsworth Atheneum, 600 Main
Street, Hartford, Connecticut 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 31, 1999.
Voting Rights
Only shareholders of record on March 22, 1999 (the "Record Date") are
entitled to notice of, and to vote at, the Annual Meeting. As of February 26,
1999, there were 226,826,658 shares of the Company's common stock ("Common
Stock") 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.
Voting By Proxy
In General. Subject to the limitations described below, shareholders may
vote by proxy by (i) using the accompanying proxy card, (ii) voting by
telephone, or (iii) voting electronically through the internet. When voting
using any of these methods, as to the election of directors, you may (a) vote
for all of the director nominees as a group except those nominees whose names
you specify, or (b) withhold your vote from all nominees as a group. As to
each other item, you may vote "for" or "against" the item or "abstain" from
voting. If you properly vote by proxy by any of these methods as described
below but do not specify any choices you will thereby confer authority upon
the persons named as proxies to vote your shares in their discretion. A 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.
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 completed proxy, or by attending the Annual
Meeting and revoking the proxy. Your attendance at the Annual Meeting will not
by itself revoke your proxy.
Voting By Proxy Card. Any shareholder, including any employee who owns
Common Stock through Company stock plans, may vote by proxy by using the
accompanying proxy card. When you return a proxy card that is properly signed
and completed, the shares of Common Stock represented by the proxy will be
voted as you specify on the proxy card.
Voting By Telephone Or Through The Internet. If you are a registered
shareholder (that is, you own Common Stock in your own name and not through a
broker, nominee or in some other "street name" capacity),
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or if you own Common Stock through a Company stock plan, you may vote by proxy
by using the telephone or internet method of voting (please see the
accompanying proxy card for instructions on how to access the telephone and
internet voting systems). If you hold shares of Common Stock in "street name,"
your broker or other nominee will advise you whether you may vote by telephone
or through the internet.
Voting Shares Held In Company Stock Plans
Shares of Common Stock held in the Hartford Investment and Savings Plan
("ISP") and in the Company's Deferred Restricted Stock Unit Plan ("Stock Unit
Plan") are held of record and are voted by the trustees of the ISP and the
Stock Unit Plan, respectively. Shares of Common Stock 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, the Stock Unit Plan and the ESPP may
direct the trustees and Dean Witter as to how to vote shares allocated to
their ISP, Stock Unit Plan and ESPP accounts by voting by proxy using any of
the three methods described above. The ISP and Stock Unit Plan trustees will
vote shares as to which they have not received direction in accordance with
the terms of the ISP and the Stock Unit Plan. To the extent that Dean Witter
does not receive voting directions from ESPP participants, it may vote such
shares in its capacity as a broker.
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 voting by proxy.
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 thirteen directors serving on the Board, twelve
of whom have been nominated for reelection as directors at the Annual Meeting,
including Frederic V. Salerno who was elected as a director by the Board of
Directors effective December 16, 1998. DeRoy C. Thomas will retire from the
Board of Directors effective on the date of the Annual Meeting, and,
therefore, will not seek reelection.
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES FOR ELECTION AS
DIRECTORS.
Directors and Nominees
BETTE B. ANDERSON
Mrs. Anderson, 70, has served as a director since 1995. She
joined Kelly, Anderson & Associates, Inc., a Washington based
management firm, in 1990 and served as President effective January
1, 1991 until January 1996, when she became Vice Chairperson. 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 United Payors & Providers and the Miller Foundation at
the University of Virginia. She attended Georgia Southern
University and Armstrong State College and is a graduate of the
Stonier Graduate School of Banking at Rutgers University.
[photo]
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RAND V. ARASKOG
Mr. Araskog, 67, has been a director since 1985. He served as an
executive officer of ITT Corporation ("ITT") until ITT split into
three separate public companies in a spin-off transaction that
occurred effective December 19, 1995 (the "ITT Spin-Off"). He was
Chief Executive Officer of ITT since 1979, Chairman since 1980 and
President since March 1991. After the ITT Spin-Off, Mr. Araskog
became Chairman and Chief Executive of the new ITT Corporation,
formerly an ITT subsidiary called ITT Destinations, Inc., until
his retirement in February 1998. 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. Mr. Araskog is a graduate of the U.S. Military
Academy at West Point and attended the Harvard Graduate School of
Arts and Sciences.
[photo]
RAMANI AYER
Mr. Ayer, 51, has been a director since 1991, and became
Chairman, President and Chief Executive Officer of the Company on
February 1, 1997. Prior to that, he served as an Executive Vice
President of the Company from the ITT Spin-Off in December 1995
until February 1997. 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. He is also Chairman of Hartford Life,
Inc. ("Hartford Life"), a public company that is majority-owned by
the Company and operates its life insurance, annuity and related
businesses. Mr. Ayer joined the Company in 1973 as a member of the
operations research department. During his career, he has been
Director of corporate reinsurance, Vice President of HartRe, the
Company's reinsurance subsidiary, and President of Hartford
Specialty Company. He is Vice Chairman of the American Insurance
Association, a member of the Listed Company Advisory Committee to
the New York Stock Exchange Board of Directors, and serves on the
Boards of the American Institute for CPCU/IIA, and the Insurance
Information Institute. Mr. Ayer is a director of Hartford
Hospital, the Greater Hartford Chamber of Commerce, and is a
trustee of the Mark Twain House in Hartford, Connecticut. He is
also a member of the Business Roundtable.
[photo]
ROBERT A. BURNETT
Mr. Burnett, 71, became a director of the Company in 1995. He
served as Chairman of Meredith Corporation from 1988 until his
retirement in 1992, and served as President and Chief Executive
Officer from 1977 and relinquished the latter office in 1989. Mr.
Burnett is a director of ITT Industries, Inc., and Whirlpool
Corporation. 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.
[photo]
DONALD R. FRAHM
Mr. Frahm, 67, served as Chairman, President and Chief Executive
Officer of the Company from April 1988 until his retirement on
January 31, 1997 and has been a director since 1985. Mr. Frahm is
a director of Hartford Life, Hartford Hospital, the University of
Hartford and the Greater Hartford Chamber of Commerce. He is also
a corporator of Connecticut Children's Medical Center.
[photo]
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PAUL G. KIRK, JR.
Mr. Kirk, 61, has served on the Board of Directors since 1995.
He became a partner in the law firm of Sullivan & Worcester in
1977 and is presently of counsel to the firm. Mr. Kirk served as
Chairman of the Democratic Party of the United States from 1985 to
1989 and as Treasurer from 1983 to 1985. Following his resignation
in 1989 as Chairman of the Democratic Party of the United States,
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 Hartford Life and Kirk & Associates,
Inc., of which he also is Chairman and Treasurer. He is also a
director of Bradley Real Estate, Inc. and Rayonier, Inc. Mr. Kirk
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.
[photo]
FREDERIC V. SALERNO
Mr. Salerno, 55, has served on the Board of Directors since
December 16, 1998. He has been Senior Executive Vice President and
Chief Financial Officer of Bell Atlantic Corporation since 1997,
coincident with the merger of NYNEX Corporation and Bell Atlantic.
Prior to this, Mr. Salerno was Vice Chairman-Finance and Business
Development at the former NYNEX Corporation from 1994 to 1997, and
had served as Vice Chairman of NYNEX and President-Worldwide
Services since March 1991. He joined New York Telephone in 1965
and was elected Vice President in 1983, was promoted in 1985 to
Executive Vice President and Chief Operating Officer of New
England Telephone and was appointed President and Chief Executive
Officer of New York Telephone in 1987. Mr. Salerno is a director
of AVNET, Inc., Bear Stearns Company, Inc., Viacom, Inc. and
Keyspan Energy. He was Chairman of the Board of Trustees of the
State University of New York, a trustee of the Inner-City
Scholarship Fund and has served as Chairman of the Archdiocese of
New York's Partnership for Quality Education Campaign. Mr. Salerno
is also a member of the World Telecommunications Advisory Council
of the International Telecommunication Union and the Metropolitan
Museum of Art Business Committee. He received a bachelor of
science degree in electrical engineering from Manhattan College
and a master of business administration degree from Adelphi
University.
[photo]
ROBERT W. SELANDER
Mr. Selander, 48, was elected as a director effective March 1,
1998, and has been nominated for election as a director of
Hartford Life at the Hartford Life 1999 annual shareholders
meeting. Since May 1997, he has served as the President and Chief
Executive Officer of MasterCard International. For three years
prior to this, Mr. Selander was an Executive Vice President of
MasterCard International and President of MasterCard's Europe,
Middle East/Africa and Canada regions. Before joining MasterCard,
he served for over twenty years in positions of increasing
responsibility at Citicorp/Citibank, N.A, including having served
as director of Global Retail Strategy and director of the bank's
Diners Club International credit card business in the United
States, Canada, United Kingdom, Germany and Benelux. Mr. Selander
is a graduate of Cornell University and has a master's degree in
business from Harvard University.
[photo]
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LOWNDES A. SMITH
Mr. Smith, 59, has served as a director of the Company since
1991. He became Vice Chairman of the Company on February 1, 1997
and is President and Chief Executive Officer and a director of
Hartford Life. Effective December 1, 1998, Mr. Smith also became
responsible for the International Operations of the Company. He
also served as an Executive Vice President of the Company since
the ITT 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, The American Council
of Life Insurance, and a Director Emeritus of the Connecticut
Business and Industry Association.
[photo]
H. PATRICK SWYGERT
Mr. Swygert, 56, was elected to the Board of Directors in 1996.
He has been President of Howard University, Washington, D.C.,
since August 1995. Prior to that, he was President of the
University at Albany, State University of New 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
Hartford Life and The Victory Funds, Cleveland, Ohio. Mr. Swygert
is the immediate past Chairman of the Washington, D.C. Area
Consortium of Colleges and Universities and currently serves as
Chairman of the Community-Business Partnership of the Greater
Washington Board of Trade.
[photo]
GORDON I. ULMER
Mr. Ulmer, 66, has been a director since 1995. He is former
Chairman and Chief Executive Officer of the former Connecticut
Bank and Trust Company ("CBT") and retired President of the former
Bank of New England Corporation, the 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 Hartford Life, 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.
[photo]
DAVID K. ZWIENER
Mr. Zwiener, 44, has been Executive Vice President and Chief
Financial Officer of the Company since August 1995, and was
elected to the Board of Directors in 1997. He previously served as
Executive Vice President and Chief Financial Officer of ITT
Financial Corporation from March 1993 until February 1995. From
November 1987 to February 1993, Mr. Zwiener served as Senior Vice
President and Treasurer, and Executive Vice President--Capital
Markets Division, of Heller International Corporation. He is also
a director of Hartford Life.
[photo]
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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 1998, the Board held nine 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, confirms 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 on Form 10-K that is filed with the SEC.
It also reviews the expense accounts of senior executives. The members of the
Audit Committee are Messrs. Frahm, Kirk (Chairman), Selander, and Thomas.
During 1998, the Committee held five meetings.
The Compensation and Personnel Committee evaluates senior management
performance and establishes executive compensation policies. Mrs. Anderson and
Messrs. Burnett, Swygert and Ulmer (Chairman) are the members of the
Committee. The Committee held five meetings during 1998.
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
Messrs. Araskog, Salerno, Thomas (Chairman) and Ulmer. During 1998, the
Committee held two meetings.
The Legal and Public Affairs Committee reviews and considers major claims
and litigation, and legal, regulatory 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. Salerno,
Selander and Swygert (Chairman). The Committee held three meetings during
1998.
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), Frahm and Kirk. During 1998, 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 1998, 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.
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. The current compensation for non-employee directors
consists of an annual retainer fee of $40,000 payable solely in restricted
shares of Common Stock pursuant to The Hartford 1996 Restricted Stock Plan for
Non-Employee Directors (the "Non-Employee Directors Plan") described below, a
$1,500 fee for each meeting of the Board attended, a $1,200 fee for each
committee meeting attended, and an option to purchase Common Stock. Directors
are also reimbursed for travel and related expenses incurred on behalf of the
Company.
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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 ("NYSE") 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.
Stock Options. Each non-employee director elected at, or continuing in
office following, each annual meeting of shareholders is also granted on the
annual meeting date an option to purchase 2,000 shares of Common Stock at an
exercise price equal to the closing price per share of the Common Stock on the
NYSE as of the date of grant. Each option may be exercised to purchase one-
third of the shares underlying the option after two years from the date of
grant and will become fully exercisable after three years from the date of
grant. The maximum term of each option is ten years and two days from the date
of grant and any unexercised portion will terminate within a certain period of
time after a director's termination of service on the Board, depending upon
the reason for the termination.
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.
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 1998 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 1998 compensation earned
by, and awarded or paid to, Ramani Ayer, who served as President and Chief
Executive Officer during 1998, and the other Named Executives (defined below)
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 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 met.
. 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.
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. Encourages the acquisition of Common 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 organizations 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 compensation program of the Company's Senior Executives 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 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 from the later of 1996
or year of hire, Senior Executives should attain an investment position in the
Common Stock that is equal to two or three times their base salary, depending
on the position of the Senior Executive. The Committee believes that this
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 and financial
services companies, although general industry practices are also considered
when reviewing pay for certain Senior Executives whose functional
responsibilities are not exclusively insurance or financial services 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 base salaries are targeted at levels that represent 90 percent of
prevailing market rates. Total compensation is designed to reach 120% 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 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; and stock
options and long-term compensation tied to earnings growth and stock price
appreciation. Each of these elements is discussed below.
1998 Compensation
1998 Base Salary
The Company's compensation policy is generally to pay base salaries for
Senior Executives at levels that represent 90% of the median salaries paid by
organizations with which the Company competes for senior executive talent.
Total compensation, comprised of base and variable pay, can achieve 120% 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.
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The Compensation Committee approved salary increases of $150,000, $100,000
and $75,000 for Messrs. Ayer, Smith and Zwiener, respectively effective
February 1, 1998. These increases reflected competing pay practices at other
peer corporations. In addition, Messrs. Ayer, Smith, and Zwiener have
employment agreements with the Company that provide for minimum base salaries
as described below under the heading "Employment Agreements and Severance
Plan."
1998 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%
of variable compensation, while long-term incentives are designed to deliver
the remaining 75%. 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 annual incentive payments vary with performance
relative to such goals. Better performance generates larger awards; lesser
results yield smaller awards.
Ordinarily, corporate or staff Senior Executives earn annual incentives
based on 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.
The amounts of annual incentive awards are based on financial performance
for the year compared to annual performance goals established by the Committee
at the beginning of the year. For 1998, performance was based on core
earnings, return on equity, and revenues, each compared to budget,
respectively, for Messrs. Ayer and Zwiener. The performance goals for Mr.
Smith were Hartford Life core earnings growth and Hartford Life return on
equity. The performance goals for Mr. Donahue were core earnings growth and
return on equity compared to budget with respect to the Company's reinsurance
and international operations. The performance goals for Mr. Gareau were
Hartford Investment Management Company (the Company's subsidiary that conducts
the Company's investing activities) portfolio performance compared to external
benchmark measures and core earnings.
For 1998, based on these goals, the Committee awarded an annual incentive of
$943,500, $946,750, $444,000, $339,200, and $115,200 for Messrs. Ayer, Smith,
Zwiener, Gareau, and Donahue, respectively.
Consistent with the Company's interest in promoting a strong alignment
between management and 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"). Under The
Hartford 1996 Deferred Restricted Stock Unit Plan, receipt of actual shares of
Common 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 ten 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.
9
<PAGE>
Stock Options
For 1998, the Committee provided eligibility to executives and key employees
for grants of stock options under the terms of The Hartford 1995 Incentive
Stock Plan (the "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 Common Stock. The option exercise price equals 100% 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 and two day 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 19, 1998, options to purchase an aggregate of 231,420 shares of
Common Stock were granted under the Incentive Stock Plan to Messrs. Ayer,
Smith, Zwiener, Gareau and Donahue at an exercise price of $46.315 per share
(the closing price of a share of the Common Stock on the NYSE on February 19,
1998). Both the number of shares granted and the exercise price per share have
been adjusted for the two-for-one stock-split that took place on July 15,
1998. The option granted to Mr. Smith represented 40% of the target award
value determined appropriate by the Committee. Also on February 19, 1998, the
Compensation and Personnel Committee of Hartford Life (the "Hartford Life
Committee") granted to Mr. Smith an option to purchase 55,900 shares of Class
A Common Stock of Hartford Life under the 1997 Hartford Life, Inc. Incentive
Stock Plan (the "Hartford Life Incentive Stock Plan") at an exercise price of
$43.94 per share (the closing price of a share of Hartford Life Class A Common
Stock on the NYSE on that day). This option represented the remaining 60% of
the target award value determined appropriate for Mr. Smith.
On October 14, 1998, options to purchase an aggregate of 246,716 shares of
Common Stock were granted under the Incentive Stock Plan to Messrs. Ayer,
Smith, Zwiener and Gareau at an exercise price of $45.50 per share. The option
granted to Mr. Smith represented 40% of the target award value determined
appropriate by the Committee. Also on October 14, 1998, the Hartford Life
Committee granted to Mr. Smith an option to purchase 74,047 shares of Class A
Common Stock of Hartford Life under the Hartford Life Incentive Stock Plan at
an exercise price of $41.0625 per share (the closing price of a share of
Hartford Life Class A Common Stock on the NYSE on that day). This option
represented the remaining 60% of the target award value determined appropriate
for Mr. Smith.
To further align the interests of Senior Executives and shareholders, the
above options granted to Messrs. Ayer, Smith, Zwiener, and Donahue included a
performance-based provision that would allow the options to become exercisable
upon the earlier to occur of (i) the closing price of the underlying stock on
the NYSE equaling or exceeding 125% of the option exercise price for a period
of at least ten consecutive trading days, or (ii) seven years from the date of
option grant. The foregoing options to purchase Common Stock granted on
February 19, 1998 became exercisable on July 17, 1998, when the closing price
of the Common Stock remained at or above $57.8938 per share (being 125% of the
$46.315 grant price) for at least ten consecutive trading days. In addition,
the option to purchase Hartford Life Class A Common Stock granted to Mr. Smith
on February 19, 1998 became exercisable on July 13, 1998, when the closing
price of Hartford Life Class A Common Stock on the NYSE remained at or above
$54.925 per share (being 125% of the $43.94 grant price) for at least ten
consecutive trading days. Also, the option to purchase Hartford Life Class A
Common Stock granted to Mr. Smith on October 14, 1998 became exercisable on
December 1, 1998 when the closing price of Hartford Life Class A Common Stock
on the NYSE remained at or above $51.3281 per share (being 125% of the
$41.0625 grant price) for at least ten consecutive trading days. All other
options, including those granted to other executives, become exercisable at
the cumulative rate of one-third per year for the first three years from the
date of grant.
Further information regarding option grants for the named Senior Executives
during 1998 is included in the option tables following this report.
10
<PAGE>
1998 Long-Term Performance Program
Senior Executives and other executives received the opportunity under the
1998 Long-Term Performance Plan 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 1998, there are two equally
weighted performance objectives measured over the 1998 through 2000 period:
(i) 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 group
will result in the awarding of a target number of shares. Better performance
(up to a maximum of 150% of each of the performance measures) will yield a
larger payout, up to a maximum combined payout of 200%; poorer performance (to
a minimum of 75% of each of the performance measures) will mean proportionally
smaller payments. If the minimum threshold is not achieved, no shares will
ultimately be awarded.
On February 19, 1998, Messrs. Ayer, Smith, Zwiener, Gareau, and Donahue were
granted performance share awards of 26,520 shares, 9,220 shares, 10,360
shares, 5,400 shares, and 3,680 shares, respectively. The award granted to Mr.
Smith represented 40% of the target award value determined appropriate by the
Committee. Also on February 19, 1998, the Hartford Life Committee granted to
Mr. Smith 14,710 performance shares of Hartford Life Class A Common Stock
under the Hartford Life 1998 Long-Term Performance Plan. This plan is similar
to the 1998 Long-Term Performance Plan of the Company, but is based on the
business performance of Hartford Life over the 1998 through 2000 period. This
award represented the remaining 60% of the target award value determined
appropriate for Mr. Smith. Additional information regarding these awards is
included below under "1998 Long-Term Incentive Plan Awards."
On January 26, 1999, the Committee approved payouts under the 1996 Long-Term
Performance Plan based on performance over the 1996 through 1998 period. The
combined payout factor for core earnings per share and total shareholder
return was 162.9%. Based on this result, the Committee approved the
distribution of 26,879, 26,879, 19,874, 16,290 and 9,612 shares to Messrs.
Ayer, Smith, Zwiener, Gareau and Donahue, respectively. These performance
shares were payable 50% in Common Stock and 50% in cash. Senior Executives
were permitted to defer receipt of all or a portion of this payout under The
Hartford 1996 Deferred Restricted Stock Unit Plan described above.
Compliance with Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, 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
H. Patrick Swygert
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides information regarding the cash and other
compensation of those persons who, during 1998 (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>
Annual Compensation Long-Term Compensation
-------------------- ---------------------------------------
Awards Payouts
----------------------------- ---------
Name and Restricted Securities LTIP All Other
Principal Stock Underlying Payouts Compensation
Position Year Salary ($) Bonus ($) Awards ($)(2) Options (#)(2) ($)(10) ($)(11)
--------- ---- ---------- --------- ------------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ramani Ayer............. 1998 837,500 943,500 15,405(3) 226,161 1,423,369 34,785
Chairman, President and 1997 685,417 513,500 3,557,500(4) 354,340 -- 30,397
Chief Executive Officer 1,467,500(5)
1996 525,000 300,000 -- 74,400 -- 21,956
Lowndes A. Smith........ 1998 691,667 946,750 -- 88,574 1,423,369 27,285
Vice Chairman; President 129,947(9)
and
Chief Executive
Officer--
Hartford Life 1997 593,750 418,400 889,375(4) 237,736 -- 24,505
733,750(5) 65,675(9)
745,461(6)
15,500(7)
1996 525,000 310,000 -- 74,400 -- 21,260
David K. Zwiener........ 1998 493,750 444,000 14,120(3) 105,848 1,052,422 19,219
Executive Vice President 1997 418,750 282,400 889,375(4) 240,880 -- 16,594
and
Chief Financial Officer 1,100,625(5)
12,500(7)
1996 332,500 250,000 241,250(8) 55,200 -- 13,895
Joseph H. Gareau........ 1998 320,000 339,200 5,135(3) 41,953 862,632 16,672
Executive Vice President 1997 319,233 205,400 4,000(7) 89,560 -- 17,496
and
Chief Investment Officer 1996 310,800 200,000 -- 45,000 -- 14,648
John F. Donahue......... 1998 270,000 115,200 -- 15,600 509,001 25,865
Senior Vice President(1) 1997 268,750 98,000 -- 68,868 -- 25,629
1996 255,000 115,000 -- 26,800 -- 25,359
</TABLE>
- - --------
(1) Mr. Donahue retired from the Company effective January 1, 1999.
(2) Except as otherwise noted, the number of shares of Common Stock and the
related prices per share set forth in the table and in the footnotes
reflect a two-for-one stock split effected in the form of a 100% stock
dividend on July 15, 1998.
(3) Pursuant to The Hartford 1996 Deferred Restricted Stock Unit Plan, certain
executives of the Company elected to forego a certain percentage of 1997
bonus payments that were ultimately awarded in 1998 in exchange for the
right to receive shares of Common Stock ("Stock Units"). The number of
Stock Units granted to an executive is equal to the amount of the bonus
forgone divided by the closing price of the Common Stock on the NYSE on
the date of grant of the Stock Units. As an incentive for foregoing the
percentage of bonus, participating executives also are granted additional
Stock Units equal to 10% of the Stock Units ("Premium Stock Units").
Shares of Common Stock underlying Stock Units may not be received until
three years from the date of grant but are fully vested, except that
shares of Common Stock underlying Premium Stock Units may be forfeited if
employment with the Company is terminated under
12
<PAGE>
certain circumstances before three years from the date of grant. Dividends
are paid (and automatically reinvested) on the shares underlying the Stock
Units and Premium Stock Units in the same amount and to the same extent as
dividends are paid on shares of Common Stock held by all shareholders. The
amounts identified in this column represent the value of the Premium Stock
Units awarded on March 13, 1998 when the closing price of the Common Stock
on the NYSE was $51.4375 per share. On December 31, 1998, the values of such
Premium Stock Units (including those acquired by dividend reinvestment) for
Messrs. Ayer, Zwiener and Gareau were $16,569, $15,187, and $5,523,
respectively, based on the closing price of the Common Stock on the NYSE of
$54.875 per share on that date.
(4) Represents the market value of 80,000 shares of restricted Common Stock
granted to Mr. Ayer and 20,000 shares of restricted Common Stock granted
to each of Messrs. Smith and Zwiener on December 17, 1997 based on the
closing price of the Common Stock on the NYSE of $44.4687 per share on
that date. The market value of such shares was $4,390,000, $1,097,500, and
$1,097,500 for Messrs. Ayer, Smith, and Zwiener, respectively, on December
31, 1998 based on the NYSE closing price of the Common Stock of $54.875
per share on that day. Each of the restricted stock grants is subject to
the following performance-based vesting: the restrictions on 50% of the
shares will lapse on March 1, 2001 only if the closing price of the Common
Stock on the NYSE is $61.50 per share or more for at least ten consecutive
trading days at any time prior to such date; the restrictions on an
additional 25% of such shares will lapse on March 1, 2001 only if the
closing price of Common Stock on the NYSE is $63.00 per share or more for
at least ten consecutive trading days at any time prior to such date; and
the restrictions on the remaining 25% of such shares will lapse on March
1, 2001 only if the closing price of the Common Stock on the NYSE is
$65.00 per share or more for at least ten consecutive trading days at any
time prior to such date. Any restricted shares not vested by March 1, 2001
shall be forfeited. Dividends are paid on the shares of restricted Common
Stock in the same amount and to the same extent as dividends are paid on
shares of Common Stock held by all shareholders.
(5) Represents the market value of 40,000, 20,000, and 30,000 shares of
restricted Common Stock granted to Messrs. Ayer, Smith and Zwiener,
respectively, on February 1, 1997 based on the closing price of the Common
Stock on the NYSE of $36.6875 per share on that date. The market value of
such shares was $2,195,000, $1,097,500 and $1,646,250 for Messrs. Ayer,
Smith and Zwiener, respectively, on December 31, 1998 based on the NYSE
closing price of the Common Stock of $54.875 per share on that day.
Dividends are paid on the shares of restricted Common Stock in the same
amount and to the same extent as dividends are paid on shares of Common
Stock held by all shareholders.
(6) Mr. Smith was granted 20,000 shares (pre-split) of restricted Common Stock
on February 1, 1997. On May 22, 1997, after the initial public offering of
Hartford Life Class A Common Stock, 10,000 (pre-split) of these shares
were exchanged for 23,205 shares of restricted Hartford Life Class A
Common Stock based on a formula intended to maintain the economic value of
the shares of restricted Common Stock. The amount set forth in the table
represents the market value of the restricted shares of Hartford Life
Class A Common Stock based on the closing price of Hartford Life Class A
Common Stock on the NYSE of $32.125 per share on such date. The market
value of these shares was $1,351,691 on December 31, 1998 based on the
NYSE closing price of Hartford Life Class A Common Stock of $58.25 per
share on that day. Dividends are paid on the shares of restricted Hartford
Life Class A Common Stock in the same amount and to the same extent as
dividends are paid on shares of Hartford Life Class A Common Stock held by
all shareholders of Hartford Life.
(7) The amounts identified represent the value of the Premium Stock Units
awarded pursuant to The Hartford 1996 Deferred Restricted Stock Unit Plan
described in note (3) above on March 10, 1997 with respect to 1996 bonus
payments made in 1997. On March 10, 1997, the closing price of the Common
Stock on the NYSE was $39.1875 per share. On December 31, 1998, the values
of such Premium Stock Units (including those acquired by dividend
reinvestment) for Messrs. Smith, Zwiener and Gareau were $22,396, $18,061
and $5,780, respectively, based on the closing price of the Common Stock
on the NYSE of $54.875 per share on that date.
(8) Represents the market value of 10,000 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 $24.125 per share on that date. The market
value of such shares was $548,750 on December 31, 1998 based on the NYSE
closing
13
<PAGE>
price of $54.875 per share on that date. Dividends are paid on the shares
of restricted Common Stock in the same amount and to the same extent as
dividends are paid on shares of Common Stock held by all shareholders.
(9) Represents the number of shares of Hartford Life Class A Common Stock
underlying options granted to Mr. Smith pursuant to the Hartford Life
Incentive Stock Plan.
(10) In 1996, each of the Named Executives was granted a certain number of
performance shares relating to the Common Stock. The grants were
contingent upon the Company achieving two general performance objectives
over a three-year period that ended on December 31, 1998. The performance
objectives, and the extent to which a Named Executive was entitled to a
payout, are substantially the same as that described below under the
heading "1998 Long-Term Incentive Plan Awards." The amounts in this
column represent the value of payouts made by the Company on February 15,
1999 in respect of performance shares awarded in 1996.
(11) Amounts shown in this column represent 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 1998 were
$29,313, $24,208, $17,281, $11,200 and $9,450, for Messrs. Ayer, Smith,
Zwiener, Gareau and Donahue, respectively. The Company's flexible benefit
programs allow for the sale back to the Company of up to one week of
vacation time capped at a 1998 limit of $3,077. An amount of $3,077 is
included in this column for Messrs. Smith and Donahue. For federal tax
purposes, income will be imputed to an employee who purchases more than
$50,000 of life insurance coverage to the extent that the value of the
coverage is greater than the premium paid. For 1998, $5,472, $0, $1,938,
$5,472, and $13,338 of income was imputed to Messrs. Ayer, Smith,
Zwiener, Gareau and Donahue, respectively, and such amounts are included
in this column.
Stock Options
Under the Incentive Stock Plan, the Compensation and Personnel Committee of
the Board of Directors selects key employees to receive various awards,
including stock options, stock appreciation rights, shares of restricted
Common Stock and performance shares. The table below provides information
regarding grants of stock options to the Named Executives during 1998.
Option Grants In Fiscal Year 1998
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Number of Price Appreciation
Securities % of Total for Option Term
Underlying Options Granted ($)(9)
Options to Employees in Exercise Price Expiration ----------------------
Name Granted (#) 1998(6) ($/Share)(8) Date 5% 10%
---- ----------- --------------- --------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ramani Ayer............. 112,140(1) 2.63 46.315 02/21/08 3,266,078 8,277,614
114,021(2) 2.67 45.50 10/16/08 3,262,141 8,268,803
Lowndes A. Smith........ 39,000(1) .91 46.315 02/21/08 1,135,875 2,878,785
49,574(2) 1.16 45.50 10/16/08 1,418,312 3,595,106
55,900(3)(4) 4.06(7) 43.94 02/21/08 1,544,517 3,914,677
74,047(3)(5) 5.37(7) 41.0625 10/16/08 1,912,449 4,846,191
David K. Zwiener........ 43,880(1) 1.03 46.315 02/21/08 1,278,005 3,239,002
61,968(2) 1.45 45.50 10/16/08 1,772,904 4,493,919
Joseph H. Gareau........ 20,800(2) .49 46.315 02/21/08 605,800 1,535,352
21,153(2) .50 45.50 10/16/08 605,187 1,534,016
John F. Donahue......... 15,600(1) .37 46.315 02/21/08 454,350 1,151,514
</TABLE>
14
<PAGE>
- - --------
(1) The options granted to Messrs. Ayer, Smith, Zwiener and Donahue became
fully exercisable on July 17, 1998, when the closing price of the Common
Stock on the NYSE had been $57.8938 per share or more for at least ten
consecutive trading days. The exercisability, payment or vesting of
options shown in the table may be accelerated upon the occurrence of a
change of control (as defined in the Incentive Stock Plan) of the Company.
(2) The options granted to Messrs. Ayer, Smith and Zwiener become exercisable
upon the earlier of: (i) seven years from the date of grant, or (ii) the
closing price of the Common Stock on the NYSE is 125% or more of the
option grant price for at least ten consecutive trading days. Mr. Gareau's
options are exercisable in three equal annual installments commencing on
the first anniversary of the date of the grant.
(3) Represents the number of shares of Hartford Life Class A Common Stock
underlying options granted to Mr. Smith by Hartford Life pursuant to the
Hartford Life Incentive Stock Plan.
(4) The option granted to Mr. Smith became fully exercisable on July 13, 1998,
when the closing price of Hartford Life Class A Common Stock on the NYSE
had been $54.925 per share or more for at least ten consecutive trading
days.
(5) The option granted to Mr. Smith became fully exercisable on December 1,
1998, when the closing price of Hartford Life Class A Common Stock on the
NYSE had been $51.3281 per share or more for at least ten consecutive
trading days.
(6) Percentages are based on options to purchase a total of 4,265,474 shares
of Common Stock granted to 2,604 employees of the Company during 1998.
(7) Percentage is based on options to purchase a total of 1,377,639 shares of
Hartford Life Class A Common Stock granted to 534 employees of Hartford
Life during 1998.
(8) All options were granted at exercise prices that were 100% of the fair
market value of the Common Stock (and with respect to two options granted
to Mr. Smith described in note (3) above, the Class A Common Stock of
Hartford Life) on the date of grant.
(9) At the end of the term of the options granted on February 19, 1998, the
projected price of a share of the Common Stock would be $75.44 and $120.13
at assumed annual appreciation rates of 5% and 10%, respectively. At the
end of the term of the options granted on October 14, 1998, the projected
price of a share of the Common Stock would be $74.11 and $118.02 at
assumed annual appreciation rates of 5% and 10%, respectively. At the end
of the term of the option to purchase shares of Hartford Life Class A
Common Stock granted to Mr. Smith on February 19, 1998 (see note (4)
above), the projected price of a share of Hartford Life Class A Common
Stock would be $71.57 and $113.97 at assumed annual appreciation rates of
5% and 10%, respectively. At the end of the term of the option to purchase
shares of Hartford Life Class A Common Stock granted to Mr. Smith on
October 14, 1998 (see note 5 above), the projected price of a share of
Hartford Life Class A Common Stock would be $66.89 and $106.51 at assumed
annual appreciation rates of 5% and 10%, respectively.
15
<PAGE>
1998 Option Exercises and 1998 Year-End Option Values
The following table provides information on stock options that were
exercised, if any, and the value of unexercised stock options held at December
31, 1998 by the Named Executives:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
-----------------------------------------------
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal In-the-Money Options Held
on Year-End (#) at Fiscal Year-End ($)(3)
Exercise Value -------------------------- ----------------------------
Name (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ramani Ayer............. 106,976 3,952,579 569,584 374,021 15,281,100 3,774,247
Lowndes A. Smith........ 100,000 3,832,095 439,168 249,574 13,568,056 2,545,756
195,622(2) 3,853,061(4) --
David K. Zwiener........ 50,000 1,579,644 175,520 261,968 3,915,538 2,661,950
Joseph H. Gareau........ 25,000 1,089,850 255,516 136,661 8,984,716 1,803,307
John F. Donahue......... -- -- 170,388 50,000 5,415,614 520,250
</TABLE>
- - --------
(1) Value realized upon the exercise of an option represents the difference
between the fair market value of the Common Stock on the date of exercise
and the exercise price of the option.
(2) Represents shares of Hartford Life Class A Common Stock underlying options
granted to Mr. Smith by Hartford Life pursuant to the Hartford Life
Incentive Stock Plan.
(3) Values are calculated for options "in-the-money" by subtracting the
exercise price per share of the options from the per share NYSE closing
price of $54.875 of the Common Stock on December 31, 1998.
(4) The value of the options granted to Mr. Smith to purchase shares of
Hartford Life Class A Common Stock (see note 2 above) are calculated by
subtracting the exercise price per share of the option from the per share
NYSE closing price of $58.25 of Hartford Life Class A Common Stock on
December 31, 1998.
1998 Long-Term Incentive Plan Awards
On February 19, 1998, the Compensation and Personnel Committee of the Board
made 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. These performance shares awarded to key employees
of the Company on February 19, 1998 will not be subject to cancellation and
substitution, but rather will become payable after the performance period to
the extent described below.
Under the terms of the awards, there are two equally weighted performance
objectives measured over the 1998-2000 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 ITT Spin-Off. TSR is measured by
the difference between the price of the Common Stock at the beginning of the
1998-2000 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 and Personnel 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-half in cash and one-half in Common Stock). The Compensation and
Personnel Committee also established a threshold (minimum) Core Earnings and
TSR to be achieved. If the threshold
16
<PAGE>
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 and
Personnel Committee.
The following table provides information on these long-term performance
share awards made to the Named Executives during 1998:
<TABLE>
<CAPTION>
Awards of Performance Estimated Future Payouts
Shares in Under Non-Stock
Last Fiscal Year Price-Based Plans (#)(1)
------------------------- ------------------------------------
Period Until
Name # of Shares Payout(1) Threshold (#) Target (#) Maximum (#)
---- ----------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Ramani Ayer...... 26,520 3 years 13,260 26,520 53,040
Lowndes A.
Smith........... 9,220 3 years 4,610 9,220 18,440
14,710(2) 3 years 7,355 14,710 29,420
David K.
Zwiener......... 10,360 3 years 5,180 10,360 20,720
Joseph H.
Gareau.......... 5,400 3 years 2,700 5,400 10,800
John F. Donahue.. 3,680 3 years 1,840 3,680 7,360
</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, 2000. 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 performance objectives.
(2) Represents a performance share grant to Mr. Smith relating to Hartford
Life Class A Common Stock pursuant to the performance share provisions of
the Hartford Life Incentive Stock Plan. The terms of the Hartford Life
performance share grant are substantially the same as those described
above for Company performance share grants except that the Hartford Life
Core Earnings performance objective does not include the Core Earnings
factor (iii) described above, and the TSR performance objective relates to
the comparison of Hartford Life TSR to a different peer group of insurance
companies.
Retirement Program
The Hartford Fire Insurance Company Retirement Plan (the "Retirement Plan")
is a defined benefit plan that 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 Retirement 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) an employee's average
annual compensation not including base salary for the five calendar years of
the employee's last 120 consecutive calendar months of eligibility service
affording the highest such average. The Retirement 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 Retirement Plan upon
completion of five years of eligibility service.
17
<PAGE>
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 a non-qualified unfunded retirement plan (the
"Hartford Excess Benefit Plan") for payment of those benefits at retirement
that cannot be paid from the qualified Retirement Plan. The practical effect
of the Hartford Excess Benefit Plan 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 Plan 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 Plan).
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 5 10 15 20 25 30
- - ------------ -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 40,000 $ 80,000 $120,000 $ 160,000 $ 200,000 $ 240,000
500,000 50,000 100,000 150,000 200,000 250,000 300,000
750,000 75,000 150,000 225,000 300,000 375,000 450,000
1,000,000 100,000 200,000 300,000 400,000 500,000 600,000
1,500,000 150,000 300,000 450,000 600,000 750,000 900,000
2,000,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000
2,500,000 250,000 500,000 750,000 1,000,000 1,250,000 1,500,000
3,000,000 300,000 600,000 900,000 1,200,000 1,500,000 1,800,000
</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, 1998, were
as follows: Ramani Ayer, 25.50 years; Lowndes A. Smith, 30.00 years; David K.
Zwiener, 5.75 years; Joseph H. Gareau, 25.42 years; and John F. Donahue, 30.00
years. Mr. Donahue and Mr. Smith have 44.50 and 30.75 years of service,
respectively, with the Company; however, only a maximum of 30 years of service
may be considered when determining benefits under the Retirement Plan.
Employment Agreements and Severance Plan
Ramani Ayer, Lowndes A. Smith and David K. Zwiener have employment
agreements (the "Employment Agreements") with the Company pursuant to which
Mr. Ayer is employed as Chairman, President and Chief Executive Officer, Mr.
Smith is employed as Vice Chairman of the Company and President and Chief
Executive Officer of Hartford Life, and Mr. Zwiener is employed as Executive
Vice President and Chief Financial Officer. The initial term of each of the
Employment Agreements began on July 1, 1997 and continues for three years,
unless terminated earlier in accordance with the agreements. However, when the
original term of the agreements or any renewal term ends, the agreements are
automatically extended for successive one-year periods unless either party
gives the other its written notice of its intention not to renew the agreement
at least fifteen months prior to any renewal date. In addition, upon the
occurrence of a change of control (as defined in the Employment Agreements) of
the Company, the terms of the Employment Agreements are automatically extended
for three years after the change of control occurs.
18
<PAGE>
The Employment Agreements provide, among other things, for annual base
salaries for Messrs. Ayer, Smith and Zwiener as determined from time to time
by the Board of Directors, and their participation in the Company's benefit
plans and awards under executive incentive bonus and other programs. The
current annual base salaries for Messrs. Ayer, Smith and Zwiener are $850,000,
$700,000 and $500,000, respectively. In addition, each executive is entitled
to certain payments and benefits if his employment terminates for certain
reasons, including a termination without "cause" (as defined in the Employment
Agreements). If a termination without cause occurs, the terminated executive
is entitled to a severance payment equal to two times (a) his base salary, and
(b) a target bonus amount, each for the year in which the termination occurs,
and the vesting of stock options and restricted stock awards. In addition, if
a change of control (as defined in the Employment Agreements) of the Company
occurs and the executive's employment is terminated for certain reasons within
certain time periods (generally, within three years after a change of
control), then the executive is entitled to receive certain payments and
benefits. Specifically, if after a change of control, the executive's
employment is terminated without cause, or the executive voluntarily
terminates his employment for any reason within six months following a change
of control, or voluntarily terminates his employment for "good reason" (as
defined in the Employment Agreements) within the remaining two years and six
months following a change of control, then the executive is generally entitled
to receive (i) a severance payment equal to three times the sum of his base
salary then in effect and his target bonus for the year, and (ii) certain
other benefits, including those that would otherwise be payable under the
Company's various employee benefit plans. While the executive is employed, and
for one year after any voluntary termination of employment (other than after a
change of control), the executive is subject to a noncompetition agreement in
favor of the Company.
The Company has an amended and restated Senior Executive Severance Pay Plan
that became effective on October 15, 1998 (the "Severance Plan") that covers
executive employees at certain levels, including Joseph H. Gareau. The
Severance Plan provides generally for the payment of amounts to such
executives upon termination of their employment, unless such termination is
initiated by the executive, is due to certain misconduct or disciplinary
action, is in connection with certain other specified circumstances, or
results from the executive's retirement, death or disability. The Severance
Plan provides for payments of amounts up to a maximum of two years of the
qualifying executive's salary depending primarily on such executive's years of
service (as defined in the Severance Plan). While receiving periodic payments
pursuant to the Severance Plan, the executive is generally eligible to
continue participating in certain of the Company's employee benefit plans,
subject, however, to the specific provisions in the benefit plans.
In addition to being covered by the Severance Plan, Joseph H. Gareau has an
agreement with the Company that entitles him to certain benefits upon a change
of control of the Company (as defined in such agreement). The agreement, dated
October 1, 1997, provides, among other things, that the Company shall employ
Mr. Gareau for three years (the "Employment Period") after a change of control
of the Company occurs, if he was employed on the date the change of control
occurs. During the Employment Period, Mr. Gareau is entitled to (i) a base
salary of not less than his base salary in effect prior to a change of control
or potential change of control, and such salary may be increased from time to
time; (ii) an opportunity to earn an annual bonus in accordance with the
Company's bonus policies; and (iii) participate in long-term compensation
programs and stock incentive plans, and to receive the benefits under the
Company's various benefit programs. If Mr. Gareau's employment terminates
during the Employment Period for certain specified reasons, including
termination for "cause," "without cause," for "good reason," voluntarily or
due to retirement, death or disability (all as defined in such agreement),
then Mr. Gareau is entitled to certain payments and/or benefits, depending on
the reason for termination. Specifically, if Mr. Gareau's employment is
terminated without cause, or he terminates his employment for good reason, he
is entitled to receive, among other things, (i) a lump sum severance payment
equal to two times his base salary and target bonus in effect in the year in
which his employment terminated, and (ii) certain other benefits, including
those that would otherwise be payable under the Company's various employee
benefit plans.
19
<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 three-year period of December
31, 1995 through December 31, 1998 with (i) the cumulative total return of the
Standard & Poor's 500 Index(R) and (ii) the Standard & Poor's 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 & Poor's 500
Index(R) and in the Standard & Poor's Insurance Composite Index(R). Common
stock performance information is provided only for the past three years as the
Company became a separate public company following the ITT Spin-Off and
regular-way trading of the Common Stock on the NYSE did not begin until
December 20, 1995.
[MAC CHART TO APPEAR HERE]
20
<PAGE>
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS
AND CERTAIN SHAREHOLDERS
Directors and Executive Officers
The following table shows as of February 26, 1999 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 all
executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and
Name of Nature of Beneficial
Beneficial Owner Ownership(1)(2)
- - ---------------- --------------------
<S> <C>
Bette B. Anderson......................................... 5,416
Rand V. Araskog........................................... 841,581
Ramani Ayer............................................... 1,008,322
Robert A. Burnett......................................... 12,420
John F. Donahue........................................... 205,010
Donald R. Frahm........................................... 445,818
Joseph H. Gareau.......................................... 296,587
Paul G. Kirk, Jr.......................................... 5,270
Frederic V. Salerno....................................... 357
Robert W. Selander........................................ 2,894
Lowndes A. Smith.......................................... 539,141
H. Patrick Swygert........................................ 2,819
DeRoy C. Thomas........................................... 54,772
Gordon I. Ulmer........................................... 7,250
David K. Zwiener.......................................... 353,128
All directors and executive officers as a group (18
persons)................................................. 4,101,159
</TABLE>
- - --------
Notes:
(1) All shares of Common Stock 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 the exercise of stock
options exercisable within sixty days after February 26, 1999, (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 February 26, 1999, (iii) acquired by directors and
executive officers under the Company's Dividend Reinvestment and Cash
Payment Plan through February 26, 1999, (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 of Common Stock shown above, the following represent
shares that may be acquired upon exercise of stock options that are
exercisable within sixty days after February 26, 1999 by: Mr. Ayer 849,280
shares; Mr. Frahm, 315,818 shares; Mr. Smith, 474,564 shares; Mr. Zwiener,
272,191 shares; Mr. Gareau, 277,642 shares; Mr. Donahue, 170,388 shares; and
all present directors and executive officers as a group, 2,622,618 shares.
(2) The shares of Common Stock beneficially owned by each person named above
do not exceed one percent of the outstanding shares of Common Stock. The
shares beneficially owned by the group of directors and executive officers
represent approximately 1.8% of the outstanding shares.
21
<PAGE>
Certain Shareholders
The following table shows those persons known to the Company as of February
26, 1999 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(1) of Class
- - ---------------- ----------------- --------
<S> <C> <C>
FMR Corp. .......................................... 22,614,156 9.97%
82 Devonshire Street
Boston, MA 02109
</TABLE>
- - --------
Notes:
(1) FMR Corp. ("FMR"), Edward C. Johnson, 3d and Abigail P. Johnson filed a
Schedule 13G with the SEC to report that they were the beneficial owners
of 22,614,156 shares of Common Stock as of December 31, 1998. FMR and Mr.
Johnson had sole power to dispose of 21,272,980 of such shares, but
neither FMR nor Mr. Johnson had sole voting power as to such shares. The
voting power for the 21,272,980 shares resides with the Boards of Trustees
of the various Fidelity mutual funds. Mr. Johnson and FMR had sole power
to dispose of 1,338,976 shares and sole voting power with respect to
1,014,176 shares. FMR is the parent to various subsidiaries that are
beneficial owners of Common Stock, including Fidelity Management &
Research Company that serves as an investment adviser to various
investment companies, and Fidelity Management Trust Company, an
institutional investment manager. 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
Johnson is a director of FMR.
ITEM 2
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, 1999. 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 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.
22
<PAGE>
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. To be approved, the
ratification of the appointment of Arthur Andersen LLP will require the
affirmative vote of the holders of a majority of shares of Common Stock
present in person or represented by proxy. Abstentions will be included in the
number of shares that are present for purposes of determining the presence of
a quorum but will not be counted as votes cast on items submitted for a vote
of shareholders. Accordingly, abstentions will have the same effect as a
negative vote. If shares are held in "street name" through a broker or other
nominee, the broker or nominee may not be permitted to exercise voting
discretion on certain matters. Thus, if a broker or nominee is not given
specific instructions on those matters, those shares may not be voted on those
matters and will not be counted in determining the number of shares necessary
for approval and thus will have no effect on the outcome of the vote. Shares
represented by such "broker non-votes" will, however, be counted in
determining whether there is a quorum.
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 6, 1999. Any proposal received after that date will not be
included in the Company's proxy materials. In addition, no proposal may be
presented at the 2000 Annual Meeting unless the Company receives notice of the
proposal by no later than February 10, 2000. Address your proposals to Amy
Gallent, Vice President and Corporate Secretary, The Hartford Financial
Services Group, Inc., 690 Asylum Avenue, Hartford, CT 06115. All proposals
must comply with certain requirements set forth in the Company's bylaws, a
copy of the which may be obtained from the Secretary of the Company. In
addition, all proposals for inclusion in the proxy statement must comply with
all of the requirements of SEC Rule 14a-8 under the Securities Exchange Act of
1934.
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 1998 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
23
<PAGE>
addition, a copy of the Company's annual report on Form 10-K (without
exhibits) for the fiscal year ended December 31, 1998, as filed with the SEC,
is available without charge upon request to the Company's Investor Relations
Department, 690 Asylum Avenue, Hartford, CT 06115, or by calling (888) 322-
8444.
By Order of the Board of Directors.
/s/ Amy Gallent
Vice President and Corporate
Secretary
Dated: March 31, 1999
SHAREHOLDERS ARE URGED TO VOTE BY PROXY WHETHER OR NOT THEY EXPECT TO ATTEND
THE MEETING. A SHAREHOLDER MAY NEVERTHELESS REVOKE HIS OR HER PROXY AND VOTE
IN PERSON IF HE OR SHE DOES ATTEND.
24
<PAGE>
- - --------------------------------------------------------------------------------
[LOGO]
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1999 at 9:00 A.M.
The Wadsworth Atheneum
600 Main Street
Hartford, Connecticut
- - --------------------------------------------------------------------------------
PROXY
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Amy Gallent, Michael O'Halloran and Michael
S. Wilder, and each of them, as proxies of the undersigned, each with power to
appoint his or her 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 The Hartford Financial Services 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 9:00 A.M. on
May 20, 1999 at the Wadsworth Atheneum, 600 Main Street, Hartford, Connecticut,
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 Item
2. The shares of common stock represented by this Proxy cannot be voted unless
you sign and return this Proxy, or vote by telephone or through the internet.
(Continued, and to be signed and dated, on the reverse side.)
- - --------------------------------------------------------------------------------
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P.O. BOX 11159
NEW YORK, NY 10203-0159
- - --------------------------------------------------------------------------------
<PAGE>
VOTE BY TELEPHONE OR INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
TELEPHONE
1-800-481-9816
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your control number, located in the
box below, and then follow the simple directions.
INTERNET
http://proxy.shareholder.com/hig
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the website. You will be prompted to enter your control number, located
in the box below, to create an electronic ballot.
MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided.
Your telephonne or Internet vote authorizes the named proxies to vote your
shares in the same manner as if you marked, signed and returned the proxy card.
If you have submitted your proxy by telephone or the Internet, there is no need
for you to mail back your proxy.
CONTROL NUMBER FOR
CALL TOLL-FREE TO VOTE IT'S FAST AND CONVENIENT TELEPHONE OR INTERNET VOTING
1-800-481-9816
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY TELEHONE OR INTERNET
- - --------------------------------------------------------------------------------
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, Paul G. Kirk, Jr., Frederic V. Salerno, Robert W.
Selander, Lowndes A. Smith, H. Patrick Swygert, Gordon I. Ulmer and David K.
Zwiener.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "EXCEPTIONS" box and write that nominee's name in the space provide below.)
*EXCEPTIONS:____________________________________________________________________
ITEM 2. Ratification of the appointment of Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending December 31, 1999.
FOR [_] AGAINST [_] ABSTAIN [_]
Mark this box if you plan to
attend the Annual Meeting
Address Change and/or Comments
Mark Here
Note: Please add your title if you are
signing for a corporation or other
busines entity, or as attorney,
administrator, executor, guardian,
trustee or in any other representative
capacity.
Dated:_____________________________, 1999
Signature
Title
Votes MUST be Indicated
(x) in black or blue ink.
(Please sign, date and return this proxy card in the enclosed envelope.)
- - --------------------------------------------------------------------------------
