Long-Term Executive Incentive Plan – Performance Goals and Target Awards
for Current Performance Cycles
The registrant maintains a shareholder-approved Long-Term Executive Incentive Compensation Plan to provide
certain executives, including the executive officers, the opportunity to receive a cash award based on the
achievement of performance objectives over a three-year cycle. The Compensation and Succession Committee
of the Board of Directors establishes performance goals for each cycle and sets threshold, target and maximum
levels of performance. Awards are calculated on an executive’s annual salary as of the beginning of the cycle.
The amount of each executive’s payout is dependent on the achievement of the performance goals. The
Committee has the authority to adjust the amount of awards payable under the plan, but has no authority to
increase the amount of an award otherwise payable to a “covered employee” as defined in Section 162(m)(3) of
the Internal Revenue Code. Payments are made in March of the year following the end of the respective cycle,
after the Committee has certified in writing the degree of attainment of the cycle’s performance goals.
The current cycles under the plan cover the following three-year periods: 2002-2004, 2003-2005, 2004-2006
The performance goal for the 2002-2004 cycle is an adjusted return on equity measure as compared to that of a
peer group of companies in the S&P 500 property/casualty index over the same three-year period. No payout is
made for this cycle unless adjusted return on equity exceeds the average rate on three-year treasury notes over
the cycle, plus 200 basis points. Award opportunities range from 0% to 250% of an executive officer’s target
award, depending on adjusted return on equity performance relative to the peer group. An executive officer’s
target award generally ranges from 40% to 155% of salary.
The performance goal for the 200