Who We Are

 

•   The world’s largest publicly traded property and casualty (P&C) insurer, based on market capitalization of $53.9 billion*   •   A truly global company, with local operations in 54 countries and territories   •   Insurance is our only business				•   Well balanced by product and customer:   –  A global leader in traditional and specialty P&C coverage for industrial commercial and mid-market companies   –  A leading commercial lines insurer in the U.S. and the largest financial lines writer globally   –  The leader in U.S. high net worth personal lines and a large personal lines business globally   –  A global leader in personal accident and supplemental health insurance   –  An international life insurer focused on Asia   –  A P&C reinsurer				•   Exceptional financial strength, managing risk conservatively in both underwriting and investing   •   Core operating insurance companies are rated “AA” for financial strength by S&P and “A++” by A.M. Best       * Pro forma at December 31, 2015

 

2016 Annual General Meeting of Shareholders
Date and Time		Place		Record Date		Proxy Mailing Date
May 19, 2016, 2:45 p.m.		Chubb Limited		March 28, 2016, except as		On or about April 7, 2016
Central European Time		Bärengasse 32		provided in “Who is
		CH-8001, Zurich		entitled to vote?” in this
		Switzerland		proxy statement

1

Approval of the management report, standalone financial statements and consolidated financial statements of Chubb Limited for the year ended December 31, 2015

 

2

Allocation of disposable profit and distribution of a dividend from reserves

 

2.1

Allocation of disposable profit

 

2.2

Distribution of a dividend

 

3

Discharge of the Board of Directors

 

4

Election of Auditors

 

4.1

Election of PricewaterhouseCoopers AG (Zurich) as our statutory auditor

4.2

Ratification of appointment of independent registered public accounting firm PricewaterhouseCoopers LLP (United States) for purposes of United States securities law reporting

 

4.3

Election of BDO AG (Zurich) as special audit firm

 

5

Election of the Board of Directors

 

6

Election of the Chairman of the Board of Directors

 

7

Election of the Compensation Committee of the Board of Directors

8

Election of Homburger AG as independent proxy

 

9

Amendment to the Articles of Association relating to authorized share capital for general purposes

 

10

Approval of the Chubb Limited 2016 Long-Term Incentive Plan

 

11

Approval of the maximum compensation of the Board of Directors and Executive Management

 

11.1

Compensation of the Board of Directors until the next annual general meeting

 

11.2

Compensation of Executive Management for the next calendar year

 

12

Advisory vote to approve executive compensation under United States securities law requirements

 

Notice of Internet availability of proxy materials: Shareholders of record are being mailed, on or around April 7, 2016, a Notice of Internet Availability of Proxy Materials providing instructions on how to access the proxy materials and our Annual Report on the Internet, and if they prefer, how to request paper copies of these materials.
By Order of the Board of Directors,     Joseph F. Wayland Executive Vice President, General Counsel and Secretary April 5, 2016, Zurich, Switzerland		Your vote is important. Please vote as promptly as possible by following the instructions on your Notice of Internet Availability of Proxy Materials, whether or not you plan to attend the meeting.

 

 

•

Majority-vote requirement for Board nominees

 

•

Board of Directors independence

 

–

Independent Board per NYSE standards (94%)

 

–

Independent Lead Director

 

–

All independent directors for Audit, Compensation, Nomination & Governance, and Risk & Finance Committees

 

•

Tenure diversity—8.6-year average Board tenure (4 out of 18 are currently first-year directors)

 

•

Shareholder ability to call special meeting

 

•

Swiss incorporation and Minder Ordinance requirements (a set of Swiss corporate governance and executive compensation rules) provide shareholders with significant voting approval on director and executive compensation

 

•

United States SEC say-on-pay requirement strengthens shareholder ability to vote their opinion on the Board’s use of the pre-approved executive management compensation for the next financial year

 

•

The Board may not appoint directors to fill vacancies

 

•

Our Board has adopted a Code of Conduct applicable to all directors, officers and employees, which sets basic principles to guide their day-to-day activities. The Code of Conduct addresses, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, compliance with laws and regulations (including insider trading laws) and reporting illegal or unethical behavior

 

•

Operating income of $9.76 per share, essentially flat with last year’s record operating income and up 3.5% when adjusted for foreign exchange

 

•

Record property and casualty (P&C) underwriting income of $1.9 billion, up 1.7%, or 8.0% in constant dollars

 

•

Net investment income of $2.2 billion, down 2.6% from 2014

•

Record P&C combined ratio of 87.4% compared to 87.7% last year

 

•

Book value per share and tangible book value per share declined 0.3% and 0.5%, respectively. Excluding the negative impacts of unfavorable foreign currency movement and unrealized losses in the Company’s investment portfolio, book value per share increased 6.6%. Tangible book value per share was also impacted

by the addition of goodwill and intangibles associated with the Fireman’s Fund acquisition that closed during the year. Excluding those items, tangible book value per share increased 8.5% in 2015

 

•

Operating return on equity of 11.5%

 

•

Total shareholder return, which includes stock price appreciation plus invested dividends, was 4.2%

 

P&C Combined Ratio Versus Peers
				Averages
				1 year		3 year		5 year		7 year		10 year
n		Chubb		87.4%		87.7%		90.3%		90.0%		89.6%
n		Global Peers1		96.8%		96.6%		97.1%		96.9%		96.3%
n		North American Peers2		95.3%		94.5%		97.6%		97.0%		95.8%
1  Includes Allianz, AXA, Munich Re, QBE, RSA, Zurich. 2  Includes AIG, Chubb Corp., CNA, HIG, TRV, XL. Source:SNL and company disclosures
Operating ROE Versus Peers
				Averages
				1 year		3 year		5 year		7 year		10 year
n		Chubb		11.5%		11.9%		11.5%		12.3%		14.0%
n		Global Peers1		8.0%		7.3%		7.9%		9.1%		11.1%
n		North American Peers2		8.8%		10.0%		8.6%		8.5%		10.2%
1  Includes Allianz, AXA, Munich Re, QBE, RSA, Zurich. 2  Includes AIG, Chubb Corp., CNA, HIG, TRV, XL. Source:SNL and company disclosures

 

 

 

 

 

 

Key Executive Compensation Practices

 

 

Individual Performance Criteria

•  Personal contribution to both short-term and long-term business results

•  Successful execution of key strategic objectives

•  Demonstrated leadership capability

•  Demonstrated application of relevant technical expertise

•  Ethical conduct, regulatory compliance and mitigation of unnecessary risk

Company Performance Metrics Criteria

•  Per share tangible book value growth

•  Quality of growth in book value

•  Operating return on equity

•  Operating income

•  P&C combined ratio

 

Agenda Item 1

Approval of the Management Report, Standalone Financial

Statements and Consolidated Financial Statements of Chubb Limited

for the year ended December 31, 2015

Under Swiss law, our management report as defined under Swiss law (previously referred to as an annual report), standalone financial statements and consolidated financial statements must be submitted to shareholders for approval or disapproval at each annual general meeting.

These items are all included in the Annual Report to Shareholders of Chubb Limited for the fiscal year ended December 31, 2015 (the Annual Report), which is part of the proxy materials we provide. Specifically, the Annual Report contains:

 

•

the standalone Swiss statutory financial statements of Chubb Limited (which do not consolidate the results of operations for Chubb Limited’s subsidiaries);

 

•

the standalone Swiss statutory compensation report of Chubb Limited, which we call the Swiss Compensation Report;

 

•

Chubb Limited’s consolidated financial statements for the year ended December 31, 2015; and

 

•

the reports of our statutory auditor and our independent registered public accounting firm, as well as information on the Company’s business, organization and strategy (which forms the management report as defined under Swiss law).

Copies of our 2015 Annual Report and this proxy statement will be available to all shareholders entitled to vote at the May 19, 2016 annual general meeting of shareholders, which we refer to as the Annual General Meeting, on the Internet at http://www.viewproxy.com/chubblimited/2016 on or about April 7, 2016.

The Company’s statutory auditor, PricewaterhouseCoopers AG, Zurich, Switzerland has issued an unqualified

recommendation to the Annual General Meeting that Chubb Limited’s statutory financial statements be approved. PricewaterhouseCoopers AG has expressed its opinion that the financial statements for the year ended December 31, 2015 comply with Swiss law and the Company’s Articles of Association. They also confirmed that the proposed appropriation of available earnings complies with Swiss law and the Company’s Articles of Association, and has reported on other legal requirements.

PricewaterhouseCoopers AG has also issued an unqualified recommendation that the Company’s consolidated financial statements be approved. PricewaterhouseCoopers AG has expressed its opinion that the consolidated financial statements present fairly, in all material respects, the financial position of Chubb Limited, the results of operations and the cash flows in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and comply with Swiss law and has reported on other legal requirements.

Representatives of PricewaterhouseCoopers AG, Zurich, Switzerland, will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting.

What Happens If Shareholders Do Not Approve This Proposal?

 

 

If shareholders do not approve this proposal, then shareholders would be precluded from approving the allocation of disposable profit and distribution of a dividend as set out in Agenda Items 2.1 and 2.2.

 

Agenda Item 2

Allocation of Disposable Profit and Distribution of a Dividend out of

Legal Reserves (by Way of Release and Allocation to a Dividend Reserve)

Agenda Item

 

Our Board of Directors is asking shareholders to approve that the Company’s disposable profit (including the profit for the year and the other items as shown below and on Chubb Limited’s standalone financial statements) be carried forward. The following table shows the appropriation of available earnings as proposed by the Board of Directors for the year ended December 31, 2015. The information in the table below is solely with respect to legacy ACE Limited and its subsidiaries and does not include the results or other information relating to Chubb Corp. and its subsidiaries.

 

		(in millions of Swiss francs)
Profit for the year			5,168
Balance brought forward			2,793
Attribution to reserve for treasury shares			(471	)
Balance carried forward			7,490

Explanation

 

Under Swiss law, the allocation of the Company’s profit or loss must be submitted to shareholders for approval or disapproval at each annual general meeting.

Our Board of Directors continues to believe that it is in the best interests of the Company and its shareholders to retain our earnings for future investment in the growth of our business, for share repurchases, for the possible acquisition of other companies or lines of business, and for dividends out of legal reserves as described in this proxy statement.

Accordingly, the Board is proposing that all retained earnings at the disposal of the Annual General Meeting be carried forward. The Board is also proposing a dividend to shareholders under Agenda Item 2.2.

What Happens If Shareholders Do Not Approve This Proposal?

 

If the shareholders do not approve this proposal, then the Board will consider the reasons the shareholders did not approve the proposal, if known, and will call an extraordinary general meeting of shareholders for reconsideration of the proposal or a revised proposal.

Voting Requirement to Approve Agenda Item

 

The affirmative “FOR” vote of the majority of the votes cast (in person or by proxy) at the Annual General Meeting, not counting abstentions, broker non-votes or blank or invalid ballots, is required to approve this agenda item.

 

		The Board of Directors recommends a vote “FOR” approval of the appropriation of retained earnings without distribution of a dividend at the time of the Annual General Meeting.

 

Introduction and Explanation

 

Our Board of Directors is requesting shareholder approval for an annual dividend of up to USD $2.76 per share, to be paid in installments as determined by the Board of Directors from a separate dividend reserve account. The separate dividend account would be in CHF in accordance with our Swiss statutory financial statements and Swiss law and is the same method approved at our annual general meeting last year. This reserve account would be larger, based on current exchange rates, than the maximum dividend amount we intend to pay out, in order to permit payment of the entire USD $2.76 per share even in the event of significant currency fluctuations. Amounts remaining in the dividend reserve account following dividend payments would be returned to the capital contributions reserve as of the date of the 2017 annual general meeting.

Dividend Reserve

 

Under this proposed process for a dividend, shareholders fix an aggregate CHF amount to be allocated from our capital contributions reserves to a special reserve account, where the amount will be available for the payment of dividends.

Our Board of Directors has proposed that the maximum amount legally available to pay an annual dividend be CHF 1.950 billion. The maximum amount proposed to be legally available is significantly higher than the CHF 1.245 billion requested and approved at last year’s annual general meeting in order to reflect a $0.08 per share annual dividend increase and the increase in our shares outstanding as a result of approximately 137 million Chubb Limited Common Shares, which we refer to as Common Shares, being issued in connection with the Chubb Corp. acquisition.

If approved by shareholders, the maximum amount legally available to pay a dividend will be released from the capital contributions reserves account, a sub-account of legal reserves, and be segregated to a dividend reserve account. We refer to this amount in the dividend reserve account as the Dividend Reserve. While dividend payments would reduce the Dividend Reserve on our Swiss balance sheet, the payments are not required to be sourced from CHF-denominated assets; in fact, we typically source dividend payments from assets already denominated in USD or equivalent, thereby avoiding currency exchange expense.

Annual Dividend and Board Discretion

 

Under this proposed process for a dividend, the Board of Directors will be authorized to use the Dividend Reserve to distribute a dividend to shareholders in installments up to a maximum of USD $2.76 per share, which we refer to as the

Annual Dividend. The Board will determine the record and payment dates at which the Annual Dividend may be paid (or, if circumstances warrant, refrain from paying it) in one or more installments, until the date of the 2017 annual general meeting. After that, any balance remaining in the Dividend Reserve will be automatically reallocated to the capital contribution reserves account of legal reserves.

The Board currently expects to pay the full USD $2.76 per share of the Annual Dividend in four equal installments of $0.69 each, on record dates at about the end of June, September, December and March, respectively, with payment dates about 21 days thereafter.

The total amount of dividends paid is limited to the amount of the Dividend Reserve expressed in Swiss Francs, which is required under Swiss law. The amount of the Dividend Reserve as proposed is high enough to permit payment of the full USD $2.76 per share Annual Dividend even if there are material currency fluctuations between the Swiss Franc and the U.S. dollar or the Company issues new shares. Should, however, these fluctuations or new share issuances result in payouts of the Annual Dividend that exceed the Dividend Reserve, the Annual Dividend’s installments would have to be capped accordingly. In the unlikely event that the Annual Dividend must be cut back in this way, our Board would propose payment of the unpaid amount in the dividend proposal at the next annual general meeting or an extraordinary general meeting called for that purpose.

Agenda Item

 

Our Board of Directors proposes:

 

(a)	that an aggregate amount equal to CHF 1,950,000,000 be released from the capital contribution reserves account, a sub-account of legal reserves, and allocated to a segregated dividend reserve account from capital contribution reserves (Dividend Reserve), and

 

(b)

to distribute a dividend to the shareholders up to an aggregate amount totaling USD $2.76 per Common Share from, and limited at a maximum to the amount of, the Dividend Reserve in one or more installments, in such amounts and on such record and payment dates as determined by the Board in its discretion.

If the Board of Directors deems it advisable for the Company, the Board of Directors shall be authorized to abstain (in whole or in part) from distributing a dividend in its discretion. The authorization of the Board of Directors to distribute the installments from the Dividend Reserve will expire on the date of the 2017 annual general meeting, on which date any balance remaining in the Dividend Reserve will be automatically reallocated to the capital contribution reserves account of legal reserves.

 

What Happens If Shareholders Do Not Approve This Proposal?

 

If the shareholders do not approve this proposal, then the Board will consider the reasons the shareholders did not approve the proposal, if known, and will call an extraordinary general meeting of shareholders for reconsideration of the proposal or a revised proposal.

Voting Requirement to Approve Agenda Item

 

The affirmative “FOR” vote of the majority of the votes cast (in person or by proxy) at the Annual General Meeting, not counting abstentions, broker non-votes or blank or invalid ballots, is required to approve this agenda item.

 

		Our Board of Directors recommends a vote “FOR” the payment of dividends from legal reserves as described above.

 

Agenda Item 3

Discharge of the Board of Directors

 

Agenda Item 4

Election of Auditors

 

Agenda Item

 

Our Board of Directors is asking shareholders to elect PricewaterhouseCoopers AG (Zurich) as the Company’s statutory auditor for the financial year ending December 31, 2016.

Explanation

 

Our shareholders must elect an audit firm supervised by the Swiss Federal Audit Oversight Authority as statutory auditor. The statutory auditor’s main task is to audit the standalone statutory financial statements and consolidated financial statements of Chubb Limited. Our Board of Directors has recommended that PricewaterhouseCoopers AG, Birchstrasse 160, CH-8050 Zurich, Switzerland (PwC AG), be elected as our statutory auditor for our consolidated financial statements and standalone statutory financial statements.

Representatives of PwC AG will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting.

For independent auditor fee information and information on our pre-approval policy of audit and non-audit services, see the explanation of Agenda Item 4.2. Please see the Audit Committee Report included in this proxy statement for additional information about our statutory auditors.

Voting Requirement to Approve Agenda Item

 

The affirmative “FOR” vote of the majority of the votes cast (in person or by proxy) at the Annual General Meeting, not counting abstentions, broker non-votes or blank or invalid ballots, is required to approve this agenda item.

 

		Our Board of Directors recommends a vote “FOR” the election of PricewaterhouseCoopers AG (Zurich) as the Company’s statutory auditor for the year ending December 31, 2016.

 

 

Agenda Item

 

Our Board of Directors is asking shareholders to ratify the appointment of PricewaterhouseCoopers LLP (Philadelphia, Pennsylvania, United States) as the Company’s independent registered public accounting firm for the year ending December 31, 2016.

Explanation

 

Our Board of Directors and the Audit Committee recommend that our shareholders ratify the appointment of PricewaterhouseCoopers LLP, Two Commerce Square, Suite 1700, 2001 Market Street, Philadelphia, Pennsylvania, 19103,

United States (PwC LLP), an affiliate of PwC AG, as our independent registered public accounting firm for purposes of U.S. securities law reporting.

The Audit Committee recommends the appointment of our independent registered public accounting firm to the Board for approval by our shareholders annually. The Audit Committee reviews both the audit scope and estimated fees for professional services for the coming year. The Audit Committee has recommended the ratification of the engagement of PwC LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2016. The Company has had a working association with PwC LLP (or its predecessor Coopers &

 

Lybrand LLP) since 1985; PwC LLP (or its predecessor Coopers & Lybrand LLP) has had the responsibility for examining the consolidated financial statements of the Company and its subsidiaries since 1985.

Representatives of PwC LLP will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting.

Independent Auditor Fee Information

 

The following table presents fees for professional audit services rendered by PwC AG and PwC LLP, which we collectively refer to as PwC, for the audit of our annual consolidated financial statements for 2015 and 2014 and fees for other services rendered by PwC for fiscal years 2015 and 2014:

 

		2015				2014
Audit fees1		$	18,432,000			$	19,139,000
Audit-related fees2			3,210,000				2,394,000
Tax fees3			3,715,000				3,472,000
All other fees4			1,165,000				465,000
Total		$	26,522,000			$	25,470,000

The fees in the table above include “out-of-pocket” expenses incurred by PwC and billed to the Company in connection with these services of $828,000 for 2015 and $1,152,000 for 2014.

 

1

Audit fees for the years ended December 31, 2015 and 2014 were for professional services rendered in connection with: the integrated audits of our consolidated financial statements and internal controls over financial reporting, the statutory and U.S. GAAP audits of various subsidiaries, and comfort letters and consents issued in connection with registration statements which we filed with the Securities and Exchange Commission.

 

2

Audit-related fees for the years ended December 31, 2015 and 2014 were for professional services rendered in connection with due diligence services ($2,467,000 in 2015 and $1,421,000 in 2014), consultation on accounting and financial reporting matters ($539,000 in 2015 and $635,000 in 2014), audits of employee benefit plans ($102,000 in 2015 and $185,000 in 2014), internal control reviews at some of our non-U.S. entities ($88,000 in 2015 and $86,000 in 2014), agreed upon procedures related to the proxy statement ($14,000 in 2015 and $14,000 in 2014) and accounting and tax advice on structuring transactions ($Nil in 2015 and $53,000 in 2014).

 

3

Tax fees for the years ended December 31, 2015 and 2014 were for professional services rendered in connection with tax planning ($1,148,000 in 2015 and $1,136,000 in 2014), tax compliance ($1,172,000 in 2015 and $972,000 in 2014) and expatriate tax services ($1,395,000 in 2015 and $1,364,000 in 2014).

4

All other fees for the years ended December 31, 2015 and 2014 were for professional services and expenses rendered principally in connection with insurance regulatory compliance services, primarily Solvency II in the European Union ($1,072,000 in 2015 and $355,000 in 2014), software licensure fees ($15,000 in 2015 and $15,000 in 2014), industry market research and survey services ($Nil in 2015 and $13,000 in 2014), and professional training ($Nil in 2015 and $2,000 in 2014), as well as professional services and expenses rendered by a consulting firm acquired by PwC during 2010 ($78,000 in 2015 and $80,000 in 2014).

Pre-Approval Policy of Audit and Non-Audit Services

 

The Audit Committee has adopted the following policies and procedures for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm, PwC. The Audit Committee considers, among other things, whether the provision of specific non-audit services is permissible under existing law and whether it is consistent with maintaining the auditor’s independence.

Before engaging independent auditors for the next year’s audit, management will submit a list of services and related fees expected to be incurred during that year to the Audit Committee for approval. The Audit Committee will pre-approve and ratify the budgeted amount of fees within each of the categories and require management and the auditor to report actual fees versus the budget periodically throughout the year by category of service.

Either the Audit Committee Chair or the entire Audit Committee must pre-approve the provision of any significant additional audit fees in excess of the budgeted amount and any excess related to non-audit fees over the budgeted amount. If the Audit Committee Chair pre-approves such amounts, it is reported to and considered for ratification by the entire Audit Committee at its next meeting. All fees related to internal control work are pre-approved by the Audit Committee before such services are rendered. The Audit Committee pre-approved all of the 2015 fees described above pursuant to its pre-approval policies and procedures.

The Audit Committee also reviewed, at its November 2015 and January 2016 meetings, the audit services and non-audited services budgeted fees for the 2016 audit. The Audit Committee reviewed all non-audit services provided in 2015 and concluded that the provision of such services by PwC was compatible with the maintenance of that firm’s independence in the conduct of its audit functions.

Please see the Audit Committee Report included in this proxy statement for additional information about PwC.

 

Agenda Item

 

Our Board of Directors is asking shareholders to elect BDO AG, Fabrikstrasse 50, CH-8031 Zurich, Switzerland as the Company’s special audit firm until our next annual general meeting.

Explanation

 

Under Swiss law, special reports by an audit firm supervised by the Swiss Federal Audit Oversight Authority are required in connection with certain corporate transactions, including certain types of increases in share capital. We have been informed that, because of the auditor independence requirements under U.S. federal securities laws, PwC AG cannot act as our special audit firm with respect to certain types of capital increases.

Voting Requirement to Approve Agenda Item

 

The affirmative “FOR” vote of the majority of the votes cast (in person or by proxy) at the Annual General Meeting, not counting abstentions, broker non-votes or blank or invalid ballots, is required to approve this agenda item.

 

		Our Board of Directors recommends a vote “FOR” the election of BDO AG (Zurich) as the Company’s special audit firm until our next annual general meeting.

 

Agenda Item 5

Election of the Board of Directors

 

Agenda Item 6

Election of the Chairman of the Board of Directors

 

Under the Minder Ordinance and our Articles of Association, the authority to elect the Chair of our Board of Directors is vested with our shareholders, who elect a Chair from the directors elected under Agenda Item 5.

With the recommendation of our Nominating & Governance Committee, our Board of Directors has nominated our current Chairman, Mr. Evan G. Greenberg, for election by shareholders as the Chairman of the Board of Directors until our next annual general meeting. Biographical information regarding Mr. Evan G. Greenberg may be found under Agenda Item 5, the election of directors.

Mr. Greenberg has served as our Chairman since 2007, a period of sustained success for the Company. Under his leadership, the Company has created superior shareholder value. Between 2008, his first full year as Chairman, and 2015, our book value per share grew at a compound annual growth rate (CAGR) of 11.1 percent and our tangible book value per share CAGR was 12.4 percent.

For the year ended December 31, 2015, the Company delivered excellent financial results, including record P&C underwriting performance, nearly 8 percent global P&C premium growth on a constant-dollar basis and an operating return on equity of 11.5 percent. The Company also advanced its strategic and operational goals, including building greater presence and capabilities in faster-growing market segments as well as increasing diversification by geography, product, customer and distribution. In 2015, the company announced the transformational acquisition of Chubb Corp., which was completed on January 14, 2016. This established Chubb Limited as the world’s largest publicly traded property and casualty insurance company.

Annual Board Review of Leadership Structure

 

Each year, the Board of Directors reviews its leadership structure. The Board of Directors (with Mr. Greenberg abstaining) has unanimously agreed that it is in the best interest of the Company and shareholders for Mr. Greenberg to continue in his role as Chairman of the Board for the upcoming year. The Board believes he has the skills and experience to best perform both roles at this time.

Board Leadership: Our Independent Lead Director

 

While Mr. Greenberg serves as Chairman, Board leadership comes also from our Lead Director, Robert Hernandez. Our Board structure provides for a strong Lead Director position, to promote and foster strong director independence. The Lead Director provides a forum for independent director deliberation and feedback and helps assure that all Board members have the means to, and do, carry out their responsibilities in accordance with their fiduciary duties.

At every regular Board meeting, the Lead Director presides over an executive session with only the independent directors present. Our Nominating & Governance Committee, and the entire Board of Directors, regularly reviews our Board leadership structure, and in particular examines and reaffirms the significant authority and powers of our Lead Director. See “Corporate Governance—Board Leadership Structure” on page 56 of this proxy statement for more details.

 

Agenda Item 7

Election of the Compensation Committee of the Board of Directors

 

Under the Minder Ordinance and our Articles of Association, authority to elect the members of the Compensation Committee of our Board of Directors is vested with our shareholders, who elect members of the Compensation Committee from the directors elected under Agenda Item 5.

Upon the recommendation of our Nominating & Governance Committee, our Board of Directors has nominated a slate of five nominees for election at the Annual General Meeting to the Compensation Committee of our Board of Directors until our next annual general meeting. Each of Michael P. Connors, Mary A. Cirillo and Robert M. Hernandez is currently serving on the Compensation Committee. Robert

Scully and James M. Zimmerman are new nominees to the Compensation Committee. Biographical information regarding each of the nominees may be found under Agenda Item 5, the election of directors.

The Board of Directors has unanimously agreed that service by each nominee to the Compensation Committee is in the best interest of the Company and the shareholders. Each of the nominees has been determined by the Nominating & Governance Committee and the Board of Directors to satisfy the Company’s Categorical Standards of Independence and related rules of the NYSE.

 

Agenda Item 8

Election of Homburger AG as Independent Proxy

 

Under the Minder Ordinance and our Articles of Association, shareholders have the authority to elect an independent proxy. The Minder Ordinance does not permit other forms of institutional proxies such as corporate proxies (appointing an officer or another representative of the Company), or depositary bank representatives as defined under Swiss law.

The independent proxy’s main task is to exercise the voting rights granted to it by shareholders in accordance with shareholder instructions. The independent proxy will not

make statements, submit proposals or ask questions of the Board of Directors on behalf of shareholders.

Our Board of Directors has recommended that Homburger AG, Prime Tower, Hardstrasse 201, PO Box 314, CH-8037 Zurich, Switzerland be elected as our independent proxy until the conclusion of our next annual general meeting. Homburger AG is a Swiss law firm.

 

Agenda Item 9

Amendment to the Articles of Association Relating to Authorized Share Capital for General Purposes

Our shareholders last approved authorized share capital for general purposes (CHF 3,984,750,000 or 165,000,000 Common Shares) at an extraordinary general meeting held on October 22, 2015 in connection with the acquisition of Chubb Corp. With shareholder approval, we issued approximately 137 million Common Shares as non-cash consideration in connection with the completion of the acquisition, which occurred on January 14, 2016. Under Swiss law, shareholder authorization for share capital only lasts for two years, so our remaining authorized share capital expires on October 22, 2017.

As a result of the issuances made for the Chubb Corp. acquisition and in order to ensure that we have the capacity to issue sufficient Common Shares in the future, we are seeking to amend Article 6(a) of the Articles of Association to provide for an increased amount of authorized share capital, which would be available until May 19, 2018.

Our Board last recommended authorized share capital at an annual general meeting in 2014 for 140,000,000 shares (amounting to approximately 40.9% of our then-outstanding share capital). Our Board’s current authorized share capital request amounts to approximately 41.7% of our currently outstanding share capital. Therefore the current request to shareholders is consistent with prior authorized share capital requests.

The authorized share capital approved pursuant to this agenda item, or as may otherwise be approved by our shareholders, will be available for issuance at such times and for such purposes as our Board of Directors may deem advisable without further action by shareholders, except as may be required by applicable laws or regulations, including NYSE requirements. For example, the additional authorized share capital will be available for issuance in connection with financings, acquisitions of other companies, stock dividends, raising capital following significant catastrophes that would otherwise have a material effect on Chubb’s balance sheet or financial condition, or other corporate purposes.

We believe this is an important step to help ensure that our Board of Directors can adapt and react to a changing

economic climate, business challenges including increased catastrophes, and opportunities in capital and other relevant markets. The authorized share capital provision provides flexibility to account for potential risks and uncertainties inherent in the insurance business and is more consistent with the Company’s global peers. Except for Common Shares issuable pursuant to the Company’s employee benefit programs, the Company at this time does not have any current plans or commitments to issue Common Shares. The Board does not intend to issue any stock except on terms or for reasons which the Board deems to be in the best interests of the Company and its shareholders.

If this agenda item is approved, we would nevertheless seek shareholder approval for share issuances to the extent required under NYSE rules. Under current NYSE rules, shareholder approval is generally required to issue Common Shares or securities convertible into or exercisable for Common Shares in one or a series of related transactions if such Common Shares represent 20 percent or more of the voting power or outstanding Common Shares of the Company before that issuance. However, Common Shares issued for cash in a public offering are excluded from this shareholder approval requirement, as are Common Shares issued for cash in a private offering at a price at least equal to both the book value and market value of the Common Shares. NYSE rules also require shareholder approval for an issuance of shares that would result in a change of control of the Company, as well as for stock issuances in connection with certain benefit plans or related party transactions. The NYSE stockholder approval requirement for the Chubb Limited 2016 Long-Term Incentive Plan is being sought at the Annual General Meeting pursuant to Agenda Item 10.

In addition to any NYSE requirements, if shareholders approve this agenda item, the Company will nevertheless undertake not to issue more than 92,000,000 shares (approximately 19.9% of our Common Shares outstanding) pursuant to Article 6 during the two-year period that the share capital authorization contained in Article 6 remains in effect without either providing Chubb’s shareholders with the opportunity to exercise preemptive rights or seeking

 

specific shareholder approval for such issuance. This undertaking by Chubb applies only to Common Shares issued pursuant to the authorization of share capital for general purposes set forth in Article 6, and not to Common Shares issued pursuant to conditional share capital authorizations that otherwise exist under the Articles of Association.

As a Swiss company, Chubb Limited is required to submit both the English and the (authoritative) German versions of the proposed amendment to its Articles of Association, pursuant to which Article 6(a) of the Articles of Association would read as follows:

 

Artikel 6 Genehmigtes Kapital zu allgemeinen Zwecken

 

(a)	Der Verwaltungsrat ist ermächtigt, das Aktienkapital jederzeit bis zum 19. Mai 2018 im Maximalbetrag von CHF 4’830’000’000 durch Ausgabe von höchstens 200’000’000 vollständig zu liberierenden Namenaktien mit einem Nennwert von CHF 24.15 je Aktie zu erhöhen.

[(b)–(d)bleiben unverändert.]

Article 6 Authorized Share Capital for General Purposes

 

(a)	The Board of Directors is authorized to increase the share capital from time to time until May 19, 2018 by an amount not exceeding CHF 4,830,000,000 through the issue of up to 200,000,000 fully paid up registered shares with a nominal value of CHF 24.15 each.

[(b)–(d)remain unchanged.]

 

Agenda Item 10

Approval of the Chubb Limited 2016 Long-term Incentive Plan

 

On February 25, 2016, our Board of Directors adopted the Chubb Limited 2016 Long-Term Incentive Plan, which we refer to as the LTIP, subject to shareholder approval at the Annual General Meeting. Equity compensation has always been an important component of our executive, employee and director compensation programs. We believe it aligns employee and director compensation with shareholder interests and properly defers value to the medium- or long-term. Approving the LTIP would allow our Board to attract and retain key employees, provide them competitive compensation, adapt to evolving compensation practices and account for the growth of Chubb and its employees.

Upon shareholder approval, the LTIP will replace the ACE Limited 2004 Long-Term Incentive Plan, which we refer to as the ACE LTIP, as well as Chubb Corp.’s legacy equity compensation plan, The Chubb Corporation Long-Term Incentive Plan (2014), which we refer to as the Chubb Corp. LTIP. The LTIP is substantially similar to the ACE LTIP in its operation and the types of awards that may granted, and has been updated primarily to increase the amount of stock-based equity compensation reserved for issuance and to reflect current best practices in stock-based compensation programs.

The LTIP reserves 19.5 million shares for delivery pursuant to grants made to eligible employees, directors and consultants of Chubb and its subsidiaries. In light of Chubb’s acquisition of Chubb Corp., which had approximately 10,000 employees, we do not have sufficient shares remaining for future grants in accordance with our equity compensation program. Although shares remain available for future grants pursuant to the Chubb Corp. LTIP, those grants can only be made to those who were employees of Chubb Corp. or its subsidiaries prior to the acquisition. In order to be able to make future grants to all of our eligible employees and directors, the Board adopted the LTIP.

Following shareholder approval of the LTIP, we will not make any additional grants under either the ACE LTIP or Chubb Corp. LTIP.

The practical impact of reserving 19.5 million shares will be to give our Board discretion to grant awards under the LTIP for at least three years before another shareholder vote would be required. This estimate is based on our rate of annual grants in the past, and assumes future grants are consistent with our past practice, adjusted to reflect the increase in employees eligible under the LTIP following the Chubb Corp. acquisition, anticipated growth of the Company and other relevant factors.

It is our practice to make annual equity awards to a large group of our employees (approximately 3,900 individuals in 2016)—not a small group of key executives—which makes the LTIP an important part of our compensation program. We expect that equity awards will continue to be reasonably stable and largely based on performance factors set forth in this proxy statement, and we will continue to comply with SEC and NYSE requirements, such as proxy disclosure requirements, for stock plans. The LTIP has additional safeguards, including limits on annual grants to individuals, prohibitions on option repricing and below-grant date fair market value option exercise prices, and minimum vesting provisions for all awards. We also strongly link employee and equity compensation to our financial results. We believe our historical equity award practices directly contribute to successful financial performance, and our financial performance and strength provide the rationale for historical and anticipated grant amounts.

To enable us to grant performance-based compensation that is exempt from the $1 million limit on tax-deductible compensation, the performance measures of the LTIP must be submitted to and approved by our shareholders. Shareholder approval of the LTIP will constitute approval of these performance measures.

The LTIP became effective February 25, 2016, which we refer to as the Effective Date, and will continue in effect until terminated by the Board, but no new awards may be granted after February 25, 2026. Any awards that are outstanding after LTIP termination will remain subject to the terms of the LTIP.

 

As reflected in Article 5 of our Articles of Association, our shareholders approved a reserve of 33,000,000 shares of “conditional share capital” (of which 25,410,929 shares remain available) in connection with our redomestication to Switzerland in July 2008, providing a pool of shares with respect to which the Board of Directors may authorize the issuance of option rights to Chubb’s employees, directors and consultants. Our Articles of Association, as revised last

year due to Minder Ordinance requirements, also require that equity grants to our Executive Management consist of instruments permitted by an equity plan that has been approved by our shareholders. The LTIP is being submitted to shareholders, despite the previous authorization of conditional share capital, to comply with applicable tax laws, NYSE requirements and our Articles of Association.

 

On February 25, 2016, we granted 1,636,290 restricted stock awards and 291,843 restricted stock units to employees of Chubb and its subsidiaries with a grant date fair value of $118.39. We also granted 1,927,857 stock options at an exercise price of $118.39.

As of February 29, 2016, there were 463,807,984 Common Shares outstanding. At that date, there were a total of 722,054 Common Shares that remained available for future issuance under the ACE LTIP, and, under the Chubb Corp. LTIP, there were 8,971,300 shares available for future issuance to former employees of Chubb Corp. and its subsidiaries.

The number of Common Shares to be issued under legacy ACE and legacy Chubb Corp. plans on February 29, 2016, upon exercise of outstanding options, warrants, and rights, was 11,784,966, with a weighted-average exercise price of outstanding options, warrants, and rights of $85.23 and a weighted average remaining contractual term of 6.6 years.

As of February 29, 2016, outstanding unvested restricted stock and unvested restricted stock units under the ACE LTIP were 3,964,020 and 817,611, respectively. Under the current ACE LTIP limit, 21,292 full value awards remained available for future issuance. As of February 29, 2016 there were 1,808,151 restricted stock units, 1,237,457 performance units at maximum target of 100 percent payout and 857,940 deferred units outstanding under legacy Chubb Corp. plans.

The LTIP, together with the ACE LTIP and the Chubb Corp. LTIP, are the only plans under which we are currently authorized to issue equity grants to employees and directors of Chubb or its subsidiaries, as well as consultants and other persons providing services to Chubb or its subsidiaries. Following shareholder approval of the LTIP, we will not make any additional grants under either the ACE LTIP or Chubb Corp. LTIP. In addition, we maintain our employee stock purchase plan, discussed below, which allows eligible participants to purchase Common Shares.

 

As described more generally above, the purpose of the LTIP is to:

 

•

attract and retain persons eligible to participate in the LTIP;

 

•

create a link between recent performance, compensation and the enhancement of long-term shareholder return;

 

•

motivate eligible individuals to whom awards under the LTIP will be granted, who we refer to as the Participants, by means of appropriate incentives, to achieve long-range goals;

 

•

provide incentive compensation opportunities that are competitive with those of other similar companies; and

 

•

further align Participants’ interests with those of our other shareholders through compensation that is based on our Common Shares.

The LTIP promotes the long-term financial interest of Chubb and its subsidiaries, including the growth in value of Chubb’s equity and enhancement of long-term shareholder return. The LTIP also serves to set parameters and describe for shareholders terms under which the Board is permitted to issue shares out of previously-approved conditional share capital to employees, directors and consultants.

We use equity-based compensation granted under our long-term incentive plans as a key element of our executives’

compensation packages, and each year we disclose the prior year grants to and other compensation of our named executive officers in our proxy statement and of our Executive Management in our Swiss Compensation Report. We believe the LTIP assists with linking executives’ overall compensation opportunities to the enhancement of long-term shareholder return. Additionally, we have previously established a set of guidelines aimed at increasing officer and director Common Share ownership. Approval of the LTIP will help achieve this goal and is necessary in order for Chubb to continue making equity awards to employees and directors at competitive levels.

The LTIP provides for the grant of non-qualified and incentive stock options, stock appreciation rights, which we refer to as SARs, full value awards and cash incentive awards. The flexibility inherent in the plan permits the Board to change the type, terms and conditions of awards as circumstances may change. We believe that this flexibility and the resulting ability to more affirmatively adjust the nature and amounts of executive compensation are particularly important for our industry and to a global company such as ours, given the volatility of the public markets and reactions to economic and world events. Equity compensation, which aligns the interests of executives and our shareholders, is an important tool for our Board.

 

The LTIP is administered by a committee, which we refer to as the Committee, of two or more Board members selected by the Board. The Committee’s functions will be performed by the Compensation Committee. The Committee selects the Participants, the types of awards to be granted and the applicable terms, conditions, performance criteria, restrictions and other provisions of such awards. The Committee may delegate all or any portion of its responsibilities or powers under the LTIP to persons selected by it. If the Committee does not exist or for any other reason determined by the Board, and to the extent not prohibited by applicable law or the applicable rules of any stock exchange, the Board may take any action under the LTIP that would otherwise be the responsibility of the Committee.

If the LTIP is approved by shareholders, the maximum number of shares that may be delivered to Participants and their beneficiaries under the LTIP will be (i) 19.5 million Common Shares; plus (ii) Common Shares that have not been previously delivered pursuant to the ACE LTIP and remain available for grant, including shares represented by awards granted under the ACE LTIP that are forfeited, expire or are canceled after the Effective Date without delivery of Common Shares (or which result in the forfeiture of Common Shares back to Chubb). Any Common Shares covered by an award that are not delivered to a Participant or beneficiary because the award is forfeited or canceled shall not be deemed to have been delivered for this purpose. However, subject to the preceding sentence, the total number of shares covered by an award granted under the LTIP or granted after July 10, 2008 pursuant to the ACE LTIP will in each case be treated as delivered for this purpose to the extent payments or benefits are delivered to the Participant with respect to such shares.

Accordingly (i) if an award denominated in Common Shares is settled in cash, the total number of shares with respect to which such payment is made shall be considered to have been delivered; (ii) if shares covered by an award are used to satisfy the applicable tax withholding obligation, the number of shares held back by Chubb to satisfy such withholding obligation shall be considered to have been delivered; (iii) if the exercise price of any option granted under the ACE LTIP is satisfied by tendering Common Shares to Chubb (including shares that would otherwise be distributable upon the exercise of the option), the number of shares tendered to satisfy such exercise price shall be considered to have been delivered; (iv) if cash or Common Shares are delivered in settlement of the exercise of an SAR, the total number of shares with respect to which such SAR is exercised shall be deemed delivered; and (v) if we repurchased shares with proceeds received from the exercise of an option issued under the LTIP or ACE LTIP, the total number of shares repurchased shall be deemed delivered.

If the LTIP is approved by shareholders, the maximum number of shares that may be delivered to Participants and their beneficiaries under the LTIP as full value awards will be 9.75 million shares. Notwithstanding the minimum vesting

limitations described below with respect to options, SARs, and full value awards, the Committee may grant a certain number of options, SARs and full value awards that are not subject to such minimum vesting provisions. The total aggregate number of Common Shares subject to options, SARs, and full value awards granted pursuant to the LTIP that are not subject to such minimum vesting limitations may not exceed five percent of the limit of the total number of Common Shares that may be delivered under the LTIP.

The following additional limits apply to awards under the LTIP:

 

•

the maximum number of Common Shares that may be delivered to Participants with respect to incentive stock options shall be 19.5 million shares;

 

•

the maximum number of Common Shares that may be covered by options and SARs granted to any one Participant in any one calendar year may not exceed 500,000 shares;

 

•

for full value awards that are intended to be performance-based compensation (as described below), no more than 250,000 Common Shares may be delivered pursuant to awards granted to any Participant during any one calendar year; and

 

•

the maximum amount of cash incentive awards intended to be “performance-based compensation” payable to any one Participant with respect to any performance period equals $1,000,000 multiplied by the number of calendar months included in the performance period.

The Common Shares with respect to which awards may be made under the LTIP shall be:

 

•

shares currently authorized but unissued;

 

•

to the extent permitted by applicable law, currently held or acquired by Chubb as treasury shares, including shares purchased in the open market or in private transactions; or

 

•

shares purchased in the open market (as determined by the Chairman and Chief Executive Officer or any executive officer of Chubb) by a direct or indirect wholly-owned subsidiary of Chubb (and Chubb may contribute to the subsidiary an amount sufficient to accomplish the purchase of the shares to be so acquired).

At the discretion of the Committee, an award under the LTIP may be settled in cash rather than Common Shares. The closing price for our Common Shares on the NYSE on March 31, 2016 was $119.15 per share.

The Committee may use Common Shares available under the LTIP as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of Chubb or a subsidiary, including the plans and arrangements of Chubb or a subsidiary assumed in business combinations.

In the event of a corporate transaction involving Chubb (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization,

 

reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the Committee may adjust awards to preserve the benefits or potential benefits of the awards. Action by the Committee may include:

 

•

adjustment of the number and kind of shares which may be delivered under the LTIP;

 

•

adjustment of the number and kind of shares subject to outstanding awards;

 

•

adjustment of the exercise price of outstanding options and SARs; and

 

•

any other adjustments that the Committee determines to be equitable, which may include, without limitation:

 

–

replacement of awards with other awards which the Committee determines have comparable value and which

are based on stock of a company resulting from the transaction, and

 

–

cancellation of the award in return for cash payment of the current value of the award, determined as though the award is fully vested at the time of payment, provided that in the case of an option, the amount of such payment may be the excess of value of the Common Shares subject to the option at the time of the transaction over the exercise price.

Awards under the LTIP are not transferable except as designated by the Participant by will or by the laws of descent and distribution, and except for transfers without consideration to the extent permitted by the Committee.

 

All employees and directors of Chubb or its subsidiaries, as well as consultants and other persons providing services to Chubb or its subsidiaries, are eligible to become Participants in the LTIP, except that non-employees may not be granted incentive stock options. Additionally, all awards granted to

directors of Chubb shall be granted in accordance with our Articles of Association and Swiss law.

As of February 29, 2016, Chubb and its subsidiaries had approximately 31,000 employees.

 

The Committee may grant an incentive stock option or non-qualified stock option to purchase Common Shares at an exercise price determined under the option. Except as described below, the exercise price for an option shall not be less than the fair market value of the Common Shares at the time the option is granted. The exercise price of an option may not be decreased after the date of grant nor may an option be surrendered to Chubb as consideration for the grant of a replacement option or SAR with a lower exercise price, except as approved by our shareholders or as adjusted for corporate transactions described above.

No option shall be surrendered to Chubb in consideration for a cash payment or grant of any other award if at the time of such surrender the exercise price of such option is greater than the then current fair market value of a Common Share, except as approved by our shareholders. In addition, the Committee may grant options with an exercise price less than the fair market value of the Common Shares at the time of grant in replacement for awards under other plans assumed in connection with business combinations if the Committee determines that doing so is appropriate to preserve the benefit of the awards being replaced. No

dividend equivalents may be granted under the LTIP with respect to any option.

The option shall be exercisable in accordance with the terms established by the Committee, but in no event shall an option become exercisable or vested prior to the first anniversary of the date of grant (subject to acceleration, to the extent provided by the Committee, in the event of death, disability, retirement, change in control or involuntary termination). The full purchase price of each Common Share purchased upon the exercise of any option shall be paid at the time of exercise of an option. Except as otherwise determined by the Committee, the purchase price of an option shall be payable in cash, Common Shares (valued at fair market value as of the day of exercise), including shares of stock otherwise distributable on the exercise of the option, or a combination thereof. The Committee, in its discretion, may impose such conditions, restrictions, and contingencies on Common Shares acquired pursuant to the exercise of an option as the Committee determines to be desirable. In no event will an option expire more than ten years after the grant date.

 

An SAR entitles the Participant to receive the amount (in cash or Common Shares) by which the fair market value of a specified number of Common Shares on the exercise date exceeds an exercise price established by the Committee. Except as described below, the exercise price for an SAR

shall not be less than the fair market value of the Common Shares at the time the SAR is granted or, if less, the exercise price of the tandem option. The exercise price of an SAR may not be decreased after the date of grant nor may an SAR be surrendered to Chubb as consideration for the grant of a

 

replacement option or SAR with a lower exercise price, except as approved by our shareholders or as adjusted for corporate transactions described above. No SAR shall be surrendered to Chubb in consideration for a cash payment or grant of any other award if at the time of such surrender the exercise price of such SAR is greater than the then current fair market value of a Common Share, except as approved by our shareholders.

In addition, the Committee may grant SARs with an exercise price less than the fair market value of the Common Shares at the time of grant in replacement for awards under other plans assumed in connection with business combinations if the Committee determines that doing so is appropriate to preserve the benefit of the awards being replaced. The Committee may grant an SAR independent of any option grant

and may grant an option and SAR in tandem with each other, and SARs and options granted in tandem may be granted on different dates but may have the same exercise price.

The SAR shall be exercisable in accordance with the terms established by the Committee, but in no event shall an SAR become exercisable or vested prior to the first anniversary of the date of grant (subject to acceleration, to the extent provided by the Committee, in the event of death, disability, retirement, change in control or involuntary termination). The Committee, in its discretion, may impose such conditions, restrictions, and contingencies on Common Shares acquired pursuant to the exercise of an SAR as the Committee determines to be desirable. In no event will an SAR expire more than ten years after the grant date. No dividend equivalents may be granted under the LTIP with respect to any SAR.

 

The following types of “full value awards” may be granted, as determined by the Committee:

 

•

the Committee may grant awards settling in Common Shares that may be in return for previously performed services or in return for the Participant surrendering other compensation that may be due;

 

•

the Committee may grant awards settling in Common Shares that are contingent on, or subject to a risk of forfeiture or other restrictions that lapse upon, the achievement of performance or other objectives during a specified period; and

 

•

the Committee may grant awards settling in Common Shares subject to a risk of forfeiture or other restrictions that lapse upon the achievement of one or more goals relating to completion of service by the Participant.

Any such awards shall be subject to such conditions, restrictions and contingencies as the Committee determines. If the right to become vested in a full value award is conditioned on the completion of a specified period of service with Chubb or its subsidiaries, without achievement of performance measures (as described below) or other performance objectives being required as a condition of

vesting, and without it being granted in lieu of other compensation, then the required period of service for full vesting will not be less than three years (subject to accelerated vesting, to the extent provided by the Committee, in the event of the Participant’s death, disability, retirement, change in control or involuntary termination).

If the right to become vested in a full value award is conditioned on the achievement of performance targets or performance objectives, and without it being granted in lieu of other compensation, then the required performance period for determining the achievement of such performance targets or objectives will not be less than one year (subject to accelerated vesting, to the extent provided by the Committee, in the event of the Participant’s death, disability, retirement, change in control or involuntary termination). Dividends or dividend equivalents settled in cash or Common Shares may be granted to a participant in relation to a full value award with payments made either currently or credited to an account. No dividend or dividend equivalents granted in relation to a full value award that is subject to vesting conditioned on the achievement of performance targets or performance objectives shall be settled prior to the date such full value award (or applicable portion thereof) becomes vested and is settled.

 

The Committee may grant cash incentive awards (including the right to receive payment of cash or Common Shares having the equivalent cash value) that may be contingent on achievement of a Participant’s performance objectives over a

specified period established by the Committee. The grant of cash incentive awards may also be subject to such other conditions, restrictions and contingencies, as determined by the Committee.

 

A U.S. income tax deduction for Chubb will generally be unavailable for annual compensation in excess of $1 million paid to any of our most highly compensated officers (not more than five). However, amounts that constitute “performance-based compensation” are not counted toward

the $1 million limit. It is expected that, generally, options and SARs granted under the LTIP will satisfy the requirements for “performance-based compensation” as that term is used in Section 162(m) of the Internal Revenue Code.

 

The Committee may designate whether any full value awards or cash incentive awards being granted to any Participant are intended to be performance-based compensation. Any such awards designated as intended to be performance-based compensation shall be conditioned on the achievement of one or more performance measures, to the extent required by Section 162(m) of the Internal Revenue Code. To satisfy the requirements that apply to performance-based compensation and continue the ability to grant performance-based compensation full value awards or cash incentive awards after the Annual General Meeting, we are requesting shareholder approval of the performance measures. Approval of the LTIP will constitute approval of the foregoing measures.

The performance measures that may be used for such awards shall be based on any one or more of the following Company, subsidiary, operating unit or division performance measures as selected by the Committee:

 

•

tangible book value per common share outstanding;

 

•

gross premiums written;

 

•

net premiums written;

 

•

net premiums earned;

 

•

net investment income;

 

•

losses and loss expenses;

 

•

underwriting and administrative expenses;

 

•

operating expenses;

 

•

cash flow(s);

 

•

operating income;

 

•

earnings before interest and taxes;

 

•

net income;

 

•

stock price;

 

•

dividends;

 

•

strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, business expansion goals, and goals relating to acquisitions or divestitures; or

 

•

any combination thereof.

Each goal may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company and/or the past or current performance of other companies, and in the case of earnings-based measures, may use or employ comparisons relating to capital, shareholders’ equity and/or shares outstanding, investments or to assets or net assets.

 

The LTIP provides that the occurrence of a change in control shall have the effect, if any, with respect to an award as determined by the Committee. For the purposes of the LTIP, a “change in control” is generally deemed to occur when:

 

•

any person becomes the beneficial owner of 50 percent or more of Chubb’s voting stock;

 

•

the majority of the Board consists of individuals other than members of the Board on the Effective Date of the LTIP, who we refer to as Incumbent Directors (any person becoming a director subsequent to the Effective Date whose election or nomination for election was supported by three-quarters of the Incumbent Directors will also be considered an Incumbent Director);

 

•

Chubb adopts any plan of liquidation providing for the distribution of all or substantially all of its assets;

•

all or substantially all of the assets or business of Chubb are disposed of pursuant to a merger, consolidation or other transaction (unless our shareholders immediately prior to such merger, consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned the voting stock of Chubb, all of the voting stock or other ownership interests of the entity or entities, if any, that succeed to the business of Chubb); or

 

•

Chubb combines with another company and is the surviving corporation but, immediately after the combination, Chubb shareholders immediately prior to the combination hold, directly or indirectly, 50 percent or less of the voting stock of the combined company.

 

The Board may amend or terminate the LTIP at any time. The Board or the Committee may amend any award granted under the LTIP, but no amendment or termination may adversely affect the rights of any Participant without the Participant’s written consent. The Board may not amend the provision of the LTIP related to repricing without approval of

shareholders or make any material amendments to the LTIP without shareholder approval. The LTIP will remain in effect as long as any awards under the LTIP remain outstanding, but no new awards may be granted after February 25, 2026, the tenth anniversary of the Effective Date.

 

The following is a brief description of the U.S. federal income tax treatment that will generally apply to awards under the

LTIP based on current U.S. income taxation with respect to Participants who are subject to U.S. income tax.

 

Non-Qualified Options. The grant of a non-qualified option will not result in taxable income to the Participant. Except as described below, the Participant will realize ordinary income at the time of exercise in an amount equal to the excess of the fair market value of the Common Shares acquired over the exercise price for those shares. Gains or losses realized by the Participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such Common Shares equal to the fair market value of the shares at the time of exercise.

Incentive Stock Options. The grant of an incentive stock option will not result in taxable income to the Participant. The exercise of an incentive stock option will not result in taxable income to the Participant provided that the Participant was, without a break in service, an employee of Chubb or a subsidiary during the period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one year prior to the date of exercise if the Participant is “disabled,” as that term is defined in the Internal Revenue Code).

The excess of the fair market value of the Common Shares at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included in the calculation of the Participant’s alternative minimum taxable income for the tax year in which the incentive stock option is exercised. For purposes of determining the Participant’s alternative minimum tax liability for the year of disposition of the shares acquired pursuant to the incentive stock option exercise, the Participant will have a basis in those shares equal to the fair market value of the Common Shares at the time of exercise.

If the Participant does not sell or otherwise dispose of the Common Shares within two years from the date of the grant of the incentive stock option or within one year after the transfer of such Common Shares to the Participant, then, upon disposition of such Common Shares, any amount realized in excess of the exercise price will be taxed to the Participant as capital gain. A capital loss will be recognized to the extent that the amount realized is less than the exercise price.

If the above holding period requirements are not met, the Participant will generally realize ordinary income at the time of the disposition of the shares, in an amount equal to the lesser of (i) the excess of the fair market value of the Common Shares on the date of exercise over the exercise price, or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price. If the amount realized exceeds the value of the shares on the date of exercise, any additional amount will be capital gain. If the amount realized is less than the exercise price, the Participant will recognize no income, and a capital loss will be recognized equal to the excess of the exercise price over the amount realized upon the disposition of the shares.

Stock Appreciation Rights. The grant of an SAR will not result in taxable income to the Participant. Upon exercise of an

SAR, the amount of cash or the fair market value of the Common Shares received will be taxable to the Participant as ordinary income. Gains and losses realized by the Participant upon disposition of any such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of exercise.

Full Value Awards. A Participant who has been granted a full value award will not realize taxable income at the time of grant, provided that the Common Shares subject to the award are not delivered at the time of grant, or if the Common Shares are delivered, it is subject to restrictions that constitute a “substantial risk of forfeiture” for U.S. income tax purposes. Upon the later of delivery or vesting of Common Shares subject to an award, the holder will realize ordinary income in an amount equal to the then fair market value of those shares. Gains or losses realized by the Participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction period, if so provided, will also be compensation income to the Participant.

Withholding of Taxes. The Company may withhold amounts from Participants to satisfy withholding tax requirements. Except as otherwise provided by the Committee, Participants may have Common Shares withheld from awards or may tender previously owned Common Shares to the Company to satisfy tax withholding requirements. The Common Shares withheld from awards may only be used to satisfy the Company’s minimum statutory withholding obligation.

Tax Deduction. Chubb is not subject to U.S. income taxes. However, if an award is granted to a Participant employed by a subsidiary that is a U.S. taxpayer, the subsidiary generally will be entitled to a deduction equal to the amount of income includible in the Participant’s income.

A U.S. income tax deduction will generally be unavailable to Chubb for annual compensation in excess of $1 million paid to any of our most highly compensated officers (not more than five). However, amounts that constitute “performance-based compensation” are not counted toward the $1 million limit. If a U.S. subsidiary has an employee who is among its most highly compensated officers, that subsidiary’s deduction will be subject to this limit. To preserve the deduction for the subsidiary, we have has designed the LTIP to enable awards thereunder to constitute “performance-based compensation” and not be counted toward the $1 million limit.

Change In Control. Any acceleration of the vesting or payment of awards under the LTIP in the event of a change in control in the Company may cause part or all of the consideration involved to be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the Participant to a 20 percent excise tax and preclude deduction by a subsidiary.

 

Agenda Item 11

Approval of the Maximum Compensation of the Board of Directors and Executive Management

Agenda Item

 

Our Board of Directors is asking shareholders to approve a maximum total of $4.9 million in aggregate compensation for the members of the Board of Directors until the 2017 annual general meeting.

Explanation of Proposal

 

All compensation to directors (other than Mr. Greenberg, who does not receive compensation for his service as a director) from the date of the Annual General Meeting through the 2017 annual general meeting is subject to this maximum aggregate amount. This includes all annual retainer fees, committee chair fees and equity awards provided to the directors. It also includes the value of dividend equivalents paid with respect to certain outstanding deferred restricted stock units (which we stopped granting in 2009) held by some of our longer-serving directors, and certain other payments described in the 2015 Director Compensation table in this proxy statement.

The requested $4.9 million represents a 1% increase from current maximum aggregate authorized Board of Directors compensation, which comprises (i) $4.2 million requested and approved at last year’s annual general meeting; and

(ii) $650,000 requested and approved at our October 2015 extraordinary general meeting to compensate Ms. Burke and Messrs. Cash, Kellner and Zimmerman from the time they joined the Board following the completion of the merger until the Annual General Meeting.

The requested $4.9 million reflects the increase in the size of our Board by three directors in net total compared to last year’s annual general meeting, as four new directors were elected at our October 2015 extraordinary general meeting, effective upon the closing of the acquisition of Chubb Corp., and one director is retiring at the expiration of his term as of the Annual General Meeting. The requested amount also represents an estimate for the dividend equivalents and other payments described above similar to last year’s, and a small cushion to permit per-meeting fees in case of special Board meetings as described in our Director Compensation Parameters.

Explanation of Swiss Requirement

 

Swiss law and our Articles of Association require shareholders to ratify, on an annual basis and in a separate binding vote, the maximum aggregate amount of compensation that can be paid, granted or promised to the Board of Directors.

 

Board of Directors Role and Compensation

 

Chubb’s Board of Directors represents shareholder and other stakeholder interests through overall management of the Company and its operations. The Board reviews and approves the Company’s strategy and supports disciplined execution of these goals, contributing significantly to Chubb’s continued growth and outstanding short-term and long-term financial performance.

Board members, with the exception of the CEO, are not employees of the Company and receive fixed compensation for their role as directors, committee members and committee chairs. Board member compensation is not tied to the achievement of specific corporate results or performance targets. Instead, the amounts paid are based on the U.S. market for Board membership of similarly-sized companies within the insurance industry.

Process Used to Determine Maximum Aggregate Compensation for the Board of Directors, Outside Consultant Survey and Analysis of Director Compensation

 

In February 2016 the Nominating & Governance Committee retained Pay Governance to provide a survey and analysis of Board of Directors compensation, including a comparison of our compensation structure to that of our competitors and other insurance and similarly sized companies.

Our Nominating & Governance Committee considered the Pay Governance survey and analysis, together with other considerations particular to the Company, to set the Director Compensation Parameters in February 2016. At that time, the Nominating & Governance Committee approved the Director

Compensation Parameters with no changes. The Board does not expect to change the Director Compensation Parameters until it considers the maximum aggregate pool to be submitted for shareholder approval next year. The aggregate payout during the one-year period from the Annual General Meeting to the 2017 annual general meeting will be higher than the corresponding amount during calendar-year 2015 disclosed in the 2015 Director Compensation table in this proxy statement, because we had fewer directors during 2015 than we have nominated for the coming year.

What Happens If Shareholders Do Not Ratify the Maximum Aggregate Compensation Amount Proposed by the Board?

 

 

If shareholders do not ratify the maximum aggregate compensation amount proposed by the Board, then the proposed amendments to the Articles of Association require the Board to consider the results of the vote, other shareholder feedback and other matters in its discretion. Then the Board may submit a new proposal for approval of the maximum aggregate amount at next year’s annual general meeting or at an extraordinary general meeting of the shareholders. The Company may continue to pay compensation to the Board subject to the subsequent approval. The Board may also split proposals for approval by submitting proposals with respect to particular elements of compensation, shorter periods of time, or a more limited group of persons. However, rejection of this proposal could lead to material uncertainty with respect to the Company’s compensation arrangements and could detrimentally impact the Company’s ability to attract and retain directors.

 

Agenda Item

 

Our Board of Directors is asking shareholders to approve a maximum total of $44 million in aggregate compensation for the members of Executive Management for the next calendar year (2017).

Explanation of Proposal

 

Swiss law and our Articles of Association require our shareholders to ratify, on an annual basis and in a separate binding vote, the maximum aggregate amount of compensation that can be paid, granted or promised to the members of Executive Management. The aggregate amount of the compensation for Executive Management relates to the subsequent calendar year.

The maximum aggregate amount includes the total compensation to be paid, granted or promised to Executive Management for the next calendar year, including base salary, annual cash bonus and long-term equity awards, as well as Company contributions to retirement plans, perquisites and the value of other special services provided to Executive Management. The elements of compensation covered by this approval are described in Articles 23 and 24 of our Articles of Association. The annual cash bonus and long-term equity awards for 2017 are based on and subject to the Compensation Committee’s consideration of year-end financial results, and will be awarded in 2018 with respect to performance during calendar year 2017.

Chubb’s Executive Management is appointed by the Board, based on the applicable provisions of Swiss law and our Organizational Regulations.

In 2015 the Board determined Executive Management consisted of Evan G. Greenberg, Philip V. Bancroft, John W. Keogh, John J. Lupica, and Joseph F. Wayland. Shareholders approved at our 2015 annual general meeting a maximum total of $49 million in aggregate compensation for that Executive Management for 2016.

In 2016, following our acquisition of Chubb Corp. and in connection with management restructuring from that acquisition, the Board of Directors determined our Executive Management consists of four executives: Messrs. Greenberg, Bancroft, Keogh and Wayland.

The aggregate compensation for Messrs. Greenberg, Bancroft, Keogh and Wayland in 2015 was approximately $44.2 million. Please note, however, that 2015 aggregate compensation includes the special one-time long-term incentive equity awards granted by our Board in February 2016 to certain Company employees, including members of Executive Management, in recognition of their extraordinary efforts associated with the substantial additional work related to the pre-closing phase of the Chubb Corp. acquisition. These particular awards are described further in “Variable Compensation” in the Compensation Discussion & Analysis section of this proxy statement. Excluding these special awards, aggregate compensation for Messrs. Greenberg, Bancroft, Keogh and Wayland in 2015 was $36.3 million.

The proposed maximum aggregate compensation amount for the next calendar year was arrived at under the assumption and plan that 2017 compensation awards will be determined consistent in practice with determination of 2015 awards, exclusive of the special one-time long-term incentive equity awards described above. For illustrative purposes, an increase to 2015 total compensation for Executive Management (excluding the special one-time long-term incentive equity awards) of approximately 10 percent for 2016 and 10 percent for 2017 would result in total compensation of approximately $44 million in 2017. It is important for shareholders to understand that this example reflects only potential compensation and performance-based awards for 2016 and 2017.

The compensation principles adhered to by our Board and Compensation Committee are described in our Articles of Association and the Compensation Discussion & Analysis section of this proxy statement. A significant portion of compensation of Executive Management will remain “at-risk” or “variable” and dependent on Company and individual performance. At Chubb, base salary generally becomes a lesser percentage of overall compensation the more senior the position. We expect to continue this emphasis on at-risk compensation to align management and shareholder interests. Exclusive of the special one-time long-term incentive equity awards granted to the CEO and the other members of Executive Management, in 2015, 94 percent of CEO compensation and 84 percent of our other Executive Management compensation was at-risk, in the form of a variable bonus, stock options, restricted share grants and performance share awards.

 

Our approach to the Swiss-required Executive Management say-on-pay vote in this Agenda Item permits shareholders to vote on executive compensation relating to the upcoming year, while the U.S. SEC say-on-pay advisory vote in Agenda Item 12 provides shareholders an opportunity to vote looking back at actual compensation paid out to NEOs in the calendar year before the date of the proxy statement. In that sense, the U.S. SEC say-on-pay vote will provide additional accountability for the way we use the maximum amounts approved in advance via this Swiss Executive Management say-on-pay vote.

Maximum Aggregate Compensation Dependent Upon Company and Individual Performance

 

Maximum potential awards and payments at the top of applicable ranges will only be made if individual and

Company performance meet performance thresholds set by the Board or Compensation Committee in accordance with the Articles of Association and the Company’s bonus and equity incentive plans. Equity awards will be valued at the fair value at the time of grant in accordance with Article 23(e) of our Articles of Association. Actual amounts realized by Executive Management will depend on various factors including our future stock price. Although the Company will not necessarily award the maximum aggregate amount of compensation, we request that our shareholders approve the maximum aggregate amount of $44 million in order to assure that the Company has the flexibility to reward superior performance and to respond to unforeseen circumstances that may arise in calendar year 2017.

 

Where Can I Find More Information about Executive Management Compensation?

 

For reference, the “Compensation, Discussion and Analysis” section of this proxy statement contains detailed information about executive compensation. Under the Minder Ordinance, we also publish an audited annual compensation report, the Swiss Compensation Report, which is included within our Annual Report. These documents are available to shareholders in their proxy materials.

Chubb Executive Management, Role and Compensation

 

Executive Management has accountability for corporate strategy, providing constant leadership to the organization on the execution of that strategy, and ensuring that the financial performance of the Company creates shareholder value both in the short and long term.

Chubb’s Executive Management receives both fixed and variable compensation for their work. The majority of their compensation is variable, in the form of annual cash bonus and long-term equity awards – both of which are directly linked to the financial performance of the Company.

The determination of annual variable compensation follows from a thoughtful and disciplined assessment of Company performance in both absolute and relative terms, fostering clear alignment between annual compensation and Company financial performance.

Process Used to Determine Maximum Aggregate Compensation for Executive Management

 

The Board of Directors calculates the maximum aggregate compensation amount based on the assumption that compensation for Executive Management will be at the maximum of all applicable ranges, meaning that all individual and Company performance criteria are met or substantially exceeded. Actual compensation determinations and awards are subject to Board or Compensation Committee determination after the Annual General Meeting. If the Board of Directors were to decide that Executive Management deserves compensation and awards in excess of the maximum amount approved by shareholders, we would pay such amounts only with subsequent shareholder approval for that additional amount.

 

If performance criteria are not met, then the actual aggregate amount of compensation paid to the individual members of Executive Management will be significantly lower than the maximum aggregate compensation amount for which the Board is seeking approval.

What Happens If Shareholders Do Not Ratify the Maximum Aggregate Compensation Amount Proposed by the Board?

 

If shareholders do not ratify the maximum aggregate compensation amount, our Articles of Association requires the Board to consider the results of the vote, other shareholder feedback and other matters in its discretion. Then the Board may submit a new proposal for approval of the maximum aggregate amount at next year’s annual general meeting or at an extraordinary general meeting of the shareholders, and the Company may pay compensation to Executive Management subject to the subsequent approval. The Board may also split proposals for approval by submitting proposals with respect to particular elements of compensation, shorter periods of time, or a more limited group of persons.

Voting Requirement to Approve Agenda Items

 

The affirmative “FOR” vote of a majority of the votes cast (in person or by proxy) at the Annual General Meeting, not counting abstentions, broker non-votes or blank or invalid ballots, is required to approve this agenda item.

 

		The Board recommends vote “FOR” the approval of the maximum aggregate compensation of the members of Executive Management for the next calendar year.

 

Agenda Item 12

Advisory Vote to Approve Executive Compensation under U.S. Securities Law Requirements

This proposal, commonly known as the SEC’s “say-on-pay” proposal, gives our shareholders the opportunity to express their views on our NEOs’ compensation for the fiscal year ended December 31, 2015. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this proxy statement.

This Agenda Item, required by the SEC, and the immediately preceding Agenda Item 11.2, required by Swiss law, provide our shareholders with a prospective and retrospective voice on executive compensation. The Swiss executive say-on-pay vote is designed as a pre-approval so that we can clarify shareholder intent and direction before the year actually begins, which we think makes sense and provides helpful certainty for our company, our executive management and our shareholders.

The SEC say-on-pay vote generally covers the calendar year prior to the date of our proxy statement. As a result, our approach to Swiss executive say-on-pay will allow shareholders to vote on executive compensation relating to the upcoming year, while the SEC say-on-pay advisory vote provides for a look-back to the calendar year before the date of the applicable proxy statement. The SEC say-on-pay vote keeps us accountable for the way we actually use the maximum amounts approved in advance via the Swiss executive say-on-pay vote. Our Board and Compensation Committee value and will use this feedback to continually evolve our compensation programs.

Under SEC rules, this U.S. say-on-pay vote is advisory, and not binding on the Company, the Compensation Committee or the Board of Directors. However, the Board of Directors and the Compensation Committee value the opinions of our shareholders and will continue to consider the outcome of this vote each year when making compensation decisions for

our CEO and other NEOs. To the extent there is any significant vote against NEO compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate the voting results and any actions necessary to address those concerns.

Shareholders should review the “Compensation Discussion and Analysis” beginning on page 70 and the executive compensation tables and related narrative disclosure in this proxy statement for information about the compensation of our NEOs. Our NEOs for 2015 are Evan G. Greenberg, Chairman, President and CEO; Philip V. Bancroft, Chief Financial Officer; John W. Keogh, Executive Vice Chairman and Chief Operating Officer; John J. Lupica, Vice Chairman; President, North America Major Accounts and Specialty Insurance; and Sean Ringsted, Chief Risk Officer and Chief Actuary.

Our Compensation Program

 

The goal of our compensation program is to fairly compensate our employees and to enhance shareholder value by closely aligning our executive compensation philosophy and practices with the interests of our shareholders. Over the past several years, we have increased the percentage of long-term equity awards delivered to our NEOs in the form of performance shares. These performance shares vest only if the relative performance criteria that are linked to increased shareholder value are met or exceeded.

We compete for executive talent with property and casualty insurers, specialty insurers, and financial services companies worldwide. We believe our compensation programs are effective in attracting and retaining the highest caliber senior executives with the skills necessary to achieve our strong financial and operating performance objectives.

 

Our compensation practices are structured to:

 

•

pay for performance,

 

•

encourage business decision-making aligned with the long-term interests of the Company, and

 

•

support the human resource requirements of our business in all the markets, globally, in which we operate.

We continually evolve our executive compensation practices to reflect the highest global standards. Our performance-based compensation criteria include key financial performance metrics, relevant business unit performance objectives and non-quantitative objectives that support our long-term strategic plan.

 

We are asking our shareholders to indicate their support for our NEO compensation as described on pages 70-107 of this proxy statement, which include the “Compensation Discussion & Analysis” section and the compensation tables and related narrative disclosure.

Accordingly, we ask our shareholders to vote “FOR” the proposal at the Annual General Meeting to approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related material disclosed in the Company’s proxy statement.

 

Corporate Governance

 

We are committed to the highest levels of ethical conduct and corporate governance standards, through our corporate values and culture. As an insurance company, we are in the business of managing risk. Our corporate governance helps us mitigate and manage risks we face as an organization by providing a framework that guides how management runs the business and how our Board provides oversight. We review and evolve corporate governance at our company regularly.

Our Board of Directors’ corporate governance policies comply with the rules of the SEC, the listing standards of the NYSE and Swiss law. Our compliance with U.S. laws includes compliance with the Sarbanes Oxley Act of 2002, the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, and other statutes applicable to corporations doing business in the U.S. To balance our NYSE listing and Swiss incorporation requirements, we:

 

•

adhere to SEC and NYSE governance and compensation regulations and best practices, and

 

•

also comply with Swiss corporate laws that necessarily impose various restrictions and requirements resulting from our place of incorporation, including our implementation, through revisions to our Articles of Association and presentation of annual ballot items for our shareholders, of Swiss corporate governance and compensation requirements under the Minder Ordinance.

We have adopted Organizational Regulations, Corporate Governance Guidelines and Categorical Standards for Director Independence covering issues such as executive

sessions of the Board of Directors, director qualification and independence standards, Board leadership, director responsibilities and procedures, director equity ownership guidelines, management evaluation and succession and Board self-evaluations. Our Board has established committees that help with oversight of the Company and its operations, and these committees govern themselves pursuant to the Organizational Regulations and charters that are reviewed at least annually and amended as necessary.

 

Corporate Governance Documents

 

 

Our Code of Conduct

 

Our Board has adopted a Code of Conduct applicable to all directors, officers and employees, which sets forth the basic principles to guide their day-to-day activities. The Code of Conduct addresses, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, compliance with laws and regulations (including insider trading laws) and reporting illegal or unethical behavior.

Director Stock Ownership Requirements

 

Our Corporate Governance Guidelines specify director equity ownership requirements. Chubb compensates independent directors with restricted stock awards to help meet these requirements. Chubb requires minimum equity ownership of $600,000 for outside directors (based on stock price on date of award). Each director has until the fifth anniversary of his or her initial election to the Board of Directors to achieve this minimum.

Executive Sessions of Directors

 

Our non-management directors meet for an executive session of the Board at each quarterly Board meeting. Our CEO is our only non-independent director and does not attend these sessions. Our Lead Director, Robert M. Hernandez, is the presiding director for executive sessions of non-management and independent directors. Executive sessions are also common for special meetings of the Board and ad hoc committees that are created from time to time to provide oversight over specific matters. Similarly, our Committees (other than the Executive Committee) generally conduct an executive session at their meetings, with only Committee members and no members of management present.

Continuing Education for Directors

 

We provide ongoing programs for existing directors, covering, among other things, the Company’s business, organizational and management structure, results of operations and financial condition, including critical accounting policies, budgets and forecasts, and corporate governance and risk management. Directors are encouraged to attend these and other appropriate continuing education programs. In 2015, we sponsored sessions for our Risk & Finance Committee members and our Audit Committee members. In addition, many of our directors attended outside director education programs.

Related Party Transaction Guidelines

 

We have adopted Related Party Transaction Guidelines that require our Nominating & Governance Committee to review and approve or ratify certain transactions between Chubb and any related persons.

Shareholder Outreach Program

 

We speak with our shareholders on a regular basis throughout the year. Chubb Investor Relations and other members of management speak with analysts and others about general matters related to our Company. But we also conduct shareholder outreach to discuss and solicit feedback about corporate governance and executive compensation matters. Each year, this outreach program results in individual meetings or telephone conferences with shareholders who hold in aggregate a majority of our outstanding shares.

Management and the Board recognize the value of taking our shareowners views into account. Feedback from our shareholders helps us understand how they view us, set goals and expectations for our performance, and identify emerging issues that may affect our strategies, corporate governance, compensation practices or other aspects of our operations.

Open Lines of Communication

 

The Chubb Ethics Help Line is a free, confidential service you can call 24 hours a day if you have questions or concerns about ethics or integrity at Chubb. Please visit our website for specific contact information at: http://ethicshelpline.chubb.com.

We have a process for shareholders, employees and other interested parties to send communications to the Board:

To contact the Board about accounting or auditing matters, you may send an e-mail to the Chairman of the Audit Committee at: chmnaudit@chubb.com. The Corporate Secretary has access to this e-mail address.

For other matters you may send an e-mail to: corpsecy@chubb.com.

You may also contact the Lead Director, any director, non-management and independent directors, the Chairman of the Board, or the Chair of any Board Committee by sending an e-mail to our Lead Director, Robert Hernandez, at LeadDirector@chubb.com. The Corporate Secretary has access to this e-mail address.

 

If you wish to send written communications, please mail to the Board c/o Secretary, Chubb Limited, Bärengasse 32, CH-8001 Zurich, Switzerland, although mail to Switzerland is not as prompt as e-mail. The Corporate Secretary will forward all communications to the Board to the Lead Director.

Chubb and the Environment

 

Chubb has a responsibility not only to provide solutions that help clients manage environmental and climate change risks, but also to control our own ecological impact and contribute to environmental causes. We also believe that the well-being of society depends on a healthy environment and that a proper ethic strives for a sustainable balance between development and preservation.

Climate change is an important and serious issue for the global insurance industry because it is our business to provide security against many of the property and casualty-related risks posed by such change. With operations in 54 countries, Chubb’s business and operating models are exposed to the full impact of global climate change. The potential physical effects of climate change present a risk to the Company, and therefore, have been integrated into Chubb’s overall risk management process.

Environmental risks are evaluated at least annually at three governance levels, with the company’s senior management actively engaged in each. The Company’s executive Risk and Underwriting Committee, product boards and credit committees meet as frequently as monthly to evaluate specific risks and risk accumulations in Chubb’s business

activities and investments, while the Board of Directors’ Risk & Finance Committee meets regularly with company management. Various reports are provided at least quarterly to business division management, product boards, credit committees, senior management, the executive Risk and Underwriting Committee and the full Board of Directors, as well as its Risk & Management Committee.

The goals and objectives of our environmental program, including a plan to reduce the Company’s greenhouse gas emissions by 10 percent per employee, are evaluated annually and approved by the CEO.

Chubb Philanthropy

 

Chubb firmly believes that positive contributions to the fabric of our communities return long-lasting benefits to society, our employees and our company. We support the communities around the world in which our employees live and work through our established philanthropic entities and through company-sponsored volunteer initiatives. In 2015, the Chubb Foundations—Chubb Charitable Foundation, Chubb Charitable Foundation-International, and Chubb Charitable Foundation-Bermuda—distributed more than $4 million in charitable grants and matching gifts to organizations throughout the world.

To learn more about Chubb’s wide-ranging global philanthropic initiatives in the areas of education, poverty and health, the environment and disaster relief, visit our website at: http://philanthropy.chubb.com.

 

The Board’s Nominating & Governance Committee reviews the qualifications of various persons to determine whether they might make good candidates for consideration for membership on the Board of Directors. The Nominating & Governance Committee considers each person’s judgment, experience, independence and understanding of our business or other related industries, as well as other factors it determines are relevant in light of the needs of the Board of Directors and the Company. The Nominating & Governance Committee will select qualified candidates and review its recommendations with the Board of Directors, which will decide whether to invite the candidate to be a nominee for election to the Board of Directors.

Our Corporate Governance Guidelines require the Nominating & Governance Committee to review annually the skills and attributes of Board members within the context of the current make-up of the full Board. Board members should have individual backgrounds that, when combined, provide a portfolio of experience and knowledge that well serve our governance and strategic needs.

We consider Board candidates on the basis of a range of criteria, including:

Director Skills Criteria

 

 

In accordance with its charter, the Nominating & Governance Committee identifies nominees for directors from various sources. We do not generally retain third-party consultants to assist in identifying and evaluating potential nominees, although the Nominating & Governance Committee may do so if it desires.

The Nominating & Governance Committee will consider shareholder recommendations for director candidates, but the Nominating & Governance Committee has no obligation

to recommend such candidates. Assuming that appropriate biographical and background material (including qualifications) is provided for candidates recommended by shareholders, the Nominating & Governance Committee will evaluate those candidates by following substantially the same process and applying substantially the same criteria as for candidates recommended by other sources. If a shareholder has a suggestion for candidates for election, it should be sent to: Corporate Secretary, Chubb Limited, Bärengasse 32, CH-8001 Zurich, Switzerland.

 

Our Board oversees our business and monitors the performance of management. The directors keep themselves informed by discussing matters with the CEO, other key executives and our principal external advisors, such as legal counsel, outside auditors, and other consultants. They also read the reports and other materials that we send them regularly and participate in Board and committee meetings.

Board Meetings Held

 

The Board usually meets a minimum of four times per year in regularly scheduled meetings, but will meet more often if necessary. The Board met eight times during 2015, including three telephonic meetings. All directors attended at least 75 percent of the aggregate number of meetings of the Board of Directors and committees of the Board of which they were a member that were held during 2015.

Director Independence and Other Information

 

The Board has determined that the following directors and nominees are independent under the listing standards of the NYSE: Michael G. Atieh, Sheila P. Burke, James I. Cash, Mary A. Cirillo, Michael P. Connors, John Edwardson, Robert M. Hernandez, Lawrence W. Kellner, Peter Menikoff, Leo F. Mullin, Kimberly Ross, Theodore E. Shasta, Robert Scully, Eugene B. Shanks, Jr., David Sidwell, Olivier Steimer and James M. Zimmerman. Our independent directors constitute a substantial majority (17 out of 18) of our Board of Directors. In making its determination of independence, the Board applied its Categorical Standards for Director Independence and determined that no other material relationships existed between the Company and these directors.

Board Composition and Diversity

 

We believe that a variety of perspectives, opinions and backgrounds among the members of the Board is critical to the Board’s ability to perform its duties and various roles. We strive to maintain, and we encourage, diversity of thought among Board members, which makes the body as a whole more effective. Our Board includes ethnic and religious minorities, members from multiple countries, both genders, and people from many walks of life and disciplines. The make-up of the Board has evolved, and broadened, as Chubb has grown and evolved as a company, and continued diversity is expected.

The Board of Directors is elected by our shareholders and they have the legal and structural power to determine the Board’s composition. Under our Articles of Association and Swiss law, the Board is entrusted with the ultimate direction of the Company, and is responsible for ensuring appropriate policies, procedures and leadership (including at Board level) are in place. The Nominating & Governance Committee was established in large part to focus on Board composition matters.

Our Corporate Governance Guidelines help ensure that the Board, as it evolves, will have the collective skills, experience, independence and diversity to enable it to function as well as possible for the short term and long term. Those guidelines instill in the Nominating & Governance Committee responsibility for oversight of this objective, although we do not have a formal Board diversity policy.

 

Board Tenure Diversity

 

Independent Board leadership is important to Chubb and currently 17 of our 18 directors are independent. Our Board considers director tenure in connection with its independence determination. Board tenure diversity is equally important as we seek to achieve the appropriate balance of tenure years of service. Our more senior directors have a deep knowledge of our company, while new directors provide fresh perspectives. Our current Board of Directors has an average tenure of 8.6 years, and four directors are currently serving their first term on our Board.

Board Tenure in Years

 

 

Independence

 

 

Our Corporate Governance Guidelines set a retirement age of 75 years old, after which directors may no longer be nominated or re-nominated to the Board. This guideline is waived from time to time as deemed advisable by the Board.

Each of our directors represents stockholders as a whole rather than any particular stockholder or group of stockholders. Individual directors are required to notify the Nominating & Governance Committee’s Chair, and the Chairman of the Board, of any change in business or professional affiliations or responsibilities, including retirement, so that diversity, conflicts and other Board composition issues can be considered. The Lead Director is also involved in this evaluation process. A director is required to offer his or her resignation from the Board in the event a director leaves a full-time job or otherwise materially changes his or her full-time employed position or status for any reason (for example, by resignation, termination, reassignment, or retirement). The resignation may be accepted or not accepted, on behalf of the Board, by the Chair of the Nominating & Governance Committee after consulting with other Committee or Board members in the reasonable discretion of the Chair. In addition, under our Corporate Governance Guidelines, a director should offer to resign if the Nominating & Governance Committee concludes that he or she no longer meets the Company’s requirements for service on the Board.

Moreover, our Code of Conduct applies to the Board and its decisions, not just Company employees. The Code of Conduct prohibits discrimination on the basis of any characteristic protected by law, and we make all director nomination decisions and set all terms and conditions of the appointment of directors without regard to these characteristics. Chubb is committed to providing an environment in which diversity is valued, and this is particularly true with respect to the Board of Directors.

Annual Board Evaluations

 

Our Nominating & Governance Committee annually performs evaluations of the Board and a self-evaluation of the Committee. In that context, they further consider the composition of the Board.

 

Our Board’s mandate under Swiss law includes overall supervision and control of management of the Company. Though our management and employees direct and are responsible for the business operations of the Company and its divisions, and implementation of policies and strategies approved by the Board, the power of management is fundamentally delegated from the Board. Our Organizational Regulations and Corporate Governance Guidelines provide the Board with the right and flexibility to vest the responsibilities of Chairman of the Board and Chief Executive Officer in the same individual or in more than one individual, as the Board determines to be in the best interest of the Company. Our Board has determined it to be in the best interests of the Company, at this time, to vest the responsibilities of Chairman and CEO in Evan G. Greenberg because the Board believes he has the skills and experience to best perform both roles.

While Mr. Greenberg serves as Chairman, Board leadership comes also from our Lead Director, Robert M. Hernandez. Our Lead Director’s powers are significant.

Independent Lead Director—Role and Responsibilities

 

 

The Board regularly reviews and discusses its composition and structure. It has specifically delegated to the Nominating & Governance Committee the duty of evaluation in this regard, and to advise the Board as it sees fit. Chubb’s Board leadership structure has evolved over time. For example, the Chairman and Chief Executive Officer roles were separate immediately before May 2007. Mr. Greenberg was promoted to President and Chief Executive Officer in 2004 and was not appointed Chairman of the Board until three years later. As Chubb and its circumstances develop in the future, the Board will continue to examine its leadership structure and will at all times conduct itself in the manner it determines to be in the best interests of the Company and its shareholders. We expect that the Company will always have either an independent lead director or a non-executive chairman.

 

Independent Auditors

 

Our Audit Committee hires, determines the compensation of, and decides the scope of services performed by, our independent auditors. It also has the authority to retain outside advisors.

Together with our Board, our Audit Committee evaluates the qualification, performance and independence of our independent auditors. If required by applicable law or regulation relating to auditor rotation or otherwise, or if the Audit Committee otherwise determines it is necessary, it will initiate and stay actively involved in the process to select and replace the independent auditors.

In determining whether to reappoint the Company’s independent auditor, the Audit Committee took into consideration a number of factors, including the length of time the firm has been engaged, the quality of the Audit Committee’s ongoing discussions with the Company’s Independent Auditor and an assessment of the professional qualifications and past performance of the lead audit partner and their global audit team.

Compensation Consultants

 

Our Compensation Committee has the authority to retain advisors and must assess the independence of any advisor so retained. Our Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any such compensation adviser. During 2015, our Compensation Committee retained Pay Governance as its independent compensation consultant. Pay Governance did not perform any other work for the Company in 2015.

Search Firm Consultants

 

Our Nominating & Governance Committee has the authority to retain search firms to be used to identify director candidates and to approve the search firm’s fees and other retention terms, but has not typically done so. Our Nominating & Governance Committee may also retain other advisors.

 

As part of its oversight of the Company and its business activities, the Board takes very seriously its role in risk management. The Risk & Finance Committee is composed entirely of directors who are independent of the Company and its management according to our Categorical Standards for Director Independence.

Under Swiss law, the Board of Directors has ultimate responsibility for management and direction of the Company. The Board discusses and considers risk management issues at each of its meetings. The Board will adjust its practices with respect to risk management oversight whenever it determines it needs to do so and will involve itself in particular risk areas or business circumstances where its proper exercise of oversight demands it. The Board’s role in risk oversight is consistent with the Company’s leadership structure, with the Chief Executive Officer and other members of senior management having responsibility for assessing and managing the Company’s risk exposure, and the Board and its committees providing oversight in connection with these efforts.

Risk & Finance Committee Role

 

The goal of the Risk & Finance Committee is to assure that the Company’s risk management process perceives risk well, has a reasonable and sound set of policies for setting parameters on risk, and, for specific material risks, has prepared itself to avoid or to mitigate outcomes that threaten the viability of the Company.

The Risk & Finance Committee helps execute the Board’s supervisory responsibilities pertaining to enterprise risk management, capital structure, financing arrangements and investments. This includes:

 

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evaluation of the integrity and effectiveness of the Company’s enterprise risk management procedures and systems and information,

 

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oversight of policy decisions about risk aggregation and minimization, including credit risk,

 

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assessment of the Company’s major decisions and preparedness levels pertaining to perceived material risks,

 

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oversight of the capital structure and financing arrangements in support of the Company’s plans and consistent with its risk tolerances, and

 

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oversight of management’s investment of the Company’s investible assets, including to give input on strategies and monitor overall conditions and developments with respect to these assets and, again, make certain they are consistent with the Company’s risk tolerances.

The Risk & Finance Committee meets regularly with Company management, including the Chief Risk Officer, Chief Investment Officer, Treasurer and others, in fulfillment of its responsibilities. The Chief Risk Officer reports to both the Risk & Finance Committee and the Chief Executive Officer of the Company. The Risk & Finance Committee also conducts joint meetings, such as with the Audit Committee.

For information about compensation risks, see “The Relationship of Compensation to Risk” in the Compensation Discussion & Analysis section.

 

The Board of Directors has adopted Related Party Transactions Guidelines. For the purposes of our Related Party Transactions Guidelines, related parties include:

 

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any director, nominee for director or executive officer of the Company and each of their immediate family members,

 

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any entity where any of the related persons listed above is a current employee, executive officer or general partner or own 10 percent or more of the equity interest in the entity and its affiliates, and

 

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any person, and his or her immediate family members, or entity, including affiliates, that was a beneficial owner of more than five percent of the Company’s outstanding Common Shares at the time the transaction occurred or existed.

Related Party Transactions

 

The Board of Directors has adopted Related Party Transactions Guidelines requiring approval, pre-approval or ratification of transactions in which we, on the one hand, and a related party, on the other hand, participate.

 

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If any of these related-party transactions involve total payment of $120,000 or more per fiscal year, then the Nominating & Governance Committee must review it to determine that it does not constitute a conflict of interest.

 

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If any of these related-party transactions involve total payments of less than $120,000 per fiscal year, then they are deemed pre-approved under the Related Party Transactions Guidelines.

 

The Related Party Transactions Guidelines also deem as pre-approved:

 

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transactions involving our sale of insurance or reinsurance in the ordinary course of business on terms that are generally available to similarly situated parties that are not related to us, and

 

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payments or settlements of claims on such policies in the ordinary course of business on commercially reasonable terms.

There is a financial limit condition to the Nominating & Governance Committee determination of pre-approval status for the transactions or payments listed in the two bullets above. If any of these transactions or payments involve payments to an entity that is a related party and a director or his or her immediate family member has interests totaling the greater of $1 million or 2 percent of that entity’s consolidated gross revenue, then they will not be considered pre-approved.

Contributions to the ACE Political Action Committee by related parties are not within the scope of our Related Party Transactions Guidelines and are not subject to approval by the Nominating & Governance Committee.

Not-for-Profit Organizations

 

Our Related Party Transactions Guidelines require the Board of Directors to review, approve or ratify, and determine that no conflict of interest exists regarding, financial contributions by the Company (or its charitable foundations) to not-for-profit organizations for which a director or an executive officer or a member of the director’s or executive officer’s immediate family serves on the board of directors or as a senior officer.

By adopting these guidelines, the Board has determined that financial contributions to a related not-for-profit organization do not constitute conflicts of interest and are deemed pre-approved if:

 

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the contributions total $10,000 or less per fiscal year for a Company director or their immediate family, or

 

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the contributions total $50,000 or less per fiscal year for a Company executive officer or their immediate family.

Financial contributions to a related not-for-profit organization that are not pre-approved as described above are reviewed as follows:

 

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for a Company director or his or her immediate family, by the Board of Directors, and

 

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for a Company executive officer or his or her immediate family, by the Nominating & Governance Committee if the contribution totals more than $50,000 but less than $100,000 per fiscal year, or by the Board of Directors if the total contribution is $100,000 or more per fiscal year.

How Do We Monitor Related Party Transactions?

 

We have established procedures to monitor related party transactions so that we can submit them to the Nominating & Governance Committee or the Board of Directors under the Related Party Transactions Guidelines. For example, we have compiled a list of relevant persons and entities, which we update on a regular basis, and search various databases to identify payments to or from these persons or entities. Our directors, nominees for directors and executive officers are also periodically required to report related party transactions of which they are aware to the Chief Compliance Officer, such as transactions in which an immediate family member or entity associated with such family member has an interest. We also circulate directors’ and officers’ questionnaires that inquire about, among other things, related parties and related party transactions.

Our Code of Conduct addresses procedures to follow with respect to matters that raise potential conflicts, including a requirement that our employees, officers and directors report potential conflicts as part of their annual Code of Conduct affirmation statement. In addition, we poll key officers to determine whether they are aware of any transactions that may be subject to the Related Party Transactions Guidelines.

 

From time to time, institutional investors, such as large investment management firms, mutual fund management organizations and other financial organizations, with whom we conduct business in the ordinary course on an arms-length basis, become beneficial owners (through aggregation of holdings of their affiliates and/or on behalf of other beneficial owners for whom they act as investment advisor or investment manager) of 5% or more of a class of voting securities of the Company and, as a result, are considered a related person under our Related Party Transactions Guidelines.

We engaged in the transactions described below with shareholders who owned more than 5% of our Common Shares at the time of the transaction or other related

persons, and and we may transact such business during 2016. As a result of our increase in size following the acquisition of Chubb Corp., which had business relationships at the time of acquisition with certain of our related persons, the specific types and amounts of our related person transactions may vary considerably during 2016. Because we acquired Chubb Corp. in January 2016, dollar values given below do not include comparable dollar values with respect to Chubb Corp. during 2015.

Some of our related person transactions include related persons or entities that have purchased from us, or sold to us, insurance or reinsurance. We believe the terms of these transactions were no more favorable to either them or us

 

than the terms made available to unrelated counterparties. As such, they may receive or make claim payments on such policies in the ordinary course of business.

Wellington Management Company, LLP provided investment management services to some of our subsidiaries, as well as the Chubb Charitable Foundation, in 2015, for which we paid Wellington approximately $9 million. Wellington managed approximately 14 percent of our investment assets during 2015. Also, during 2015, we invested an average balance of approximately $17 million for Chubb’s general account with money market and other mutual funds managed by Wellington Management Company, LLP or its affiliates.

BlackRock Inc. entities provide investment management services to some of our subsidiaries, in 2015 managing approximately 20 percent of our investment assets and, additionally, approximately $504 million of investment assets for our legacy United Kingdom defined benefit and defined contribution programs. We paid BlackRock approximately $15 million for these services in 2015.

BlackRock affiliates also provide investment management services for certain assets within one of Chubb United Kingdom’s pension plan, and receive fees to the extent participants in the plan choose to invest in BlackRock funds (which are offered among other investment options through the plan). During 2015, participants in the plan paid approximately $500,000 in management fees to BlackRock. In addition, we include BlackRock funds as among the investment options that may be selected by our clients with respect to their separate accounts with us. We understand that BlackRock funds may pay investment management fees to BlackRock, Inc. and/or its affiliates for their services to the funds.

In 2015, our subsidiary ACE Tempest Reinsurance Ltd. and an affiliate of BlackRock partially funded ABR Reinsurance Capital Holdings, Inc. (or ABR), a newly formed Bermuda reinsurance holding company. Both ACE Tempest Reinsurance Ltd. and the BlackRock affiliate invested in common shares of ABR in a private placement. ABR is obligated to reimburse Chubb and BlackRock for certain expenses incurred by each of them for the formation of ABR and its reinsurance subsidiary. In addition, Chubb and BlackRock established contractual relationships with ABR (Chubb in connection with reinsurance and reinsurance operations, and BlackRock in connection with asset management), and entered into a fee-sharing arrangement with each other to equally share certain fees payable by ABR pursuant to these contracts. No reimbursement or fee-sharing payments have yet been made.

Mr. Hernandez, our Lead Director, is the Chairman of the Board of Trustees of various BlackRock Open-End Equity and Long Term Bond Funds, publicly traded open-end mutual funds, which are advised by BlackRock Advisors, LLC. He is not an executive officer of BlackRock Advisors, LLC or its ultimate parent, BlackRock, Inc., a publicly held company.

Fidelity Management & Research Company (FMR) funds are included among the investment options that may be