UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 28, 2006
Selective Insurance Group, Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 0-8641 22-2168890
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
40 Wantage Avenue, Branchville, New Jersey 07890
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 948-3000
n/a
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On April 24, 2006, the Salary and Employee Benefits Committee (the
"Committee") of the Board of Directors of Selective Insurance Group, Inc. (the
"Company") approved a new Employment Agreement between the Company and Gregory
E. Murphy, the Company's Chairman, President and Chief Executive Officer, dated
as of April 26, 2006 (the "Employment Agreement").
The Employment Agreement replaces eleven-year old employment and
termination agreements entered into by the Company, one of its subsidiaries, and
Mr. Murphy, as described in Item 1.02. (collectively, the "Prior Agreements").
The Employment Agreement corrects inconsistencies between the Prior Agreements
and changes certain terms in those agreements to align them with current
practices at peer companies, including decreasing the potential amount of
severance in a change of control and increasing the potential amount of
severance in a termination not for cause. In developing the Employment
Agreement, the Committee worked with and accepted the recommendations of both
the Committee's independent compensation consultants and outside counsel.
The terms of the Employment Agreement with Mr. Murphy are as follows:
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Term Three (3) years, automatically renewed for additional one (1) year periods unless
terminated by either party with written notice.
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Compensation Base salary not less than $900,000.
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Benefits Eligible to participate in incentive compensation plan, stock plan, 401(k) plan,
defined benefit pension plan and any other stock option, stock appreciation right,
stock bonus, pension, group insurance, retirement, profit sharing, medical,
disability, accident, life insurance, relocation plan or policy, or any other plan,
program, policy or arrangement of the Company intended to benefit the employees of the
Company generally.
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Vacation and Reimbursements Vacation time and reimbursements for ordinary travel and entertainment expenses in
accordance with the Company's policies.
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Perquisites Suitable offices, secretarial and other services, and other perquisites to which other
executives of the Company are generally entitled.
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Severance and o For Cause or Resignation by Executive other than for Good Reason (each term
Benefits on Termination as defined in the Employment Agreement): Salary and benefits accrued through
without Change in Control termination date.
o Death or Disability: Two (2) times: (i) Executive's salary, plus (ii)
average of three (3) most recent annual cash incentive payments; provided that
any such severance payments be reduced by life or disability insurance payments
under policies with respect to which Company paid premiums.
o Without Cause by Company, Relocation of Office over Fifty (50) Miles (without
Executive's consent), Resignation for Good Reason by Executive:
o Two (2) times: (i) Executive's salary, plus (ii) average of three (3) most
recent annual cash incentive payments.
o Medical, dental, vision, disability and life insurance coverages in effect
for Executive and dependents until the earlier of twenty-four (24) months
following termination or commencement of equivalent benefits from a new
employer.
o Stock Awards: Except for termination for Cause or resignation by the
Executive other than for Good Reason, immediate vesting and possible extended
exercise period for any previously granted stock options, stock appreciation
rights, restricted stock and stock bonuses.
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Severance and Benefits on For termination without Cause or by Executive with Good Reason within two (2) years
Termination after Change in following a Change in Control (as defined in the Employment Agreement), Executive is
Control entitled to:
o Severance payment equal to 2.99 times the greater of (i) Executive's salary
plus target annual cash incentive payment; or (ii) Executive's salary plus the
average of Executive's three (3) immediately prior annual cash incentive
payments.
o Medical, dental, vision, disability and life insurance coverages in effect
for Executive and dependents until the earlier of three (3) years following
termination or commencement of equivalent benefits from a new employer.
o Stock Awards, same as above.
o Tax Gross-Up Payment, if necessary, to offset any excise tax imposed on
Executive for such payments or benefits.
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Release; Confidentiality o Receipt of severance payments and benefits conditioned upon:
and Non-Solicitation o Entry into release of claims; and
o No disclosure of confidential or proprietary information or solicitation of
employees to leave the Company for a period of two (2) years following the
termination of the Employment Agreement.
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The foregoing description of the Employment Agreement is qualified in
its entirety by reference to the copy of the Employment Agreement, which is
filed as Exhibit 10.1 to this Current Report on Form 8-K.
1.02. Termination of a Material Definitive Agreement.
Upon Mr. Murphy's entry into the new Employment Agreement, dated and
effective as of April 26, 2006, each of (i) the employment agreement among
Gregory E. Murphy, the Company, and the Company's wholly owned subsidiary,
Selective Insurance Company of America ("SICA"), dated August 1, 1995, as
amended (the "Prior Employment Agreement"), and (ii) the Termination Agreement
among Mr. Murphy, the Company and SICA, dated August 1, 1995, as amended (the
"Termination Agreement"), were terminated.
Under the Prior Employment Agreement, Mr. Murphy received an annual
salary of not less than $700,000. If Mr. Murphy was not re-elected to his
current position, or was terminated without Cause (as defined in the Prior
Employment Agreement), he would have been entitled to receive severance pay
equal to his salary and certain benefits in effect at the time of his
termination of employment for a period of two (2) years after the date of such
termination. If terminated for Cause, Mr. Murphy would have been entitled to
receive that portion of his salary earned to the date of his termination and the
benefits accrued to him under certain employee benefit plans to the date of such
termination, in accordance with the terms of such plans.
Under the Termination Agreement, in the event of a Change in Control
(as defined in the Termination Agreement) of the Company, SICA was to continue
to employ Mr. Murphy in the capacity in which he was serving immediately prior
to the Change in Control for a period of three (3) years, following such Change
in Control, which term would be automatically renewed for successive one-year
periods unless prior written notice is given. The Termination Agreement provided
that if Mr. Murphy's employment was terminated after a Change in Control
occurred, other than (i) due to his death or retirement, (ii) by SICA for Cause
or Disability (as defined in the Termination Agreement), or (iii) by him other
than for Good Reason (as defined in the Termination Agreement), Mr. Murphy would
have been entitled to receive earned but unpaid base salary through the date of
termination, as well as any incentive compensation benefits or awards that had
accrued, earned, or become payable but which had not been paid, and as severance
pay in lieu of any further salary after termination, an amount in cash equal to
his "annualized includible compensation for the base period" (as defined in
Section 280G(d)(1) of the Internal Revenue Code, multiplied by a factor of 2.99.
The Termination Agreement also contains provisions to mitigate the effect of any
excise tax imposed on such payments.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
10.1 Employment Agreement between Selective Insurance Group, Inc.
and Gregory E. Murphy, dated as of April 26, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SELECTIVE INSURANCE GROUP, INC.
(Registrant)
Date: April 28, 2006 By: /s/ Michael H. Lanza
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Name: Michael H. Lanza, Esq.
Title: Senior Vice President, General
Counsel and Corporate Secretary
EXHIBIT INDEX
Exhibit No. Description
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10.1 Employment Agreement between Selective Insurance Group, Inc.
and Gregory E. Murphy, dated as of April 26, 2006.