John C. Roche
HANOVER INSURANCE GROUPAbout John C. Roche
President and CEO of The Hanover Insurance Group (THG) since 2017; director since 2017; age 61; 30+ years in P&C insurance with prior senior roles at St. Paul Travelers, and earlier underwriting/management roles at Fireman’s Fund and Atlantic Mutual . 2024 performance under his leadership: Net Income $426.0M, combined ratio 94.8%, net written premiums +4.7%, dividend up 5.9%, and $26.7M of buybacks . Three-year TSR for the 2022–2024 PSU cycle was 30.17% (absolute), but 23rd percentile vs the peer set, yielding a 25% RTSR PSU payout; 3-year average Adjusted Operating ROE was 11.5% (125% PSU payout) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| The Hanover Insurance Group | President & CEO | 2017–present | Led margin recapture/cat mitigation; 2024 Pre-Tax Operating Income $650.1M and Ex-Cat Operating Income $1,026.0M; advanced data/analytics and leadership succession . |
| The Hanover Insurance Group | EVP & President, Hanover Agency Markets; President, Business Insurance; VP roles (Field Ops/Marketing/Distribution; Commercial Lines Underwriting/Product) | 2006–2017 | Led personal and commercial lines businesses; distribution and underwriting leadership . |
| The St. Paul Travelers Companies | Senior roles | Pre-2006 | Senior leadership in P&C; strategic/operational oversight . |
| Fireman’s Fund; Atlantic Mutual | Underwriting and management | Pre-2006 | Core underwriting/management foundation in P&C . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| THG Board of Directors | Director (non-independent) | 2017–present | CEO-director; no additional director pay as an employee . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 1,083,846 | 1,100,000 | 1,100,000 |
| STIP Target (% of salary) | 175% (raised to 185% in 2023) | 185% | 200% |
Performance Compensation
Short-term incentive (STIP) design and 2024 results
- Metrics/weights: Pre-Tax Operating Income (20%), Ex-Cat Operating Income (50%), Strategic Objectives (30%) .
- 2024 target levels: Pre-Tax Op Inc $461M (max $576M); Ex-Cat Op Inc $874M (max $1,049M) .
- 2024 actuals vs target: Pre-Tax Op Inc $650.1M (175%); Ex-Cat Op Inc $1,026.0M (187%); Strategic Objectives certified at 115% .
- Funding decision: STIP funded at 150% of target (committee exercised downward discretion from ~163% metric outcome) .
- CEO payout: $3,300,000 (paid Mar 14, 2025) .
| STIP metric (2024) | Weight | Target | Actual | Payout factor |
|---|---|---|---|---|
| Pre-Tax Operating Income ($M) | 20% | 461 | 650.1 | 175% |
| Ex-Cat Operating Income ($M) | 50% | 874 | 1,026.0 | 187% |
| Strategic Objectives | 30% | — | Achieved at 115% | 115% |
| STIP Funding | — | — | — | 150% |
| CEO STIP Award ($) | — | — | — | 3,300,000 |
Long-term incentives (LTI) structure and 2024 grants
- Mix: ~25% each of RTSR PBRSUs, ROE PBRSUs, TBRSUs, and stock options; cliff vest at 3 years for RSUs; options vest 1/3 annually over 3 years; 10-year option term; grant-date 2/27/2024; option exercise price $134.26 .
- 2024 CEO grants: 9,311 RTSR PBRSUs; 9,311 ROE PBRSUs; 9,311 TBRSUs; 41,437 options .
| LTI Component | 2024 Grant detail | Vesting | Notes |
|---|---|---|---|
| RTSR PBRSUs | 9,311 units (target) | Cliff on 3rd anniversary | Payout 0–150% vs peer TSR percentiles; 50th=100%; 25th=50%; <25th=0% unless dividend-yield hurdle met . |
| ROE PBRSUs | 9,311 units (target) | Cliff on 3rd anniversary | 3-yr avg Adjusted Operating ROE: 6%→50%, 10%→100%, 13%→150%; includes revised catastrophe “cat-collar” in 2024 . |
| TBRSUs | 9,311 units | Cliff on 3rd anniversary | Retention; dividend equivalents accrue and vest with awards . |
| Stock Options | 41,437 @ $134.26 | 1/3 on each anniversary; 10-year term | Value only if stock appreciates . |
LTI performance outcomes (recent cycles)
| PSU cycle (3-year) | Performance metric | Result | Payout |
|---|---|---|---|
| 2022–2024 | RTSR vs peers | 23rd percentile; TSR 30.17% > 3-yr compounded dividend yield 7.74% | 25.0% |
| 2022–2024 | Avg Adjusted Operating ROE | 11.5% | 125.0% |
| 2021–2023 | RTSR vs peers | 36th percentile | 72.73% |
| 2021–2023 | Avg Adjusted Operating ROE | 11.1% | 112.0% |
Equity Ownership & Alignment
- Beneficial ownership: 425,773 shares (1.2% of class); includes 313,100 options exercisable within 60 days and 14,454 shares held by spouse . Shares outstanding eligible to vote: 36,039,404 (for context) .
- Stock ownership guidelines: CEO requirement 4–6x salary; Roche counted 192,140 shares, equating to 27.4x salary (in compliance) as of 3/12/2025 . Hedging and pledging are prohibited for executives and directors .
- Vested vs unvested (selected detail as of 12/31/2024):
- Unvested RSUs and market values at $154.66/share: 2022 TBRSUs 7,311 ($1,130,719); 2022 ROE PBRSUs 9,554 ($1,477,622); 2022 RTSR PBRSUs 1,744 ($269,727); 2023 TBRSUs 8,279 ($1,280,430); 2023 ROE PBRSUs 8,655 ($1,338,582); 2023 RTSR PBRSUs 8,365 ($1,293,731); 2024 TBRSUs 9,129 ($1,411,891); 2024 ROE PBRSUs 9,543 ($1,475,920); 2024 RTSR PBRSUs 9,543 ($1,475,920) .
- Options outstanding (select): 2015–2021 tranches fully exercisable; 2022: 23,126 exercisable/11,563 unexercisable @ $139.51; 2023: 12,151 exercisable/24,302 unexercisable @ $140.01; 2024: 41,437 unexercisable @ $134.26 (1/3 vests annually) .
Employment Terms
- Severance (non-CIC): Lump sum ≈ one year’s cash comp (base + target bonus) if terminated without cause or for good reason (CEO falls under standard severance; CFO has 2x base salary and one year continued equity vesting) .
- Change in control (double-trigger): Cash severance multiple 2x (CEO), plus pro-rated target STIP, up to one year of health benefits, outplacement, and 401(k)/non-qualified plan replacement contribution; no 280G tax gross-up .
- Illustrative CIC economics (assuming 12/31/2024 event): CEO totals $20,662,742 comprised of $6,600,000 cash severance; $2,200,000 target STIP; $10,356,962 unvested RSUs; $1,376,519 unvested options; $29,261 health; $40,000 outplacement; $60,000 retirement plan credit .
- Equity plan terms: Retirement eligibility (age 60+5 yrs or 65) allows continued or accelerated treatment of RSUs/options per plan; Roche was retirement-eligible as of 12/31/2024 .
- Clawbacks: NYSE/SEC-compliant clawback plus robust recoupment in equity agreements (non-solicit, non-interference, confidentiality, Code of Conduct breaches) .
- Perquisites: Financial planning, charitable match (up to $5,000), executive physicals (added 2024), limited spousal travel; Board required temporary private aircraft use for CEO for security reasons in Dec 2024; CEO “All Other Compensation” includes DC plan contributions and $53,214 of private aircraft-related costs in 2024 .
Compensation: Multi‑Year Summary (CEO)
| Year | Salary ($) | Stock Awards ($) | Option Awards ($) | STIP/Non-Equity ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2022 | 1,083,846 | 2,970,256 | 990,010 | 1,694,000 | 87,911 | 6,826,023 |
| 2023 | 1,100,000 | 3,450,128 | 1,150,005 | 1,933,250 | 87,746 | 7,721,129 |
| 2024 | 1,100,000 | 3,755,592 | 1,250,025 | 3,300,000 | 144,979 | 9,550,596 |
Board Governance (Director service, committees, independence)
- Board structure: Independent Chair (Cynthia L. Egan); CEO and Chair roles are separate; nine of ten directors independent; Roche is not independent due to management role .
- Committees: All standing committees (Audit; Compensation & Human Capital; Nominating & Corporate Governance; Committee of Independent Directors) are composed solely of independent directors; as CEO, Roche does not serve on committees .
- Board activity/attendance: Board met 5 times in 2024; all incumbent directors attended ≥75% of Board/committee meetings; directors expected to attend the annual meeting .
- Director pay: Employee-directors (Roche) receive no additional compensation for Board service .
Performance & Track Record
- Financial execution in 2024: Pre-Tax Operating Income $650.1M; Ex-Cat Operating Income $1,026.0M; NWP $6.1B (+4.7%); quarterly dividend raised 5.9%; ~170k shares repurchased for $26.7M .
- Strategic achievements recognized in STIP: margin recapture and catastrophe mitigation advances; capital position improvement and resumption of buybacks; portfolio/pricing actions; technology enhancements and AI initiatives; human capital progress .
- Pay-for-performance alignment: 2024 STIP funded at 150% on strong underlying performance; 2022–2024 ROE PSUs at 125% vs 2022–2024 RTSR PSUs at 25%, demonstrating balanced absolute vs relative outcomes .
Say‑on‑Pay & Shareholder Feedback
- Advisory vote outcomes: “More than 95%” approval each year since 2011; 2025 proxy again seeks advisory approval (annual cadence) .
Compensation Peer Group
- Comparative Proxy Data peers (for benchmarking): AFG, AXIS, Cincinnati Financial, CNA, Kemper, Markel, Mercury General, Old Republic, Selective, The Hartford, W.R. Berkley (and others) . RTSR PSU peer set is broader and P&C-focused, updated for corporate actions (e.g., removal of Argo post-acquisition) .
Additional Governance/Risk Notes
- Hedging/pledging prohibited; robust clawbacks and award recoupment provisions; no 280G tax gross-ups; no option repricing .
- Related-party transactions: none to report per policy/process; audit oversight in place .
- Board declassification approved in 2024; fully declassified by 2027 .
Upcoming Vesting / Potential Insider Supply Indicators
- TBRSUs granted in 2022 vested in early 2025; PSUs for 2022 cycle vested in Q1’25 (25% RTSR, 125% ROE); 2023 and 2024 grants cliff vest in 2026 and 2027, respectively .
- Options: 2024 grant (41,437 @ $134.26) vests 1/3 annually on each anniversary (first tranche in Feb 2025); 2023 and 2022 grants continue to roll; all older grants are fully exercisable . Retirement-eligible status can facilitate vesting/settlement mechanics and may influence timing of sales per tax/settlement needs .
Investment Implications
- Pay-for-performance alignment is strong: high at-risk mix (PSUs/options) and objective financial metrics (ROE, RTSR, pre-tax and ex-cat operating income) tie realized pay to results; clawbacks/ownership rules reinforce alignment .
- Retention risk moderate: CEO is retirement-eligible, but equity design (cliff vesting; multi-year cycles; double-trigger CIC) and significant in-the-money options/RSUs (>$11.7M unvested option intrinsic and RSU value in CIC table; ~$9.15M+ RSUs marked at 12/31/24) suggest incentives to remain through cycles; however, watch for sale activity around vest/exercise dates for liquidity/tax .
- Governance quality is solid: independent Chair; declassification underway; robust committee oversight; >95% say-on-pay history indicates investor support .
- 2024 fundamentals improved materially (pre-tax and ex-cat operating income), but RTSR underperformed peers in the last 3-year window (25% payout), underscoring the need to sustain operational momentum to drive relative TSR catch-up .