Richard W. Lavey
HANOVER INSURANCE GROUPAbout Richard W. Lavey
Richard W. Lavey (age 57) is Executive Vice President and President, Hanover Agency Markets at The Hanover Insurance Group, a role he has held since 2017. He joined THG in 2004, previously serving as Chief Growth Innovation Officer (Feb–Nov 2017), President of Personal Lines (since 2014), Chief Marketing Officer (since 2011, assuming Field Operations in 2016), and earlier roles in distribution, operations, marketing and regional leadership; prior employers include The Hartford and The Travelers . Company performance in 2024 included 4.7% net written premium growth, combined ratio of 94.8%, and Ex-Cat Operating Income of $1,026.0 million, while THG’s TSR (indexed to $100) was 127.71 versus the S&P P&C peer index 227.67 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Hanover Insurance Group | President, Hanover Agency Markets (EVP) | 2017–present | Leads Agency Markets (Core Commercial and Personal Lines), overseeing pricing, underwriting, distribution, and platform modernization . |
| The Hanover Insurance Group | Chief Growth Innovation Officer (EVP) | Feb–Nov 2017 | Innovation leadership prior to Agency Markets role . |
| The Hanover Insurance Group | President, Personal Lines | 2014–2017 | Advanced product/pricing, geographic diversification and account strategy . |
| The Hanover Insurance Group | Chief Marketing Officer; Field Operations responsibility | 2011–2016 | Led marketing, distribution; assumed field operations in 2016 to strengthen agency relationships . |
| The Hanover Insurance Group | Chief Distribution Officer; SVP Operations & Marketing; Regional President (Northeast); VP Field Ops/Marketing & Distribution | 2004–2011 | Built agency franchise, local presence and segment capabilities . |
| The Hartford Financial Services Group; The Travelers Corp. | Various leadership roles | Pre-2004 | Senior roles in P&C underwriting/management providing foundational industry experience . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| NCCI Holdings, Inc. | Board member representing THG as an industry member | Current as of 2025 | Supports workers’ compensation market data and risk oversight; Board independence affirmed despite THG’s NCCI relationship . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | $644,231 | $669,231 | $694,231 |
| Stock Awards ($) | $675,099 | $750,144 | $826,465 |
| Option Awards ($) | $225,006 | $250,023 | $275,030 |
| Non-Equity Incentive ($) | $560,500 | $683,100 | $1,245,500 |
| All Other Compensation ($) | $69,646 | $70,178 | $75,465 |
| Total ($) | $2,174,482 | $2,422,676 | $3,116,691 |
| Base Salary Rate ($) | $650,000 (rate) | $675,000 (rate) | $700,000 (rate) |
Performance Compensation
Short-Term Incentive Program (STIP) – Framework and 2024 Outcomes
| Metric | Weight | Target | Actual (2024) | Funding Component |
|---|---|---|---|---|
| Pre-Tax Operating Income | 20% | $461M | $650.1M | 175% of target |
| Ex-Cat Operating Income | 50% | $874M | $1,026.0M | 187% of target |
| Strategic Objectives | 30% | Pre-established | Certified at 115% | 115% |
| Program Funding Decision | — | — | — | 150% of target payout for STIP participants |
Lavey’s STIP target was 120% of base salary; his 2024 payout was $1,245,500, reflecting strong Personal Lines profitability and execution on pricing, deductibles and portfolio management .
Long-Term Incentives – 2024 Grants and Terms (granted 2/27/2024)
| Component | Units Granted | Vesting | Performance Metric & Payout Curve |
|---|---|---|---|
| RTSR PBRSUs | 2,049 | 3-year cliff (2024–2026) | Relative TSR: 25th%→50th%→75th% pays 50%→100%→150%; negative TSR caps at 100%; floor at 25% if TSR exceeds compounded dividend yield . |
| ROE PBRSUs | 2,049 | 3-year cliff (2024–2026) | Avg Adjusted Operating ROE: <6%→0%, 6%→50%, 10%→100%, ≥13%→150% . |
| TBRSUs | 2,049 | 3-year cliff (time-based) | Dividend equivalents accrue, paid only on vest . |
| Stock Options | 9,117 @ $134.26 strike | 1/3 per year over 3 years; 10-year term | Value only if stock appreciates above strike; dividend equivalents not applicable . |
Recent LTI outcomes: 2022 PBRSUs vested in Q1’25 at 25% (RTSR at 23rd percentile; TSR 30.17% > 7.74% compounded dividend yield) and 125% (ROE average 11.5%), with 2022 TBRSUs also vesting .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial ownership (shares) | 138,258; includes 105,240 options exercisable within 60 days of Mar 12, 2025 . |
| Ownership as % of outstanding | <1% of 36,039,404 shares (only CEO at 1.2%; others <1%) . |
| Shares counted under ownership guidelines | 51,044; Lavey’s ownership equals 11.1× base salary and is in compliance . |
| Ownership guidelines (NEOs) | 2–4× base salary (CEO 4–6×); options do not count; valued at market or acquisition price . |
| Hedging/pledging | Prohibited for directors and executive officers; insider trading policy in place . |
| Clawbacks/recoupment | NYSE-compliant clawback plus robust recoupment in equity award agreements for non-solicit/interference/confidentiality and Code violations . |
Unvested equity at 12/31/2024 (selected):
- TBRSUs not vested: 2,100 (2024 grant), 1,882 (2023), 1,738 (2022) .
- PBRSUs (unearned) ROE: 2,100 (2024), 1,882 (2023), 2,172 (2022, shown at 125% earned) .
- PBRSUs (unearned) RTSR: 2,100 (2024), 1,819 (2023), 397 (2022, shown at 25% earned) .
- Options exercisable (selected vintages): 2016: 17,420; 2017: 21,222; 2018: 20,489; 2019: 9,137; 2020: 12,118; 2021: 8,648; unexercisable: 2022: 5,256; 2023: 2,641/5,284; 2024: 9,117 .
Employment Terms
| Provision | Key Terms |
|---|---|
| Severance (without cause / good reason) | Lump-sum cash approximating one year’s target cash compensation (base salary + target bonus); for Lavey $1,540,000 shown as illustrative amount; requires separation agreement with release and non-disparagement . |
| Change-in-control (CIC) economics | Double-trigger; cash payoff = 1.5× (base + target bonus), plus target STIP pro-rata, continued benefits up to one year, outplacement, and 401(k)/NQ plan replacement contribution; TBRSU immediate vesting applies only to “retirement-eligible” executives (Lavey is not retirement-eligible as of 12/31/24) . |
| CIC potential payments (illustrative, Dec 31, 2024) | Cash severance: $2,310,000; Cash incentives: $840,000; Unvested RSUs (PBRSUs/TBRSUs): $2,327,014; Unexercisable options: $303,212; Health & welfare: $1,850; Outplacement: $40,000; 401(k)/NQ: $60,000; Total: $5,882,076 . |
| Non-solicit/confidentiality | Required as conditions of LTI awards and CIC participation; recoupment applies for breaches . |
| Tax gross-ups | None for 280G excise tax; no re-pricing of options . |
Perquisites and retirement:
- 2024 perqs: matching charitable $5,000; spousal travel $5,490; tax reimbursements $1,375; executive physical $3,600 .
- Company contributions: 401(k) $20,700; Non-Qualified Retirement Savings Plan $39,300; aggregate NQ balance $611,627 at 12/31/24 .
Performance & Track Record
- 2024 execution: exceeded Pre-Tax Operating Income target in Personal Lines; delivered 4.3% net written premium growth; improved pricing/deductibles; advanced data/tech; talent development; BRG executive sponsorship (Kinship Village) .
- 2023: managed Core Commercial and Personal Lines amid severe weather/inflation; exceeded top-line growth targets; improved pricing/product/terms and digital marketing; profit improvement plans .
- Company outcomes: 2024 net income $426.0M; Ex-Cat Operating Income $1,026.0M; combined ratio 94.8%; dividend increased 5.9% (to $0.90/qtr) .
- Say-on-pay: >95% approval annually since 2011 .
Compensation Structure Analysis
- Year-over-year mix: Lavey’s pay shows rising variable components tied to PBRSUs/TBRSUs/options and higher STIP in 2024 as performance rebounded; total compensation increased to $3.12M (2024) from $2.42M (2023) and $2.17M (2022) .
- Metrics rigor: STIP targets increased for Ex-Cat Operating Income by $125M vs 2023; CHCC reduced formulaic funding to 150% to balance growth, expenses and prior payouts .
- Clawbacks and hedging/pledging prohibitions enhance alignment and mitigate risk of misaligned incentives .
- Peer benchmarking: CHCC uses a P&C peer set (e.g., CNA, Selective, Hartford, W.R. Berkley) and market surveys to calibrate pay; independent consultant CAP supports CHCC .
Related-Party Transactions and Governance Red Flags
- Related-party transactions: none to report .
- Pledging/hedging: prohibited for executives/directors .
- Option re-pricing: not permitted .
- CIC tax gross-ups: none .
- Insider trading policy: in place; Exhibit in 10-K .
Equity Ownership & Alignment Details
| Detail | 2022 | 2023 | 2024 |
|---|---|---|---|
| Shares beneficially owned (incl. options within 60 days) | — | — | 138,258 (incl. 105,240 options) |
| Ownership guideline multiple (x salary) | — | — | 11.1×; 51,044 shares counted; in compliance |
| Shares outstanding (Company) | — | — | 36,039,404 |
Investment Implications
- Alignment: Strong adherence to ownership guidelines (11.1× salary), clawbacks, and hedging/pledging bans signal high alignment and reduced governance risk .
- Retention risk: Lavey is not retirement-eligible, so accelerated vesting protections are more limited than certain peers; multi-year cliff vesting on RSUs and staged option vesting support retention through 2026–2027 .
- Selling pressure: Significant options are currently exercisable (105,240 within 60 days), and multiple RSU tranches are scheduled to vest; monitor Form 4 activity around vesting dates for potential supply .
- Pay-for-performance: 2024 STIP outcomes (150% funding) tied to Pre-Tax and Ex-Cat Operating Income and strategic objectives, and PBRSU payouts linked to ROE/relative TSR, indicate robust P4P mechanisms; improving underwriting and margin recapture in Personal Lines support future incentive realization .
- Governance stability: No related-party transactions, no tax gross-ups, and consistently high say-on-pay (>95%) reduce compensation controversy and activist risk .