UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrantþ

Filed by a Party other than the Registrant¨

Check the appropriate box:

Webster Financial Corporation

(Exact Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

March 18, 201123, 2012

To the Shareholders of

Webster Financial Corporation:

You are cordially invited to attend the Webster Financial Corporation Annual Meeting of Shareholders to be held on Thursday, April 28, 201126, 2012 at 4:00 p.m., Eastern Time, at the Courtyard by Marriott, 63 Grand Street, Waterbury, Connecticut 06702.

At the Annual Meeting, you will be asked: (i) to elect three directors to serve for one-year terms or, if proposal (iii) is not approved, for three-year terms; (ii) to approve, on a non-binding, advisory basis, the compensation of the named executive officers of Webster; (iii) to vote, on a non-binding, advisory basis, onapprove an amendment to and restatement of Webster’s Second Restated Certificate of Incorporation, as amended, to provide for the frequencyannual election of voting on the compensation of the named executive officers of Webster;directors; (iv) to ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of Webster for the year ending December 31, 2011;2012; and (v) to vote on a shareholder proposal concerning the annual election of directors; and (vi) to transact any other business that properly comes before the Annual Meeting or any adjournments of the meeting.

We encourage you to read the accompanying Proxy Statement, which provides information regarding Webster and the matters to be voted on at the Annual Meeting. Also enclosed is our 20102011 Annual Report.

It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you may vote your common shares via a toll-free telephone number or on the Internet or you may complete, date, sign and return the enclosed proxy card in the enclosed postage paidpostage-paid envelope. If you attend the meeting and prefer to vote in person, you may do so.

WEBSTER FINANCIAL CORPORATION

145 Bank Street

Waterbury, Connecticut 06702

800-325-2424

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 28, 201126, 2012

To the Shareholders of

Webster Financial Corporation:

NOTICE IS HEREBY GIVENthat the annual meeting of shareholders (the “Annual Meeting”) of Webster Financial Corporation (“Webster”) will be held on Thursday, April 28, 201126, 2012 at 4:00 p.m., Eastern Time, at the Courtyard by Marriott, 63 Grand Street, Waterbury, Connecticut 06702, for the following purposes:

The Board of Directors has fixed the close of business on February 28, 201127, 2012 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. Only shareholders of record at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.

Waterbury, Connecticut

March 18, 201123, 2012

IT IS IMPORTANT THAT YOU VOTE PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE VOTE YOUR COMMON SHARES VIA THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD, THE INTERNET OR BY MAIL.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April 28, 2011:26, 2012: This proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 20102011 and our 20102011 Annual Report, are available free of charge on the Investor Relations section of our website (www.wbst.com).

WEBSTER FINANCIAL CORPORATION

145 Bank Street

Waterbury, Connecticut 06702

800-325-2424

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 28, 201126, 2012

Solicitation, Voting and Revocability of Proxies

This Proxy Statement (the “Proxy Statement”) is being furnished to the shareholders of Webster Financial Corporation, a Delaware corporation (“Webster” or the “Company”), as part of the solicitation of proxies by its Board of Directors from holders of its outstanding shares of Common Stock, par value $.01 per share (the “Common Stock”), for use at the Annual Meeting of Shareholders of Webster to be held on Thursday, April 28, 201126, 2012 at 4:00 p.m., Eastern Time, at the Courtyard by Marriott, 63 Grand Street, Waterbury, Connecticut 06702 (the “Annual Meeting”) and at any adjournments thereof. The Proxy Statement, together with the enclosed proxy card, is being mailed to shareholders of Webster on or about March 18, 2011.23, 2012.

The Annual Meeting has been called for the following purposes:

1. To elect three directors to serve for one-year terms or, if Proposal 3 is not approved, for three-year terms (Proposal 1);

2. To approve, on a non-binding, advisory basis, the compensation of the named executive officers of Webster (Proposal 2);

3. To vote, on a non-binding, advisory basis, onapprove an amendment to and restatement of Webster’s Second Restated Certificate of Incorporation, as amended, to provide for the frequencyannual election of voting on the compensation of the named executive officers of Websterdirectors (Proposal 3);

4. To ratify the appointment by the Board of Directors of the firm of Ernst & Young LLP as the independent registered public accounting firm of Webster for the year ending December 31, 20112012 (Proposal 4); and

5. To act upon a shareholder proposal concerning the annual election of directors (Proposal 5); and

6. To transact any other business that properly comes before the Annual Meeting or any adjournments thereof.

If you vote using the enclosed proxy card, your shares will be voted in accordance with the instructions indicated.Executed but unmarked proxies will be voted:

1.   FOR the election of the Board’s nominees as directors;

2. FOR the approval, on a non-binding, advisory basis, of the compensation of the named executive officers of Webster;

3. FOR the holdingapproval of a non-binding, advisory vote onan amendment to and restatement of Webster’s Second Restated Certificate of Incorporation, as amended, to provide for the compensationannual election of the named executive officers of Webster every year;directors; and

4.   FOR the ratification of the appointment of Webster’s independent registered public accounting firm; and

5. AGAINST approval of the shareholder proposal concerning the annual election of directors.firm.

Except for procedural matters incident to the conduct of the Annual Meeting, the Board of Directors does not know of any matters other than those described in the Notice of Annual Meeting that are to come before the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the

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proxy will vote the shares represented by such proxy on such matters as determined by a majority of the Board of Directors. The proxies confer discretionary authority to vote on any matter of which Webster did not have notice at least 30 days prior to the date of the Annual Meeting.

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The presence of a shareholder at the Annual Meeting will not automatically revoke that shareholder’s proxy. A shareholder may, however, revoke a proxy at any time before it is voted: (i) by delivering either a written notice of revocation of the proxy or a duly executed proxy bearing a later date to Mark S. Lyon, Assistant Secretary, Webster Financial Corporation, 145 Bank Street, Waterbury, Connecticut 06702; (ii) by re-voting by telephone or on the Internet; or (iii) by attending the Annual Meeting and voting in person.

The cost of soliciting proxies for the Annual Meeting will be borne by Webster. In addition to use of the mails, proxies may be solicited personally or by telephone or telecopy by directors, officers and employees, who will not be specially compensated for such activities. Webster also will request persons, firms and companies holding shares in their names or in the name of their nominees, which are beneficially owned by others, to send proxy materials to and obtain proxies from those beneficial owners and will reimburse those holders for their reasonable expenses incurred in that connection. Webster also has retained Morrow & Co., LLC, a proxy soliciting firm, to assist in the solicitation of proxies at a fee of $7,500, plus reimbursement of certain out-of-pocket expenses.

Who Can Vote.The securities which can be voted at the Annual Meeting consist of shares of Common Stock of Webster with each share entitling its owner to one vote on all matters properly presented at the Annual Meeting. There is no cumulative voting of shares. The Board of Directors has fixed the close of business on February 28, 201127, 2012 as the record date for the determination of shareholders of Webster entitled to notice of and to vote at the Annual Meeting. On the record date, there were 8,7468,279 holders of record of the 87,160,09487,545,968 shares of Common Stock then outstanding and eligible to be voted at the Annual Meeting.

Voting.If your Common Stock is held by a broker, bank or other nominee (i.e., in “street name”), you should receive instructions from that person or entity that you must follow in order to have your shares of Common Stock voted. If you hold your Common Stock in your own name and not through a broker or another nominee, you may vote your shares of Common Stock:

Whichever of these methods you select to transmit your instructions, the proxy holders will vote your Common Stock in accordance with your instructions. If you give a proxy without specific voting instructions, your proxy will be voted by the proxy holders as recommended by the Board of Directors.

Vote by Telephone.If you hold your Common Stock in your own name and not through your broker or another nominee, you can vote your shares of Common Stock by telephone by dialing the toll-free telephone number printed on your proxy card. Telephone voting is available 24 hours a day until 11:59 p.m., Eastern Time, on April 27, 2011.25, 2012. Easy-to-follow voice prompts allow you to vote your shares of Common Stock and confirm that your instructions have been properly recorded.If you vote by telephone, you do not need to return your proxy card.

Vote by Internet.If you hold your Common Stock in your own name and not through your broker or another nominee, you can choose to vote via the Internet. The website for Internet voting is printed on your proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Eastern Time, on April 27, 2011.25, 2012. As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded.If you vote via the Internet, you do not need to return your proxy card.

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Vote by Mail.You can vote by mail by signing, dating and returning the enclosed proxy card in the enclosed postage paidpostage-paid envelope.

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The presence, in person or by proxy, of at least one-third of the total number of outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Assuming the presence of a quorum at the Annual Meeting, directors will be elected by a majority of the votes cast by shares present in person or represented by proxy and entitled to vote. The affirmative vote of the majority of the votes cast is required to approve the non-binding, advisory vote on the compensation of the named executive officers of Webster, approve the non-binding, advisoryWebster. The affirmative vote on the frequency of voting on the compensation of the named executive officersholders of Webster,at least two-thirds of the shares entitled to vote thereon is necessary to approve an amendment to and approve the shareholder proposal concerningrestatement of Webster’s Second Amended and Restated Certificate of Incorporation, as amended, to provide for the annual election of the directors. Shareholders’ votes will be tabulated by the persons appointed by the Board of Directors to act as inspectors of election for the Annual Meeting.

Under New York Stock Exchange Rule 452, which governs NYSE brokerage members, brokerage firms may not vote on non-routine matters in their discretion on behalf of their clients if such clients have not furnished voting instructions. A “broker non-vote” occurs when a broker’s customer does not provide the broker with voting instructions on non-routine matters for shares owned by the customer but held in the name of the broker. For non-routine matters, the broker cannot vote either FOR or AGAINST a proposal and reports the number of such shares as “non-votes.” Because none of the matters to be voted upon at the Annual Meeting are considered routine matters under Rule 452 except for the ratification of the appointment of the independent registered public accounting firm, there potentially can be broker non-votes at the Annual Meeting. Both abstentions and broker non-votes will be treated as shares present for purposes of determining the presence of a quorum at the Annual Meeting. Abstentions and broker non-votes will not be counted for purposes of determining the number of votes cast on a proposalProposals 1, 2 or 4 and, therefore, will have no effect on the outcome of the votes for those proposals. However, abstentions and broker non-votes will have the proposals.effect of a vote “against” Proposal 3.

Electronic Delivery of Proxy Materials.As a shareholder, you have the option of electing to receive future proxy materials (including annual reports) online over the Internet. This online service provides savings to Webster by eliminating printing, mailing, processing and postage costs associated with hard copy distribution. You may enroll for this service on the Internet after you vote your shares in accordance with the instructions for Internet voting set forth on the enclosed proxy card. You may also enroll for electronic delivery of future Webster proxy materials at any time on the Company’s website atwww.wbst.com. Under “Electronic Enrollment,” select the “Click Here To Enroll” link. Then select the box indicating your appropriate form of share ownership, and follow the instructions for electronic delivery enrollment. In the future, you will receive an email message, at the address you provided while enrolling, informing you that the Webster proxy materials are available to be viewed online on the Internet. Follow the instructions to view the materials and vote your shares. Your enrollment in electronic delivery of Webster proxy materials will remain in effect until revoked by you.

Annual Report on Form 10-K.Webster is required to file an annual report on Form 10-K for its 20102011 fiscal year with the Securities and Exchange Commission (“SEC”). Shareholders may obtain, free of charge, a copy of the Form 10-K by writing to Mark S. Lyon, Assistant Secretary, Webster Financial Corporation, 145 Bank Street, Waterbury, Connecticut 06702. Our annual report on Form 10-K is available on the Company’s website,www.wbst.com.

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ELECTION OF DIRECTORS

(Proposal 1)

At the Annual Meeting, three directors will be elected to serve for one-year terms or, if Proposal 3 is not approved, for three-year terms. Unless otherwise specified on the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election as directors of the

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persons named below as nominees. The Board of Directors believes that the nominees will stand for election and will serve if elected as directors. If, however, any person nominated by the Board fails to stand for election or is unable to accept election, the proxies will be voted for the election of such other person as the Board of Directors may recommend. Assuming the presence of a quorum at the Annual Meeting, directors will be elected by a majority of the votes cast by shares present in person or represented by proxy and entitled to vote at the Annual Meeting. There are no cumulative voting rights in the election of directors.

As required by Webster’s Bylaws, directors must be elected by a majority of the votes cast with respect to such director in uncontested elections (number of shares voted “for” a director must exceed the number of votes cast “against” that director). In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. In addition, under Webster’s Bylaws, incumbent directors nominated for reelection are required, as a condition to such nomination, to submit a conditional letter of resignation. In the event an incumbent nominee for director fails to receive a majority of the votes cast at an annual meeting, the Nominating and Corporate Governance Committee will consider the resignation and make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. The director who tenders his or her resignation will not participate in the Board’s decision.

The Board of Directors currently consists of ten members and is divided into three classes which are composed of three directors in the class whose term currently expires in 2011,2012, four directors in the class whose term expires in 2013 and three directors in the class whose term expires in 2012 and four directors in the class whose term expires in 2013.2014. The term of office of one class of directors expires in each year, and their successors are elected for terms of up to three years and until their successors are elected and qualified. If Proposal 3 is approved by the requisite vote, the terms of all directors will expire at the annual meeting of shareholders each year and the directors’ successors will be elected for one-year terms that will expire at the next annual meeting. If Proposal 3 is approved, the nominees for election at the Annual Meeting, if elected, will have terms expiring at the 2013 Annual Meeting. The current terms of the directors who were elected at the 2010 and 2011 Annual Meetings will not be affected and those directors will continue to hold their offices until their terms expire in 2013 and 2014, respectively.

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Information as to Nominees and Other Directors

The following table sets forth the names of the Board of Directors’ nominees for election as directors and the current directors of Webster. Also set forth in the table is certain other information with respect to each such person’s age at December 31, 2010,2011, the periods during which such person has served as a director of Webster and positions currently held with Webster and its wholly owned subsidiary, Webster Bank, National Association (“Webster Bank”).

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Following the table are biographies of each of the nominees and continuing directors which contain information regarding each such person’s business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board of Directors to determine that such person should serve as a director as of the time of filing of this Proxy Statement. Each director brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance, board service, executive management, business, finance and marketing. The process undertaken by the Nominating and Corporate Governance Committee in recommending qualified candidates is described beginning on page 1312 under “Corporate Governance—Director Qualifications and Nominations.”

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Joel S. Beckeris Chairman and Chief Executive Officer of Torrington Supply Co., Inc., a Waterbury, Connecticut based wholesale distributor of plumbing, heating and industrial pipe valve and fitting supplies to contractors and industry. Mr. Becker is Chairman of the Compensation Committee, and a member of the Executive Committee and the Nominating and Corporate Governance Committee and the Risk Committee.

Mr. Becker’s experience as Chairman and Chief Executive Officer of a local business in Webster’s market area combined with twenty fourtwenty-five years of experience on Webster’s Board gives him unique insight into Webster’s challenges, opportunities and operations. He also has extensive experience in public company executive compensation as a result of his over nine years of service as the Chairman of the Compensation Committee.

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David A. Coulteris Managing Director and Senior AdvisorVice Chairman at Warburg Pincus LLC, a global private equity firm headquartered in New York, New York. He co-leadspreviously held the firm’s financial services investment activities.position of Managing Director and Senior Advisor. From January 2001 to September 2005, he was Vice Chairman of JPMorgan Chase & Co. He is a director of MBIA, Inc. (NYSE:MBI), a publicly held financial guarantor insurance company headquartered in Armonk, New York, Sterling Financial Corporation (NASDAQ:STSA), headquartered in Spokane, Washington, and Strayer Education, Inc. (Nasdaq:(NASDAQ:STRA), a publicly held education services company headquartered in Arlington, Virginia. Mr. Coulter is a member of the Compensation Committee and the Risk Committee.

Mr. Coulter’s experiences as both a former Vice Chairman and Chairman and Chief Executive Officer of publicly traded financial services corporations, JP Morgan Chase and Bank of America, respectively, and his experience as a director of public and private companies, provides the Board with extensive executive experience with regard to matters of interest to financial institutions, including risk, compensation and corporate governance matters.

John J. Crawfordis President of Strategem LLC, a New Haven, Connecticut based company which provides consulting services to the business and not-for-profit community on business and financial strategies. Mr. Crawford served as President, Chief Executive Officer and a director of Aristotle Corporation, a New Haven, Connecticut based education training company from October 1992 through December 2002. Mr. Crawford continued to serve on the Board of Directors of Aristotle Corporation until August 31, 2005. From 1994 until December 2000, he served as President and Chief Executive Officer of the South Central Connecticut Regional Water Authority, New Haven, Connecticut. Mr. Crawford is Lead Director, Chairman of the Nominating and Corporate Governance Committee, and a member of the CompensationAudit Committee and the Executive Committee.

Mr. Crawford’s extensive executive and corporate governance experience as a former Chief Executive Officer of three companies, including a financial institution, and his fourteenfifteen plus years of service on Webster’s Board, including eightnine years as the Lead Director, provides him with a seasoned view of Webster’s operations and challenges.

Robert A. Finkenzelleris President of Eyelet Crafters, Inc., a Waterbury, Connecticut based company that manufactures deep drawn metal parts for the cosmetics, writing instrument and drapery hardware fields. Mr. Finkenzeller has held this position since 1990. Mr. Finkenzeller is a member of the Audit Committee and the Nominating and Corporate Governance Committee.

Mr. Finkenzeller brings meaningful corporate governance experience to the Board having served as a member of the Audit, Compensation, Nominating and Corporate Governance and Risk Committees. Mr. Finkenzeller is an executive of a business based in Webster’s market area and has over twenty fourtwenty-five years of experience on Webster’s Board.

C. Michael Jacobiis President of Stable House 1, LLC, a Middlebury, Connecticut based company engaged in real estate development. Mr. Jacobi served from June 2001 to May 2005 as President, Chief Executive Officer and a director of Katy Industries, Inc., a publicly held company headquartered in Middlebury,

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Connecticut engaged in the design, manufacture and distribution of maintenance and electrical products. Mr. Jacobi is a certified public accountant. He is a director and chairman of the audit committee of Corrections Corporation of America (NYSE:CXW), a publicly held company headquartered in Nashville, Tennessee engaged in the ownership and management of prisons for federal, state and local governments, a director and chairman of the board of Sturm Ruger & Co., Inc. (NYSE:RGR), a publicly held company headquartered in Southport, Connecticut engaged in manufacturing and distribution of consumer products, and a director and audit committee member of Kohlberg Capital Corporation (NASDAQ:KCAP), a publicly held company headquartered in New York, New York specializing in equity and debt investments in middle market companies. HeMr. Jacobi is Chairman of the Audit Committee, and a member of the ExecutiveCompensation Committee and the Risk Committee.

Mr. Jacobi provides the Board with extensive experience and expertise in corporate finance and accounting as a Certified Public Accountant, andhaving served as Chairman of the Audit Committee of Webster for Webster and other public companies.many years. His former service as the Chief Executive Officer of a public company also brings strong executive experience to the Board.

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Laurence C. Morseis the co-founder and Chief Executive Officer of Fairview Capital Partners, Inc. in West Hartford, Connecticut, an investment management firm established in 1994 that oversees venture capital funds, some of which invest capital in venture capital partnerships and similar investment vehicles that provide capital primarily to minority-controlled companies. Mr. Morse is a director of the Institute of International Education, and is a former director of Princeton University Investment Company and the Institute of International Education, and a former director and chairman of the National Association of Investment Companies, a private, not-for-profit trade association that represents 52 private equity and specialty finance investment firms. HeMr. Morse is Chairman of the Risk Committee, and is a member of the Audit Committee and the Executive Committee.

Mr. Morse’s entire career has been spent in the investment management field, including as the co-founder and Chief Executive Officer of an investment management firm, which provides the Board with extensive knowledge of the capital markets and accounting issues. His experience has made him adept at assessingperforming rigorous risk assessments of managers and management teams, and assessing new technologies, products and services, business strategies, markets and industries.

Karen R. Osar was Executive Vice President and Chief Financial Officer of Chemtura Corporation (NYSE:CHMT), a specialty chemicals company headquartered in Middlebury, Connecticut from 2004 until her retirement in March 2007. From 1999 to April 2003, Ms. Osar served as Senior Vice President and Chief Financial Officer of Westvaco Corporation and Mead Westvaco Corporation. She is a director and audit committee chair of Innophos Holdings, Inc. (Nasdaq:(NASDAQ:IPHS), a publicly held specialty chemicals company headquartered in Cranbury, New Jersey, a director and audit committee member of Sappi Limited (NYSE:SPP), a publicly held company engaged in the production of coated fine paper and chemical cellulose, headquartered in Johannesburg, South Africa, and from 1999 through 2006 she served as a director and audit and finance committee chair of Allergan, Inc., a publicly held multi-specialty health care company focused on developing and commercializing pharmaceuticals. Ms. Osar is Chair of the Audit Committee and a member of the AuditExecutive Committee and the Risk Committee.

Ms. Osar’s experience as the former Chief Financial Officer of a public company, her previous corporate finance experience at JPMorgan Chase & Co., and her service as well as her serviceChair of the Audit Committee for Webster and as the chair of the audit committee of aanother public company, provides the Board with strong corporate finance and accounting experience. Her Board committee service also provides corporate governance and executive compensation expertise.

Mark Pettiewas Chairman and Chief Executive Officer of Prestige Brands Holdings, Inc. (NYSE:PBH), a publicly held company headquartered in Irvington, New York which develops, sells, distributes and markets over-the-counter drugs, household cleaning products and personal care items, from January 2007 until September 2009. Mr. Pettie was President of the Dairy Foods Group with ConAgra from 2005 to 2006. From 1981 to 2004, Mr. Pettie held various positions of increasing responsibility in marketing and finance at

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Kraft Foods and was named Executive Vice President and General Manager of Kraft Food’s Coffee Division in 2002. He is a member of the CompensationAudit Committee and the Nominating and Corporate GovernanceCompensation Committee.

Mr. Pettie’s experience as Chief Executive Officer of a public company brings strong executive experience to the Board, along with his expertise in finance and marketing. He also has extensive business and corporate governance experience as a director for both public and private companies.

Charles W. Shiveryis Chairman, President and Chief Executive Officer of Northeast Utilities (NYSE: NU). He joined Northeast Utilities in 2002 and assumed his current position at Northeast Utilities on March 29, 2004 after holding previous posts with the company including interim president, president-Competitive Group of Northeast Utilities, and president and chief executive officer of NU Enterprises, Inc., the unregulated subsidiary of the Northeast Utilities system. Prior to that, he was co-president of the Constellation Energy Group, the parent company of Baltimore Gas & Electric and other energy related businesses. He is Chairman of the Compensation Committee and a member of the CompensationExecutive Committee.

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Mr. Shivery’s role as President and Chief Executive Officer of an energy company provides extensive experience managing a sizable, highly regulated business. Northeast Utilities conducts business in a large part of the region serviced by Webster, so certain variables impact both businesses similarly. Mr. Shivery also provides the Webster Board with corporate governance and executive compensation knowledge.

James C. Smithis Chairman President,and Chief Executive Officer and a director of Webster and Webster Bank, having been elected Chief Executive Officer in 1987 and Chairman in 1995. Mr. Smith joined Webster Bank in 1975, and was elected President, Chief Operating Officer and a director of Webster Bank in 1982 and of Webster in 1986. Mr. Smith served as President of Webster and Webster Bank until 2000, and was again elected President in 2008.from 2008 through 2011. Mr. Smith is a member of board of directors of the Financial Services Roundtable based in Washington, D.C. He is also co-chairman of the American Bankers Council (American Bankers Association Mid-Cap Banks) and serves on the executive committee of the Connecticut Bankers Association. He is a past member of the Federal Advisory Council, which advises the deliberations of the Federal Reserve Board of Governors, and recently completed a three-year termserved as a member of the board of directors of the Federal Reserve Bank of Boson.Boston for a three year term ending December 2010. He is a past member of the board of directors of the American Bankers Association and of the Federal Home Loan Bank of Boston, where he served as chair of the finance committee.Boston. He is a director of St.Saint Mary’s HospitalHealth System and the Palace Theater, both of Waterbury, Connecticut, and was a director of MacDermid, Incorporated (NYSE:MRD) until it was sold in June 2007. Mr. Smith is Chairman of the Executive Committee.

Mr. Smith’s position as Chairman President and Chief Executive Officer of Webster and his day to day leadership of the Company provides him with thorough knowledge of Webster’s opportunities, challenges and operations. He also has extensive experience in banking.

The Board of Directors recommends that shareholders vote FOR the election of all of its director nominees.

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CORPORATE GOVERNANCE

General

The business and affairs of Webster are managed under the direction of the Board of Directors.Directors (the “Board”). Members of the Board are kept informed of Webster’s business through discussions with the Chairman of the Board and Webster’s other executive officers, by reviewing materials provided to them and by participating in meetings and strategic planning sessions of the Board and its committees. The Board is also kept apprised by the Chairman of the Board and management of continuing educational programs on corporate governance and fiduciary duties and responsibilities. In addition, new directors of Webster participate in an orientation program, which is designed to familiarize them with Webster’s business and operations and with their duties as directors under applicable laws and regulations. Each member of the Board also serves as a director of Webster Bank.

Webster believes in the importance of sound and effective corporate governance. Over the years Webster has forged an explicit link between its corporate culture and corporate governance by identifying its core values, communicating them and living them every day. With uncompromising commitment to its core principles, Webster continues to add value for its customers, shareholders, employees and the communities it serves. The Board has adopted corporate governance practices and policies which the Board and senior management believe promote this philosophy.

Board Leadership

At Webster, the roles of Chairman of the Board of Directors and principal executive officer are combined, both held by Mr. Smith. In addition, there is a lead independent director who is appointed in accordance with Webster’s Corporate Governance Policy, which provides that the Board of Directors shall appoint an independent director to serve as the Lead Director of the Board of Directors for a one-year term, or until a successor is appointed. The lead independent director

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presides over the executive sessions of independent directors and assists and advises the Chairman of the Board. During fiscal year 2010,2011, Mr. Crawford served as the lead independent director. The Board of Directors believes that having a combined Chairman and principal executive officer, coupled with a lead independent director, is the most appropriate leadership structure for Webster, especially given Mr. Smith’s long service as Chief Executive Officer and his extensive knowledge of the Company and its governance. This structure allows Board discussions regarding performance and strategic matters to be led by the person who oversees Webster’s strategy and operations and establishes a single voice to speak on behalf of Webster, while the lead independent director component of the structure provides independent leadership that mitigates any real or perceived conflicts of interest.

Director Independence

Pursuant to the New York Stock Exchange (“NYSE”) listing standards, Webster is required to have a majority of “independent directors” on its Board of Directors.Board. In addition, the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee must be composed solely of independent directors. The NYSE listing standards define specific relationships that would disqualify a director from being independent and further require that for a director to qualify as “independent,” the board of directors must affirmatively determine that the director has no material relationship with the Company.

The Board, of Directors, with the assistance of the Nominating and Corporate Governance Committee, conducted an evaluation of director independence, based primarily on a review of the responses of the directors and executive officers to questions regarding employment and compensation history, affiliations and family and other commercial, industrial, banking consulting, legal, accounting, charitable and legal relationships with Webster, including those relationships described under “Compensation Committee Interlocks and Insider Participation” and “Certain Relationships” beginning on page 4644 of this Proxy Statement, and on discussions with the Board of Directors.Board.

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As a result of this evaluation, the Board of Directors affirmatively determined that each of Messrs. Becker, Coulter, Crawford, Finkenzeller, Jacobi, Morse, Pettie, Shivery and Ms. Osar is an “independent director” for purposes of Section 303A of the Listed Company Manual of the NYSE and applicable SEC rules and regulations. In connection with this evaluation, the Board considered that in addition to Webster providing lending and other financial services to directors, their immediate family members, and their affiliated organizations in the ordinary course of business and without preferential terms or rates, some directors and their affiliated entities provide services to Webster in the ordinary course of business. In particular, the Board considered the following relationships:

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Mr. Smith is not considered independent because he is an executive officer of Webster and Webster Bank.

Executive Sessions of Independent Directors

In keeping with Webster’s Corporate Governance Policy, in 20102011 the Board of Directors held two meetings that were limited to independent directors. The Lead Director presides over the executive sessions of independent directors.

Risk Oversight

The Board of Directors administers its risk oversight function primarily through the Risk Committee, which is described in more detail below. The Risk Committee meets frequently throughout the year and reports its findings to the full Board of Directors on an ongoing basis. In addition, the Compensation Committee and the

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Risk Committee review and assess risks as related to Webster’s compensation programs. Webster also has a Chief Risk Officer, Daniel H. Bley, who reports in that capacity to the Risk Committee, as well as two senior risk officers who report to the Chief Risk Officer.

Board of Director and Committee Meetings

During 2010,2011, Webster held eleventen meetings of its Board of Directors.Board. Each incumbent director attended at least 75 percent of the aggregate of (i) the total number of meetings held by the Board of Directors during the period that the individual served and (ii) the total number of meetings held by all committees of the Board on which the individual served during the period that the individual served.

Committees of the Board of Directors;Board; Code of Business Conduct and Ethics and Corporate Governance Guidelines

The Board of Directors has established five standing committees. The standing committees are the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee, the Executive Committee and the Risk Committee. The Board of Directors has adopted a charter for each of these committees, as well as corporate governance guidelines that address the make-up and functioning of the Board of Directors and qualification guidelines for board members. The Board of Directors has also adopted a code of business conduct and ethics (the “Code of Conduct”) that applies to all employees, officers and directors. Each employee, officer and director participates in an annual training session that focuses on topics covered by our code of business conduct and ethics. The training reinforces our core values and our commitment to full compliance with applicable laws and regulations.You can find links to these materials on the Company’s website at:www.wbst.com.

You can also obtain a printed copy of any of the materials referred to above, without charge, by contacting us at the following address:

Webster Financial Corporation

145 Bank Street

Waterbury, Connecticut 06702

Attn: Harriet Munrett Wolfe, Esq.

Executive Vice President, General Counsel and Secretary

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The Board of Directors has determined that all of the Directors who serve on the Audit, Compensation, and Nominating and Corporate Governance committees are “independent” for purposes of Section 303A of the Listed Company Manual of the NYSE. In addition, all of the Directors who serve on the Risk Committee are “independent.”

Audit Committee

The Board of Directors has appointed an Audit Committee that oversees the Company’s financial reporting process, the system of internal financial and accounting controls, the audit process, and compliance with applicable laws and regulations. The Audit Committee reviews the Company’s annual financial statements, including management’s discussion and analysis, and regulatory examination findings. The Audit Committee recommends the appointment of an independent registered public accounting firm and is responsible for the oversight of such firm.A copy of the Audit Committee’s charter is available on the Company’s website at:www.wbst.com. During 2010,2011, the Audit Committee held ninefive meetings. The members of the Audit Committee currently are Ms. Osar (Chair) and Messrs. Jacobi (Chairman),Crawford, Finkenzeller, Morse and Ms. Osar.Pettie. Each of the members of the Audit Committee meets the independence requirements of the rules of the NYSE and applicable rules and regulations of the SEC. The Board of Directors has determined that each of the members of the Audit Committee is financially literate and that Messrs.Ms. Osar and Mr. Crawford and Jacobi each qualify as an “audit committee financial expert,” as that term is defined in Item 407(d)(5) of Regulation S-K.

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Under the corporate governance listing standards of the NYSE, if an audit committee member simultaneously serves on the audit committees of more than three public companies, and the listed company does not limit the number of audit committees on which its audit committee members serve to three or less, then in each case, the board must determine that such simultaneous service would not impair the ability of such member to effectively serve on the listed company’s audit committee. The Board of Directors has determined that Mr. Jacobi’s simultaneous service on the audit committees of three public companies in addition to Webster’s will not impair his ability to serve effectively as a member of the Audit Committee.

Compensation Committee

The Board of Directors has appointed a Compensation Committee. During 2010,2011, the Compensation Committee held sevennine meetings. Compensation Committee meetings are attended by Webster’s Chief Executive Officer (the “CEO”), other than while his compensation and benefits are discussed. For a description of the role of Webster’s CEO in determining or recommending the amount of compensation paid to our named executive officers during 2010,2011, see “Compensation Discussion and Analysis.” The members of the Compensation Committee currently are Messrs. BeckerShivery (Chairman), Coulter, Crawford, PettieJacobi and Shivery.Pettie. Each of the members of the Compensation Committee meets the independence requirements of the rules of the NYSE, and also serves as the Compensation Committee of the Company’s subsidiary, Webster Bank.A copy of the Compensation Committee’s charter is available on the Company’s website at:www.wbst.com. The Compensation Committee may delegate to its chairperson or any other Compensation Committee member such power and authority as the Compensation Committee deems appropriate, except such powers and authorities required by law to be exercised by the whole Compensation Committee or subcommittee thereof.

Pursuant to the Compensation Committee’s charter, among other responsibilities, the Committee is charged with annually reviewing and making recommendations to the Board of Directors with respect to the annual base salary, annual bonus arrangements, long-term incentive compensation and severance and/or change in control or similar agreements/provisions, if any, paid to the CEO; annually determining such compensation and benefits for the members of the Company’s Executive Management Committee other than the CEO; annually recommending to the Board of Directors the content of the annual performance evaluation for the CEO and reviewing performance evaluations for all members of the Executive Management Committee; administering and implementing the Company’s performance-based incentive plans; reviewing the talent management and succession planning processes to ensure that there is a pool of qualified candidates to fill future Executive Management Committee positions; and reviewing and assessing on a periodic basis the Company’s employee stock ownership guidelines.

For information on the role of compensation consultants determining or recommending the amount or form of executive or directors compensation, see “Compensation Discussion and Analysis – Role of Compensation Consultant.”

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Executive Committee

The Board of Directors has appointed an Executive Committee that has responsibility for serving as an exploratory committee for mergers and acquisitions and to serve as an ad hoc committee as needed. The Executive Committee did not meet during 2010.2011. The members of the Executive Committee are Messrs. Smith (Chairman), Becker, Crawford, JacobiMorse, Shivery and Morse.Ms. Osar.

Nominating and Corporate Governance Committee

The Board of Directors has appointed a Nominating and Corporate Governance Committee that has overall responsibility for recommending corporate governance process and board operations for the Company. The Nominating and Corporate Governance Committee identifies director candidates, reviews the qualifications and experience of each person considered as a nominee for election or reelection as a director, and recommends director nominees to fill vacancies on the Board and for approval by the Board of Directors and the shareholders.A copy ofthe Nominatingand Corporate Governance Committee’s charteris available on the Company’s website at:www.wbst.com. During 2010,2011, the Nominating and Corporate Governance Committee held two

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meetings. The members of the Nominating and Corporate Governance Committee are Messrs. Crawford (Chairman), Becker Finkenzeller and Pettie.Finkenzeller. Each member of the Nominating and Corporate Governance Committee meets the independence requirements of the rules of the NYSE.

Risk Committee

The Board of Directors has appointed a Risk Committee whose primary function is to assist the Board in fulfilling its oversight responsibilities regarding the Company’s enterprise risk management, receiving information regarding the Company’s policies, procedures and practices relating to risk, and discussing material regulatory issues, compliance matters, and emerging risks to the Company. The Risk Committee also has responsibility for overseeing management’s monitoring of security issues. During 2010,2011, the Risk Committee held nineeight meetings. The members of the Risk Committee are Messrs. Morse (Chairman), Becker, Coulter, Jacobi and Ms. Osar.

Director Qualifications and Nominations

The Board of Directors believes that it should be composed of directors with diverse experience in business and in areas that are relevant to the Company, and that directors should, at a minimum, possess the highest personal and professional ethics, integrity, and values, and be committed to representing the long-term interests of the shareholders. Directors should also have an objective perspective and practical wisdom, and should be willing and able to devote the required amount of time to Webster’s business. These attributes are embodied in Webster’s Qualification Guidelines for Board Members, which specifies that diversity is one of the factors to be considered in deciding on nominations for directors.

When considering candidates for the Board, of Directors, the Nominating and Corporate Governance Committee takes into account a number of factors, including the following:

When seeking candidates for director, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management or others, including third party search firms. The

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Committee will review the qualifications and experience of each candidate. If the Committee believes a candidate would be a valuable addition to the Board, it will recommend to the full Board that candidate’s election. The Nominating and Corporate Governance Committee reviews and assesses the effectiveness of the Qualification Guidelines for Board Members periodically.

Webster’s Bylaws also permit shareholders eligible to vote at the Annual Meeting to make nominations for directors, but only if such nominations are made pursuant to timely notice in writing to the Secretary of Webster. To be timely, notice must be delivered to, or mailed to and received at, the principal executive offices of Webster not less than 30 days nor more than 90 days prior to the date of the meeting, provided that at least 45 days’ notice or prior public disclosure of the date of the Annual Meeting is given or made to shareholders. If less than 45 days’ notice or prior public disclosure of the date of the Annual Meeting is given or made to shareholders, notice by the shareholder to be timely must be received by Webster not later than the close of business on the 15th day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure was made. Public disclosure of the date of the Annual Meeting was made by the issuance of a press release on February 14, 20112012 and by filing a Current Report on Form 8-K under the Securities

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Exchange Act of 1934, as amended, with the Securities and Exchange Commission on February 14, 2011.2012. The Nominating and Corporate Governance Committee will consider candidates for director suggested by shareholders applying the criteria for candidates described above and considering the additional information required by Article III, Section 13 of Webster’s Bylaws, which must be set forth in a shareholder’s notice of nomination. Section 13 of Webster’s Bylaws requires that the notice include: (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of Webster which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations or proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the shareholder giving notice (i) the name and address, as they appear on Webster’s books, of such shareholder and (ii) the class and number of shares of Webster which are beneficially owned by such shareholder. In considering any nominees for directors recommended by a shareholder, the Nominating and Corporate Governance Committee considers, among other things, the same factors set forth above.

Compensation of Directors

The following table summarizes the compensation paid to Webster’s non-employee directors during 2010.2011. Employee directors of Webster receive no additional compensation for serving as directors or committee members of Webster or its subsidiaries. Beyond these and other standard arrangements described below, no other compensation was paid to any such director.

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Webster uses a combination of cash and restricted stock to attract and retain qualified candidates to serve on the Board. Webster targets director compensation to be at the median for its peer group (as described in “Compensation Discussion and Analysis” below), with the opportunity to earn significantly more based on Webster’s total shareholder return. Stock ownership guidelines have also been established for directors to closely align directors’ interests with those of Webster’s shareholders.

During 2010,2011, each non-employee director of Webster received an annual retainer valued at $32,000, comprised of $7,000 in cash plus 2,004 shares of Webster Common Stock pursuant to the 2001 Directors Retainer Fees Plan, which provides for the payment of annual retainer fees to non-employee directors in shares of restricted Common Stock (the “Fees Plan”). Under the Fees Plan, each non-employee director is granted restricted shares of Common Stock for the equity portion (currently $25,000) of their annual retainer determined by the average four-quarter value of our Common Stock as of the grant date. The average four-quarter value is based on the average of the closing prices of Common Stock at the end of the four calendar quarters preceding the grant date, which is the date of each annual meeting of shareholders. Shares of Common Stock granted under the Fees Plan are subject to vesting requirements of one year and other substantial risks of forfeiture.$32,000. In addition, non-employee directors of Webster received 2,9442,793 shares of restricted stock, which vest incrementally over three years.

In addition, except as set forth below, each non-employee director received $1,200 for each Webster or Webster Bank Board meeting attended, $1,200 for each committee meeting attended, and $600 for each telephonic Webster or Webster Bank Board and committee meeting called by either Webster or Webster Bank. Each non-employee director of both Webster and Webster Bank received a total of $2,000 for separate board meetings of Webster and Webster Bank that were held on the same day. Non-employee directors receive $1,000 for a committee meeting if it is held on the same day as a Board meeting and $1,000 for a second committee meeting if more than one committee meeting is held on the same day. Webster also reimburses directors for reasonable travel expenses incurred in connection with attending off-site Board meetings (including the travel expenses of spouses if they are specifically invited to attend).

In 2010,2011, the Lead Director received an additional annual retainer of $22,500. The Chairman of the Audit Committee received an annual additional retainer of $15,000, the Chairman of the Compensation Committee and the Chairman of the Risk Committee received additional annual retainers of $10,000 and the Chairman of the Nominating &and Corporate Governance Committee received an additional annual retainer of $7,500.

Directors are eligible to participate in Webster Bank’s non-qualified deferred compensation plan. Directors may elect to defer up to 100% of their cash directors’ fees. Deferral accounts are indexed to net rates of return in mutual fund portfolios chosen by each director. Deferred amounts are credited by Fidelity Investments to accounts for each director. Such accounts, plus accrued interest, are payable upon death, disability, or termination of service as a director or a specified date that is at least five years from the year of deferral (as elected by the director at the time of deferral). Distribution elections may be paid in a lump sum or in ten annual installments, at the election of the director, except in the case of disability, where lump sum distribution is required.

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Our stock ownership guidelines require non-employee directors to own Webster Common Stock with a market value equal to at least $100,000. Non-employee directors who do not meet the guidelines agree to hold all long-term incentives which include vested restricted stock and exercised stock options (net of exercise price and taxes) until they achieve the required ownership threshold of Webster Common Stock.

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Communications with Directors

The Company’s shareholders and other interested persons who want to communicate with the Board of Directors, any individual Director, the Lead Director, the non-management directors as a group or any other group of directors, can write to:

[Name of Director or Directors]

c/o Lead Director of the Board of Directors

Webster Financial Corporation

P.O. Box 1074

754 Chapel Street

New Haven, Connecticut 06510

All communications received (except for communications that are primarily commercial in nature or relate to an improper or irrelevant topic) will be forwarded to the intended recipient(s) or the full Board, as appropriate.

Director Attendance at Annual Meetings

Webster typically schedules a meeting of the Board of Directors in conjunction with the annual meeting and expects that the Board of Directors will attend the annual meeting, absent a valid reason, such as a previously scheduled conflict. Last year all of the individuals then serving as directors attended the annual meeting.

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EXECUTIVE COMPENSATION AND OTHER INFORMATION

Named Executive Officers of Webster Financial Corporation

The following table sets forth information regarding the named executive officers (“NEOs”) of Webster Financial Corporation at December 31, 2010.2011.

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Provided below is biographical information for each of Webster’s NEOs, other than Mr. Smith. For information regarding Mr. Smith, see “Election of Directors-Information as to Nominees and Other Directors.”

Gerald P. Plush is Vice Chairman andPresident, Chief Operating Officer of Webster and Webster Bank, and serves as Chief Financial Officera director of Webster and Webster Bank. Mr. Plush joined Webster in July 2006 as Executive Vice President and Chief Financial Officer and was promoted to Senior Executive Vice President in July 2007. He was elected Chief Risk Officer in July 2008 and served in this role until August 2010. Mr. Plush was promoted to Vice Chairman and Chief Operating Officer on January 5, 2011 and was promoted to President and elected to the board of directors of Webster Bank on December 13, 2011. He serves as Chairman of Webster’s Enterprise Risk Management Committee. Prior to joining Webster, Mr. Plush was employed at MBNA America in Wilmington, Delaware. In his most recent position with MBNA, he was Senior Executive Vice President and Managing Director of Corporate Development and Acquisitions. Prior to this position, Mr. Plush was Senior Executive Vice President and Chief Financial Officer of MBNA’s North American Operations, and prior to that he was Senior Executive Vice President and Chief Financial Officer of U.S. Credit Card. Mr. Plush serves on the executive committee and the board of directors of Junior Achievement of Southwest New England, Inc.

Glenn I. MacInnes is Executive Vice President and Chief Financial Officer of Webster and Webster Bank. He oversees accounting and tax, treasury, corporate and business finance planning, procurement and investor relations units. Before joining Webster in 2011, Mr. MacInnes was Chief Financial Officer at New Alliance Bancshares. Prior to that, he worked for 11 years at Citigroup in a series of positions including deputy CFO for Citibank North America and CFO of Citibank (West) FSB.

Joseph J. Savageis Executive Vice President of Webster and Executive Vice President, Commercial Banking for Webster Bank. He joined Webster in April 2002. Prior to joining Webster, Mr. Savage was Executive Vice President of the Communications and Energy Banking Group for CoBank in Denver, Colorado from 1996 to April 2002. Mr. Savage serves as a director of the Hartford Metro Alliance, the Connecticut Technology Council and the Travelers Championship Committee.

Jeffrey N. Brownis Executive Vice President of Human Resources, Marketing and Chief Administrative OfficerCommunications of Webster and Webster Bank. Mr. Brown was elected to this position in July 2007.December 2011. Mr. Brown joined Webster in 1996 as Executive Vice President of Marketing and Communications for Webster Bank and assumed responsibility for strategic planning in 1997 until January 2010. He was elected Executive Vice President of Marketing and Communications for the holding company in March 2004. In July 2007, he was elected Chief Administrative Officer of both Webster and Webster Bank. Mr. Brown serves on the board of directors of Thethe Bushnell Center for the Performing Arts and the Wadsworth Atheneum, both in Hartford, Connecticut. He is also a member of the Executive Committee of the World Affairs Council of Connecticut, a member of the board of directors for the Eastern Connecticut State University Foundation and President of the Harold Webster Smith Foundation.

Compensation Committee Report

The Compensation Committee met with management to review and discuss the Compensation Discussion and Analysis disclosures that follow. Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Form 10-K for its 2011 fiscal year, and the Board has approved the recommendation.

Compensation Committee

Charles W. Shivery (Chairman)

David A. Coulter

C. Michael Jacobi

Mark Pettie

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Anne M. Slattery is Executive Vice President, Retail Banking of Webster and Webster Bank. Ms. Slattery was appointed to this position in October 2009. She was a consultant for Webster from May 2009 until October 2009. Prior to joining Webster, Ms. Slattery headed her own manufacturing company, Carlon Products Co. in Connecticut, from March 2002 until February 2009. Earlier in her career, she was President of Marymount College in Tarrytown, New York and held senior positions at Fleet Bank and Citibank.

Compensation Discussion and Analysis

The Compensation Discussion and Analysis (“CD&A”) discusses in detail the 20102011 compensation program for the Company’s named executive officers (the “NEOs”(“NEOs”): James C. Smith (Chairman, President. The Compensation Committee (“Committee”) recommends the compensation for the CEO to the full board and Chief Executive Officer); Gerald P. Plush (Vice Chairman, Chief Operating Officer and Chief Financial Officer who served as Senior Executive Vice President, Chief Financial Officer and Chief Risk Officer during 2010); Joseph J. Savage (Executive Vice President, Commercial Banking); Jeffrey N. Brown (Executive Vice President and Chief Administrative Officer); and Anne M. Slattery (Executive Vice President, Retail Banking).sets the compensation for Webster’s other NEOs. In addition to the NEOs, all members of the Executive Management Committee are compensated under this program.

At the annual meeting of shareholders held on April 28, 2011, Webster held an advisory vote on executive compensation. Although the vote was non-binding, the Committee has considered and will continue to consider the outcome of the vote when determining compensation policies and setting NEO compensation. Approximately 94% of the shares of Webster Common Stock that were voted on the proposal were voted for the approval of the compensation of the NEOs as discussed in Webster’s 2011 Proxy Statement. The Committee believes that the results of this advisory vote show especially strong support for Webster’s compensation policies and procedures.

Objectives of Compensation Program

Webster’s executive compensation program is structured so asdesigned to closely align NEOs’ total realized compensation with Webster’s financialattract, retain and strategic performancemotivate highly qualified executives and futureto reward actions and results that the Committee and Board of Directors believe will increase economic profits and maximize shareholder return. The board of directors and the Committee intendSpecial attention is given to compensateensuring that compensation plans do not encourage NEOs and other executive officers in a manner that rewards themto take unnecessary or excessive risks.

Webster’s compensation program closely aligns total compensation with achievement of Webster’s strategic and financial goals. A meaningful portion of total compensation is tied to future shareholder return thereby rewarding NEOs for pursuing strategies that increase economic profits over time.

The compensation program has three primary objectives. components:

Effect of U.S. Treasury Guidance on 2010 ExecutiveSetting 2011 Compensation Structure

Webster was a participant inIn April 2011 the U.S. Treasury’s (“UST”) Capital Purchase Program (“CPP”) for most of 2010. Therefore, the Company was required to comply with UST guidance issued in June, 2009 regarding the structure and variabilityCommittee reviewed all elements of compensation for its “most highly compensated” employees, where most highly compensated includes the NEOs and approved a new compensation structure consistent with the next 10 highest compensated employees in the Company.

Under UST guidance, short termobjectives outlined above. The approved design comprises base salary, annual incentive (“STI”) payments are prohibited for most highly compensated officers. Therefore, no such payments were made to NEOs in 2010. NEOs and other most highly compensated employees received a salary paid in cash and stock. Thus, the only variable component of compensation for 2010 is long term incentive (“LTI”).

LTI awards are variable based on The annual incentive rewards current year performance, while the Compensation Committee’s (“Committee”) assessment oflong term equity-based incentive grant aligns the NEOs’ interests with the long term goals and performance of the CompanyCompany. The long term incentive grant, which comprises a 60/40 mix of performance-based shares and the NEOs relative to financialstock options, is based in part on NEOs’ prior year performance and strategic metrics approved by the Committee in early 2010does not consider current year performance. Performance shares have a three-year cliff vesting and basedstock options have a three-year vesting of one-third on the NEOs’ individual contributions. The performance metrics, individual performance ratings and individual LTI awards are discussed in depth later in this report. The Committee determined the CEO’s LTI award, and approved the CEO’s recommendations for LTI awards for the other NEOs.each anniversary.

In accordance with UST guidance,the new structure, LTI grants are made to the CEO based on his target LTI and for the other NEOs from a pool that is determined by the sum of the NEOs’ collective target LTI. The LTI targets are listed in 2010 was structured not to exceed one-thirdthe “Components of total NEO compensation and was paid in time-vesting restricted shares rather than in performance-based shares as has been the Company’s practice (seeTotal Direct Compensation at Target” table on page 28 for details on previous performance share grants).20. The Committee may

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Since Webster redeemed UST’s CPP investment in 2010, UST guidance will not apply in 2011.increase or decrease the CEO’s LTI or the NEOs’ pool based on a variety of factors including the Company’s prior year performance against strategic and financial goals. The Committee plans to reinstitute variable STI and increasewill determine the LTI portion of compensation, a portion of which may be tied to Webster’s relative shareholder return performance against a peer goup over time.

Elements of 2010 Compensation

Base Salary.    Base salaries were adjusted in mid-2009 as a result of UST guidance which eliminated the short term bonus and redistributed the pay mix. The adjustments were in effect for 26 weeks in 2009 and continuedrecommended grant for the full year 2010, resultingCEO and will consider the CEO’s recommendation for the other officers. The February 2012 LTI grants were made in accordance with the new structure and are shown in a year-over-year increasenon-required table on page 27 for the purpose of setting forth clearly the compensation earned for 2011 performance.

The February 2011 LTI grants were based in base salaries for NEOs. All NEOs agreed to receive 100%part on 2010 performance and did not consider 2011 performance. The grants were made in the form of time-vested restricted stock under Webster’s previous compensation program, and were awarded in a range of 80-120% of the base salary adjustmentsNEOs’ LTI targets. The grants are described in Webster stock under a board approved stock purchase plan. The stock salary that was paid as part of this program was not transferable until Webster exited CPP.

Annual Incentive Compensation.Under UST guidance, NEOs were ineligible for an annual incentivedetail beginning on page 26 and are included in the required 2011 summary compensation award for 2010.

Long-Term Incentive Compensation.    Webster grants long-term equity awards to motivate NEOs to allocate capital and other resources in support of strategies that increase economic profits over time. The board and the Committee believe that varying the amount of the grants based on Company and individual performance against measurable goals most closely aligns NEOs’ compensation with shareholders’ interests.

Based on UST guidance, LTI awards for 2010 performance were limited to restricted stock and cannot exceed one-third of total compensation. LTI awards vest upon the later of three years from the date of grant or at the repayment of CPP funds.tables.

For 2010, Webster’s LTI program became variable based on performance. Accordingly, granting of LTI awards for 2010 was shifted from December 2010 to February 2011, so that the Committee could consider the full year’s results before making the variable grants based on corporate and individual performance compared to pre-established metrics and objectives. As a result, there are no LTI grants reflected in the Summary Compensation Table on page 32. In order to provide continuity as regards total compensation based on 2010 results, the Committee has provided an adjusted table reflecting the grants as a 2010 event on page 26. LTI amounts will reappear in the Summary Compensation Table in 2012.

The Committee’s Intentions for 2010 Compensation

The Committee believes that return on capital and performance against agreed upon financial, strategic and individual metrics should be primary determinants of executive compensation. Webster’s 2010 compensation program has been structured accordingly, in the context of UST guidance, and with special attention to ensuring that compensation plans do not encourage executive officers to take unnecessary or excessive risks that threaten the value of Webster.

For 2010, the Committee approved total compensation for NEOs that is generally higher than total compensation for 20092010, given the significant improvement in financial and credit-related results, measurable progress toward achieving strategic goals, and improved performance relative to Webster’s strengthened risk infrastructure. Peer Group.

The Committee also intendedintends that total compensation should be less than the targetedcommensurate with that at like institutions with similar performance. In determining total compensation levels in effect prior to Webster’s participation in the CPP. In settingdirect compensation, the Committee noted that while Webster improved its performance materially as compared to its 14 bank peer group, Webster still performed belowPeer Group and that Webster’s TSR over the peer group median on several important financial measures.past three year period achieved the 90^th percentile within the KBW Regional Bank Index ( “KRX”).

2011 Long Term Incentive Grants Paid For 2010 PerformanceCompensation Consultant

In settingcarrying out its responsibilities, the year’s LTI programCommittee engages McLagan, an independent compensation consultant, to offer market perspectives on annual pay, current executive compensation trends and compensation programs currently in early 2010,place at Webster. The consultant also provides insight into regulatory issues affecting compensation. The Committee has the authority to hire and terminate the consultant and determine the nature and scope of the consultant’s assignments. The Committee has engaged McLagan since June 2010.

McLagan provided the Committee ongoing insights relating to trends in executive compensation in the banking sector. At the direction of the Committee, McLagan reviewed all elements of compensation for the NEOs and made recommendations with regard to plan design. McLagan reviewed management’s proposals to the Committee regarding 2011 executive compensation and also presented an analysis of Webster’s 2011 performance relative to the Peer Group as an additional point of reference. McLagan attended all Committee meetings and in each one of those meetings had the opportunity to meet with the Committee in executive session. The Committee weighs the consultant’s perspective as part of its decision making process. The Committee communicates compensation decisions directly to management. McLagan did not determine the amount or form of compensation paid to Webster’s executive officers or directors during 2011.

Compensation Peer Group

The Committee regularly uses proxy information for the Peer Group to review annually the compensation of Webster’s NEOs relative to comparable positions. This review is supplemented by available market survey data. The Committee may also use comparisons to the Peer Group to consider market practices in other areas relevant to the scope of the NEOs’ responsibilities. This may include, for example, change-in-control provisions and stock ownership guidelines.

In 2011, the Committee considered actual and, where available, target compensation data from the desiredPeer Group. This data was presented by McLagan and contributed to an assessment of the competitiveness of actual and target pay for Webster NEOs.

The Committee reviews the composition of the Peer Group annually with the assistance of McLagan with the objective of maintaining a group of peer banks that individually and collectively represent suitable comparators for compensation-related analyses. Suitability is defined using a number of factors, including size, scope, business mix and geographic focus. Scope measures include total assets, net revenue, market

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capitalization and number of employees. Business mix is reflected by an analysis of loan composition (consumer, real estate, commercial and construction) and revenue composition (sources and proportion of net interest income and non-interest income). Banks with a geographic focus outside the continental United States are excluded regardless of the appropriateness of their scope and business mix. The Committee identified the 13 companies listed below as the Peer Group for 2011:

Elements of 2011 Compensation

Webster’s compensation program has three basic elements: a fixed base salary, a variable annual cash incentive and a variable equity-based long term incentive. All elements of compensation are reviewed annually, both separately and in aggregate by the Committee to ensure that the total amount of compensation is within appropriate competitive parameters based on data from independent sources and based on the performance of the Company and NEOs. The program is intended to provide NEOs with a compensation opportunity commensurate with persons with similar duties and responsibilities at other financial institutions with comparable performance. In determining levels of NEOs’ overall compensation, the Committee also considers the qualifications and experience of the respective officer, Webster’s size and complexity of operations and, to a certain extent, the compensation paid to other persons employed by the Company. The Committee uses external data as input for the Committee’s analysis and to obtain a general understanding of current compensation practices rather than strict rules for establishing compensation. A large portion of pay is tied to strategic and financial performance and other goals believed to be related to increasing shareholder value over the long term. Consequently, actual compensation received will vary from targeted compensation.

In early 2011, the Committee engaged McLagan to provide an analysis of Webster’s total compensation opportunity relative to prior years’ targets and relative to peer group compensation for comparable positions, as well as UST guidance. The Committee took into consideration the base salariesindividual components compared to the Peer Group and McLagan’s2010 Top Management Survey. This data contributed to an assessment of the NEOscompetitiveness of actual and target pay for Webster’s NEOs. Based on the findings, the Committee set the components of pay and weight of each component creating a structure that reflects the company’s objectives for compensation outlined above while allowing individual variations based on job scope, tenure, retention risk, and other factors relevant to the Committee.

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The chart below breaks down total compensation by element as well as the weight and target of each component by NEO for the program approved in April 2011.

Please note that the February 2011 LTI grants based on 2010 performance and reported in the required Summary Compensation Table on page 33 were made prior to the program approved in April 2011, and were therefore made entirely in the form of time vesting restricted shares. LTI grants made in February 2012 based on 2011 performance and reported in the non-required table on page 27 reflect the mix and the targets in the table above.

Salary

Annual salary is the only fixed component of Webster’s executive compensation program. In setting the salary, the Committee looks at current pay practices, Peer Group comparisons and general market analysis in consultation with its compensation consultant, McLagan. The Committee then establishes salaries that are competitive to our peer group for similar positions. The salaries are reviewed on an annual basis by the Committee.

In the case of a change in role, an officer’s new responsibilities, external pay practices, internal equity, past performance and experience are all considered in determining whether a change in salary is warranted.

Prior to the April 2011 adoption of the new compensation structure, NEOs received a portion of their salaries in the form of Webster stock. The stock-based salary program was discontinued in April 2011, and the NEOs’ salaries were reduced by the amount they had been receiving in salary stock.

As part of the Committee’s annual salary review, salaries were determined to be competitive when compared with the actual proxy data of the Peer Group and benchmark survey information. None of the NEOs received a merit increase or adjustment to base salary as a result of this review. Mr. Plush’s salary was increased in 2011 from $500,000 to $535,000 to reflect his additional responsibilities relative to his appointment as Chief Operating Officer.

Annual Incentive Compensation – Plan Overview

Annual incentive compensation is variable based on performance and ties a significant portion of the NEOs’ compensation to achievement of the Company’s annual strategic and financial goals. Measurements for the plan are approved annually by the Committee. For 2011, target incentives were set for each of the NEOs between 25% and 27% of total compensation. The plan is designed so that the weighted average performance for the financial measures must exceed a predetermined threshold before a payout can be made.

The plan is structured to include three Primary Components: the financial and strategic performance of the Company, which also considers performance relative to the Peer Group (the Corporate Component); each

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NEOs’ individual performance (the Individual Component); and, for each line of business head, the performance of the line of business against plan (the Line of Business Component). Measures are set for each of these three components with the mix and weight differing based on each officer’s responsibilities.

The Corporate Component is determined by scoring performance against five pre-established financial measures. Each measure is weighted based on relative importance and then the measures are totaled to determine a weighted score. Adjustments to this score may then be made based on the Committee’s assessment of the measurable progress against the Company’s stated strategic objectives and its performance against key metrics relative to its Peer Group.

The Individual Component is determined based on an assessment of each NEO’s individual performance measured against specific performance objectives.

The Line of Business Component is determined based on the financial and operating results of the line of business against its goals for the year and an assessment of results against strategic objectives. The program dictates that the Line of Business Component is not scored unless the Corporate Component is scored at or above its threshold payout level. Mr. Savage, Webster’s Executive Vice President, Commercial Banking, is the only line of business head among the NEOs.

The three Primary Components are weighted based on each NEO’s respective responsibilities. The CEO and other corporate officers’ incentives are weighted 80% on the Corporate Component and 20% on the Individual Component. As a line of business head, Mr. Savage’s incentive is weighted 40% on the Corporate Component, 20% on the Individual Component and 40% on the Line of Business Component. The weighting of the Primary Components is shown in the chart below:

Note: The Corporate Component must achieve a payout before the Line of Business Component will be paid out.

Annual Incentive Scoring

Corporate Component:The Corporate Component is determined by calculating a weighted performance score against five pre-established financial measures (Financial Performance). The resulting score may then be modified up or down at the Committee’s discretion by up to 30% of target based on performance relative to stated strategic goals and as compared to Webster’s Peer Group. The Committee has discretion to make adjustments for extraordinary, unusual or non-recurring items. Scores below 80 on an individual goal are reduced to zero and a total weighted score below 90 on the five goals in the aggregate earns no payout.

Webster achieved target or better on four of the five financial goals. Based on the CEO’s recommendation and the Committee’s concurrence, the Committee exercised its discretion to adjust three of the

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five financial measures taking into account non-recurring conditions and circumstances that favorably affected the Company’s results. All of these adjustments had the effect of lowering the Corporate Component score.

With regard to the adjustments, total revenues were adjusted downward to neutralize the positive impact of the one quarter delay in the implementation of the Durbin amendment. Non-interest income was adjusted downward by $2.0 million to neutralize the impact of non-recurring gain on sale of investments. Three adjustments were made to the Non-Performing Assets (“NPA”)/Assets metric: year-end projected NPAs were adjusted upward by $40 million to offset to positive effect of an opening balance of NPAs lower than plan; year-end projected NPAs were adjusted upward by $2.5 million to neutralize the positive effect of write downs against other real estate owned that were higher than plan; and average earning assets were reduced by $275 million to adjust for the effect of higher securities balances than planned.

The weighted Corporate Component rating generates a potential payout of 0-200% of target. A score of 100 would pay out at target. Each point below 100 reduces the payout by 5% down to the threshold score of 90 which generates a payout of 50% of target, below which no incentive is earned. Each point above 100 adds 10% with a maximum payout of 200% of target for a score of 110. The chart below shows the adjusted Financial Performance.

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The Committee has discretion to adjust the weighted Financial Performance score within the Corporate Component by plus or minus three points (30% of target) based on Webster’s strategic performance against the objectives set forth in the strategic plan. In conducting its review the Committee noted Webster’s strong progress in growing transaction balances, meaningfully expediting problem asset resolution and improving service scores. Also noted was the shortfall in earning asset growth due to higher than anticipated loan prepayments. Based on its review the Committee made an adjustment to add 0.6 points (6%) to the weighted rating. The 2011 strategic measurements are summarized in the chart below.

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The Committee also has discretion to adjust the weighted score within the Corporate Component by plus or minus three points (30% of target) based on Webster’s performance relative to its Peer Group. The Committee assesses Webster’s performance relative to its Peer Group against a set of 10 predetermined measures. Webster demonstrated meaningful improvement on several performance measures relative to peers in 2011 including return on average equity and return on average assets. Given that Webster’s improved returns on average equity and assets were only slightly better than the median for the Peer Group, the Committee determined that no adjustment was appropriate. The table below shows Webster’s performance relative to the Peer Group:

Final Corporate Component:The adjusted Financial Performance produced a weighted score of 102.9 which translates to an incentive payout of 129% of target. Based on the Committee’s assessment of the progress against stated strategic objectives (0.6 point favorable adjustment) and Webster’s performance relative to its Peer Group (no adjustment), a total of 0.6 points (equal to 6% of target) were added, bringing the total Corporate Component score to 103.5, which equates to a payout of 135% of target for the portion of the annual incentive based on the Corporate Component.

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Individual Component:The Individual Component score accounts for 20% of the total target bonus for each NEO. The Individual Component is determined through the annual review process as part of the Company-wide performance management process. Each NEO is evaluated based on achievement of individual performance objectives. The Committee evaluates the CEO, and the CEO evaluates the other NEOs in consultation with the Committee. The chart below lists the individual component scores for each NEO and summarizes each NEOs’ performance:

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Line of Business Component:Given his responsibilities as head of Webster’s Commercial Bank business segment, 40% of Mr. Savage’s target bonus is payable based on the financial and operating results of his line of business and on results relative to its strategic initiatives. 40% of Mr. Savage’s annual incentive target is based on this component.

The Commercial Bank registered meaningful improvement in financial and operating performance fueled by growth in the loan portfolio of 5%, $1.5 billion in new loan originations, strong pricing discipline that expanded spreads, increased fee revenue and significant improvement in credit quality. Revenue grew 13% and loan spreads increased 11% year over year, while deposit costs improved 16 basis points and non-performing loans declined by 49%, and charge-offs declined by 22%. Strategic contributions included: growth of middle market banking activity, with particular strength in the Boston market, strong growth in transaction account balances for across the Commercial Bank including government / institutional customers, and better cash management product offerings.

Final Tabulation of Annual Incentive Compensation:The Primary Component scores for each NEO are added together and multiplied by each NEO’s target annual incentive to determine each NEO’s annual incentive. The Committee retains discretion to adjust the CEO’s annual incentive and, in consultation with the CEO, the annual incentives for the other NEOs. There were no such adjustments for 2011. The final tabulations for annual incentive compensation are set forth below:

Webster participated in the U.S. Treasury’s Capital Purchase Program (“CPP”) from 2008 until December 2010, during which time the Company implemented a salary stock program consistent with U.S. Treasury guidance. Following Webster’s redemption in full of its outstanding preferred stock under the CPP, the salary stock program was suspended in April 2011, when the Committee approved the new compensation structure. The Committee determined at that time that the NEOs’ annual incentive payments would be reduced by the value of the salary stock received in 2011. The reductions amount to $291,485 for Mr. Smith, $96,510 for Mr. Plush, $48,275 for Mr. Savage, and $49,238 for Mr. Brown.

Long Term Incentive Grants

Webster grants long-term equity awards to reward performance that increases economic profits and maximizes shareholder value over time.

LTI grants made in February 2012 were based in part on NEOs’ 2011 performance. These LTI grants are shown in a non-required table on page 27 for the purpose of setting forth clearly the compensation earned for

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2011 performance. In accordance with the new structure approved in April 2011, the February 2012 LTI grants were made in a range of 90-110% of the NEOs’ LTI targets depending on each NEO’s 2011 performance. The Committee approved grants at 100% of target for Mr. Smith and, based on Mr. Smith’s recommendation, at 110% of target for Mr. Plush and Mr. Savage, and at 100% of target for Mr. MacInnes and Mr. Brown. The LTI grants at 110% of target for Messrs. Plush and Savage were driven by, in Mr. Plush’s case, his overall strong performance in 2011 as Chief Operating Officer; and, in Mr. Savage’s case, the significantly improved financial performance and the strategic progress recorded by the Commercial Bank business segment. The vesting criteria for the performance share portion of the 2012 LTI grants are based equally on performance against two metrics over the three-year cliff vesting period: (i) return on equity versus the target set by the Committee, and (ii) total shareholder return measured against Webster’s Peer Group. The number of granted shares which ultimately vest may range from 0-200% of target depending on performance against the agreed upon metrics. The 2012 LTI grants will be described in detail in the compensation report for 2012.

LTI grants made in February 2011 were based in part on NEOs’ 2010 performance and did not consider 2011 performance. While Webster was participating in the CPP (until December 2010), the only variable compensation allowed by U.S. Treasury guidance was in the form of time-vesting restricted stock which could not exceed 33% of total compensation. The Committee set the LTI target for each NEO should be set at approximately 28% of total compensation with thea maximum grant set at one-third of 33%. The LTI awards vest three years from the date of grant. While Webster had historically awarded LTI grants in December each year, the Committee decided in 2010 to award LTI in the first quarter of 2011, and thereafter, in order to enable the Committee to consider full year results as part of the LTI grant process.

The non-required chart below shows total direct compensation approved by the Committee for 2011 and 2010 performance. The 2010 LTI was paid in keeping with UST guidelines.time vested restricted shares and the 2011 LTI was paid in performance shares and stock options as described above:

The following section discusses in detail the 2011 LTI grants which were initially reported in last year’s proxy statement and were made based on 2010 performance. This section includes the required summary compensation tables.

Detailed ReportCriteria and Scoring for 2011 LTI Grants Based on LTI Awards2010 Performance

As previously described the February 2011, LTI grants were made based on 2010 performance. The following information was included in last year’s compensation report and is included here because the grants

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were made in 2011. Similarly, the LTI grants were made in February 2012 based on 2011 performance. Although the 2012 grants will be discussed in next year’s compensation report, we have determined to voluntarily disclose the grants in the table set forth on page 27.

The Committee approved a set of financialstrategic and strategicfinancial performance metrics in early 2010, which, when combined with theirits evaluation of the CEO’s performance and the CEO’s evaluation of the NEOs’ performance, would lead to determination of LTI awards.awards made in February 2011. The Committee then considered Webster’s performance relative to a 14 bank14-bank peer group and considered whether to make a discretionary adjustment to the awards.

The strategic and financial and strategic metricsmeasures consisted of 13 quantitative and qualitative performance objectives in total that were established at the beginning of 2010, as set forth in the table below. Seven financial metrics accountaccounted for 50% of an NEO’s target LTI and measure profitability, cost efficiency, liquidity and capital position against the plan. Sixsix strategic metrics accountaccounted for 35% of an NEO’s target LTI and include Webster’s growth across the region, its ability to generate new loans and deposits, create new sources of revenue, manage credit and non-performing assets and make improvements to operations and technology, all measured against the plan.

LTI. Individual performance accountsaccounted for 15% of each NEO’s target LTI based on the NEO’s success in meeting performance objectives, as determined by the Committee in the case of the CEO, and by the CEO for the other NEOs.

When the Committee approved the financial and strategic metrics in early 2010, each objective within a category was assigned a weight, as set forth below. In early 2011, the Committee assessed the degree to which each objective was achieved and assigned a score in a range between 50% and 160%. The score for each objective is included in the description below.

The following is a more detailed description of each of the 13 objectives listed above and includes the purpose of each objective, information on the degree to which each objective was achieved and the performance score assigned to the objective.

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2010 Company Objectives (100%)

A. Financial Results – Measurement Weight: 50%

1.Adjusted Net Income Pre-tax – The Company set its main financial goal to increase net income over 2009.

2.Net Interest Margin – The Company sought to increase its net interest margin by lowering its cost of funds and increasing loan spreads through pricing discipline.

3.Efficiency Ratio – Improved efficiency ratio was targeted to enhance efficiency in generating revenue.

4.Earning Asset Growth – The Company sought growth in interest earning assets, specifically targeting core business banking portfolios.

5.Liquidity / Loan to Deposit Ratio – This measure, which indicates the percentage of a bank’s loans funded via deposits rather than borrowings is used to ensure appropriate liquidity levels at the Bank.

6.Tier 1 Common to Risk Weighted Assets (RWA) Ratio – This ratio uses Tier 1 capital divided by risk weighted assets.

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7.Total Risk Based Capital Ratio – This ratio constitutes the sum of Tier 1 and Tier 2 capital divided by risk-weighted assets.

The total of all metrics for Financial Results resulted in a score of 55% compared with a target weight of 50%.

B. Strategic Initiatives – Measurement Weight: 35%

1.Core Footprint Business Banking Growth – This goal targeted commercial and small business loan growth throughout the region.

2.Geographic Expansion – Webster planned business growth at the outer regions of our footprint, in Boston, MA and Westchester County, NY.

3.Superior Service Delivery – This initiative created a plan for technical improvements to reduce ATM and related system outages in our branch network. The goal was to reduce negative year-end customer service impacts by 35%.

4.Expand Sources of Fee Income – This involved the introduction of new products and services to replace overdraft fees and increase current service income.

5.Continuous Improvement – This initiative provides a constant review of ideas for cost savings and operational improvements along with possible sources of new revenue.

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6.Capital and Risk Management – Increased focus on the management of non-performing assets was a priority along with careful management and pricing of new loan activity to avoid undue risk taking and manage the existing portfolio.

The total of all metrics for Strategic Initiatives resulted in a score of 39% compared with a target weight of 35%.

Summary of LTIP Score Results and Awards

Webster achieved target or better on five out of seven financial goals and five out of six strategic goals. Three financial metrics: Adjustedmetrics (Adjusted Net Income Pre-tax, Tier 1 Common to Risk-Weighted Assets and Total Risk-Based Capital,Capital) were capped at 120% of target based on the CEO’s recommendation and the Committee’s concurrence, taking into account conditions and circumstances that favorably affected the Company’s results but were not anticipated when targets were established. This resulted in an adjusted weighted score of 55% for the financial measures compared to a target of 50% and a weighted score of 39% for the strategic measures compared to a target of 35%. The Committee believes that the revised scores appropriately reflect Webster’s performance and the contributions of the NEO’s in 2010.NEOs.

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The CEO recommended adjustments to the financial and strategic results for 2010 as applied to each executive officer,NEO based on his / hereach NEO’s contribution to Webster’s financial and strategic performance. He then rated each officerNEO based on his / her individual performance relative to stated objectives to arrive at a total score for each executive officer.score. He then adjusted that score for each executive officer based on each officer’sNEO’s record of identifying, managing and mitigating risk, including an assessment of outcomes in the areas of compliance, operating risk, credit issues, audit findings or regulatory citings,citing, or other contributions that should be taken into account. The Committee evaluated the CEO in the same manner.

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The Committee then considered Webster’s performance relative to its peer group Based on 11 comparable financial metrics. The chart below shows Webster’s resultsthis evaluation, each NEO’s percentage achievement on the 11 metrics along with its percentile ranking in 2009 and 2010 and changes relative toIndividual Component is summarized on the peer group.

The Committee noted that Webster’s performance lagged the peer group in two measures: net interest margin and efficiency ratio; and significantly exceeded the peer group in three measures: non-interest bearing deposit growth, reserves to non-performing assets, and reserves to loans. Webster performed between the 43^rd percentile and 50^th percentile in six measures: non-interest income to operating revenue, interest earning asset growth, non-performing assets to total assets, net charge offs to total loans, return on average assets and return on average equity. Webster improved its position from 2009 relative to the peer group on seven metrics while declining in three. The Committee concluded that the considerable progress made in relative performance in 2010 was sufficient to offset Webster’s below median performance in most peer group measurements and elected to make no discretionary adjustments based on comparisons of Webster’s performance to the peer group.

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LTI awards were made in restricted stock, 100% of which will vest at the end of three years. Awards were made to each NEO taking into consideration the rationale shown below:following table:

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2010 Compensation Actions2008 Performance Shares

The following table, which is not required, is providedIn 2008, performance shares were granted to show total compensation earned by NEOs and other executive officers for 2010, given that LTI awards for 2010 performance were not determined until February 2011.

Setting Executive Compensation

The Committee sets the compensation of Webster’s NEOs. In so doing, the Committee regularly uses proxy information for a Compensation Peer Group (“CPG”) to review annually the compensation of Webster’s NEOs relative to comparable positions. This review is supplemented by available market survey data. The Committee may and has from time-to-time also used the CPG to consider market practice in other areas relevant to the scope of their responsibility. This may include, for example, change-in-control provisions, stock ownership guidelines and incentive plan design features.

In carrying out its responsibilities, the Committee engages an independent compensation consultant to offer market perspectives on annual pay, current executive compensation trends and compensation programs currently in place at Webster. The consultant also provides insight into regulatory issues affecting compensation. The Committee has the authority to hire and terminate the consultant and determine the nature and scope of the consultant’s assignments. During the first quarter of 2010, the Committee used Hewitt as outside compensation consultant to provide calculations in support of Webster’s stock plan proposal and to review the competitive landscape for the Committee. In June 2010, the Committee engaged McLagan as outside compensation consultant.

The Committee worked with McLagan to update the composition of the CPG. The objective of the selection process was to identify a group of peer banks that individually and collectively represent suitable comparators for compensation related analyses. Suitability is defined using a number of factors, including scope,

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business mix and geographic focus. Scope measures included total assets, net revenue, market capitalization and number of employees. Business mix was reflected by an analysis of loan composition (consumer, real estate, commercial and construction) and revenue composition (net interest vs. non-interest). In addition, banks with a geographic focus outside the continental United States were excluded regardless of the appropriateness of their scope and business mix. With McLagan’s assistance, the Committee identified the 14 companies listed below as the CPG:

At the direction of the Committee, McLagan reviewed management’s proposals to the Committee regarding 2010 executive compensation programs. McLagan also provided ongoing insights relating to trends in executive compensation in the banking sector. McLagan also presented an analysis of Webster’s 2009 and 2010 performance relative to the CPG as an additional point of reference. McLagan attended all Committee meetings after their selection and in each one of those meetings had the opportunity to meet with the Committee in executive session. The Committee weighs the consultant’s perspective as part of its decision making process. The Committee communicates compensation decisions directly to management. McLagan did not determine the amount or form of compensation paid to Webster’s executive officers or directors during 2010.

All elements of compensation are reviewed, both separately and in aggregate, by the Committee to ensure that the total amount of compensation is within appropriate competitive parameters based on data from independent sources and based on the performance of the Company and NEOs. The program is intended to provide NEOs, with a targeted compensation opportunity commensurate with persons with similar duties and responsibilities at other financial institutions with comparable performance. In determining levels of NEOs’ overall compensation, the Committee also considers the qualifications and experience of the respective officer, Webster’s size and complexity of operations and, to a certain extent, the compensation paid to other persons employed by the Company.

In 2010, the Committee considered actual and, where available, target compensation data from the CPG. This datathree-year performance period ending December 31, 2011. The payout was presented to them by McLagan and contributed to an assessment of the competitiveness of actual and target pay for Webster NEOs. The Committee supplemented the compensation data from the peer group with survey data. The supplemental data included information from comparably sized companies in the finance/banking industry and came from the following surveys:

The Committee reviewed data covering both total compensation and the individual components of compensation and focused on targeting total compensation opportunities that are in line with the competitive market median. Consistent with the objectives of Webster’s compensation program, the Committee used the data as input for the Committee’s analysis and to obtain a general understanding of current compensation practices, rather than strict rules for establishing compensation. The Committee reviewed the total compensation opportunity of NEOs relative to the total compensation of the peer group and survey data, with individual

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variations based on job scope, tenure, retention risk, and other factors relevant to the Committee. A large portion of pay is tied to financial and strategic performance and other goals believed to be related to increasing shareholder value over the long term. Consequently, actual compensation received varies from targeted compensation.

In 2010, the Committee considered actual and, where available, target compensation data from the CPG. This data was presented to them by McLagan and contributed to an assessment of the competitiveness of actual and target pay for Webster NEOs. While there were no merit increases in 2010 as a result of this review, it should be noted that 2010 was the first full year of salary adjustments made in 2009.

Performance Shares.    Between 2004 and 2008, Webster granted performance shares to certain NEOs with final payouts based on criteria for performance over a three-year period, targeted to reinforce Webster’s primary objective of tying compensation to shareholders’ interests. Only the performance shares granted in 2008 remain outstanding. Performance shares granted to all participants in 2004, 2005 and 2006 were previously forfeited due to failure to achieve the threshold performance. In addition, performance shares granted in 2007 which matured in 2010 to Messrs. Smith, Plush, Savage and Brown were also forfeited due to failure to achieve the threshold performance.

The outstanding 2008 performance share awards are tied to Webster’s total shareholder returnTSR versus the companies in the KBW Regional Banking Index.KRX. The total shareholder returnTSR measure was selected because the Committee believed it best reflectsreflected the relative return that an investment in Webster provides to its shareholders. This group of companies was chosen because it represents a stable mix of the size and type of financial institutions that best compare with Webster. In addition, a list of these companies is readily available in a published index and it represents a large enough group (50) to be relevant over the three-year measurement period.

As of the close of business on December 31, 2011, Webster was in the 90th percentile. This level of performance has a payout at 200% of target. Grants are valued at the time they are granted. The Committee certified the results for the performance shares were not granted to NEOs in 2009 or 2010.

Forfeiture of Performance Shares.    Performance shares that wereat the January 2012 meeting. Previous performance based LTI granted in 2004, 2005, 2006 and 2006 to Mr. Smith and to Mr. Plush in 20062007 were forfeited because Webster did not achieve the threshold performance level was not achieved. Performance shares that were granted in 2007 to Messrs. Smith, Plush, Savage and Brown in the targeted amounts of $743,576, $202,846, $116,237, and $108,678 respectively were forfeited in 2010 because the threshold performance level was not achieved. Performance shares granted and forfeited are shown in the table below:threshold.

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Retirement Plans

Pension Plan. Webster Bank maintains a frozen defined benefit pension plan for eligible employees, including the NEOs.plan. Webster stopped benefit accruals under the plan for all employees, including accruals under a non-qualified supplemental defined benefit plan (as discussed below) available to the NEOs, after December 31, 2007. The Pension Benefits section of this Proxy Statement details pension benefits for the NEOs.

401(k) Plan. Webster Bank maintains a defined contribution 401(k) plan for eligible employees, including the NEOs. All participants in the plan, including each of the NEOs, are eligible to make pre-tax contributions from 1% to 25% of their pay, up to Internal Revenue Code (“IRC”) limits ($16,500 in 2010)2011). Webster Bank matches the employee’s contributions on a dollar for dollar basis for the first 5% of pay the employee contributes. In addition, Webster provides transition credits ranging from 1% to 6% of pay for those employees, including NEOs, who were hired before January 1, 2007 and had reached age 35 or older on January 1, 2008. The purpose of these contributions andtransition credits is to help offset the impact of freezing the pension plan. A two-year vesting schedule applies to all Webster contributions. Under IRC limits, annual compensation in excess of $245,000 in 20102011 may not be taken into account for determining benefits or contributions under the qualified plan. Employees who are age 50 or older by the last day of the year may contribute an additional $5,500 to the plan. Effective as of February 1, 2012, the rate of matching contributions was changed to 100% of the first 2% of pay, plus 50% of the next 6% of pay.

Supplemental Defined Benefit Plan. Webster Bank maintains a frozen non-qualified supplemental defined benefit plan for certain executives, including NEOs who were participants in the pension plan. The purpose of the plan was to provide these individuals with supplemental pension benefits in excess of IRC limits for tax qualified pension plans. The plan was frozen as of December 31, 2007. Thus, service and compensation after this date are not used in calculating an NEO’s benefit from the plan.

Supplemental Defined Contribution Plan. Webster Bank maintains a non-qualified supplemental defined contribution plan for certain executives, including the NEOs. This plan provides each NEO with an allocation to their supplemental 401(k) account equal to the additional match and transition credit contributions that the NEO would have been received by the officer in the qualified 401(k) plan if there were no IRC compensation or deferral

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limits. In addition, Mr. Smith and Mr. Plush receive an additional supplemental transition credit allocation equal to 25.5% and 10.0% of compensation, respectively. The purpose of the additional supplemental allocation is to help offset the impact of freezing the supplemental defined benefit plan.

Non-Qualified Deferred Compensation Plan. The executive officers, including each of the NEOs, arewere eligible to participate in a voluntary non-qualified deferred compensation plan. The plan allowsallowed employees at the senior vice president level and above to defer a portion of their compensation because of the statutory limits under the qualified plan. This is a cost-effective methodAll deferrals under this plan ceased as of offering a market-competitive benefit to the NEOs.January 1, 2012.

Employment Agreements

The NEOs do not have employment agreements,agreements; however, Messrs. Smith, Plush, Savage and Brown are subject to non-competition agreements.

Other Executive Benefits

Webster offers a limited number of benefits to the NEOs and other executives in addition to the broad-based employee benefits program. Each benefit supports a specific objective, but falls within the overall purpose of recognizing leadership responsibility and contributions to the Company’s goals. Management reviews the benefits with the Compensation Committee for consistency with ourWebster’s organizational culture and market practices. These benefits are described in footnote 6 following the Summary Compensation Table.

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Post-Termination Arrangements

Webster has had change in control agreements in effect with its NEOs for some time. However, as a result of Webster’s participation in the CPP and in accordance with the Interim Final Rules, Webster adopted an omnibus resolution that amended the benefits plans and agreements in which any of the NEOs could receive payments upon termination or change in control. The amendments cover the period required by Section 111(b) of the Emergency Economic Stabilization Act of 2008, as amended (“EESA”), and applicable guidelines and regulations that prohibit any “golden parachute payment” as defined under Section 280G of the IRC. For this purpose, “golden parachute payment” is defined generally to mean any payment made on account of the executive’s departure. Accordingly, Webster had suspended all such arrangements during 2010. Since Webster is no longer subject to the CPP and the Interim Final Rules, change in control agreements for the NEOs are in effect for 2011.

Webster’s change in control practices are designed to retain the NEOs during rumored and actual change in control activity. During these times, continuity is a key factor in preserving the value of the business. Webster also provided other termination benefits designed to facilitate changes in key executives as needed. The amounts payable, triggering events and other terms of Webster’s change in control and other termination arrangements are set at the time of hiring by the Committee generally based on Company policy and competitive market information. Webster will be reviewingreviews the provisions of the change in control agreements during 2011.annually. Agreements issued in 2011 or later do not contain gross-up provisions. Webster has notified all holders of change in control agreements that the current agreements will not be renewed upon expiration. New agreements will not contain gross-up provisions.

Executive Stock Ownership

Webster believes stock ownership by management is beneficial in aligning the interests of management and shareholders. Executive Stock Ownership Guidelines are established to enhance shareholder value and focus each executive’s attention on the long-term success of the Company. Webster has adopted formal stock ownership guidelines for all of the executive officers, including the NEOs, in 2004 as shown below:NEOs.

Once achieved, ownership of the guideline amount must be maintained for as long as the executive is subject to the stock ownership guidelines. Even if stock ownership guidelines have been achieved, NEOs are required to continue to hold all net vested restricted stock and performance shares and net shares of Common Stock delivered after exercising stock options for a minimum of one year. NEOs who do not meet the guidelines further agree to hold Common Stock received through LTI awards until they achieve their respective ownership thresholds. In

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January 2012, the ownership guidelines for Mr. Smith and Mr. Plush were increased to six times and four times salary respectively. As of December 31, 2010,January 23, 2012, Messrs. Smith, Plush, Savage and Brown met the stock ownership guidelines. Mr. MacInnes was hired as the CFO on May 31, 2011 and was not eligible for LTI awards until February 2012. The Committee recognizes that ownership multiples have diminished in recent years due to decreases in the price of Webster Common Stock, offset in part by recent gains. In addition, the Committee noted that had performance shares previously granted and forfeited become vested, Mr. Plush would have met his ownership requirement. Given these fluctuations, the Committee believes the other NEOs arehe is making satisfactory progress toward theirthe ownership goals.goal.

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Policy on Internal Revenue Code Section 162(m)

As a result of Webster’s participation in the CPP, for as long as UST held any Webster securities acquired under the purchase agreement or the warrant,The Internal Revenue Code Section 162(m) limits the deduction limitavailable for remunerationcompensation paid to the seniorchief executive officer and the three most highly compensated executive officers duringother than the chief financial officer to the extent the compensation paid to any taxable yearsuch person exceeds $1,000,000, unless such compensation was $500,000 instead of $1 million, and must be computed without regard to “performance-based” compensation and certain deferrals of income. As a result,based on performance goals. In 2011, Webster expects to havehad non-deductible compensation arising from amounts paid to its NEOs.CEO resulting from a compensation structure in place for part of 2011 that was designed for Webster to comply with U.S. Treasury’s guidance while participating in the CPP.

Say-on-Pay

In 2010, Webster’s advisory “Say-on-Pay” proposal received the support of a super-majoritycompensation programs are structured to comply with IRC Section 162(m). Section 162(m) of the votes cast, affirming Webster’sIRC limits the deduction available to Webster for compensation philosophy, policies and practices. Therefore, no changes were made in responsepaid to the vote.chief executive officer and, based on IRS interpretive guidance, the three most highly compensated executive officers other than the chief financial officer to the extent the compensation paid to any such person exceeds $1,000,000, unless such compensation was based on performance goals determined by a compensation committee consisting solely of two or more non-employee directors and the performance goals are approved by the shareholders prior to payment. Where applicable, Webster will endeavor to structure compensation as exempt performance-based compensation. Webster does, however, reserve the right to determine to pay compensation to the executive officers, including the CEO, which may not be deductible under Section 162(m) of the IRC.

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COMPENSATION OF EXECUTIVE OFFICERS

The following tables contain certain compensation information for the Chief Executive Officer, the President, the Chief Financial Officer, and the threetwo other most highly compensated executive officers who were serving as NEOs on December 31, 2010:2011.

Summary Compensation Table

Salary, bonus, incentive payments and other compensation amounts to Webster’s NEOs are summarized in the following table. Some of the amounts below represent the opportunity to earn future compensation under performance-based compensation incentives that may be forfeited based on future performance vesting. As a result of mixing compensation paid and contingent compensation, the total shown in the Summary Compensation Table includes amounts that the named executives may never receive.

In reference to the Summary Compensation Table below, Mr. Smith forfeited the three-year performance share grant that would have vested after the close of 2008, Messrs. Smith and Plush forfeited the three-year performance share grants that would have vested after the close of 2009 and Messrs. Smith, Plush, Savage and Brown forfeited the three-year performance share grants that would have vested after the close of 2010.

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