Exhibit 10(g)
BALDWIN
& LYONS, INC. EMPLOYEE INCENTIVE BONUS PLAN
(EQUITY
APPRECIATION
RIGHTS PLAN)
General
The BALDWIN & LYONS, INC. EMPLOYEE EQUITY APPRECIATION RIGHTS PLAN (hereafter referred to as the “EAR
Plan”) was adopted by the Compensation Committee and approved
by the Board of Directors. The Board of Directors directed that the
EAR Plan be submitted to the shareholders of the Corporation and
the EAR Plan was approved at the Annual Meeting of shareholders
held on May 6, 2008. As a part of the Compensation
Committee’s ongoing monitoring of the impact of
Section 162(m) of the Internal Revenue Code (the
“Code”) on the Corporation, it was determined that it
was in the best interests of the Corporation and its shareholders
to take steps necessary to verify that the requirements of Section
162(m) were satisfied to assure that compensation to the Named
Executive Officers would be deductible for tax purposes.
The EAR Plan is designed to qualify as providing
“performance-based” compensation under
Section 162(m) of the Code. “Performance-based”
compensation meeting the requirements of Section 162(m) of the
Code is generally exempt from the federal income tax law which
disallows a tax deduction for annual compensation over $1,000,000
that a corporation subject to SEC reporting requirements may pay to
certain of its most highly paid executives.
Reasons for the EAR
Plan
The Board of Directors and the Compensation
Committee continue to believe that it is in the best interests of
the Corporation and its stockholders to provide for a
shareholder-approved plan under which awards paid to its executives
can qualify for deductibility for federal income tax purposes.
Accordingly, the Corporation has structured the EAR Plan in a
manner such that payments under it can satisfy the requirements for
“performance-based” compensation within the meaning of
Section 162(m) of the Code.
Description of EAR
Plan
The EAR Plan is designed to qualify as
“performance-based” compensation under Code
Section 162(m). Under Section 162(m), the Corporation may
not receive a federal income tax deduction for compensation paid to
the Chief Executive Officer, Chief Financial Officer or up to three
additional executive officers whose total compensation is required
to be reported in the Proxy Statement to the extent that any of
these persons receives more than $1,000,000 in compensation in any
one year. However, any compensation that is
“performance-based”, as defined in Section 162(m),
is generally exempt from the deduction limitation. The EAR Plan
will allow the Corporation to pay incentive compensation that is
performance-based and therefore fully tax deductible to the extent
otherwise allowable on our federal income tax return.
Eligibility
Participation in the EAR Plan is available to
all salaried employees of the Corporation.
Determination of the Amount of the Grants and
Value of the Rights
The
Compensation Committee shall designate, in writing, the
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