Exhibit 10.3
HORACE MANN EDUCATORS
CORPORATION
DEFERRED COMPENSATION PLAN FOR
EMPLOYEES
SECTION 1.
INTRODUCTION
1.1. Establishment of
Plan. Horace Mann
Educators Corporation, a Delaware corporation (the
“Company”), maintains the Horace Mann Educators
Corporation Deferred Compensation Plan for Employees (the
“Plan”) for those employees of the Company who are
eligible for bonus payments under the Company’s short term or
long term incentive plans (the “LTIP Employees”). The
Plan provides the opportunity for LTIP Employees to defer receipt
of all or a part of their cash compensation under the short term
incentive plan and/or the long term incentive plan on a pretax
basis and to invest those deferrals in the Company’s Stock.
The Plan shall be interpreted and applied at all times in
accordance with Code Section 409A, and guidance issued
thereunder. No benefits under the Plan shall be subject to
“grandfathering” treatment under Code
Section 409A, even if such benefits were deferred and vested
under the Plan before January 1, 2005.
1.2. Purposes.
The purposes of the Plan were to
align the interests of LTIP Employees more closely with the
interests of other shareholders of the Company, to encourage the
highest level of LTIP Employee performance by providing the LTIP
Employees with a direct interest in the Company’s attainment
of its financial goals and to help attract and retain qualified
LTIP Employees.
1.3. Effective Date.
The Plan was originally effective
December 1, 1997. It is hereby amended and restated effective
as of January 1, 2009. To the extent an investment or
distribution of cash or Stock may be made under the Plan, the Plan
is intended to qualify for the exemption from short swing profits
liability under Section 16(b) of the Exchange Act, provided by
Rule 16b-3 of the Securities and Exchange Commission as now in
effect or hereafter amended.
SECTION 2.
DEFINITIONS
2.1. Definitions.
The following terms shall have the
meanings set forth below:
(a) “Administrator”
means the person designated in Section 3 to administer the
Plan.
(b) “Annual Bonus
Compensation” means the bonus payable under the
Company’s short term incentive plan, as such plan shall exist
from time to time.
(c) “Board” means the
Board of Directors of the Company.
(d) “Change in Control”
means any of the events set forth below:
(1) any one person, or more than one
person acting as a group, acquires ownership of stock of the
Company that, together with stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair
market value or total voting power of the stock of the
Company;
(2) any one person, or more than one
person acting as a group, acquires (or has acquired during the
twelve (12)-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
Company that, together with stock held by such person or group,
constitutes thirty percent (30%) or more of the total fair
market value or total voting power of the stock of the Company;
or
(3) a majority of members of the
Company’s Board is replaced during any twelve (12)-month
period by directors whose appointment or election is not endorsed
by a majority of the members of the Company’s Board before
the date of the appointment or election.
(e) “Code” means the
Internal Revenue Code of 1986 as from time to time
amended.
(f) “Common Stock
Equivalent” means a hypothetical share of Stock which shall
have a value on any date equal to the Fair Market Value of one
share of Stock on that date.
(g) “Deferred Stock Equivalent
Account” means the bookkeeping account established by the
Company in respect to each LTIP Employee pursuant to
Section 5.1 hereof and to which shall be credited the amounts
of Annual Bonus Compensation and/or Long Term Bonus Compensation
deferred by the LTIP Employee as provided in the Plan and converted
into Common Stock Equivalents pursuant to the Plan. The
Administrator maintains separate subaccounts (each a
“Subaccount”) within each LTIP Employee’s
Deferred Stock Equivalent Account with respect to Annual Bonus
Compensation and/or Long-Term Bonus Compensation for which a
deferral election is made during the same election period under
Section 4.2.
(h) “Distribution Date”
means, with respect to any Subaccount, the date selected by the
LTIP Employee with respect to such Subaccount on an approved
election form. The date selected may be a fixed date, the LTIP
Employee’s attainment of a particular age or the LTIP
Employee’s Separation from Service for any reason.
(i) “Employer” means the
Company and all persons with whom the Company would be considered a
single employer under Code Sections 414(b) and 414(c), except that
in applying Code Sections 1563(a)(1), (2) and (3) for
purposes of determining a controlled group of corporations under
Code Section 414(b), the language “at least 50
percent” shall be used instead of “at least 80
percent” in each place it appears in Code Sections
1563(a)(1), (2) and (3), and in applying Treas. Regs. Sec.
1.414(c)-2 for purposes of determining a controlled group of trades
or businesses under Code Section 414(c), the language
“at least 50 percent” shall be used instead of
“at least 80 percent” in each place it appears in
Treas. Regs. Sec. 1.414(c)-2.
(j) “Exchange Act” means
the Securities Exchange Act of 1934, as amended from time to
time.
(k) “Fair Market Value”
means as of any applicable date the closing sale price of a share
of Stock on the Composite Tape for New York Stock Exchange-Listed
Stocks, or, if Stock is not quoted on the Composite Tape, on the
New York Stock Exchange, or, if Stock is not listed on such
Exchange, on the principal United States securities exchange
registered under the Exchange Act on which Stock is listed, or, if
Stock is not listed on any such exchange, the last closing bid
quotation with respect to a share of Stock immediately preceding
the time in question
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on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use
(or any other system of reporting or ascertaining quotations then
available), or if Stock is not so quoted, the fair market value at
the time in question of a share of Stock as determined by the Board
in good faith.
(l) “Internal Revenue
Code” means the Internal Revenue Code of 1986, as amended
from time to time.
(m) “Long Term Bonus
Compensation” means the bonus payable under the
Company’s long term incentive plan, as such plan shall exist
from time to time.
(n) “Payment Date” means
the date on which the Company would have paid the Annual Bonus
Compensation and/or the Long Term Bonus Compensation to the LTIP
Employee but for the LTIP Employee’s deferral election
hereunder.
(o) “Separation from
Service” means the LTIP Employee has a termination of
employment with the Employer. Whether a termination of employment
has occurred shall be determined based on whether the facts and
circumstances indicate the LTIP Employee and Employer reasonably
anticipate that no further services will be performed by the LTIP
Employee for the Employer; provided, however, that an LTIP Employee
shall be deemed to have a termination of employment if the level of
services he or she would perform for the Employer after a certain
date permanently decreases to no more than twenty percent
(20%) of the average level of bona fide services performed for
the Employer (whether as an employee or independent contractor)
over the immediately preceding 36-month period (or the full period
of services to the Employer if the LTIP Employee has been providing
services to the Employer for less than 36 months). For this
purpose, an LTIP Employee is not treated as having a Separation
from Service while he or she is on a military leave, sick leave, or
other bona fide leave of absence, if the period of such leave does
not exceed six months, or if longer, so long as the LTIP Employee
has a right to reemployment with the Employer under an applicable
statute or by contract.
(p) “Specified Employee”
has the meaning given such term by the Board by separate action
given effect from time to time under Code
Section 409A.
(q) “Stock” means the
$0.001 par value common stock of the Company.
(r) “Unforeseeable
Emergency” is a severe financial hardship to the LTIP
Employee resulting from a sudden and unexpected illness or accident
of the LTIP Employee, the LTIP Employee’s spouse, the LTIP
Employee’s beneficiary, or the LTIP Employee’s
dependent (as defined in Code Section 152(a), without regard
to subsections (b)(1), (b)(2) and (d)(1)(B)), the loss of the LTIP
Employee’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the LTIP Employee.
2.2. Gender and
Number. Except when
otherwise indicated by the context, the masculine gender shall also
include the feminine gender, and the definitions of any term herein
in the singular shall also include the plural.
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SECTION 3. PLAN ADMINISTRATION.
The Plan shall be administered by
the Human Resources Benefits Officer of the Company. Subject to the
limitations of the Plan, the Administrator shall have the sole and
complete authority: (a) to impose such limitations.
restrictions and conditions as he or she shall deem appropriate,
(b) to interpret the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating
to the Plan and (c) to make all other determinations and to
take all other actions necessary or advisable for the
implementation and administration of the Plan. Notwithstanding the
foregoing, the Administrator shall have no authority, discretion or
power to alter any terms or conditions specified in the Plan. The
Administrator’s determinations on matters within his or her
authority shall be conclusive and binding upon the Company, the
LTIP Employees, beneficiaries and all other persons.
SECTION 4. DEFERRAL
ELECTIONS
4.1. Deferral
Elections. An LTIP
Employee may elect to defer receipt of all or a specified portion
of any Annual Bonus Compensation or Long Term Bonus Compensation
payable in cash to the LTIP Employee. Deferral elections permitted
under this Section 4 must be filed with the Company on forms
(which may be electronic) approved by the Administrator. The LTIP
Employee’s election shall include: (a) the percentage or
dollar amount of each applicable Annual Bonus Compensation payment
to be deferred and the percentage of each applicable Long Term
Bonus Compensation payment to be deferred, (b) the date (i.e.,
the Distribution Date) as of which the deferred payments shall be
distributed as provided in Section 6.1, and (c) the form
of such distribution (i.e., lump sum or annual installments over a
fixed period not to exceed five (5) years) as provided in
Section 6.2.
4.2. Timing of Deferral
Elections.
(a) An election to defer Annual
Bonus Compensation and/or Long Term Bonus Compensation payments
shall be made on or before December 31 of the calendar year
preceding the performance period during which the Annual Bonus
Compensation is earned or, in the case of Long Term Bonus
Compensation, the first calendar year in the performance period
during which the Long Term Bonus Compensation is earned.
(b) Notwithstanding the preceding,
with res
