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Exhibit 10.2
STANCORP FINANCIAL GROUP, INC. SHORT TERM
INCENTIVE PLAN
1. PURPOSES.
This Plan is intended to enable the Company
to attract, retain, motivate and reward qualified executive
officers and key employees by providing them with the opportunity
to earn competitive annual cash bonus compensation directly linked
to individual performance, business unit performance and overall
Company performance. This Plan is also intended to qualify eligible
portions of the compensation paid under the Plan as
"performance-based compensation" within the meaning of
Section 162(m), so as to exempt such eligible compensation
from the deduction limits imposed by Section 162(m) and to
make such eligible compensation deductible by the Company for
Federal income tax purposes.
2. DEFINITIONS.
The following words as used in this Plan
have the meanings ascribed to each below:
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(a)
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"162(m) Performance Goals" means one or more
targeted levels of performance for a fiscal year with respect to
one or more of the following objective measures with respect to the
Company or any Business Unit: net income, earnings per share, net
income or earnings per share excluding after-tax net capital gains,
stock price increase, total shareholder return (stock price
increase plus dividends), capital adequacy ratio, double leverage
ratio, assets under management, portfolio return, return on average
equity, return on average equity excluding after-tax net capital
gains and losses from net income and accumulated other
comprehensive income (loss) from equity, return on assets, return
on net assets, return on capital, return on investment, economic
value added, revenues, premium revenues, annualized new premiums,
operating expenses, income before income taxes, earnings before
interest, taxes, depreciation and amortization ("EBITDA"),
non-premium earnings, net investment income and cash flows, or any
of the foregoing before or after the effect of acquisitions,
divestitures, accounting changes, and restructuring and special
charges (determined according to criteria pre-established by the
Committee). The portion of any cash bonus paid under the Plan based
on achievement of 162(m) Performance Goals is intended to
constitute "performance-based compensation" within the meaning of
Section 162(m).
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(b)
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"Award" means an annual cash incentive award
granted in accordance with Section 4 of the Plan.
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(c)
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"Board" means the Board of Directors of the
Company.
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(d)
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"Business Unit" means any subsidiary, division,
line of business or other unit of the Company.
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(e)
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"Committee" means the Organization and
Compensation Committee of the Board, which shall be comprised
solely of two or more "outside directors" as defined in regulations
promulgated under Section 162(m).
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(f)
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"Company" means StanCorp Financial Group,
Inc.
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(g)
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"Discretionary Bonus" means the portion of a
Participant’s target bonus for any fiscal year (not to exceed
20% of the target bonus) that will be payable (up to the maximum
bonus percentage thereof) in the discretion of the Committee and
will not be subject to achievement of 162(m) Performance Goals or
Other Performance Goals. The Discretionary Bonus will not
constitute "performance-based compensation" within the meaning of
Section 162(m).
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(h)
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"Other Performance Goals" means one or more
targeted levels of performance for a fiscal year addressing aspects
of a Participant’s individual job performance or the
performance of any Business Unit for which the Participant is
responsible or to which the Participant contributes, as determined
and established by the Committee in its discretion. Other
Performance Goals may be either objectively or subjectively
determinable. The portion of any cash bonus paid under the Plan
based on achievement of Other Performance Goals will not constitute
"performance-based compensation" within the meaning of
Section 162(m).
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(i)
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"Participant" means (i) each executive
officer of the Company and (ii) each other key employee of the
Company or a subsidiary, whom the Committee designates as a
participant under the Plan.
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(j)
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"Plan" means the Stancorp
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