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Exhibit 10.4
FPIC INSURANCE
GROUP, INC.
2007 SENIOR EXECUTIVE ANNUAL INCENTIVE
PLAN
(effective January 1, 2007)
1. Purpose. The compensation
policies of FPIC Insurance Group, Inc. (the "Company") are intended
to support the Company's overall objective of enhancing shareholder
value. In furtherance of this philosophy, the FPIC Insurance Group,
Inc. 2007 Senior Executive Annual Incentive Plan (the "Plan") is
intended to motivate and reward executive officers of the Company
by providing for annual incentive bonuses if annual pre-established
performance goals are achieved. The Plan is also intended to
qualify as a performance-based compensation plan under Section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Effective Date. The Plan shall be
effective as of January 1, 2007, upon approval of the Plan by the
Company’s shareholders.
3. Plan Administration. The Plan
shall be administered by the Compensation Committee ("Committee")
of the Company’s Board of Directors ("Board"), which shall
consist of members appointed from time to time by the Board. Each
member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code. The Committee shall have
full power and authority, subject to the provisions of the Plan and
applicable law, to (a) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it deems necessary
or advisable for the proper administration of the Plan, (b)
construe, interpret and administer the Plan and any instrument or
agreement relating to the Plan, and (c) make all other
determinations and take all other actions necessary or advisable
for the administration of the Plan. Unless otherwise expressly
provided in the Plan, each determination made and each action taken
by the Committee pursuant to the Plan or any instrument or
agreement relating to the Plan (x) shall be within the sole
discretion of the Committee, and (y) may be made at any time. All
decisions of the Committee concerning the Plan shall be binding on
the Company and its subsidiaries and their respective boards of
directors, and on all Participants, their legal representatives and
beneficiaries and other persons claiming rights under the Plan.
4. Eligibility. The Company's Chief
Executive Officer and each other employee of the Company and its
subsidiaries that the Committee determines, in its discretion, is
or may be a "covered employee" of the Company within the meaning of
Section 162(m) of the Code and the regulations adopted thereunder
shall be eligible to participate in the Plan for a given period of
twelve months or less (a "Plan Year"). Participation in the Plan by
a Participant during a given Plan Year does not entitle continued
participation by such Participant in any subsequent Plan Year.
5. Awards.
(a) Initial Designations. Prior to or within
ninety (90) days after the commencement of each Plan Year, the
Committee shall designate the following:
(i) The persons who will participate (the
"Participants") in the Plan for the Plan Year.
(ii) The Performance Criteria, as defined
herein, which will apply to Awards for the Plan Year.
(iii) The Performance Goals, as defined herein,
to be met in order for Participants to earn Awards for the Plan
Year.
(iv) The payout matrix or formula for such
Performance Criteria and Performance Goals.
(b) Forms of Awards. Awards under this Plan ("Awards")
will be bonus payments in an amount determined in accordance with
the applicable payout matrix or formula. Subject to Section 8(f)
hereof, Awards shall be paid to the Participants in cash.
(c) Performance Criteria. The Committee shall use
any one or more of the following performance criteria ("Performance
Criteria") to establish Performance Goals:
(i) Awards intended to qualify as "qualified
performance-based compensation" under Section 162(m) of the Code
("Qualified Awards") shall be based solely upon one or more of the
following: stock price; premiums (whether written, earned or
otherwise); revenues; earnings, including operating earnings;
shareholders' equity (whether including or excluding intangibles);
return on equity; assets; return on assets; capital; return on
capital; economic value added; operating margins; cash flow;
shareholder return; expenses; combined ratio; expense ratio; loss
ratio; underwriting results; debt-to-capital ratio; or market
share. Any of the Performance Criteria may be on a per share
basis.
(ii) Awards other than Qualified Awards may be
described in any terms that are related to the performance of the
individual Participant or the Company or a subsidiary of
subsidiaries of the Company, a business unit, division, department
or other portion thereof or the function with any of the foregoing
performed by the Participant.
2
The Committee may specify any reasonable definition of the
financial or other measures it uses. Such definitions may
provid
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