Exhibit 10.1
STANCORP FINANCIAL GROUP,
INC.
LONG-TERM INCENTIVE AWARD
AGREEMENT
(20__ Performance
Period)
This Long-Term Incentive Award
Agreement (this “Agreement”) is made effective as of
____________, 20__ between StanCorp Financial Group, Inc., an
Oregon corporation (the “Company”) and
__________________ (the “Employee”).
The Organization and Compensation
Committee (the “Committee”) of the Company’s
Board of Directors (the “Board”) authorized a
performance-based award to the Employee pursuant to Section 8
of the Company’s 2002 Stock Incentive Plan (the
“Plan”). Compensation paid pursuant to the award is
intended to qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986 (the
“Code”). Employee desires to accept the award subject
to the terms and conditions of this Agreement.
In consideration of the agreements
set forth below, the Company and the Employee agree as
follows:
1.
Award . Subject to the terms and conditions of this
Agreement, the Company shall issue to the Employee the number of
shares of common stock (“Common Stock”) of the Company
(“Performance Shares”) determined under this Agreement
based on (a) the Company’s financial performance during
the 20__ calendar year (the “Performance Period”) as
described in Section 2, and (b) Employee’s
continued employment until the vesting date as described in
Section 3. Recipient’s “Maximum Share
Amount” for purposes of this Agreement is _______
shares.
2.
Performance Conditions .
2.1 Subject
to Section 3.1 and Section 4, the number of Performance
Shares to be issued to the Employee shall be determined by
multiplying the Maximum Share Amount by the Payout Factor
determined under the following formula:
Payout Factor = (50% * Adjusted EPS PF) + (35% *
Revenues PF) + (15% * AM Earnings PF)
where the “Adjusted EPS
PF,” the “Revenues PF” and the “AM Earnings
PF” are determined under the following table based on the
Company’s Adjusted EPS, Revenues and AM Earnings,
respectively (each as defined below), for the Performance
Period.
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Adjusted EPS
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Adjusted EPS PF
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Revenues
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Revenues PF
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AM Earnings
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AM Earnings PF
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(in millions)
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(in millions)
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0%
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0%
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0%
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10%
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10%
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10%
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20%
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20%
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20%
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30%
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30%
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30%
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40%
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40%
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40%
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50%
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50%
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50%
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60%
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60%
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60%
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70%
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70%
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70%
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80%
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80%
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80%
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90%
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90%
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90%
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100%
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100%
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100%
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If the Adjusted EPS for the
Performance Period is between any two data points set forth in the
first column of the above table, the Adjusted EPS PF shall be
determined by interpolation between the corresponding data points
in the second column of the table. If the Revenues for the
Performance Period are between any two data points set forth in the
third column of the above table, the Revenues PF shall be
determined by interpolation between the corresponding data points
in the fourth column of the table. If the AM Earnings for the
Performance Period are between any two data points set forth in the
fifth column of the above table, the AM Earnings PF shall be
determined by interpolation between the corresponding data points
in the sixth column of the table.
2.2 The
Company’s “Adjusted EPS” for the Performance
Period shall be the Company’s net income per diluted common
share excluding after-tax net capital gains for the Performance
Period. Adjusted EPS shall be calculated by subtracting After-Tax
Net Capital Gains (Losses) (as defined below) from the
Company’s net income for the year, and then dividing the
resulting amount by the Company’s diluted weighted-average
common shares outstanding for the year. “After-Tax Net
Capital Gains (Losses)” shall mean the amount calculated by
multiplying the Company’s net capital gains (losses) for the
year by a fraction, the numerator of which shall be the
Company’s net income for the year and the denominator of
which shall be the Company’s income before income taxes for
the year. For this purpose, the Company’s net income, diluted
weighted-average common shares outstanding, net capital gains
(losses) and income before income taxes for the year shall be those
amounts as set forth in the audited consolidated financial
statements of the Company and its subsidiaries for the year. If,
after the date of this Agreement, the outstanding Common Stock is
increased or decreased by reason of any stock split, combination of
shares or dividend payable in shares, the Adjusted EPS targets in
the above table shall each be adjusted by multiplying such targets
by a fraction, the numerator of which shall be the number of
outstanding shares of Common Stock immediately before the increase
or decrease and the denominator of which shall be the number of
outstanding shares of Common Stock immediately after the increase
or decrease.
2.3 The
Company’s “Revenues” for the Performance Period
shall be the Company’s consolidated revenues excluding
capital gains and losses for the Performance Period as set forth in
the audited consolidated financial statements of the Company and
its subsidiaries for the year.
2.4 The
Company’s “AM Earnings” for the Performance
Period shall be the Company’s Asset Management Earnings for
the Performance Period. Asset Management Earnings shall be equal to
the aggregate income before income taxes for the year of all of the
Company’s business units other than the Individual and Group
Life Insurance and Individual and Group Disability Insurance
business units. Income before income taxes of the included business
units shall be computed based on the Company’s books and
records, in accordance with generally accepted accounting
principles, and in a manner consistent with the manner in which the
Company calculated such aggregate amount as being $__ million for
its 20__ fiscal year.
2.5 If the
Company implements a change in accounting principle between
________, 20__ and the end of the Performance Period, either as a
result of the issuance of new accounting standards or otherwise,
and the effect of the accounting change was not reflected in the
Company’s business plan at the time of approval of this
award, then Adjusted EPS, Revenues and AM Earnings shall be
adjusted to eliminate the impact of the change in accounting
principle.
3.
Employment Condition .
3.1 In order
to receive the number of Performance Shares determined under
Section 2, the Employee must not have a Termination of
Employment (as defined below) prior to the last day of the
Performance Period (the “Vesting Date”), other than by
reason of Total Disability, Death or Retirement as suc
