BONUS COMPENSATION AGREEMENT
THIS BONUS COMPENSATION AGREEMENT ["Bonus Agreement"] is made and
entered into this 30th day of September, 1994, by and between AMVESTORS
FINANCIAL CORPORATION ["AmVestors"] and AMERICAN INVESTORS LIFE INSURANCE
COMPANY, INC. ["AILICO"], all Kansas corporations, as parties of
the first part, and RALPH W. LASTER, JR. ["Mr. Laster"], an individual,
party of the second part.
WITNESSETH:
WHEREAS, AmVestors has employed Mr. Laster as its Chairman of the
Board of Directors and Chief Executive Officer, and AILICO has employed
Mr. Laster as its President and Chief Executive Officer in accordance
with the terms and conditions of an Employment Agreement dated August 25, 1994;
WHEREAS, the Employment Agreement dated August 25, 1994, establishes
Mr. Laster's annual base salary, benefits and perquisites, but does not
provide him with any additional compensation based upon the
financial performance or profitability of AmVestors and its affiliates
["the Companies"];
WHEREAS, AmVestors and AILICO believe that Mr. Laster may be in a
position to influence the financial performance and profitability of the
Companies by virtue of his employment, knowledge and experience;
WHEREAS, AmVestors and AILICO believe that the best interests of the
Companies, their shareholders, policyholders and/or creditors will be
promoted by providing Mr. Laster with a personal financial incentive
to maximize the profitability of the Companies, and that this objective can be
attained by affording
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him the opportunity to earn additional or bonus compensation based upon
objective indicia of performance;
WHEREAS, AmVestors and AILICO desire to provide Mr. Laster with the
opportunity to earn additional or bonus compensation based upon the financial
performance of the Companies in accordance with the terms and conditions
described below;
WHEREAS, Mr. Laster desires the opportunity to earn additional or
bonus compensation, in addition to his annual base salary, benefits and
perquisites, based upon the financial performance
of the Companies in accordance with the terms and conditions described below.
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties expressly understand and agree as follows:
1. Performance of Executive Employee. Mr. Laster shall fully
discharge his duties and responsibilities in accordance with the Employment
Agreement dated August 25, 1994, and shall utilize his best efforts to
maximize the financial performance and profitability of the
Companies to the fullest extent permitted under law.
2. Additional or Bonus Compensation. During each year of his
employment, Mr. Laster shall be entitled to earn additional or bonus
compensation based upon the annual financial
performance of AmVestors and its affiliates, and shall be entitled to receive
such compensation if one or more specified performance objectives have been
fulfilled and the conditions of this section are otherwise satisfied.
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(a) Peformance Objectives During each calendar year of his
employment, Mr. Laster shall be entitled to additional or bonus compensation
if one or more of the following goals is met for the calendar year as a
whole: (i) AmVestors achieves a return on equity equal to or greater than
13%; (ii) AmVestors achieves asset growth equal to or greater than 15%; (iii)
AmVestors realizes a total return on its own common stock equal to or greater
than the total return reported in the Standard & Poor Life Index for the life
insurance industry that year; (iv) AmVestors' core operating earnings are
equal to or greater than the reported expectations of market analysts as of
April 1st of the calendar year; (v) AILICO receives premiums and
annuity consideration before reinsurance equal to or greater than $300
million; (vi) AmVestors realizes and/or maintains a gross margin equal to or
greater than 200 basis points ["BP"]; and (vi) AmVestors incurs total
expenses equal to or less than 100 basis points ["BP"].
(b) Definitions For purposes of this section: (i) "return on equity"
shall be stated as a percentage derived from net income divided by average
shareholder's equity for the calendar year; (ii) "asset growth" shall be
stated as a percentage derived from total assets as of December 31st of the
calendar year minus total assets as of December 31st of the preceding
calendar year divided by total assets as of December 31st of the preceding
calendar year; (iii) "total return on its own common stock" shall be
calculated using the same factors and metholodology as the Standard
& Poor Life Index, including stock appreciation and dividends per share, if
any, during the calendar year; (iv) "core
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operating earnings" shall be derived from the
corresponding entry on Form 10K of AmVestors' annual report to the
shareholders; (v) "the reported expectations of market analysts" means any
published forecast(s) of future financial performance deemed to be reliable
by AmVestors' Board of Directors in its sole discretion; (vi) "premiums and
annuity consideration before reinsurance" shall be derived from AILICO's annual
statement filed with the Kansas Insurance Department; (vii) "gross margin"
shall be derived from the corresponding entry in the margin analysis on
Form 10K of AmVestors' annual report to the shareholders; and (viii) "total
expenses" means general insurance expenses and amortization of deferred
acquisition cost ["DAC"] associated with core operating earnings stated as a
percentage of average invested assets for the calendar year.
(c) Additional or Bonus Compensation Formula. Additional or bonus
compensation shall be calculated by multiplying Mr. Laster's annual base
salary for the calendar year ["base"] times the ratio of performance
objective points earned divided by total performance objective points
possible. For purposes of this formula, performance objectives are
assigned the following point values:
Objective Points
AmVestors Return on Equity > 13% .
AmVestors Asset Growth > 15% . . . . . . . . 1
Total Return on AmVestors Stock
> Total Return on S&P Life Index . . . . . 1
AmVestors Core Operating Earnings
> Analyst Expectations . . . . . . . . . . 1
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AILICO Premiums & Annuity
Consideration > $300 Million . . . . . . . 1
AmVestors Gross Margin > 200 BP . . . . . . . 0.5
AmVestors Total Expenses
< 100 BP . . . . . . . . . . . . . . . . . 0.5
for a total of 6.0 performance objective points possible each year in
which such criteria are utilized. In determining the multiplication ratio as
a fractional amount, the total objective points earned serves as the
numerator and the total objective points possible serves as the
denominator. If no performance objectives are achieved for the calendar
year as a whole, however, no points are earned and no additional or
bonus compensation shall be due.
(d) Modification of Performance Measures and Point Values. During
the first ninety (90) days of calendar year 1995 and each calendar year
thereafter as deemed appropriate, the Board of Directors of AmVestors and
AILICO, in consultation with the Compensation Committee, is authorized in its
sole discretion to amend, modify and/or supplement the performance goals or
objectives set forth in subsections (a), (b) and (c) above, and to assign
relative point values to all such performance goals or objectives, for
the purpose of determining Mr. Laster's eligibility for additional or bonus
compensation and calculating its amount, and any such amendments or
modifications shall be effective as of January 1st of any calendar year in
which the action is taken.
(e) Allocation and Payment of Additional or Bonus Compensation. The
total amount of any additional or bonus
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compensation which may be otherwise due in accordance with this section for
any year of Mr. Laster's employment shall be allocated in equal
amounts to a cash bonus and a salary bonus to be paid during the next succeeding
calendar year as follows: (i) Mr. Laster shall be paid the total amount of
the cash bonus [i.e., 50% of all additional or bonus compensation] in a
lump sum as soon as practicable following receipt of the certified audit
report for the year in which objective points were earned, but no later than
April 15th; and (ii) Mr. Laster shall be paid the total amount of the salary
bonus in equal bi-monthly installments from April 15th through December 31st
except as otherwise provided herein.
(f) Entitlement to and Forfeiture of Additional or Bonus Compensation
Under Prescribed Circumstances. The terms of this subsection shall have
the same meaning as terms utilized in a comparable context of the Employment
Agreement dated August 25, 1994.
(i) Expiration of Term of Employment In the event that Mr.
Laster's employment is terminated for any reason upon expiration of the period
covered by his Employment Agreement dated August 25, 1994, Mr. Laster shall
be entitled to receive a lump sum payment equal to the full amount of any
cash bonus and salary bonus that would otherwise have been due or owing to
him, which shall be paid within ten (10) days following receipt of the
certified audit report for the last calendar year of his employment.
(ii) Death or Disability In the event that Mr.
Laster's employment is terminated due to death or disability
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at any time prior to December 31st of any calendar year,
his personal representative(s): shall be entitled to receive a lump sum
payment equal to the full amount of any cash bonus and salary bonus that
would otherwise have been due or owing to him for the remainder of
such calendar year, which shall be paid within thirty(30) days of death or
disability; and, if Mr. Laster was employed at least nine (9) months during
the calendar year of death or diability, a lump sum payment equal to the
full amount of any cash bonus and salary bonus that would otherwise have
been due or owing to him during the next succeeding calendar year,
which shall be paid within ten (10) days following receipt of the certified
audit report for the calendar year of his death or disability.
(iii) Termination For Good Reason In the event
that Mr. Laster terminates his employment for good reason, including a
change in control, at any time prior to December 31st of any
calendar year, he shall be entitled to receive a lump sum payment equal to
the full amount of any cash bonus and salary bonus that would otherwise have
been due or owing to him for the remainder of such calendar year, which
shall be paid within thirty (30) days of termination; and an
additional lump sum payment equal to the full amount of any cash bonus and
salary bonus that would otherwise have been due or owing to him during the
next succeeding calendar year, which shall be paid within ten (10) days
following receipt of the certified audit report for the year of termination.
(iv) Termination Without Good Reason In the
event that Mr. Laster terminates his employment without good reason
prior to December 31st of any calendar year, Mr. Laster
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shall forfeit his right to any unpaid salary bonus through the remainder of
the calendar year of termination, and Mr. Laster
shall not be entitled to receive any cash bonus or salary
bonus that would have otherwise been due or owing to him hereunder at any
time during the calendar year following such termination.
(v) Termination Without Cause In the event that
Mr. Laster's employment is terminated by AmVestors and/or AILICO without
cause prior to December 31st of any calendar year, Mr. Laster
shall be entitled to receive the full amount of any cash bonus and
salary bonus otherwise due in that calendar year, which shall be paid within
ten (10) days of such termination; and, if Mr. Laster was employed for
at least nine (9) months during the year of termination, he shall be entitled to
receive an additional lump sum payment equal to the full amount of the
cash bonus and salary bonus that would have otherwise been due or owing to
him hereunder during the next succeeding calendar year, which shall be paid
within ten (10) days following receipt of the certified audit report for the
year of termination.
(vi) Termination for Cause In the event that
AmVestors and/or AILICO terminate Mr. Laster's employment for cause
prior to December 31st of any calendar year, Mr. Laster shall forfeit
his right to any unpaid salary bonus through the remainder of the
calendar year of termination, and Mr. Laster shall not be entitled to
receive any cash bonus or salary bonus that would have otherwise been
due or owing to him hereunder at any time during the next succeeding calendar
year.
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3. Governing Law and Binding Effect This Bonus
Agreement shall be governed by the laws of the State of Kansas, and shall
be binding upon the parties hereto, their successors, heirs,
legatees and personal representatives.
IN WITNESS WHEREOF, parties hereto have signed this
Bonus Compensation Agreement the day and year first written above.
PARTY OF THE FIRST PART:
AMVESTORS FINANCIAL CORPORATION
By: /s/Mark V. Heitz
_________________________
Mark V. Heitz, its President
and General Counsel
ATTEST:
/s/Lynn F. Hammes
_____________________________
CORPORATE SECRETARY
AMERICAN INVESTORS LIFE INSURANCE
COMPANY, INC.
By: /s/Mark V. Heitz
_____________________________
Mark V. Heitz, its Chairman of
the Board and General Counsel
ATTEST:
/s/Lynn F. Hammes
__________________________
CORPORATE SECRETARY
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COMPENSATION COMMITTEE - AMVESTORS
FINANCIAL CORPORATION and AMERICAN
INVESTORS LIFE INSURANCE COMPANY,
INC.
By: /s/ R. Rex Lee
______________________________
R. Rex Lee, it Chairman
PARTY OF THE SECOND PART:
/s/Ralph W. Laster, Jr.
_________________________________
RALPH W. LASTER, JR.
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