THE ST. PAUL COMPANIES, INC.
LONG-TERM INCENTIVE PLAN
1. Purpose
The purpose of this Plan is to further the growth and
profitability of the Company by offering Key Executives the
opportunity to receive incentive awards based on the
successful achievement of certain long-range corporate
goals.
2. Definitions
For the purpose of the Plan, except where the context
otherwise indicates, the following definitions shall apply:
"Board" means the Board of Directors of the Company.
"Committee" means the Executive Compensation Committee
or any other committee designated by Board action.
"Company" means The St. Paul Companies, Inc.
"Key Executive" means any person who is employed by the
Company or a Subsidiary on a salaried basis and whose
performance could have a significant effect on the long-
term success of the Company or a Subsidiary (or both).
"Participant" means a Key Executive to whom Performance
Objectives or group Performance Objectives have been
assigned for a Performance Period.
"Performance Award" means an award made pursuant to the
Plan following the attainment of any Performance
Objective.
"Performance Objective" means an absolute or relative
goal set for a Participant. Performance Objectives
must be based on the Company's total shareholder return
or earnings per share or on the return on equity,
expense management, revenues, net income or operating
income of the Company, any Subsidiary or any business
unit of the Company or any Subsidiary, or any
combination thereof.
"Performance Period" means a period of three or more
consecutive years with respect to which one or more
Performance Objectives have been set. Consecutive
Performance Periods may be commenced each year while
the Plan remains in effect. Each Performance Objective
established in any year for a Participant shall be
assigned a Performance Period which need not be of the
same duration as any other Performance Period assigned
to any other Performance Objective established for such
individual in that year.
"Plan" means this Long-Term Incentive Plan.
"Retirement" of any Participant means a retirement
under the retirement plan of the Company or a
Subsidiary.
"Subsidiary" means any entity of which, at the time
such Subsidiary status is to be determined, at least
50% of the combined voting power of such entity is
directly or indirectly owned or controlled by the
Company.
3. Administration of the Plan
The Plan shall be administered by the Committee. A
majority of the Committee shall constitute a quorum, and all
acts of the Committee must be approved by a majority of its
members.
Subject to the provisions of the Plan and applicable laws
and regulations, the Committee shall have authority in its
discretion:
(a) To interpret the provisions of the Plan and decide
all questions of fact arising in its application;
(b) To prescribe, amend and rescind rules and
regulations relating to the Plan;
(c) To determine which Key Executives shall be
Participants;
(d) To establish Performance Objectives and adjust
Performance Objectives pursuant to Section 5 hereof;
(e) To establish Performance Periods; and
(f) To terminate, suspend or modify the Plan.
The Committee's determination of the foregoing matters
shall be final and conclusive unless disapproved by the
Board.
4. Participant Selection; Establishment of Potential Award
A Key Executive may be selected as a Participant in
more than one Performance Period and in overlapping
Performance Periods. Selection may be made before or at any
time during Performance Periods. The Committee shall set a
potential Performance Award or a range of potential
Performance Awards for each Participant at the time of the
Participant's selection. Potential Performance Awards shall
be in terms of the dollar amounts payable if Performance
Objectives are attained. In no event may the maximum Performance
Award payable to any Participant for any Performance Period
exceed 50% of that Participant's average annual base salary
in effect over the Performance Period. In no event shall the
average base salary used to compute such a maximum Performance
Award exceed 150% of the annual salary in effect on January 1
of the first year of the Performance Period.
Nothing in the Plan is intended or shall be construed
to give any employee of the Company or a Subsidiary any
right to be selected as a Participant.
5. Performance Objective Adjustments
Subject to applicable laws and regulations, and the
specific terms of any particular Performance Objective, any
Performance Objective or group Performance Objective may be
adjusted, at any time not later than the midpoint of any
Performance Period, if it is determined that
external economic conditions or other factors beyond the
reasonable control of a Participant or a group of
Participants have materially changed in a manner not
reasonably foreseeable or taken into account when the
Performance Objective was originally set, provided that
failure to make an adjustment would likely be inconsistent
with the purpose of the Plan.
6. Determination of Performance Awards
As soon as practicable following the conclusion of each
Performance Period for each Performance Objective, the
Committee shall determine which Participants and groups of
Participants have earned Performance Awards. Performance
Awards will be made as soon as practicable following such
determination.
7. Entitlement to Performance Awards
A Participant is entitled to a Performance Award for a
Performance Period only if a Performance Objective for the
Participant or the Participant's group is met and if the
Participant is actively employed by the Company or a
Subsidiary on the final day of the Performance Period,
provided, however, that, in the event of the Participant's
death, disability, approved leave of absence or Retirement
during a Performance Period or for any other reason deemed
appropriate, a pro rata Performance Award may be made based
upon the period of active employment. In no event shall
there be pro rata entitlement to a Performance Award if a
Performance Objective is not achieved.
Nothing in the Plan or in the administration thereof
shall in any way diminish the right of the Company or any
Subsidiary to reduce the compensation or to terminate the
employment of any Participant.
8. Non-Alienation
No potential Performance Award or unpaid earned
Performance Award shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge the same shall be void.
9. Exclusion From Benefits Computations
By becoming a Participant under the Plan, each
Participant shall be deemed to have agreed that any
Performance Award paid to such Participant is special
incentive compensation and that it will not be taken into
account as "salary" or "compensation" or "bonus" in
determining the amount of any payment under any insurance,
pension, retirement, profit sharing or similar plan of the
Company or any Subsidiary.