EXHIBIT 10.4
RELIANCE STANDARD LIFE INSURANCE COMPANY
MANAGEMENT INCENTIVE COMPENSATION PLAN
ARTICLE I - INTRODUCTION, OBJECTIVES AND DURATION
1.1 INTRODUCTION. Reliance Standard Life Insurance Company ("RSL" or
the "Company"), hereby establishes an incentive compensation plan to be
known as the RSL Management Incentive Compensation Plan ("the Plan"),
as set forth below in this plan document.
The Plan permits the payment of annual awards, pursuant to achievement
of certain pre-established goals, in cash, stock options or a
combination thereof.
The Plan shall become effective as of January 1, 2001 (the "Effective
Date") and shall remain in effect as provided in Section 1.3 hereof.
The first Performance Period (as defined in Section 4.1) shall be
calendar year 2001.
1.2 PLAN OBJECTIVE. To promote profitable growth of the Company by
providing eligible employees with incentive based compensation, linked
to the financial performance of RSL. Thus, RSL will attract and retain
employees of the highest caliber who will demonstrate outstanding
performance and will assist in the achievement of overall objectives.
1.3 DURATION. The Plan will commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to
the right of the Committee to amend or terminate the Plan at any time.
It is expressly understood that while the Plan may remain in effect
from year to year, the Incentive Bonus, Measuring Objectives,
Participation Percentages, Achievement Percentages and any and all
other Exhibits will be separately adopted for each Performance Period,
such that following the conclusion of a Performance Period, amended
Exhibits must be adopted for the next Performance Period and Plan.
ARTICLE II - DEFINITIONS
When used in the Plan, the following terms will have the definitions
set forth below:
2.1 "ACHIEVEMENT PERCENTAGE" means the percentage amount as determined
by the Chairman of the Board of RSL and as indicated in Exhibit D
hereof, as may be amended from time to time.
2.2 "AWARD" means individually or collectively, a payment under this
plan of cash, stock options, or some combination thereof.
2.3 "BASE SALARY" means the employee's base annual salary at calendar
year end in the year immediately preceding the Performance Period.
2.4 "BOARD" or "BOARD OF DIRECTORS" means Board of Directors of the
Company.
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2.5 "COMMITTEE" means, as specified in Article 3 herein, the
Compensation Committee of the Board or such other Committee as may be
appointed by the Board to administer the Plan, including the Executive
Committee of the Board.
2.6 "COMPANY" means Reliance Standard Life Insurance Company, an
Illinois corporation, and any successor thereto.
2.7 "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Section 1.1 hereof.
2.8 "INCENTIVE BONUS" means the bonus and calculation thereof as
described in Exhibit B hereof, as may be amended from time to time.
2.9 "MEASURING OBJECTIVE" shall have the meaning ascribed to such term
as indicated in Exhibit C hereof, as may be amended from time to time.
2.10 "PARTICIPANT" means any employee of the Company so designated as a
Participant in this Plan by the Board of Directors and as indicated in
Exhibit A hereof, as may be amended from time to time.
2.11 "PARTICIPATION PERCENTAGE" is an amount as determined by the
Participant's manager based on the Manager's assessment of the
Participant's performance during the Performance Period. The actual
Participation Percentage to be awarded is discretionary and will be
based on recommendations of the Participant's senior officer, subject
to the approval of the President of RSL. Exhibit A, as may be amended
from time to time, sets forth the maximum Participation Percentage
amount up to which a Participant may participate in the Plan.
ARTICLE III - ADMINISTRATION
3.1 ADMINISTRATION. The Plan will be administered by the Committee. The
Committee is responsible for establishing appropriate rationale,
strategy and targets within the organizational structure for approval
by the Board of Directors.
3.2 AUTHORITY OF COMMITTEE. Except as limited by law and subject to the
provisions herein, the Committee shall have the authority to adopt
procedures for the administration of the Plan and to take any and all
action necessary to implement such procedures.
The Committee shall have full power to select Participants who shall
receive Awards under the Plan; determine the amounts and forms of
Awards; determine the terms and conditions of Awards in a manner
consistent with the Plan; construe and interpret the Plan and any
agreement or instrument entered into under the Plan; make factual
determinations; and establish, amend, or waive rules and regulations
for the Plan's administration. Further, the Committee shall make all
other determinations which may be necessary or advisable for the
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administration of the Plan. As permitted by law and consistent with
Section 3.1, the Committee may delegate its authority as identified
herein.
3.3 DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan (a) shall be final,
conclusive and binding on all persons, including the Company, its
employees, Participants, and their estates and beneficiaries, (b) shall
be in the sole discretion of the Committee, and (c) need not be uniform
as to similarly situated individuals.
ARTICLE IV - INCENTIVE PARTICIPATION
4.1 ELIGIBILITY, PARTICIPANTS AND PERFORMANCE PERIOD. Eligibility to
participate in the Plan is restricted to the Participants identified in
Exhibits A-1 and A-2, as may be amended from time to time. Eligibility
for Awards and Award amounts for which Participants are eligible will
be determined by the Committee for each calendar year (or other fiscal
year or partial year performance period established by the Committee)
(the "Performance Period").
4.2 PARTICIPATION. The Participation Percentages relate to each
employee's Base Salary. Changes in Participation Percentages,
Achievement Percentages or Participants shall be approved by the
Committee, which has absolute discretion to determine Participants,
Participation Percentages and/or Achievement Percentages. No employee
shall participate in more than one Incentive Compensation Plan, except
as required by transfer within a given year.
4.3 FORM OF AWARDS. Awards may be paid in cash, stock options or any
combination thereof, as determined by the Committee in its sole
discretion or, to the extent expressly authorized and directed by the
Committee, by each Award recipient.
4.4 DISTRIBUTION. After the close of each Performance Period a
Participant's actual Participation Percentage, if any, and Award will
be determined. Awards will be paid as soon as practical thereafter.
Each Participant will be notified of his or her participation in the
Plan, either in terms of the actual Participation Percentage or
Incentive Bonus, if the specified results are achieved.
4.5 PARTIAL AWARDS. Participants entering the Plan during the
Performance Period may be eligible to receive prorated Awards based on
the number full months employed and covered under the Plan during that
Performance Period. Employees hired after the last day of the tenth
month of a Performance Period are ineligible for an Award for that
Performance Period.
4.6 TERMINATION OF EMPLOYMENT, DISABILITY. Except as provided below, an
employee must be employed by the Company at the close of the
Performance Period in order to participate in and receive an Award
under the Plan. If employment is terminated during
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the Performance Period on account of death, disability, or retirement,
the employee may participate proportionately for the part of the
Performance Period he or she was employed prior to termination to the
extent (if any) deemed appropriate by the President of RSL at his sole
discretion. If employment is terminated during the Performance Period
for the convenience of RSL, but not for cause or by resignation, the
employee may participate to the extent (if any) deemed appropriate by
the President of RSL at his sole discretion. If an employee is
terminated for cause during the Performance Period or after the close
of the Performance Period but prior to the date for actual payment of
an Award under this Plan no Award will be paid and the employee will
not participate in this Plan.
If an employee terminates employment (other than on account of death,
disability, or retirement) after the close of the Performance Period
but prior to the date for actual payment of an Award under this Plan,
the President of RSL will unilaterally determine, at his sole
discretion, whether and to what extent (if any), under the
circumstances, payment of an Award to the former employee under the
terms of the Plan would be appropriate.
Employees hired or promoted during the Performance Period and named as
a Participant will become a Participant on the first day of the month
following approval by the Committee or the President of RSL.
Notwithstanding the foregoing provisions, the Committee or the
President of the Company, acting on behalf of the Committee, reserves
the right, in its or his sole discretion, to grant Awards to
Participants who are otherwise ineligible by reason of terminating
employment during the Performance Period and to determine the amounts
of any such Awards.
ARTICLE V - PERFORMANCE CRITERIA, CALCULATIONS, AND CHANGE OF STRATEGY
5.1 PERFORMANCE CRITERIA AND CALCULATIONS. Incentive Bonus Calculation,
Participants, Achievement Percentages, and Measuring Objectives, must
be approved by the Committee. The Award is calculated as outlined in
Exhibit B (Incentive Bonus Calculation) for each eligible Participant.
5.2 CHANGE OF STRATEGY. If the agreed upon operating strategy for RSL
is changed during the year, objectives and strategies in the Plan may
be changed accordingly, with approval of the Committee or the Board of
Directors. The Committee may, in its sole discretion, modify, reduce or
eliminate the Award otherwise payable to any eligible Participant. In
addition, the Committee may, in its sole discretion, grant Awards to
employees, which Awards need not be determined in accordance with this
Article but may be in such amounts and on such terms as the Committee
determines in its sole discretion.
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ARTICLE VI - DEFERRALS
The Committee may permit or require an eligible Participant to defer
his or her Award. If any such deferral is permitted or required, the
Committee shall, in its sole discretion, establish rules and procedures
for such deferrals.
ARTICLE VII - RIGHTS OF EMPLOYEES
7.1 NOT A CONTRACT. This Plan does not constitute a contract between
RSL and the Participants, and no Participant shall have any legal
rights by reason of the existence of this Plan. No right, benefit or
Award under this Plan 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; and, if any Participant hereunder should become bankrupt
or attempt to participate, alienate, sell, assign, pledge, encumber or
charge any right or benefit hereunder, then such right, benefit or
Award shall, at the discretion of the Committee or the Board of
Directors, cease and terminate. RSL may offset any claim it has against
the Participant against any amount to which a Participant may otherwise
be entitled to hereunder, but rights hereunder shall not otherwise be
subject to debts or liabilities of the Participant.
7.2 EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's
employment at any time, or confer upon any Participant any right to
continue in the employ of the Company.
7.3 PARTICIPATION. No Participant shall have the right to be selected
to receive an Award under this Plan, or, having been so selected in a
particular Performance Period, to be selected to receive an Award in
any future Performance Period.
ARTICLE VIII - AMENDMENT, MODIFICATION, AND TERMINATION
8.1 AMENDMENT, MODIFICATION, AND TERMINATION. The Committee may at any
time and from time to time, alter, amend, modify or terminate the Plan
or any Exhibits thereto, in whole or in part.
8.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any
Award previously granted under the Plan, to the extent such Award has
not yet been paid, without the written consent of the Participant to
whom such Award is granted.
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ARTICLE IX - WITHHOLDING
The Company shall deduct or withhold from Awards or other amounts
payable to a Participant, or require the Participant to remit to the
Company, an amount sufficient to satisfy Federal, state and local
taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of this
Plan.
ARTICLE X - INDEMNIFICATION
Each person who is or shall have been a member of the Committee, shall
be indemnified and held harmless by the Company against and from any
loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a
party or in which he or she may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all
amounts paid by him or her in a settlement approved by the Company, or
paid by him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her, provided he or she shall give
the Company an opportunity, at its own expense, to defend the same
before he or she undertakes to defend it or his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or By-Laws, as a matter of law,
or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
ARTICLE XI - SUCCESSORS
All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or
indirect purchase of all or substantially all of the business and/or
assets of the Company, or a merger, consolidation, or otherwise.
ARTICLE XII - LEGAL CONSTRUCTION
12.1 GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the
feminine; the plural shall include the singular and the singular shall
include the plural.
12.2 SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining part of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not
been included.
12.3 REQUIREMENTS OF LAW. The granting of Awards and the issuance of
stock and/or cash payouts under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be
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required.
12.4 SECURITIES LAW COMPLIANCE. Transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 under
the Exchange Act, or any successor rule. To the extent any provision of
the plan or action by the Committee fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
12.5 GOVERNING LAW. To the extent not preempted by federal law, the
Plan and all agreements hereunder shall be construed in accordance with
and governed by the laws of the Commonwealth of Pennsylvania.
12.6 RSL'S RESPONSIBILITY. RSL is responsible for providing full
financial data to establish appropriate rates to compute results,
obtaining approval of the Plan, and for coordination of the total
program.
In witness thereof, the Company has caused this Plan to be executed by its duly
authorized Officer, effective January 1, 2001.
Reliance Standard Life Insurance Company
By: /s/ LAWRENCE E. DAURELLE
------------------------
Signature
Title: /s/ PRESIDENT AND CHIEF EXECUTIVE OFFICER
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Date: August 6, 2001
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AMENDED EXHIBIT A-1 FOR PERFORMANCE PERIOD 2003
SENIOR MANAGEMENT PARTICIPANTS
MAXIMUM
PARTICIPATION
NAME POSITION PERCENTAGE
- ------------------------------------------------------------------------------------------------------------
SENIOR MANAGEMENT
Lawrence E. Daurelle President & Chief Executive Officer 85%
[Information Regarding Other Plan Participants Omitted]
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AMENDED EXHIBIT B FOR PERFORMANCE PERIOD 2003
INCENTIVE BONUS CALCULATION
An Incentive Bonus will be earned by a Participant based upon RSL's achieving
the Measuring Objective of the Plan as set forth in Exhibit C. The Incentive
Bonus will be the product of the Achievement Percentage as set forth in Exhibit
D multiplied by the Participation Percentage times Base Salary.
The Participation Percentage is an amount as determined by the Participant's
manager based on the Manager's assessment of the Participant's performance
during the Performance Period, subject to the maximum percentage set forth in
Exhibits A-1 and A-2. The actual Participation Percentage to be awarded is
discretionary and will be based on the recommendations of the Participant's
senior officer, subject to the approval of the President of RSL.
For Participants set forth in Exhibit A-1, the Committee in its sole discretion
may elect to award the Incentive Bonus as either (a) cash or (b) a grant of
options to purchase shares of Delphi Class A Common Stock ("Incentive Options"),
or a combination of both, subject to the approval by the Stock Option and
Compensation Committee of the Board of Directors of Delphi Financial Group, Inc.
("Delphi"). With regard to Incentive Options, the Incentive Bonus amount shall
be divided by the fair market value of the Delphi Class A Common Stock on the
date of grant of the option, and the quotient then multiplied by three (3),
yielding the total number of Incentive Options awarded.
For Participants set forth in Exhibit A-2, the Incentive Bonus is payable in
cash.
All Incentive Options shall be granted under Delphi's Second Amended and
Restated Employee Stock Option Plan, as amended from time to time, and have the
same characteristics and properties. The Incentive Option price per share shall
be one hundred percent (100%) of the Fair Market Value of a share on the date of
grant. For purposes hereof, "Fair Market Value" shall be the closing price on
the date of grant of a share of Delphi Class A Common Stock, as reported on the
New York Stock Exchange (the "NYSE"), or, if the shares are not then listed for
trading on the NYSE, the closing price of the shares as reported on another
recognized securities exchange or system. If the shares did not trade on the
grant date on the NYSE or such other applicable exchange or system, the Fair
Market Value for purposes hereof shall be the reported closing price on the last
business day on which the shares were traded preceding the grant date. Each
Incentive Option shall have a term of ten (10) years, exercisable immediately in
full. In the case of termination of employment, by either party, for any reason
whatsoever (subject to the following sentence), options may be exercised any
time during the remainder of the ten (10) year term. If a Participant's
employment is terminated by the Company on account of any act of (a) fraud or
intentional misrepresentation or (b) embezzlement, misappropriation or
conversion of assets or opportunities of the Company, or any unauthorized
disclosure of confidential information or trade secrets of the Company, all
unexercised Incentive Options shall terminate as of the date of such
termination.
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AMENDED EXHIBIT C FOR PERFORMANCE PERIOD 2003
MEASURING OBJECTIVES
The 2003 Measuring Objective of the Plan is Life Insurance Companies Operating
Income per the Elements of Profit on page two of the monthly financial package,
for the life companies only. For 2003, this amount is $82,354,000.
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AMENDED EXHIBIT D FOR PERFORMANCE PERIOD 2003
ACHIEVEMENT PERCENTAGE
If the actual results of RSL in the 2003 Plan year equal or exceed the 2003
Measuring Objective, the 2003 Achievement Percentage will be equal to an amount
as determined by the Chairman of the Board of RSL, such amount will not be less
than 90% or greater than 110%.
If the actual results of RSL in the 2003 Plan year are less than the 2003
Measuring Objective, the Achievement Percentage will be an amount, if any, as
determined by and at the sole discretion of the Chairman of the Board of RSL.
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