Exhibit 10(e)
LINCOLN NATIONAL CORPORATION
DIRECTORS' VALUE SHARING PLAN
(Including All Amendments Through March 8, 2001)
ARTICLE I - PURPOSE OF PLAN
1.1 Establishment of Plan. Lincoln National Corporation (the
"Corporation") adopts the Directors' Value Sharing Plan (the "Plan") to
provide the benefits specified in the Plan for members of the Board of
Directors of the Corporation who are not employees of the Corporation or
any of its affiliates or subsidiaries ("Non-Employee Directors").
1.2 Purpose of the Plan. The purpose of the Plan is to provide
Non-Employee Directors with an increased economic interest in the
Corporation in order to attract and retain well-qualified individuals to
serve as Non-Employee Directors and to enhance the identity of interests
between Non-Employee Directors and the shareholders of the Corporation.
The Corporation intends that its Non-Employee Directors' Base
Compensation (i.e., retainer and meeting fees) approximate the median of
that for peer companies within the industry. The Plan is designed to
provide additional compensation to Non-Employee Directors linked to
overall return to the Corporation's shareholders.
The Plan increases the Non-Employee Directors' financial interest in the
Corporation through the payment of stock units based on:
1. Performance of the Corporation's stock relative to a group of
peer companies, and
2. Service on the Board.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
All Non-Employee Directors are eligible and shall participate in the
Plan in accordance with the terms and conditions set forth herein.
ARTICLE III - VALUE SHARING AWARD: COMPANY PERFORMANCE
3.1 Stock Units. In consideration for services rendered and as soon as
practicable after completion of a performance cycle determined by the
Board of Directors of the Corporation ("Performance Cycle"), the
Corporation shall award a whole number of stock units (the "Stock
Units") to each individual who was a Non-Employee Director during such
Cycle, as determined under subsection 3.2. Each Stock Unit shall
represent an unfunded, unsecured obligation of the Corporation to pay an
amount equal to the fair market value of a share of common stock of the
Corporation ("Stock"). Such value shall be determined as of any
business day by averaging the high and low sales price of the Stock
(quoted on the New York Stock Exchange Composite Listing) on the
preceding business day.
3.2 Calculation of Stock Unit Award. The number of Stock Units to be
awarded to each Non-Employee Director will be determined in accordance
with the following provisions:
a. Generally. For each Performance Cycle, such number of Stock Units
shall be determined pursuant to resolution of the Board of Directors of
the Corporation.
b. Individual Not Director Throughout Period. If an individual is a
Non-Employee Director during a portion but not all of a Performance
Cycle, the number of Stock Units awarded to the individual shall equal
what would have been awarded for a full Performance Cycle, multiplied by
the appropriate factor, determined as follows:
1. If the individual becomes a Non-Employee Director after a Performance
Cycle begins and remains a Non-Employee Director at the end of the
Cycle, the appropriate factor shall equal the number of full months that
the individual was a Non-Employee Director during the Cycle divided by
the number of months in the Cycle.
2. If the individual ceases to be a Non-Employee Director before the end
of a Performance Cycle (A) after attaining age 70, (B) after attaining
age 65, but with the consent of a majority of the members of the Board
of Directors of the Corporation other than the individual, (C) as a
result of the individual's death, or (D) as a result of the individual's
permanent and total disability (as defined in section 22(e)(3) of the
Internal Revenue Code of 1986, as amended), the appropriate factor shall
equal the number of full months that the individual was a Non-Employee
Director during the Cycle divided by the number of months in the Cycle.
3. If during a Performance Cycle the individual ceases to be a
Non-Employee Director as a result of a "change of control" (within the
meaning given to that term under the Corporation's Executives' Severance
Benefit Plan on the date that is six months immediately preceding the
"change of control"), the appropriate factor shall equal the number of
full months that the individual was a Non-Employee Director during the
Cycle divided by the number of full months from the start of the Cycle
through the date of the change of control.
4. If before the end of the Cycle the individual ceases to be a
Non-Employee Director for any reason not described in paragraphs
3.2(b)(2) or (3), the appropriate factor shall be zero, except to the
extent decided otherwise by the Board of Directors of the Corporation.
c. Notwithstanding the foregoing, the Board of Directors may in its
discretion increase or decrease the number of Stock Units awarded to one
or more of its members or former members as it determines appropriate.
3.3 Special Payment Rules. Notwithstanding the foregoing:
a. In the event of such change of control, the maximum number of Stock
Units for then-current Performance Cycles shall be awarded to
Non-Employee Directors (as if the highest applicable level of
performance were achieved), and cash payments with respect to those
Stock Units will be made as soon as practicable following the change of
control.
b. In the event an individual ceases to be a Non-Employee Director
before the end of a Performance Cycle for any reason other than such
change in control, payment with respect to any Stock Units awarded to the
individual pursuant to this Article III will be made as soon as
practicable following the end of the Cycle; provided, however, that if
the Non-Employee Director elected installment payments under Article VII
with respect to other Stock Units awarded under the Plan, payment with
respect to the Stock Units awarded pursuant to this Article III will be
made over the remaining installment period.
ARTICLE IV - VALUE SHARING AWARD: BOARD SERVICE
4.1 In addition to the awards based on stock performance described in
Article III, the Corporation shall award Stock Units in lieu of
participation in any pension or other retirement program of the
Corporation to each Non-Employee Director who on or before
March 31, 1996, waived any entitlement under (or who never becomes
entitled to benefits under) such a program.
4.2 The number of such Stock Units to be granted each eligible
Director shall be determined by (i) calculating the dollar amount
(the "Level Funding") required to fund in equal quarterly payments
over the Calculation Period (defined below) a notional lump sum
amount payable as of age 70 of .185 of the current annual retainer
multiplied by the number of quarters in the Calculation Period; and
then (ii) applying the provisions of 4.3 through 4.9 of this Plan.
The Level Funding shall be calculated assuming such payments were
credited at the end of each calendar quarter commencing on the later
of April 1, 1986, or the beginning of the calendar quarter which
includes the date on which the individual first became a Non-Employee
Director and terminating at the end of the Calculation Period and
assuming an effective annual interest rate of 7.5% during the
Calculation Period and during the period from the end of the
Calculation Period to age 70. The Calculation Period shall be a
period equal to the lesser of forty calendar quarters or the number
of calendar quarters commencing with the calendar quarter which
includes the date on which the individual's service as a Non-Employee
Director began and ending with the calendar quarter immediately
preceding the calendar quarter during which attainment of age 70
occurs. (See Exhibit A.)
4.3 An initial grant of stock units shall be made to each Non-Employee
Director who has waived benefits as provided in 4.1 above by
calculating (i) the dollar amount that would have accumulated had
such Level Funding outlined in 4.2(i) above taken place during the
period beginning the later of April 1, 1986 or the quarter which
includes the date the individual became a Non-Employee Director and
ending on March 31, 1996, including interest at 7.5% and dividing
this amount by (ii) the value of a share of Stock determined in the
manner set forth in 3.1 above (the "Stock Value") on March 31, 1996.
4.4 For an individual who as of March 31, 1996 has served as a
Non-Employee Director for a period equal to or greater than the
Calculation Period, the initial grant as described in 4.3 above
shall constitute the entire basic Board Service Value
4.5 For a Non-Employee Director who as of March 31, 1996 has not
served as a Non-Employee Director for a period equal to or greater
than the Calculation Period, the Corporation shall continue to make
grants of Stock Units at the end of calendar quarters beginning
April 1, 1996, and thereafter equal to the Level Funding amount
calculated under 4.2(i) divided by the Stock Value as of the date
of grant until grants have been made for each of the remaining
quarters in the Calculation Period during which the individual
continues to serve as a Non-Employee Director.
4.6 To the extent that the current annual retainer payable to Non-Employee
Directors is increased in any year, each Non-Employee Director serving for
such year shall also receive a grant of Stock Units equal to (i) .185 of
the dollar amount of such increase times the number of quarters (to a
maximum of forty) then served as a Non-Employee Director discounted at 7.5%
interest from the Non-Employee Director's age 70 to the last day of the
quarter during which such increase in retainer occurred, divided by (ii)
the Stock Value as of the last day of the quarter in which such increase in
retainer occurred.
4.7 For a Non-Employee Director who, as of the date any increase in
retainer occurs, has not served as a Non-Employee Director for a period
equal to or greater than the Calculation Period, the amount of any
quarterly payment made in quarters following the quarter during which the
increase in retainer occurred will be increased to an amount equal to the
then current quarterly payment times the ratio of the new retainer to the
then current retainer.
4.8 The beneficiary of a Non-Employee Director who dies while serving as a
Non-Employee Director and who prior to March 31, 1996, waived his or her
rights under any pension or retirement plan as provided in 4.1 above shall
be entitled to receive an additional amount credited to his or her Account
equal to the amount by which (i) the lump sum death benefit which would
have been payable under the Lincoln National Corporation Directors'
Retirement Plan had the Non-Employee Director continued to participate in
that plan until his or her date of death exceeds (ii) the value as of the
date of his or her death of the Stock Units calculated under the provisions
of 4.2 through 4.7 and the Dividend Equivalent Payments provided by Article
VI attributable to such Stock Units. No additional amount shall be
credited under 4.8 if 4.8(ii) exceeds 4.8(i).
4.9 In no event shall grants under this Article IV be increased or
decreased to reflect increases or decreases in Stock Value subsequent to
the date of grant.
ARTICLE V - STOCK UNIT TERMS AND CONDITIONS
Stock Units shall be represented by and recorded in a bookkeeping
account set up in each Non-Employee Director's name (the "Account").
The following terms and conditions shall apply to Stock Units: (i) a
Dividend Equivalent Payment, as defined in Article VI below, shall be
credited to the Account and shall have the same terms and conditions as
the Stock Units; (ii) none of the Stock Units may be sold, transferred,
assigned, pledged, or otherwise encumbered or disposed of; and (iii) the
Stock Units and Dividend Equivalent Payments shall vest on the date the
Non-Employee Director ceases to be a Director of the Corporation.
ARTICLE VI - DIVIDEND EQUIVALENT PAYMENTS
As of each dividend payment date with respect to Stock, each
Non-Employee Director shall be awarded a Dividend Equivalent Payment
equal to the product of (i) the per share cash dividend payable with
respect to each share of Stock on such date; and (ii) the total number
of Stock Units and Dividend Equivalent Payments credited to the
Non-Employee Director's Account, as of the record date corresponding to
such dividend payment date, divided by the fair market value. The
Dividend Equivalent Payments are subject to the restrictions specified
in Article V.
ARTICLE VII - PAYMENT OF BENEFITS
As soon as practicable following the date the Non-Employee Director
ceases to be a director of the Corporation (the "Date"), the Corporation
shall pay to the Non-Employee Director (or his or her designated
beneficiary) an amount equal in value to the Stock Units and Dividend
Equivalent Payments credited to his or her Account in a lump sum valued
as of the Date. In lieu of a lump sum, at age 70 or after, a Director
who has so elected may receive payments in annual installments over a 5,
10 or 15 year period.
ARTICLE VIII - ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event of a Stock dividend, Stock split or combination,
reclassification, recapitalization or other capital adjustment of shares
of Stock, the number of Stock Units and the amount of Dividend
Equivalent Payments credited to Accounts shall be appropriately adjusted
by the Board of Directors of the Corporation, whose determination shall
be final, binding and conclusive. The award of Stock Units pursuant to
this Plan shall not affect in any way the right or power of the
Corporation to issue additional Stock or other securities, to make
adjustments, reclassification, reorganizations or other changes in its
corporate, capital or business structure, to participate in a merger,
consolidation or share exchange or to transfer its assets or dissolve or
liquidate.
ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN
9.1 In General. The Board of Directors of the Corporation may at any
time terminate, suspend or amend this Plan.
9.2 Written Consents. No amendment may, without the written consent of
such Non-Employee Director, adversely affect the right of any
Non-Employee Director to receive any Stock Units or any Dividend
Equivalent Payments previously awarded.
ARTICLE X - GOVERNMENT REGULATIONS
The obligations of the Corporation under this Plan shall be subject to
all applicable laws, rules and regulations and the obtaining of all such
approvals by government agencies as may be deemed necessary or
appropriate by the Board of Directors of the Corporation.
ARTICLE XI - MISCELLANEOUS
11.1 Unfunded Plan. The Plan shall at all times be entirely unfunded.
Any Account established and maintained under the Plan is solely for
accounting purposes and shall not require a segregation of any assets of
the Corporation. A Non-Employee Director's right to receive any payment
under this Plan shall be no greater than the rights of an unsecured
general creditor of the Corporation.
11.2 Assignment; Encumbrances. Stock Units and Dividend Equivalent
Payments under this Plan are not assignable or transferrable and shall
not be subject to any encumbrances, liens, pledges or charges of the
Non-Employee Director or his or her creditors. Any attempt to assign,
transfer or hypothecate any Stock Units or Dividend Equivalent Payments
shall be void and of no force and effect whatsoever.
11.3 Applicable Law. This Plan shall be governed by the laws of the
State of Indiana to the extent not preempted by Federal law.
11.4 Headings. The headings in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of this Plan.
11.5 Plan Administration. The Plan shall be administered by a DVSP
Administration Committee (the "Committee"). At any date, the members of
the Committee shall be those members of the Nominating and Governance
Committee of the Board of Directors who are Non-Employee Directors as
such term is defined in Section 16 of the Securities Exchange Act of
1934, as it may be amended from time to time. The Committee may not
exercise its authority at any time there are less than two (2) members.
The Committee shall exercise its authority only by a majority vote of
its members at a meeting or by a writing without meeting.
ARTICLE XII - EFFECTIVE DATE OF PLAN
This Plan shall become effective as of January 1, 1996.
EXHIBIT A
DVSP Board Service Quarterly Contribution
Calculated for $30,000 Retainer at 7.5% Interest
Calculation
Become Period
Director Quarterly
at Age Contribution
69 5,400
68 5,205
67 5,015
66 4,829
65 4,649
64 4,473
63 4,302
62 4,136
61 3,974
60 3,817
59 3,551
58 3,303
57 3,073
56 2,858
55 2,659
54 2,473
53 2,301
52 2,140
51 1,991
50 1,852
49 1,723
48 1,603
47 1,491
46 1,387
45 1,290
44 1,200
43 1,116
42 1,039
41 966
40 899
39 836
38 778