AMERICAN FINANCIAL GROUP, INC.
DIRECTORS' COMPENSATION PLAN
P R E A M B L E
The purpose of the Directors' Compensation Plan ("Plan") of
American Financial Group, Inc. (the "Company") is to align
further the interests of the Company's non-employee directors
with the interests of shareholders by providing that a minimum of
50% of such directors' annual retainers are paid through the
issuance of shares of the Company's Common Stock, $1.00 par value
("Common Stock").
Directors who are not employees of the Company or a Company
subsidiary are paid an annual retainer ("Board Retainer"), an
additional annual Board Committee retainer ("Committee Retainer")
and an attendance fee for each Board or Committee meeting
attended ("Meeting Fees"), in amounts which shall be set by the
Board of Directors. The initial amounts established by the Board
of Directors for the retainers and fees is set forth on the
attached Schedule 1. These amounts may be changed by the Board
of Directors from time to time without shareholder approval.
1. PAYMENT OF COMPENSATION TO NON-EMPLOYEE DIRECTORS.
The Board Retainer and Committee Retainer shall be paid by
the Company quarterly, in arrears, as soon as practicable
following the end of each calendar quarter. The quarterly
portion of the Board Retainer and Committee Retainer (if
applicable) shall be paid 50% in cash and 50%, or in such
proportion as an eligible director may elect pursuant to Section
3 below, in the form of shares of the Company's Common Stock.
The number of shares of Common Stock to be issued to each
non-employee director pursuant to this Plan shall be determined
by dividing the amount of the retainers payable in Common Stock
by the average of the per share Fair Market Value of the Common
Stock (as defined in Section 3 below) for the ten trading days
ending on the last business day of each calendar quarter; the
resulting number shall then be rounded up to the nearest share.
The Meeting Fees accrued during each calendar quarter, if
any, shall be paid by the Company at the end of such quarter in
cash, together with the cash portion of the applicable quarterly
retainers.
2. ELECTION BY NON-EMPLOYEE DIRECTORS TO RECEIVE CASH PORTION
OF THEIR COMPENSATION IN ADDITIONAL COMPANY COMMON STOCK.
Each non-employee director may elect to receive all or a
portion (in 20% increments) of the quarterly cash portion of
their applicable retainers for service on the Board of Directors
in shares of Common Stock. Such election shall be irrevocable
for each quarter and shall be made at least six months in advance
of the date the non-employee director is to receive the quarterly
payment.
3. FAIR MARKET VALUE OF COMPANY COMMON STOCK.
The "Fair Market Value" of a share of Common Stock shall be
the mean between the high and low prices of the shares on such
date on the New York Stock Exchange Composite Tape (or the
principal market in which the Common Stock is traded, if the
shares are not listed on that Exchange on such date) or, if the
shares were not traded on such date, then the mean between the
high and low prices of the shares on the next preceding trading
day during which the shares were traded.
4. RESTRICTIVE LEGEND; HOLDING PERIOD FOR SHARES OF COMMON
STOCK.
In order to comply with certain provisions of the Federal
securities laws, including Section 16(b) of the Securities
Exchange Act of 1934, all certificates representing shares of
Common Stock issued pursuant to the Plan shall bear the following
restrictive legend which will prevent the recipient from
disposing of such shares for six months from the date of
issuance:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED UNTIL THE
EXPIRATION OF THE SIX MONTH PERIOD BEGINNING ON THE
DATE OF ORIGINAL ISSUANCE BY AMERICAN FINANCIAL GROUP,
INC. (THE "COMPANY") AS PROVIDED BY SECTION 4 OF THE
COMPANY'S DIRECTORS' COMPENSATION PLAN EFFECTIVE AS OF
, 1996, A COMPLETE AND CORRECT COPY OF THE FORM OF
WHICH WILL BE FURNISHED BY THE COMPANY TO THE HOLDER
HEREOF UPON REQUEST.
When the legend requirement imposed by this Section shall
terminate, the holder of shares of Common Stock for which such
legend requirement has terminated may request that the Company
(at its expense) promptly issue a replacement certificate
representing such shares without such legend.
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5. NO RIGHT TO CONTINUANCE AS A DIRECTOR.
Neither the action of the Company in establishing the Plan
nor the issuance of Common Stock hereunder shall be deemed to
create any obligation on the part of the Board of Directors to
nominate any non-employee director for reelection by the
Company's shareholders or to be evidence of any agreement or
understanding, express or implied, that the non-employee director
has a right to continue as a director for any period of time or
at any particular rate of compensation.
6. SHARES SUBJECT TO THE PLAN.
One hundred thousand shares of Common Stock are authorized
for issuance under the Plan in accordance with the provisions
hereof. The Company shall at all times during the term of the
Plan retain as authorized and unissued Common Stock at least the
number of shares from time to time required under the provisions
of the Plan, or otherwise assure itself of its ability to perform
its obligations hereunder.
7. EFFECTIVE DATE AND EXPIRATION OF PLAN.
The Plan is subject to approval by a majority of the votes
cast at the next Annual Meeting of Shareholders of the Company by
the holders of shares of Common Stock entitled to vote thereon,
and, if so approved, shall be effective beginning on the first
day of the calendar quarter immediately following such vote (the
"Effective Date"). Unless earlier terminated by the Board of
Directors pursuant to Section 10, the Plan shall terminate on the
tenth anniversary of the Effective Date. No shares of Common
Stock shall be issued pursuant to the Plan after its termination
date.
8. ELECTION TO DEFER DIRECTOR COMPENSATION.
a. Any non-employee director may, by delivering a
written election to the Secretary of the Company on or
before December 31 of any calendar year, elect to defer
receipt of all or a specified portion (in 20%
increments) of his cash or Common Stock compensation
during the calendar year following such election and
succeeding calendar years.
b. Any person who shall become a non-employee
director during any calendar year, and who was not a
non-employee director on the preceding December 31,
may, before his term begins, elect to defer receipt of
all or a specified portion (in 20% increments) of his
cash compensation during the balance of such calendar
year and for succeeding calendar years.
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c. A non-employee director's election to defer
receipt of compensation shall continue until the date
on which such non-employee director ceases to be a
director of the Company or until he terminates such
election by written notice delivered to the Secretary
of the Company.
9. PAYMENT IN EVENT OF DEATH.
If a non-employee director dies (before or after his ceasing
to be a Company director), any portion of his compensation
pursuant to the Plan (whether or not deferred) then unpaid shall
be paid to the beneficiaries of the director named in the most
recent beneficiary designation filed with the Secretary of the
Company. In the absence of such a designation, such compensation
shall be paid to, or as directed by, the director's personal
representative, in one or more installments as the non-employee
director may have elected in writing.
10. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN.
The amount, pricing and timing of Company Common Stock
issuances pursuant to the Plan shall not be amended more than
once every six months, other than to comport with changes in the
Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
The Board of Directors may suspend or terminate the Plan or
any portion of it at any time, and may amend it, subject only to
the preceding paragraph, from time to time in such respects as
the Board may deem advisable in order that any awards hereunder
shall conform to any change in applicable laws or regulations or
in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such
amendment shall, without the further approval of the shareholders
of the Company by the affirmative vote of shareholders entitled
to cast at least a majority of the total number of votes
represented at a meeting of shareholders of the Company, increase
the number of shares of Common Stock which may be issued under
the Plan, materially modify the requirements as to eligibility
for participating in the Plan, or extend the termination date of
the Plan.
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SCHEDULE 1
Annual Board Retainer $40,000
Annual Board Committee Retainer $12,000
Attendance Fee per Meeting $ 1,000
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