Exhibit 10.2
THE UNUM CORPORATION
INCENTIVE COMPENSATION PLAN
FOR DESIGNATED EXECUTIVE OFFICERS
1. PURPOSE OF THE PLAN
The purpose of the UNUM Corporation ("UNUM" or the "Corporation")
Incentive Compensation Plan for Designated Executive Officers (the "Plan") is to
provide a means of rewarding certain executive officers of the Corporation and
its subsidiaries with compensation which, when coupled with a base salary,
produces a competitive level of total compensation that reflects their
contributions to the overall long term enhancement of the value of the
Corporation in a manner which permits such compensation to be deductible for
federal income tax purposes.
2. ADMINISTRATION OF THE PLAN
The administration of this Plan shall be vested in the Compensation
Committee of the Board (the "Committee") which shall make all determinations
necessary under this Plan. All members of the Committee shall qualify as
"outside directors" (as that term is defined in Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder or
as may from time to time be in effect (the "Regulations")).
3. PARTICIPATION IN THE PLAN
All executive officers, as defined by rules of the Securities and
Exchange Commission, shall be eligible to participate in the Plan. Within the
period specified in the Regulations within which a performance goal is required
to be established to qualify as a pre-established performance goal (the
"Designation Period"), the Committee may designate one or more such executive
officers of the Corporation (each, a "Participant") who shall participate in the
Plan for the Performance Period.
4. PERFORMANCE GOALS AND AWARDS TO PARTICIPANTS
Within the Designation Period the Committee will allocate amounts on
behalf of each Participant which will be awarded if the Corporation and/or a
business unit attains objective performance goals established by the Committee
within the Designation Period based on one or more of the following: the market
price of a share of the Common stock, earnings-per-share, return to stockholders
(including dividends), return-on-equity, earnings on a GAAP, operating, or
statutory accounting basis, revenues, annualized sales, market share, cash flow
or cost reduction goals, underwriting margin, or any combination of the
foregoing. Such goals may be expressed either on an absolute basis or relative
to the performance of a peer group selected by the Committee.
Where applicable, the Performance Goals may be expressed in terms of
attaining a specified level of the particular criteria or the attainment of a
percentage increase or decrease in the particular criteria. The Performance
Goals may include a threshold level of performance below which no payment will
be made (or no vesting will occur), levels of performance at which specified
payments will be made (or no vesting will occur) and a maximum level of
performance above which no additional payment will be made (or at which full
vesting will occur). Each of the foregoing Performance Goals shall be determined
in accordance with generally accepted accounting principles and shall be subject
to certification by the Committee; provided that the Committee shall have the
authority to make equitable adjustments to the Performance Goals in recognition
of unusual or non-recurring events affecting the Corporation or any subsidiary
or affiliate thereof or the financial statements of the Corporation or any
subsidiary or affiliate thereof, in response to changes in applicable laws or
regulations, or to account for items of gain, loss or expense determined to be
extraordinary or unusual in nature or infrequent in occurrence or related to the
disposal of a segment of a business or to a change in accounting principles.
The Committee may, in its sole discretion, reduce or cancel any award
under the Plan. At the discretion of the Committee, Awards shall be satisfied in
cash or restricted stock under the Company's 1996 Stock Long-Term Incentive Plan
or a combination of the above.
The maximum amount payable in cash and Restricted Stock (valued at the fair
market value on the date of grant) to any single participant with respect to any
Performance Period shall be the lesser of 250% of the base salary of the
participant at the time of designation or $3,000,000.
5. PERFORMANCE PERIOD
The Performance Period as to which awards may be made under this Plan
shall be the twelve-month period commencing January 1 of a calendar year and
ending on December 31 of such calendar year.
6. PAYMENT OF INCENTIVE AWARDS UNDER THE PLAN
(a) Following the completion of each Performance Period, the Committee
will certify in writing (i) whether the performance goals and any other material
terms of each award were attained, and (ii) the award payable to the
Participants.
(b) Except as provided in Section 7 of this Plan, each Participant
shall receive payment, in cash or certificates representing shares of Restricted
Stock, subject to all required tax withholdings, of his or her incentive award
as soon as practicable following the determination of the amount of such award.
7. DEFERRAL OF PAYMENT OF AWARDS
At the discretion of the Committee and subject to such terms and
conditions as the Committee may determine, any Participant may elect to defer
payment of the cash portion of all or part of any award which such Participant
might earn with respect to a Performance Period (together with interest thereon
from the date as of which the award would have been paid but for such
Participant's election to defer payment at the rate, if any, fixed by the
Committee) by complying with such procedures as the Committee may from time to
time prescribe.
8. SEPARATION FROM THE CORPORATION AND ITS SUBSIDIARIES
The Committee may adopt rules governing the rights of Participants who
cease to be employed by the Corporation or its subsidiaries prior to the end of
the Performance Period to receive award payments.
10. AMENDMENTS
The Committee may amend this Plan at any time, provided that if Section
162(m) of the Code or the Regulations would require stockholder approval of such
an amendment in order for payments under the Plan to be deductible then no such
amendment shall be effective without such approval.
11. TERMINATION
The Board of Directors of the Corporation may terminate this Plan at
any time. No termination of this Plan shall adversely affect the right of any
person to receive any award for a Performance Period or Periods for which such
person had been designated under Section 3 of this Plan, or amounts previously
awarded to such person but deferred in accordance with Section 7 of this Plan
plus any earnings thereon, or as provided in rules adopted under Section 8 of
this Plan.
12. MISCELLANEOUS
(a) Nothing contained in this Plan shall be construed as giving any
executive officer of the Corporation the right to participate in the Plan, to
continued employment or any interest in any asset of the Corporation or any of
its subsidiaries, or to prevent the Corporation or any of its subsidiaries or
affiliates from taking any action which it deems to be appropriate or in its
best interests, whether or not such action would have an adverse effect on this
Plan or the amounts payable hereunder.
(b) This Plan shall be unfunded and the Corporation shall not be
required to establish any segregation of assets to assure payment of any awards
made hereunder.
(c) A Participant may not sell, transfer or assign any right or
interest in the Plan except as provided in rules adopted by the Committee under
Section 8 hereof and any attempted sale, transfer or assignment shall be null
and void.
(d) This Plan shall be governed by and construed in accordance with the
laws of the State of Delaware and the applicable provisions of the Code and the
Regulations.
13. EFFECTIVE DATE
This Plan shall be effective as of January 1, 1997, subject to the
subsequent approval hereof by the Corporation's stockholders at the 1997 Annual
Meeting of Stockholders and, if so approved, shall remain in effect until
terminated in accordance with Section 11 hereof.