Exhibit 10.1

INFINITY PROPERTY & CASUALTY CORPORATION

2008 PERFORMANCE SHARE PLAN (“PLAN”)

OBJECTIVES

 

  •  

To reward key employees of Infinity proportionately with the degree to which
Infinity’s performance objectives are met

 

  •  

To attract, motivate and retain achievement-oriented employees by providing a
capital accumulation opportunity tied to achievement of Infinity’s long-term
performance objectives

GENERAL PLAN FEATURES

Participation in the Plan shall be through the award of Performance Share Units.
The Compensation Committee shall determine the award of the Performance Share
Units to Infinity’s Named Executive Officers. Awards to all other employees
shall be approved by the Compensation Committee, after consultation with the
Chief Executive Officer and any other officer of the Company as determined by
the Compensation Committee. In no event shall the aggregate number of shares of
common stock distributed through the conversion of Performance Share Units under
this Plan exceed one million (1,000,000).

General guidelines for the selection of participants will include, but not be
limited to, the following:

 

  (a) Involvement and contribution of the individual in the planning, setting
and/or accomplishing of the Company’s performance objectives.

 

  (b) Demonstrated ability of the individual to establish and/or effectively
carry out plans to accomplish the Company’s performance objectives.

 

  (c) Demonstrated capability of the individual to make decisions and/or perform
actions to effectively accomplish the Company’s performance objectives.

After the end of the three (3) year life of each Performance Measurement Cycle
(defined herein), Performance Share Units shall convert to shares of common
stock, and each conversion shall be based on a pre-established valuation,
calculation and payment schedule. The number of shares of common stock issued in
exchange for Performance Share Units shall be based on the achievement of
“Performance Component Targets,” which may include but are not limited to,
combined ratio, premium growth, including growth within certain specific
geographical areas, earnings per share, return on equity, or any other criteria
established by the Compensation Committee during the Performance Measurement
Cycle.

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DEFINITIONS

Award Value shall mean, with respect to any participant in the Plan, a number
shares to be distributed to the participant following the Termination Date.

Change in Control shall mean the occurrence of one (1) or more of the following
events:

(i) After the Commencement Date, any person or group of persons becomes a
Beneficial Owner (as such term is defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934 (the “1934 Act”)) directly or indirectly of
securities representing 40% or more of the total number of votes that may be
cast for the election of directors of the Company, whether by open market
purchases, by tender offer or exchange offer, through issuance of new shares by
the Company or by merger or consolidation;

(ii) Within two (2) years after a merger, consolidation, liquidation or sale of
assets involving the Company or the issuance of voting securities of the
Company, or a contested election of a Company director or directors, or any
combination of the foregoing, the individuals who were directors of the Company
immediately prior to the merger, consolidation, liquidation, sale of assets,
issuance of securities, or contested election shall cease to constitute a
majority of the Board; or

(iii) Within two (2) years after a tender offer or exchange offer for voting
securities of the Company, the individuals who were directors of the Company
immediately prior to the commencement of the tender offer or exchange offer
shall cease to constitute a majority of the Board.

Commencement Date shall mean January 1 of any year in which an award of
Performance Share Units is made.

Disability shall mean the failure of the participant to render services to the
Company for a continuous period of six (6) months because of the participant’s
physical or mental disability or illness.

Named Executive Officer shall mean the principal executive officer, the
president, the principal financial officer, the principal accounting officer,
the principal operating officer and any other executive officer for whom
compensation disclosure was required in the Company’s most recent filing with
the Securities and Exchange Commission pursuant to Item 402 of Regulation S-K.

Performance Measurement Cycle shall mean any three (3) year period beginning
upon a Commencement Date and ending upon the corresponding Termination Date.

Plan Year shall mean each calendar year beginning on the Commencement Date and
ending on the Termination Date.

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Retirement shall mean the termination of employment of an employee who is at
least 65 years of age, or 55 years of age with at least ten years of employment
with the Company and/or a wholly-owned subsidiary of the Company.

Termination Date shall mean December 31 of the third calendar year from the
Commencement Date.

COMMENCEMENT DATE, TERM AND RESULTS COVERED

Each three (3) year Performance Measurement Cycle will commence as of the
Commencement Date and terminate on the Termination Date.

PLAN PAYOUTS

The amount of stock distributed under the Plan upon conversion of the
Performance Share Units shall be determined under the Performance Compensation
Matrix. Interpolation will be used to determine payments for performance results
that fall between the points on the Performance Compensation Matrix.

ELIGIBILITY FOR PLAN PAYOUTS

Except on the occasion of death, Disability, Retirement or certain other limited
instances as determined by the Compensation Committee either at the time of or
after a grant, a participant shall only be entitled to distributions under the
Plan if he or she is actively employed, full-time, with the Company as of the
Termination Date.

VESTING & CONVERSIONS

Except as otherwise provided herein, Performance Share Units issued under the
Plan shall become vested (available for conversion to shares) as of the
Termination Date and thereafter converted to shares as set forth herein.

The Award Value of a participant’s Performance Share Units will be calculated
within three months following the Termination Date. Award Values will be
determined using calculations of the Performance Component Targets for the
period from the Commencement Date to the Termination Date. Within four
(4) months of the Termination Date, the Performance Share Units shall convert to
shares of common stock and be distributed by the Company to participants.

UNIT AWARDS

Each grant of Performance Share Units under this Plan will be evidenced by a
written document, executed by the Chief Executive Officer (or by the Secretary
in the case of an grant made to the Chief Executive Officer) and delivered to
the participant (each a “Performance Share Agreement”), in the form set forth in
Exhibit A, attached hereto, which shall include a copy of the Plan and specify
the effective date of the grant, the number and type of Performance Share Units
awarded, and be subject to, and incorporate by reference, the terms and
conditions of the Plan (including the Performance Compensation Matrix).

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TERMINATION OF EMPLOYMENT

For purposes of this Plan, unless otherwise determined by the Compensation
Committee, a participant’s employment will be deemed to have terminated at such
time as such participant is no longer a full-time employee of Infinity or any of
its wholly-owned subsidiaries.

If a Change in Control occurs or a participant’s employment is terminated
involuntarily without cause, including by reason of such participant’s death,
Disability, or Retirement, and if such Change in Control or termination occurs
at least one (1) year after the Commencement Date, the Award Value of a
participant’s Performance Share Units shall be (i) calculated based on the
performance of the Company as of the Plan Year closest in number of days to the
date of termination (“Early Termination Period”), and (ii) proportional to the
Early Termination Period. By way of example, if a participant is involuntarily
terminated, without cause, on September 1 of the second Plan Year, and was
awarded 30,000 Performance Share Units, his or her Performance Share Unit Award
Value would be a share amount equal to two-thirds of his award
(20,000) multiplied by the applicable percentage based on the Company’s
achievement of its Performance Component Targets through the end of the second
Plan Year.

If a participant’s employment is terminated involuntarily for cause (as
hereafter defined), or voluntarily (unless otherwise determined by the
Compensation Committee) before the Termination Date, all rights of such
participant under this Plan or in any Performance Share Units will terminate
automatically (and without any compensation therefor), and such participant will
forfeit all such rights and all unpaid benefits hereunder. For purposes hereof,
“cause” shall have the meaning given in any binding agreement governing the
material terms of such participant’s employment with the Company or, in the
absence of any such agreement or provision, shall mean conduct of the
participant that is grounds for termination under the Company’s Employee
Handbook or other established Company guidelines or policies.

FEDERAL INCOME TAX CONSEQUENCES

The Plan is established with the intent of having any grant of Performance Share
Units taxable to the participant for Federal income tax purposes only upon the
participant’s receipt of payment upon the conversion of such Performance Share
Units to stock. However, no IRS ruling will be requested by the Company as to
the timing of the inclusion of the value of any Performance Share Units in the
participant’s taxable income or as to any other possible Federal income tax
consequences of the arrangement. Consequently, no assurances are or can be given
by the Company as to such consequences. In addition, the state or local tax
consequences pertaining to this arrangement may or may not differ from the
Federal tax treatment. For this reason, participants are urged to review this
arrangement carefully and consult their tax advisers with regard to the Federal,
state or local tax consequences for their individual circumstances.

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OTHER GENERAL PROVISIONS

Notwithstanding anything to the contrary herein or grant hereunder, the
Compensation Committee shall have final authority to decide all questions and
make all determinations regarding the implementation, operation, and
interpretation of the Plan, and the decisions of the Compensation Committee
shall be conclusive and binding on the Company, the participants and any person
claiming under or through any of them.

The Plan is an unfunded compensation plan for a select group of management or
highly compensated employees. The Plan shall be administered, interpreted and
construed to carry out such intention, and any provision of the Plan that cannot
be so administered, interpreted and construed shall, to that extent, be
disregarded.

No provision of the Plan, nor any aspect of its operation or administration, nor
any document delivered or executed pursuant to or describing the Plan, shall
limit or restrict in any way the right of the Company to terminate the
employment of any employee at any time with or without cause, or shall be
construed to impose upon the Company any liability not expressly and
specifically assumed by the Company under the Plan, whether for any forfeiture
of Performance Share Units or rights under Performance Share Units, or any loss
of eligibility for the future grant of Performance Share Units, or otherwise,
that may result if the employment of any employee should be so terminated.

No rights under the Plan, contingent or otherwise, shall be assignable,
alienable or subject to any encumbrance, pledge or charge of any nature, or be
subject to any lien or to attachment, levy or execution, and no such rights
shall be transferable other than by designation of a beneficiary or by will or
the laws of descent and distribution.

The Company may withhold any taxes that the Company determines are required to
be withheld from distributions or amounts payable under the Plan under the
applicable laws or other regulations of any governmental authority, whether
Federal, state or local and whether domestic or foreign.

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EXHIBIT A

INFINITY PROPERTY AND CASUALTY CORPORATION

PERFORMANCE SHARE AGREEMENT

Infinity Property and Casualty Corporation (the “Company”), hereby awards to
[INSERT NAME], (the “Employee”) ___________ Performance Share Units
(“Performance Shares”) in accordance with and subject to the terms of the
Infinity Property and Casualty Corporation 2008 Performance Share Plan (the
“Plan”), a copy of which is attached hereto and made a part hereof, and of this
Performance Share Agreement. All terms and conditions regarding the vesting and
conversion of Performance Shares into shares of common stock of the Company are
set forth in the Plan and in the Performance Compensation Matrix, attached
hereto as Exhibit 1.

Except in the event of Employee’s death, the Performance Shares are
non-transferable Furthermore, the Employee shall not have any of the rights or
privileges of a stockholder of the Company in respect of the Performance Shares
unless and until such Performance Shares are converted into shares of common
stock of the Company, pursuant to the terms and conditions of the Plan and
Exhibit 1.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the ____ day of _____________,20__.

 

INFINITY PROPERTY AND CASUALTY CORPORATION By:     Name:     Title:    

I hereby accept the award of Performance Shares set forth above in accordance
with and subject to the terms and conditions of this Performance Share Agreement
and of the Plan and agree to be bound thereby.

____________________________________

Employee