Exhibit 10.17

STANCORP FINANCIAL GROUP, INC.

LONG-TERM INCENTIVE AWARD AGREEMENT

(                     Performance Period)

 

This Long-Term Incentive Award Agreement (this “Agreement”) is made effective as
of February 11, 2013 between StanCorp Financial Group, Inc., an Oregon
corporation (the “Company”) and                          (the “Employee”).

 

On                                 , the Organization and Compensation Committee
(the “Committee”) of the Company’s Board of Directors (the “Board”) gave final
approval for a performance-based award to the Employee pursuant to Section 8 of
the Company’s 2002 Stock Incentive Plan (the “Plan”). Compensation paid pursuant
to the award is intended to qualify as performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). Employee
desires to accept the award subject to the terms and conditions of this
Agreement.

 

In consideration of the agreements set forth below, the Company and the Employee
agree as follows:

 

1.     Award.    Subject to the terms and conditions of this Agreement, the
Company shall issue to the Employee the number of shares of common stock
(“Common Stock”) of the Company (“Performance Shares”) determined under this
Agreement based on (a) the Company’s performance during the three-year period
from                                  to                              (the
“Performance Period”) as described in Section 2, and (b) Employee’s continued
employment through the Performance Period as described in Section 3. Recipient’s
“Target Share Amount” for purposes of this Agreement is
                                 shares.

 

2.     Performance Conditions.

 

2.1    Subject to Section 3 and Section 4, the number of Performance Shares to
be issued to the Employee shall be determined by multiplying the Target Share
Amount by the Payout Factor determined under the following formula:

 

Payout Factor = (40% * TSR PF) + (40% * ROE PF) + (20% * Premium Growth PF)

 

where the “TSR PF,” the “ROE PF” and the “Premium Growth PF” are determined
under the following table based on the Company’s TSR Rank, ROE Rank and Premium
Growth Rank, respectively (each as defined below), for the Performance Period.

 

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TSR Rank    TSR PF         ROE Rank    ROE PF        

Premium

Growth Rank

  

Premium

Growth PF

1

   200%         1    200%         1    200%

2

   200%         2    200%         2    200%

3

   167%         3    167%         3    167%

4

   133%         4    133%         4    133%

5

   100%         5    100%         5    100%

6

   75%         6    75%         6    75%

7

   50%         7    50%         7    50%

8

   25%         8    25%         8    25%

9

   0%         9    0%         9    0%

10

   0%         10    0%         10    0%

 

If the number of companies to be ranked for purposes of determining the TSR PF,
the ROE PF or the Premium Growth PF is reduced below 10 pursuant to the last two
sentences of Section 2.2.2 or the last two sentences of Section 2.4.2, the
applicable PF shall be determined under the relevant columns of the following
tables based on the total number of companies remaining to be ranked:

 

9 Companies to be Ranked         8 Companies to be Ranked        
7 Companies to be Ranked Rank   PF         Rank    PF         Rank    PF 1  
200%         1    200%         1    200% 2   200%         2    167%         2   
167% 3   167%         3    133%         3    133% 4   133%         4    100%   
     4    100% 5   100%         5    75%         5    63% 6   63%         6   
50%         6    25% 7   25%         7    25%         7    0% 8   0%         8
   0%                9   0%                              

 

6 Companies to be Ranked         5 Companies to be Ranked        
4 Companies to be Ranked Rank   PF         Rank    PF         Rank    PF 1  
200%         1    200%         1    200% 2   150%         2    150%         2   
100% 3   100%         3    100%         3    25% 4   63%         4    25%     
   4    0% 5   25%         5    0%                6   0%                       
      

 

2.2        TSR Rank.

 

2.2.1    To determine the Company’s “TSR Rank,” the TSR (as defined below) of
the Company and each of the Peer Group Companies (as defined below) shall be
calculated, and the Company and the Peer Group Companies shall be ranked from
“1” to “10” based on their respective TSRs with “1” being the company with the
highest TSR.

 

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2.2.2    The “Peer Group Companies” are:

 

Assurant, Inc.

   The Hartford Financial Services Group, Inc.

Lincoln National Corporation

   MetLife, Inc.

Principal Financial Group, Inc.

   Protective Life Corporation

Prudential Financial, Inc.

   Symetra Financial Corporation

Unum Group

    

 

If prior to the end of the Performance Period, any Peer Group Company ceases to
be a public reporting company for any reason, then such company shall not be
considered a Peer Group Company. In addition, if as of the last day of the
Performance Period, any Peer Group Company is a party to an agreement pursuant
to which all or substantially all of the stock or assets of the Peer Group
Company will be acquired by a third party, then such company shall not be
considered a Peer Group Company for purposes of determining the Company’s TSR
Rank, but shall remain a Peer Group Company for purposes of determining the
Company’s ROE Rank.

 

2.2.3    The “TSR” for the Company and each Peer Group Company shall be
calculated by (a) assuming that $100 is invested in the common stock of the
company at a price equal to the closing market price of the stock on the last
trading day of             , (b) assuming that for each dividend paid on the
stock during the Performance Period, the amount equal to the dividend paid on
the assumed number of shares held is reinvested in additional shares at a price
equal to the closing market price of the stock on the ex-dividend date for the
dividend, and (c) determining the final dollar value of the total assumed number
of shares based on the closing market price of the stock on the last trading day
of             . The TSR shall then equal the amount determined by subtracting
$100 from the foregoing final dollar value, dividing the result by 100 and
expressing the resulting fraction as a percentage.

 

2.3        ROE Rank.

 

2.3.1    To determine the Company’s “ROE Rank,” the Average ROE (as defined
below) of the Company and each of the Peer Group Companies (as defined in
Section 2.2.2 above) shall be calculated, and the Company and the Peer Group
Companies shall be ranked from “1” to “10” based on their respective Average
ROEs with “1” being the company with the highest Average ROE.

 

2.3.2    The “Average ROE” of the Company and each Peer Group Company for the
Performance Period shall be calculated by averaging the Adjusted ROEs determined
for the applicable company for each of the three years of the Performance
Period. “Adjusted ROE” of any company for any year shall mean the company’s net
income return on average equity (excluding accumulated other comprehensive
income (loss)) as publicly reported by the Company and calculated as follows.
Adjusted ROE for any year shall be calculated by dividing the company’s net
income for the year by the company’s Average Equity for the year. For this
purpose, a company’s net income for any year shall be that amount as set forth
in the audited consolidated income statement of the company for the year or, if
the audited income statement is not available, as set forth in the financial or
statistical supplement published by the company for the last quarter of the
applicable year; provided, however, that if there are

 

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noncontrolling interests in any company’s subsidiaries or if any company has
outstanding preferred stock, net income shall mean net income after giving
effect to income or loss attributable to noncontrolling interests but without
giving effect to dividends or other amounts attributable to preferred
shareholders. “Average Equity” of any company for any year shall mean the
average of the company’s Adjusted Equity (as defined below) as of the last day
of the year and the company’s Adjusted Equity as of the last day of the prior
year. “Adjusted Equity” of any company as of any date shall be calculated by
subtracting the company’s accumulated other comprehensive income (loss) from the
company’s total shareholders’ equity (which excludes noncontrolling interests,
if any), in each case as set forth on the audited consolidated balance sheet of
the company as of the applicable date or, if the audited balance sheet is not
available, as set forth in the financial or statistical supplement published by
the company for the last quarter of the applicable year. If a company restates
its audited consolidated financial statements for any applicable year or as of
any applicable date, the latest publicly available restated data on the date the
Committee certifies the ROE Rank pursuant to Section 4.1 shall be used for the
calculations under this Section 2.3.2.

 

2.4        Premium Growth Rank.

 

2.4.1    To determine the Company’s “Premium Growth Rank,” the Premium Growth
(as defined below) of the Company and each of the PG Peer Companies (as defined
below) shall be calculated, and the Company and the PG Peer Companies shall be
ranked from “1” to “10” based on their respective Premium Growths with “1” being
the company with the highest Premium Growth.

 

2.4.2    The Company’s “Premium Growth” shall be calculated by dividing the
total ____ premium revenues for the Company’s group life and AD&D, group long
term disability and group short term disability product lines by the total ____
premium revenues for the same product lines (in each case as set forth in the
notes to audited consolidated financial statements of the Company and its
subsidiaries for the applicable year), subtracting one from the result and then
expressing the resulting fraction as a percentage. The “Premium Growth” for each
of the companies listed in the following table (the “PG Peer Companies”) shall
be calculated by dividing the amount of ____ revenues for the company’s segment
or product line(s) listed in the table by the total ____ revenues for the same
segments or product line(s), subtracting one from the result and then expressing
the resulting fraction as a percentage. All revenue information for each PG Peer
Company shall be obtained from the financial or statistical supplement published
by the company for the last quarter of the applicable year; provided, however,
that if the ____ revenue information for any PG Peer Company is subsequently
revised, the latest publicly available ____ revenue information on the date the
Committee certifies the Premium Growth Rank pursuant to Section 4.1 shall be
used for the calculations under this Section 2.4.2.

 

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PG Peer Company    Comparative Premium Revenue Line Item(s)

Aetna Inc.

   Group Insurance—Premiums of the Disability and Life product lines

Assurant, Inc.

   Employee Benefits—Net earned premiums and other considerations of the Group
Disability Single Premiums for Closed Blocks, All Other Group Disability, and
Group Life product lines

CIGNA Corporation

   Disability and Life—Premiums and fees of the Disability and Life product
lines

The Hartford Financial Services Group, Inc.

   Group Benefits—Premiums of the Group Disability and Group Life product lines

Lincoln National Corporation

   Group Protection—Premiums of the Disability and Life product lines

MetLife, Inc.

   The Americas: Group, Voluntary & Worksite Benefits— Operating premiums, fees
and other revenues of the Group Life product line

Principal Financial Group, Inc.

   U.S. Insurance Solutions: Specialty Benefits Insurance— Premiums and Fees of
the Group Disability and Group Life product lines

Prudential Financial, Inc.

   U.S. Individual Life and Group Insurance: Group Insurance— Earned premiums,
policy charges and fee income of the Group Disability Insurance and Group Life
Insurance product lines

Unum Group

   Unum US—Premiums of the Group Disability (Group Long-term Disability and
Group Short-term Disability), Group Life and Accidental Death & Dismemberment
product lines

 

If prior to the end of the Performance Period, any PG Peer Company ceases to be
a public reporting company for any reason, or if it ceases to report premium
revenues for the segment or product lines listed in the above table, then such
company shall not be considered a PG Peer Company. In addition, if prior to the
end of the Performance Period, any PG Peer Company acquires (including an
acquisition by reinsurance) any other PG Peer Company, any of the companies
listed in the following table, or the group life and disability product lines of
any of those companies, then such company shall not be considered a PG Peer
Company.

 

Guardian Life of America    Mutual of Omaha    Liberty Mutual ING Employee
Benefits    AIG Benefit Solutions    New York Life Minnesota Life    WellPoint
Life & Disability    Fort Dearborn Life United Healthcare Specialty Benefits   
OneAmerica (AUL)    Liberty Life of Boston

 

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3.    Employment Condition.

 

3.1    In order to receive the full number of Performance Shares determined
under Section 2, the Employee must not have a Termination of Employment (as
defined below) prior to the last day of the Performance Period (the “Vesting
Date”).

 

3.2    If the Employee has a Termination of Employment prior to the Vesting Date
as a result of Total Disability, Death or Retirement as such terms are defined
in Sections 6.1-4(b), 6.1-4(c) and 6.1-4(f), respectively, of the Plan, the
Employee or beneficiary shall be entitled to receive an award payout following
the completion of the Performance Period as determined under this Agreement
based on a reduced Target Share Amount. The Target Share Amount following Total
Disability, Death or Retirement of the Employee shall be determined by
multiplying the Target Share Amount before such event by a fraction, the
numerator of which is the number of days in the period starting on the first day
of the Performance Period and ending on the date of the Employee’s Termination
of Employment and the denominator of which is the number of days in the
Performance Period.

 

3.3    If the Employee has a Termination of Employment prior to the Vesting
Date, other than by reason of Total Disability, Death or Retirement, the
Employee shall forfeit all rights to receive any Performance Shares.

 

3.4    A “Termination of Employment” shall be deemed to occur on the date on
which the Employee ceases to be employed on a continuous full time basis by the
Company or a subsidiary of the Company for any reason or no reason, with or
without cause. The Employee shall not be treated as having a Termination of
Employment during the time the Employee is receiving long term disability
benefits provided by the Company or a subsidiary of the Company, unless the
Employee has received formal written notice of termination.

 

4.    Certification and Payment.

 

4.1    As soon as practicable following the release of earnings by the Company,
the Peer Group Companies and the PG Peer Companies for the last year of the
Performance Period, the Company shall calculate the Payout Factor and the
corresponding number of Performance Shares issuable to the Employee based on the
Payout Factor, and shall submit these calculations to the Committee.
Notwithstanding anything to the contrary in this Agreement, the Committee may,
in its sole discretion, reduce by up to 50% the calculated numbers of
Performance Shares to be issued based on circumstances relating to the
performance of the Company or the Employee. No later than the March 15
immediately following the Vesting Date the Committee shall certify in writing
(which may consist of approved minutes of a Committee meeting) the TSR Rank, ROE
Rank and Premium Growth Rank attained by the Company for the Performance Period,
and the number of Performance Shares issuable to the Employee based on those
performance levels. Subject to applicable tax withholding, the number of
Performance Shares so certified shall be issued to the Employee as soon as
practicable following such certification, but no Performance Shares shall be
issued prior to certification. No fractional shares shall be issued and the
number of Performance Shares deliverable shall be rounded to the nearest whole
share.

 

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4.2    If, after the certification and payment under this Agreement, any Peer
Group Company restates its financial statements for any year of the Performance
Period for a reason other than a change in accounting principles or guidance,
and if such restatement would result in an improvement in the Company’s ROE Rank
or Premium Growth Rank, the Company shall recalculate the Payout Factor and
submit it for certification at the next meeting of the Committee, and promptly
following such certification any additional Performance Shares resulting from
the recalculation shall be issued to the Employee, subject to applicable tax
withholding.

 

5.    Tax Withholding.    The Employee acknowledges that, on the date the
Performance Shares are issued to the Employee (the “Payment Date”), the Value
(as defined below) on that date of the Performance Shares will be treated as
ordinary compensation income for federal and state income and FICA tax purposes,
and that the Company will be required to withhold taxes on these income amounts.
To satisfy the required minimum withholding amount, the Company shall withhold
the number of Performance Shares having a Value equal to the minimum withholding
amount. For purposes of this Section 5, the “Value” of a Performance Share shall
be equal to the closing market price for Common Stock on the last trading day
preceding the Payment Date.

 

6.    Change of Control.

 

6.1    Notwithstanding any other provision of this Agreement, if a Change of
Control (as defined below) occurs before the Vesting Date and the Employee has
not previously forfeited the Employee’s Performance Shares under Section 3, the
Company shall, within 5 business days thereafter and subject to applicable tax
withholding as provided for in Section 5, issue to the Employee a number of
Performance Shares determined by multiplying the Target Share Amount by a
fraction, the numerator of which is the number of days in the period starting on
the first day of the Performance Period and ending on the date of the Change in
Control and the denominator of which is the number of days in the Performance
Period; provided, however, that if the Employee had a Termination of Employment
due to Total Disability, Death or Retirement prior to the date of the Change in
Control, the number of Performance Shares to be issued shall be equal to the
Target Share Amount (as previously adjusted under Section 3.2). Amounts
delivered or paid under this Section 6 shall be in satisfaction of any and all
obligations of the Company to issue Performance Shares under this Agreement.

 

6.2    For purposes of this Agreement, a Change of Control shall have occurred
if:

 

(a)    Any “Person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the
Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by
the shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company’s then outstanding securities;

 

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(b)    The Company completes a merger or other consolidation of the Company with
any other company, other than (i) a merger or consolidation which results in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) 51% or more of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person acquires more than 30% of the combined
voting power of the Company’s then outstanding securities;

 

(c)    The Company completes a sale or disposition of all or substantially all
of its assets; or

 

(d)    During any period of twelve months or less, individuals who at the
beginning of such period constituted a majority of the Board cease for any
reason to constitute a majority of the Board unless the nomination or election
of such new directors was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period.

 

7.    Mergers, Consolidations or Changes in Capital Structure.    If, after the
date of this Agreement, the outstanding Common Stock is increased or decreased
or changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation by reason of any
reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split, combination of shares or dividend payable in
shares, or in the event of any consolidation, merger or plan of exchange
involving the Company pursuant to which the Common Stock is converted into cash,
securities or other consideration, then appropriate adjustment shall be made by
the Committee in the number and kind of shares subject to this Agreement so that
the Employee’s proportionate interest before and after the occurrence of the
event is maintained.

 

8.    No Right to Employment.    Nothing in this Agreement or the Plan shall
(i) confer upon the Employee any right to be continued in the employment of the
Employee’s employer or interfere in any way with the right of such employer to
terminate the Employee’s employment at any time, for any reason or no reason,
with or without cause, or to decrease the Employee’s compensation or benefits,
or (ii) confer upon the Employee any right to the continuation, extension,
renewal, or modification of any compensation, contract or arrangement with or by
the Company or any subsidiary of the Company.

 

9.    Approval.    The obligations of the Company under this Agreement and the
Plan are subject to the approval of state, federal or foreign authorities or
agencies with jurisdiction in the matter. The Company will use its reasonable
best efforts to take steps required by state, federal or foreign law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange on which the Company’s shares may
then be listed, in connection with the grant evidenced by this Agreement. The
foregoing notwithstanding, the Company shall not be obligated to deliver the
Performance Shares if such delivery would violate or result in a violation of
applicable state or federal securities laws.

 

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10.    Miscellaneous.

 

10.1    Governing Law.    This Agreement shall be governed by and construed
under the laws of the State of Oregon, without regard to the choice of law
principles applied in the courts of such state.

 

10.2    Severability.    If any provision or provisions of this Agreement are
found to be unenforceable, the remaining provisions shall nevertheless be
enforceable and shall be construed as if the unenforceable provisions were
deleted.

 

10.3    Entire Agreement.    This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous oral or written agreements between the Company and the
Employee relating to the subject matter hereof.

 

10.4    Amendment.    This Agreement may be amended or modified only by written
consent of the Company and the Employee.

 

10.5    Assignment.    The Employee may not assign this Agreement or any rights
hereunder to any other party or parties without the prior written consent of the
Company. This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

STANCORP FINANCIAL GROUP, INC.

By:

   

EMPLOYEE

 

 

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