EXHIBIT 10.1

 

 

 

 

 

 
 
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2011 EQUITY BONUS PLAN
 
ADOPTED ON MARCH 15, 2011
 
AS AMENDED ON FEBRUARY 23, 2012
 

 
 

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1.           PURPOSE
 
The purpose of the 2011 Equity Bonus Plan (the “Plan”) is to further the
profitability of American Financial Group, Inc. (the “Company”) to the benefit
of the shareholders of the Company by promoting extraordinary levels of
corporate performance and by incentivizing senior executive officers of the
Company through the potential for performance-based equity compensation as a
component of a Plan Participant’s compensation.
 
2.           DEFINITIONS
 
When used in the Plan, the following terms have the following meanings.
 
        2.1.           “Award” means an award made pursuant to the Plan.
 
        2.2.           “Award Agreement” means the agreement entered into
between the Company and a Participant, setting forth the terms and conditions
applicable to an Award granted to the Participant.
 
        2.3.           “Board” means the Board of Directors of the Company.
 
        2.4.           “Bonus Amount” means the amount that may become payable
under an Award as a result of the satisfaction of Performance Objectives for a
Performance Period.
 
        2.5.           “Change of Control” means a change in ownership or
effective control of the Company as defined in Section 1.409A-3 of the Treasury
Regulations to Section 409A of the Code that also meets one of the following:
 
(a)           there occurs an event or series of events by which Lindner Family
Members (as defined below) collectively cease to be the “beneficial owner,” as
defined in Rule 13d-3 under the Exchange Act of at least 15% of the Shares; or
 
(b)           during any period of one year after January 1, 2011, individuals
who at the beginning of such period constitute the Board and any new director
whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof.
 
For purposes of the Plan, “Lindner Family Member” means Carl H. Lindner
(deceased), his surviving spouse and all lineal descendants and their spouses,
as well as trusts established for the benefit of such person.
 
        2.6.           “Code” means the Internal Revenue Code of 1986, as
amended.
 
        2.7.           “Committee” means the committee appointed by the Board as
described under Section 3.
 

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        2.8.           “Performance Objectives” means the objective targets
selected by the Committee to measure performance, the outcome of which is
substantially uncertain at the time selected, for a Performance Period which
shall be based upon one or more of the following performance-based business
criteria, either on a Company, subsidiary, division, business unit or line of
business basis or in comparison with peer group performance or to an index, as
the Committee deems appropriate: net income or operating income; net income per
share or operating income per share; aggregate or per-share book value or
adjusted book value; written premiums (net or gross); return measures
(including, but not limited to, return on assets, capital, invested capital,
equity, sales, or premiums); cash flow (including, but not limited to, operating
cash flow, free cash flow, and cash flow return on capital); combined ratios;
share price (including, but not limited to, growth measures and total
shareholder return); and increase in or maintenance of the Company’s market
share.  In the discretion of the Committee at the time of the grant of an Award
and as set forth in an Award Agreement, any Performance Objective may be
calculated after accounting for specified adjustments.
 
        2.9.           “Performance Period” means a period of at least one and
at most five fiscal years of the Company as determined by the Committee at the
time of the grant of an Award.  Upon the grant of an Award, the Performance
Period shall be fixed and may not subsequently be changed.  Performance Periods
may overlap.
 
        2.10.           “Shares” means shares of common stock of the Company.
 
        2.11.           “Subsidiary” means a subsidiary of the Company within
the meaning of Code Section 424(f).
 
3.           ADMINISTRATION
 
Awards under the Plan are intended to be performance-based compensation for
purposes of Section 162(m)(4)(C) of the Code.  Except as otherwise expressly
provided in this Plan, the Plan shall be administered by the Compensation
Committee or a successor committee or subcommittee (the “Committee”) of the
Board comprised solely of two or more “outside directors” as defined pursuant to
Section 162(m) of the Code.  Subject to the provisions of the Plan, the
Committee shall determine the Performance Period and Performance Objectives
applicable to Awards and all other terms and conditions of Awards.  Subject to
the provisions of the Plan, the Committee shall have the authority to interpret
the Plan and establish, adopt or revise such rules and regulations and to make
all determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan.  The Committee’s interpretation of the Plan
and all of its actions and decisions with respect to the Plan shall be final,
binding and conclusive on all parties.
 
4.           PARTICIPATION
 
The participants in the Plan are the Co-Chief Executive Officers of the Company
and such other members of senior management of the Company and its Subsidiaries
as determined by the Committee (the “Participants”).
 

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5.           SHARES SUBJECT TO PLAN; MAXIMUM AWARDS
 
The number of Shares which may be issued under this Plan shall not exceed One
Million Five Hundred Thousand (1,500,000) Shares.  Shares issued under the Plan
shall be authorized but unissued Shares.  If there shall occur any change with
respect to the outstanding Shares by reason of any recapitalization,
reclassification, stock dividend, extraordinary dividend, stock split, reverse
stock split or other distribution with respect to the Shares, or any merger,
reorganization, consolidation, combination, spin-off or other similar corporate
change, or any other change affecting the common stock of the Company, the
Committee may, in the manner and to the extent that it deems appropriate and
equitable to the Participants and consistent with the terms of the Plan, cause
an adjustment to be made in the maximum number and kind of Shares provided in
this Section 5.  The maximum amount which may be awarded to any Participant for
any Performance Period shall be $6,000,000.
 
 
6.
ESTABLISHMENT OF PERFORMANCE OBJECTIVES AND BONUS AMOUNTS

 
The Committee shall establish objectively determinable Performance Objectives
and Bonus Amounts that shall become payable upon the achievement of such
Performance Objectives and the applicable Performance Period annually.  The
Performance Objectives, Bonus Amount and Performance Period shall be set forth
in an Award Agreement approved by the Committee.  In no event shall the
establishment of any Participant’s Bonus Amount give a Participant any right to
be paid all or any part of such amount unless and until a bonus is actually
awarded pursuant to Section 7.
 
7.           DETERMINATION OF BONUSES AND TIME OF PAYMENT
 
        7.1.           As soon as practicable after the end of each Performance
Period, the Committee shall determine whether or not the Performance Objectives
of each Participant have been attained and shall certify to such attainment in
writing.  The Committee shall determine the Bonus Amount, if any, to be awarded
to each Participant for such Performance Period according to the terms of this
Plan.  Such Bonus Amount determinations shall be based on achievement of the
Performance Objectives for such Performance Period.
 
        7.2.           Except as otherwise provided in Section 8.2, once the
Bonus Amount is determined for each Participant pursuant to Section 7, it shall
be paid in Shares.  The payment, if any, shall take place between March 15 and
March 31 following any Performance Period.  The Participant must continue to be
employed through the last day of the Performance Period to be eligible for the
Bonus Amount.  For the purpose of determining the number of Shares to be awarded
under this Plan, the value of a Share shall be calculated by taking the average
high and low sale prices of a Share on the date of determination of the Bonus
Amount as provided in Section 7.
 
8.           TERMINATION OF EMPLOYMENT; CHANGE OF CONTROL
 
        8.1.           Notwithstanding the requirement to be employed on the
last day of the Performance Period in order to be eligible for payment of the
Bonus Amount described in Section 7.2, if a Participant’s employment with the
Company is terminated during a Performance Period
 

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for which Performance Objectives have been attained for any reason other than
discharge for “cause,” the Committee, in its sole discretion, may determine that
the Participant is entitled to a portion of the Bonus Amount that is determined
at the end of the Performance Period and payable at the time specified in
Section 7.2.  This provision only provides discretion in determining whether to
waive the employment requirement.  In the event the employment requirement is
waived, the Bonus Amount shall be a pro rata amount based on the number of
months of the Participant’s employment during the Performance Period with the
month of termination counting as a full month of employment.  For purposes of
the Plan, “cause” shall mean: (i) a Participant’s failure or refusal to
materially perform his duties; (ii) a Participant’s failure or refusal to follow
material directions of the Board or any other act of material insubordination on
the part of Participant; (iii) the commission by a Participant of an act of
fraud or embezzlement against the Company; or (iv) any conviction of, or plea of
guilty or nolo contendere to, a felony by a Participant.
 
        8.2.           Notwithstanding any provision in this Plan to the
contrary, upon the occurrence of a Change of Control during the course of a
Performance Period, then a Participant shall be deemed to have satisfied the
Performance Objectives in order to receive the target bonus as specified in the
Participant’s Award Agreement. Distribution of amounts payable in connection
with an Award shall be made in cash immediately following (but in no event later
than 30 days) following the occurrence of the Change of Control.
 
9.           RECOUPMENT
 
In the event of a restatement of materially inaccurate financial results, the
Committee has the discretion to recover bonus awards that were paid under the
Plan to a Participant with respect to the period covered by the restatement. If
the payment of a bonus award would have been lower had the achievement of
applicable financial performance targets been calculated based on such restated
financial results, the Committee may, if it determines appropriate in its sole
discretion, to the extent permitted by law, recover from the Participant the
portion of the bonus award paid in excess of the payment that would have been
made based on the restated financial results. The Company will not seek to
recover bonus awards paid more than three years after the date the Company files
the report with the Securities and Exchange Commission that contained the
incorrect financial results. This Section 9 is in addition to, and not in lieu
of, any requirements under any applicable law or regulation, including but not
limited to the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform
and Consumer Protection Act and shall apply notwithstanding anything to the
contrary in the Plan.
 
10.         COMPLIANCE WITH SECTION 409A OF THE CODE
 
It is intended that this Plan shall either be exempt from the application of, or
comply with, the requirements of Section 409A of the Code.  This Plan shall be
construed, administered, and governed in a manner that reflects such intent, and
the Committee shall not take any action that would be inconsistent with such
intent.  Without limiting the foregoing, the bonus amount shall not be deferred,
accelerated, extended, paid

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out, settled, adjusted, substituted, exchanged or modified in a manner that
would cause the award to fail to satisfy the conditions of an applicable
exception from the requirements of Section 409A of the Code or otherwise would
subject the Participant to the additional tax imposed under Section 409A of the
Code.  The amounts payable pursuant to this Agreement are intended to be
separate payments that qualify for the “short-term deferral” exception to
Section 409A of the Code to the maximum extent possible.
 
11.         MISCELLANEOUS
 
        11.1.           Government and Other Regulations.  The obligation of the
Company to pay bonuses shall be subject to all applicable laws, rules and
regulations and to such approvals by governmental agencies as may be required.
 
        11.2.           Tax Withholding.  The Company shall have the right to
deduct from all bonuses paid any federal, state or local taxes required by law
to be withheld with respect to such payments.
 
        11.3.           Claim to Bonuses and Employment Rights.  Neither this
Plan nor any action taken hereunder shall be construed as giving any Participant
any right to be retained in the employ of the Company or a Subsidiary.
 
        11.4.           Beneficiaries.  Any bonuses awarded and otherwise
payable under this Plan to a Participant who dies prior to payment shall be paid
at the time specified in Section 7.2 to the beneficiary designated by the
Participant on a form filed with the Company.  If no such beneficiary has been
designated or survives the Participant, payment shall be made to the
Participant’s legal representative.  A beneficiary designation may be changed or
revoked by a Participant at any time provided the change or revocation is filed
with the Company.  If the Participant dies during the Performance Period and
while employed, the payment shall be made at the end of the Performance Period
at the time specified in Section 7.2 and shall be a pro rata amount based on the
Participant’s months of employment during the Performance Period prior to death
with the month of death counting as a full month of employment.
 
        11.5.           Nontransferability.  A person’s rights and interests
under the Plan may not be assigned, pledged or transferred except, in the event
of a Participant’s death, to his designated beneficiary as provided in the Plan
or, in the absence of such designation, by will or the laws of descent and
distribution.
 
        11.6.           Indemnification.  Each person who is or shall have been
a member of the Committee or of the Board shall be indemnified and held harmless
by the Company (to the extent permitted by the Articles of Incorporation and
Code of Regulations of the Company and applicable law) against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by him in connection with or resulting from any claim, action, suit or
proceeding to which he may be a party or in which they may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid by him in settlement thereof, with the Company’s approval,
or paid by him, in satisfaction of judgment in any such action, suit or
proceeding against him.  He shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to handle and defend
it on his own behalf.  The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such person may be
entitled under the Company’s Articles of Incorporation or Code of Regulations,
as a matter of law or otherwise or of any power that the Company may have to
indemnify him or hold him harmless.
 

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        11.7.           Reliance on Reports.  Each member of the Committee and
each member of the Board shall be fully justified in relying or acting in good
faith upon any report made by the independent certified public accountants of
the Company or of its Subsidiaries or upon any other information furnished in
connection with the Plan by any officer, director or employee of the Company or
any of its Subsidiaries.  In no event shall any person who is or shall have been
a member of the Committee or of the Board be liable for any determination made
or other action taken or any omission to act in reliance upon any such report or
information or for any action taken, including the furnishing of information, or
failure to act, if in good faith.
 
        11.8.           Expenses.  The expenses of administering the Plan shall
be borne by the Company and its Subsidiaries in such proportions as shall be
agreed upon by them from time to time.
 
        11.9.           Titles and Headings.  The titles and headings of the
sections in the Plan are for convenience of reference only, and, in the event of
any conflict between any such title or heading and the text of the Plan, such
text shall control.
 
        11.10.           Shareholder Approval.  This Plan shall become effective
following its adoption by the Board of Directors and its approval by the
Company’s shareholders.
 
12.         AMENDMENT AND TERMINATION
 
The Board may at any time terminate the Plan.  Other than modifying the number
of Shares to be issued under the Plan, the Board may at any time, or from time
to time, amend or suspend and, if suspended, reinstate the Plan in whole or in
part.  This Plan shall terminate upon the payment of Bonus Amounts, if any,
associated with all Performance Periods, provided that the Plan shall continue
in effect to the extent necessary to settle all matters relating to the payment
of bonuses awarded prior to any such termination or suspension.
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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