Exhibit 10(a)

 

PROTECTIVE LIFE CORPORATION

ANNUAL INCENTIVE PLAN

(Effective as of January 1, 2002)

 

1.                                       Purpose.

 

The purposes of the Plan are to enable the Company and its Subsidiaries to
attract, retain, motivate and reward qualified executive officers and key
employees by providing them with the opportunity to earn competitive
compensation directly linked to the Company’s performance.  The Plan is designed
to assure that amounts paid to certain executive officers of the Company will
not fail to be deductible by the Company for Federal income tax purposes because
of the limitations imposed by Section 162(m).

 

2.                                       Definitions.

 

Unless the context requires otherwise, the following words as used in the Plan
shall have the meanings ascribed to each below, it being understood that
masculine, feminine and neuter pronouns are used interchangeably and that each
comprehends the others.

 

(a)                                  “Board” shall mean the Board of Directors
of the Company.

 

(b)                                 “Committee” shall mean the Compensation and
Management Succession Committee of the Board (or such other committee of the
Board that the Board shall designate from time to time) or any subcommittee
thereof comprised of two or more directors each of whom is an “outside director”
within the meaning of Section 162(m).

 

(c)                                  “Company” shall mean Protective Life
Corporation.

 

(d)                                 “Covered Employee” shall have the meaning
set forth in Section 162(m).

 

(f)                                    “Participant” shall mean (i) each
executive officer of the Company and (ii) each other key employee of the Company
or a Subsidiary who the Committee designates as a participant under the Plan.

 

(g)                                 “Plan” shall mean the Protective Life
Corporation Annual Incentive Plan, as set forth herein and as may be amended
from time to time.

 

(h)                                 “Section 162(m)” shall mean Section 162(m)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.

 

3.                                       Administration.

 

The Committee shall administer and interpret the Plan, provided that, in no
event, shall the Plan be interpreted in a manner which would cause any amount
payable under the Plan to any Covered Employee to fail to qualify as
performance-based compensation under Section 162(m).  The Committee shall
establish the performance objectives for any calendar year in accordance with
Section 4 and certify whether such performance objectives have been obtained. 
Any determination made by the Committee under the Plan shall be final and
conclusive.  The Committee may employ such legal counsel, consultants

 

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and agents (including counsel or agents who are employees of the Company or a
Subsidiary) as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant or agent and
any computation received from such consultant or agent.  All expenses incurred
in the administration of the Plan, including, without limitation, for the
engagement of any counsel, consultant or agent, shall be paid by the Company. 
No member or former member of the Board or the Committee shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan other than as a result of such individual’s willful misconduct.

 

4.                                       Bonuses.

 

(a)                                  Performance Criteria.  On or before April 1
of each year (or such other date as may be required or permitted under
Section 162(m)), the Committee shall establish the performance objective or
objectives that must be satisfied in order for a Participant to receive a bonus
for such year.  Any such performance objectives will be based upon the relative
or comparative achievement of one or more of the following criteria, as
determined by the Committee:  (i) net income; (ii) operating income; (iii)
income per share; (iv) economic value added; (v) return on equity; (vi) total
return; (vii) division or subsidiary income; (viii) division or subsidiary sales
or revenues; (ix) division or subsidiary economic value added; or (x) other
reasonable bases provided that to the extent required to qualify compensation
paid to certain executive officers under the Plan the performance criteria shall
be based on one or more of the criteria listed in (i) through (ix) above.

 

(b)                                 Maximum Amount Payable.  If the Committee
certifies that any of the performance objectives established for the relevant
year under Section 4(a) has been satisfied, each Participant who is employed by
the Company or one of its Subsidiaries on the last day of the calendar year for
which the bonus is payable shall be entitled (subject to the provisions of
Section 4(c) hereof) to receive an annual bonus equal to 200% of such
Participant’s base salary up to a maximum of $2,000,000.  Unless the Committee
shall otherwise determine, if a Participant’s employment terminates for any
reason (including, without limitation, his death, disability or retirement under
the terms of any retirement plan maintained by the Company or a Subsidiary)
prior to the last day of the calendar year for which the bonus is payable, such
Participant shall receive an annual bonus equal to the amount the Participant
would have received as an annual bonus award if such Participant had remained an
employee through the end of the year multiplied by a fraction, the numerator of
which is the number of days that elapsed during the calendar year in which the
termination occurs prior to and including the date of the Participant’s
termination of employment and the denominator of which is 365.

 

(c)                                  Negative Discretion.  Notwithstanding
anything else contained in Section 4(b) to the contrary, the Committee shall
have the right, in its absolute discretion, (i) to reduce or eliminate the
amount otherwise payable to any Participant under Section 4(b) based on
individual performance or any other factors that the Committee, in its
discretion, shall deem appropriate and (ii) to establish rules or procedures
that have the effect of limiting the amount payable to each Participant to an
amount that is less than the maximum amount otherwise authorized under
Section 4(b).

 

(d)                                 Affirmative Discretion.  Notwithstanding any
other provision in the Plan to the contrary, (i) the Committee shall have the
right, in its discretion, to pay to any Participant who is not a Covered
Employee an annual bonus for such year in an amount up to the maximum bonus
payable under Section 4(b), based on individual performance or any other
criteria that the Committee deems appropriate and (ii) in connection with the
hiring of any person who is or becomes a Covered Employee, the Committee may
provide for a minimum bonus amount in any calendar year, regardless of whether
performance objectives are attained.

 

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5.                                       Payment.

 

Except as may be determined pursuant to the terms of Section 4(e) or as
otherwise provided hereunder, payment of any bonus amount determined under
Section 4 shall be made to each Participant as soon as practicable after the
Committee certifies that one or more of the applicable performance objectives
have been attained (or, in the case of any bonus payable under the provisions of
Section 4(d), after the Committee determines the amount of any such bonus).

 

6.                                       General Provisions.

 

(a)                                  Effectiveness of the Plan.  Subject to the
approval by the holders of the Common Stock at the 2002 Annual Meeting of
Stockholders, the Plan, as amended, shall be effective with respect to calendar
years beginning on or after January 1, 2002, and ending on or before
December 31, 2011, unless the term hereof is extended by action of the Board.

 

(b)                                 Amendment and Termination.  Notwithstanding
Section 6(a), the Board or the Committee may at any time amend, suspend,
discontinue or terminate the Plan; provided, however, that no such amendment,
suspension, discontinuance or termination shall adversely affect the rights of
any Participant in respect of any calendar year which has already commenced and
no such action shall be effective without approval by the stockholders of the
Company to the extent necessary to continue to qualify the amounts payable
hereunder to Covered Employees as performance-based compensation under
Section 162(m).

 

(c)                                  Designation of Beneficiary.  Each
Participant may designate a beneficiary or beneficiaries (which beneficiary may
be an entity other than a natural person) to receive any payments which may be
made following the Participant’s death.  Such designation may be changed or
canceled at any time without the consent of any such beneficiary.  Any such
designation, change or cancellation must be made in a form approved by the
Committee and shall not be effective until received by the Committee.  If no
beneficiary has been named, or the designated beneficiary or beneficiaries shall
have predeceased the Participant, the beneficiary shall be the Participant’s
spouse or, if no spouse survives the Participant, the Participant’s estate.  If
a Participant designates more than one beneficiary, the rights of such
beneficiaries shall be payable in equal shares, unless the Participant has
designated otherwise.

 

(d)                                 Delegation.  Except where required by
Section 162(m), the Committee may delegate authority for establishing
performance goals and for the certification of the achievement of such goals for
Participants who are not executive officers of the Company to the Chief
Executive Officer or President.

 

(e)                                  No Right of Continued Employment.  Nothing
in this Plan shall be construed as conferring upon any Participant any right to
continue in the employment of the Company or any of its Subsidiaries.

 

(f)                                    Interpretation.  Notwithstanding anything
else contained in this Plan to the contrary, to the extent required to so
qualify any award as other performance based compensation within the meaning of
Section 162(m) (4) (C) of the Code, the Committee shall not be entitled to
exercise any discretion otherwise authorized under this Plan (such as the right
to accelerate vesting without regard to the achievement of the relevant
performance objectives) with respect to such award if the ability to exercise
such discretion (as opposed to the exercise of such discretion) would cause such
award to fail to qualify as other performance based compensation.

 

(g)                                 No Limitation to Corporation Action. 
Nothing in this Plan shall preclude the Committee or the Board, as each or
either shall deem necessary or appropriate, from authorizing the payment to the

 

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eligible employees of compensation outside the parameters of the Plan,
including, without limitation, base salaries, awards under any other plan of the
Company and/or its Subsidiaries (whether or not approved by stockholders), any
other bonuses (whether or not based on the attainment of performance objectives)
and retention or other special payments, provided that, if the stockholders of
the Company do not approve the Plan at the first annual meeting of stockholders
following the adoption of the Plan, the Plan set forth herein shall not be
implemented.

 

(h)                                 Nonalienation of Benefits.  Except as
expressly provided herein, no Participant or beneficiary shall have the power or
right to transfer, anticipate, or otherwise encumber the Participant’s interest
under the Plan.  The Company’s obligations under this Plan are not assignable or
transferable except to (i) a corporation which acquires all or substantially all
of the Company’s assets or (ii) any corporation into which the Company may be
merged or consolidated.  The provisions of the Plan shall inure to the benefit
of each Participant and the Participant’s beneficiaries, heirs, executors,
administrators or successors in interest.

 

(i)                                     Withholding.  Any amount payable to a
Participant or a beneficiary under this Plan shall be subject to any applicable
Federal, state and local income and employment taxes and any other amounts that
the Company or a Subsidiary is required at law to deduct and withhold from such
payment.

 

(j)                                     Severability.  If any provision of this
Plan is held unenforceable, the remainder of the Plan shall continue in full
force and effect without regard to such unenforceable provision and shall be
applied as though the unenforceable provision were not contained in the Plan.

 

(k)                                  Governing Law.  The Plan shall be construed
in accordance with and governed by the laws of the State of Delaware, without
reference to the principles of conflict of laws.

 

(l)                                     Headings.  Headings are inserted in this
Plan for convenience of reference only and are to be ignored in a construction
of the provisions of the Plan.

 

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