National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

EXHIBIT 10(o)

This 2019 Officer Bonus Program (the “Program”) is designed to reward eligible
Officers (excludes Marketing Officers) of National Western Life Insurance
Company (the “Company”) for their performance in assisting the Company in
achieving pre-determined sales targets while managing to its expense and profit
criteria. A CEO, President, Executive Vice President, Senior Vice President,
Vice President, or Assistant Vice President of the Company who is designated by
the Committee as a participant in the Program (a “Participant”) shall be
eligible to receive a bonus hereunder.
The Program was adopted by the Compensation and Stock Option Committee of the
Board of Directors of National Western Life Group Inc. (the “Committee”) on
December 12, 2018.
I.
Goals/Performance Payout:

1.
The Plan incorporates four (4) measurable performance factors: (1) Company
sales, which are defined as net placed annualized target premium for Life
business and total place premium for Annuity business, (2) Company expense
management, (3) overall profitability and (4) achievement of specific objectives
by Participants as assessed by the senior staff and the President.

2.
The bonus percentages included in the tables below pertain to Participants who
are eligible officers at the CEO, President, Executive Vice President, Senior
Vice President, Vice President and Assistant Vice President levels. The bonus
percentages for Participants who are Vice Presidents are determined using
one-half of the bonus percentages shown for Senior Vice Presidents. The bonus
percentages for Participants who are Assistant Vice Presidents are determined by
using one-fourth of the bonus percentages shown for Senior Vice Presidents.

3.
The target bonus percentage under the program is 110% for the CEO, 100% for the
President, 50% for Executive Vice President, 35% for Senior Vice Presidents,
17.5% for Vice Presidents, and 8.75% for Assistant Vice Presidents. The maximum
bonus percentage under the Program is 150% for the CEO, 130% for the President,
65% for Executive Vice President, 45.00% for Senior Vice Presidents, 22.50% for
Vice Presidents, and 11.25% for Assistant Vice Presidents. The targeted
weighting of the total bonus percentage for the CEO and President (applied to
Base Salary (as defined below)) for the three measurable performance factors is
30% for sales performance, 30% for expense management performance, and 40% for
profitability. The targeted weighting of the total bonus percentage for EVP, SVP
and below (applied to Base Salary (as defined below)) for the three measurable
performance factors is 25% for sales performance, 25% for expense management
performance, and 50% for profitability. Actual results will be compared to the
target grids and can either increase or decrease each of the individual
performance factor bonus percentages as explained in the following sections For
purposes of the Program, the Base Salary of each Participant is his annual base
salary for 2019 (prorated for Participants who are not employed by the Company
for the entire 2019 performance period from January 1, 2019 through December 31,
2019) as certified by the Committee in its sole discretion.

Page 1 of 7                                        December 12, 2018

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

4.
Once the percentage amount has been determined, as described in the previous
paragraph, 25% of that amount will be “at risk” and subject to successful
completion of individual objectives as assessed by the President. The objectives
will be established by each Participant together with the President before the
end of the first quarter of 2019. The President will present recommendations to
the Committee at the end of the 2019 as to the actual award to be paid based on
his assessment of achievement.

II.
Company Sales Component:

1.
The sales component of the Program is further subdivided between Life production
and Annuity production. For 2019, the sales goals for each line of business of
the Company are:

a.
Foreign National Life -- $2,500,000 net placed annualized target premium

b.
Life -- $37,500,000 net placed annualized target premium

c.
Annuities -- $650,000,000 total placed premium

Life sales means non-Foreign National life sales unless specifically identified
as Foreign National Life Sales.

2.
The Company’s New Business Market Summary Report (NWAR60) and the equivalent
LifeCycle 2.0 sales report will be the source of sales results for purposes of
this Program. The bonus percentage corresponding with each sales production
levels achieved in 2019 will be applied to 100% of the Participant’s Base Salary
in accordance with the following grids:

CEO & President
 
EVP
 
SVP*
Foreign National Placed Target
Bonus %
 
Foreign National Placed Target
Bonus %
 
Foreign National Placed Target
Bonus %
$1,900,000
5.00%
 
$1,900,000
2.500%
 
$1,900,000
2.083%
$2,200,000
7.50%
 
$2,200,000
3.333%
 
$2,200,000
2.500%
$2,500,000
10.00%
 
$2,500,000
4.166%
 
$2,500,000
2.917%
$2,700,000
12.50%
 
$2,700,000
5.000%
 
$2,700,000
3.333%
$2,900,000
15.00%
 
$2,900,000
5.833%
 
$2,900,000
3.750%

*Reduce by one-half for participants who are Vice Presidents and by
three-fourths for participants who are Assistant Vice Presidents.

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

CEO & President
 
EVP
 
SVP*
Life Placed Target
Bonus %
 
Life Placed Target
Bonus %
 
Life Placed Target
Bonus %
$24,500,000
5.00%
 
$24,500,000
2.550%
 
$24,500,000
2.083%
$31,000,000
7.50%
 
$31,000,000
3.333%
 
$31,000,000
2.500%
$37,500,000
10.00%
 
$37,500,000
4.166%
 
$37,500,000
2.917%
$42,000,000
12.50%
 
$42,000,000
5.000%
 
$42,000,000
3.333%
$46,500,000
15.00%
 
$46,500,000
5.833%
 
$46,500,000
3.750%

*Reduce by one-half for participants who are Vice Presidents and by
three-fourths for participants who are Assistant Vice Presidents.

CEO & President
 
EVP
 
SVP*
Annuities Placed Total Premium
Bonus %
 
Annuities Placed Total Premium
Bonus %
 
Annuities Placed Total Premium
Bonus %
$400,000,000
5.00%
 
$400,000,000
2.500%
 
$400,000,000
2.083%
$525,000,000
7.50%
 
$525,000,000
3.333%
 
$525,000,000
2.500%
$650,000,000
10.00%
 
$650,000,000
4.166%
 
$650,000,000
2.917%
$725,000,000
12.50%
 
$725,000,000
5.000%
 
$725,000,000
3.333%
$800,000,000
15.00%
 
$800,000,000
5.833%
 
$800,000,000
3.750%

      
*Reduce by one-half for participants who are Vice Presidents and by
three-fourths for participants who are Assistant Vice Presidents.
3.
If net placed annualized target premium or total placed premium, as applicable,
for a segment is below the lowest target amount for that segment, no bonus
percentage will be earned for that segment. The bonus percentage shown for each
specified amount of net placed annualized target premium or total placed
premium, as applicable, applies if actual performance is equal to or greater
than the amount shown and, except for the last level, is less than the amount
shown for the next level.

III.
Company Expense Management Component:

1.
The expense component of the Program is based upon a ratio of actual cost center
expenses to budgeted cost center expenses. For purposes of this measurement,
expenses pertaining to Marketing cost centers are excluded.

2.
Actual cost center expenses will be compared to budgeted expenses for purposes
of determining a ratio. The “par” ratio of actual expenses to targeted expenses
is 100% for this bonus component. The bonus percentage corresponding with the
actual expense to targeted expense ratio achieved will be applied to 100% of
each Participant’s Base Salary in accordance with the following grid:

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

CEO & President
 
EVP
 
SVP*
Ratio of Actual Expense to Targeted Expense
Bonus %
 
Ratio of Actual Expense to Targeted Expense
Bonus %
 
Ratio of Actual Expense to Targeted Expense
Bonus %
109.0% and above
0.00%
 
109.0% and above
0.000%
 
109.0% and above
0.000%
106.5% to 109.0%
7.50%
 
106.5% to 109.0%
5.000%
 
106.5% to 109.0%
3.125%
104.0% to 106.5%
15.00%
 
104.0% to 106.5%
7.500%
 
104.0% to 106.5%
6.250%
101.5% to 104.0%
22.50%
 
101.5% to 104.0%
10.000%
 
101.5% to 104.0%
7.500%
99.0% to 101.5%
30.00%
 
99.0% to 101.5%
12.500%
 
99.0% to 101.5%
8.750%
96.5% to 99.0%
37.50%
 
96.5% to 99.0%
15.000%
 
96.5% to 99.0%
10.000%
Less than 96.5%
45.00%
 
Less than 96.5%
17.500%
 
Less than 96.5%
11.250%

*Reduce by one-half for participants who are Vice Presidents and by
three-fourths for participants who are Assistant Vice Presidents.

3.
The bonus percentage shown for each specified range level applies if the ratio
of actual cost center expenses to budgeted expenses achieved is greater than the
lower limit shown in the level and, except for the last level, is equal to or
less than the upper limit shown for the same level.

4.
For purposes of the expense component, special consideration may be given at the
discretion of the Compensation Committee for items of an unusual and/or
non-recurring nature (e.g., lawsuit settlements, excess pension contributions)
that are beyond the control of Company management.

IV.
Company Profitability Component:

1.
The profitability component of the Program is based upon the consolidated GAAP
return on assets (ROA) percentage as derived from the segment results reported
in National Western Life Group, Inc.’s (NWLGI)’s Form 10-K. The ROA percentage
is calculated as the sum of GAAP segment net operating earnings divided by the
sum of the beginning of the year GAAP segment assets. Segment GAAP net operating
earnings are after federal income taxes but exclude realized gains and losses on
investments. As the GAAP results, including segment information, reported in the
Form 10-K are audited by the Company’s independent auditors, the ROA calculation
will be finalized at the time NWLGI’s Form 10-K for the year is filed with the
SEC.

2.
The bonus percentage corresponding with the actual ROA percentage for 2019 will
be applied to 100% of each Participant’s Base Salary in accordance with the
following grid:

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

CEO
 
President
 
EVP
 
SVP*
ROA %
Bonus %
 
ROA %
Bonus %
 
ROA %
Bonus %
 
ROA %
Bonus %
0.65% to 0.75%
25.00%
 
0.65% to 0.75%
20.00%
 
0.65% to 0.75%
15.00%
 
0.65% to 0.75%
12.50%
0.75% to 0.85%
37.50%
 
0.75% to 0.85%
30.00%
 
0.75% to 0.85%
20.00%
 
0.75% to 0.85%
15.00%
0.85% to 0.95%
50.00%
 
0.85% to 0.95%
40.00%
 
0.85% to 0.95%
25.00%
 
0.85% to 0.95%
17.50%
0.95% to 1.05%
55.00%
 
0.95% to 1.05%
50.00%
 
0.95% to 1.05%
27.50%
 
0.95% to 1.05%
20.00%
1.05% and above
60.00%
 
1.05% and above
60.00%
 
1.05% and above
30.00%
 
1.05% and above
22.50%

*Reduce by one-half for participants who are Vice Presidents and by
three-fourths for participants who are Assistant Vice Presidents.

3.
If the actual ROA percentage achieved in 2019 is less than the lowest percentage
shown (0.65%), no bonus percentage will be earned. The bonus percentage shown
for each specified ROA percentage range level applies if the actual ROA
percentage achieved is greater than the lower limit shown in the level and,
except for the last level, is equal to or less than the upper limit shown for
the same level.

V.
Administration:

1.
Determination of Bonuses.  After audited GAAP financial statements become
available for the 2019 performance period, the Committee shall determine the
extent to which the first 3 measureable performance factors have been achieved
and take into consideration the President’s assessment of achievement towards
goals and objectives of each participant and determine the bonus percentage for
each Participant for 2019. The Committee shall certify such determination in
writing. The Company’s independent auditors will also review the calculation of
the bonus percentage for compliance with the details of this Program as part of
the Company’s audited financial statements. Notwithstanding any contrary
provision of the Program, the Committee, in its sole discretion, may eliminate
or reduce the bonus payable to any Participant below that which otherwise would
be payable under the Program formula.

2.
Timing and Form of Payment.  After the bonus amount is certified by the
Committee, the bonuses shall be paid in cash in a single lump sum. Such payment
shall occur on or after January 1, 2020 and on or before March 15, 2020. Bonus
payments are intended to qualify as short-term deferrals under section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) and shall be paid not
later than the latest specified payment date (March 15, 2020). The Company shall
have the authority to delay the payment of any bonus under the Program to the
extent it deems necessary or appropriate to comply with Code
section 409A(a)(2)(B)(i).

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

3.
Effect of Termination.

a.
If a Participant terminates employment with the Company for any reason after the
end of the 2019 performance period but prior to the date the bonus for such
period is paid, the Participant shall be entitled to payment of the bonus
determined by the Committee, subject to reduction or elimination under the last
sentence of the “Determination of Bonuses” paragraph above based on the
circumstances surrounding such termination of employment.

b.
If a Participant terminates employment with the Company prior to the end of the
applicable 2019 Performance Period for any reason other than termination for
cause by the Company (as determined by the Committee in its sole discretion),
the Committee shall reduce the Participant’s bonus proportionately based on the
date of termination (and subject to further reduction or elimination under the
last sentence of the “Determination of Bonuses” paragraph above based on the
circumstances surrounding such termination of employment).

c.
If a Participant is terminated for cause by the Company prior to the payment of
any bonus, no bonus shall be payable hereunder.

d.
If a Participant dies prior to the payment of a bonus payable hereunder, the
bonus shall be paid to the Participant’s beneficiary of record.

4.
Source of Payments.  Bonuses that may become payable under the Program shall be
paid solely from the general assets of the Company. The rights of each
Participant (and any person claiming entitlement by or through a Participant)
hereunder shall be solely those of an unsecured general creditor of the Company.
The Program shall be unfunded. The Company may maintain bookkeeping accounts
with respect to Participants who are entitled to bonuses under the Program, but
such accounts shall be used merely for bookkeeping convenience. The Company
shall not be required to segregate any assets that may at any time be
represented by interests in bonuses nor shall the Program be construed as
providing for any such segregation.

5.
Committee Administration.  The Program shall be administered by the Committee.
The Committee shall have complete discretion and authority to administer the
Program and to interpret the provisions of the Program. Any determination,
decision, or action of the Committee in connection with the construction,
interpretation, administration, or application of the Program shall be final,
conclusive, and binding upon all persons, and shall be given the maximum
deference permitted by law. The Committee may amend or terminate the Program at
any time without the consent of any Participant by adoption of a written
instrument.

6.
Miscellaneous.  

a.
The Company shall withhold all applicable taxes and other amounts required by
law to be withheld from any bonus payment, including any non-U.S., federal,
state, and local taxes.

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National Western Life Insurance Company
2019
OFFICER BONUS PROGRAM

 
 
 

b.
A Participant’s rights under this Program will not be assignable, transferable,
pledged, or in any manner alienated, whether by operation of law or otherwise,
except as a result of death or incapacity where such rights are passed pursuant
to a will or by operation of law.

c.
Any assignment, transfer, pledge, or other disposition in violation of this
provision will be null and void.

d.
Nothing in the Program shall interfere with or limit in any way the right of the
Company to terminate any Participant’s employment at any time, nor confer upon
any Participant any right to continue in the employment of the Company.

e.
Bonuses payable hereunder shall constitute special discretionary incentive
payments to the Participants and will not be required to be taken into account
in computing the amount of salary or compensation of the Participants for the
purpose of determining any contributions to or any benefits under any pension,
retirement, profit-sharing, bonus, life insurance, severance or other benefit
plan of the Company or under any agreement with a Participant, unless the
Company specifically provides otherwise. T

f.
The Program and all determinations made and actions taken pursuant hereto, to
the extent not otherwise governed by the Code, shall be governed by the law of
the State of Texas, without giving effect to conflict or choice of laws
provisions thereof.

g.
This Program shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participants, and their heirs, assigns, and
personal representatives.

h.
The captions used in this Program are for convenience only and shall not be
construed in interpreting the Program.

 
i.
Whenever the context so requires, the masculine shall include the feminine and
neuter, and the singular shall also include the plural, and conversely.

j.
This Program constitutes the final and complete expression of agreement with
respect to the subject matter hereof and may not be amended except by a written
instrument adopted by the Committee.

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