Exhibit 10.21

STANCORP FINANCIAL GROUP, INC.

FORM OF LONG-TERM INCENTIVE AWARD AGREEMENT

(             Performance Period)

This Long-Term Incentive Award Agreement (this “Agreement”) is made effective as
of              between StanCorp Financial Group, Inc., an Oregon corporation
(the “Company”) and «First_Name» «Last_Name» (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 = (50% * TSR PF) + (50% * Premium Growth PF)

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

 

Comparative TSR

     TSR PF      Comparative
Premium Growth      Premium
Growth PF                 % or less         0%                     % or less   
     0%                  %         100%                     %         100%     
            % or more         200%                     % or more         200%   

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If the Comparative TSR for the Performance Period is between any two data points
set forth in the first column of the above table, the TSR PF shall be determined
by interpolation between the corresponding data points in the second column of
the table (rounded to the nearest tenth of a percentage point). If the
Comparative Premium Growth for the Performance Period is between any two data
points set forth in the third column of the above table, the Premium Growth PF
shall be determined by interpolation between the corresponding data points in
the fourth column of the table (rounded to the nearest tenth of a percentage
point).

2.2 The Company’s “Comparative TSR” for the Performance Period shall be equal to
the Company TSR minus the S&P 500 TSR. The “Company TSR” shall be calculated by
(a) assuming that $100 is invested in the Common Stock 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 Common 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 Common Stock on the last trading day of
            . The “Company 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. The “S&P 500 TSR”
shall be calculated by dividing the reported closing value of the S&P 500 Total
Return Index on the last trading day of              by the reported closing
value of the S&P 500 Total Return Index on the last trading day of             ,
subtracting one from the result and then expressing the resulting fraction as a
percentage.

2.3 The Company’s “Comparative Premium Growth” for the Performance Period shall
be equal to the Company Premium Growth minus the Peer Group Premium Growth.
“Company 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. “Peer Group Premium
Growth” shall be calculated by determining for each of the companies listed in
the following table (the “Peer Group Companies”) the amount of             
revenues for the segment or product line(s) listed in the table and adding those
amounts together, and then dividing that total by the total             
revenues for the same segments or product line(s) of the Peer Group Companies,
subtracting one from the result and then expressing the resulting fraction as a
percentage. All revenue information for each Peer Group Company shall be
obtained from the financial or statistical supplement published by the company
for the last quarter of the applicable year.

 

Peer Group Company

  

Comparative Premium Revenue Line Item(s)

Aetna Inc.

   Premiums of Group Insurance Segment

Assurant, Inc.

   Employee Benefits Segment—Net earned premiums and other considerations of the
Group disability single premiums for closed blocks, All other group disability
premiums, and Group life product lines

 

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CIGNA Corporation

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

Delphi Financial Group, Inc.

   Group Employee Benefit Products Segment—Premiums of the Disability and Life
product lines

The Hartford Financial Services Group, Inc.

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

Lincoln National Corporation

   Group Protection Segment—Insurance Premiums of the Life and Disability
product lines

MetLife, Inc.

   Insurance Products Segment—Premiums of the Group Life product line

Principal Financial Group, Inc.

   Life and Health Insurance Segment—Specialty Benefits Insurance
subsegment—Premiums and Fees of the Group life and Group disability product
lines

Prudential Financial, Inc.

   Premiums and Policy charges and fee income of Group Insurance Segment

Unum Group

   Unum US Segment—Premiums of the Group Disability, Group Life and AD&D product
lines

If prior to the end of the Performance Period, any Peer Group 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 Peer Group Company and Peer Group Premium
Growth shall be calculated based on the remaining Peer Group Companies;
provided, however, that if a Peer Group Company, or a Peer Group Company’s
segment or product line(s) listed in the above table, is acquired by another
Peer Group Company during the Performance Period, then such Peer Group Company
shall continue to be considered a Peer Group Company for purposes of calculating
the total             revenues of the applicable segments or product line(s) of
the Peer Group Companies. In addition, if prior to the end of the Performance
Period, any Peer Group Company acquires (including an acquisition by
reinsurance) 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 Peer Group Company and Peer Group Premium Growth shall
be calculated based on the remaining Peer Group Companies.

 

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

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”).

 

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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. As soon as practicable following the release of
earnings by the Company and the Peer Group 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 levels of
Comparative TSR and Comparative Premium Growth 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.

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

 

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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;

(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

 

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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.

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.

 

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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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