Exhibit 10.3

 

THIRD AMENDED AND RESTATED

NATIONWIDE FINANCIAL SERVICES, INC.

1996 LONG-TERM EQUITY COMPENSATION PLAN

 

NVA Target Award Opportunity

 

Date                         

 

Name

Address

Address

 

Dear Name:

 

Congratulations on your selection as a Participant in the Third Amended and
Restated Nationwide Financial Services, Inc. 1996 Long-Term Equity Compensation
Plan (the “Plan”) and your receipt under the Plan of an NVA Target Award
Opportunity.

 

This agreement, which includes Annex A hereto, (the “Award Agreement”), together
with the Plan (available on the Human Resources/Executive Performance and
Rewards Services Website), provides a complete detail of your rights with
respect to your Award Opportunity. If there is any inconsistency between the
terms of this agreement and the terms of the Plan, the Plan’s terms shall
completely supersede and replace the conflicting terms of this Agreement. All
capitalized terms used in this Award Agreement have the same meaning as in the
Plan, unless otherwise defined in this Award Agreement.

 

You are being asked to read and understand your rights under the Plan, this
Award Agreement (including Annex A attached), and the terms and conditions which
may limit your rights under your Award Opportunity.

 

Please sign and return the attached signature page as acceptance of the terms
and conditions hereof and your participation in the Plan by [date], 2006.

 

Following are the key terms of your Award Opportunity:

 

NVA Target Award Opportunity

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NVA Performance Period:

January 1, 2006 through December 31, 2006

 

Target NVA Award:* $

   

 

*This is the amount that would be credited to your “NVA Award Bank” (described
in Annex A) if target levels of NVA performance (described in Annex A) are
achieved over the NVA Performance Period. As explained below, your NVA Award
Bank will be credited (or debited) based on actual NVA performance and there is
no guaranty that the target annual contribution will be achieved.

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Further terms and conditions applicable to your Award Opportunity are set forth
in the Plan and Annex A hereto, each of which are integral parts of this Award
Agreement and are hereby incorporated by reference. The terms and conditions
contained in Annex A hereto supersede the terms and conditions contained in any
prior Award Opportunity documents (including any attached Annexes).

 

Please refer any questions you may have regarding your Award Opportunity to Beth
Owens, Director, Compensation and Benefits at (614) 249-3544. Once again,
congratulations on receipt of your Award Opportunity.

 

Sincerely,

 

Nationwide Mutual Insurance Company

 

Terri L. Hill

Executive Vice President-Chief Administrative Officer

 

Please acknowledge your agreement to participate in the Plan, to accept your
Award Opportunity, and to abide by all of the governing terms and conditions of
the Plan and this Award Agreement, by signing the following representation:

 

Agreement to Participate

 

By signing a copy of this Award Agreement and returning it to Beth Owens,
Compensation and Benefits (1-26-11), [a] I acknowledge that I have read the Plan
and this Award Agreement (including Annex A hereto), and that I fully understand
all of my rights under the Plan and this Award Agreement (including Annex A
hereto), as well as all of the terms and conditions which may limit my rights
under my Award Opportunity and [b] I consent to the adjustment of my NVA Award
Bank balance to reflect the true-up adjustments approved by the Committee
relating to the prior overstatement of NVA performance. I further acknowledge
and agree that the Company at its discretion may combine/transfer the NVA Award
bank balance under the Plan to my NVA Award Bank under the Amended and Restated
Nationwide Property and Casualty Long-Term Performance Plan, as may be further
amended from time to time. Without limiting the generality of the preceding
sentence, I understand that my rights under my Award Opportunity may be
adversely affected (as described in this Award Agreement) if my employment
terminates during the Performance Period.

 

[Participant’s Name] (please print)

      

Participant’s Signature

 

Please note: Sign and return one copy of this Award Agreement to Beth Owens,
Compensation and Benefits (1-26-11) and retain one copy for your records.

 

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ANNEX A

NVA Target Award Opportunity

 

It is understood and agreed that the NVA Target Award Opportunity evidenced by
the Award Agreement to which this is annexed is subject to the following
additional terms and conditions.

 

1.

Overview of Your NVA Target Award Opportunity. As described below, your NVA
Target Award Opportunity provides you with an opportunity to have your NVA Award
Bank credited (or debited) based on the Enterprise’s NVA performance over the
NVA Performance Period, and to receive a distribution equal to 1/3 of any
positive balance in your NVA Award Bank after the close of the NVA Performance
Period.

 

  a)

NVA Award Bank. The Company will maintain a bookkeeping account in your name
(your “NVA Award Bank”) and, based on the Enterprise’s NVA performance over the
NVA Performance Period, will credit (or debit) your NVA Award Bank as soon as
practicable after the last day of the NVA Performance Period in accordance with
the following formulas:

 

  i)

NIACC:

 

NIACC  =  50%  x  Target  x   [Actual Return Rate]

Cost of Capital *

 

  ii)

CHANGE IN NIACC:

 

CHANGE IN NIACC  =  50%  x  Target  x  [1 + (3 x (Change in NIACC - (.5% x
Year-End Capital)))]

Hurdle Net Income

 

  iii)

“Actual Return Rate”  =   Adjusted GAAP Income

Average CapitalYear1

 

  iv)

“Hurdle Net Income”  =  Cost of Capital x Average Capital Year1

 

You will be notified of the Enterprise’s NVA and NIACC performance as soon as
practicable after the last day of the NVA Performance Period.

 

  b)

Determination of NVA Performance. NVA performance will be determined by the
Committee based on the following metrics:

 

  i)

NIACC. NIACC is measured based on the incremental change in Enterprise value
created by the current year’s economic results, as follows:

 

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NIACC  =  adjusted GAAP net income  -  [average adjusted GAAP capital  x  Cost
of Capital]

 

Target NIACC performance is achieved if NIACC equals zero.

 

  ii)

CHANGE IN NIACC. Change in NIACC is measured based on the change in NIACC from
one year to the next during the NVA Performance Period, as follows:

 

Change in NIACC  =  NIACC Year1  -  NIACC Year0

 

Target CHANGE IN NIACC is achieved if CHANGE IN NIACC multiplied by three
(3) equals one-half of one percent (0.5%) times the year-end capital.

 

*For purposes of this Award Agreement, Cost of Capital means the expected return
for the Enterprise given its risk profile. The Committee shall determine the
Cost of Capital at least annually and communicate the Cost of Capital percentage
to you within a reasonable time after the determination is made.

 

  c)

Distribution. Subject to Section 2 below, you will receive a distribution equal
to 1/3 of any positive balance in your NVA Award Bank (less applicable tax
withholding) as soon as practicable after the Committee credits (or debits) your
NVA Award Bank pursuant to subsection 1(a) above; provided, however, that such
payment shall in all events be made within the calendar year immediately
following the close of the NVA Performance Period.

 

No distribution will be made if, after the credit (or debit) is made to your NVA
Award Bank pursuant to subsection 1(a) above, your NVA Award Bank has a negative
balance; however, in no event will you be obligated to make a payment to the
Company (or repay an amount previously distributed) because of a negative
balance in your NVA Award Bank.

 

Your NVA Award Bank, reduced by any distribution made pursuant to this
subsection 1( c), will be carried forward and added to the next NVA Target Award
Opportunity that you receive.

 

2.

Termination. If your employment terminates prior to the last day of the NVA
Performance Period, the Company’s obligation to make a contribution to your NVA
Award Bank pursuant to subsection 1(a) above and your right to receive a
distribution pursuant to subsection 1(c) above shall be as follows:

 

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  a)

Termination of Employment due to Death, Disability or Retirement. If your
employment is terminated during the NVA Performance Period by reason of your
death, Disability or Retirement, a pro-rata award for the NVA Performance Period
will be credited (or debited) to your NVA Award Bank and you will receive three
equal distributions from your NVA Award Bank. Each distribution will be equal to
1/3 of any positive balance in your NVA Award Bank after the prorated amount is
credited (or debited) pursuant to the preceding sentence, less applicable tax
withholding (the “Termination Distributions”). The Termination Distributions
shall be made at the same time distributions from NVA Award Banks are made to
other participants in the three calendar years immediately following the NVA
Performance Period for this NVA Award. If distributions are not made to other
Participants in such years, the Termination Distributions shall be made on such
dates in the three applicable calendar years as the Committee shall determine.
However, payment from the NVA Award Bank may be accelerated if your termination
of employment is due to your death and the beneficiary of your Award is your
estate. The executor or other authorized representative of your estate may
request acceleration of the distribution method otherwise applicable pursuant to
this Award Agreement. For purposes of clarity, except for prorated credits or
debits made pursuant to the first sentence of this Section 2(b), no credits or
debits will be made to or from your NVA Bank Award following termination of
employment.

 

  b)

Termination of Employment for Other Reasons. If your employment terminates
during the NVA Performance Period for any reason other than death, Disability or
Retirement, your NVA Target Award Opportunity and your NVA Award Bank shall be
forfeited; provided, however, that unless your employment is terminated for
Cause, the Committee, in its sole discretion, may make a prorated credit (or
debit) to your NVA Award Bank and may allow you to receive a prorated amount of
the distribution you would have received in [2007] had your employment not
terminated (the “Prorated Distribution”). The proration of any such Prorated
Distribution shall be based on the portion of the NVA Performance Period that
you were employed, and shall be paid (subject to applicable tax withholding) at
the same time distributions from NVA Award Banks are made to other Participants
in [2007]. If distributions are not made to other Participants in such calendar
year, distributions shall be made on such date in [2007] as the Committee shall
determine. The remaining portion of your NVA Award Bank shall be forfeited.

 

3.

Retirement. For purposes of your NVA Target Award Opportunity, “Retirement”
shall mean termination of your employment with the Company on or after the date
on which you shall have:

 

  a)

Attained Normal Retirement Age;

 

  b)

Attained age 55 and completed 180 Months of Vesting Service; or

 

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  c)

Attained age 62 and completed 60 Months of Vesting Service, whichever is
earliest.

 

For purposes of this Section 3, Normal Retirement Age and Months of Vesting
Service shall have the meanings assigned to them in the Nationwide Retirement
Plan.

 

4.

Cause. For purposes of your NVA Target Award Opportunity, “Cause” shall mean
(a) willful misconduct on your part that is materially detrimental to the
Company; or (b) your conviction of a felony or crime involving moral turpitude;
provided, however, that if you have entered into an employment agreement that is
binding as of the date of employment termination, and if such employment
agreement defines “Cause,” such definition of “Cause” shall apply. “Cause” under
either (a) or (b) shall be determined in good faith by the Committee in its sole
discretion.

 

5.

Tax Withholding. The Company shall have the power and right to deduct or
withhold, or require you to remit to the Company, an amount sufficient to
satisfy applicable federal, state, and local tax withholding obligations arising
with respect to your NVA Target Award Opportunity.

 

6.

Section 409A Compliance. To the extent applicable, it is intended that the terms
of this NVA Award Opportunity (and any deferral thereof) comply with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and any related regulations or other guidance promulgated with
respect to such Section by the U.S. Department of the Treasury or the Internal
Revenue Service (“Section 409A”). Any provision hereof or in the Plan (and any
rights conveyed hereby or thereby) that would cause this NVA Target Award
Opportunity and any amounts payable with respect to this NVA Target Award
Opportunity (or any other plan or award) to fail to satisfy Section 409A shall
have no force or effect until amended to comply with Section 409A, which
amendment may be retroactive to the extent permitted by Section 409A. In
addition, payment of amounts under this Agreement may be delayed for up to six
months following termination of your employment if (and to the extent) deemed
necessary by the Committee to comply with Section 409A(a)(2)(B) of the Code.

 

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