Exhibit 10.2

STANCORP FINANCIAL GROUP, INC.

LONG-TERM INCENTIVE AWARD AGREEMENT

(20     Performance Period)

This Long-Term Incentive Award Agreement (this “Agreement”) is made effective as
of                     , 20     between StanCorp Financial Group, Inc., an
Oregon corporation (the “Company”) and                      (the “Employee”).

On                     , 20    , the Organization and Compensation Committee
(the “Committee”) of the Company’s Board of Directors (the “Board”) authorized 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 financial performance during the 20     calendar year
(the “Performance Period”) as described in Section 2, and (b) Employee’s
continued employment until the vesting date as described in Section 3.
Recipient’s “Maximum Share Amount” for purposes of this Agreement is
             shares.

2. Performance Conditions.

2.1 Subject to Section 3.1 and Section 4, the number of Performance Shares to be
issued to the Employee shall be determined by multiplying the Maximum Share
Amount by the Payout Factor determined under the following formula:

Payout Factor = (50% * Adjusted EPS PF) + (35% * Revenues PF) + (15% * AM
Earnings PF)

where the “Adjusted EPS PF,” the “Revenues PF” and the “AM Earnings PF” are
determined under the following table based on the Company’s Adjusted EPS,
Revenues and AM Earnings, respectively (each as defined below), for the
Performance Period.

 

Adjusted EPS

   Adjusted EPS PF     Revenues    Revenues PF     AM Earnings    AM Earnings PF
             (in millions)          (in millions)           0 %      0 %      0
%    10 %      10 %      10 %    20 %      20 %      20 %    30 %      30 %     
30 %    40 %      40 %      40 %    50 %      50 %      50 %    60 %      60 %  
   60 %    70 %      70 %      70 %    80 %      80 %      80 %    90 %      90
%      90 %    100 %      100 %      100 %

 

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If the Adjusted EPS for the Performance Period is between any two data points
set forth in the first column of the above table, the Adjusted EPS PF shall be
determined by interpolation between the corresponding data points in the second
column of the table. If the Revenues for the Performance Period are between any
two data points set forth in the third column of the above table, the Revenues
PF shall be determined by interpolation between the corresponding data points in
the fourth column of the table. If the AM Earnings for the Performance Period
are between any two data points set forth in the fifth column of the above
table, the AM Earnings PF shall be determined by interpolation between the
corresponding data points in the sixth column of the table.

2.2 The Company’s “Adjusted EPS” for the Performance Period shall be the
Company’s net income per diluted common share excluding after-tax net capital
gains for the Performance Period. Adjusted EPS shall be calculated by
subtracting After-Tax Net Capital Gains (Losses) (as defined below) from the
Company’s net income for the year, and then dividing the resulting amount by the
Company’s diluted weighted-average common shares outstanding for the year.
“After-Tax Net Capital Gains (Losses)” shall mean the amount calculated by
multiplying the Company’s net capital gains (losses) for the year by a fraction,
the numerator of which shall be the Company’s net income for the year and the
denominator of which shall be the Company’s income before income taxes for the
year. For this purpose, the Company’s net income, diluted weighted-average
common shares outstanding, net capital gains (losses) and income before income
taxes for the year shall be those amounts as set forth in the audited
consolidated financial statements of the Company and its subsidiaries for the
year. If, after the date of this Agreement, the outstanding Common Stock is
increased or decreased by reason of any stock split, combination of shares or
dividend payable in shares, the Adjusted EPS targets in the above table shall
each be adjusted by multiplying such targets by a fraction, the numerator of
which shall be the number of outstanding shares of Common Stock immediately
before the increase or decrease and the denominator of which shall be the number
of outstanding shares of Common Stock immediately after the increase or
decrease.

2.3 The Company’s “Revenues” for the Performance Period shall be the Company’s
revenues for the Performance Period as set forth in the audited consolidated
financial statements of the Company and its subsidiaries for the year.

2.4 The Company’s “AM Earnings” for the Performance Period shall be the
Company’s Asset Management Earnings for the Performance Period. Asset Management
Earnings shall be equal to the aggregate income before income taxes for the year
of all of the Company’s business units other than the Individual and Group Life
Insurance and Individual and Group Disability Insurance business units. Income
before income taxes of the included business units shall be computed based on
the Company’s books and records, in accordance with generally accepted
accounting principles, and in a manner consistent with the manner in which the
Company calculated such aggregate amount as being $             million for its
20     fiscal year.

 

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2.5 If the Company implements a change in accounting principle between the date
of this Agreement and the end of the Performance Period, either as a result of
the issuance of new accounting standards or otherwise, and the effect of the
accounting change was not reflected in the Company’s business plan at the time
of approval of this award, then Adjusted EPS, Revenues and AM Earnings shall be
adjusted to eliminate the impact of the change in accounting principle.

3. Employment Condition.

3.1 In order to receive the 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”),
other than by reason 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.
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.

3.2 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 completion of
the audit of the Company’s consolidated financial statements for 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 February 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 Adjusted EPS, Revenues and AM
Earnings 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

 

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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 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 3.1,
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 70% of the Maximum Share Amount by
a fraction, the numerator of which is the number of days in the period starting
on January 1 of the year in which the parties entered into this Agreement and
ending on the date of the Change of Control and the denominator of which is the
number of days in the period starting on January 1 of the year in which the
parties entered into this Agreement and ending on the Vesting Date. 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 shareholders of the Company approve a merger or other consolidation of
the Company with any other company, other than (i) a merger or consolidation
which would result 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 shareholders of the Company approve an agreement for the sale or
disposition by the Company of all or substantially all of its assets;

 

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(d) A tender or exchange offer is made for Common Stock (or securities
convertible into Common Stock) and such offer results in a portion of those
securities being purchased and the offeror after the consummation of the offer
is the beneficial owner (as determined pursuant to Section 13(d) of the Exchange
Act), directly or indirectly, of securities representing at least 30% of the
voting power of outstanding securities of the Company;

(e) 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 vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period; or

(f) Any other event or combination of events occurs which the Board, acting in
its sole discretion, determines to be a “Change of Control” for purposes of this
Agreement.

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.

 

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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.

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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