Exhibit 10(gg)

 

Payments to Directors

 

Directors of Torchmark Corporation are currently compensated on the following
basis:

 

(1) Directors who are not officers or employees of the Company or a subsidiary
of the Company (Outside Directors) receive a fee of $2,000 for each physically
attended Board or Board Committee meeting, a fee of $500 for each telephonic
Board or Board Committee meeting in which they participate, and an annual
retainer of $45,000 payable each January for the entire year. They do not
receive fees for the execution of written consents in lieu of Board meetings and
Board committee meetings. They receive reimbursement for their travel and
lodging expenses if they do not live in the area where the meeting is held.

 

Each Outside Director is automatically awarded annually non-qualified stock
options on 6,000 shares of Company common stock on the first day of each
calendar year in which stock is traded on the New York Stock Exchange. The
entire Board may, for calendar years commencing with 1996, award non-qualified
stock options on a non-formula basis to all or such individual Outside Directors
as it shall select. Such options may be awarded at such times and for such
number of shares as the Board in its discretion determines. The price of such
options may be fixed by the Board at a discount not to exceed 25% of the fair
market value on the grant date or at the fair market value of the stock on the
grant date. Options on 6,000 shares are typically granted pursuant to this
non-formula provision on the date of election of each new director at fair
market value on that date.

 

Commencing with 1997 retainer and meeting and committee fees (assuming
attendance at all scheduled meetings), Outside Directors may annually elect to
make deferrals on such compensation for the following year into the
interest-bearing account of the Torchmark Corporation 1996 Non-Employee Director
Stock Option Plan (for amounts earned prior to 1999) and pursuant to the
deferred compensation stock option provisions of the 1998 Incentive Plan (for
amounts earned in 1999 and in subsequent years). They may subsequently elect to
convert such balances to stock options with either fair market value or
discounted exercise prices.

 

In order to comply with certain changes to the law regarding non-qualified
deferred compensation paid to the Company’s non-employee directors, which are
required by the American Jobs Creation Act, the Compensation Committee of the
Board on December 13, 2004 adopted a new plan, the Torchmark Corporation 2005
Non-Employee Director Incentive Plan (the 2005 Director Plan), subject as
required by the rules of the New York Stock Exchange to the approval of Company
shareholders at the April 28, 2005 Annual Meeting of Shareholders. Non-employee
directors may elect to defer up to 100% of their 2005 director compensation and
receive contingently granted fair market value stock options pursuant to the
2005 Director Plan, subject to that Plan’s approval by Company shareholders at
their April 28, 2005 Annual Meeting, on a January 2005 grant date selected by
the Compensation Committee.

 

(2) Beginning in January, 1993, directors who are officers or employees of the
Company or a subsidiary of the Company waived receipt of all fees for attending
Board meetings. They do not receive fees for the execution of written consents
in lieu of Board meetings or Board committee meetings. They also do not receive
a fee for attending Board committee meetings or an annual retainer. They are
reimbursed their travel and lodging expenses, if any.

 

(3) Compensation paid to the director serving as Chairman of the Executive
Committee is determined annually by the Compensation Committee in their
discretion. Pursuant to the terms of a Consultation Agreement, the Compensation
Committee determined to pay R.K. Richey $250,000 for service in 2004 as Chairman
of the Executive Committee.

 

(4) Beginning in April 2003, the director serving as Chairman of the Audit
Committee receives a $5,000 annual retainer for service as chairman.

 

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(5) Each person who served as a non-employee director on or prior to February
29, 2000 is eligible to receive upon retirement from the Board a retirement
benefit payable annually, in an amount equal to $200 a year for each year of
service as a director or advisory director up to 25 years, but not less than
$1,200 a year. In determining this benefit, the number of years of service may
include years as a director of a subsidiary of the Company if the payment for
such years by the Company is in place of a payment which would otherwise be made
by the subsidiary. Directors who retired prior to the termination of this
retirement benefit program effective February 29, 2000, have been and will
continue to receive their retirement benefit payments in cash. Directors with
accrued but unpaid retirement benefits under this program on the date of
termination were offered the opportunity to convert the present value of such
retirement benefits on that date to options in Company common stock. Directors
elected after February 29, 2000 will not receive any director retirement
benefits.