Exhibit 10(A)


 


THE ST. PAUL
COMPANIES, INC.


SENIOR EXECUTIVE PERFORMANCE PLAN


1.               PURPOSE


The purpose of The St. Paul Companies, Inc. Senior
Executive Performance Plan is to permit The St. Paul Companies, Inc. (the
“Company”), through awards of annual incentive compensation which satisfy the
requirements for performance-based compensation under Section 162(m) of the
Internal Revenue Code, to attract and retain executives and to motivate these
executives to promote the profitability and growth of the Company.


2.               DEFINITIONS


“AFTER-TAX OPERATING EARNINGS” shall mean, for each
Performance Period, the Company’s net income from continuing operations as
reported in the Company’s income statement for the Performance Period, adjusted
to eliminate the after-tax effects of net realized investment gains or losses
in the fixed maturities and real estate portfolios, extraordinary items, and
the cumulative effect of accounting changes, each as defined by accounting
principles generally accepted in the United States.  This amount will be further adjusted to eliminate the after-tax
impact of any restructuring charges (as reported in the footnotes to the
Company’s financial statements), losses from catastrophes (as designated by the
Insurance Service Office’s Property Claims Service Group, the Lloyd’s Claim
Office, Swiss Reinsurance Company’s sigma report, or a comparable report or
organization generally recognized by the insurance industry) in the Company’s
“ongoing” businesses (as reported in press releases announcing its financial
results), and underwriting results of all businesses (except “voluntary pools
and other”) included in the Company’s “Other” segment in those press releases.


 “AWARD” shall
mean the amount granted to a Participant by the Committee for a Performance Period.


“BEGINNING TOTAL COMMON STOCKHOLDERS’ EQUITY” shall
mean, for each Performance Period, the Company’s total common stockholders’
equity as reported in the Company’s balance sheet for the beginning of the
Performance Period, excluding net unrealized appreciation or depreciation of
investments.


“BOARD” shall mean the Board of Directors of the
Company.


“CODE” shall mean the Internal Revenue Code of 1986,
as amended.

















 


“COMMITTEE” shall mean the Personnel and Compensation
Committee of the Board or any subcommittee thereof which meets the requirements
of Section 162(m)(4)(C) of the Code.


“EXCHANGE ACT” shall mean the Securities Exchange Act
of 1934, as amended.


“EXECUTIVE” shall mean any covered employee as defined
in Section 162(m) of the Code and, in the discretion of the Committee, any
other executive officer of the Company or its Subsidiaries.


 “PARTICIPANT”
shall mean, for each Performance Period, each Executive who is a “covered
employee” (as defined in Section 162(m) of the Code) for that Performance
Period, unless otherwise determined by the Committee in its sole discretion.


“PERFORMANCE PERIOD” shall mean the Company’s fiscal
year or any other period designated by the Committee with respect to which an
Award may be granted.


“PLAN” shall mean The St. Paul Companies, Inc. Senior
Executive Performance Plan, as amended from time to time.


“RETURN ON EQUITY” shall mean, for each Performance
Period, the percentage equivalent to the fraction resulting from dividing
After-Tax Operating Earnings by Beginning Total Common Stockholders’ Equity.


“STOCK PLANS” shall mean The St. Paul Companies, Inc.
Amended and Restated 1994 Stock Incentive Plan and/or any prior and successor
stock plans adopted or assumed by the Company.


“SUBSIDIARY” shall mean any entity that is directly or
indirectly controlled by the Company or any entity, in which the Company has at
least a 50% equity interest.


3.               ADMINISTRATION


The Plan shall be administered by the Committee, which
shall have full authority to interpret the Plan, to establish rules and
regulations relating to the operation of the Plan, to select Participants, to
determine the maximum Awards and the amounts of any Awards and to make all
determinations and take all other actions necessary or appropriate for the
proper administration of the Plan. 
Before any payments are made under the Plan, the Committee shall certify
in writing that the Return on Equity required by Section 4(b) has been
met.  The Committee’s interpretation of
the Plan, and all actions taken within the scope of its authority, shall be
final and binding on the Company, its stockholders and Participants,
Executives, former Executives and their respective successors and assigns.  No member of the Committee shall be eligible
to participate in the Plan.


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4.               DETERMINATION OF AWARDS


(a)   Prior to
the beginning of each Performance Period, or at such later time as may be
permitted by applicable provisions of the Code, the Committee shall establish
for each Participant a maximum Award, expressed as a percentage of the
incentive pool for the Performance Period pursuant to paragraph (b) of this
section, provided that the maximum percentage for any single Participant shall
not exceed 50%.


(b)   If the
Return on Equity for a Performance Period is greater than 8%, the incentive
pool for the Performance Period shall be equal to 1.5% of After-Tax Operating
Earnings.  If the Return on Equity for a
Performance Period is equal to or less than 8%, the incentive pool shall be $0.


(c)   Following
the end of each Performance Period, the Committee may determine to grant to any
Participant an Award, which may not exceed the maximum amount specified in
paragraph (a) of this section for such Participant.  The aggregate amount of all Awards under the Plan for any
Performance Period shall not exceed 100% of the incentive pool pursuant to
paragraph (b) of this section.


5.               PAYMENT OF AWARDS


Each Participant shall be eligible to receive, as soon
as practicable after the amount of such Participant’s Award for a Performance
Period has been determined, payment of all or a portion of that Award.  Awards may be paid in cash, stock,
restricted stock, options, other stock-based or stock-denominated units or any
combination thereof determined by the Committee.  Equity or equity-based awards may be granted under the terms and
conditions of the applicable Stock Plan. 
Payment of the award may be deferred in accordance with a written
election by the Participant pursuant to procedures established by the
Committee.


6.               AMENDMENTS


The Committee may amend the Plan at any time and from
time to time, provided that no such amendment that would require the consent of
the stockholders of the Company pursuant to Section 162(m) of the Code or the
Exchange Act, or any other applicable law, rule or regulation, shall be
effective without such consent.  No such
amendment which adversely affects a Participant’s rights to, or interest in, an
Award granted prior to the date of the amendment shall be effective unless the
Participant shall have agreed thereto in writing.


7.               TERMINATION


The Committee may terminate this Plan at any
time.  In such event, and
notwithstanding any provision of the Plan to the contrary, payment of deferred
amounts plus any earnings may be accelerated with respect to any affected
Participant in the discretion of the Committee and paid as soon as practicable;
but in no event shall the termination of the Plan adversely affect the rights
of any Participant to deferred amounts previously awarded such Participant, plus
any earnings thereon.


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8.               OTHER PROVISIONS


        (a)   No Executive or other person shall have any
claim or right to be granted an Award under this Plan until such Award is
actually granted.  Neither the establishment
of this Plan, nor any action taken hereunder, shall be construed as giving any
Executive any right to be retained in the employ of the Company.  Nothing contained in this Plan shall limit
the ability of the Company to make payments or awards to Executives under any
other plan, agreement or arrangement.


        (b)   The rights and benefits of a Participant
hereunder are personal to the Participant and, except for payments made
following a Participant’s death, shall not be subject to any voluntary or
involuntary alienation, assignment, pledge, transfer, encumbrance, attachment,
garnishment or other disposition.


        (c)   Awards under this Plan shall not constitute
compensation for the purpose of determining participation or benefits under any
other plan of the Company unless specifically included as compensation in such
plan.


        (d)   The Company shall have the right to deduct
from Awards any taxes or other amounts required to be withheld by law.


        (e)   All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Minnesota without regard
to principles of conflict of laws.


        (f)    If any provision of this Plan would cause
Awards not to constitute “qualified performance-based compensation” under
Section 162(m) of the Code, that provision shall be severed from, and shall be
deemed not to be a part of, the Plan, but the other provisions hereof shall
remain in full force and effect.


 


        (g)   No member of the Committee or the Board, and
no officer, employee or agent of the Company shall be liable for any act or
action hereunder, whether of commission or omission, taken by any other member,
or by any officer, agent, or employee, or, except in circumstances involving
bad faith, for anything done or omitted to be done in the administration of the
Plan.


 


9.               EFFECTIVE DATE


The Plan shall be effective as of January 1, 2002,
subject to approval by the stockholders of the Company in accordance with
Section 162(m) of the Code.


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