exhibit10br.htm


    Exhibit
10(br)

    


    National Western Life
Insurance Company

    2008 DOMESTIC MARKETING
OFFICER BONUS PROGRAM

    


    The Bonus
Program (“Program”) is designed to reward Domestic Marketing officers for their
performance in achieving pre-determined sales targets while assisting the
Company in managing to its profit criteria. The Plan incorporates three
measurable performance factors: (1) sales, which are defined as net placed
annualized target premium for Life business and as total placed premium for
Annuity business, (2) persistency, and (3) expense management. The bonus
percentages included in this document pertain to Domestic Marketing officers at
the vice president level and higher. The bonus percentages for assistant vice
presidents are determined using one-half of the
percentages shown for vice presidents and above.

    


    Each of
the three performance factors will have an assigned target level for purposes of
the Program. Assuming a “par” performance (i.e. achieving each target level),
the weighting of the bonus (applied to base salary) is 70% for sales
performance, 15% for persistency performance, and 15% for expense management
performance. Actual results compared to the targets can either increase or
decrease these percentages as explained in each of the following
sections.

    


    Sales
Component (70%):

    


    The sales
component of the Program is further subdivided between Life production and
Annuity production. For 2008, the Domestic sales goals are:

    


    
      	
              Ø  

            	
              Life
      -- $13,500,000 net placed annualized target premium (14% of MaxWealth and
      25% of Lifetime Returns Select total premium assumed to be target for
      purposes of the Program)

            


    

    
      	
              Ø  

            	
              Annuities
      -- $540,000,000 net placed total
premium

            


    

    


    The New
Business Market Summary Report (NWAR60) will be the source of sales results for
purposes of this Program. Based upon these sales goals, the bonus percentage
corresponding with the Life and Annuity sales production levels achieved in 2008
will be applied to 100% of each Domestic Marketing officer’s base salary in
accordance with the following grid:

     

    
      	
              Life
      Placed Target Premium

            	
              Bonus
      %

            	
              Annuity
      Placed Total Premium

            	
              Bonus
      %

            
	
              $11,000,000

            	
              15.0%

            	
              $340,000,000

            	
              5.0%

            
	
              $11,500,000

            	
              20.0%

            	
              $380,000,000

            	
              10.0%

            
	
              $12,000,000

            	
              25.0%

            	
              $420,000,000

            	
              15.0%

            
	
              $12,500,000

            	
              30.0%

            	
              $460,000,000

            	
              20.0%

            
	
              $13,000,000

            	
              35.0%

            	
              $500,000,000

            	
              25.0%

            
	
              $13,500,000

            	
              40.0%

            	
              $540,000,000

            	
              30.0%

            
	
              $14,000,000

            	
              45.0%

            	
              $580,000,000

            	
              35.0%

            
	
              $14,500,000

            	
              50.0%

            	
              $620,000,000

            	
              40.0%

            
	
              $15,000,000

            	
              55.0%

            	
              $660,000,000

            	
              45.0%

            
	
              Increment for every
      $500,000 thereafter

            	
              5.0%

            	
              Greater
      than $660,000,000

            	
              45.0%

            


    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    Bonus
percentages associated with life sales are not capped but increase by 5.0% with
every additional $500,000 of placed target premium. Conversely, the bonus
percentage for annuity sales is capped at 45% irrespective of sales production
above the annuity sales goal.

    


    Assuming
an officer salary of $100,000 and 2008 production of $14,100,000 of Life placed
target premium and $470,000,000 of Annuity placed total premium, the officer’s
2008 sales bonus component under the Program would be $65,000 ($100,000 x 45%
for Life business plus $100,000 x 20% for Annuity business).

    


    In the
event that adverse persistency experience develops during calendar year 2009
with respect to 2008 life product sales, the Company reserves the right revisit
the 2008 Program bonus awarded for life sales and true up the award for such
adverse experience.

    


    Persistency Component
(15%):

    


    Similar
to the sales component, the persistency component of the Program is further
subdivided between Life business and Annuity business.

    


    The
24th
month ratio of actual persistency to expected (i.e. pricing) persistency as
reported in the Duration Score Listing query will serve as the measure for the
Life persistency component of the Program. For purposes of the persistency
measurement, the parameters include all writing agents (active and terminated)
and all life business (universal life and traditional).

    


    Based
upon these persistency performance factors, the bonus percentage corresponding
with the Domestic Life persistency levels achieved in 2008 will be applied to
each Domestic Marketing officer’s base salary in accordance with the following
grid:

     

    
      


      
        	
                Domestic
      Life Persistency

              	
                Bonus
      %

              
	
                Less
      than 88%

              	
                0%

              
	
                88%
      – 91%

              	
                1.5%

              
	
                91%
      – 94%

              	
                3.0%

              
	
                94%
      – 97%

              	
                4.5%

              
	
                97%
      – 100%

              	
                6.0%

              
	
                100%
      - 101%

              	
                7.5%

              
	
                101%
      - 102%

              	
                9.0%

              
	
                102%
      - 103%

              	
                10.5%

              
	
                103%
      - 104%

              	
                12.0%

              
	
                104%
      - 105%

              	
                13.5%

              
	
                105%
      - 106%

              	
                15.0%

              
	
                Greater
      than 106%

              	
                15.0%

              


      

      

        
          
             


          

          
             


            
              

            

          

          
             


          

        



    

    It is
anticipated that the Duration Score Listing query will also support the annuity
line of business sometime during 2008. Therefore, the 24th month
ratio of actual persistency to expected (i.e. pricing) persistency as reported
in the Duration Score Listing query for Annuity business will also serve as the
measure for the Annuity persistency component of the Program. The bonus
percentage corresponding with the Annuity persistency levels achieved in 2008
will be applied to each Domestic Marketing officer’s base salary in accordance
with the following grid:

    
 

    
      
        	
                Annuity

                 Persistency

              	
                Bonus
      %

              
	
                Less
      than 96%

              	
                0%

              
	
                96%
      – 97%

              	
                1.5%

              
	
                97%
      – 98%

              	
                3.0%

              
	
                98%
      – 99%

              	
                4.5%

              
	
                99%
      – 100%

              	
                6.0%

              
	
                100%
      - 101%

              	
                7.5%

              
	
                101%
      - 102%

              	
                9.0%

              
	
                102%
      - 103%

              	
                10.5%

              
	
                103%
      - 104%

              	
                12.0%

              
	
                104%
      - 105%

              	
                13.5%

              
	
                105%
      - 106%

              	
                15.0%

              
	
                Greater
      than 106%

              	
                15.0%

              


      



    Assuming
an officer salary of $100,000 and 2008 persistency ratios of 92.2% for Life
business and 102.42% for Annuity business, the officer’s 2008 persistency bonus
component under the Program would be $13,500 ($100,000 x 3.0% for Life business
plus $100,000 x 10.5% for Annuity business).

    


    Expense Component
(15%):

    


    The
expense component of the program is based upon the ratio of actual expenses to
target premium sales. For purposes of this ratio, annuity target premium is
defined as 7.5% of total placed premium. Actual expenses include all cost center
expenses with the exception of bonuses paid, agent health claims, agent reserve
balance changes, and sales conference expenses.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Based
upon the actual ratio achieved, the corresponding bonus percentage based upon
the following chart will be applied to 100% of each Domestic Marketing officer’s
base salary:

     

    
      


      
        	
                 Ratio
      of Expense/

                Target
      Premium

              	
                Bonus
      %

              
	
                Less
      than 3.90%

              	
                30.0%

              
	
                3.90
      % to 4.05%

              	
                27.0%

              
	
                4.05%
      to 4.20%

              	
                24.0%

              
	
                4.20%
      to 4.35%

              	
                21.0%

              
	
                4.35%
      to 4.50%

              	
                18.0%

              
	
                4.50%
      to 4.65%

              	
                15.0%

              
	
                4.65%
      to 4.80%

              	
                12.0%

              
	
                4.80%
      to 4.95%

              	
                9.0%

              
	
                4.95%
      to 5.10%

              	
                6.0%

              
	
                5.10%
      to 5.25%

              	
                3.0%

              
	
                More
      than 5.25%

              	
                0.0%

              


      

      
 

    

    Assuming
actual expenses of $2.3 million, life target premium sales of $14.1 million, and
annuity total placed premium of $470 million, the calculated ratio would be
4.66% ($2.3 million divided by the sum of $14.1 million life target sales and
$49.35 million annuity ($470 million times 7.5%)). The officer’s 2008 expense
management bonus component under the Program, assuming a $100,000 base salary,
would be $12,000 ($100,000 x 12%).

    


    From the
above examples, the officer with a $100,000 base salary would receive a 2008
bonus under the program of 90.5% or $90,500 ($65,000 sales plus $13,500
persistency plus $12,000 expense management) reflecting persistency, expense
management and sales below “par”. See “Administration” for further guidelines
when the bonus percentage exceeds 100%.

    


    Administration:

    


    Bonus
amounts under the program will be calculated and advanced quarterly based upon
actual results. However, bonus advances will be limited to 100% of participant
base salary even if actual results to-date exceed 100%. In the event that actual
year-to-date results are below minimum Program performance factor levels, the
Company may, at its discretion, suspend the bonus
advance payments until such time as the year-to-date results reach the minimum
Program performance levels. Bonus amounts paid year-to-date will not be recouped
from the participants in the event of suspension of quarterly payments except at
the end of the Program year if unearned.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    If at the
end of the year the aggregate bonus percentage exceeds 100%, the incremental %
above 100% will be applied to the base salaries of all Domestic Marketing
Officers (weighted for the portion of the calendar year each participant was
employed by the Company) to determine a dollar amount to be put into a “pool”.
The pool amount will be allocated based upon the recommendation of the Domestic
Chief Marketing Officer and as approved by the Company President. The
recommendation of the pool allocation by the Chief Marketing Officer must be
submitted to the Company President by the end of the January 2009. The pool
amount will be paid out quarterly in the following calendar year (i.e. 2009).
Participants must be currently employed by the Company in order to receive pool
payments. In other words, unpaid pool bonuses will be forfeited by participants
upon termination from the Company. Amounts forfeited by terminated participants
will remain the property of the Company and will not be redistributed among the
remaining participants.

    


    If
employment with the Company is terminated during calendar 2008 for any reason
other than “termination for cause” by NWL, the 2008 bonus amount paid at
termination will be based upon the current year-to-date bonus % (not to exceed
100%) and the prorated percentage of the calendar year that services were
rendered to the Company. In the event of death, the bonus amount will be paid to
the individual’s spouse, and if the individual’s spouse is also not living at
that time, then to the individual’s children.

    


    The
Program, its terms, and its administration are at the complete discretion of the
Company President and/or Compensation and Stock Option Committee (“Compensation
Committee”) of the Board of Directors and may be changed or revoked at any time
without the consent of the participants. This includes, among other things,
amendment of the terms, targets, and other features of the Program as the
Company President and/or Compensation Committee sees fit. Accordingly, this
Program does not constitute a legal and binding obligation of the Company to
perform.

    


    All
amounts paid to participants under this program will be excluded when
determining benefits under the Company’s pension, 401(k), and other benefit
programs.

    


    


    


    August
2008