Exhibit 10.8


 


Deferred Compensation Plan

for Non-Employee Directors of

Principal Financial Group, Inc.

(Amended and Restated as of January 1, 2005)


 


1.                                       Eligibility; Administration


 


(a)                                  Restatement Date. 
Each member of the Board of Directors (the “Board”) of Principal Financial Group, Inc., a Delaware
corporation (the “Company”), who
was a participant in the Deferred Compensation Plan for Non-Employee Directors
of Principal Financial Group, Inc. (the “Plan”)
on December 31, 2004 shall continue to be a participant in the Plan, and
all amounts then standing to the credit of each such participant shall be
administered in accordance with the terms hereof, based on any elections in
effect on December 31, 2004 (or as the same may be amended in accordance
with the terms hereof).


 


(b)                                 Post-2004 Eligibility. 
Each member of the Board who is not an employee of the Company or a
subsidiary or affiliate of the Company (each, a “Director”), including a Director who takes office after the
restatement of the Plan, shall be eligible to participate in the Plan, and
shall become a participant by making a timely election to defer compensation
for services as a Director in accordance with the requirements of the Plan.


 


(c)                                  Compensation Subject to Deferral. 
The compensation which may be deferred pursuant to this Plan includes (i) all
or any part of the annual retainer(s) for Board and/or Board committee service
to which the Director would otherwise be entitled for the period subject to an
applicable deferral election (the “Deferral
Period”) and (ii) all or any part of the Board and/or Board
Committee meeting fees to which such Director would otherwise be entitled to
receive during such Deferral Period.


 


(d)                                 Administration. 
The Plan shall be administered by the Nominating and Governance
Committee of the Board (“Committee”)
or such other committee of the Board as the Board shall designate from time to
time.  The Committee shall have full
authority to interpret and administer the Plan, to establish, amend, and
rescind rules and regulations relating to the Plan, to provide for
conditions deemed necessary or advisable to protect the interests of the
Company and to make all other determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes, provided however that no Committee member may
participate in any decision with respect to such member’s benefits or
entitlements under the Plan, unless such decision applies generally to all
non-employee Directors.  Determinations,
interpretations, or other actions made or taken by the Committee shall be
final, binding, and conclusive for all purposes and upon all persons.


 


2.                                       Participation


 


(a)                                  Deferral Election. 
Prior to 2005, a Director could elect to defer receipt of eligible
compensation to which the Director would otherwise be entitled for serving on
the Board and/or a Board committee for the approximate one-year period that
commenced upon an annual meeting of stockholders and concluded just prior to
the annual meeting of stockholders held in the following calendar year (such
period herein referred to as a “Board Year”).  With respect to compensation payable in
respect of services during 2005 and prior to the end the Board Year ending just
prior to the start of the annual meeting of shareholders in 2005, the elections
of any Director in effect on December 31, 2004 with respect to such Board
Year shall continue in effect.  For
compensation payable in respect of services in 2005 after the end of such Board
Year, a Director may elect to defer all or a portion of such compensation at
any time on or before March 15, 2005. 
For compensation payable in respect of services after 2005, any election
to defer all or a portion of such compensation must be made in the calendar
year preceding the calendar year in which such services are to be
performed.  Any amounts deferred by a


 

















 


Director hereunder
shall be credited to a book entry account established for such Director (the “Account”), and the aggregate amount
deferred by a Director is hereinafter referred to as “Fees”.


 


Any person who
shall become a Director and who was not a Director of the Company (i) immediately
prior to 2005 (with respect to compensation payable in respect of the Board
Year ending in 2005), (ii) on March 15, 2005 (with respect to
compensation payable in respect of 2005 services after the end of the Board
Year ending in 2005) or (iii) immediately prior to the beginning of the
then current calendar year (with respect to compensation payable for services
after 2005) may elect, not later than 30 days after having become a Director
and before the Director becomes entitled to receive such amounts, to defer
payment of all or any part of the Director’s proportionate annual retainer(s)
and any and all meeting fees for Board and/or Board committee service to which
such Director would otherwise be entitled for the remainder of the then current
Board Year or calendar year, as the case may be.


 


(b)                                 Form and Duration of Deferral
Election.  An election to participate in the Plan shall
be made by the applicable date specified above and by written notice executed
by the Director and filed with the Vice President – Human Resources (or higher
level officer designated by the Committee, “Human
Resources Officer”).  Such
election shall continue in effect until the Director terminates such election
by written notice filed with the Human Resources Officer.  Any such termination shall become effective
as with respect to the calendar year following the calendar year in which such
notice of termination is given, and only with respect to compensation payable
for services as a Director after the calendar year in which such notice is
given.  Amounts credited to the Director’s
Account prior to the effective date of the termination of such election to
participate in the Plan shall not be affected by such termination and shall be
distributed only in accordance with the terms of the Plan.


 


(c)                                  Renewal.  A Director
who has terminated an election to participate in the Plan may thereafter file
another election to participate with respect to Fees payable for services to be
performed in the calendar year subsequent to the calendar year in which such
election is filed.


 


(d)                                 Adjustment of Amount Deferred. 
Prior to the beginning of any calendar year, a Director participating in
the Plan may file another written notice with the Human Resources Officer
electing to change the amount of Fees to be deferred for services as a Director
in such next calendar year.  Amounts
credited to the Director’s Account in respect of services performed prior to
such next calendar year shall not be affected by such change and shall be
distributed only in accordance with the terms of the Plan.


 


3.                                       Directors’ Accounts


 


(a)                                  Additions to Account. 
The Company shall maintain a separate Account for each Director who has
elected to participate in the Plan, and shall make additions to and
subtractions from such Account as provided in this Section 3.  Compensation allocated to a Director’s
Account pursuant to this Section 3 shall be credited to such Account as of
the date such compensation would otherwise have been paid to the Director.


 


(b)                                 Investment Election. 
Each Director shall from time to time designate on a form approved by
the Company whether, and to what extent, Fees shall be deemed invested in Units
or in one or more Phantom Funds, as each such term is defined below.  With respect to any portion of the Director’s
Account that a Director does not to elect to have deemed invested in one or
more Phantom Funds (or if any such election ceases to be effective for any
reason), such Director shall be deemed to have elected that that portion of his
or her Account shall be deemed invested in Units.  The Committee may, in its discretion, (i) establish
minimum amounts (in terms of dollar amounts or a percentage of a Director’s
Account) that may be allocated to any Phantom Fund, (ii) establish rules regarding
the time at which any such election (or any change in such election permitted
under Section 3(e)) shall become effective, (iii) establish restrictions
regarding the number of changes that may be made between Units and Phantom
Funds, or between Phantom Funds, in any given period and (iv) permit
different designations with respect to a Director’s existing Account balance
and amounts to be credited to such Account under Section 3(e) after
the date the election form is filed.


 

















 


(c)                                  Units.  A Director
may (or pursuant to Section 3(b) shall be deemed to) elect that all
or a portion of the Fees credited to a Director’s Account shall be deemed to be
invested in a theoretical number of units (each, a “Unit”) in respect of Common Stock, par value $0.01 per share,
of the Company (“Company Stock”),
calculated to the nearest ten thousandth of a Unit, produced by dividing the
dollar amount of such Fees by the price of the last trade, regular way, in the
Common Stock on the New York Stock Exchange (or, if at the relevant time, the
Common Stock is not listed to trade on the New York Stock Exchange, on such
other recognized quotation system on which the trading prices of the Common
Stock are then quoted) (the “Market Value Per
Share”) on the date such Fees would otherwise have been paid.


 


(d)                                 Designation of Phantom Investment Funds. 
Effective as of any date after August 31, 2005 as it shall
determine, the Committee shall select one or more mutual funds or other
investment vehicles in addition to Units (the “Phantom Funds”) which a Director may designate (in lieu of
Units) to determine the hypothetical investment experience of each Director’s
Account under the Plan.


 


(e)                                  Change in Investment Designation. 
Effective as of the second business day (or such earlier or later time
as the Human Resources Officer shall determine) after instructions have been
given to the Company or such agent as the Company shall designate in accordance
with the procedures identified to the Director in writing from time to time, a
Director may change the investment designation with respect to all or any
portion of the Director’s Account form Units to any Phantom Fund, from any
Phantom Fund to another Phantom Fund or from a Phantom Fund to Units.  Any such change shall comply with all rules applicable
with respect to any initial designation of the manner by which such Account is
to be deemed invested between Units and the Phantom Funds and any other
addition restrictions related to such transfers that the Human Resources
Officer may impose from time to time.


 


(f)                                    Crediting of Phantom Investment
Experience.


 


(i)                                     Phantom Funds. 
As of the last day of each calendar month (or such other time or times
as the Human Resources Officer shall establish from time to time), each
Director’s Account shall be credited or debited, as the case may be, with an
amount equal to the net investment gain or loss which such Director would have
realized had he actually invested in each Phantom Fund an amount equal to the
portion of the Director’s Account designated as deemed invested in such Phantom
Fund during that calendar month (or such other period as may have been
established by the Human Resources Officer).


 


(ii)                                  Units.  Whenever a
dividend is declared with respect to the Common Stock, a Director’s Account
shall also be credited as of the payment date with a number of additional Stock
Units computed as follows: (x) the number of Stock Units in the
Director’s Account multiplied by any dividend payable in cash or property other
than Common Stock declared by the Company on a share of Common Stock, divided
by the Market Value Per Share on the related dividend payment date and/or (y) the
number of Stock Units in the Director’s Account multiplied by any dividend
payable in Common Stock declared by the Company on a share of Common
Stock.  In the event of any change in the
Common Stock by reason of any merger, consolidation, reorganization,
recapitalization, stock split, combination or exchange of shares, or any other
similar change affecting the Common Stock, other than a stock dividend as
provided above, the number of Stock Units credited to a Director’s Account
shall be appropriately adjusted in such manner as determined by the Committee.


 


(h)                                 No
Actual Investment.  Notwithstanding
anything else in this Section 3 to the contrary, no amount standing to the
credit of any Director’s Account shall be set aside or invested in any actual
fund on behalf of such Director; provided, however, that nothing in this Section 3(h) shall
be deemed to preclude the company from making investments for its own account
in any Phantom Funds (whether directly or through a grantor trust) to assist it
in meeting its obligations to the Directors hereunder.


 

















 


4.                                       Distribution from Accounts


 


(a)                                  Form of Distribution Election. 
At the time a Director makes an initial deferral election pursuant to Section 2(a),
the Director shall also file with the Human Resources Officer a written
election with respect to the distribution of the value of the Units credited to
the Account.  A Director may elect to
receive the distribution of the value of such Units in one lump-sum payment, or
a Director may elect to receive a distribution of the value in such number of
annual installments (not to exceed ten annual installments) as the Director may
designate.  Any lump-sum payment or the
first installment shall be paid on (i) the first business day of the
calendar year immediately following the year in which the Director ceases to be
a Director of the Company or (ii) on the first business day of any
calendar year as the Director shall specify in his or her election.  Any subsequent installments shall be paid on
the first business day of each succeeding installment period until the entire
amount credited to the Account and subject to that distribution election shall
have been paid.


 


(b)                                 Amendment of Distribution Election. 
A Director participating in the Plan may, at any time, and from time to
time, file a written notice to further delay the timing and/or change the form
of the distribution from the Director’s Account as provided in Section 4(a);
provided that, prior to any such change in the form of distribution, the
Committee may limit the number of annual installments that may be payable
pursuant to an election under this Section 4(b) to less than
ten.  To be effective, an election to
further delay the timing and/or change the form of distribution with respect to
the Account must be received by the Human Resources Officer at least twelve
(12) months prior to the date of distribution under the previously-filed
election for such distribution and, to the extent that such deferral election
pertains to amounts in respect of Fees deferred after 2004, must defer the date
on which the distribution of amounts would have been made from the Director’s
Account for a period of not less than five years.


 


(c)                                  Distribution of Units in Stock. 
Unless the Committee otherwise directs that payment of the value of the
Director’s Units be made in whole or in part in cash based on the Market Value
Per Share on the last trading date immediately preceding the date on which such
distribution is to be made, any distribution to be made to a Director or to the
beneficiary of a deceased Director with respect to Units shall be made in
shares of the Common Stock, with one share of such Common Stock to be
distributed in respect of each Unit then distributable from the Account; provided, however, that no fractional shares
shall be issued.  Any fraction of a Unit
distributable from the Director’s Account shall be settled for a cash payment
equal to the product of such fractional interest and the Market Value Per Share
on the last trading date immediately preceding the date on which such
distribution is to be made.


 


(d)                                 Distributions in Respect of Phantom Funds. 
Payment of that portion of the Director’s Account deemed invested in any
Phantom Fund shall be made in cash, based on the redemption value of an
interest in such Phantom Fund on the last business day immediately preceding
the date on which such distribution is to be made.


 


(e)                                  Installment Payments. 
If a Director elects to receive distribution of the Director’s Account
in installments, the amount distributable with respect to each installment
shall be equal to the product of (i) the total value of the Director’s
Account times (ii) a fraction (the “Installment
Fraction”), the numerator of which is one (1) and the
denominator of which is the total number of installments (including the then
current installment) remaining to be paid at that time.  If all or any portion of the Director’s
Account is invested in Units, the amount of each installment attributable to
Units shall be equal to the product of the total number of Units in the Account
on the date of such distribution times the Installment Fraction.  If all or a portion of the Director’s Account
is invested in whole or in part in Phantom Funds, the amount of each
installment to be deemed distributed from each Phantom Fund is the value (based
on its redemption value as of the last business day prior to such distribution)
of the portion of the Director’s Account deemed invested in such Phantom Fund
times the Installment Fraction.


 


5.                                       Designation of a Beneficiary


 


A Director may
designate a beneficiary or beneficiaries (which may be an entity other than a
natural person) to receive any payments to be made pursuant to Section 6
hereof upon the Director’s death.  At any
time, and from time to time, any such designation may be changed or canceled by
the Director


 

















 


without the
consent of any beneficiary.  Any such
designation, change or cancellation must be by written notice filed with the
Human Resources Officer.  If a Director
designates more than one beneficiary, any payments made pursuant to Section 6
to such beneficiaries shall be made in equal shares unless the Director has
designated otherwise, in which case the payments shall be made in the
proportions designated by the Director. 
If no beneficiary has been named by a Director, payment shall be made to
the Director’s estate.


 


6.                                       Distribution on Death


 


If the Director
shall die before payment has commenced or all installment payments have been
completed, the total unpaid balance then credited to such Director’s Account
shall be paid to the designated beneficiaries or such Director’s estate in a
lump sum on the first business day of the month immediately following the month
in which the Board receives notice of such Director’s death, or as soon as
reasonably practical following such date.


 


7.                                       Amendment and Termination


 


The Board of
Directors may at any time amend or terminate the Plan; provided no such
amendment or termination shall impair the rights of a Director with respect to
amounts then credited to such Director’s Account under the Plan.


 


8.                                       Miscellaneous


 


(a)                                  The Company shall not fund its liability
for deferred Fees or amounts equal to interest thereon or for any appreciation
in Unit value in any way, the separate memorandum accounts for each Director
electing deferment shall not constitute trusts, and a Director shall have no
claim against the Company or its assets other than as an unsecured general
creditor.


 


(b)                                 The crediting of Units to the Account
pursuant to Section 3 hereof shall not be deemed to create for a Director
any interest in any class of equity securities of the Company.


 


(c)                                  The Human Resources Officer shall provide
a copy of the Plan to each Director together with a form of letter which may be
used, if the Director so elects, to notify the Company of the Director’s
election to defer Fees in accordance with the Plan.


 


(d)                                 Nothing contained herein and no action
taken pursuant hereto will be construed to create a trust or separate fund of
any kind or a fiduciary relationship between the Company and any Director, the
Director’s beneficiary or estate or any other person.  Title to and beneficial ownership of any
funds represented by the Account will at all times remain in the Company; such
funds will continue for all purposes to be a part of the general funds of the
Company and may be used for any corporate purpose.  No person shall, by virtue of the provisions
of this Plan, have any interest whatsoever in any specific assets of the
Company.  To the extent that any person
acquires a right to receive payments from the Company under this Plan, such
right will be no greater than the right of any unsecured general creditor of
the Company.


 


(e)                                  A Director’s right or the right of any
other person to the balance in the Account cannot be assigned, alienated, sold,
garnished, transferred, pledged or encumbered except by a written designation
of beneficiary under this Plan, by written will, or by the laws of descent and
distribution.


 


(f)                                    The Company shall have the right to
deduct from all distributions hereunder any federal, state, foreign or local
taxes or other obligations required by law to be withheld with respect
thereto.  The Company shall also have the
right to delay or defer distributions from a Director’s Account if, and solely
to the extent necessary, to comply with applicable law.


 


On behalf of the Board of Directors of the Company,
this Deferred Compensation Plan for Non-Employee Directors of Principal
Financial Group, Inc. has been executed this 29th day of November, 2005.


 

















 


	
  By:

  	
  /s/ Betsy J. Bernard

  	
   

  
	
   

  	
  Betsy J. Bernard, Chair

  
	
   

  	
  Nominating and Governance Committee