exhibitb10bz.htm


    EXHBIBIT
10(bz)

    


    National Western Life
Insurance Company

    2009 SENIOR VICE PRESIDENT
BONUS PROGRAM

    


    


    The Bonus
Program (“Program”) is designed to reward Senior Vice Presidents for their
performance in assisting the Company in achieving pre-determined sales targets
while managing to 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) expense management, and (3) overall Company
profitability.

    


    Each of
the above 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 7.5% for sales
performance, 7.5% for expense management performance, and 15% for profitability,
or an overall par percentage of 30%. Actual results compared to the targets can
either increase or decrease each of these individual percentages as explained in
the following sections. However, the total bonus percentage cannot exceed
30%.

    


    Sales
Component:

    


    The sales
component of the Program is further subdivided between Life production and
Annuity production. For 2009, the bonus sales goals are:

    


    
      	
              ●

            	
              International
      Life -- $27,000,000 net placed annualized target
  premium

            


    

    
      	
              ●

            	
              Domestic
      Life -- $7,700,000 net placed annualized target
  premium

            


    

    
      	
              ●

            	
              Annuities
      -- $382,500,000 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 each sales production levels achieved in 2009 will be applied
to 100% of the executive officer’s base salary in accordance with the following
grid:

    


    
      
        	 
      	 
      	
                Domestic
      Life

              	 
      	 
      	 
      
	
                Intl
      Life

              	
                Bonus

              	
                Placed
      Target

              	
                Bonus

              	
                Annuities
      Placed

              	
                Bonus

              
	
                Placed
      Target

              	
                %

              	
                 (1)

              	
                %

              	
                Premium

              	
                %

              
	
                $23,100,000

              	
                2.00%

              	
                $6,200,000

              	
                2.00%

              	
                $309,800,000

              	
                2.00%

              
	
                $25,000,000

              	
                2.25%

              	
                $6,900,000

              	
                2.25%

              	
                $344,200,000

              	
                2.25%

              
	
                $27,000,000

              	
                2.50%

              	
                $7,700,000

              	
                2.50%

              	
                $382,500,000

              	
                2.50%

              
	
                $29,000,000

              	
                2.75%

              	
                $8,400,000

              	
                2.75%

              	
                $420,800,000

              	
                2.75%

              
	
                $31,200,000

              	
                3.00%

              	
                $9,300,000

              	
                3.00%

              	
                $462,800,000

              	
                3.00%

              


      

    

    


    (1) Does
not include California 1st year
premium.


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    The level
shaded in gray represents the Company’s sales goals for each segment for
purposes of the bonus program and represents the par performance level. If the
actual results attain this level, the executive officer would be eligible to
receive a bonus of 7.5% (2.5% for each line of business) of base
salary.

    


    Expense Management
Component:

    


    The
expense component of the program is based upon a ratio of actual expenses to a
sales unit of production. For purposes of this ratio, the sales unit of
production will be based upon target premium. Annuity sales target premium will
be assumed to be equal to 7.5% of total placed annuity premium.

    


    Assuming
“par” sales goals of $27.0 million in International Life sales, $7.7 million in
Domestic Life sales (not including California 1st year
premium), and $382.5 million in total annuity sales, the par sales production
for purposes of the expense management component is $63.4 million. The submitted
expense budget based upon these sales goals is approximately $49.2 million.
Accordingly, the par ratio of expenses to sales production is roughly 77%. Based
upon this relationship, the bonus percentage corresponding with the actual
expense ratio achieved in 2009 will be applied to 100% of each executive
officer’s base salary in accordance with the following grid:

    


    
      
        	
                Expense/Sales
      Ratio

              	
                Bonus
      %

              
	
                83%

              	
                5.5%

              
	
                80%

              	
                6.5%

              
	
                77%

              	
                7.5%

              
	
                74%

              	
                8.5%

              
	
                71%

              	
                9.5%

              


      

    

    


    For
purposes of the expense component, marketing and executive officer bonuses will
be excluded. In addition, special consideration may be given at the discretion
of the  Compensation and Stock Option Committee of the Board of
Directors (“Compensation Committee”) for items of an unusual and/or
non-recurring nature (i.e. excess pension contributions) that are beyond the
control of Company management.

    


    Company Profitability
Component:

    


    The
profitability component of the program is based upon GAAP operating earnings as
a percentage of beginning stockholders’ equity. GAAP operating earnings are net
of federal income taxes and exclude realized gains and losses on investments.
The amounts used for purposes of the bonus calculation will be the figures
audited by the Company’s independent auditors.

    



    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    The bonus
percentage corresponding with the actual GAAP operating earnings achieved in
2009 relative to beginning of the year stockholders’ equity will be applied to
100% of each executive officer’s base salary in accordance with the following
grid:

    


    
      
        	
                GAAP
      Profitability

              	
                Bonus
      %

              
	
                7.5%
      of Stockholders’ Equity

              	
                5.0%

              
	
                8.5%
      of Stockholders’ Equity

              	
                10.0%

              
	
                9.5%
      of Stockholders’ Equity

              	
                15.0%

              
	
                10.5%
      of Stockholders’ Equity

              	
                17.0%

              
	
                11.5%
      of Stockholders’ Equity

              	
                19.0%

              


      

    

    


    Example:

    


    Assume
the following results for 2009:

     

    
      
        
          
            
              
                	 
      ●	
                        International
      Life placed target premium sales

                      	
                        $

                      	
                        30,000,000

                      
	 
      ●	
                        Domestic
      Life placed target premium sales

                      	
                        $

                      	
                        7,000,000

                      
	 
      ●	
                        Annuity
      placed total premium sales

                      	
                        $

                      	
                        400,000,000

                      
	 
      ●	
                        Actual
      budget center expenses

                      	
                        $

                      	
                        49,700,000

                      
	 
      ●	
                        GAAP
      operating earnings

                      	
                        $

                      	
                        80,000,000

                      
	 
      ●	
                        Beginning
      GAAP stockholders’ equity

                      	
                        $

                      	
                        990,000,000

                      


              

            

             

          

        

      

    

    Based
upon the above charts, the executive officer’s 2009 bonus would be calculated as
follows:

    


    
      
        
          
            
              
                
                  	 
      	
                          Sales Component

                        	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          International
      Life sales bonus %

                        	 
      	
                          2.75%

                        
	 
      	
                          Domestic
      Life sales bonus %

                        	 
      	
                          2.25%

                        
	 
      	
                          Annuity
      s Total sales bonus %ales bonus %

                        	 
      	
                          2.50%

                        
	 
      	 
      	 
      	
                          7.50%

                        
	 
      	 
      	 
      	 
      
	 
      	
                          Expense Management
Component

                        	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          Actual
      budget center expenses

                        	
                          $

                        	
                          49,700,000

                        
	 
      	 
      	 
      	 
      
	 
      	
                          Sale
      Production Amount:

                        	 
      	 
      
	 
      	
                               International
      Life target premium

                        	
                          $

                        	
                          30,000,000

                        
	 
      	
                               Domestic
      Life target premium

                        	 
      	
                          7,000,000

                        
	 
      	
                               Annuity
      target ($400m @ 7.5%)

                        	 
      	
                          30,000,000

                        
	 
      	 
      	
                          $

                        	
                          67,000,000

                        
	 
      	 
      	 
      	 
      
	 
      	
                          Ratio
      of Actual/Sales Production

                        	 
      	
                          74.2%

                        
	 
      	
                          Expense
      management bonus %

                        	 
      	
                          8.5%

                        
	 
      	 
      	 
      	 
      


                

              

            

          

        

      

    

    



    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    


    
      
        
          
            
              	 
      	
                      Company Profitability
    Component

                    	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                      GAAP
      operating earnings

                    	
                      $

                    	
                      80,000,000

                    
	 
      	
                      Beginning
      stockholders’ equity

                    	
                      $

                    	
                      990,000,000

                    
	 
      	 
      	 
      	 
      
	 
      	
                      Ratio
      of earnings/equity

                    	 
      	
                      8.1%

                    
	 
      	
                      Company
      profitability bonus

                    	 
      	
                      5.0%

                    
	 
      	 
      	 
      	 
      
	 
      	
                      Total Bonus %

                    	 
      	 
      
	 
      	
                      Sales
      component

                    	 
      	
                      7.5%

                    
	 
      	
                      Expense
      management component

                    	 
      	
                      8.5%

                    
	 
      	
                      Company
      profitability component

                    	 
      	
                      5.0%

                    
	 
      	
                      Total

                    	 
      	
                      21.0%

                    


            

          

        

      

    

    


    Administration:

    


    Bonus
amounts under the program will be earned and paid at the end of the Company’s
calendar year upon the availability of audited GAAP financial statements. The
Company’s independent auditors will also review the calculation of the bonus %
for compliance with the details of this Program as part of the Company’s audited
financial statements.

    


    If
employment with the Company is terminated for any reason other than “termination
for cause” by NWL, the bonus amount paid at termination will be based upon the
pro rated 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 there is no spouse, then to the individual’s
children.

    


    Participants
in the Program are designated by the Compensation Committee. The Program, its
terms, and its administration are at the complete discretion of the Compensation
Committee 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 Compensation Committee sees
fit. Accordingly, this Program does not constitute a legal and binding
obligation of the Company to perform.

    


    


    


    


    


    


    


    


    February
2009


    
      
         


      

      
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