exhibit10bw.htm


    
      

        EXHIBIT
10(bw)

        


        National Western Life
Insurance Company

        2009 EXECUTIVE OFFICER BONUS
PROGRAM

        


        


        The Bonus
Program (“Program”) is designed to reward the Chairman of the Board/Chief
Executive Officer and the President/Chief Operating Officer 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 15% for sales
performance, 15% for expense management performance, and 20% for profitability,
or an overall par percentage of 50%. 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
50%.

        


        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:

        


        
          
            	
                    Intl
      Life

                  	 
      	
                    Domestic

                  	 
      	
                    Annuities

                  	 
      
	
                    Placed

                  	
                    Bonus

                  	
                    Life
      Placed

                  	
                    Bonus

                  	
                    Placed

                  	
                    Bonus

                  
	
                    Target

                  	
                    %

                  	
                    Target  (1)

                  	
                    %

                  	
                    Premium

                  	
                    %

                  
	
                    $23,100,000

                  	
                    3.00%

                  	
                    $6,200,000

                  	
                    3.00%

                  	
                    $309,800,000

                  	
                    3.00%

                  
	
                    $25,000,000

                  	
                    4.00%

                  	
                    $6,900,000

                  	
                    4.00%

                  	
                    $344,200,000

                  	
                    4.00%

                  
	
                    $27,000,000

                  	
                    5.00%

                  	
                    $7,700,000

                  	
                    5.00%

                  	
                    $382,500,000

                  	
                    5.00%

                  
	
                    $29,000,000

                  	
                    6.00%

                  	
                    $8,400,000

                  	
                    6.00%

                  	
                    $420,800,000

                  	
                    6.00%

                  
	
                    $31,200,000

                  	
                    7.00%

                  	
                    $9,300,000

                  	
                    7.00%

                  	
                    $462,800,000

                  	
                    7.00%

                  


          

        

        


        (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 15% (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 (excluding 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%

                    	
                      10.00%

                    
	
                      80%

                    	
                      12.50%

                    
	
                      77%

                    	
                      15.00%

                    
	
                      74%

                    	
                      17.50%

                    
	
                      71%

                    	
                      20.00%

                    


            

          

        

        


        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

                    	
                      10.00%

                    
	
                      8.5%
      of Stockholders’ Equity

                    	
                      15.00%

                    
	
                      9.5%
      of Stockholders’ Equity

                    	
                      20.00%

                    
	
                      10.5%
      of Stockholders’ Equity

                    	
                      25.00%

                    
	
                      11.5%
      of Stockholders’ Equity

                    	
                      30.00%

                    


            

          

        

        


        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 %

                            	 
      	
                              6.0%

                            
	 
      	
                              Domestic
      Life sales bonus %

                            	 
      	
                              4.0%

                            
	 
      	
                              Annuity
      s Total sales bonus %ales bonus %

                            	 
      	
                              5.0%

                            
	 
      	 
      	 
      	
                              15.0%

                            
	 
      	 
      	 
      	 
      
	 
      	
                              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 %

                            	 
      	
                              17.5%

                            
	 
      	 
      	 
      	 
      


                    

                  

                

              

            

          

        

        



        
          
             


          

          
            3

            
              

            

          

          
             


          

        


        


        
          
            
              
                
                  	 
      	
                          Company Profitability
    Component

                        	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          GAAP
      operating earnings

                        	
                          $

                        	
                          80,000,000

                        
	 
      	
                          Beginning
      stockholders’ equity

                        	
                          $

                        	
                          990,000,000

                        
	 
      	 
      	 
      	 
      
	 
      	
                          Ratio
      of earnings/equity

                        	 
      	
                          8.08%

                        
	 
      	
                          Company
      profitability bonus

                        	 
      	
                          10.00%

                        
	 
      	 
      	 
      	 
      
	 
      	
                          Total Bonus %

                        	 
      	 
      
	 
      	
                          Sales
      component

                        	 
      	
                          15.0%

                        
	 
      	
                          Expense
      management component

                        	 
      	
                          17.5%

                        
	 
      	
                          Company
      profitability component

                        	 
      	
                          10.0%

                        
	 
      	
                          Total

                        	 
      	
                          42.5%

                        


                

              

            

          

        

        


        


        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.

        


        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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