Exhibit 10(a)


 


PROTECTIVE LIFE CORPORATION


ANNUAL INCENTIVE PLAN


(Effective as of January 1, 2002)


 


1.                                       Purpose.


 


The
purposes of the Plan are to enable the Company and its Subsidiaries to attract,
retain, motivate and reward qualified executive officers and key employees by
providing them with the opportunity to earn competitive compensation directly
linked to the Company’s performance.  The
Plan is designed to assure that amounts paid to certain executive officers of
the Company will not fail to be deductible by the Company for Federal income
tax purposes because of the limitations imposed by Section 162(m).


 


2.                                       Definitions.


 


Unless
the context requires otherwise, the following words as used in the Plan shall
have the meanings ascribed to each below, it being understood that masculine,
feminine and neuter pronouns are used interchangeably and that each comprehends
the others.


 


(a)                                  “Board” shall mean the Board of Directors of
the Company.


 


(b)                                 “Committee” shall mean the Compensation and
Management Succession Committee of the Board (or such other committee of the
Board that the Board shall designate from time to time) or any subcommittee
thereof comprised of two or more directors each of whom is an “outside director”
within the meaning of Section 162(m).


 


(c)                                  “Company” shall mean Protective Life
Corporation.


 


(d)                                 “Covered Employee” shall have the meaning set
forth in Section 162(m).


 


(f)                                    “Participant” shall mean (i) each executive
officer of the Company and (ii) each other key employee of the Company or a
Subsidiary who the Committee designates as a participant under the Plan.


 


(g)                                 “Plan” shall mean the Protective Life
Corporation Annual Incentive Plan, as set forth herein and as may be amended
from time to time.


 


(h)                                 “Section 162(m)” shall mean Section 162(m)
of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.


 


3.                                       Administration.


 


The
Committee shall administer and interpret the Plan, provided that, in no
event, shall the Plan be interpreted in a manner which would cause any amount
payable under the Plan to any Covered Employee to fail to qualify as
performance-based compensation under Section 162(m).  The Committee shall establish the performance
objectives for any calendar year in accordance with Section 4 and certify
whether such performance objectives have been obtained.  Any determination made by the Committee under
the Plan shall be final and conclusive. 
The Committee may employ such legal counsel, consultants


 





















 


and
agents (including counsel or agents who are employees of the Company or a
Subsidiary) as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant or agent and
any computation received from such consultant or agent.  All expenses incurred in the administration
of the Plan, including, without limitation, for the engagement of any counsel,
consultant or agent, shall be paid by the Company.  No member or former member of the Board or
the Committee shall be liable for any act, omission, interpretation,
construction or determination made in connection with the Plan other than as a
result of such individual’s willful misconduct.


 


4.                                       Bonuses.


 


(a)                                  Performance Criteria.  On
or before April 1 of each year (or such other date as may be required or
permitted under Section 162(m)), the Committee shall establish the
performance objective or objectives that must be satisfied in order for a
Participant to receive a bonus for such year. 
Any such performance objectives will be based upon the relative or
comparative achievement of one or more of the following criteria, as determined
by the Committee:  (i) net income;
(ii) operating income; (iii) income per share; (iv) economic value added;
(v) return on equity; (vi) total return; (vii) division or subsidiary income;
(viii) division or subsidiary sales or revenues; (ix) division or subsidiary
economic value added; or (x) other reasonable bases provided  that
to the extent required to qualify compensation paid to certain executive
officers under the Plan the performance criteria shall be based on one or more
of the criteria listed in (i) through (ix) above.


 


(b)                                 Maximum Amount Payable.  If
the Committee certifies that any of the performance objectives established for
the relevant year under Section 4(a) has been satisfied, each Participant
who is employed by the Company or one of its Subsidiaries on the last day of
the calendar year for which the bonus is payable shall be entitled (subject to
the provisions of Section 4(c) hereof) to receive an annual bonus equal to
200% of such Participant’s base salary up to a maximum of $2,000,000.  Unless the Committee shall otherwise
determine, if a Participant’s employment terminates for any reason (including,
without limitation, his death, disability or retirement under the terms of any
retirement plan maintained by the Company or a Subsidiary) prior to the last
day of the calendar year for which the bonus is payable, such Participant shall
receive an annual bonus equal to the amount the Participant would have received
as an annual bonus award if such Participant had remained an employee through
the end of the year multiplied by a fraction, the numerator of which is the
number of days that elapsed during the calendar year in which the termination
occurs prior to and including the date of the Participant’s termination of
employment and the denominator of which is 365.


 


(c)                                  Negative Discretion. 
Notwithstanding anything else contained in Section 4(b) to the
contrary, the Committee shall have the right, in its absolute discretion, (i)
to reduce or eliminate the amount otherwise payable to any Participant under Section 4(b)
based on individual performance or any other factors that the Committee, in its
discretion, shall deem appropriate and (ii) to establish rules or procedures
that have the effect of limiting the amount payable to each Participant to an
amount that is less than the maximum amount otherwise authorized under Section 4(b).


 


(d)                                 Affirmative Discretion. 
Notwithstanding any other provision in the Plan to the contrary, (i) the
Committee shall have the right, in its discretion, to pay to any Participant
who is not a Covered Employee an annual bonus for such year in an amount up to
the maximum bonus payable under Section 4(b), based on individual
performance or any other criteria that the Committee deems appropriate and (ii)
in connection with the hiring of any person who is or becomes a Covered
Employee, the Committee may provide for a minimum bonus amount in any calendar
year, regardless of whether performance objectives are attained.


 


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5.                                       Payment.


 


Except
as may be determined pursuant to the terms of Section 4(e) or as otherwise
provided hereunder, payment of any bonus amount determined under Section 4
shall be made to each Participant as soon as practicable after the Committee
certifies that one or more of the applicable performance objectives have been
attained (or, in the case of any bonus payable under the provisions of Section 4(d),
after the Committee determines the amount of any such bonus).


 


6.                                       General Provisions.


 


(a)                                  Effectiveness of the Plan. 
Subject to the approval by the holders of the Common Stock at the 2002
Annual Meeting of Stockholders, the Plan, as amended, shall be effective with
respect to calendar years beginning on or after January 1, 2002, and
ending on or before December 31, 2011, unless the term hereof is extended
by action of the Board.


 


(b)                                 Amendment and Termination. 
Notwithstanding Section 6(a), the Board or the Committee may at any
time amend, suspend, discontinue or terminate the Plan; provided, however, that
no such amendment, suspension, discontinuance or termination shall adversely
affect the rights of any Participant in respect of any calendar year which has
already commenced and no such action shall be effective without approval by the
stockholders of the Company to the extent necessary to continue to qualify the
amounts payable hereunder to Covered Employees as performance-based
compensation under Section 162(m).


 


(c)                                  Designation of Beneficiary.  Each
Participant may designate a beneficiary or beneficiaries (which beneficiary may
be an entity other than a natural person) to receive any payments which may be
made following the Participant’s death. 
Such designation may be changed or canceled at any time without the
consent of any such beneficiary.  Any
such designation, change or cancellation must be made in a form approved by the
Committee and shall not be effective until received by the Committee.  If no beneficiary has been named, or the
designated beneficiary or beneficiaries shall have predeceased the Participant,
the beneficiary shall be the Participant’s spouse or, if no spouse survives the
Participant, the Participant’s estate. 
If a Participant designates more than one beneficiary, the rights of
such beneficiaries shall be payable in equal shares, unless the Participant has
designated otherwise.


 


(d)                                 Delegation.  Except where required by Section 162(m),
the Committee may delegate authority for establishing performance goals and for
the certification of the achievement of such goals for Participants who are not
executive officers of the Company to the Chief Executive Officer or President.


 


(e)                                  No Right of Continued Employment. 
Nothing in this Plan shall be construed as conferring upon any
Participant any right to continue in the employment of the Company or any of
its Subsidiaries.


 


(f)                                    Interpretation. 
Notwithstanding anything else contained in this Plan to the contrary, to
the extent required to so qualify any award as other performance based
compensation within the meaning of Section 162(m) (4) (C) of the Code, the
Committee shall not be entitled to exercise any discretion otherwise authorized
under this Plan (such as the right to accelerate vesting without regard to the
achievement of the relevant performance objectives) with respect to such award
if the ability to exercise such discretion (as opposed to the exercise of such
discretion) would cause such award to fail to qualify as other performance
based compensation.


 


(g)                                 No Limitation to Corporation Action. 
Nothing in this Plan shall preclude the Committee or the Board, as each
or either shall deem necessary or appropriate, from authorizing the payment to
the


 


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eligible
employees of compensation outside the parameters of the Plan, including,
without limitation, base salaries, awards under any other plan of the Company
and/or its Subsidiaries (whether or not approved by stockholders), any other
bonuses (whether or not based on the attainment of performance objectives) and
retention or other special payments, provided that, if the stockholders
of the Company do not approve the Plan at the first annual meeting of
stockholders following the adoption of the Plan, the Plan set forth herein
shall not be implemented.


 


(h)                                 Nonalienation of Benefits. 
Except as expressly provided herein, no Participant or beneficiary shall
have the power or right to transfer, anticipate, or otherwise encumber the
Participant’s interest under the Plan. 
The Company’s obligations under this Plan are not assignable or
transferable except to (i) a corporation which acquires all or substantially
all of the Company’s assets or (ii) any corporation into which the Company may
be merged or consolidated.  The provisions
of the Plan shall inure to the benefit of each Participant and the Participant’s
beneficiaries, heirs, executors, administrators or successors in interest.


 


(i)                                     Withholding.  Any amount payable to a
Participant or a beneficiary under this Plan shall be subject to any applicable
Federal, state and local income and employment taxes and any other amounts that
the Company or a Subsidiary is required at law to deduct and withhold from such
payment.


 


(j)                                     Severability.  If
any provision of this Plan is held unenforceable, the remainder of the Plan
shall continue in full force and effect without regard to such unenforceable
provision and shall be applied as though the unenforceable provision were not
contained in the Plan.


 


(k)                                  Governing Law.  The
Plan shall be construed in accordance with and governed by the laws of the
State of Delaware, without reference to the principles of conflict of laws.


 


(l)                                     Headings.  Headings are inserted in this
Plan for convenience of reference only and are to be ignored in a construction
of the provisions of the Plan.


 


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