Document:

<PAGE>   1
                                                                    EXHIBIT 10.2

                            PRINCIPAL FINANCIAL GROUP
                           LONG-TERM PERFORMANCE PLAN

                 (As Amended and Restated as of January 1, 2001)

                                    ARTICLE I

                                PURPOSE; HISTORY

1.1    Purpose. The purpose of the Plan is to provide incentives to key
employees of the Principal Financial Group(R) that would reward them for
increasing the success of the business over the long-term.

1.2    History. The Plan was originally adopted by Principal Life Insurance
Company of Des Moines, Iowa in November 1986, and has since been amended from
time to time. Prior to the date of this amendment and restatement, the Plan was
amended and restated in November, 1999 ("Prior Plan"). This amended and restated
version of the Plan is essentially the same as the Prior Plan, as in effect on
December 1, 1999, but has been adopted and assumed by the Company with respect
to Performance Periods commencing on or after January 1, 2001, and revised in
terms of its administration and presentation in light of the anticipated public
market for the Common Stock as a result of the proposed demutualization of the
Company. Awards made in respect of Performance Periods commencing prior to
January 1, 2001 shall be governed under the terms of the Prior Plan, unless
specifically provided otherwise in the Plan.

                                   ARTICLE II

                                   DEFINITIONS

       For the purposes of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:

       "Account" means the records that will be established to record amounts
deferred by a Participant under the Plan.

       "Adjusted Consolidated GAAP Equity" for any period means the equity of
the Company and its consolidated subsidiaries, taken as a whole, as determined
in accordance with GAAP, adjusted for accumulated other comprehensive income or
loss, as defined by GAAP, unless otherwise determined by the Committee.

       "Agents Savings Plan" means The Principal Select Savings Plan for
Individual Field.

<PAGE>   2

       "Three-Year Average ROE" means, with respect to any three-year period,
the sum of the ROE identified separately for each of the three years in the
period, divided by three.

       "Beneficiary" or "Beneficiaries" means the person, persons or entity
entitled under Article VI to receive any Plan benefits payable after a
Participant's death.

       "Board" means the Board of Directors of the Company, or the successor
thereto.

         "Cause" means any one or more of the following:

               (i)    a Participant's commission of a felony or other crime
                      involving fraud, dishonesty or moral turpitude;

               (ii)   a Participant's willful or reckless material misconduct in
                      the performance of the Participant's duties;

               (iii)  a Participant's habitual neglect of duties; or

               (iv)   a Participant's willful or intentional breach of
                      obligations to an Employer, provided that, if such breach
                      involved an act, or a failure to act, which was done, or
                      omitted to be done, by a Participant in good faith and
                      with a reasonable belief that a Participant's act, or
                      failure to act, was in the best interests of the Company
                      or was required by applicable law or administrative
                      regulation, such breach shall not constitute Cause, if,
                      within 30 days after a Participant is given written notice
                      of such breach that specifically refers to this
                      definition, a Participant cures such breach to the fullest
                      extent that it is curable;

       provided, however, that Cause shall not include any one or more of the
following:

               (1)    a Participant's negligence, other than a Participant's
                      habitual neglect of duties or gross negligence; or

               (2)    any act of omission believed by a Participant in good
                      faith to have been in or not opposed to the interest of
                      the Company (without intent of the Participant to gain,
                      directly or indirectly, a profit to which the Participant
                      was not legally entitled).

       "Committee" means the Human Resources Committee of the Board or such
other committee of the Board as the Board shall designate from time to time,
which committee shall be composed of two or more outside directors.

                                       2
<PAGE>   3

       "Common Stock" means the common stock, par value $0.01 per share. of
Principal Financial Group, Inc., a Delaware corporation, and any successor
thereto.

       "Company" means Principal Mutual Holding Company and its successors and
assigns and any company which shall acquire substantially all of its assets.

       "Company Stock Plan" means any stock option plan, stock incentive plan,
stock purchase plan and share ownership plans related to the Common Stock that
are customary for publicly traded companies, and shall include the Directors
Stock Plan, the Plan, the Savings Plans, the Stock Incentive Plan and the Stock
Purchase Plan.

       "Directors Stock Plan" means the Principal Financial Group, Inc.
Directors Stock Plan.

       "Disability" or "Disabled" means becoming eligible to receive long-term
disability benefits under a plan, policy or program sponsored or maintained by
the Company or a Subsidiary.

       "Employees Savings Plan" means the Principal Select Savings Plan for
Employees.

       "Employer" means the Company and any Subsidiary whose employees are
designated as Participants under the Plan.

       "End Imputed Value" will be determined by the average closing stock price
of the Common Stock for the last 20 trading days of a Performance Period, after
any Initial Public Offering. Prior to any Initial Public Offering, End Imputed
Value will be based on the following quotient:

         (i)    the product of

               (A)    10 times

               (B)    the Three-Year Average ROE for the three year period ended
                      on the last day of the calendar year ended coincident with
                      the end of the Performance Period times

               (C)    the Adjusted Consolidated GAAP Equity as of the last day
                      of the calendar year ended coincident with the end of the
                      Performance Period, divided by

         (ii)   the total number of Initial Performance Units established for
                the Performance Period (regardless of whether awarded to
                Participants).

                                        3
<PAGE>   4

Notwithstanding the foregoing, if an Initial Public Offering occurs during a
Performance Period under the Plan or a performance period under the Prior Plan,
the Committee may determine End Imputed Value based on the above quotient or the
stock price, as it deems advisable. Further, pursuant to Section 3.2(d), in
determining the number and value of Final Performance Units to be awarded with
respect to a Transition Period as defined therein, the Committee may make any
adjustment, change or conversion as it deems necessary or advisable to achieve
an appropriate assessment of, and compensation for, performance during such
Transition Period.

       "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.

       "Excess Plan" means the Principal Select Savings Excess Plan and the Non-
Qualified Defined Contribution Plan for Designated Participants.

       "Final Performance Units" with respect to a Performance Period means the
number of Performance Units resulting following the adjustment to the number of
Initial Performance Units awarded for such Performance Period pursuant to
Section 3.2(b).

       "GAAP" means generally accepted accounting principles, consistently
applied.

       "Initial Performance Units" means the Performance Units initially
established by the Committee with respect to any given Performance Period.

       "Initial Public Offering" means the first underwritten offering of Common
Stock to the public.

       "Operating Earnings" means operating earnings of the Company and its
consolidated subsidiaries, consistent with GAAP principles, unless otherwise
determined by the Committee.

       "Participant" with respect to a Performance Period means an employee who
has been granted an award of Initial Performance Units for such Performance
Period. For the purposes of Article V, "Participant" shall include only an
employee who was employed by an Employer on or before the date of the applicable
Change of Control.

       "Performance Factor" means a multiplier, stated as a percentage,
determined based on the Performance Matrix established for the Performance
Period, that shall serve to increase or decrease the number of Initial
Performance Units based on the performance of the Company and its consolidated
subsidiaries during the Performance Period.

       "Performance Matrix" means a matrix established by the Committee not
later than March 15 of the relevant Performance Period that will establish the
multiplier which will apply to each Participant's Initial Performance Units
based on the actual performance of

                                        4
<PAGE>   5

the Company and its consolidated subsidiaries against the Performance Objectives
for the relevant Performance Period, subject to any actions by the Committee
pursuant to Section 3.2(c).

       "Performance Objectives" means one or more pre-established performance
measures established by the Committee with respect to a Performance Period. The
Committee may establish several levels of achievement for each Performance
Objective established, to reflect the level of recognition to be afforded to
partial achievement of, or to surpassing, the level of achievement targeted for
such objective for such Performance Period. The measures of performance shall be
selected by the Committee from such measures as the Committee shall deem
appropriate, including, without limitation, ROE, Operating Earnings, earnings
before interest, taxes, depreciation and amortization ("EBITDA"), and total
shareholder return.

       "Performance Period" means each three calendar year period beginning
during the term of the Plan.

       "Performance Units" means Initial Performance Units and Final Performance
Units.

       "Plan" means the Principal Financial Group Long-Term Performance Plan, as
currently in effect and as the same may be amended from time to time.

       "Plan of Conversion" means the Plan of Conversion of Principal Mutual
Holding Company.

       "Plan Administrator" means the Corporate Management Committee of the
Company, as provided in Section 7.1, or such other committee or persons approved
by the Board.

       "Retirement" means a termination of a Participant's employment for any
reason other than death, Disability or Cause and qualifying to retire under the
terms of any pension plan maintained by the Company or a Subsidiary.

       "ROE" means, with respect to any calendar year, Operating Earnings
divided by the average Adjusted Consolidated GAAP Equity for the year (prior
12-month period ending Adjusted Consolidated GAAP Equity plus end of 12-month
period Adjusted Consolidated GAAP Equity, divided by two) unless otherwise
determined by the Committee.

       "Savings Plans" means the Employees Savings Plan, the Agents Savings Plan
and the Excess Plan.

                                        5
<PAGE>   6

       "Start Imputed Value" will be determined by the average closing stock
price of the Common Stock for the last 20 trading days of the prior Performance
Period, after any Initial Public Offering. Prior to an Initial Public offering,
Start Imputed Value will be based on the following quotient:

         (i)    the product of

               (A)    10 times

               (B)    the Three-Year Average ROE for the three year period ended
                      on the last day of the last calendar year ended prior to
                      the commencement of the Performance Period times

               (C)    the Adjusted Consolidated GAAP Equity as of the last day
                      of the last calendar year ended prior to the commencement
                      of the Performance Period, divided by

         (ii)   the total number of Initial Performance Units established for
                the Performance Period (regardless of whether awarded to
                Participants).

       "Stock Incentive Plan" means the Principal Financial Group, Inc Stock
Incentive Plan.

       "Subsidiary" means (1) any entity in which the Company, directly or
indirectly, owns at least 50% of the outstanding equity interests and over which
the Company has effective control, or (2) any other entity or joint venture,
domestic or non-domestic, in which the Company, directly or indirectly, owns an
interest and that is designated a "Subsidiary" by the Plan Administrator for
purposes of this Plan.

       "Threshold Objectives" means one or more minimal performance objectives
established hereunder and communicated to Participants at the time an Initial
Performance Unit award is communicated that must be achieved in order for any
payment to be made in respect of Performance Units awarded for such Performance
Period. Such Threshold Objectives may be any measure of performance that the
Committee shall deem appropriate, provided that, for the Performance Period
commencing in 2001 and, unless otherwise specified by the Committee by March 15
of the relevant Performance Period, the Threshold Objectives shall be:

         (1)   Adjusted Consolidated GAAP Equity for the year ending
               simultaneously with the end of the Performance Period, stated as
               a percentage of the general account assets of Principal Life
               Insurance Company, must be at least 6%; and

                                        6
<PAGE>   7

         (2)   Principal Life Insurance Company must have a Risk Based Capital
               ratio (as defined by the National Association of Insurance
               Commissioners) of at least 150%; and

         (3)   ROE for the last calendar year in the Performance Period must
               exceed a minimum level established for such Performance Period in
               the Performance Matrix; and

         (4)   Operating Earnings for the Performance Period must exceed a
               minimum level established for such Performance Period in the
               Performance Matrix.

                                   ARTICLE III

       ELIGIBILITY, PARTICIPATION AND VESTING UNDER THE PLAN

3.1    Eligibility. Eligibility to participate in the Plan shall be limited to a
select group of management who are key contributors to the success of the
Company and the Subsidiaries and designated by the Committee or Chief Executive
Officer as Participants in the Plan.

3.2    Awards of Performance Units.

       (i)     Grants. The Committee shall establish the number of Initial
               Performance Units that shall be deemed outstanding with respect
               to any Performance Period. Each Participant in a Performance
               Period shall be awarded the number of Initial Performance Units
               as the Committee shall determine; provided that, the Committee
               may delegate to the Chief Executive Officer the authority to
               award Initial Performance Units to officers holding titles below
               Senior Vice President who are not reporting officers under
               Section 16(a) of the Securities Exchange Act of 1934. The
               Committee and the Chief Executive Officer shall not be required
               to award all of the Initial Performance Units to Participants in
               respect of any Performance Period. Each Initial Performance Unit
               shall have a Start Imputed Value. The Company shall communicate
               to each Participant the number of Initial Performance Units
               awarded, and the Start Imputed Value thereof, not later than
               March 31 in the relevant Performance Period unless the
               Participant first receives Initial Performance Units for such
               Performance Period at a later time.

       (ii)    Adjustment to Number of Initial Performance Units. The number of
               Performance Units allocated to each Participant for a Performance
               Period shall be adjusted at the end of such Performance Period by
               multiplying that number by the Performance Factor. The resulting
               number of Performance Units shall be referred to as the Final
               Performance Units.

                                        7
<PAGE>   8

       (iii)   Impact of Extraordinary Items. In comparing actual performance
               against the Performance Objectives, the Committee may exclude
               from such comparisons any extraordinary gains, losses, charges,
               or credits which appear on the Company's books and records as it
               deems appropriate. An extraordinary item may include, without
               limiting the generality of the foregoing, an item in the
               Company's financial statements reflecting an accounting rule, tax
               law, or major legislative change not taken into consideration in
               the establishment of the Performance Objectives. In addition, the
               impact of a material disruption in the U. S. economy or a
               substantive change in the Principal Financial Group's business
               plans also may be deemed to be such an extraordinary item.

       (d) Transition Period. In order to assure that the objectives of the Plan
are met for any Performance Period under the Plan or performance period under
the Prior Plan in which an Initial Public Offering occurs (a "Transition
Period"), the Committee may establish a formula for conversion of existing
Performance Units into Performance Units based on the value of the publicly
issued and outstanding Common Stock, including with respect to Final Performance
Units that have been deferred pursuant to Section 4.9 and under the Prior Plan,
and the Committee may make such other changes, adjustments and determinations
with respect to the Performance Factor, Performance Matrix and Performance
Objectives for such Transition Period as it shall deem necessary or advisable to
achieve an appropriate assessment of, and compensation for, performance during
such Transition Period.

3.3    Vesting. Except as otherwise provided in Article IV and Article V, a
Participant's right to receive a payment in respect of an award of any
Performance Units shall only become vested and shall cease to be subject to
forfeiture if the Participant has been continuously employed by the Company or a
Subsidiary throughout the entire Performance Period.

                                   ARTICLE IV

                                  DISTRIBUTIONS

4.1    Distributions in Respect of Performance Units. Except as otherwise
provided in this Article IV or Article V, payment shall be made as soon as
practical after the end of a Performance Period to each Participant who has been
continuously employed by the Company or a Subsidiary for the entire Performance
Period. The amount payable to each Participant shall be equal to the product of
the number of Final Performance Units held by the Participant and the End
Imputed Value. Unless the Committee shall otherwise determine, payment of such
amount may be made in (i) cash, if at the time of payment an Initial Public
Offering has not occurred or (ii) cash, shares of Common Stock, or any
combination of cash and shares of Common Stock, if at the time of payment an
Initial

                                        8
<PAGE>   9

Public Offering has occurred. Payment in Common Stock shall be based on the
average closing stock price of the Common Stock for the last 20 days of the
prior Performance Period.

4.2    Threshold Performance. Notwithstanding anything else contained in this
Plan to the contrary, no payment shall be made to any Participant in respect of
any Performance Period if the Threshold Objectives with respect to such
Performance Period are not satisfied. Moreover, in no event shall the sum of all
awards for a three-year award cycle, whether paid or deferred, under the Plan
for all of the Principal Financial Group exceed 5% of pre-tax GAAP operating
earnings for the third year of a performance cycle (disregarding awards deferred
from any prior three-year award cycle for payout in the year in question). If
the awards calculated for this year (disregarding awards deferred from prior
award cycles) would exceed such 5% pre-tax GAAP operating earnings, all
calculated awards, whether paid or deferred, under the plan shall be
proportionately reduced so that the awards in the aggregate equal 5% of pre-tax
GAAP operating earnings.

4.3    Distributions on the Participant's Death. If a Participant dies prior to
the end of any Performance Period that commenced at least one year prior to the
Participant's death, the Participant's Beneficiary (or, if none is named, the
Participant's estate) shall receive a distribution at the same time and in the
same amount as though the Participant remained employed through the end of the
Performance Period, unless payment at an earlier date is otherwise authorized by
the Plan Administrator. If a Participant dies prior to the end of a Performance
Period that commenced less than one year prior to the Participant's death, the
Participant's Beneficiary (or, if none is named, the Participant's estate) shall
receive a distribution at the same time as other Participants receive their
distributions under the Plan, unless payment at an earlier date is otherwise
authorized by the Plan Administrator, but the amount payable shall be equal to
the amount that would have been payable had the Participant been employed for
the entire Performance Period, multiplied by a fraction, the numerator of which
is the number of days in the Performance Period elapsed prior to the
Participant's death and the denominator of which is 365.

4.4    Distributions on the Participant's Disability. If a Participant becomes
Disabled, prior to the end of any Performance Period that commenced at least one
year prior to the Participant's date of Disability, the Participant shall
receive a distribution at the same time and in the same amount as though the
Participant remained actively employed through the end of the Performance
Period. If a Participant becomes Disabled prior to the end of a Performance
Period that commenced less than one year prior to the Participant's date of
Disability, the Participant shall receive a distribution at the same time as
other Participants receive their distributions under the Plan, but the amount
payable shall be equal to the amount that would have been payable had the
Participant been actively employed for the entire Performance Period, multiplied
by a fraction, the numerator of which is the number of days in the Performance
Period elapsed prior to the Participant's

                                        9
<PAGE>   10

Disability and the denominator of which is 365. Notwithstanding the foregoing,
if prior to the first anniversary of the date of the Participant's date of
Disability, the Participant accepts employment with any entity that is in the
financial services industry and is unrelated to the Company or a Subsidiary, the
Participant shall cease to be eligible to receive any further payments under the
Plan in respect of Performance Periods that had not ended prior to the date of
the Participant's Disability.

4.5    Distribution on the Participant's Retirement. If a Participant's
employment is terminated by reason of Retirement prior to the end of any
Performance Period that commenced at least one year prior to the Participant's
Retirement, the Participant shall receive a distribution at the same time and in
the same amount as though the Participant remained employed through the end of
the Performance Period. If a Participant's employment is terminated by reason of
Retirement prior to the end of a Performance Period that commenced less than one
year prior to the Participant's Retirement, the Participant shall receive a
distribution at the same time as other Participants receive their distributions
under the Plan, but the amount payable shall be equal to the amount that would
have been payable had the Participant been employed for the entire Performance
Period, multiplied by a fraction, the numerator of which is the number of days
in the Performance Period elapsed prior to the Participant's Retirement and the
denominator of which is 365. Notwithstanding the foregoing, if prior to the
first anniversary of the date of the Participant's termination of employment, a
Participant accepts employment with any entity that is in the financial services
industry and is unrelated to the Company or a Subsidiary, the Participant shall
cease to be eligible to receive any further payments under the Plan in respect
of any Performance Period that had not ended prior to the date of the
Participant's termination of employment.

4.6    Distributions on the Participant's Discharge for Cause. If a
Participant's employment is terminated for Cause, as determined by the Company,
the Participant shall not be entitled to receive any further payments under the
Plan with respect to any Performance Period (including any Performance Period
ended prior to such termination, but for which distributions have not yet been
made under Section 4.1), except such amounts as were deferred pursuant to
Section 4.9 or pursuant to the Prior Plan.

4.7    Distribution on Other Termination of Employment. If a Participant's
employment is terminated for any other reason other than those otherwise
outlined above, the Participant shall not be entitled to receive any payment in
respect of any Performance Period that had not ended prior to the date of the
Participant's termination of employment.

4.8    Distribution on the Participant's Transfer. Unless otherwise determined
by the Committee, if a Participant is transferred to a position which is not
eligible to participate in the Plan or to employment with a subsidiary which
does not participate in the Plan, service in the new position shall count as
continued employment for purposes of

                                       10
<PAGE>   11

determining the Participant's vested interest in any Performance Units awarded
for Performance Periods then in progress. In such circumstances, the Participant
will continue to participate in the Plan with respect to such Performance
Periods until the earlier of (i) the end of such Performance Period or (ii) the
termination of the Participant's employment with the Company and each Subsidiary
by which the Participant was employed, in which case, such Participant's rights
under the Plan shall be determined under this Article IV, based on the reason
for such termination of employment.

4.9    Deferral Election.

       (a) Voluntary Deferral. A Participant may elect to defer payment of all
or a portion of the amount otherwise payable to the Participant pursuant to the
terms of the Plan in respect of Final Performance Units. Such deferral may
permit payment to be delayed until the earlier to occur of (i) the end of any
calendar year ending not later than the fifth anniversary of the Performance
Period for which such amount is payable and (ii) the termination of the
Participant's employment for any reason, unless the Participant's employment
terminated due to Retirement or the Participant becomes Disabled. Any such
election shall be in writing, on a form prescribed for such purpose by the Plan
Administrator, and delivered to the Plan Administrator or its designee prior to
the first day of the final year of a Performance Period for which such amount is
payable. With respect to any Performance Periods under the Plan or performance
periods under the Prior Plan for which the Committee has not determined, prior
to the start of the last year of such period, whether the award will be paid in
cash, Common Stock, or a combination thereof, a Participant may make a deferral
election contingent on the form of payment. In addition, if the Committee so
allows, a Participant may specify in such deferral election the form of payment
to be deferred whether or not the Committee has determined, prior to the start
of the last year of such period, the form of award payment for such period.

       (b) Earnings on Deferrals. Any amount deferred by the Participant
pursuant to the preceding paragraph shall be credited to an Account established
for the Participant. The amount held in such Account shall be deemed to continue
to be invested in the same Final Performance Units that relate to such
Performance Period, but the value thereof shall be adjusted as provided in
Section 4.9(c) below.

       (c) Distribution of Deferral Account. Final Performance Units deferred
that were payable in Common Stock shall be distributed in Common Stock. The
number of shares distributed shall be equal to the number of shares that would
have originally been distributed in the absence of deferral, adjusted for stock
splits, stock dividends and reinvestment of cash dividends between the end of
the Performance Period for which the Final Performance Units were granted and
the date the deferred amounts are actually distributed. Final Performance Units
deferred that were payable in cash shall be distributed in cash. The amount
distributed shall be based on the End Imputed Value for

                                       11
<PAGE>   12

the last Performance Period ended prior to the distribution. If the End Imputed
Value is calculated based on the quotient set forth in Article II, then End
Imputed Value shall be adjusted, if necessary, to make the denominator equal to
the number of Initial Performance Units established for the Performance Period
for which the Final Performance Units were granted. If the End Imputed Value is
based on the price of Common Stock, adjustments set forth in Section 3.2(d)
shall be made, if necessary.

                                    ARTICLE V

                                CHANGE OF CONTROL

       Capitalized words used in this Article V have the meaning ascribed to
them under The Principal Severance Pay Plan for Senior Executives as amended
from time to time, unless the context clearly indicates otherwise.
Notwithstanding the foregoing, the following terms shall have the meanings
ascribed to them in Article II hereof: Board, Company, Disability, Employer,
Participant, Plan.

5.1    Change of Control Payments. Within ten (10) days following the later
of a Change of Control Date or Merger of Equals Cessation Date ("Trigger Date"),
the Company shall pay each Participant the sum of (a) the Pro-Rata LTIP Bonus
and (b) the amount of all LTIP Bonuses earned but either deferred or not yet
paid as of the date of the Trigger Date, in satisfaction of the Company's
obligations under the LTIP for periods prior to the Trigger Date.

5.2    Termination during the Post-Change Period. If, during the Post-Change
Period (other than during a Post-Merger of Equals Period) a Participant's
employment is terminated other than for Cause or Disability, or a Participant
terminates employment for Good Reason, the Company shall pay the Participant the
Participant's Pro-rata LTIP Bonus reduced (but not below zero) by the amount of
any LTIP Bonus previously paid to Participant with respect to any Performance
Period that had not ended prior to the date of the Participant's termination of
employment.

                                   ARTICLE VI

                             BENEFICIARY DESIGNATION

6.1    Beneficiary Designation. A Participant shall have the right, at any
time, to designate one (1) or more persons or an entity as the Participant's
Beneficiary (both primary as well as secondary) to whom benefits under this Plan
shall be paid in the event of Participant's death. Each Beneficiary designation
shall be in a written form and shall be filed with the Plan Administrator during
the Participant's lifetime. If a Participant fails to designate a Beneficiary or
if a Beneficiary does not survive the Participant, payment will be made to the
Participant's estate in the event of the Participant's death.

                                       12
<PAGE>   13

6.2    Beneficiary. A Participant may change his/her Beneficiary at any time
by completing a new beneficiary designation form. The change will take effect
only after it is received by the Plan Administrator and determined to be in good
order. Any previous Beneficiary's interest under the Plan will end as of the
date the request is received (so long as it is thereafter determined to be in
good order).

                                   ARTICLE VII

                                 ADMINISTRATION

7.1    Administration of the Plan. The Plan Administrator shall be the
Corporate Management Committee of the Company or such other committee, entity or
persons approved by the Board. The Plan Administrator shall maintain such
procedures and records as will enable the Plan Administrator to determine the
Participants and their Beneficiaries who are entitled to receive benefits under
the Plan and the amounts thereof.

7.2    General Powers of Administration. The Committee shall have the
exclusive right, power, and authority, in its sole, full and absolute
discretion, to interpret any and all of the provisions of the Plan, to supervise
the administration and operation of the Plan, and to consider and decide
conclusively any questions (whether of fact or otherwise) arising in connection
with the administration of the Plan or any claim for benefits arising under the
Plan. Any decision or action of the Committee or the Plan Administrator shall be
conclusive and binding on all parties, including the Participants. The Committee
and the Plan Administrator shall also have the discretion and authority to adopt
and revise rules and procedures relating to the Plan, to correct any defect or
omission or reconcile any inconsistency in this Plan or any payment hereunder,
and to make any other determinations that they believe necessary or advisable in
the administration of the Plan.

7.3    Limitations in Plan of Conversion. Notwithstanding anything else
contained in the Plan to the contrary, no portion of any Participant's Account
may be deemed invested in Common Stock until the six month anniversary of the
effective date of the Plan of Conversion. No action shall be taken, and no award
or distribution shall be made, under the Plan, which contains any term or
condition that would violate any provision of the Plan of Conversion. To the
extent that shares of Common Stock are made available for distribution
hereunder, the number of such shares distributed hereunder shall count against
(i) the limit of 6% of the number of shares of Common Stock outstanding
immediately following the effective date of the Plan of Conversion that may be
made issuable or distributable under all Company Stock Plans (including, without
limitation, the Plan) other than the Employees Savings Plan, the Agents Savings
Plan and the Stock Purchase Plan, and (ii) the operational guideline established
pursuant to the Stock Incentive Plan limiting the maximum number of shares of
Common Stock that may be awarded or issued within 18 months of the effective
date of the Plan of Conversion to 40% of the limit set forth in subclause (i).

                                       13
<PAGE>   14

                                  ARTICLE VIII

                   AMENDMENT AND TERMINATION OF PLAN

8.1    Amendment of the Plan. The Committee shall have the authority to
amend the Plan at any time and from time to time. Any such amendments must be
made by written instrument, and notice of such amendment shall be provided to
Participants as soon as practicable after adoption.

8.2    Termination of the Plan. The Company reserves the right to terminate
the Plan in any respect and at any time and may do so at any time pursuant to a
written resolution of the Committee.

8.3    Limitations on Amendment or Termination of the Plan. Notwithstanding
anything else to the contrary set forth in the Plan, any amendment or
termination of the Plan may not adversely affect the rights of any Participant
or Beneficiary in respect of Performance Units previously awarded.

                                   ARTICLE IX

                                  MISCELLANEOUS

9.1    Unfunded / Participant's Rights Unsecured and Unfunded. This Plan is
unfunded and therefore is exempt from the provisions of Parts 2, 3 and 4 of
Title I of ERISA. Accordingly, no assets of the Company or any Subsidiary shall
be segregated or earmarked to represent the liability for accrued benefits under
the Plan. The right of a Participant (or any Beneficiary) to receive a payment
hereunder shall be an unsecured claim against the general assets of the Company
or any Subsidiary. All payments under the Plan shall be made from the general
funds of the Company or the applicable Subsidiary. The Company and Subsidiaries
are not required to set aside money or any other property to fund obligations
under the Plan, and all amounts that may be set aside by the Company or
Subsidiary prior to the distribution thereof under the terms of the Plan remain
the property of the Company. The liability of the Company or any affiliate under
this Plan is limited to the obligations expressly set forth in the Plan, and no
term or provision of this Plan may be construed to impose any further or
additional duties, obligations, or costs on the Company, any Subsidiary or the
Committee not expressly set forth in the Plan.

9.2    No Right to Participate. No Participant or other employee shall at
any time have a right to be selected for participation in the Plan, despite
having previously participated in the Plan or any other incentive or bonus plan
of the Company or any affiliate.

9.3    Plan is Not a Contract of Employment. The existence of this Plan, as
in effect at any time or from time to time, or participation under the Plan,
shall not be deemed to

                                       14
<PAGE>   15

constitute a contract of employment between the Company or any affiliate and any
employee or Participant, nor shall it constitute a right to remain in the employ
of the Company or a Subsidiary.

9.4    Parachute Cap. Unless the Participant has an agreement with the Company
or a Subsidiary specifically providing otherwise:

       (a) If it is reasonably determined by the computation of the independent
auditors of the Company or a Subsidiary that any amount payable or deemed
payable to such Participant under this Plan or otherwise (collectively, the
"Payments") is or will become subject to any excise tax under Section 4999 of
the Internal Revenue Code of 1986, as amended, or any similar tax payable under
any United States federal, state, local or other law ("Excise Taxes") or will
fail to be deductible by the Company or a Subsidiary by reason of Section 280G
of the Internal Revenue Code of 1986, then the amount paid to such Participant
under the Plan shall be reduced to the largest amount that may be paid without
causing any portion of such payment to be subject to Excise Taxes or to not be
deductible by the Company or a Subsidiary.

       (9)     If, after the receipt by a Participant of any payment hereunder,
               such Payment (or any portion thereof) shall become subject to any
               Excise Taxes or shall become nondeductible by the Company or a
               Subsidiary, the Participant shall repay to the Company or
               Subsidiary the amount that exceeds the greatest amount that could
               be paid to the Participant hereunder without causing the
               Participant to become liable for any Excise Taxes or without
               causing any of the Payments to become nondeductible by the
               Company.

9.5    Notice. Any notice required or permitted under the Plan shall be
sufficient if in writing and hand delivered, sent by first class, registered or
certified mail, or by such other means as the Committee, in its sole discretion,
may deem appropriate. Such notice shall be deemed as given as of the date of
delivery or, if delivery is made by mail, as of the date shown on the postmark
or on the receipt for registration or certification. Mailed notice to the
Committee shall be directed to the Company's address, c/o the Corporate
Management Committee. Mailed notice to a Participant or Beneficiary shall be
directed to the individual's last known home address in the Participant's
Employer's records.

9.6    No Guarantee of Benefits or Participation. Nothing contained in the
Plan shall constitute a guaranty by any Employer or any other person or entity
that the assets of such entity will be sufficient to pay any benefit hereunder.

9.7    Non-Alienation Provision. Subject to the provisions of applicable law, no
interest of any person or entity in any Performance Unit (or, if applicable, any
Account), or any right to receive any distribution or other benefit under the
Plan, shall be subject in any

                                       15
<PAGE>   16

manner to sale, transfer, assignment, pledge, attachment, garnishment, or other
alienation or encumbrance of any kind; nor may such interest in any Performance
Unit (or, if applicable, any Account), or right to receive any distribution or
any benefit under the Plan, be taken, either voluntarily or involuntarily, for
the satisfaction of the debts of, or other obligations or claims against, such
person or entity, including (but not limited to) claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.

9.8    Applicable Law. The Plan shall be construed and administered under the
laws of the State of Delaware, except to the extent that such laws are preempted
by ERISA.

9.9    Taxes. The Company or a Subsidiary shall have the right to deduct, from
amounts payable pursuant to the Plan or from other amounts payable to the
Participant (or payable to the Beneficiary of the Participant, if the
Participant is deceased), any taxes required by law to be withheld from such
awards.

9.10   No Impact on Other Benefits. Amounts accrued and awards paid under the
Plan will not be included in the definition of pay for the purposes of
calculating benefits under the Company's or any Subsidiary's employee benefit
plan nor considered base salary for the purpose of any incentive compensation
plan.

9.11   Usage of Headings. Any headings are included for ease of reference only,
and are not to be construed to alter the terms of the Plan.

9.12   No Limitation on Corporate Action. Nothing contained in this Plan shall
be construed to prevent the Company, or a Subsidiary, from taking any corporate
action which is deemed by it to be appropriate, or in its best interest, whether
or not such action would have an adverse effect on this Plan, or any awards made
under this Plan. No employee, beneficiary, or other person shall have any claim
against the Company, or any Subsidiary, as a result of any such action.

9.13   Parties. Nothing express or implied in this Plan is intended or may be
construed to give any person other than Participants and Beneficiaries any
rights or remedies under this Plan.

9.14   Missing Participants. A recipient of any payment under this Plan who is
not a current employee of the Company or a Subsidiary, shall have the obligation
to inform the Company of his or her current address, or other location to which
payments are to be sent. Neither the Company nor any Subsidiary shall have any
liability to such recipient, or any other person, for any failure of such
recipient, or person, to receive any payment if it sends such payment to the
address provided by such recipient by first class mail, postage paid, or other
comparable delivery method. Notwithstanding anything else in this Plan to the
contrary, if a recipient of any payment cannot be located within 120 days
following the date on which such payment is due after reasonable efforts by the
Company

                                       16
<PAGE>   17

or a Subsidiary, such payments and all future payments owing to such recipient
shall be forfeited without notice to such recipient. If, within two years (or
such longer period as management, in its sole discretion, may determine), after
the date as of which payment was forfeited (or, if later, is first due), the
recipient, by written notice to the Company, requests that such payment and all
future payments owing to such recipient be reinstated and provides satisfactory
proof of their identity, such payments shall be promptly reinstated. To the
extent the due date of any reinstated payment occurred prior to such
reinstatement, such payment shall be made to the recipient (without any interest
from its original due date) within 90 days after such reinstatement.

On behalf of the Human Resources Committee of the Board of Directors of the
Company, this Amended and Restated Long-Term Performance Plan has been executed
this      day of June, 2001.
    ------
By:
   -------------------------
C. Daniel Gelatt, Jr., Chair

                                       17<PAGE>   1
                                                                    EXHIBIT 10.3

             PRINCIPAL FINANCIAL GROUP INCENTIVE PAY PLAN (PRINPAY)
                  AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2001

                       SECTION 1. INTRODUCTION AND PURPOSE

The Principal Financial Group Incentive Pay Plan (the "Plan") is designed to
motivate employees who work for the Principal Financial Group(R) to perform at
levels which will ensure the success of the Company. The Plan is intended to pay
financial rewards based on performance. The Plan was originally adopted by
Principal Life Insurance Company of Des Moines, Iowa on January 1, 1995 and has
since been amended from time to time. Prior to the date of this restatement, the
Plan was amended and restated on January 1, 1999. This amended and restated
version of the Plan has been adopted and assumed by the Company as of January
1, 2001 The Plan remains in effect until amended, suspended or terminated.

                              SECTION 2. PLAN YEAR

The Plan Year is the calendar year beginning on January 1 and ending on December
31.

                             SECTION 3. DEFINITIONS

For the purposes of this Plan, the following terms shall have the meanings
indicated, unless the context clearly indicates otherwise:

"Adjusted Consolidated GAAP Equity" for any period means the ending equity of
the Company and its consolidated subsidiaries, taken as a whole, as determined
in accordance with GAAP, adjusted for accumulated other comprehensive income or
loss, as defined by GAAP, unless otherwise determined by the Committee.

"Award Component" means one of the following: corporate, business unit or
individual performance weighted for a Participant.

"Award Opportunity" means the percentage of a Participant's Fixed Salary
earnable under the Plan if target performance for the Plan Year is met.

"Award Opportunity Scale" means the percentage of the Award Opportunity earnable
under the Plan if minimum, maximum or any other scale factors that have been
identified are met. The Award Opportunity Scale is a percentage of the Award
Opportunity. The Award Opportunity Scale may be any that the Committee shall
deem appropriate, provided that, for the Plan Year commencing in 2001 and,
unless otherwise specified by the Committee by March 15 of the relevant Plan
Year, the Award Opportunity scale shall be 0%, 50%, 100%, 150% and 200%
(maximum) of the Award Opportunity.

"Beneficiary" or "Beneficiaries" means the person, persons or entity entitled
under Section 7 to receive any Plan benefits payable after a Participant's
death, If a Participant dies before receiving an award to which he or she is
entitled, the award will be paid to the person(s) or entity designated as the
beneficiary for the Participant's life insurance benefit through The Principal
Trust for Life Insurance Benefits for Employees.

                                       1

Amended and Restated as of January 1, 2001.
<PAGE>   2
"Board" means the Board of Directors of the Company, or the successor thereto.

"Cause" shall mean any one or more of the following:

     (i)   a Participant's commission of a felony or other crime involving
           fraud, dishonesty or moral turpitude;

     (ii)  a Participant's willful or reckless material misconduct in the
           performance of the Participant's duties;

     (iii) A Participant's habitual neglect of duties; or

     (iv)  A Participant's willful or intentional breach of obligations to an
           Employer, provided that, if such breach involved an act, or failure
           to act, which was done, or omitted to be done, by a Participant in
           good faith and with a reasonable belief that a Participant's act, or
           failure to act, was in the best interest of the Company or was
           required by applicable law or administrative regulation, such breach
           shall not constitute Cause, if, within 30 days after a Participant is
           given written notice of such breach that specifically refers to this
           definition, a Participant cures such breach to the fullest extent
           that it is curable;

provided, however, that Cause shall not include any one or more of the
following:

     (i)   a Participant's negligence, other than a Participant's habitual
           neglect of duties or gross negligence; or

     (ii)  any act or omission believed by a Participant in good faith to have
           been in or not opposed to the interest of the Company (without intent
           of the Participant to gain, directly or indirectly, a profit to which
           the Participant was not legally entitled).

"Committee" means the Human Resources Committee of the Board or such other
committee of the Board as the Board shall designate from time to time, which
committee shall be composed of two or more outside directors.

"Company" means Principal Mutual Holding Company and its successors and assigns
and any company which shall acquire substantially all of its assets.

"Disability" means, with respect to any Participant, long-term disability as
defined under any long-term disability plan maintained by the Company or a
Subsidiary in which the Participant participates. In the event of any question
as to whether a Participant has a Disability, the plan administrator of the
relevant long-term disability plan shall determine whether a disability exists,
in accordance with such plan.

"Employer" means the Company and any Subsidiary whose employees are designated
as Participants under the Plan.

"Exempt" means an employee who is not subject to the minimum wage and overtime
pay provisions of the Fair Labor Standards Act. These employees include
executives, administrative employees, professional employees and those engaged
in outside sales.

"Fair Labor Standards Act" means 29 U.S.C. Section 201 et seq.

                                        2

Amended and Restated as of January 1, 2001.

<PAGE>   3
"Final Warning" means a disciplinary action designated to be a final warning.

"Fixed Salary" means the gross amount of earnings received for base salary, lump
sum merit, Personal Time Off, shift differential, on-call pay, holiday pay,
overtime and short-term disability coverage during the Plan Year. Fixed Salary
does not include the award earned under this Plan or any other bonus, incentive
or commission and paid in the current Plan Year.

"GAAP" means generally accepted accounting principles, consistently applied.

"Individual Goals" means one or more financial or non-financial measure
established for the Plan Year between the Participant and the Participant's
leader, at 100% performance, which may also have written Award Opportunity
Scales.

"Job Level" means an Employer's internal hierarchical level of a job that is
used to determine eligibility and participation in corporate programs and
amenities.

"Non-exempt" means an employee who is subject to the minimum wage and overtime
pay provisions of the Fair Labor Standards Act.

"Operating Earnings" means operating earnings of the Company and its
consolidated subsidiaries, consistent with GAAP principles, unless otherwise
determined by the Committee.

"Participant" means an employee who has met the eligibility requirements for the
Plan Year. For the purposes of Section 8, "Participant" shall include only an
employee who was employed by an Employer before the date of the applicable
Change of Control.

For purposes of Section 8 "Executive Participant" means an employee at the level
of vice president or equivalent and above who has met the eligibility
requirements for the Plan Year. For the purposes of Section 8, "Executive
Participant" shall include only an employee who was employed by an Employer
before the date of the applicable Change of Control.

"Performance Measures" means one or more financial or non-financial measures
established for the Plan Year. The Committee shall establish performance levels
of achievement for the Award Opportunity Scale, in order to reflect the level of
recognition to be afforded to partial achievement of, or to surpassing, the
level of achievement targeted for such objective for such Plan Year. The
corporate and business unit Performance Measures shall be selected from such
measures as the Committee or Plan Administrator shall deem appropriate,
including, without limitation, ROE, Operating Earnings, earnings before
interest, taxes, depreciation and amortization ("EBITDA"), budget, customer
satisfaction and total shareholder return.

"Plan" means the Principal Financial Group Incentive Pay Plan, as currently in
effect and as the same may be amended from time to time,

"Plan Administrator" means the committee, committees or persons in Section 9,
that have been designated by the Chief Executive Officer and approved by the
Committee.

                                        3

Amended and Restated as of January 1, 2001.

<PAGE>   4
"Retirement" means a termination of a Participant's employment for any reason
other than death, Disability or Cause and qualifying to retire under the terms
of any pension plan maintained by the Company or a Subsidiary.

"ROE" means, with respect to any calendar year, Operating Earnings divided by
the average Adjusted Consolidated GAAP Equity for the year (prior 12-month
period ending Adjusted Consolidated GAAP Equity plus end of 12-month period
Adjusted Consolidated GAAP Equity, divided by two) unless otherwise determined
by the Committee.

"Pro-Ration Factor" means the number of days as a Participant under the Plan
divided by 365 days.

"Subsidiary" means (1) any corporation in which the Company owns, directly or
indirectly, at least 50% of the outstanding equity interests and over which the
Company has effective control, or (2) any other entity or joint venture,
domestic or non-domestic, in which the Company, directly or indirectly, owns an
interest and that is designated in writing as a "Subsidiary" by the Plan
Administrator for purposes of this Plan.

"Threshold Objectives" means one or more minimal performance objectives
established hereunder that must be achieved in order for any payment to be made
for the Plan Year. Such Threshold Objectives may be any measure of performance
that the Committee shall deem appropriate, provided that, for the Plan Year
commencing in 2001 and, unless otherwise specified by the Committee by March 15
of the relevant Plan Year, the Threshold Objectives shall be:

     (1)   The Principal must maintain the minimum claims paying/financial
           strength rating from 2 of the 3 rating agencies: Fitch AA-, Moody's
           Aa3 and Standard & Poors AA-; and

     (2)   Adjusted Consolidated GAAP Equity for the end of the Plan Year,
           stated as a percentage of the general account assets of Principal
           Life Insurance Company, must be at least 6%; and

     (3)   Principal Life Insurance Company must have a Risk Based Capital Ratio
           (as defined by the National Association of Insurance Commissioners)
           of at least 150%.

                             SECTION 4. ELIGIBILITY

Exempt employees of an Employer are Participants in the Plan on their date of
hire. Non-exempt employees of an Employer are eligible to participate in the
Plan if they work at least 20 hours per week on a regularly scheduled basis and
become a Participant after completing six months of employment.

Unless pre-approved by the Plan Administrator in writing, an employee who is a
Participant in the Plan is not eligible to participate in any other Company or
Subsidiary annual incentive, bonus or commission plan. Unless pre-approved by
the Plan Administrator in writing, employees who are participants in other
annual incentives, bonus or commission plans are not eligible to be Participants
in the Plan.

                                        4

Amended and Restated as of January 1, 2001.

<PAGE>   5
      SECTION 5. TARGET AWARD OPPORTUNITY, PERFORMANCE MEASURES AND SCALES

Participants will be assigned an Award Opportunity based on their job or Job
Level with an Employer . The Award Opportunity will be paid if stated target
Performance Measures are achieved. The Plan Administrator will approve the Award
Opportunity and Award Opportunity Scale for Participants at and below the Vice
President level. The Committee will approve the Award Opportunity and Award
Opportunity Scale for Participants at the Senior Vice President level or above.

Each Participant's Award Opportunity and Award Opportunity Scale will be
segmented into one or more of the following Award Components: corporate,
business unit and/or individual, as determined by the Plan Administrator for
Participants at and below the Vice President Level, and by the Committee for
Participants at the Senior Vice President level or above. The weighting of these
components will be determined by the Plan Administrator or the Committee as the
case may be. One component's performance will not directly affect the portion of
the Award Opportunity earnable from another component except as it relates to
the Threshold Objectives.

At the start of each Plan Year, Performance Measures that correspond to the
Award Opportunity Scale will also be determined. Corporate Performance Measures
will be approved by the Committee. Business Unit Performance Measures will be
approved by the Plan Administrator. Individual Goals will be set jointly between
the Participant and the Participant's leader. The Individual Goals for the Chief
Executive Officer of The Principal shall be established by the Committee. The
Individual Goals can vary from year to year, from one position to another, and
from one incumbent to another. Where the development of appropriate Individual
Goals for a partial year would be impractical, eligibility for the individual
component may be delayed until the following Plan Year or paid at the Award
Opportunity level with approval by the leader.

                         SECTION 6. AWARD DETERMINATION

Unless otherwise determined by the Plan Administrator in writing, the
Participant's Award Opportunity for calculation of the annual award is
determined by the Participant's job or Job Level and business unit with an
Employer held on the last day of the Plan Year and will be applied for the
entire Plan Year.

Unless otherwise determined by the Plan Administrator, Pro-Ration Factor will be
applied to a Participant's award if the Participant transfers to or from a
ineligible position within the Plan Year.

When needed, interpolated performance levels for Corporate Performance Measures,
Business Unit Performance Measures, and where appropriate, Individual Goals will
be established on a straight-line basis in the Award Opportunity Scale. If
actual performance falls below the minimum Performance Measure set forth for a
particular Award Component, that Award Component will be zero, If actual
performance is above the maximum Performance Measure for a particular Award
Component, that Award Component will be the maximum determined by the Committee.

Notwithstanding anything else contained in this Plan to the contrary, all
Threshold Objectives with respect to such Plan Year must be met in order for any
award to be made under this Plan.

The Committee approves corporate and business unit Performance Measure results.
Leaders approve Individual Goal results.

                                        5

Amended and Restated as of January 1, 2001.

<PAGE>   6
At the end of the Plan Year the value of the actual awards is calculated by
completing the following steps. Step 1: Determination of the Component Score.
The Component Score is the corporate, business unit or individual component
percentage that is the weighted average of the scores of the Performance
Measures for one or more Performance Measures and Individual Goals established
for each component. Step 2: Determination of Award Score. The Award Score is the
weighted average of Component Scores for the appropriate components (corporate,
business unit, individual). Step 3: Determination of Participant award. The
annual award paid to each will be calculated by multiplying, 1) the
Participant's Fixed Salary earnings received during the Plan Year; by 2) the
Award Opportunity, by (3) Award Score, and by (4) the Pro-Ration Factor.

In comparing actual performance against the Performance Measures, the Committee,
by recommendation of the Chief Executive Officer may exclude from such
comparison any extraordinary gains, losses, charges, or credits which appear on
the Company's books and records as it deems appropriate. An extraordinary item
may include, without limiting the generality of the foregoing, an item in the
Company's financial statements reflecting an accounting rule, tax law, or major
legislative change not taken into consideration in the establishment of the
Performance Measures. In addition, the impact of a material disruption in the
U.S. economy or a substantive change in the Company's business plans also may be
deemed to be such an extraordinary item.

In no event will the sum of all annual awards paid to Participants under the
Plan exceed 6% of pre-tax GAAP operating earnings of the Company for the Plan
Year. If the awards calculated for the year would so exceed 6% of operating
earnings, all calculated awards under the plan shall be proportionately reduced
so the awards aggregate to no more than 6% of operating earnings.

                            SECTION 7. DISTRIBUTIONS

No payment shall be made to any Participant who is on Final Warning any time
during the Plan Year.

Award payments shall be made following the release of audited results after the
end of the Plan Year in which they are earned, but no later than March 15.

Upon a Participant's death prior to the end of the Plan Year, the Participant's
Beneficiary (or, if none is named, the Participant's estate) shall receive an
early distribution based on the Fixed Salary received during the Plan Year,
multiplied by the Award Opportunity. Upon a Participant's death following the
close of the Plan Year, but prior to an Award payment, the Participant's
Beneficiary (or, if none is named, the Participant's estate) shall receive a
distribution at the same times as other Participants and the amount payable
shall be calculated according to Section 6.

Unless otherwise determined by the Plan Administrator in writing, upon a
Participant's Disability, Retirement, or involuntary termination due to office
closing, downsizing or outsourcing, the Participant shall receive a distribution
at the same time as other Participants and the amount payable shall be
calculated according to Section 6.

If a Participant terminates and is rehired during a Plan Year, the Participant's
eligibility will be restored as if they had not terminated and there will be no
Pro-Ration Factor of the award payable to the Participant. Non-exempt employees
who have not completed the 6-month employment period to be a

                                        6

Amended and Restated as of January 1, 2001.

<PAGE>   7
Participant in the Plan will use the adjusted service date to determine when
they are eligible to be a Participant in the Plan.

If a Participant is separated from employment for Cause, as determined by the
Company, the Participant shall not be entitled to receive any further payment
under the Plan with respect to any Plan Year.

Except as provided in Section 8, if a Participant's employment is terminated for
any other reason other than those otherwise outlined above, the Participant
shall not be entitled to receive any payment in respect to any Plan Year that
had not ended prior to the date of the Participant's termination of employment.

                          SECTION 8. CHANGE OF CONTROL

Capitalized words used in this Section 8 have the meaning ascribed to them under
the Principal Severance Pay Plan for Senior Executives as amended from time to
time, unless the context clearly indicates otherwise. Notwithstanding the
foregoing, the following terms shall have the meanings ascribed to them in
Section 3 hereof: Board, Company, Disability, Employer, Executive Participant,
Participant, Plan.

Within ten (10) days following the later of a Change Date or Merger of Equals
Cessation Date ("Trigger Date"), the Company shall pay each Executive
Participant an amount equal to the Executive Participant's Target Annual Bonus
for the year in which the Trigger Date occurs multiplied by fraction, the
numerator of which is the number of days elapsed in the year up to and including
the Trigger Date, and the denominator of which is 365, in satisfaction of the
Company's obligations under the Plan for the period prior to the Trigger Date,

If, during the Post-Change Period (other than during a Post-Merger of Equals
Period) an Executive Participant's employment is terminated other than for Cause
or Disability, or an Executive Participant terminates employment for Good
Reason, the Company shall pay the Executive Participant the Executive
Participant's Target Annual Bonus for the year in which such termination occurs
multiplied by a fraction, the numerator of which is the number of days elapsed
in the year up to and including the Termination Date, and the denominator of
which is 365, in satisfaction of the Company's obligations under the Plan for
the period prior to the Termination Date, Any amounts payable under this
paragraph shall be reduced (but not below zero) by the amount of any annual
bonus paid to the Executive Participant with respect to the Employer's fiscal
year in which the Termination Date occurs. If an Executive Participant receives
a payment pursuant to this third paragraph of this Section 8, the Executive
Participant may not also receive payment pursuant to the fourth paragraph of
this Section 8.

If the Plan is terminated on or after the Trigger Date, within the same Plan
year as the Trigger Date, or any amendment to the Plan is adopted that adversely
affects the rights of any Participant or Beneficiary, the Company shall pay the
Participant the Participant's Target Annual Bonus for the year in which such
amendment or Plan termination occurs multiplied by a fraction, the numerator of
which is the number of days elapsed in the year up to and including the
amendment or Plan termination, and the denominator of which is 365, in
satisfaction of the Company's obligations under the Plan for the period prior to
the amendment or Plan termination. Any amounts payable under this paragraph
shall be reduced (but not below zero) by the amount of any annual bonus paid to
an Executive Participant with

                                        7

Amended and Restated as of January 1, 2001.

<PAGE>   8
respect to the Employer's fiscal year in which the Trigger Date occurs. If an
Executive Participant receives a payment pursuant to this fourth paragraph of
this Section 8, the Executive Participant may not also receive payment pursuant
to the third,paragraph of this Section 8.

Any amounts payable under this Section 8 shall be reduced (but not below zero)
by the amount of any annual bonus paid to an Executive Participant with respect
to the Employer's fiscal year in which the Trigger Date occurs.

                            SECTION 9. ADMINISTRATION

The Plan Administrator shall maintain such procedures and records as will enable
the Plan Administrator to determine the Participants and their Beneficiaries who
are entitled to receive benefits under the Plan and the amounts thereof.

The Plan Administrator shall have the exclusive right, power, and authority, in
its sole, full and absolute discretion, to interpret any and all of the
provisions of the Plan, to supervise the administration and operation of the
Plan, and to consider and decide conclusively any questions (whether fact or
otherwise) arising in connection with the administration of the Plan or any
claim for benefits arising under the Plan. Any decision or action of the Plan
Administrator shall be conclusive and binding on all parties, including the
Participants. The Plan Administrator shall also have the discretion and
authority to adopt and revise rules and procedures relating to the Plan, to
correct any defect or omission or reconcile any inconsistency in this Plan or
any payment hereunder, and to make any other determinations that it believes
necessary or advisable in the administration of the Plan.

                  SECTION 10. AMENDMENT AND TERMINATION OF PLAN

The Committee shall have the authority to amend the Plan at any time and from
time to time. Any such amendments must be made by written instrument, and notice
of such amendment shall be provided to Participants as soon as practical after
adoption.

The Company reserves the right to terminate the Plan in any respect and at any
time and may do so at any time pursuant to a written resolution of the
Committee.

Notwithstanding anything else to the contrary set forth in the Plan, no
amendment or termination of the Plan may adversely affect the rights of any
Participant or Beneficiary in respect to an award determined or earned with
respect to a Plan Year.

                            SECTION 11. MISCELLANEOUS

No Participant or other employee shall at any time have a right to be selected
for participation in the Plan, despite having previously participated in the
Plan or any other incentive or bonus plan of the Company or any of it
affiliates.

                                       8

Amended and Restated as of January 1, 2001.

<PAGE>   9
The existence of this Plan, as in effect at any time or from time to time, or
participation under the Plan, shall not be deemed to constitute a contract of
employment between the Company or any Subsidiary and any employee or
Participant, nor shall it constitute a right to remain in the employ of the
Company or it's Subsidiary.

Any notice required or permitted under the Plan shall be sufficient if in
writing and hand delivered, sent by first class, registered or certified mail,
or by such other means as the Committee, in its sole discretion, may deem
appropriate. Such notice shall be deemed as given as of the date of delivery or,
if delivery is made by mail, as of the date shown on the postmark or on the
receipt for registration or certification. Mailed notice to the Committee shall
be directed to the Company's address, c/o the Plan Administrator. Mailed notice
to a Participant or Beneficiary shall be directed to the individual's last known
home address in the Participant's Employer's records.

Nothing contained in the Plan shall constitute a guaranty by any Employer or any
other person or entity that the assets of such entity will be sufficient to pay
any benefit hereunder.

Subject to the provisions of applicable law, no interest of any person or entity
in any award, or any right to receive any distribution or other benefit under
the Plan, shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, or other alienation or encumbrance of any kind; nor may such
interest in any award, or right to receive any distribution or any benefit under
the Plan, be taken, either voluntarily or involuntarily, for the satisfaction of
the debts of, or other obligations or claims against, such person or entity,
including (but not limited to) claims for separate maintenance and claims in
bankruptcy proceedings.

The Plan shall be construed and administered under the laws of the State of
Iowa.

The Employer shall have the right to deduct, from amounts payable pursuant to
the Plan or from amounts otherwise payable to the Participant (or payable to the
beneficiary of the Participant, if the Participant is deceased), any taxes
required by law to be withheld from such awards.

Nothing contained in this Plan shall be construed to prevent the Company, or any
Subsidiary, from taking any corporate action which is deemed by it to be
appropriate, or in its best interest, whether or not such action would have an
adverse effect on this Plan, or any awards made under this Plan. No employee,
beneficiary, or other person shall have any claim against the Company, or a
Subsidiary, as a result of any such action.

Nothing express or implied in this Plan is intended or may be construed to give
any person other than Participants and Beneficiaries any rights or remedies
under this Plan.

A recipient of any payment under this Plan who is not a current employee of an
Employer, shall have the obligation to inform the Company of his or her current
address, or other location to which payments are to be sent. Neither the Company
nor any Subsidiary shall have any liability to such recipient, or any other
person, for any failure of such recipient, or person, to receive any payment if
it sends such payment to the address provided by such recipient by first class
mail, postage paid, or other comparable delivery method. Notwithstanding
anything else in this Plan to the contrary, if a recipient of any payment cannot
be located within 120 days following the date on which such payment is due after
reasonable efforts by the Company or a Subsidiary, such payments and all future
payments owing to

                                        9

Amended and Restated as of January 1, 2001.

<PAGE>   10
such recipient shall be forfeited without notice to such recipient. If, within
two years (or such longer period as management, in its sole discretion, may
determine), after the date as of which payment was forfeited (or, if later, is
first due), the recipient, by written notice to the Company, requests that such
payment and all future payments owing to such recipient be reinstated and
provides satisfactory proof of their identity, such payments shall be promptly
reinstated. To the extent the due date of any reinstated payment occurred prior
to such reinstatement, such payment shall be made to the recipient (without any
interest from its original due date) within 90 days after such reinstatement.

On behalf of the Human Resources Committee of the Board of Directors of the
Company, this Amended and Restated Incentive Pay Plan has been executed this
_______ day of _____________, 2001.

By:
   -----------------------------
C. Daniel Gelatt, Jr., Chair

                                       10

Amended and Restated as of January 1, 2001.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00026-of-00352.parquet"}]]