Document:

exhibit10ck.htm

    EXHIBIT
10(ck)

    National Western Life
Insurance Company

    2010
DOMESTIC MARKETING OFFICER BONUS PROGRAM

    

    This 2010
Domestic Marketing Officer Bonus Program (the “Program”) is designed to reward
eligible Domestic Marketing officers of National Western Life Insurance Company
(the “Company”) for their performance in achieving pre-determined sales targets
while assisting the Company in managing to its profit criteria.  The
Program is adopted by the Compensation and Stock Option Committee of the Board
of Directors of the Company (the “Committee”) on December 16, 2009.

    

    A
Domestic Marketing officer of the Company who is designated by the Committee as
a participant in the Program (a “Participant”) shall be eligible to receive a
bonus hereunder.

    

    The
Program incorporates three measurable performance factors:  (1)
Company sales, which are defined as net placed annualized target premium for
domestic Life business and as total placed premium for domestic Annuity
business, (2) persistency, and (3) Company expense management.  The
bonus percentages included in the tables below pertain to Participants who are
Domestic Marketing officers at the Vice President level and
higher.  The bonus percentages for Participants who are Assistant Vice
Presidents are determined using one-half of the bonus
percentages shown for Vice Presidents and above.

    

    Each of
the three 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 percentage (applied to Base Salary (as
defined below)) is 75% for sales performance, 15% for persistency performance,
and 10% for expense management performance, for an overall par bonus percentage
of 100%.  Actual results compared to the targets can either increase
or decrease these percentages as explained in each of the following
sections.  For purposes of the Program, the Base Salary of each
Participant is his annual base salary for 2010 (prorated for Participants who
are not employed by the Company for the entire 2010 performance period from
January 1, 2010 through December 31, 2010) as certified by the Committee in its
sole discretion.

    

    Company
Sales Component (75%):

    

    The sales
component of the Program is further subdivided between domestic Life production
and domestic Annuity production.  For 2010, the Domestic sales goals
for the following lines of business of the Company are:

     

    	
        
          Domestic
  Life -- $5,000,000 net placed annualized target premium (excluding California
  1st year
  business).  For purposes of this Program net placed annualized
  target premium for MaxWealth and Lifetime Returns Select (LTRS) total single
  premium shall be 14% of actual premium, net placed annualized target premium
  for LTRS 5 year pay premium shall be 55% of actual premium, and net placed
  annualized target premium for LTRS 10 year pay premium shall be 85% of actual
  premium.

        

      
	
        
          
            Domestic
  Annuities -- $800,000,000 total placed
  premium
 

          

        

      

    
      
        
           

        

         

      

      
        Page 1of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    The
Company’s New Business Market Summary Report (NWAR60 Report No. 5A (Premium))
will be the source of sales results for purposes of this Program.  The
bonus percentage corresponding with the domestic Life sales production levels
achieved in 2010 will be applied to 100% of each Participant’s Base Salary in
accordance with the following grid:

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Life
      Placed Target

                                        	
                                          Bonus

                                        
	
                                          Premium
      (Minus California

                                        	
                                          %*

                                        
	
                                          1st
      Yr Premium)

                                        	 
      
	
                                          $4,000,000

                                        	
                                          12.5%

                                        
	
                                          $4,200,000

                                        	
                                          19.0%

                                        
	
                                          $4,400,000

                                        	
                                          25.5%

                                        
	
                                          $4,600,000

                                        	
                                          32.0%

                                        
	
                                          $4,800,000

                                        	
                                          38.5%

                                        
	
                                          $5,000,000

                                        	
                                          45.0%

                                        
	
                                          $5,200,000

                                        	
                                          51.5%

                                        
	
                                          $5,400,000

                                        	
                                          58.0%

                                        
	
                                          $5,600,000

                                        	
                                          64.5%

                                        
	
                                          Increment for
      every

                                        	 
      
	
                                          additional
      $500,000

                                        	 
      
	
                                          thereafter

                                        	
                                          5.0%

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    The level
shaded in gray represents the Company’s sales goals for each segment for
purposes of the Program and represents the par performance level.  If
the actual results attain this level, the Participant would be eligible to
receive a bonus of 45% of Base Salary.  If domestic net placed
annualized target premium (excluding California 1st year
business) is below the lowest target amount, no bonus percentage will be
earned.  The bonus percentage shown for each specified amount of net
placed annualized target premium applies if actual performance is equal to or
greater than the amount shown and is less than the amount shown for the next
level.  Bonus percentages associated with Life sales are not capped
but increase by five percentage points with every additional $500,000 of net
placed annualized target premium.

    

    
      
        
           

        

        
        

      

      
        Page 2of
9         

          December 16,
2009

        

        
          

        

      

      
         

      

    

    The bonus
percentage corresponding with the domestic Annuity sales production levels
achieved in 2010 will be applied to 100% of each Participant’s Base Salary in
accordance with the following grid:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            Annuity
      Total Placed

                                          	
                                            Bonus

                                          
	
                                            Premium1

                                          	
                                            %*

                                          
	
                                            $675,000,000

                                          	
                                            5.0%

                                          
	
                                            $700,000,000

                                          	
                                            10.0%

                                          
	
                                            $725,000,000

                                          	
                                            15.0%

                                          
	
                                            $750,000,000

                                          	
                                            20.0%

                                          
	
                                            $775,000,000

                                          	
                                            25.0%

                                          
	
                                            $800,000,000

                                          	
                                            30.0%

                                          
	
                                            $825,000,000

                                          	
                                            35.0%

                                          
	
                                            $850,000,000

                                          	
                                            40.0%

                                          
	
                                            $875,000,000

                                          	
                                            45.0%

                                          
	
                                            Greater
      than

                                          	 
      
	
                                            $875,000,000

                                          	
                                            45.0%

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    1 Annuity
Total Placed Premium does not include premium ceded to a reinsurance
program.  Also, any annuity premium resulting from a conservation
program is not included.

     

    * Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    The level
shaded in gray represents the Company’s sales goal for the segment for purposes
of the Program and represents the par performance level.  If the
actual results attain this level, the Participant would be eligible to receive a
bonus of 30% of Base Salary.  If domestic Annuity total placed premium
(not including premium ceded to a reinsurance program or premium resulting from
a conservation program) is below the lowest target amount, no bonus percentage
will be earned for this segment.  The bonus percentage shown for each
specified amount of total placed premium applies if actual performance is equal
to or greater than the amount shown and, except for the last level, is less than
the amount shown for the next level.  The bonus percentage for annuity
sales is capped at 45% irrespective of sales production above the maximum
annuity sales goal.

    

    Company
Sales Example:

    

    Assuming
a Participant Base Salary of $100,000 and 2010 production of $5,000,000 of
domestic Life net placed annualized target premium (excludes California
business)an and $800,000.000 of domestic Annuity placed total premium, the
Participant’s 2010 sales bonus component under the Program would be $75,000
($100,000 x 45% for Life business plus $100,000 x 30% for Annuity
business).

    
       

      
        Page 3of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    Persistency Component
(15%):

    

    Similar
to the sales component, the persistency component of the Program is further
subdivided between domestic Life business and domestic Annuity
business.

    

    The
24th
month ratio of actual persistency to expected (i.e., pricing) persistency for
2010 as reported in the Company’s Duration Score Listing query will serve as the
measure for the domestic Life persistency component of the
Program.  For purposes of the persistency measurement, the parameters
include all writing agents (active and terminated) and all domestic Life
business (universal life and traditional).  Based upon these
persistency performance factors, the bonus percentage corresponding with the
domestic Life persistency levels achieved in 2010 will be applied to each
Participant’s Base Salary in accordance with the following grid:

    

    
      
        
          
            
              
                
                  	
                          Domestic
      Life

                        	
                          Bonus

                        
	
                          Persistency

                        	
                          %*

                        
	
                          Less
      than 88%

                        	
                          0%

                        
	
                          88%

                        	
                          1.5%

                        
	
                          91%

                        	
                          3.0%

                        
	
                          94%

                        	
                          4.5%

                        
	
                          97%

                        	
                          6.0%

                        
	
                          100%

                        	
                          7.5%

                        
	
                          101%

                        	
                          9.0%

                        
	
                          102%

                        	
                          10.5%

                        
	
                          103%

                        	
                          12.0%

                        
	
                          104%

                        	
                          13.5%

                        
	
                          105%
      or greater

                        	
                          15.0%

                        

                

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    
      
        
        

      

      
        Page 4of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    The
Duration Score Listing query (“Durational Totals” report) supports the domestic
Annuity line of business for 2010.  Therefore, the 24th month
ratio of actual persistency to expected (i.e., pricing) persistency as reported
in the Company’s Duration Score Listing query for domestic Annuity business will
also serve as the measure for the domestic Annuity persistency component of the
Program.  The bonus percentage corresponding with the domestic Annuity
persistency levels achieved in 2010 will be applied to each Participant’s Base
Salary in accordance with the following grid:

    

    

    
      
        
          
            
              
                	
                        Annuity

                      	
                        Bonus

                      
	
                        Persistency

                      	
                        %*

                      
	
                        Less
      than 96%

                      	
                        0%

                      
	
                        96%

                      	
                        1.5%

                      
	
                        97%

                      	
                        3.0%

                      
	
                        98%

                      	
                        4.5%

                      
	
                        99%

                      	
                        6.0%

                      
	
                        100%

                      	
                        7.5%

                      
	
                        101%

                      	
                        9.0%

                      
	
                        102%

                      	
                        10.5%

                      
	
                        103%

                      	
                        12.0%

                      
	
                        104%

                      	
                        13.5%

                      
	
                        105%
      or greater

                      	
                        15.0%

                      

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    The
levels shaded in gray in the two persistency grids above represent the Company’s
domestic Life and Annuity persistency goals for the segments for purposes of the
Program and represent the par performance level.  If the actual
results attain this level, the Participant would be eligible to receive an
aggregate bonus of 15% of Base Salary.  If persistency is below the
lowest target amount, no bonus percentage will be earned for the
segment.  The bonus percentage shown for each specified level of
persistency applies if actual performance is equal to or greater than the amount
shown and, except for the last level, is less than the amount shown for the next
level.

    

    Persistency
Example:

    

    Assuming
a Participant Base Salary of $100,000 and 2010 persistency ratios of 100% for
domestic Life business and 100% for domestic Annuity business, the Participant's
2010 persistency bonus component under the Program would be $15,000 ($100,000 x
7.5% for Life business plus $100,000 x 7.5% for Annuity business).

    

    
      
        
        

      

      
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9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    Company Expense Component
(10%):

    

    The
expense component of the Program is based upon the ratio of actual Company
expenses to domestic target premium sales for 2010.  For purposes of
this ratio, domestic Annuity target premium is defined as 7.5% of total placed
premium for 2010.  Actual expenses include all cost center expenses
with the exception of bonuses paid, agent health claims, agent reserve balance
changes, and sales conference expenses.

    

    Based
upon the actual expense to sales ratio achieved, the corresponding bonus
percentage based upon the following chart will be applied to 100% of each
Participant’s Base Salary in accordance with the following grid:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Ratio
      of Expense/

                                        	 
      
	
                                          Target
      Premium

                                        	
                                          Bonus
      %*

                                        
	
                                          Less
      than 4.15%

                                        	
                                          22.5%

                                        
	
                                          4.15%
      to 4.30%

                                        	
                                          20.0%

                                        
	
                                          4.30%
      to 4.45%

                                        	
                                          17.5%

                                        
	
                                          4.45%
      to 4.60%

                                        	
                                          15.0%

                                        
	
                                          4.60%
      to 4.75%

                                        	
                                          12.5%

                                        
	
                                          4.75%
      to 4.90%

                                        	
                                           10.0%

                                        
	
                                          4.90%
      to 5.05%

                                        	
                                          7.5%

                                        
	
                                          5.05%
      to 5.20%

                                        	
                                          5.0%

                                        
	
                                              5.20%
      to 5.35%

                                        	
                                          2.5%

                                        
	
                                          5.35%
      or More

                                        	
                                          0.0%

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    If the
actual expense to sales ratio exceeds the highest level shown (5.35%), no bonus
percentage will be earned.  The bonus percentage shown for each
specified expense to sales ratio applies if the actual expense to sales ratio is
equal to or less than the amount shown and, except for the last level, is
greater than the amount shown for the next level.

    

    Company
Expense Example:

    

    Assuming
actual expenses of $2.65 million, domestic Life target premium sales of $5.0
million and domestic Annuity total placed premium of $800 million, the
calculated ratio would be 4.08% ($2.65 million divided by the sum of $5.0
million domestic Life target sales and $60 million domestic Annuity (7.5% of
$800 million)).  The Participant’s 2010 expense management bonus
component under the Program, assuming a $100,000 Base Salary, would be $22,500
($100,000 x 22.5%).

    
      
        
        

      

      
        Page 6of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    Aggregate
Example:

    

    From the
above examples, a Participant with a $100,000 Base Salary would receive a 2010
bonus under the Program of 112.5% or $112,500 ($75,000 sales plus $15,000
persistency plus $22,500 expense management) reflecting expense management
better than “par” and sales and persistency at “par”.  See
“Administration” for further guidelines when the bonus percentage exceeds
100%.

    

    Administration:

    

    Determination of
Bonuses.  On a quarterly basis the Committee or the President
of the Company (the “President”) shall determine the extent to which the
measurable performance factors have been achieved and the bonus percentage for
the Participants for 2010.  The Committee or the President, as
applicable, shall certify such determination in writing.  The bonus
for each Participant shall be determined by applying the total certified bonus
percentage to the Participant’s Base Salary in accordance with the calculation
methodology described below.  Notwithstanding any contrary provision
of the Program, the Committee or the President, in its or his sole discretion,
may eliminate or reduce the bonus payable to any Participant below that which
otherwise would be payable under the Program formula.

     

    Bonus
amounts under the Program will be calculated quarterly on a cumulative basis
using actual year-to-date results compared to prorated performance factors,
prorated Base Salary for the calculation period, and a reduction for the amount
of prior quarterly bonus payments.  The overall quarterly bonus
percentage will be capped at 100% of prorated Base Salary for the calculation
period.  In the event that actual year-to-date results at the end of a
quarter are less than the aggregate prior bonus payments to date, no additional
bonus will be paid for that quarter.  However, bonus amounts paid
year-to-date will not be recouped from Participants in the event of a suspension
of quarterly payments except at the end of the Program year if
unearned.  The Company may recoup any excess bonus payments from any
other bonus payments (including bonus pool payments) payable hereunder after the
end of the Program year, from bonuses under any successor bonus plan or program,
or from any other wages or compensation payable to a Participant.  A
Participant must consent to such recoupment as a condition for participation in
the Program.

     

    Timing and Form of
Payment.  After the bonus amount for a quarter is certified by
the Committee or the President, as applicable, the bonuses shall be paid in cash
in a single lump sum within 45 days after the last day of the quarter, provided
that the payment (if any) for the fourth quarter shall occur on or after
January 1, 2011 and on or before March 15, 2011.  Bonus payments
are intended to qualify as short-term deferrals under section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and shall be paid not
later than the latest specified payment date (March 15, 2011).  The
Company shall have the authority to delay the payment of any bonus under the
Program to the extent it deems necessary or appropriate to comply with Code
section 409A(a)(2)(B)(i).

     

    
      
        
        

      

      
        Page 7of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    Bonus
Pool.  If at the end of the Program year the aggregate bonus
percentage exceeds 100%, the incremental percentage above 100% will be applied
to the Base Salaries of all Participants to determine a dollar amount to be put
into a “pool”.  The pool amount will be allocated to Participants
based upon the recommendation of the Senior Vice President – Domestic Marketing
and as approved by the Committee or the President.  The recommendation
of the pool allocation by the Senior Vice President – Domestic Marketing must be
submitted to the Committee and the President by January 31,
2011.  Subject to forfeiture as described below, the pool allocations
will be paid out quarterly (25% each quarter) to the designated Participants in
the following calendar year (i.e., 2011) with the regular pay period that occurs
on or immediately preceding the last day of the quarter.  Participants
must be currently employed by the Company to receive pool
payments.  In other words, unpaid pool bonuses will be forfeited by
Participants upon termination of employment with the Company.  Amounts
forfeited by terminated Participants will remain the property of the Company and
will not be redistributed among the remaining Participants.  Bonus
pool payments are intended to qualify as short-term deferrals under
section 409A of the Code.  The Company shall have the authority
to delay the payment of any bonus under the Program to the extent it deems
necessary or appropriate to comply with Code
section 409A(a)(2)(B)(i).

     

    

    Effect of
Termination.

     

    
      	
              ·  

            	
              If
      a Participant terminates employment with the Company for any reason after
      the end of the 2010 performance period but prior to the date the bonus for
      such period is paid, the Participant shall be entitled to payment of the
      bonus determined by the Committee or the President, subject to reduction
      or elimination under the last sentence of the first paragraph of the
      “Determination of Bonuses” section above based on the circumstances
      surrounding such termination of employment; provided that unpaid bonus
      pool payments, if any, shall be forfeited in any event as described
      above.

            

    

     

    
      	
              ·  

            	
              If
      a Participant terminates employment with the Company prior to the end of
      the applicable 2010 Performance Period for any reason other than
      termination for cause by the Company (as determined by the Committee or
      the President in its or his discretion), the Committee or the President,
      as applicable, shall reduce the Participant’s bonus proportionately based
      on the date of termination (and subject to further reduction or
      elimination under the last sentence of the first paragraph of the
      “Determination of Bonuses” section above based on the circumstances
      surrounding such termination of employment); provided that unpaid bonus
      pool payments, if any, shall be forfeited in any event as described
      above.

            

    

     

    
      	
              ·  

            	
              If
      a Participant is terminated for cause by the Company prior to the payment
      of any bonus, no bonus shall be payable
  hereunder.

            

    

     

    
      	
              ·  

            	
              If
      a Participant dies prior to the payment of a bonus payable hereunder, the
      bonus shall be paid to the Participant’s
estate.

            

    

     

    
      
        
        

      

      
        Page 8of
9 

          December 16,
2009

        

        
          

        

      

      
         

      

    

    Source of
Payments.  Bonuses that may become payable under the Program
shall be paid solely from the general assets of the Company.  The
rights of each Participant (and any person claiming entitlement by or through a
Participant) hereunder shall be solely those of an unsecured general creditor of
the Company.  The Program shall be unfunded.  The Company
may maintain bookkeeping accounts with respect to Participants who are entitled
to bonuses under the Program, but such accounts shall be used merely for
bookkeeping convenience.  The Company shall not be required to
segregate any assets that may at any time be represented by interests in bonuses
nor shall the Program be construed as providing for any such
segregation.

     

    Committee
Administration.  The Program shall be administered by the
Committee and, to the extent specified herein, the President.  The
Committee and, to the extent specified herein, the President shall have complete
discretion and authority to administer the Program and to interpret the
provisions of the Program.  Any determination, decision, or action of
the Committee or the President in connection with the construction,
interpretation, administration, or application of the Program shall be final,
conclusive, and binding upon all persons, and shall be given the maximum
deference permitted by law.  The Committee may amend or terminate the
Program at any time without the consent of any Participant by adoption of a
written instrument.

     

    Miscellaneous.  The
Company shall withhold all applicable taxes and other amounts required by law to
be withheld from any bonus payment, including any non-U.S., federal, state, and
local taxes.  A Participant’s rights under this Program will not be
assignable, transferable, pledged, or in any manner alienated, whether by
operation of law or otherwise, except as a result of death or incapacity where
such rights are passed pursuant to a will or by operation of law.  Any
assignment, transfer, pledge, or other disposition in violation of this
provision will be null and void.  Nothing in the Program shall
interfere with or limit in any way the right of the Company to terminate any
Participant’s employment at any time, nor confer upon any Participant any right
to continue in the employment of the Company.  Bonuses payable
hereunder shall constitute special discretionary incentive payments to the
Participants and will not be required to be taken into account in computing the
amount of salary or compensation of the Participants for the purpose of
determining any contributions to or any benefits under any pension, retirement,
profit-sharing, bonus, life insurance, severance or other benefit plan of the
Company or under any agreement with a Participant, unless the Company
specifically provides otherwise.  The Program and all determinations
made and actions taken pursuant hereto, to the extent not otherwise governed by
the Code, shall be governed by the law of the State of Texas, without giving
effect to conflict or choice of laws provisions thereof.  This Program
shall be binding upon and inure to the benefit of the Company, its successors
and assigns, and the Participants, and their heirs, assigns, and personal
representatives.  The captions used in this Program are for
convenience only and shall not be construed in interpreting the
Program.  Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall also include the plural,
and conversely.  This Program constitutes the final and complete
expression of agreement with respect to the subject matter hereof and may not be
amended except by a written instrument adopted by the Committee.

     

    

    
      
        
        

      

      
        Page 9of
9 

          December 16,
2009exhibit10cl.htm

    EXHIBIT
10(cl)

    National Western Life
Insurance Company

    2010 INTERNATIONAL MARKETING
OFFICER BONUS PROGRAM

    

    This 2010
International Marketing Officer Bonus Program (the “Program”) is designed to
reward eligible International Marketing officers of National Western Life
Insurance Company (the “Company”) for their performance in achieving
pre-determined sales targets while assisting the Company in managing to its
profit criteria.  The Program is adopted by the Compensation and Stock
Option Committee of the Board of Directors of the Company (the “Committee”) on
December 16, 2009.

    

    An
International Marketing officer of the Company who is designated by the
Committee as a participant in the Program (a “Participant”) shall be eligible to
receive a bonus hereunder.

    

    The
Program incorporates three measurable performance factors:  (1)
Company sales, which are defined as net placed annualized target premium for
International Life business and as total placed premium for International
Annuity business, (2) persistency, and (3) Company expense
management.  The bonus percentages included in the tables below
pertain to Participants who are International Marketing officers at the Vice
President level and higher.  The bonus percentages for Assistant Vice
Presidents are determined using one-half of the bonus
percentages shown for Vice Presidents and above.

    

    Each of
the three 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 percentage (applied to Base Salary (as
defined below) is 75% for sales performance, 15% for persistency performance,
and 10% for expense management performance, for an overall par bonus percentage
of 100%.  Actual results compared to the targets can either increase
or decrease these percentages as explained in each of the following
sections.  For purposes of the Program, the Base Salary of each
Participant is his annual base salary for 2010 (prorated for Participants who
are not employed by the Company for the entire 2010 performance period from
January 1, 2010 through December 31, 2010) as certified by the
Committee in its sole discretion.

    

    
      
        
                                                                         

        

         

      

      
        
          Page 1of
8

          December 16, 2009

        

        
          

        

      

      
         

      

    

    Company
Sales Component (75%):

    

    The sales
component of the Program is based upon an International Life sales target of
$30,450,000 net placed annualized target premium.  The Company’s New
Business Market Summary Report (NWAR60 Report No. 5A (Premium)) will be the
source of sales results for purposes of this Program.  The bonus
percentage corresponding with the International Life sales production levels
achieved in 2010 will be applied to 100% of each Participant’s Base Salary in
accordance with the following grid:

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Life
      Placed Target Premium

                                        	
                                          Bonus

                                        
	 
      	
                                          %*

                                        
	
                                          $26,950,000

                                        	
                                          25.0%

                                        
	
                                          $27,650,000

                                        	
                                          35.0%

                                        
	
                                          $28,350,000

                                        	
                                          45.0%

                                        
	
                                          $29,050,000

                                        	
                                          55.0%

                                        
	
                                          $29,750,000

                                        	
                                          65.0%

                                        
	
                                          $30,450,000

                                        	
                                          75.0%

                                        
	
                                          $31,150,000

                                        	
                                          85.0%

                                        
	
                                          $31,850,000

                                        	
                                          95.0%

                                        
	
                                          $32,550,000

                                        	
                                          100.0%

                                        
	
                                          Increment for every
      additional

                                        	 
      
	
                                          $700,000
      thereafter

                                        	
                                          5.0%

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    The level
shaded in gray represents the Company’s sales goal for purposes of the Program
and represents the par performance level.  If the actual results
attain this level, the Participant would be eligible to receive a bonus of 75%
of Base Salary.  If International Life net placed annualized target
premium is below the lowest target amount, no bonus percentage will be
earned.  The bonus percentage shown for each specified amount of net
placed annualized target premium applies if actual performance is equal to or
greater than the amount shown and is less than the amount shown for the next
level.  Bonus percentages associated with International Life sales are
not capped but increase by 5.0% with every additional $700,000 of net placed
annualized target premium.

    

    Company
Sales Example:

    

    Assuming
a Participant Base Salary of $100,000 and 2010 production of $30,000,000 of
International Life placed target premium, the Participant’s 2010 sales bonus
component under the Program would be $65,000 ($100,000 x 65%).

    
      
        
           

        

         

      

      
        Page 2of
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    Persistency Component
(15%):

    

    The
24th
month ratio of actual persistency to expected (i.e., pricing) persistency for
2010 as reported in the Company’s Duration Score Listing query will serve as the
measure for the persistency component of the Program.  For purposes of
the persistency measurement, the parameters include all international writing
agents (active and terminated) and all International Life business (universal
life and traditional).

    

    Based
upon these persistency performance factors, the bonus percentage corresponding
with the International Life persistency levels achieved in 2010 will be applied
to each Participant’s Base Salary in accordance with the following
grid:

    

    

    
      
        
          
            
              
                
                  
                    	
                            Life
      Business

                          	
                            Bonus

                          
	
                            Persistency

                          	
                            %*

                          
	
                            Less
      than 88%

                          	
                            0%

                          
	
                            88%

                          	
                            3%

                          
	
                            91%

                          	
                            6%

                          
	
                            94%

                          	
                            9%

                          
	
                            97%

                          	
                            12%

                          
	
                            100%

                          	
                            15%

                          
	
                            101%

                          	
                            18%

                          
	
                            102%

                          	
                            21%

                          
	
                            103%

                          	
                            24%

                          
	
                            104%

                          	
                            27%

                          
	
                            105%
      or greater

                          	
                            30%

                          

                  

                

              

            

          

        

      

    

    

    *  Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    The level
shaded in gray represents the Company’s International Life persistency goal for
purposes of the Program and represents the par performance level.  If
the actual results attain this level, the Participant would be eligible to
receive a bonus of 15% of Base Salary.  If persistency is below the
lowest target amount, no bonus percentage will be earned.  The bonus
percentage shown for each specified level of persistency applies if actual
performance is equal to or greater than the amount shown and, except for the
last level, is less than the amount shown for the next level.

    

    
      
        
           

        

         

      

      
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    Persistency
Example:

    

    Assuming
a Participant Base Salary of $100,000 and 2010 persistency of 92.1% for
International Life business, the Participant’s 2010 persistency bonus component
under the Program would be $6,000 ($100,000 x 6%).

    

    Company Expense Component
(10%):

    

    The
expense component of the Program is based upon the ratio of actual Company
expenses to International Life target premium sales for 2010.  Actual
expenses include all cost center expenses as reported in the monthly cost center
reports comparing actual expenses to budgeted expenses with the exception of
bonuses paid and sales conference expenses.

    

    Based
upon the actual expense to sales ratio achieved, the corresponding bonus
percentage based upon the following chart will be applied to 100% of each
Participant’s Base Salary in accordance with the following grid:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            Ratio
      of Expense/

                                          	
                                            Bonus

                                          
	
                                            Target
      Premium

                                          	
                                            %*

                                          
	
                                            Less
      than 5.20%

                                          	
                                            22.5%

                                          
	
                                            5.20%
      to 5.30%

                                          	
                                            20.0%

                                          
	
                                            5.30%
      to 5.40%

                                          	
                                            17.5%

                                          
	
                                            5.40%
      to 5.50%

                                          	
                                            15.0%

                                          
	
                                            5.50%
      to 5.60%

                                          	
                                            12.5%

                                          
	
                                            5.60%
      to 5.70%

                                          	
                                            10.0%

                                          
	
                                            5.70%
      to 5.80%

                                          	
                                            7.5%

                                          
	
                                            5.80%
      to 5.90%

                                          	
                                            5.0%

                                          
	
                                            5.90%
      to 6.00%

                                          	
                                            2.5%

                                          
	
                                            More
      than 6.00%

                                          	
                                            0.0%

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    * Reduce
by one-half for Participants who are Assistant Vice Presidents.

    

    If the
actual expense to sales ratio exceeds the highest level shown (6.00%), no bonus
percentage will be earned.  The bonus percentage shown for each
specified expense to sales ratio applies if the actual expense to sales ratio is
equal to or less than the amount shown and, except for the last level, is
greater than the amount shown for the next level.

    

    
      
        
           

        

         

      

      
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    Company
Expense Example:

    

    Assuming
actual expenses of $1.3 million and International Life target premium sales of
$30.0 million, the calculated expense to sales ratio would be
4.33%.  The Participant’s 2010 expense management bonus component
under the Program, assuming a $100,000 Base Salary, would be $22,500 ($100,000 x
22.5%).

    

    Aggregate
Example:

    

    From the
above examples, a Participant with a $100,000 Base Salary would receive a 2010
bonus under the Program of 93.5% or $93,500 ($65,000 sales plus $6,000
persistency plus $22,500 expense management) reflecting expense management
better than “par” and sales and persistency below “par”.  See
“Administration” for further guidelines when the bonus percentage exceeds
100%.

    

    Administration:

    

    Determination of
Bonuses.  On a quarterly basis the Committee or the President
of the Company (the “President”) shall determine the extent to which the
measurable performance factors have been achieved and the bonus percentage for
the Participants for 2010.  The Committee or the President, as
applicable, shall certify such determination in writing.  The bonus
for each Participant shall be determined by applying the total certified bonus
percentage to the Participant’s Base Salary in accordance with the calculation
methodology described below.  Notwithstanding any contrary provision
of the Program, the Committee or the President, in its or his sole discretion,
may eliminate or reduce the bonus payable to any Participant below that which
otherwise would be payable under the Program formula.

     

    Bonus
amounts under the Program will be calculated quarterly on a cumulative basis
using actual year-to-date results compared to prorated performance factors,
prorated Base Salary for the calculation period, and a reduction for the amount
of prior quarterly bonus payments.  The overall bonus advance
percentage will be capped at 100% of prorated Base Salary for the calculation
period.  In the event that actual year-to-date results at the end of a
quarter are less than the aggregate prior bonus payments to date, no additional
bonus will be paid for that quarter.  However, bonus amounts paid
year-to-date will not be recouped from Participants in the event of a suspension
of quarterly payments except at the end of the Program year if
unearned.  The Company may recoup any excess bonus payments from any
other bonus payments (including bonus pool payments) payable hereunder after the
end of the Program year, from bonuses under any successor bonus plan or program,
or from any other wages or compensation payable to a Participant.  A
Participant must consent to such recoupment as a condition for participation in
the Program.

     

    
      
        
           

        

         

      

      
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    Timing and Form of
Payment.  After the bonus amount for a quarter is certified by
the Committee or the President, as applicable, the bonuses shall be paid in cash
in a single lump sum within 45 days after the last day of the quarter, provided
that the payment (if any) for the fourth quarter shall occur on or after January
1, 2011 and on or before March 15, 2011.  Bonus payments are intended
to qualify as short-term deferrals under section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and shall be paid not later than
the latest specified payment date (March 15, 2011).  The Company shall
have the authority to delay the payment of any bonus under the Program to the
extent it deems necessary or appropriate to comply with Code
section 409A(a)(2)(B)(i).

     

    

    Bonus
Pool.  If at the end of the Program year the aggregate bonus
percentage exceeds 100%, the incremental percentage above 100% will be applied
to the Base Salaries of all Participants to determine a dollar amount to be put
into a “pool”.  The pool amount will be allocated to Participants
based upon the recommendation of the Senior Vice President – International
Marketing and as approved by the Committee or the President.  The
recommendation of the pool allocation by the Senior Vice President –
International Marketing must be submitted to the Committee and the President by
January 31, 2011.  Subject to forfeiture as described below, the pool
allocations will be paid out quarterly (25% each quarter) to the designated
Participants in the following calendar year (i.e., 2011) with the regular pay
period that occurs on or immediately preceding the last day of the
quarter.  Participants must be currently employed by the Company to
receive pool payments.  In other words, unpaid pool bonuses will be
forfeited by Participants upon termination of employment with the
Company.  Amounts forfeited by terminated Participants will remain the
property of the Company and will not be redistributed among the remaining
Participants.  Bonus pool payments are intended to qualify as
short-term deferrals under section 409A of the Code.  The Company
shall have the authority to delay the payment of any bonus under the Program to
the extent it deems necessary or appropriate to comply with Code
section 409A(a)(2)(B)(i).

    

    Effect of
Termination.

     

    
      	
              ·  

            	
              If
      a Participant terminates employment with the Company for any reason after
      the end of the 2010 performance period but prior to the date the bonus for
      such period is paid, the Participant shall be entitled to payment of the
      bonus determined by the Committee or the President, subject to reduction
      or elimination under the last sentence of the first paragraph of the
      “Determination of Bonuses” section above based on the circumstances
      surrounding such termination of employment; provided that unpaid bonus
      pool payments, if any, shall be forfeited in any event as described
      above.

            

    

     

    
      
        
           

        

         

      

      
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    

     

    
      	
              ·  

            	
              If
      a Participant terminates employment with the Company prior to the end of
      the applicable 2010 Performance Period for any reason other than
      termination for cause by the Company (as determined by the Committee or
      the President in its or his discretion), the Committee or the President,
      as applicable, shall reduce the Participant’s bonus proportionately based
      on the date of termination (and subject to further reduction or
      elimination under the last sentence of the first paragraph of the
      “Determination of Bonuses” section above based on the circumstances
      surrounding such termination of employment); provided that unpaid bonus
      pool payments, if any, shall be forfeited in any event as described
      above.

            

    

     

    
      	
              ·  

            	
              If
      a Participant is terminated for cause by the Company prior to the payment
      of any bonus, no bonus shall be payable
  hereunder.

            

    

     

    
      	
              ·  

            	
              If
      a Participant dies prior to the payment of a bonus payable hereunder, the
      bonus shall be paid to the Participant’s
estate.

            

    

     

    Source of
Payments.  Bonuses that may become payable under the Program
shall be paid solely from the general assets of the Company.  The
rights of each Participant (and any person claiming entitlement by or through a
Participant) hereunder shall be solely those of an unsecured general creditor of
the Company.  The Program shall be unfunded.  The Company
may maintain bookkeeping accounts with respect to Participants who are entitled
to bonuses under the Program, but such accounts shall be used merely for
bookkeeping convenience.  The Company shall not be required to
segregate any assets that may at any time be represented by interests in bonuses
nor shall the Program be construed as providing for any such
segregation.

     

    Committee
Administration.  The Program shall be administered by the
Committee and, to the extent specified herein, the President.  The
Committee and, to the extent specified herein, the President shall have complete
discretion and authority to administer the Program and to interpret the
provisions of the Program.  Any determination, decision, or action of
the Committee or the President in connection with the construction,
interpretation, administration, or application of the Program shall be final,
conclusive, and binding upon all persons, and shall be given the maximum
deference permitted by law.  The Committee may amend or terminate the
Program at any time without the consent of any Participant by adoption of a
written instrument.

     

    
      
        
           

        

         

      

      
        Page 7of
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          December 16, 2009

        

        
          

        

      

      
         

      

    

    Miscellaneous.  The
Company shall withhold all applicable taxes and other amounts required by law to
be withheld from any bonus payment, including any non-U.S., federal, state, and
local taxes.  A Participant’s rights under this Program will not be
assignable, transferable, pledged, or in any manner alienated, whether by
operation of law or otherwise, except as a result of death or incapacity where
such rights are passed pursuant to a will or by operation of law.  Any
assignment, transfer, pledge, or other disposition in violation of this
provision will be null and void.  Nothing in the Program shall
interfere with or limit in any way the right of the Company to terminate any
Participant’s employment at any time, nor confer upon any Participant any right
to continue in the employment of the Company.  Bonuses payable
hereunder shall constitute special discretionary incentive payments to the
Participants and will not be required to be taken into account in computing the
amount of salary or compensation of the Participants for the purpose of
determining any contributions to or any benefits under any pension, retirement,
profit-sharing, bonus, life insurance, severance or other benefit plan of the
Company or under any agreement with a Participant, unless the Company
specifically provides otherwise.  The Program and all determinations
made and actions taken pursuant hereto, to the extent not otherwise governed by
the Code, shall be governed by the law of the State of Texas, without giving
effect to conflict or choice of laws provisions thereof.  This Program
shall be binding upon and inure to the benefit of the Company, its successors
and assigns, and the Participants, and their heirs, assigns, and personal
representatives.  The captions used in this Program are for
convenience only and shall not be construed in interpreting the
Program.  Whenever the context so requires, the masculine shall
include the feminine and neuter, and the singular shall also include the plural,
and conversely.  This Program constitutes the final and complete
expression of agreement with respect to the subject matter hereof and may not be
amended except by a written instrument adopted by the Committee.

     

    

    

    
      
        
           

        

         

      

      
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          December 16, 2009

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