SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: FEBRUARY 28, 2005
(Date of earliest event reported)
PRINCIPAL FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-16725 42-1520346
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation) Identification Number)
711 HIGH STREET, DES MOINES, IOWA 50392
(Address of principal executive offices)
(515) 247-5111
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On February 28, 2005, the Human Resources Committee (the "Committee") of the
Board of Directors of Principal Financial Group, Inc. (the "Company") approved
the annual base salaries (effective as of March 5, 2005) of the Company's
executive officers after a review of comparative compensation information,
individual performance, internal equity and other factors as the Committee
determined important. The following table sets forth the annual base salary
levels of the Company's Named Executive Officers (which officers were determined
by reference to the Company's proxy statement dated April 1, 2004) for 2005,
compared to the actual salary paid in 2004:
NAME AND POSITION YEAR BASE SALARY
---------------------------------------------------------- ----------- --------------------------------------------------
J. Barry Griswell, Chairman, President and Chief 2005 $ 1,000,000
Executive Officer 2004 1,038,462
---------------------------------------------------------- ----------- --------------------------------------------------
John E. Aschenbrenner, President, Insurance and 2005 530,000
Financial Services 2004 521,077
---------------------------------------------------------- ----------- --------------------------------------------------
Michael H. Gersie, Executive Vice President, Global 2005 445,000
Asset Management 2004 441,231
---------------------------------------------------------- ----------- --------------------------------------------------
James P. McCaughan, President, Global Asset Management 2005 510,000
2004 519,231
---------------------------------------------------------- ----------- --------------------------------------------------
Larry D. Zimpleman, President, Retirement and Investor 2005 530,000
Services 2004 507,231
---------------------------------------------------------- ----------- --------------------------------------------------
Also on February 28, 2005, the Committee authorized the payment of annual
incentive awards to each of the Company's Named Executive Officers in respect of
the year ended December 31, 2004. The annual incentive awards were made pursuant
to the Company's broad-based annual incentive plan (the "PrinPay Plan"). In
February 2004, the Committee approved the following components upon which to
base awards for senior officers under the PrinPay Plan for 2004: (1) Company
performance and individual performance in the case of the Chief Executive
Officer and senior officers with service unit responsibilities, and (2) Company
performance, business unit performance and individual performance in the case of
senior officers with business unit responsibilities.
In February 2004, the Committee decided a single metric relating to achievement
of a stated level of operating earnings for the total organization would
determine how the Company performed for purposes of the PrinPay Plan for 2004.
The Committee established a level of operating earnings achievement as target
performance for the Company component under the plan. "Operating earnings" is a
non-GAAP financial measure used as the key financial measure in the Company's
industry. It is believed to best illustrate the performance of a Company's
normal, ongoing operations, which is important in understanding and evaluating
financial condition and results of operations on a basis comparable to that used
by securities analysts.
In approving the PrinPay awards for 2004, the Committee determined that the
result obtained for Company performance should be set at 120% of the target.
This determination of Company performance affected all participants. The extent
to which the Company performance result affected any particular participant
depended on the relative weight of the Company performance component to any
other business unit components applicable to the participant. After the
Committee assessed the Company's and applicable business unit performance for
the year and took into account the limitations stated in the plan (including,
without limitation, the attainment of certain minimum threshold performance
objectives), a final award was approved for each senior officer. The final award
approved for each senior officer took into account the Committee's assessment of
his or her performance based on the officer's level of achievement of the
individual goals the Committee established for that officer at the beginning of
the year. The individual goals for the Named Executive Officers related to
achievement of targeted levels of Company and applicable business unit
performance with respect to operating earnings, as well as other performance
measures and corresponding targets for business unit and individual performance
the Committee determined were important in furthering achievement of the
objectives and initiatives of the organization. For 2004, the Committee approved
for eligible senior officers, including the Named Executive Officers, target
awards at ranges of 50% to 250% of base salary for achieving performance at
target and maximum awards of 100% to 500% of base salary for achieving
performance above target. Attainment of individual performance targets varied
among Named Executive Officers.
2
The following table sets forth cash payments to the Named Executive Officers in
respect of their annual incentive awards under the PrinPay Plan for 2004 and
2003:
NAME YEAR ANNUAL INCENTIVE AWARD
------------------------------------------------------------ ----------- ------------------------------------------------
Mr. Griswell 2004 $ 1,800,000
2003 1,318,125
------------------------------------------------------------ ----------- ------------------------------------------------
Mr. Aschenbrenner 2004 624,511
2003 359,510
------------------------------------------------------------ ----------- ------------------------------------------------
Mr. Gersie 2004 397,108
2003 323,481
------------------------------------------------------------ ----------- ------------------------------------------------
Mr. McCaughan 2004 1,661,539
2003 1,412,500
------------------------------------------------------------ ----------- ------------------------------------------------
Mr. Zimpleman 2004 530,310
2003 367,015
------------------------------------------------------------ ----------- ------------------------------------------------
In addition to approving the annual incentive awards for the Named Executive
Officers for 2004, the Committee on February 28, 2005 made decisions for the
performance period of January 1, 2005 to December 31, 2005 with respect to the
Principal Financial Group, Inc. Annual Incentive Plan (the "Annual Incentive
Plan") approved by shareholders in May 2004, to be effective January 1, 2005. On
February 28, 2005, the Committee affirmed the incentive pool for the performance
period as defined in the Plan and determined that the participants in the plan
will include the Chief Executive Officer and each other "covered employee"
within the meaning of 162(m)(3) of the Internal Revenue Code. The Committee also
determined that the maximum award for the performance period for the Chief
Executive Officer will be 40% of the incentive pool, the maximum award for the
second highest "covered employee" will be 20% of the incentive pool, and the
maximum award for each of the other participants will be 13.3% of the incentive
pool. The Committee intends to administer the Annual Incentive Plan through the
use of negative discretion and subject to the achievement of the applicable
performance criteria (without regard to any adjustment that may increase the
amounts payable), so that the actual annual awards payable to any such officer
do not exceed the amount that would have been payable based on the same
performance measures, components and weightings as those that would have been
applicable to such senior officers under the PrinPay Plan. For 2005, the
Committee decided that the Company's achievement against a stated level of
operating earnings would be the sole determiner of Company performance under the
PrinPay Plan.
Beginning in 2004, the Committee determined that the long-term incentive plan
for senior officers would consist of stock-based compensation awards under the
Company's Stock Incentive Plan. Prior to 2004, the Company also made awards
under a long-term plan that existed before the Company became publicly-held in
2001, the "Long-Term Performance Plan." The Company's Long-Term Performance Plan
affords eligible executives, including the Named Executive Officers, the
opportunity to share in the success of the Company if the Company achieves
specified performance objectives over periods of three calendar years. The last
three-year cycle under the Long-Term Performance Plan ends on December 31, 2005.
On February 28, 2005, the Committee authorized payments to the Company's
executive officers and other senior officers under the Long-Term Performance
Plan for the three-year performance period ended on December 31, 2004, and
awarded stock options and restricted stock units, as described below, under the
Company's Stock Incentive Plan.
For the 2002 - 2004 performance period under the Long-Term Performance Plan, the
Committee used two metrics: cumulative operating earnings for the three-year
period, and return on average equity for the third year of the performance
period. The target set for operating earnings performance was the sum of the
individual years' targets for operating earnings. The target set for year-three
return on average equity was based on goals agreed to by the Board and
management for long-term growth and creation of long-term shareholder value.
In approving awards for the three-year performance period ended December 31,
2004, the Committee determined that the Company achieved its financial
performance goals by achieving 70.59% of target levels of operating earnings and
the year-three average return on equity. This determination of financial
performance affected all participants.
The following table sets forth the long term incentive payouts to be made to the
Company's Named Executive Officers in respect of the 2002 - 2004 performance
period (which are payable in March 2005), as well as the long-term incentive
payouts made to the Named Executive Officers in respect of the 2001 - 2003
performance period (which were paid in March 2004):
3
NAME PERFORMANCE PERIOD LONG-TERM INCENTIVE PAYOUT
----------------------------------------------------------- --------------------- ---------------------------------------
Mr. Griswell 2002-2004 $ 499,104
2001-2003 996,531
----------------------------------------------------------- --------------------- ---------------------------------------
Mr. Aschenbrenner 2002-2004 197,627
2001-2003 336,117
---------------------------------------------------------- --------------------- ----------------------------------------
Mr. Gersie 2002-2004 179,668
2001-2003 318,886
----------------------------------------------------------- --------------------- ---------------------------------------
Mr. McCaughan 2002-2004 249,552
2001-2003 Not Eligible
----------------------------------------------------------- --------------------- ---------------------------------------
Mr. Zimpleman 2002-2004 179,668
2001-2003 219,020
----------------------------------------------------------- --------------------- ---------------------------------------
(1) The amounts shown in this table are awards under the Long-Term
Performance Plan. For the three-year period 2001-2003, 100% of the
long-term performance award opportunity for the Named Executive
Officers was provided under the Long-Term Performance Plan. For the
three-year period 2002-2004, 20% to 25% of the long-term performance
award opportunity for the Named Executive Officers was provided under
the Long-Term Performance Plan and 75% to 80% of the long-term
performance award opportunity was provided under the Stock Incentive
Plan, as described above.
Also on February 28, 2005, the Committee approved grants of non-qualified stock
options and restricted stock units to each of the Named Executive Officers
pursuant to the Stock Incentive Plan. The Committee determines the level of
options and restricted stock units it could grant Named Executive Officers under
the plan by considering the percentage of total compensation that competitors
award in the form of options and other forms of equity compensation for
comparable positions, and other factors the Committee deems important. Utilizing
this information, the Committee sets target award opportunities for equity
compensation, expressed as a percentage of base salary. Actual grants may vary
from these targets based on a variety of factors such as individual performance
and the importance of retaining the senior officer ("Adjusted Target Award
Opportunity"). The Committee administers the plan so that actual grants
typically do not exceed the sum of all grants if all grants were made at target.
The Committee calculates the actual number of options it will award to a senior
officer by dividing the present value of one option, utilizing the Black-Scholes
model (but adjusting for the possibility of forfeitures of options), into the
portion of the Adjusted Target Award Opportunity to be granted in options. The
Committee calculates the actual number of restricted stock units it will award a
senior officer by dividing the 20-day average stock price immediately preceding
the grant date into the portion of the Adjusted Target Award Opportunity to be
granted in restricted stock units. The following table sets forth information
regarding grants of stock options and restricted stock unit awards to the Named
Executive Officers made on February 28, 2005 and February 24, 2004.
NUMBER OF
NUMBER OF STOCK EXERCISE PRICE RESTRICTED STOCK
NAME YEAR OPTIONS (1)(2) PER SHARE(3) UNITS(4)
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
Mr. Griswell 2005 408,235 $ 39.02 37,519
2004 339,435 36.30 41,736
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
Mr. Aschenbrenner 2005 108,185 39.02 9,942
2004 79,345 36.30 9,756
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
Mr. Gersie 2005 68,125 39.02 6,261
2004 50,850 36.30 6,252
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
Mr. McCaughan 2005 91,955 39.02 8,451
2004 74,960 36.30 9,217
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
Mr. Zimpleman 2005 108,185 39.02 9,942
2004 77,790 36.30 9,565
---------------------------------------- ---------------- ---------------------- ------------------- --------------------
4
(1) Options vest in three equal annual installments beginning on first
anniversary of date of grant, subject to continuous employment.
(2) Options granted to the Named Executive Officers under the Stock Incentive
Plan are exercisable for ten years after the date of grant, generally
subject to the optionee's continued service with the Company and its
subsidiaries. Unvested options terminate upon termination of service,
except in the event of such participant's death, disability or approved
retirement. In the event of a participant's death, disability or approved
retirement, options granted to the participant become immediately
exercisable by the participant, or participant's beneficiary, if
applicable, and may be exercised at any time prior to the earlier of the
expiration of the remaining term of the option or three years from the date
of death or termination of employment, as applicable. The Board amended the
Stock Incentive Plan effective January 1, 2004 and January 1, 2005 to
provide that for all future grants, options may be exercised for up to five
and ten years, respectively, from approved retirement or until the options
expire, whichever is shorter. The vesting of restricted stock units and
options and the exercisability of the options may also accelerate upon the
occurrence of a change of control, unless the options are honored or
assumed on terms intended to preserve the value of the option for the
optionee (including acceleration of vesting upon an involuntary termination
following a change of control).
(3) The per-share option exercise price equals the closing price of the Common
Stock on the date of grant.
(4) Restricted stock units vest on the third anniversary of the grant date.
The Company intends to provide additional information regarding the compensation
awarded to the Named Executive Officers with respect to and during the year
ended December 31, 2004, in the proxy statement for the Company's 2005 annual
meeting of shareholders, which is expected to be filed with the Securities and
Exchange Commission in March, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1.1 Form of Restricted Stock Unit Award Agreement
10.1.2 Form of Stock Option Award Agreement
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PRINCIPAL FINANCIAL GROUP, INC.
By: /S/ JOYCE N. HOFFMAN
----------------------------------
Name: Joyce N. Hoffman
Title: Senior Vice President and
Corporate Secretary
Date: March 4, 2005
5
EXHIBIT 10.1.1
PRINCIPAL FINANCIAL GROUP, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT
This Agreement, dated as of DATE, is between Principal Financial Group,
Inc. (the "Company") and you, <> <>, (the
"Employee") a Participant under the Company's Stock Incentive Plan (the "Plan").
Capitalized terms that are used but not defined in this Agreement have the
meanings given to them in the Plan.
1. AWARD. Subject to the all terms and conditions of the Plan and this
Agreement, the Company hereby grants to you the number of Restricted Stock
Units listed below your name on SCHEDULE A attached to and incorporated as
a part of this Agreement. The Restricted Stock Units comprising this award
will be recorded in an unfunded Restricted Stock Unit account in your name
maintained by the Company or other designated administrator retained by the
Company (the "Administrator"). You will have no rights as a stockholder of
the Company by virtue of any Restricted Stock Unit awarded to you unless
and until such Restricted Stock Unit vests and a share of Common Stock is
issued to you. Each Restricted Stock Unit will remain subject to forfeiture
unless and until such Unit has vested in accordance with the Plan and this
Agreement, and will remain restricted as to transferability until such Unit
is settled.
2. VESTING OF RESTRICTED STOCK UNITS. The Restricted Stock Units subject to
this award will vest in the amounts and on the vesting dates specified in
SCHEDULE A, so long as you have been continuously employed by the Company
from the date of this Agreement until the applicable vesting date. When
Restricted Stock Units vest, the risk of forfeiture of those Restricted
Stock Units expires. Settlement of Restricted Stock Units that have vested
will be in shares of Common Stock and will occur as provided in Section 7.
3. NO GUARANTEE OF EMPLOYMENT. Nothing in this Agreement shall interfere with
or limit in any way the right of the Company or a Subsidiary to terminate
the Employee's employment at any time, or confer upon the Employee any
right to continue in the employ of the Company or a Subsidiary.
4. TERMINATION OF EMPLOYMENT.
(a) DEATH, DISABILITY OR APPROVED RETIREMENT. In the event that the Employee's
employment with the Company or a Subsidiary terminates by reason of
Approved Retirement, any shares related to Restricted Stock Units held by
such Participant shall become non-forfeitable at the time the restrictions
would have naturally lapsed. In the event the Employee's employment or
service terminates by reason of Disability or death, any shares related to
Restricted Stock Units held by the Employee shall become non-forfeitable on
the date of termination.
(b) OTHER TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee at or after the time of grant, in the event that the Employee's
employment with the Company or Subsidiary terminates for any reason other
than one described above, any Restricted Stock Units awarded to the
Employee as to which the Period of Restriction has not lapsed shall be
forfeited.
5. NON-SOLICITATION. For a period of 24 months after the termination of the
Employee's employment, Employee shall not, directly or indirectly:
(a) encourage any employee or agent of the Company or a Subsidiary to
terminate his or her relationship with the Company;
(b) employ, engage as a consultant or adviser, or solicit the employment
or engagement as a consultant or adviser, any employee or agent of the
Company or a Subsidiary (other than by the Company or a Subsidiary),
or cause or encourage any Person to do any of the foregoing;
6
(c) establish (or take preliminary steps to establish) a business with, or
encourage others to establish (or take preliminary steps to establish)
a business with, any employee or agent of the Company or a Subsidiary;
or
(d) interfere with the relationship of the Company or a Subsidiary with,
or endeavor to entice away from the Company, any Person who or which
at any time during the period commencing one year prior to the
termination of the Employee's employment was or is a material customer
or material supplier of, or maintained a material business
relationship with, the Company or a Subsidiary.
6. DIVIDEND EQUIVALENTS.
(a) During the period that a Restricted Stock Unit is outstanding, it will
accrue dividend equivalents, which are amounts equal to cash dividends
paid on a share of Common Stock, as and when such cash dividends are
paid to holders of the Common Stock.
(b) Such dividend equivalents shall be deemed to be reinvested in
additional Restricted Stock Units on the date of payment of the
corresponding cash dividend, and each additional Restricted Stock Unit
so acquired will be credited to your Restricted Stock Unit account and
have the same vesting date and be subject to the same risk of
forfeiture as the underlying Restricted Stock Units on which the
dividend equivalents were deemed paid. Additional Restricted Stock
Units acquired as a result of the deemed reinvestment of dividend
equivalents accrued after the underlying Restricted Stock Units are
vested but before they are settled will vest immediately upon the
applicable dividend payment date. The number of Restricted Stock Units
credited to your account on a dividend payment date shall be
calculated as the product of (i) the number of outstanding Restricted
Stock Units in your account immediately prior to the payment of the
dividend equivalent (including Restricted Stock Units previously
credited to your account as a result of the deemed reinvestment of
dividend equivalents) multiplied by (ii) the cash dividend amount per
share of Common Stock, divided by the Fair Market Value of a share of
Common Stock on the date the cash dividend is paid.
7. SETTLEMENT OF RESTRICTED STOCK UNITS.
(a) The timing of the settlement of Restricted Stock Units shall be as
follows:
(1) Settlement of all vested Restricted Stock Units as to which you
have not made an election pursuant to Section 8 will occur as of
the date on which the restrictions lapse.
(2) Settlement of vested Restricted Stock Units as to which you have
made a valid election pursuant to Section 8 will occur at the
time specified in the written election you have submitted to the
Company. If, however, your employment is terminated before the
specified settlement date, settlement of your Restricted Stock
Units granted hereunder will occur as of the date of your
termination.
(b) At the time of settlement of vested Restricted Stock Units, and
subject to any withholding obligation under Section 10, you are
entitled to receive payment in the form of shares of Common Stock in
an amount (rounded to the nearest whole share) equal to the number of
vested Restricted Stock Units (including those deemed to have been
acquired by the reinvestment of dividend equivalents) that are subject
to settlement on the date in question. The shares will be credited to
a share account in your name established with the Administrator as
soon as administratively practical.
8. ELECTION TO DEFER SETTLEMENT DATE. If the IRS determines that the value of
the stock or the cash delivered in the future in connection with the
Restricted Stock Units is subject to the disallowance rule of section
162(m)(1), your Restricted Stock Units will automatically be deferred until
your termination of employment. If the IRS determines this amount is not
subject to the disallowance rule of section 162(m)(1) of the Code, you may
elect to defer settlement of your Restricted Stock Units granted hereunder,
as set forth in this Section 8, to a specified future date that is
different from the settlement date specified in section 7(a)(1) of this
Agreement, subject to the following terms and conditions:
(a) The election must be effected by signing and delivering to the Company
a written election in the form prescribed by the Committee.
7
(b) The election must cover all of the Restricted Stock Units granted
hereunder (including the additional Restricted Stock Units credited to
your account as a result of the deemed reinvestment of dividends
thereon).
(c ) The settlement date specified by such election must be at least
twelve months after the date of such election and must be on or after
the latest vesting date for Restricted Stock Units granted hereunder.
(d) The election must be delivered to the Company by March 15, 2005.
9. CHANGE OF CONTROL.
(a) ACCELERATED VESTING AND PAYMENT. Except as otherwise provided in
Section 9(b), in the event of a Change of Control, 100% of the
Restricted Stock Units shall become vested and payable.
(b) ALTERNATIVE AWARD. Notwithstanding Section 9(a), no cancellation,
acceleration of exercisability, vesting, cash settlement or other
payment shall occur with respect to any portion of the Restricted
Stock Units if the Committee reasonably determines in good faith,
prior to the occurrence of a Change of Control, that such portion of
the Restricted Stock Units shall be honored or assumed, or new rights
substituted therefore (such honored, assumed or substituted Restricted
Stock Units being hereinafter referred to as an "Alternative Award")
by the Employee's employer (or an affiliate thereof) immediately after
the Change of Control, provided that any such Alternative Award must:
(1) be based on stock which is traded on an established securities
market;
(2) provide the Employee with rights and entitlements substantially
equivalent to or better than the rights, terms and conditions
applicable under such portion of the Restricted Stock Units,
including, but not limited to, an identical or better exercise
and vesting schedule, and identical or better timing and methods
of payments;
(3) have substantially equivalent economic value to such portion of
the Restricted Stock Units (determined at the time of the Change
of Control); and
(4) provide that, in the event that such Employee's employment is
involuntary terminated or constructively terminated, any
conditions on such Employee's rights under, or any restrictions
on transfer or exercisability applicable to, each such
Alternative Award shall be waived or shall lapse, as the case may
be.
For this purpose, a constructive termination shall mean a termination of
employment by the Employee within 120 days following a material reduction
in the Employee's base salary or an Employee's incentive compensation
opportunity, a material reduction in the Employee's responsibilities, or
relocation of the Employee's principal place of employment is a location 35
miles away from Employee's prior place of employment.
10. TAX WITHHOLDING. Unless and until you have made arrangements satisfactory
to the Company to pay any withholding taxes due as a result of the issuance
of shares of Common Stock on any settlement date, the Company may withhold
from the total number of shares of Common Stock you are to receive on a
settlement date a number of shares that has a total value equal to the
amount necessary to satisfy any such withholding tax obligations. If you
are not an officer subject to Section 16 of the Securities and Exchange Act
of 1934 as amended and/or Rule 144 promulgated under the Securities Act of
1933 as amended, you may elect to have the amount of taxes due withheld
from other cash compensation payable to you. If you are an officer subject
to Section 16 of the Securities and Exchange Act of 1934 as amended and/or
Rule 144 promulgated under the Securities Act of 1933 as amended, you may
elect to pay a portion or all of the amount of any required withholding
taxes in cash.
11. TRANSFERABILITY. The Restricted Stock Units granted hereunder may not be
sold, transferred, pledged, assigned or other wise alienated or
hypothecated, other than in accordance with Section 8.3 of the Plan, by
will or by the laws of descent and distribution. Neither the Plan nor this
Agreement restrict the transfer of shares of Common Stock credited to your
share account with the Administrator upon the settlement of Restricted
Stock Units granted hereunder. Shares credited to your share account upon
settlement may be withdrawn from that account at any time by contacting the
Administrator.
8
12. MISCELLANEOUS.
(a) The Restricted Stock Units granted hereunder are subject to all the
terms and conditions of the Plan and this Agreement. If any provision
of this Agreement is inconsistent with the Plan in any respect, the
Plan shall govern in all circumstances and such inconsistent provision
shall be construed so as to be consistent in all respects with the
Plan.
(b) Any amendment to the Plan will also be deemed an amendment to the
Agreement to the extent such amendment is applicable to this
Agreement. However, no such amendment may adversely affect your rights
with respect to Restricted Stock Units granted hereunder without your
consent.
(c) If it is necessary to prevent an increase or decrease in the rights
you have been granted under this Agreement as a result of a
transaction or transactions of the type referenced in Section 4.3 of
the Plan, the Committee will make appropriate adjustments in the
number or kind of securities issuable to you upon the subsequent
vesting and settlement of Restricted Stock Units granted hereunder.
This Agreement has been executed by the parties as of the date first written
above.
Principal Financial Group, Inc.
By:
---------------------------------------
Name: Jim DeVries
Title: Vice President - Human Resources
-------------------------------------------
Date
--------------------------------------------
<> <>
--------------------------------------------
Date
9
SCHEDULE A
TO
PRINCIPAL FINANCIAL GROUP, INC.
RESTRICTED STOCK UNIT AGREEMENT
DATED DATE
Name of Employee/Participant: <> <>
Number of Restricted Stock Units Granted: <>
Date of Grant: DATE
Vesting Dates: Number of Units Vesting:
DATE <>
10
EXHIBIT 10.1.2
STOCK INCENTIVE PLAN AWARD AGREEMENT
FOR: EMPLOYEE NAME (the "Employee")
STOCK OPTION AGREEMENT ("Agreement"), evidencing the grant of the stock
option described below under the Principal Financial Group, Inc. Stock Incentive
Plan (the "Plan") by Principal Financial Group, Inc., a Delaware corporation
(the "Company") to the employee whose name appears above, (the "Employee").
Capitalized terms not defined in this Agreement shall have the meanings given to
such terms in the Plan.
TYPE OF GRANT: Nonqualified Stock Options
NUMBER OF OPTIONS GRANTED UNDER THIS PLAN: #,####
GRANT DATE: GRANT DATE
EXERCISE PRICE: $##.##
VESTING SCHEDULE: NUMBER OF SHARES VESTING DATE
#,### Vesting Date(s)
#,### Vesting Date(s)
#,### Vesting Date(s)
EXPIRATION DATE: Expiration Date
1. CONFIRMATION OF GRANT; OPTION EXERCISE PRICE. The Company hereby evidences
and confirms its grant to the Employee, effective on the date hereof (the
"Grant Date") and subject to and upon the terms and conditions set forth in
this Agreement, of an option (the "Option") to purchase the number of
shares of the Company's common stock (the "Common Stock"), set forth above
(the "Shares") at an option exercise price set forth above (the "Exercise
Price"). The Option is not intended to be an incentive stock option under
Internal Revenue Code of 1986, as amended. This Agreement is subordinate
to, and the terms and conditions of the Option granted hereunder are
subject to, the terms and conditions of the Plan.
2. EXERCISE OF OPTION. Options shall vest and become exercisable as described
above, subject in each case to the Employee's continued employment with the
Company or a Subsidiary until such vesting date, and provided that 100% of
such Option shall be exercisable to the extent provided in Sections 5(a)
and 6(a) of this Agreement. Shares eligible for purchase may thereafter be
purchased, subject to the provisions hereof, at any time and from time to
time on or after the date they first become available for purchase
hereunder until the date on which the Option terminates.
3. EXPIRATION OF OPTION. Unless an earlier expiration date applies pursuant to
Section 5, the Option shall expire on the date specified above.
4. METHOD OF EXERCISE AND PAYMENT. The Employee may exercise any portion of
the Option that has become exercisable by (i) written or verbal notice to
the Company's broker specifying the number of Shares the Employee wants to
purchase and (ii) payment in full at the time of exercise. Payment of the
exercise price may be made (i) in cash or its equivalent, (ii) by
exchanging shares of Common Stock owned by the optionee (which are not the
subject of any pledge or other security interest), (iii) through an
arrangement with a broker approved by the Company whereby payment of the
exercise price is accomplished with the proceeds of the sale of Common
Stock or (iv) by any combination of the foregoing; provided that the
combined value of all cash and cash equivalents paid and the Fair Market
Value of any such Common Stock so tendered to the Company, valued as of the
date such tender, is at least equal to such Exercise Price required to be
paid for the Shares being exercised.
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5. TERMINATION OF EMPLOYMENT.
(a) DEATH, DISABILITY OR APPROVED RETIREMENT. In the event that the
Employee's employment with the Company or a Subsidiary terminates due
to (i) the Employee's death, or (ii) the Employee's Disability, then
100% of the Option shall be exercisable as of the date of such
termination and thereafter may be exercised by the Employee or the
Employee's beneficiary as designated in accordance herewith at any
time prior to the earlier of (i) the third anniversary of the
Employee's termination or (ii) the expiration of the term of the
Option. In the event that the Employee's employment with the Company
or a Subsidiary terminates due to the Employee's Approved Retirement,
then 100% of the Option shall be exercisable as of the date of such
termination and thereafter may be exercised by the Employee or the
Employee's beneficiary as designated in accordance herewith at any
time prior to the expiration of the term of the Option. Any portion of
the Option described in the preceding sentences that is not exercised
within the period described above shall terminate and be canceled upon
the expiration of such period.
(b) RESIGNATION OR TERMINATION FOR CAUSE. In the event of voluntarily
termination of employment by the Employee or the Employee's employment
with the Company or a Subsidiary is terminated for Cause, 100% of the
Option (regardless of the extent to which the Option would otherwise
be exercisable under Section 2 of this Agreement) shall terminate and
be canceled immediately upon such termination of employment.
(c) OTHER TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, in the event that the Employee's employment with the
Company or a Subsidiary terminates for any reason other than those
listed in paragraphs (a) or (b) of this Section, the portion of the
Employee's Option that is exercisable as of the date of such
termination shall remain exercisable for a period of 90 days or the
remaining of the Option, whichever is shorter. That portion of the
Employee's Option that is not exercisable at the date of the
Employee's termination of employment shall terminate and be canceled
immediately, as will any exercisable portion of the Option that is not
exercised within the period described above.
(d) NO GUARANTEE OF EMPLOYMENT. Nothing in this Agreement shall interfere
with or limit in any way the right of the Company or a Subsidiary to
terminate the Employee's employment at any time, or confer upon the
Employee any right to continue in the employ of the Company or a
Subsidiary.
6. CHANGE OF CONTROL.
(a) ACCELERATED EXERCISABILITY AND PAYMENT. Except as otherwise provided
in paragraph 6(b), in the event of a Change of Control, 100% of the
Option shall become exercisable (whether or not then exercisable) and
may, if the Committee so determines, be canceled in exchange for a
payment in cash of an amount equal to the product of (x) the excess,
if any, of the Change of Control Price over the Exercise Price
multiplied by (y) the number of shares then covered by the Option.
(b) ALTERNATIVE AWARD. Notwithstanding Section 6(a), no cancellation,
acceleration of exercisability, vesting, cash settlement or other
payment shall occur with respect to any portion of the Option if the
Committee reasonably determines in good faith, prior to the occurrence
of a Change of Control, that such portion of the Option shall be
honored or assumed, or new rights substituted therefore (such honored,
assumed or substituted Option being hereinafter referred to as an
"Alternative Award") by the Employee's employer (or an affiliate
thereof) immediately after the Change of Control, provided that any
such Alternative Award must:
(1) be based on stock which is traded on an established securities
market;
(2) provide the Employee with rights and entitlements substantially
equivalent to or better than the rights, terms and conditions
applicable under such portion of the Option, including, but not
limited to, an identical or better exercise and vesting schedule,
and identical or better timing and methods of payment;
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(3) have substantially equivalent economic value to such portion of
the Option (determined at the time of the Change of Control); and
(4) provide that, in the event that such Employee's employment is
involuntary terminated or constructively terminated, any
conditions on such Employee's rights under, or any restrictions
on transfer or exercisability applicable to, each such
Alternative Award shall be waived or shall lapse, as the case may
be.
For this purpose, a constructive termination shall mean a termination of
employment by the Employee within 120 days following a material reduction
in the Employee's base salary or an Employee's incentive compensation
opportunity, a material reduction in the Employee's responsibilities, or
relocation of the Employee's principal place of employment is a location 35
miles away or more from Employee's prior place of employment.
7. NON-SOLICITATION. For a period of 24 months after the termination of
Employee's employment, Employee shall not, directly or indirectly:
(a) encourage any employee or agent of the Company or a Subsidiary to
terminate his or her relationship with the Company;
(b) employ, engage as a consultant or adviser, or solicit the employment
or engagement as a consultant or adviser, of any employee or agent of
the Company or a Subsidiary (other than by the Company or a
Subsidiary), or cause or encourage any Person to do any of the
foregoing;
(c) establish (or take preliminary steps to establish) a business with, or
encourage others to establish (or take preliminary steps to establish)
a business with, any employee or agent of the Company or a Subsidiary;
or
(d) interfere with the relationship of the Company or a Subsidiary with,
or endeavor to entice away from the Company, any Person who or which
at any time during the period commencing one year prior to the
termination of the Employee's employment was or is a material customer
or material supplier of, or maintained a material business
relationship with, the Company.
8. NONTRANSFERABILITY OF AWARDS. The Option granted hereunder may not be sold,
transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Following the Employee's death, all rights with respect to
any Option that was exercisable at the time of such Employee's death and
has not expired may be exercised by his designated beneficiary or by his
estate in accordance with, and subject to, the terms and conditions hereof
and of the Plan.
9. BENEFICIARY DESIGNATION. The Employee may from time to time name any
beneficiary or beneficiaries (who may be named contingently or
successively) by whom any right under this Agreement is to be exercised in
case of the Employee's death PROVIDED THAT, if the Employee shall not have
designated any beneficiary under this Plan, the Employee's beneficiary
shall be deemed to be the person designated by the Employee under the group
life insurance plan of the Company or a Subsidiary in which such Employee
participates (unless such designated beneficiary is not a Family Member).
Each designation will revoke all prior designations, shall be in a form
prescribed by the Committee, and will be effective only when filed in
writing with the Committee during the Employee's lifetime. In the absence
of any such effective designation, benefits remaining unpaid at the
Employee's death shall be paid to or exercised by the Employee's surviving
spouse, if any, or otherwise to or by his estate.
10. TAX WITHHOLDING. Whenever Common Stock is to be issued or cash paid
pursuant to the exercise of an Option under this Agreement, the Company
shall have the power to withhold, or require the Employee to remit, an
amount sufficient to satisfy Federal, state and local withholding tax
requirements relating to such transaction, and the Company may defer
payment of cash or the issuance of Common Stock until such requirements are
satisfied. The Committee may permit the Employee to elect, subject to such
conditions as the Committee may impose:
(1) to have Shares otherwise issuable upon the exercise of an Option
withheld by the Company, or
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(2) to deliver to the Company cash equal to all or part of the Employee's
Federal, state or local tax obligation associated with the
transaction.
11. ADJUSTMENT OF THE NUMBER OF OPTION SHARES. In the event of any Common Stock
dividend or Common Stock split, recapitalization (including, but not
limited to, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to
stockholders (other than ordinary cash dividends), exchange of shares, or
other similar corporate change, the aggregate number of shares of Common
Stock subject to this Option and the exercise price applicable to this
Option shall be appropriately adjusted by the Committee and the Committee's
determination shall be conclusive; provided, however, that any fractional
shares resulting from any such adjustment shall be disregarded.
12. REQUIREMENTS OF LAW. The issuance of shares of Common Stock pursuant to any
Option shall be subject to all applicable laws, rules and regulations, and
to such approvals by any governmental agencies or national securities
exchanges as may be required. No shares of Common Stock shall be issued
upon exercise of any portion of the Option granted hereunder if such
issuance or exercise would result in a violation of applicable law,
including the federal securities laws and any applicable state or foreign
securities laws. The Option granted hereunder shall be offered pursuant to
an applicable federal securities law exemption from registration.
13. GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, regardless of the law that
might be applied under principles of conflict of laws.
14. INTERPRETATION; CONSTRUCTION. Any determination or interpretation by the
Committee under or pursuant to this Agreement shall be final and conclusive
on all persons affected hereby. In the event of a conflict between any term
of this Agreement and the terms of the Plan, the terms of the Plan shall
control.
15. AMENDMENTS. The Committee shall have the exclusive right to amend this
Agreement, from time to time, provided that no such amendment shall impair
the rights of the Employee under this Agreement without the Employee's
consent. Upon its adoption by the Committee, any alteration or amendment of
this Agreement shall become binding and conclusive on all persons affected
thereby without any need for consent or other action by any such person.
The Company shall give written notice to the Employee of any such amendment
as promptly as practicable after the adoption thereof.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute, and the Employee has executed, this Agreement, each as of the date
first written above.
By signing a copy of this Agreement and returning it to the Company, I, the
Employee, acknowledge that I have read the Plan, and that I fully understand all
of my rights under the Plan, as well as all of the terms and conditions which
may limit my eligibility to exercise this Option Award and/or transfer Shares
acquired under this Option Award. Without limiting the generality of the
preceding sentence, I understand that my right to exercise this Option Award is
conditioned upon my continued employment with the Company. The terms and
conditions set forth in this Agreement and in the Plan will be binding upon me,
my person representative or the person or persons to whom my rights under this
Agreement pass by will or by the applicable laws of descent and distribution. I
shall not have any rights of a shareholder with respect to the shares subject to
the Option until such shares have been issued to me upon proper exercise of the
Option.
I acknowledge that the covenants contained in Section 7 are reasonable in the
scope of the activities restricted and the duration of the restrictions, and
that such covenants are reasonably necessary to protect the Company's legitimate
interests in its relationships with its employees, customers and suppliers.
Employee further acknowledges such covenants are essential elements of this
Agreement and that, but for such covenants, the Company would not have entered
into this Agreement.
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PRINCIPAL FINANCIAL GROUP, INC.
By: ____________________________________
Name: Jim DeVries-Sr VP Human Resources
____________________________________________
Date
EMPLOYEE
--------------------------------------------
Name: EMPLOYEE NAME
--------------------------------------------
Date
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