|
|
|
|
|
| Class I Directors Continuing in Office Whose Term Expires in 2011 |
|
|
|
| Betsy J. Bernard |
|
|
| Jocelyn Carter-Miller |
|
|
| Gary E. Costley |
|
|
|
| Class II Directors Continuing in Office Whose Term Expires in 2012 |
|
|
|
| Richard L. Keyser |
|
|
| Arjun K. Mathrani |
|
|
| Elizabeth E. Tallett |
|
|
|
|
| |
In addition, the shareholders approved and adopted the Principal Financial Group, Inc. 2010 Stock |
| Incentive Plan, more fully described above in Item 5.02(e). The voting results were as follows: |
|
|
|
|
|
| FOR AGAINST ABSTAIN |
| 178,040,995 7,091,341 2,117,808 |
|
|
| |
In the last agenda item, the shareholders ratified the appointment of Ernst & Young LLP as our |
| independent auditors for 2010. The voting results were as follows: |
|
|
|
|
|
| FOR AGAINST ABSTAIN |
| 201,620,679 2,129,733 1,270,397 |
| |
| Item 9.01 Financial Statements and Exhibits |
|
|
|
|
|
| (c) |
Exhibits |
|
|
| 99.1 |
Form of Performance Based Restricted Stock Unit Award Agreement |
| 99.2 |
Form of Nonqualified Stock Option Award Agreement |
|
|
|
|
| |
|
Exhibit 99.1 |
| |
| 2010 Stock Incentive Plan |
| Performance Based Restricted Stock Unit Award Agreement |
| |
| |
| PERFORMANCE BASED RESTRICTED STOCK UNIT AGREEMENT (“Agreement”), evidencing the |
| restricted stock unit award described below under the Principal Financial Group, Inc. 2010 Stock Incentive Plan (the |
| “Plan”) by Principal Financial Group, Inc., a Delaware corporation (the “Company”), to you, (the “Employee”). |
| Capitalized terms not defined in this Agreement shall have the meanings given to such terms in the Plan. |
| |
| Type of Grant: Performance Based Restricted Stock Unit |
|
| |
| Performance Period: ______________________________ (the “Performance Period”) |
| |
| 1. Confirmation of Grant. The Company hereby evidences and confirms its grant to the Employee, effective on |
| the date reflected on your online award acceptance screen (the “Grant Date”) and subject to and upon the terms and |
| conditions set forth in this Agreement, of a restricted stock unit award (the “Award”) in respect of the number of |
| performance based restricted stock units listed on your online award acceptance screen (the “Restricted Stock |
| Units”). Each Restricted Stock Unit represents a contractual right to receive one share of the Company’s common |
| stock (the “Common Stock”), subject to the terms and conditions of this Agreement. Employee’s right to receive |
| Common Stock in respect of Restricted Stock Units is generally contingent upon (i) the achievement of the |
| performance objective outlined in Section 2 below (the “Performance Objective”) and (ii) the Employee’s continued |
| employment through the end of the Performance Period. This Agreement is subordinate to, and the terms and |
| conditions of this Award, are subject to, the terms and conditions of the Plan. |
| |
| 2. Performance Objective. |
|
| |
| (a) No Performance Based Restricted Stock Units shall become vested and payable hereunder unless and until |
| the Committee shall have certified that the Threshold ROE Objective or the Operating Income Objective (as |
| defined below) has been satisfied. If the Threshold ROE Objective or Operating Income Objective is satisfied, |
| and subject to the Committee’s authority to exercise negative discretion to reduce the number of Performance |
| Based Restricted Stock Units as described in Section 2(b) below, the maximum award that may be payable |
| hereunder shall be equal to one and one-half the number of Performance Based Restricted Stock Units specified |
| above. |
|
|
| |
| (b) Notwithstanding the provisions of Section 2(a), if the Committee determines not to exercise its discretion to |
| reduce the maximum award payable hereunder: |
|
| |
| (i) |
the number of Performance Based Restricted Stock Units that will be earned and payable |
| hereunder shall be zero if the Threshold ROE Objective or Operating Income Objective, as defined |
| below, is not satisfied; and |
|
| |
| (ii) except as provided in Sections 3 and 4, if the Threshold ROE Objective or Operating Income |
| Objective is satisfied, the number of Performance Based Restricted Stock Units earned and payable |
| shall be determined by adding the results of (a) multiplying (i) 50% of the number of Performance |
| Based Restricted Stock Units by (ii) the ROE Multiplier (as defined below) and (b) multiplying (i) 50% |
| of the number of Performance Based Restricted Stock Units by (ii) the Book Value Per Share Multiplier |
| (as defined below). |
|
| |
| (c) The “ROE Objective” is Average return on equity (“ROE”) for the Performance Period established by the |
| Committee as the Threshold ROE Objective for this Award, which is listed on Annex I hereto. “Average ROE” |
| shall mean a simple average of the ROE for each of the calendar years ended during the Performance Period |
| based on the audited financial statements for each such calendar year as prepared in accordance with U.S. |
| generally accepted accounting principles (“GAAP”). “ROE” with respect to any calendar year shall mean (i) |
|
|
| |
income from continuing operations before income taxes per the audited Consolidated Statements of Operations |
| |
less (A) net realized/unrealized capital gains (losses) and (B) preferred stock dividends declared during such |
| |
calendar year divided by (ii) the average equity excluding other comprehensive income available to common |
| |
stockholders. |
| |
| |
(d) The “Operating Income Objective” is the cumulative Operating Income for the Performance Period |
| |
established by the Committee as the Threshold Operating Income Objective for this Award, which is listed on |
| |
Annex I hereto. “Operating Income” with respect to any calendar year shall mean annual income from the |
| |
Company’s continuing operations, minus net realized and unrealized gains and losses. |
| |
| |
(e) The “ROE Multiplier” is |
| |
(i) 50%, if Average ROE for the Performance Period is equal to the “Minimum ROE Objective” for this |
| |
Award, which is listed on Annex I hereto; |
| |
| |
(ii) 100%, if Average ROE for the Performance Period is equal to such level for the Performance Period |
| |
specified by the Committee as the “Target ROE Objective” for this Award, which is listed on Annex I |
| |
hereto; and |
| |
| |
(iii) 150%, if Average ROE for the Performance Period is equal to or in excess of the level of Average |
| |
ROE for such Performance Period specified by the Committee as the “Maximum ROE Objective” for |
| |
this Award, which is listed on Annex I hereto. |
| |
| |
If Average ROE for the Performance Period is above the Minimum ROE Objective but below the Target |
| |
ROE Objective, or above the Target ROE Objective but below the Maximum ROE Objective, the ROE |
| |
Multiplier shall be determined by mathematical interpolation between the relevant stated ROE Objectives. |
| |
| |
(f) Average Book Value Per Share shall mean a simple average of the Book Value Per Share for each of the |
| |
calendar years ended during the Performance Period. “Book Value Per Share” with respect to any calendar year |
| |
is defined as total ending common equity excluding other comprehensive income divided by number of |
| |
common shares outstanding end of year. The “Book Value Per Share Multiplier” is |
| |
(i) 50%, if Average Book Value Per Share for the Performance Period is equal to the “Minimum Book |
| |
Value Per Share Objective” for this Award, which is listed on Annex I hereto; |
| |
| |
(ii) 100%, if Average Book Value Per Share for the Performance Period is equal to such level for the |
| |
Performance Period specified by the Committee as the “Target Book Value Per Share Objective” for |
| |
this Award, which is listed on Annex I hereto; and |
| |
| |
(iii) 150%, if Average Book Value Per Share for the Performance Period is equal to or in excess of the |
| |
level of Average Book Value Per Share for such Performance Period specified by the Committee as the |
| |
“Maximum Book Value Per Share Objective” for this Award, which is listed on Annex I hereto. |
| |
| |
If Average Book Value Per Share for the Performance Period is above the Minimum Book Value Per Share |
| |
Objective but below the Target Book Value Per Share Objective, or above the Target Book Value Per |
| |
Share Objective but below the Maximum Book Value Per Share Objective, the Book Value Per Share |
| |
Multiplier shall be determined by mathematical interpolation between the relevant stated Book Value Per |
| |
Share Objectives. |
| |
| |
(g) Payment in respect of Earned Performance Based Restricted Stock Units shall be made not later than the |
| |
first March 15 following the calendar year in which the Performance Period ends. Except to the extent |
| |
expressly provided under the applicable provisions of the Code and regulations thereunder, payment under this |
| |
agreement shall not be made unless the Human Resources Committee of the Company’s Board of Directors |
| |
certifies the performance results for 2010. Unless otherwise determined by the Committee, all payments in |
| |
respect of Earned Performance Based Restricted Stock Units shall be made in an equivalent number of shares of |
| |
Common Stock, rounded down to the nearest whole number of shares. |
| |
| 3. |
Termination of Employment. |
|
| (a) Death, Disability or Approved Retirement. Except as provided in Section 4(e) or to the extent that the |
| Committee may provide for more favorable treatment at or after grant, in the event that the Employee’s |
| employment with the Company or a Subsidiary terminates due to the Employee’s (i) death, (ii) Disability or |
| (iii) Approved Retirement prior to the last day of the first year in the Performance Period, the Employee shall |
| be deemed to have earned, as of the end of the Performance Period, a number of Restricted Stock Units equal |
| to the product of (i) the number of Earned Restricted Stock Units to which the Employee would have become |
| entitled pursuant to Section 2 had the Employee remained employed through the end of the Performance |
| Period, multiplied by (ii) a fraction not greater than one (the “Pro-Ration Fraction”), the numerator of which is |
| (A) the number of days during the Performance Period during which the Employee was employed and (B) the |
| denominator of which is 365. In the event that an Employee’s employment with the Company or a Subsidiary |
| terminates due to the Employee’s (i) death, (ii) Disability or (iii) Approved Retirement on or after the last day |
| of the first year in the Performance Period, the Employee shall be deemed to have earned, as of the end of the |
| Performance Period, the same number of Earned Restricted Stock Units to which the Employee would have |
| become entitled pursuant to Section 2 had the Employee remained employed through the end of the |
| Performance Period. Any portion of the Restricted Stock Units that cannot become vested and payable in |
| accordance with the second preceding sentence shall terminate and automatically be cancelled as of the date of |
| the Employee’s termination of employment. Any portion of the Employee’s Restricted Stock Units that could |
| have vested pursuant to the third and second preceding sentences, but do not vest as of the end of the |
| Performance Period, shall terminate and be canceled upon the expiration of such Performance Period. |
| |
| (b) Other Termination of Employment. Unless otherwise determined by the Committee at or after grant, in the |
| event that the Employee’s employment with the Company or a Subsidiary terminates prior to the end of the |
| Performance Period for any reason other than those listed in Section 3(a), all of the Employee’s Restricted |
| Stock Units shall terminate and automatically be canceled upon such termination of employment. |
| |
| (c) 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 Subsidiary. |
| |
| 4. Change of Control. Notwithstanding the provisions of Section 2 and 3 hereof, in the event of a Change of |
| Control, the Restricted Stock Units subject to this Agreement shall be converted into a number of shares of Common |
| Stock or, if the Change of Control is a Reorganization Transaction, shares of the common stock of the Surviving |
| Corporation, as provided in (and subject to the terms and conditions of) this Section 4. If the Employee has been |
| continuously employed from the Grant Date until the date of the Change of Control, the Employee’s rights in respect |
| of the Restricted Stock Units shall be determined as provided in Section 4(a) or 4(b), depending on the period of |
| time that has passed since the commencement of the Performance Period. If the Employee’s employment shall have |
| terminated prior to the date of the Change of Control, but at least some of the Employee’s Restricted Stock Units |
| remain outstanding pursuant to Section 3(a) (or by reason of the Committee’s exercise of its discretionary authority |
| pursuant to Section 3(b)), the Employee’s rights in respect of the Employee’s outstanding Restricted Stock Units |
| shall be determined as provided in Section 4(e). |
| |
| (a) If the Change of Control occurs within one year of the commencement of the Performance Period, the |
| Employee will be granted a contractual right to receive a number of shares of Common Stock equal to the |
| number of the Employee’s Restricted Stock Units. |
| |
| (b) If the Change of Control occurs on or after the first anniversary of the commencement of the Performance |
| Period, the Employee will be granted a contractual right to receive a number of shares of Common Stock equal |
| to the number of restricted stock units that would have become Earned Restricted Stock Units, assuming that |
| |
| (i) the Performance Period ended on the date on which the Change of Control occurs (the “Change of |
| Control Date”) and |
| |
| (ii) the determination of whether, and to what extent, the Performance Objective is achieved, is based on |
| actual performance against the stated performance criteria through the Change of Control Date, |
|
| projected out for the remainder of the originally stated Performance Period, but without adjustment due |
| to the fact that the Change of Control Date occurs prior to the end of the stated Performance Period. |
| |
| (c) Any shares of Common Stock subject to the contractual rights granted pursuant to Section 4(a) or 4(b) shall |
| vest in full (without regard to any performance condition related to the period following the Change of Control |
| Date) on the last day of the Performance Period so long as the Employee is continuously employed through |
| such date. These rights shall also vest in full upon any earlier termination of Employee’s employment due to |
| (1) Approved Retirement, (2) death, (3) Disability, (4) a termination by the Company without Cause or (5) the |
| constructive termination of the Employee’s employment. |
| |
| For this purpose, a constructive termination shall mean a termination of employment by the (x) within 120 |
| days following (1) a material reduction in the Employee’s base salary or incentive compensation opportunity, |
| (2) a material reduction in the Employee’s responsibilities, or (3) relocation of the Employee’s principal place |
| of employment to a location 50 miles away or more from Employee’s prior place of employment or (y) |
| following the occurrence of any other event or circumstance that entitles Employee to terminate his or her |
| employment with the Company and receive severance benefits under any agreement between Employee and |
| the Company. Any shares of Common Stock issuable in respect of the rights granted under this Section 4 shall |
| be issued the day following the last day of the Performance Period An Employee who is granted the right to |
| receive shares under this Section 4(c) shall also have the right to receive dividend equivalents in respect of |
| such shares, at the same time and in the same amounts as though the shares that would be delivered had been |
| outstanding shares. Any dividend equivalents payable shall be deemed re-invested in additional shares of the |
| underlying stock based on the fair market value thereof on the payment date of the corresponding dividend or |
| distribution, and such additional shares shall vest and be distributed at the same time and subject to the same |
| conditions as apply to the underlying shares. |
| |
| (d) If, prior to the occurrence of a Change of Control, Employee has timely elected pursuant to Section 10 |
| hereof to defer receipt of the Common Stock that would have been deliverable in respect of any Earned |
| Restricted Stock Units, then in lieu of issuing shares of Common Stock at the time specified in Section 4(c) the |
| shares of Common Stock shall be issued at the time or times specified in, and subject to the terms of, the |
| Employee’s deferral election. An Employee who is granted the right to receive shares under this Section 4(d) |
| shall also have the right to receive dividend equivalents in respect of such shares, at the same time and in the |
| same amounts as though the shares that would be delivered had been outstanding shares. Any dividend |
| equivalents payable shall be deemed re-invested in additional shares of the underlying stock based on the fair |
| market value thereof on the payment date of the corresponding dividend or distribution, and such additional |
| shares shall vest and be distributed at the same time and subject to the same conditions as apply to the |
| underlying shares. |
| |
| (e) If Employee’s employment terminated prior to the Change of Control Date, but some or all of the |
| Employee’s Restricted Stock Units are still outstanding on such Date pursuant to either Section 3(a) or 3(b) |
| hereof, then, unless otherwise specified by the Committee at the time of any exercise of its discretionary |
| authority under Section 3, the Employee shall receive, immediately following (and not later than 15 days after) |
| the Change of Control Date, a number of shares of Common Stock equal to |
| |
| (i) if the Change of Control Date occurs prior to the first anniversary of the commencement of the |
| Performance Period, the product of (A) the number of Restricted Stock Units initially awarded to the |
| Employee hereunder times (B) the Pro-Ration Fraction; or |
| |
| (ii) if the Change of Control Date occurs on or after the first anniversary of the commencement of the |
| Performance Period (A) the number of shares of Common Stock that would have been issued to the |
| Employee based on the number of Restricted Stock Units initially awarded to the Employee had Section |
| 4(b) been applicable to the Employee times (B) the Pro-Ration Fraction. |
| |
| Except as may otherwise have been provided by the Committee at the time of its exercise of its discretionary |
| authority under Section 3, any shares of Common Share (or the Surviving Corporation’s common stock) |
| issuable pursuant to this Section 4(e) shall be fully vested and freely transferable as of the date of the Change |
| of Control. |
|
| (f) Notwithstanding the preceding subsections of this Section 4, if a Change of Control is also a Reorganization |
| Transaction, in lieu of contractual rights to receive shares of Common Stock (including any such shares |
| deliverable in respect of any contractual right described in Section 4(d)), the Employee shall receive the |
| contractual right to receive the number of shares of the Surviving Corporation’s common stock into which the |
| number of shares of Common Stock that would otherwise have been subject to the contractual rights granted |
| under this Section 4 would convert, based on the exchange ratio in the Reorganization Transaction applicable |
| to outstanding shares of Common Stock or, in any case where the Committee can not reasonably discern such |
| an exchange ratio (such as where the Company’s shareholders receive cash instead of Surviving Corporation |
| common stock), the relative Fair Market Values of a share of Common Stock and such Surviving Corporation |
| common stock on the Change of Control Date. |
| |
| (g) Notwithstanding anything else contained in this Section 4 to the contrary, the Committee may elect, at its |
| sole discretion by resolution adopted prior to the Change of Control Date, to satisfy the Employee’s rights in |
| respect of the Restricted Stock Units, in whole or in part, by making a cash payment to the Employee within 5 |
| business days of the Change of Control Date in respect of all such Restricted Stock Units or such portion of |
| such Restricted Stock Units as the Committee shall determine. Any cash payment for any Restricted Stock |
| Unit shall be equal to the Fair Market Value of the applicable Common Stock on the Change of Control Date. |
| |
| (h) Upon conversion into either shares of Common Stock or a right to receive shares of Common Stock (or, in |
| either case, Surviving Corporation common stock) pursuant to this Section 4, a cash settlement of the |
| Employee’s rights pursuant to Section 4(e) or a combination of the issuance of stock and the payment of cash |
| in accordance with the applicable provisions of this Section, all of the Employee’s Restricted Stock Units |
| subject to the Award shall be cancelled and terminated. |
| |
| 5. Non-Solicitation. For a period of twelve 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. |
| |
| 6. Nontransferability of Awards. The Restricted Stock Units 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, any shares distributable (or cash payable) in respect of Restricted |
| Stock Units pursuant to Section 3 or 4 will be delivered or paid, at the time specified in Section 2(g) or, if |
| applicable, Section 4(e), to the Employee’s designated beneficiary or to the Employee’s estate in accordance with, |
| and subject to, the terms and conditions hereof and of the Plan. |
| |
| 7. Beneficiary Designation. The Employee may from time to time name any beneficiary or beneficiaries (who |
| may be named contingently or successively) to whom shall be delivered or paid under this Agreement following the |
| Employee’s death any shares that are distributable (or cash payable) hereunder in respect of Employee’s Restricted |
| Stock Units pursuant to Section 3 or Section 4 at the time specified in Section 2(g) or, if applicable, Section 4(a) or |
| 4(e); 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, shares issuable in connection with the Employee’s death shall be paid by the |
| Employee’s surviving spouse, if any, or otherwise to the Employee’s estate. |
| |
| 8. Tax Withholding. Whenever Common Stock is to be issued in settlement of Earned Restricted Stock Units |
| under this Agreement or unrestricted stock is to be delivered pursuant to Section 2, 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: |
| |
| (a) to have shares of Common Stock otherwise issuable upon the exercise under this Award withheld by the |
| Company; or |
| |
| (b) 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. |
| |
| 9. Adjustment of the Number of Restricted Stock Units. 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 Restricted Stock Units |
| subject to this Award 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. |
| |
| 10. Deferral of Distribution in Respect of Restricted Stock Units. An Employee may elect, by written notice to |
| the Company delivered not later than December 31 of the second year in the Performance Period, to defer delivery |
| of the shares of Common Stock (or any other distribution payable hereunder) in respect of Earned Restricted Stock |
| Units. Any such election shall specify the date on which such shares of Common Stock shall be delivered in a |
| single distribution; provided, however, that regardless of the date selected by the Employee all of the shares will be |
| delivered 5 business days after Employee’s termination of employment (or, if Employee is a key employee of the |
| Company within the meaning of Section 416(i) of the Code for the year in which his or her employment terminates, |
| six (6) months following such termination of employment unless such termination of employment is due to |
| Employee’s death or disability (as defined in Section 409A of the Code). The Employee may, in addition to electing |
| a date for payment, elect to have delivery of the shares be made within a fixed number of days following a change of |
| control of the Company (as defined for purposes of Section 409A of the Code). The Company or the Committee |
| may impose any such other or additional conditions on the terms of, or the timing of, any deferral election pursuant |
| to this Section 10, to the extent deemed necessary or appropriate to satisfy the applicable provisions of Section |
| 409A. Notwithstanding anything else contained in this Section 10 to the contrary, any election to defer delivery of |
| any amount otherwise payable under this Agreement that would fail to comply with the conditions set forth in such |
| Section 409A shall be deemed void and without effect. |
| |
| 11. Compensation Recovery Policy. The restricted stock unit award described in this Agreement is subject to the |
| Principal Financial Group, Inc. Executive Compensation Recovery Policy, effective February 23, 2010, as may be |
| amended from time to time, which is incorporated by this reference. |
| |
| 12. Requirements of Law. The issuance of shares of Common Stock pursuant to this Agreement 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 pursuant to this Agreement 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. |
| |
| 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. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to |
| current or future participation in the Plan by electronic means. The Employee hereby consents to receive such |
| documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system |
| established and maintained by the Company or a third party designated by the Company. |
| |
| 16. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined |
| to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding |
| and enforceable. |
| |
| 17. 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 Grant Date. |
| |
| By electronically signing this Agreement, 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 of this Award. Without limiting |
| the generality of the preceding sentence, I understand that, in most instances, my right to receive any Common Stock |
| or other benefit pursuant to this Award is conditioned upon my continued employment with the Company and the |
| achievement of the Performance Objectives specified herein. The terms and conditions set forth in this Agreement |
| and in the Plan are 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 Common Stock corresponding to the Restricted Stock Units awarded hereby until |
| shares of such Common Stock have been issued to me, if at all, in accordance with the terms and conditions of this |
| Agreement. |
| |
| I acknowledge that the covenants contained in Section 5 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. I further acknowledge such |
| covenants are essential elements of this Agreement and that, but for such covenants, the Company would not have |
| entered into this Agreement. |
|
|
| |
Exhibit 99.2 |
| |
| Stock Incentive Plan Award Agreement |
| |
| |
| STOCK OPTION AGREEMENT (“Agreement”), evidencing the grant of the stock option described |
| below under the Principal Financial Group, Inc. 2010 Stock Incentive Plan (the “Plan”) by Principal Financial |
| Group, Inc., a Delaware corporation (the “Company”) to you, (the “Employee”). Capitalized terms not defined in |
| this Agreement shall have the meanings given to such terms in the Plan. |
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| Type of Grant: Nonqualified Stock Options |
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| 1. Confirmation of Grant; Option Exercise Price. The Company hereby evidences and confirms its grant |
| to the Employee, effective on the date of grant reflected on your online award acceptance screen (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 on your online award |
| acceptance screen (the “Shares”) at an option exercise price set forth on your online award acceptance screen (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. |
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| 2. Exercise of Option. Options shall vest and become exercisable as described on your online award |
| acceptance screen, 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. |
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| 3. Expiration of Option. Unless an earlier expiration date applies pursuant to Section 5, the Option shall |
| expire ten years from the date of grant. |
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| 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. |
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| (a) Death or Disability 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. |
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| (b) Approved Retirement. In the event that the Employee’s employment with the Company |
| or a Subsidiary terminates due to the Employee’s Approved Retirement the Participant shall be |
| entitled to exercise (i) the number of Options (the “Last Year Options”) granted during the year in |
| which the Participant’s employment or service terminates by reason of Approved Retirement (the |
| “Retirement Year”) equal to the product of (x) the Last Year Options, multiplied by (y) a fraction not |
| greater than one, the numerator of which is (A) the number of days during the Retirement Year |
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during which the Participant was employed and (B) the denominator of which is 365 (the “Pro- |
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Ration Factor”), and (ii) any Options granted to such Participant prior to the Retirement Year. Any |
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Options that are exercisable in accordance with the preceding sentence may be exercised by the |
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Participant at any time prior to the expiration date of the term of the Options. Any of the Last Year |
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Options that are not exercisable at the date of a Participant’s Approved Retirement shall be cancelled |
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on such date. |
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(c) Resignation. In the event of voluntary termination by the Employee, other than on |
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account of Approved Retirement (a “Resignation”), any of the Participant’s then outstanding |
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Options that are exercisable on the date of such Resignation may be exercised by the Participant |
| until the later of (i) the thirtieth (30th) day following the Participant’s Resignation, or (ii) if, |
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immediately prior to such Resignation, the Participant was subject to the Company’s policies |
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restricting sales of its securities (a “Restricted Participant”), the thirtieth (30th ) day from the date the |
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first Trading Window commences following the Participant’s Resignation, but in no event following |
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the expiration of the term of such Options. Any outstanding Options that are not exercisable at the |
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time of a Participant’s Resignation shall expire at the time of such Resignation and shall not be |
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exercisable thereafter. |
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(d) Termination for Cause. In the event of voluntarily termination of employment by the |
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Employee or the Employee’s employment with the Company or a Subsidiary is terminated for |
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Cause, 100% of the Option (regardless of the extent to which the Option would otherwise be |
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exercisable under Section 2 of this Agreement) shall terminate and be canceled immediately upon |
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such termination of employment. |
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(e) Other Termination of Employment. Unless otherwise determined by the Committee, in |
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the event that the Employee’s employment with the Company or a Subsidiary terminates for any |
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reason other than those listed in paragraphs (a), (b), (c) or (d) of this Section, the portion of the |
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Employee’s Option that is exercisable as of the date of such termination may be exercised by the |
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Participant until the later of (i) the ninetieth (90th) day following the Participant’s termination, or (ii) |
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if, immediately prior to such termination, the Participant was subject to the Company’s policies |
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restricting sales of its securities (a “Restricted Participant”), the thirtieth (30th ) day from the date the |
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first Trading Window commences following the Participant’s termination, but in no event following |
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the expiration of the term of such Options. Any outstanding Options that are not exercisable at the |
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time of a Participant’s termination shall expire and be cancelled immediately at the time of such |
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termination as will any exercisable portion of the Option that is not exercised within the period |
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described above. |
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(f) No Guarantee of Employment. Nothing in this Agreement shall interfere with or limit in |
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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 |
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Subsidiary. |
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| 6. |
Change of Control. |
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(a) Accelerated Exercisability and Payment. Except as otherwise provided in paragraph |
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6(b), in the event of a Change of Control, 100% of the Option shall become exercisable (whether or |
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not then exercisable) and may, if the Committee so determines, be canceled in exchange for a |
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payment in cash of an amount equal to the product of (x) the excess, if any, of the Change of Control |
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Price over the Exercise Price multiplied by (y) the number of shares then covered by the Option. |
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(b) Alternative Award. Notwithstanding Section 6(a), no cancellation, acceleration of |
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exercisability, vesting, cash settlement or other payment shall occur with respect to any portion of |
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the Option if the Committee reasonably determines in good faith, prior to the occurrence of a |
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Change of Control, that such portion of the Option shall be honored or assumed, or new rights |
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substituted therefore (such honored, assumed or substituted Option being hereinafter referred to as |
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an “Alternative Award”) by the Employee’s employer (or an affiliate thereof) immediately after the |
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Change of Control, provided that any such Alternative Award must: |
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(1) be based on stock which is traded on an established securities market; |
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(2) provide the Employee with rights and entitlements substantially equivalent to or |
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better than the rights, terms and conditions applicable under such portion of the |
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Option, including, but not limited to, an identical or better exercise and vesting |
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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 |
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(determined at the time of the Change of Control and using valuation principles |
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permitted under Treas. Reg. §1.424-1); and |
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(4) provide that, in the event that such Employee’s employment is involuntary |
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terminated or constructively terminated, any conditions on such Employee’s rights |
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under, or any restrictions on transfer or exercisability applicable to, each such |
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Alternative Award shall be waived or shall lapse, as the case may be. |
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| 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 50 miles away or more from Employee’s prior place of employment. |
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| 7. Non-Solicitation. For a period of twelve months after the termination of Employee’s employment, |
| Employee shall not, directly or indirectly: |
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| (a) encourage any employee or agent of the Company or a Subsidiary to terminate his or her |
| relationship with the Company; |
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| (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; |
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| (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 |
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| (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. |
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| 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. |
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| 9. Beneficiary Designation. Each Participant under the Plan may from time to time name any beneficiary or |
| beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid or |
| by whom any right under the Plan is to be exercised in case of the Participant’s death; provided that, if the |
| Participant shall not have designated any beneficiary under this Plan, the Participant’s beneficiary shall be deemed |
| to be the person designated by the Participant under the group life insurance plan of the Company or a Subsidiary in |
| which such Participant participates (unless such designated beneficiary is not a Family Member). Each designation |
| made hereunder will revoke all prior designations by the same Participant with respect to all Awards previously |
| granted (including, solely for purposes of this Plan, any deemed designation), shall be in a form prescribed by the |
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| Committee, and will be effective only when received by the Committee in writing during the Participant’s lifetime. |
| In the absence of any such effective designation (including a deemed designation), benefits remaining unpaid at the |
| Participant’s death shall be paid to or exercised by the Participant’s surviving spouse, if any, or otherwise to or by |
| the Participant’s estate. Except as otherwise expressly provided herein, nothing in this Plan is intended or may be |
| construed to give any person other than Participants any rights or remedies under this Plan. |
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| 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: |
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| a) |
to have Shares otherwise issuable upon the exercise of an Option withheld by the Company, or |
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| b) |
to deliver to the Company cash equal to all or part of the Employee’s Federal, state or local tax obligation |
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associated with the transaction. |
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| 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. |
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| 12. |
Compensation Recovery Policy. The restricted stock unit award described in this Agreement is subject to |
| the Principal Financial Group, Inc. Executive Compensation Recovery Policy, effective February 23, 2010, as may |
| be amended from time to time, which is incorporated by this reference. |
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| 13. |
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. |
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| 14. |
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. |
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| 15. |
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. |
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| 16. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to |
| current or future participation in the Plan by electronic means. The Employee hereby consents to receive such |
| documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system |
| established and maintained by the Company or a third party designated by the Company. |
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| 17. |
Severability. The provisions of this Agreement are severable and if any one or more provisions are |
| determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless |
| be binding and enforceable. |
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| 18. |
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 |
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| such person. The Company shall give written notice to the Employee of any such amendment as promptly as |
| practicable after the adoption thereof. |
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| IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute, and the |
| Employee has executed, this Agreement, each as of the Grant Date. |
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| By electronically signing this Agreement, 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. |
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| 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. |
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| By: ______________________________ |
| Name: Ralph Eucher, SVP Human Resources |