Rule 424(b)(2)
File No. 333-32667
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
PROSPECTUS
Dated August 7, 1997
LINCOLN NATIONAL CORPORATION
1997 INCENTIVE COMPENSATION PLAN
<PAGE>
PROSPECTUS
11,613,256 Shares
LINCOLN NATIONAL CORPORATION
COMMON STOCK
(No Par Value)
Offered as set forth in this Prospectus pursuant to the
LINCOLN NATIONAL CORPORATION
1997 INCENTIVE COMPENSATION PLAN
This Prospectus applies to shares of Common Stock of Lincoln National
Corporation to be offered and sold under the 1997 Incentive Compensation Plan
(the "Plan") to eligible executive, managerial, supervisory, or professional
employees of Lincoln National Corporation and its subsidiaries or to eligible
persons holding either agents' or brokers' contracts with a subsidiary of
Lincoln National Corporation.
FOR A DISCUSSION OF THE MATERIAL RISKS RELATED TO INVESTMENT IN THE SECURITIES
OFFERED HEREBY, SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offer contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell or the solicitation of an offer to buy any of the securities offered
hereby in any state to or from any person to whom it is unlawful to make or
solicit such offer in such state. Neither the delivery of this Prospectus nor
any sales made hereunder shall under any circumstances create any implication
that there has been no change in the information herein since the date hereof.
The date of this Prospectus is August 7, 1997.
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TABLE OF CONTENTS
Page
General Information . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary of the Plan . . . . . . . . . . . . . . . . . . . . . . . . .
1. Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Administration . . . . . . . . . . . . . . . . . . . . . . .
3. Shares Available, Resale; Limitations . . . . . . . . . . . .
4. Term; Amendment. . . . . . . . . . . . . . . . . . . . . . .
5. Participants . . . . . . . . . . . . . . . . . . . . . . . .
6. Stock Options. . . . . . . . . . . . . . . . . . . . . . . .
7. Stock Appreciation Rights. . . . . . . . . . . . . . . . . .
8. Restricted Stock Awards. . . . . . . . . . . . . . . . . . .
9. Deferred Stock Units . . . . . . . . . . . . . . . . . . . .
10. Bonus Stock and Awards in Lieu of Cash Obligations . . . . .
11. Other Stock Based Awards . . . . . . . . . . . . . . . . . .
12. Performance Awards and Annual Incentive Awards . . . . . . .
13. Other Material Provisions . . . . . . . . . . . . . . . . .
14. Certain Tax Aspects . . . . . . . . . . . . . . . . . . . .
15. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Documents by Reference . . . . . . . . . . . . . . .
Annual Report to Shareholders . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports,
proxy statements, and other information with the Securities and Exchange
Commission. All reports, proxy statements and other information filed by the
Company can be inspected and copied at the Commission's public reference
facilities at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the following Regional Offices: Federal Building, 75 Park Place, Room 1228,
New York, New York 10007; and Everett McKinley Dirksen Building, 219 South
Dearborn Street, Chicago, Illinois 60604. Copies of these materials may also
be obtained from the Commission at the prescribed rates by mailing a request
to: Public Reference Branch, Securities and Exchange Commission, Washington,
D.C. 20549. Such material may also be accessed by means of the Commission's
home page on the Internet at http://www.sec.gov. In addition, the Company
will provide, without charge, to each person, including any beneficial owner,
to whom this prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this prospectus (excluding unincorporated exhibits), but not
delivered with it. Such requests should be made to C. Suzanne Womack,
Secretary, Lincoln National Corporation, 200 East Berry Street, Fort Wayne,
Indiana 46802, telephone: (219) 455-3271.
The Company's Common Stock is listed on the following stock exchanges and
reports, proxy statements and other information concerning the Company can be
inspected at the offices of those exchanges: New York Stock Exchange, Chicago
Stock Exchange, Pacific Stock Exchange, London Stock Exchange, and Tokyo Stock
Exchange.
GENERAL INFORMATION
The Lincoln National Corporation 1997 Incentive Compensation Plan (the
"Plan") was established subject to shareholder approval by the Board of
Directors (the "Board") of Lincoln National Corporation (the "Company" or
LNC) on May 13, 1997 and approved by the Company's shareholders at their
annual meeting held on May 15, 1997.
The principal executive offices of the Company, an Indiana corporation,
are at 200 East Berry Street, Fort Wayne, Indiana 46802. Its telephone number
is (219) 455-2000. Certain executive, managerial, supervisory, or
professional employees of the Company and its subsidiaries and certain persons
holding either agents' or brokers' contracts with subsidiaries of the Company
may participate in the Plan.
RISK FACTORS
In addition to the risks typically associated with investing in equity
securities (particularly publicly traded equity securities), investing in
shares of LNC common stock entails certain risks that are specific to the
industries in which LNC's subsidiaries operate. These risk factors include,
among other things, the highly competitive nature of those industries, state
and federal regulation, changing economic conditions, ratings received by, and
underwriting losses and claims of, LNC's insurance subsidiaries, and the
investment performance of assets held by LNC's insurance subsidiaries and
entities advised by investment advisory subsidiaries of LNC. These risk
factors are discussed briefly below.
Competition. The insurance, financial services and mutual funds
industries are highly competitive. Currently, there are thousands of
insurance companies actively engaged in business in the United States,
some of which offer insurance and annuity products not currently offered
by subsidiaries of LNC. In addition, LNC's life insurance and annuity
subsidiaries encounter competition from the expanding number of banks,
securities brokerage firms and other financial intermediaries which are
marketing insurance products and which offer competing investments such as
savings accounts and securities. Similarly, there are thousands of open-
and closed-end mutual funds available to public investors, and a large
number of investment advisers offer their services to pension funds and
other institutional investors. While the Company believes its subsidiaries
can effectively compete in the industries in which they operate, there can be
no assurance that such subsidiaries will be able to do so.
Regulation. The Company's insurance affiliates are subject to regulation
and supervision by the states, territories and foreign countries in which
they are admitted to do business. These jurisdictions generally maintain
supervisory agencies with broad discretionary powers relative to granting and
revoking licenses to transact business, regulating trade practices, licensing
agents, prescribing and approving policy forms, regulating premium rates for
some lines of business, establishing premium requirements, regulating
competitive matters, prescribing the form and content of financial statements
and reports, determining the reasonableness and adequacy of capital and
surplus and regulating the type and amount of investments permitted. The
Company's insurance subsidiaries conduct business in numerous jurisdictions
and, accordingly, are subject to the laws and regulations of each of those
jurisdictions. Most of the Company's principal insurance subsidiaries are
domiciled in Indiana and are primarily regulated by the Indiana Commissioner.
As a holding company of insurance businesses, the Company is also subject
to regulatory requirements of the states where its insurance subsidiaries
are domiciled. For example, certain transactions involving an affiliated
insurance company, such as loans, extraordinary dividends or investments,
in some cases may require the prior approval of such company's primary
regulators. Additionally, these requirements restrict the ability of any
person to acquire control of the Company or any of its subsidiaries engaged
in the insurance business without prior regulatory approval. Control is
generally deemed to exist if an entity beneficially owns 10% or more of the
voting securities of a company. Such requirements may have the effect of
preventing an acquisition of the Company.
The Company's investment management subsidiaries are subject to a number
of federal and state laws and regulations, including without limitation, the
Investment Company Act of 1940, the Investment Adviser's Act of 1940 and the
National Association of Securities Dealers Rules of Fair Practice. These laws
and regulations generally grant supervisory agencies and self-regulatory
organizations broad administrative powers, including the power to limit or
restrict the subsidiaries from carrying on their businesses in the event that
they fail to comply with such laws and regulations.
Ratings. Insurance companies are generally assigned ratings by various
rating agencies, such as the A.M. Best Company and the Duff and Phelps Rating
Agency. A company's sales of insurance products are generally affected by
these ratings. A stronger rating can translate to a marketing advantage and
the ability to price less aggressively to generate sales. As of July 28,
1997, The Lincoln National Life Insurance Company had financial strength
ratings of AA+ and A+ by Duff and Phelps and A.M. Best Company, respectively.
Similarly, while mutual funds are not rated, per se, many industry
periodicals and services provide rankings of mutual fund performance. These
rankings often have an impact on the decisions of public investors regarding
which mutual funds to invest in.
Economic Conditions. The operating results of LNC's insurance
subsidiaries are affected significantly by changes in interest rates and
inflation. Similarly, these economic factors significantly affect the
investment performance of the mutual funds and other entities advised by LNC
subsidiaries. The performance of these entities, in turn, affects their
ability to attract and retain clients and investors.
The investment income and market value of the investment portfolios of
LNC's insurance subsidiaries and of the fixed-income-oriented mutual funds
and private investment portfolios advised by LNC's investment advisory
subsidiaries are primarily related to yields on their investments in the
fixed-income markets. An increase in interest rates will generally decrease
the market value of the relevant investment portfolio, but will increase
investment income as investments mature and proceeds are reinvested at higher
rates. Additionally, changes in interest rates and inflation have
implications for the volume and profitability of the business of LNC's
insurance subsidiaries. As interest rates rise, competitors may respond by
changing crediting rates and the policyholders will evaluate the products of
LNC's subsidiaries by comparison; there can be no guarantee that the
subsidiaries' products will be competitive as compared to products offered by
other insurance companies.
Underwriting Losses and Claims. In addition to return on investment
income, the profitability of an insurance company is dependent upon its loss
experience in connection with its outstanding insurance contracts. Successful
underwriting experience is, in turn, dependent upon the quality, diversity,
and size of the insurer's pool of insureds. While LNC believes that the
outstanding insurance contracts of its subsidiaries were issued in accordance
with adequate underwriting guidelines, and that the pools of insureds of its
insurance company subsidiaries are of sufficient size and diversity, above
average loss experience could result in underwriting losses. No assurance can
be given that the current and future reserves of LNC's insurance subsidiaries
will be sufficient to provide for payment of all claims, or that the insurance
operations of such subsidiaries will be profitable.
SUMMARY OF THE PLAN
1. Purpose.
The Plan was adopted because, in the judgment of the Board, the Company
and its shareholders would benefit from an incentive compensation program
which is attractive to executives and other key employees, agents and brokers
of the Company and its subsidiaries and encourages them to increase their
ownership of its common stock. The purpose of the Plan is to assist LNC and
its subsidiaries in attracting, retaining, and rewarding high quality
executives, employees and other persons who provide services to the Company
and/or its subsidiaries, enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company s shareholders, and providing
such persons with annual and long-term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is also
intended to qualify certain compensation awarded under the Plan for tax
deductibility under the Code Section 162(m) (as herein after defined) to the
extent deemed appropriate by Compensation Committee of the Board (the
Committee) the of the Board of Directors of the Company (the Board). In
addition, the Board has concluded that the Committee should be given as much
flexibility as possible to provide for annual and long-term incentive awards
contingent on performance.
The Company has no specific plan for the use of any proceeds generated
from the sale of its Common Stock pursuant to the Plan.
2. Administration.
The Plan is administered by the Committee. The Committee shall consist of
each of the members of the Compensation Committee of the Board who is (i) a
non-employee director within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934 (the Exchange Act), unless administration of the Plan by
non-employee directors is not required in order for exemptions under Rule
16b-3 to apply to transactions under the Plan, and (ii) an outside director
as defined under Code Section 162(m), unless the action taken pursuant to the
Plan is not required to be taken by outside directors in order to qualify
for tax deductibility under Code Section 162(m). Unless otherwise designated
by the Board the Committee will include at least three members. In the event
that fewer than three member of the Compensation Committee are eligible to
serve on the Committee, the Board may appoint one or more of its members who
is otherwise eligible to serve on the Committee until such time as three
members of the Compensation Committee are eligible to serve. Present members
of the Compensation Committee are John M. Pietruski, (Chairman), Thomas D.
Bell, Jr., Earl L. Neal, Jill S. Ruckelshaus and Gordon A. Walker. They may
be contacted in care of the Secretary of the Company at 200 East Berry Street,
Fort Wayne, Indiana 46802.
Subject to the terms and conditions of the Plan, the Committee is
authorized to interpret the provisions of the Plan, select participants,
determine the type and number of Awards (as defined below) to be granted and
the number of shares of Common Stock to which Awards will relate, specify
times at which Awards will be exercisable or settleable (including performance
conditions that may be required as a condition thereof), set other terms and
conditions of such Awards, prescribe forms of Award agreements, adopt, amend
and rescind rules and regulations relating to the Plan and make all other
determinations that may be necessary or advisable for the administration of
the Plan. The Committee may, in its discretion, convert any Award or the
value of any Award under the Plan, subject to applicable laws and regulations,
into Deferred Stock Units which will be administered under the Lincoln
National Corporation Deferred Compensation Plan for Employees (the Deferred
Compensation Plan). The Plan provides that Committee members shall not be
personally liable, and shall be fully indemnified, in connection with any
action, determination, or interpretation taken or made in good faith under the
Plan.
To provide a flexible and competitive program, the Plan gives the
Committee full discretion to select the awards from among the various forms
available under the Plan: stock options, stock appreciation rights (SARs),
restricted stock (Restricted Stock), deferred stock units, other stock-
related awards, and performance or annual incentive awards that may be settled
in cash, stock, or other property (Awards).
3. Shares Available; Resale; Limitations
Under the Plan, the total number of shares of the Common Stock of the
Company (the Common Stock or Stock) reserved and available for delivery to
participants in connection with Awards is 12,700,000, less any shares of stock
which are the subject of an option granted or other award made under the Pre-
existing Plans after March 12, 1997. Pre-existing Plans include the Lincoln
National Corporation 1986 Stock Option Incentive Plan (the Stock Option Plan)
and the 1994 Amended and Restated Lincoln National Corporation Executive Value
Sharing Plan (the EVSP) each of which was terminated on May 15, 1997. As
of May 15, 1997, 1,086,744 awards had been made under Pre-existing Plans
thereby reducing the total number of shares authorized to 11,613,256. The
total number of shares of Common Stock with respect to which incentive stock
options (ISOs) may be granted shall not exceed 1,000,000, and the total
number of shares of Restricted Stock that may be granted shall not exceed
2,944,756. Any shares of Common Stock delivered under the Plan shall consist
of authorized and unissued shares.
In addition, the Plan imposes individual limitations on the amount of
certain Awards in order to comply with Section 162(m) of the Internal Revenue
Code (the Code). Under these limitations, during any fiscal year the number
of options, SARs, shares of restricted stock, units of deferred stock, shares
of Common Stock issued as a bonus or in lieu of other obligations, and other
stock-based Awards granted to any one participant shall not exceed 1,000,000
shares for each type of such Award, subject to adjustment in certain
circumstances. The maximum amount that may be earned as an annual incentive
award or other cash Award (payable currently or on a deferred basis) in any
fiscal year by any one participant is $8,000,000, and the maximum amount that
may be earned as a performance award or other cash Award (payable currently or
on a deferred basis) in respect of a performance period by any one participant
is $8,000,000.
No Award may be granted if the number of shares of stock to be delivered
in connection with such Award or, in the case of an Award relating to shares
of stock but settleable only in cash (such as cash-only SARs), the number of
shares to which such Award relates, exceeds the number of shares of stock
remaining under the Plan minus the number of shares of stock issuable in
settlement of or relating to then-outstanding Awards. Shares of stock subject
to an Award under the Plan or award under a Pre-existing Plan that is
canceled, expired, forfeited, settled in cash or otherwise terminated without
delivery of shares to the participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or taxes
relating to Awards, and (ii) the number of shares surrendered in payment of
any exercise or purchase price of an Award or taxes relating to any Award,
will again be available for Awards under the Plan.
The Committee is authorized to adjust the number and kind of shares
subject to the aggregate share limitations and annual limitations under the
Plan and subject to outstanding Awards (including adjustments to exercise
prices and number of shares of options and other affected terms of Awards) in
the event that a dividend or other distribution (whether in cash, shares, or
other property), recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase, or share exchange,
or other similar corporate transaction or event affects the Common Stock so
that an adjustment is appropriate. The Committee is also authorized to adjust
performance conditions and other terms of Awards in response to these kinds of
events or in response to changes in applicable laws, regulations, or
accounting principles.
Except as described under "Restricted Stock Awards" below, the Plan does
not impose any restriction on the resale of shares of the Company's Common
Stock acquired pursuant to a grant under the Plan. However, any "affiliate"
of the Company (defined in Rule 405 under the Securities Act of 1933 (the
1933 Act) to include persons who directly or indirectly, through one or more
intermediaries, control, or are controlled by, or are under common control
with, the Company) may not use this Prospectus to offer and sell shares of
Common Stock they acquire under the Plan. They may, however, sell such
shares:
(1) pursuant to an effective registration statement under the Securities
Act of 1933;
(2) in compliance with Rule 144 under the Act; or
(3) in a transaction otherwise exempt from the registration requirements
of that Act.
Each participant who is the beneficial owner of at least 10% of the
outstanding shares of the Company's Common Stock (the "Common Stock") and each
participant who is director or policy making officer of the Company is subject
to Section 16(b) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), which requires such persons to disgorge to the Company any "profits"
resulting from a sale and purchase (or purchase and sale) of shares of the
Common Stock within a six month period. For such participants, sales of
certain shares of Common Stock occurring within six months of the grant of an
option or the grant of a restricted stock award may result in such Section
16(b) liability, unless one or both of those transactions are exempt, as
described below in more detail.
Pursuant to Rule 16b-3 of the 1934 Act, because the Plan is administered
by a committee consisting solely of at least two "Non-Employee Directors" (as
defined in Rule 16b-3(b)(3)), the grant of an option, a stock appreciation
right, a restricted stock award, or other award to a participant subject to
Section 16(b) will not be deemed, for purposes of Section 16(b), to be a
purchase of the shares that underlie the option, award or right for purposes
of determining whether a participant is liable to the Company for any profits
derived from the purchase and sale of Common Stock.
In addition, if at least six months have elapsed between the award of an
option, a stock appreciation right, a restricted stock award, or other award,
and the disposition of the underlying Common Stock, no purchase of Common
Stock would be deemed to have occurred under Section 16(b) for purposes of
determining whether a participant is liable to the Company for any profits
derived from the purchase and sale of Common Stock.
It is the intent of the Company that the grant of any Awards to or other
transaction by a participant who is subject to Section 16 of the Exchange Act
shall be exempt under Rule 16b-3 (except for transactions acknowledged in
writing to be non-exempt by such participant). Accordingly, if any provision
of this Plan or any Award agreement does not comply with the requirements of
Rule 16b-3 as then applicable to any such transaction, unless the participant
shall have acknowledged in writing that a transaction pursuant to such
provision is to be non-exempt, such provision shall be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 so that such participant shall avoid liability under Section 16(b)
of the Exchange Act.
However, even if a transaction is exempt under Section 16(b), the general
prohibition of federal and state securities laws on trading securities while
in possession of material non-public information concerning the issuer
continue to apply.
4. Term; Amendment.
The Board of Directors, or the Committee acting pursuant to authority
delegated to it by the Board, may amend, alter, suspend, discontinue, or
terminate the Plan or the Committee's authority to grant Awards without
further shareholder approval, except shareholder approval must be obtained for
any amendment or alteration if required by law or regulation or under the
rules of any stock exchange or automated quotation system on which the shares
are then listed or quoted. Shareholder approval will not be deemed to be
required under laws or regulations, such as those relating to ISOs, that
condition favorable treatment of participants on such approval, although the
Board may, in its discretion, seek shareholder approval in any circumstance in
which it deems such approval advisable. Thus, shareholder approval will not
necessarily be required for amendments that might increase the cost of the
Plan or broaden eligibility. Unless earlier terminated by the Board, the Plan
will terminate at such time as no shares remain available for issuance under
the Plan and the Company has no further rights or obligations with respect to
outstanding Awards under the Plan.
5. Participants.
The Committee may select any executive officers and other officers
employees, agents and brokers of the Company or any of its subsidiaries,
including any such person who may also be a director of the Company to be
eligible to be granted Awards under the Plan. It is anticipated that
approximately 700 individuals will be eligible to participate during the
current year of operation of the Plan.
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Certain United Kingdom directors and officers who are employed by any
corporate entity, including Lincoln National (UK) PLC, which is under the
Control of the Company, may also be selected by the Committee to participate
in the Plan. Stock options granted to and Common Stock issued to United
Kingdom officers and directors shall be granted or issued subject to
applicable United Kingdom laws and regulations. The terms and conditions
of stock options or Company Common Stock so granted or issued, and the tax
consequences of such grant or issuance, may vary from those relating to United
States persons described below. PARTICIPATING UNITED KINGDOM OFFICERS AND
DIRECTORS ARE ESPECIALLY URGED TO CONSULT THEIR OWN LEGAL AND TAX ADVISORS.
6. Stock Options.
The Committee is authorized to grant stock options, including both ISOs
that can result in potentially favorable tax treatment to the participant and
non-qualified stock options (i.e., options not qualifying as ISOs).
Incentive Stock Options or ISO means any option intended to be and
designated as an incentive stock option within the meaning of Code Section 422
or any successor provision thereto. The terms of any ISO granted under the
Plan is intended to comply in all respects with the provisions of Code Section
422. The aggregate fair market value (determined at the time an incentive
stock option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by a participant during any
calendar year may not exceed $100,000. For purposes of this $100,000
limitation, all of the plans of the Company and its subsidiaries will be taken
into account. The maximum number of options awarded to one individual cannot
exceed 100,000 options per year. Information regarding outstanding options
may be provided in the Company s annual reports to shareholders, proxy
statements, or appendices to this prospectus. No term of the Plan relating to
ISOs (including any SAR in tandem therewith) may be interpreted, amended or
altered, nor may any discretion or authority granted under the Plan be
exercised, so as to disqualify either the Plan or any ISO under Code Section
422, unless the Participant has first requested the change that will result in
the disqualification. The total number of shares of Common Stock with respect
to which ISOs may be granted may not exceed 1,000,000.
The exercise price per share subject to an option is determined by the
Committee, but may not be less than the Fair Market Value of a share of Common
Stock on the date of grant. The maximum term of each option, the times at
which each option will be exercisable, and provisions requiring forfeiture of
unexercised options at or following termination of employment generally are
fixed by the Committee, except that no option may have a term exceeding ten
years. Options may be exercised by payment of the exercise price in cash,
Common Stock, outstanding Awards, or other property (possibly including notes
or obligations to make payment on a deferred basis) having a Fair Market Value
equal to the exercise price, as the Committee may determine from time to time.
The Committee may include a provision in an option permitting the grant of a
new option when payment of the exercise price of an option is made in shares
of Common Stock.
For purposes of the Plan, the Fair Market Value means the Fair Market
Value of the Award as determined by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of stock will be the
average of the highest and lowest prices of a share of Stock, as quoted on the
composite transaction table on the New York Stock Exchange, on the last
trading day prior to the date on which the determinations of the Fair Market
Value is being made.
7. Stock Appreciation Rights.
The Committee is authorized to grant Stock Appreciation Rights (SARs) to
participants. A SAR entitles the participant to receive the excess of the
Fair Market Value (as defined above) of one share of stock on the date of
exercise over the grant price of the SAR as determined by the Committee. In
addition, the Committee may grant a Limited SAR whereby the participant is
entitled to the Fair Market Value determined by reference to the Change in
Control Price over the grant price of the Limited SAR. Change in Control
Price means the amount in cash equal to the higher of (i) the amount of cash
or Fair Market Value of property that is the highest price per share paid in
any transaction triggering a Change in Control (as defined below) or the
highest Fair Market Value per share at any time during the 60 day period
preceding and 60 day period following a Change in Control. SARs and Limited
SARs may be either free standing or in tandem with other Awards. Limited SARs
may only be exercised in connection with a Change in Control.
The grant price of an SAR is determined by the Committee. The term of the
SAR, the times at which each SAR will be exercisable, whether or not a SAR
will be in tandem or in combination with any other Award and provisions
requiring forfeiture of SARs at or following terminations of employment are
generally fixed by the Committee, except that no SAR may have a term exceeding
ten years. Methods of exercise and settlement and other terms of the SARs are
determined by the Committee.
8. Restricted Stock Awards.
The Committee is authorized to grant restricted stock. Restricted stock
is a grant of Common Stock which may not be sold or disposed of, and which may
be forfeited in the event of certain terminations of employment and/or failure
to meet certain performance requirements, prior to the end of a restricted
period specified by the Committee. The total number of shares that may be
granted as restricted stock may not exceed 2,944,756. A participant granted
restricted stock generally has all of the rights of a shareholder of the
Company, including the right to vote the shares and to receive dividends
thereon, unless otherwise determined by the Committee. As a condition to the
grant of an Award of Restricted Stock, the Committee may require that any cash
dividends paid on a share of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock or applied to the purchase of additional
Awards. Such stock will be subject to the same restrictions as the Restricted
Stock. If certificates representing the Restricted Stock are registered in
the participant s name, the Committee may require such stock to bear the
appropriate restrictive legend.
9. Deferred Stock Units.
The Committee is authorized to grant to participants Deferred Stock Units,
which are rights to receive stock, cash, or a combination thereof at the end
of a specified deferral period. Unless otherwise specified by the Committee,
Deferred Stock Units shall be credited as of the date of award to a
bookkeeping reserve account maintained by the Company under the Lincoln
National Corporation Executive Deferred Compensation Plan for Employees or its
successor (the Deferred Compensation Plan) in units which are equivalent in
value to shares of Common Stock (Deferred Stock Units). Once credited to the
account, Deferred Stock Units shall be governed by the terms of the Deferred
Compensation Plan.
Such an Award confers upon a participant the right to receive shares at
the end of a specified deferral period, subject to possible forfeiture of the
Award in the event of certain terminations of employment and/or failure to
meet certain performance requirements prior to the end of a specified
restricted period (which restricted period need not extend for the entire
duration of the deferral period). Prior to settlement, an Award of deferred
stock units carries no voting or dividend rights or other rights associated
with share ownership, although dividend equivalents may be granted, as
discussed below.
10. Bonus Stock and Awards in Lieu of Cash Obligations.
The Committee is authorized to grant Stock as a bonus, or to grant Stock
or other Awards in lieu of obligations to pay cash or deliver other property
under the Plan or under other plans or compensatory arrangements, provided
that in the case of participants subject to Section 16 of the Exchange Act,
the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of stock or other Awards do
not impair a participant s exemption from liability under Section 16(b).
Stock or Awards granted hereunder shall be subject to such terms as shall be
determined by the Committee.
11. Other Stock-Based Awards.
The Plan authorizes the Committee to grant Awards that are denominated or
payable in, valued by reference to, or otherwise based on or related to
shares. Such Awards might include convertible or exchangeable debt
securities, other rights convertible or exchangeable into shares, purchase
rights for shares, Awards with value and payment contingent upon performance
of the Company or any other factors designated by the Committee, and Awards
valued by reference to the book value of shares or the value of securities of
or the performance of specified subsidiaries. The Committee determines the
terms and conditions of such Awards, including consideration to be paid to
exercise Awards in the nature of purchase rights, the period during which
Awards will be outstanding, and forfeiture conditions and restrictions on
Awards.
12. Performance Awards and Annual Incentive Awards.
The right of a participant to exercise or receive a grant or settlement
of an Award, and the timing thereof, may be subject to such performance
conditions as may be specified by the Committee. In addition, the Plan
authorizes specific annual incentive awards, which represent a conditional
right to receive cash, shares or other Awards upon achievement of
preestablished performance goals during a specified one-year period.
Performance awards and annual incentive awards granted to persons the
Committee expects will be among the Chief Executive Officer and four other
most highly compensated executive officers (the "Named Executive Officers")
for the year in which a deduction arises, will, if so intended by the
Committee, be subject to provisions that should qualify such Awards as
"performance-based compensation" not subject to the limitation on tax
deductibility by the Company under Code Section 162(m).
The performance goals to be achieved as a condition of payment or
settlement of a performance award or annual incentive award will consist of
(i) one or more business criteria and (ii) a targeted level or levels of
performance with respect to each such business criterion. In the case of
performance awards intended to meet the requirements of Code Section 162(m),
the business criteria used must be one of those specified in the Plan,
although for other participants the Committee may specify any other criteria.
The business criteria specified in the Plan are, as defined by the Committee:
(1) earnings per share; (2) revenues; (3) cash flow; (4) cash flow return on
investment; (5) return on assets, return on investment, return on capital,
return on equity; (6) economic value added; (7) operating margin; (8) net
income; pretax earnings; pretax earnings before interest, depreciation and
amortization; pretax operating earnings after interest expense and before
incentives, service fees, and extraordinary or special items; operating
earnings; income from operations; (9) total shareholder return; (10) any of
the above goals as compared to the performance of a published or special index
deemed applicable by the Committee including, but not limited to, the Standard
& Poor's 500 Stock Index or a group of comparator companies; and (11) any
criteria comparable to those listed above that shall be approved by the
Committee.
In granting annual incentive or performance awards, the Committee may
establish unfunded award "pools," the amounts of which will be based upon the
achievement of a performance goal or goals using one or more of the business
criteria described in the preceding paragraph. During the first 90 days of a
fiscal year or performance period, the Committee will determine who will
potentially receive annual incentive or performance awards for that fiscal
year or performance period, either out of the pool or otherwise. After the
end of each fiscal year or performance period, the Committee will determine
the amount, if any, of the pool, the maximum amount of potential annual
incentive or performance awards payable to each participant in the pool, and
the amount of any potential annual incentive or performance award otherwise
payable to a participant. The Committee may, in its discretion, determine
that the amount payable as an annual incentive or performance award will be
increased or reduced from the amount of any potential Award, but may not
exercise discretion to increase any such amount intended to qualify under Code
Section 162(m).
Subject to the requirements of the Plan, the Committee will determine
other performance award and annual incentive award terms, including the
required levels of performance with respect to the business criteria, the
corresponding amounts payable upon achievement of such levels of performance,
termination and forfeiture provisions, and the form of settlement.
All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Award and the amount of any annual incentive award
pool or potential individual annual incentive awards and the amount of final
annual incentive awards shall be made in writing in the case of any Award
intended to qualify under Code Section 162(m).
13. Other Material Provisions.
Awards may be settled in the form of cash, Common Stock, other Awards, or
other property, in the discretion of the Committee. The Committee may require
or permit participants to defer the settlement of all or part of an Award in
accordance with such terms and conditions as the Committee may establish,
including payment or crediting of interest or dividend equivalents on deferred
amounts, and the crediting of earnings, gains, and losses based on deemed
investment of deferred amounts in specified investment vehicles. The
Committee is authorized to place cash, shares, or other property in trusts or
make other arrangements to provide for payment of the Company s obligations
under the Plan. The Committee may condition any payment relating to an Award
on the withholding of taxes and may provide that a portion of any shares or
other property to be distributed will be withheld (or previously acquired
shares or other property surrendered by the participant) to satisfy
withholding and other tax obligations. Awards granted under the Plan
generally may not be pledged or otherwise encumbered and are not transferable
except by will or by the laws of descent and distribution, or to a designated
beneficiary upon the participant's death, except that the Committee may, in
its discretion, permit transfers for estate planning or other purposes.
Awards under the Plan are generally granted without a requirement that
the participant pay consideration in the form of cash or property for the
grant (as distinguished from the exercise), except to the extent required by
law. The Committee may, however, grant Awards in exchange for other Awards
under the Plan, awards under other plans of the Company, or other rights to
payment from the Company, and may grant Awards in addition to and in tandem
with such other Awards, awards, or rights as well.
Unless the Award agreement specifies otherwise, the Committee may cancel
or rescind Awards if the participant fails to comply with certain
noncompetition, confidentiality or intellectual property covenants. For
instance, Awards may be canceled or rescinded if the participant engages in
competitive activity while employed with the Company or within a specified
period following termination of employment. The Company may, in its
discretion, in any individual case provide for waiver in whole or in part of
compliance with the noncompetition, confidentiality or intellectual property
covenants.
The Committee may, in its discretion, accelerate the exercisability, the
lapsing of restrictions, or the expiration of deferral or vesting periods of
any Award, and such accelerated exercisability, lapse, expiration and vesting
shall occur automatically in the case of a "change of control" of the Company
except to the extent otherwise determined by the Committee at the date of
grant. In addition, the Committee may provide that the performance goals
relating to any performance-based award will be deemed to have been met upon
the occurrence of any change of control. Upon the occurrence of a change of
control, except to the extent otherwise determined by the Committee at the
date of grant, options will become fully vested and exercisable and
restrictions on restricted stock and deferred stock units will lapse. "Change
of Control" is defined in the Plan to include a variety of events, including
significant changes in the stock ownership of the Company or a significant
subsidiary, changes in the Company s board of directors, certain mergers and
consolidations of the Company or a significant subsidiary, and the sale or
disposition of all or substantially all the consolidated assets of the
Company.
14. Certain Tax-Aspects.
THE FOREGOING TAX DISCUSSION AND THE TAX DISCUSSION SET FORTH BELOW ARE
INCLUDED HEREIN FOR GENERAL INFORMATION ONLY. IN VIEW OF THE INDIVIDUAL
NATURE OF TAX CONSEQUENCES, EACH PARTICIPANT SHOULD CONSULT HIS OR HER TAX
ADVISOR FOR MORE SPECIFIC INFORMATION, INCLUDING THE EFFECT OF APPLICABLE
FEDERAL, STATE AND OTHER TAX LAWS.
Under present law the federal income tax consequences of grants and
awards under the Plan are generally as follows:
Incentive Stock Options. Incentive stock options may be awarded only to
those participants who are "employees" (as that term is defined in Section
3401(c) of the Code and the regulations promulgated thereunder) of the Company
or one of its subsidiaries at the time of the granting of the option. In
addition, an option that qualifies as an incentive stock option at the time of
grant generally will not be treated as an incentive stock option for income
tax purposes if the optionee is not an "employee" at the time of exercise
(except when the optionee was an employee within three months of his death or
at the time of his disability or termination of employment and the option is
exercised within a specified period of time after his death, disability or
termination of employment). Those persons who are eligible to participate in
the Plan because they hold either agents' or brokers' licenses with a
subsidiary of the Company may or may not, depending on their particular facts
and circumstances, be "employees" for this purpose. For the tax treatment of
options granted to or exercised by non-employees, see Non-qualified Stock
Options, below.
The granting of an incentive stock option will not result in taxable
income to the participant at the time of grant. The exercise of the incentive
stock option will also ordinarily have no federal income tax consequences to
the participant, although an incentive stock option exercised more than three
months after retirement (or one year after retirement, when retirement was as
a result of the participant's disability) will be treated as a non-qualified
stock option and taxed as described in Non-qualified Stock Options, below,
unless the option is exercised by the heirs or the estate of the deceased
participant who was employed on the date of his death and throughout the
three-month period ending on the date of death. If, however, a participant
tenders payment upon the exercise of an incentive stock option by surrendering
shares obtained upon a prior exercise of an incentive stock option which
shares were not held for the "required holding period" (as defined below),
that participant may recognize income upon the surrendering of the previously
acquired shares under those rules described below pertaining to the
disposition of shares acquired pursuant to an incentive stock option.
If the shares acquired pursuant to a timely exercise of an incentive
stock option are held for at least one year after they were acquired by
exercise of the incentive stock option and two years after the date on which
the incentive stock option was granted to the participant (the "required
period"), then any gain on disposition of the shares will generally be taxable
as long-term capital gain and no corresponding deduction will be allowed to
the Company. For a discussion of the federal income tax consequences of a
long-term capital gain, see Capital Gains Treatment, below.
If the shares acquired pursuant to a timely exercise of an incentive
stock option are disposed of before the expiration of the required period,
then the difference between the participant's "basis" (as defined below) and
the fair market value of the shares at the date of exercise, will generally be
taxable as ordinary income and a contemporaneous deduction in the amount of
such income will be allowed to the Company. Any additional gain (or loss)
realized on a disposition of such shares will generally be taxable to the
participant as long or short-term capital gain (or loss) depending on the
period for which the shares were deemed to have been held. For a discussion
of holding periods and the federal income tax treatment of long-term capital
gains, see Capital Gains Treatment, below.
For purposes of determining whether shares acquired pursuant to the
exercise of an incentive stock option have been disposed of before the
expiration of the required period, the term "disposition" will include a sale,
exchange, gift or transfer of legal title of the shares, but does not include
a transfer from a decedent to an estate, a transfer by bequest or inheritance,
a pledge or hypothecation, or transfers pursuant to certain non-recognition
transactions such as like-kind exchanges (except as noted above with respect
to the exchange of shares acquired pursuant to an incentive stock option that
have not been held for the required period and are surrendered to exercise an
incentive stock option) or exchanges pursuant to reorganizations.
A participant's "basis" in shares of common stock acquired pursuant to
the exercise of an incentive stock option will equal the amount of any cash
paid for such shares plus the basis of any shares surrendered, as determined
immediately before the surrender, plus any income recognized on the
disposition of the surrendered shares. If a participant uses shares of the
Company's Common Stock to exercise his incentive stock option and such shares
either were not acquired by the prior exercise of an incentive stock option,
or were so acquired but were held by him for the required period, it is
expected that the basis and holding period (for the purpose of determining
whether amounts realized or lost upon the subsequent disposition of the shares
constitute short-term or long-term capital gains or losses) of the shares that
the participant surrenders carries over to the same number of shares received
upon the exercise of the option.
If a participant uses shares of the Company's Common Stock to exercise
his incentive stock option, and such shares were acquired upon a prior
exercise of incentive stock option and were not held for the required period,
the participant's basis in the shares acquired upon exercise of his incentive
stock option will equal the sum of the basis of shares surrendered, as
determined immediately before the surrender, and any income recognized on the
disposition of the surrendered shares. In addition, the holding period of the
newly acquired stock should begin on the date of the most recent exercise of
the incentive stock option.
The amount by which the fair market value, determined at the time of
exercise, of a share of Company Common Stock acquired pursuant to the exercise
of an incentive stock option exceeds the option price shall, along with other
specified items, constitute an adjustment for the purposes of calculating the
alternative minimum taxable income of the participant for the taxable year in
which the option was exercised. Such adjustment items are potentially subject
to a 26% - 28% alternative minimum tax as determined by a complex formula
involving special deductions, additions and exemptions. As a result, the
exercise of an incentive stock option may subject a participant to an
alternative minimum tax depending on that participant's particular
circumstances.
For purposes of computing alternative minimum taxable income realized on
a subsequent disposition of shares acquired pursuant to the exercise of an
incentive stock option, the participant's basis in the stock so acquired shall
be increased by the amount that alternative minimum taxable income realized
was increased due to the earlier exercise of the stock option.
Non-Qualified Stock Options. The granting of a non-qualified stock
option will not result in taxable income to the participant at the time of
grant. On exercise of a non-qualified stock option, the participant will
normally realize taxable ordinary income equal to any excess of the fair
market value of the shares at the time of exercise over the option price of
the shares. At the time this ordinary income is recognized by the
participant, the Company will be entitled to a corresponding deduction.
If a participant exercises his non-qualified stock option with a cash
payment, the basis of the shares he acquires will generally equal the option
price plus the amount included in his income upon exercise. If the
participant uses shares of the Company's Common Stock to exercise his
non-qualified stock option, the basis and holding period of the shares he
surrenders carries over to the same number of the shares received upon the
exercise of the option. The basis of the remaining shares received is the
fair market value of the shares on the date of exercise.
To the extent that the shares constitute a capital asset in the hands
of a participant, on the disposition of the shares acquired upon exercise of a
non-qualified stock option, the difference between the amount received for the
shares and the basis, i.e. fair market value of the shares on exercise of the
option, will be treated as long-term or short-term capital gain or loss,
depending on the holding period. For a discussion of holding periods and the
federal income tax treatment of a long-term capital gain, see Capital Gains
Treatment, below.
Stock Appreciation Rights. The granting of a stock appreciation right
should not result in taxable income to the participant at the time of grant.
On exercise of a stock appreciation right, the participant will realize
taxable ordinary income equal to the cash and fair market value of any shares
received. At the time the participant recognizes ordinary income on the
exercise of a stock appreciation right, the Company will be entitled to a
corresponding deduction.
To the extent that any such shares constitute a capital asset in the
hands of a participant, on the disposition of any shares acquired under a
stock appreciation right, the difference between the amount received for the
shares and the fair market value of the shares as of the exercise of the stock
appreciation right will be treated as long-term or short-term capital gain or
loss, depending on the holding period. For a discussion of holding periods
and the federal income tax treatment of a long-term capital gain, see Capital
Gains Treatment, below.
Restricted Stock Awards. The granting of a restricted stock award or
issuance of restricted shares generally will not result in taxable income to
the participant at the time of grant or issuance. Instead, the participant
will normally realize taxable ordinary income when the restrictions on the
shares lapse in an amount equal to the fair market value of the shares on the
date of lapse. Notwithstanding the foregoing, a participant may elect
(pursuant to Section 83(b) of the Code), within 30 days of the date of a
restricted stock award, to be taxed on the value of the shares as of the date
of grant. If the participant subsequently forfeits the shares, the
participant will not be entitled to a deduction. At the time the participant
recognizes ordinary income with respect to shares issued pursuant to a
restricted stock award, the Company will be entitled to a corresponding
deduction.
To the extent that the shares constitute a capital asset in the hands
of a participant, on disposition of the shares after restrictions lapse, the
difference between the amount received and the fair market value of the shares
on the date of lapse (or on the date of issuance if the participant made the
election described above) will be treated as long-term or short-term capital
gain or loss, depending on the holding period. For a discussion of holding
periods and the federal income tax treatment of capital gains, see Capital
Gains Treatment, below. A participant's holding period in the shares will
begin when the restrictions to which they are subject lapse unless he makes
the election provided for under Code Section 83(b) (as noted above), in which
case the holding period in his shares will begin on the day after the Company
Common Stock is transferred to him.
Amounts equivalent to dividends received by the participant under the
restricted stock award and dividends paid on restricted stock received by the
participant prior to the lapse of restrictions will be taxable as ordinary
income to the participant and a corresponding and contemporaneous deduction
will be allowed to the participant's employer unless the participant made the
Section 83(b) election described above. If the election was made, dividends
actually paid on restricted stock will be taxable as dividends and no
corresponding deduction will be allowed to the employer. In addition, if the
election was made and the participant later forfeits the restricted stock, the
participant will be allowed no loss deduction.
Deferred Stock Units. Generally, a participant will be subject to tax,
and the Company will receive a corresponding deduction, with respect to a
deferred stock unit when the unit is paid to the participant from the
Deferred Compensation Plan in accordance with the terms of that plan or, if
earlier, any date on which, by operation of the Deferred Compensation Plan,
the participant is deemed to have constructively received the unit. If,
however, the award is paid in shares of Common Stock which are subject to
restrictions or to forfeiture, the participant will be subject to tax, and the
Company will be entitled to a deduction, when the shares cease to be subject
to the restrictions or to the risk of forfeiture. The amount of taxable
income a participant will be required to recognize, and the amount of the
deduction to which the Company will be entitled, will equal the amount of cash
and the fair market value of the shares received on the date as of which the
participant is required to recognize income.
Bonus Stock, Awards in Lieu of Cash Obligations and Other Stock-Based
Awards. Generally, a participant will be subject to tax, and the Company will
receive a corresponding deduction, with respect to a bonus stock or similar
award when the stock is paid to the participant. If, however, the award is
paid in shares of Common Stock which are subject to restrictions or to
forfeiture, the participant will be subject to tax, and the Company will be
entitled to a deduction, when the shares cease to be subject to the
restrictions or to the risk of forfeiture. The amount of taxable income a
participant will be required to recognize, and the amount of the deduction to
which the Company will be entitled, will equal the amount of cash and the fair
market value.
Performance Awards and Annual Incentive Awards. Generally, a participant
will be subject to tax, and the Company will receive a corresponding
deduction, with respect to a performance award or an annual incentive award
when the award is paid to the participant. If, however, the award is paid in
shares of Common Stock which are subject to restrictions or to forfeiture, the
participant will be subject to tax, and the Company will be entitled to a
deduction, when the shares cease to be subject to the restrictions or to the
risk of forfeiture. The amount of taxable income a participant will be
required to recognize, and the amount of the deduction to which the Company
will be entitled, will equal the amount of cash and the fair market value.
Capital Gains Treatment. Gain or loss from the sale or exchange of
property will be treated as long-term capital gain or loss if it was deemed to
have been held for more than one year. Any gain or loss other than long-term
capital gain or loss will be treated as short-term capital gain.
Except in those situations expressly described above (relating to the
"tacking" of holding periods where Company Common Stock is used to exercise a
stock option and to optionees subject to Section 16(b) of the Securities
Exchange Act of 1934), it is expected that the holding period of shares
acquired pursuant to the exercise of an incentive stock option, non-qualified
stock option or stock appreciation right will generally begin on the date
following the date of acquisition through such exercise. Similarly, the
holding period of awarded shares acquired pursuant to a restricted stock award
is expected to begin on the date following the date on which the restrictions
lapse, subject to the exception relating to elections under Code Section
83(b).
For net capital gains recognized by individuals, the Code imposes a
preferential maximum tax rate of 28% (as compared with a 39.6% maximum tax
rate on ordinary income).
Participants Subject to Section 16(b). Notwithstanding the general
tax treatment of the various types of awards as discussed above, a participant
who is subject to the application of Section 16(b) of the 1934 Act, will not
be subject to tax with respect to an award until such time as the stock
acquired pursuant to the exercise of an option or the grant of another type
of award may no longer be considered a purchase of the shares underlying the
option or award. Because, however, the Plan is administered by a committee
of three or more "non-employee directors" within the meaning of section 16(b),
the acquisition of stock pursuant to an award under the Plan would not be
considered a purchase of that stock. Thus, the general rules of taxation
described above apply. For capital gains tax purposes, the participant's
holding period begins to run on the date, on which he is subject to taxation
on the award of stock.
Payment of Withholding Obligations Through Surrender of Shares. The
federal income tax treatment of the surrender of shares of Company Common
Stock to satisfy a participant's federal income tax withholding obligation
under the Plan is complex and uncertain. To the extent that a participant
surrenders shares of Company Common Stock for this purpose, the participant
will be treated as having sold such shares to the Company for their fair
market value and may recognize income as a result thereof. The nature and
extent of this income will depend upon the manner in which the surrendered
shares were acquired, the basis of the surrendered shares, the holding period
of the surrendered shares and other factors as described above. Depending
upon the effect of the surrender upon the participant's proportionate share
ownership interest in the Company, the participant may be treated as having
received a dividend equal to the fair market value of the shares surrendered.
A participant who satisfies a withholding obligation by surrendering shares
acquired pursuant to an earlier exercise of an incentive stock option may also
be treated as having made a disqualifying disposition of such shares if the
applicable holding period requirements have not been satisfied. For a
discussion of disqualifying dispositions of shares acquired pursuant to the
exercise of an incentive stock option and the tax treatment thereof, see
Incentive Stock Options, above. For a discussion of the times when elections
to surrender shares to satisfy withholding obligations must be made, including
specific requirements applicable to elections by "officers" under Section 16
of the Securities Exchange Act of 1934, see Other Material Provisions, above.
PARTICIPANTS ELECTING TO SATISFY A WITHHOLDING OBLIGATION BY SURRENDERING
SHARES OF COMPANY COMMON STOCK ARE STRONGLY URGED TO CONSULT THEIR OWN TAX
ADVISORS.
15. Miscellaneous
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code and is not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into its Prospectus the
following documents filed with the Securities and Exchange Commission (the
"Commission"):
(a) The Company's Annual Report on Form 10-K filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (the "1934
Act") for the fiscal year ended December 31, 1996;
(b) All other reports including, but not limited to, Forms 8-K, 10-K and
10-Q of the Company filed pursuant to Section 13(a) or 15(d) of the
1934 Act since December 31, 1996; and
(c) The section entitled "Description of Capital Stock" contained on
pages 31 through 35 of the Company's Prospectus dated December 22,
1992, relating to 4,000,000 shares of the Company's Common Stock.
All reports and documents subsequently filed with the Commission by the
Company subsequent to the date of this registration statement pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended, prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference into
this Registration Statement and to be part thereof from the date of filing of
those documents. Additional updating information with respect to the
securities and Plan covered herein may be provided in the future to
participants by means of appendices to the Prospectus.
ANNUAL REPORT TO SHAREHOLDERS
The Company will deliver with this Prospectus to each employee or agent
to whom it is sent or given a copy of the Company's Annual Report to
Shareholders for its last fiscal year, unless the employee or agent otherwise
has received a copy, in which case the Company will promptly furnish, without
charge, an additional copy on written request by the employee or agent.
Except as indicated herein, the Annual Report to Shareholders is not
incorporated by reference into the Prospectus.
EXPERTS
The consolidated financial statements and schedules of Lincoln National
Corporation and subsidiaries appearing in the Lincoln National Corporation
Annual Report (Form 10-K) for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements and schedules are incorporated herein by
reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
The legality of the securities to be issued pursuant to the Plan will be
passed upon for the Company by John L. Steinkamp. Mr. Steinkamp is employed
by the Company as a Vice President and Associate General Counsel and owns
options to purchase common stock and owns, through the Company's Employees'
Savings and Profit-Sharing Plan, shares of the Company's Common Stock.
