Exhibit 10.01
Meridian Insurance
Long Term Incentive Plan for Executive Staff
Purpose:
Link executive and shareholder interest through
improved company financial performance
Attract and retain individuals of outstanding ability
Encourage exceptional executive performance to
consistently outperform the industry
Increase executive ownership level of MIGI
Participants: Executive Staff
Performance Period: The incentive program will run 3
successive calendar years with annual awards in MIGI stock
or its equivalent if the annual performance goal is achieved
or exceeded.
Performance Incentive Award:
1. Each participant has the potential to earn an annual
bonus payable in MIGI stock or a combination of stock and
cash, if Meridian's consolidated combined ratio result for
each of three successive years is better than the property
casualty industry average for the same period as calculated
by A. M. Best Company.
2. The plan shall run for a period of three years
beginning on January 1, 2000 and ending on December 31,
2002.
3. The bonus for the three year period will be valued as
an Aggregate Stock Award for each participant as follows:
CEO = X shares per $1,000 of base salary compensation
Sr. VP/CFO = X shares per $1,000 of base salary
of base salary compensation
VP/Director =X shares per $1,000 of base salary
of base salary compensation
Base salary compensation means annualized salary
compensation as of February 1, 2000 exclusive of
bonuses, commissions, car allowances, taxable relocation
earnings, taxable fringe benefits, taxable expense
reimbursements, taxable group term life insurance
premiums and miscellaneous income.
4. The Target Level Stock Award for each calendar year of
the Plan will be one-third of the Aggregate Stock Award.
5. The bonus will be payable, if earned, two days after
publication of year end financial results as approved by the
Joint Audit Committee of the Board of Directors, provided
the industry average has been published by A.M.Best.
6. Payout of any award is contingent on annual results in
which net income after recording of expenses related to this
incentive payout is produced.
Incentive Measurement:
1.For each calendar year, Meridian's consolidated combined
ratio will be compared to the property/casualty industry
average combined ratio as calculated and published by A.
M. Best Company.
2.The plan will pay a bonus when the Company's year end
combined ratio is lower than the property casualty
industry combined ratio average.
3.In each year, a bonus will be earned at the Target Level
Stock Award or a multiple thereof, at the following rate.
Each year's award will be rounded to the nearest whole
share:
a) Target Level Stock Award if the company result is X% to
X% lower than the industry
b) 2 times Target Level Stock Award if the company result
if X% to X% lower than the industry
c) 3 times Target Level Stock Award if the company result
is X% to X% lower than the industry
d) 4 times Target Level Stock Award if the company result
is at least X% lower than the industry.
Payouts:
By July 1st of each plan year the participant shall
elect to receive that year's bonus payment under one of the
following options:
1. Receive 100% in stock, write a check for payroll taxes.
2. Receive 50% in stock and 50% in cash less applicable
payroll taxes.
3. Receive part in stock and the remainder in cash equal
to applicable payroll taxes.
Participants may be added or terminated from the plan
throughout the 3 year performance period at the discretion
of the Compensation Committee.
The level of award will be adjusted for a change in
title or responsibilities.
The Compensation Committee will reserve the right to
amend or terminate this incentive plan at any time.
No bonus is payable in the event of a participant's
termination before the bonus payment date, other than by
death, permanent disability or normal retirement in which
event a discretionary payment may be made.
