lincoln8k2-13.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
February
7,
2008
Date of
Report (Date of earliest event reported)
Lincoln
National
Corporation
(Exact
name of registrant as specified in its charter)
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Indiana
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1-6028
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35-1140070
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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150 N. Radnor Chester Road,
Radnor, PA 19087
(Address
of principal executive offices) (Zip Code)
(484)
583-1400
(Registrant’s
telephone number)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
5.02. Departure ofDirectors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
February 7, 2008, the Compensation Committee of our Board of Directors took the
following actions:
(1) Approved
the performance-based compensation measures pursuant to which annual incentive
program (“AIP”) awards may be earned by executive officers under the Lincoln
National Corporation Amended and Restated Incentive Compensation Plan (the
“ICP”) during fiscal 2008, for payment in 2009. The 2008 performance
measures are:
· income
from operations per share,
· sales
growth, and
· merger-related
expense savings.
For the
executive officers in our business lines, these measures are weighted between
enterprise results and the applicable line of business results, with income from
operations replacing income from operations per share. In addition,
Patrick P. Coyne, who
is President of Lincoln National Investment Company, Inc. and Delaware
Management Holdings, Inc., has retail investment performance and institutional
investment performance as additional performance measures. The retail
investment performance measure is based on the percentage of Delaware retail
funds that beat their Lipper peer group’s average performance over one, three,
five and 10-year periods. The institutional investment performance
measure is based on the performance of eight Delaware institutional performance
composites created in accordance with CFA institute standards (GIPS), which are
compared to the appropriate industry benchmarks over one, three and five-year
periods.
Unless
and until we disclose new performance measures, these measures will apply to
future AIP awards.
The ICP
was filed as Exhibit 4 to our proxy statement for the 2007 Annual Meeting of
Shareholders. Annual incentive awards, if and to the extent earned,
will be paid in cash, unless an executive officer does not meet the share
ownership requirements applicable to him at the time of payment, in which case
the award will be paid in shares of common stock, as provided in the
ICP.
(2) Approved
the performance goals for the three-year (2008-2010) ICP long-term performance
cycle. The performance measures are:
· growth in
income from operations per share,
· sales
growth, and
· return on
equity.
Unless
and until we disclose new performance measures, these measures will apply to
future long-term incentive awards.
In a Form
8-K filed on November 9, 2007, we reported the 2008-2010 long-term
incentive (“LTI”) compensation target, as a percentage of base salary, for each
of the named
executive officers identified in our 2007 proxy statement filed with the SEC on
April 4, 2007 who was then employed by us (“NEOs”). One-half of the
LTI compensation target was paid in the form of a stock option that vests over a
three-year period if the NEO remains employed by us on each vesting date.
The options granted to the NEOs all had a strike price of $52.76 and were as
follows: Mr. Glass—319,364; Mr. Crawford—91,631; Mr.
Coyne—101,273; and Mr. Thompson—112,070.
Except
for Mr. Coyne, the remainder of the LTI target compensation is in the form of a
2008-2010 performance cycle award, that will be paid out or vest after the end
of the applicable performance period only upon the Compensation Committee’s
determination that threshold performance has been achieved for at least one of
the three performance measures described above. Participants will
have the opportunity to elect to receive their performance cycle award as
either: 100% performance shares or 75% performance shares and 25% cash
(permitted only if current share ownership requirements are
satisfied). Such elections were made in advance of the date on which
the cycle was established. Participants entering the cycle after that
date will receive their awards entirely in performance shares. For
Mr. Coyne, 16.5% of his LTI target compensation is in the form of a 2008-2010
performance cycle award as described above and 33.5% is in the form of
restricted stock units of Delaware Investments U.S., Inc. (“DIUS”), as described
below. Performance awards are converted to shares based on
the value of the award divided by the average of the high and
low prices of our common stock on the NYSE's consolidated transactions
tape on February 6, 2008 of $55.
The 2008
long term incentive program is substantially similar to the 2006 program, which
is described in Exhibit 10.1 to our Form 8-K filed with the SEC on April 12,
2006. The 2008-2010 Long-Term Incentive Plan Award Agreement is
attached hereto as Exhibit 10.1, and incorporated herein by reference. The 2008
non-qualified stock option award agreement is attached hereto as Exhibit 10.2,
and incorporated herein by reference.
(3) Granted
to Mr. Coyne an award of restricted stock units of DIUS under the DIUS Incentive
Compensation Plan (the “DIUS ICP”). The dollar value of the
restricted stock units is $530,000 and will be converted into a number of
restricted stock units when the December 31, 2007 valuation of DIUS shares is
completed. Because
DIUS stock is not publicly traded, an independent valuation firm performs
periodic valuations of DIUS to determine the fair market value (“FMV”) of the
DIUS stock underlying all forms of equity granted pursuant to the DIUS
ICP. The valuation guidelines take a “market transaction” approach to
valuation, considering three commonly applied benchmarks in the asset management
industry: (a) assets under management, (b) price to revenues, and (c) earnings
before interest, taxes, depreciation and amortization as well as comparable
market transactions. The DIUS ICP was filed as Exhibit 10.1 to our
Form 8-K filed on November 9, 2007. The form of restricted
stock unit agreement is attached hereto as Exhibit 10.3, and incorporated herein
by reference.
(4) Pursuant
to the ICP, the Committee is authorized to make adjustments in the terms and
conditions of awards in recognition of unusual or nonrecurring events
(including, without limitation, acquisitions and dispositions of businesses and
assets) affecting us; provided that the adjustment would not cause an award
intended to qualify as “performance-based compensation” under Section 162(m) of
the Internal Revenue Code of 1986, as amended, and regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Section
162(m). Currently,
Section 162(m) applies to all of our NEOs, except the chief financial
officer. Accordingly, consistent with the terms of the ICP, the
Committee approved an adjustment to the calculation of “return on equity” for
the purpose of determining the extent to which participants, excluding all of
the NEOs, except our chief financial officer, achieved that performance measure
for the 2005-2007 ICP long-term performance cycle. For Frederick J.
Crawford, our chief financial officer, the adjustment resulted in the vesting of
approximately 3,913 of additional performance shares. The adjustment
related to the impact to the equity component of ROE from the goodwill
associated with our acquisition of Jefferson-Pilot Corporation (“JP”) and
resulted in a payout equal to 86% of target versus an unadjusted payout of 63.5%
of target. The Committee did not adjust the calculation to entirely
eliminate the goodwill associated with our acquisition of JP, which would have
resulted in an above target payout. The Committee took this action
because the JP transaction was not anticipated at the beginning of the cycle and
was beneficial to us and our shareholders, and the Committee believed that the
goodwill from the transaction should not have such a negative effect on the
participants’ long-term incentive payment.
Item
9.01. Financial Statements and Exhibits.
The
Exhibit Index set forth on page E-1 is incorporated herein by
reference.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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LINCOLN
NATIONAL CORPORATION
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By /s/ Douglas N.
Miller
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Name: Douglas
N. Miller
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Title: Vice
President and
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Chief
Accounting Officer
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Date: February
13, 2008
INDEX
TO EXHIBITS
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Exhibit
Number
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Description
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