1
Exhibit 10.8
PERFORMANCE STOCK RIGHTS
AWARD AGREEMENT
ISSUED UNDER THE SAFECO LONG-TERM INCENTIVE PLAN OF 1997
SAFECO CORPORATION ("SAFECO") grants to NAME OF INDIVIDUAL ("Employee") the
following performance stock rights pursuant to, and in accordance with the
provisions of, the SAFECO Long-Term Incentive Plan of 1997 (the "Plan").
1. SHARES SUBJECT TO RIGHTS. SAFECO shall issue to Employee up to a total of
[NUMBER OF SHARES] shares of SAFECO common stock (the "Award Shares"), or,
at the Employee's request, make a payment of an amount equal to the Fair
Market Value of the Award Shares (or any portion thereof) upon the
Employee's achievement of the stated Performance Goals for each of the
Performance Cycles covered by this Award Agreement.
2. PERFORMANCE CYCLES. The period covered by this Award Agreement is January
1, [FIRST YEAR] through December 31, [THIRD YEAR] (the "Award Period"),
within which each of the following periods shall constitute a Performance
Cycle:
January 1, [FIRST YEAR] through December 31, [FIRST YEAR]; January 1,
[FIRST YEAR] through December 31, [SECOND YEAR]; and January 1, [FIRST
YEAR] through December 31, [THIRD YEAR].
3. PERFORMANCE GOALS
STATE PERFORMANCE GOALS HERE
4. SHARES EARNED. Following the end of each Performance Cycle, the number of
Award Shares earned ("Earned Shares") shall be determined based on the
Average Combined Percentage Achieved for that Performance Cycle, computed
as follows:
a. The sum of the percentages achieved for each of the Percentage Goals
during the prior calendar year shall be divided by the number of
Performance Goals to yield the Combined Percentage Achieved for that
year.
b. The Average Combined Percentage Achieved for the Performance Cycle
shall be calculated by adding the Combined Percentages Achieved for
every year in the Performance Cycle and dividing that sum by the
number of years in the Performance Cycle.
2
c. The Earned Shares with respect to any Performance Cycle shall equal
the Average Combined Percentage Achieved multiplied by the number of
shares set forth below, less any Award Shares previously issued
under this Award Agreement:
Performance Cycle Number of Shares
1/1/FIRST YEAR - 12/31/FIRST YEAR 1/3 Award Shares
1/1/FIRST YEAR - 12/31/SECOND YEAR 2/3 Award Shares
1/1/FIRST YEAR - 12/31/THIRD YEAR Total Award Shares
5. ACHIEVEMENT OF PERFORMANCE GOALS; PAYMENT OF SHARES EARNED. The
determination as to whether a Performance Goal has been met, its level
of achievement, the Combined Percentage Achieved, and the Average
Combined Percentage Achieved shall be made as soon as practical after
the end of each Performance Cycle by the Committee selected by the
SAFECO Board of Directors to administer the Plan (the "Committee").
Promptly following such determination (and in any event no later than
45 days following the end of a Performance Cycle), the Earned Shares
shall be settled by the issuance and delivery of unrestricted shares of
SAFECO common stock equal to the number of Earned Shares or, at
Employee's request, by a cash payment equal to the Fair Market Value of
those shares on the date settlement would otherwise have been made in
shares (the "Settlement Date") or by a combination of cash and shares.
6. ADJUSTMENT OF PERFORMANCE GOALS. The Committee may adjust the
Performance Goals in such manner as it deems equitable in recognition
of unusual or nonrecurring events affecting SAFECO, changes in
applicable tax laws or accounting principles, or such other factors as
the Committee may determine. If, however, an Employee is a person
covered by Section 162(m) of the Code and the adjustment of any
Performance Goal or other term of this Award Agreement would cause an
increase in the number of Award Shares to be issued with respect to a
Performance Cycle, then the Committee may not make such adjustment.
7. TAX WITHHOLDING. As a condition to settlement of the Earned Shares,
Employee must tender to SAFECO on or before the Settlement Date an
amount sufficient to satisfy all applicable federal, state and local
withholding tax requirements ("Tax Requirements"). Unless Employee
pays SAFECO an amount equal to the Tax Requirements by the Settlement
Date, SAFECO shall pay the Tax Requirements and either withhold the
amount paid from Employee's next paycheck or reduce the number of Award
Shares issued to Employee (or the cash equivalent paid to Employee) by
the number of Award Shares which, as of the Settlement Date, has a Fair
Market Value equal to the Tax Requirements.
8. TERMINATION OF EMPLOYMENT. If Employee ceases to be an employee of
either SAFECO or a subsidiary of SAFECO for any reason, then, except as
provided in the Plan with respect to a Change in Control or to the
extent the Committee may decide otherwise in select situations,
Employee shall lose all rights to receive any Award Shares or their
cash equivalent with respect to any unexpired Performance Cycles
covered by this Award
2
3
Agreement (including the Performance Cycle in which Employee terminates
employment).
9. FORFEITURE. In the event Employee engages in any activity deemed by
the Committee to be in competition with SAFECO or otherwise contrary to
SAFECO's interests while employed by SAFECO or one of its subsidiaries,
or within one year following Employee's termination of employment, all
of Employee's rights under this Award Agreement shall be forfeited,
including the right to receive settlement of any Earned Shares. In
addition, in such event, Employee shall surrender to SAFECO any Award
Shares issued to Employee during the 12 months prior to termination of
employment, or if such Award Shares were settled in cash or Employee no
longer owns the Award Shares, Employee shall reimburse SAFECO for the
Fair Market Value of the Award Shares on the date they were settled.
Employee agrees that SAFECO shall have the right to offset any amounts
owing to Employee by SAFECO (e.g., including, without limitation,
salary, profit-sharing bonus, payment for accrued vacation and sick
leave) by any amount that Employee owes to SAFECO under this Section 9.
10. CONTINUATION OF EMPLOYMENT. Nothing in this Award Agreement shall be
construed or interpreted to confer upon Employee any right to continued
employment by SAFECO or a SAFECO subsidiary or to interfere in any way
with the right of SAFECO, in its sole discretion, to terminate Employee at
any time.
11. NO ADDITIONAL COMPENSATION PAYMENTS. No dividend equivalent payments shall
be made with respect to the Award Shares.
12. COORDINATION WITH OTHER BENEFIT PLANS. Settlements of Award Shares shall
not be taken into account in administering other employee benefit and
bonus programs for which Employee may be eligible (e.g., the SAFECO
Employees' Profit Sharing Retirement Plan, Cash Balance Plan or Savings
Plan and the profit-sharing cash bonus).
13. RIGHTS NOT TRANSFERABLE. The rights granted to Employee under this Award
Agreement shall not be transferable except by will or by the laws of
descent and distribution. During the Employee's lifetime, only Employee or
Employee's guardian may exercise such rights.
14. NO RIGHTS AS STOCKHOLDER. Neither Employee, nor Employee's personal
representative, heir, legatee or distributee, shall be deemed to be a
holder of, or to have any rights with respect to, any Award Shares until
the Award Shares are issued.
15. NO SEPARATE FUND. SAFECO has not segregated any assets or established any
separate account or fund to insure payment of its obligations under this
Award Agreement.
16. OTHER PLAN PROVISIONS. The rights granted under this Award Agreement are
subject to all of the provisions of the Plan, as it may be amended from
time to time, and, except as otherwise expressly provided, to all
constructions, interpretations, rules and regulations
3
4
which may be adopted in connection with the Plan. Capitalized terms not
otherwise defined in this Award Agreement shall have the meanings assigned
to them in the Plan.
17. PLAN DOCUMENT. By signing below to acknowledge acceptance of the rights
granted under this Award Agreement, Employee acknowledges that Employee
has received a Plan Summary which includes the text of the Plan and has
been afforded an opportunity to ask any questions that Employee may have
regarding the Plan or the rights granted under this Award Agreement.
Dated this day of , 19 .
SAFECO: SAFECO CORPORATION
By:
--------------------------------------
Chief Executive Officer
EMPLOYEE: Accepted this ___ day of _____________, 19
------------------------------------------
NAME OF EMPLOYEE