Allmerica Financial Corporation Incentive Compensation Conversion Program Description
Allmerica Financial Corporation offers a program for senior leadership to defer a portion of their 2004 incentive compensation into restricted stock units (RSUs) with a three-year restriction. Participants can defer the greater of $50,000 or up to 20% of their base salary, and the company matches 15% of the deferral with additional RSUs. If the employee leaves before three years, the RSUs are forfeited, but the original deferral plus interest is returned. Taxes are deferred until restrictions lapse, and notional dividends are credited at the GATT interest rate.
Exhibit 10.65
Allmerica Financial Corporation
Description of Incentive Compensation Conversion Program
Objective
| • | Build stock ownership of Senior Leadership |
Participants
| • | Operating Committee |
Opportunity
| • | Defer a portion of 2004 IC Award into Restricted Stock Units with 3 year restriction (Principal Units) |
| - | Defer the greater of $50,000 or up to a max of 20% of current base |
| • | Company matches 15% of deferral with additional Restricted Stock Units (Premium Units) |
Timing of Election
| • | Prior to 2/4/2005 |
Taxation
| • | FICA tax is applied to deferral amount; no state or federal income tax due until restrictions lapse |
| • | Premium Units taxed when restrictions lapse |
Dividends
| • | Dividends, if paid on common shares, will be notionally credited to a dividend account and credited at the GATT interest rate |
(Note that this is different from Restricted Stock Units issued under the Long Term Incentive Program which are performance based and will not be credited with notional dividends)
| • | Application of this provision will apply to amounts issued under this program in prior years as well |
| • | Vesting and forfeiture of notional dividends will mirror the treatment of Restricted Stock Units |
Administrative Guidelines
| • | If employee leaves prior to 3 years, Principal and Premium units are returned to company. Employee will receive original amount deferred plus GATT interest rate. |
| • | If employee remains with the company for entire 3 year period, employee will receive Principal and Premium Units |
