METROPOLITAN LIFE INSURANCE COMPANY ANNUAL VARIABLE INCENTIVE PLAN
(FOR PERFORMANCE PERIODS STARTING ON OR AFTER JANUARY 1, 2000)
I. PURPOSE OF THE PLAN
- Align total annual pay with the Company's annual financial business
results.
- Provide competitive levels of pay for competitive levels of Company
performance.
- Make a competitive portion of total compensation variable based on
Company, business unit and individual performance.
II. PARTICIPATION
All associates in salary grade 29 and above and equivalent grades who have
signed the 'Agreement to Protect Corporate Property', other than those
participating in incentive plans which are alternatives to, and not
supplementary to, the Annual Variable Incentive Plan.
In addition, the Officers may impose such other reasonable conditions for
participation in the Annual Variable Incentive Plan as they deem necessary
or appropriate.
III. DETERMINATION OF THE INCENTIVE POOL FOR DISTRIBUTION
The Board determines at the beginning of the performance year financial
objectives consistent with the Company's Annual Business Plan that will
provide the basis for determining the maximum aggregate incentive pool for
distribution. The pool will be determined using a formula approved by the
Board, which will be expressed in terms of percentages of operating
earnings and return on equity ('ROE'). The formula will be reviewed each
year by the Board to determine its appropriateness in connection with the
Company's Business Plan, and may be revised by the Board as a result of
such review. The maximum pool may also be increased by the Nominating and
Compensation Committee ('Committee') based on the recommendation of the
Chief Executive Officer ('CEO').
For purposes of this Plan: (a) 'Operating earnings' means earnings net of
all taxes (other than the surplus tax), and excludes the impact of
demutualization costs; and (b) 'Return on Equity' means operating earnings
divided by GAAP equity, where GAAP equity excludes unrealized investment
gains.
A portion of the aggregate incentive pool will be allocated by the CEO
among the various business units based on their performance relative to
certain agreed upon objectives set at the beginning of the performance
year by the CEO. Following the performance year, business unit performance
will be evaluated by the CEO. All or a portion of the aggregate incentive
pool allocated to a particular business unit may be distributed to Plan
participants in that business unit, depending on the performance of that
business unit. A portion of the pool will be applied to the Company's
Performance Incentive Plan, as determined by the CEO.
IV. TARGET INCENTIVE OPPORTUNITIES
A. Incentive opportunity percentages for the various grades are
determined based on competitive total compensation market factors
and take into account incentive compensation opportunities for
comparable positions at our comparator companies, including major
insurance companies, banks and diversified financial services
companies.
B. The schedule of incentive opportunity percentages for the various
grades is as follows:
TARGET INCENTIVE
GRADE (CURRENT TITLE) OPPORTUNITY PERCENTAGE
--------------------- ----------------------
41 (Chief Executive Officer) 150%
40 (President) 90%
39 (Senior Executive Vice President) 80%
38 (Executive Vice President) 70%
37 (Senior Vice President) 50%
36 (Vice President/Senior Vice President) 50%
35 (Vice President) 45%
34 (Vice President) 40%
33 (Vice President) 40%
32 (Assistant Vice President) 25%
29-31 (Various Non- Officer Titles) 5%-15%
V. CALCULATION OF INDIVIDUAL AWARDS
Annual incentive awards are discretionary and significant weight is given
to individual performance and relative contributions among Plan
participants. It is anticipated that there will be significant
differentiation of annual incentive awards based on individual
performance. Where performance indicates, individuals may receive no award
at all.
2
The total of all individual awards under the Plan may not exceed the
maximum aggregate incentive pool.
VI. ADMINISTRATION OF AWARDS
A. Incentive awards for any performance year shall be made as soon as
possible during the following calendar year in the form of lump sum
payments.
B. Participants who voluntarily terminate their employment or whose
employment is discontinued for cause after the performance year, but
before the payout, or during the performance year are not eligible
to receive an award.
C. Participants terminating employment during or after the performance
year due to death, disability, or retirement may be eligible to
receive awards on a pro rata basis, at the Company's discretion.
Participants whose employment is terminated during the performance
year and who are eligible to receive a severance payment from the
Company may receive a pro rata award at the Company's discretion, in
exchange for their valid release.
D. Incentive awards paid prior to retirement or discontinuance of
employment will be taken into account for purposes of determining
the level of Insurance and Retirement benefits and contributions to
the Savings and Investment Plan, subject to any regulatory
limitations or approvals. Incentive awards paid subsequent to
retirement or discontinuance of employment will not be taken into
account for purposes of determining the level of Insurance and
Retirement benefits or contributions to the Savings and Investment
Plan, except as may be provided otherwise in any other Company plan
or program.
VII. ROLE OF THE NOMINATING AND COMPENSATION COMMITTEE
The Committee exercises overall responsibility and has broad discretion in
the administration of the Plan.
With respect to corporate performance, inasmuch as other unforeseen
matters have an impact on overall performance during the year, the
Committee, at its discretion, may adjust the maximum pool either
positively or negatively. The Committee may use its discretion to adjust
for unusual events that are beyond the control of management and obviously
influence performance results unduly, such as material
3
changes in accounting policy, tax and other government regulations, and
the acquisition or sale of a business.
With respect to individual awards, the Committee will report its
recommendations for individual incentive awards for Officers of the rank
of Executive Vice President and above, or such other group of officers as
the Committee may from time to time select, to the Board following the
performance year. Following the determination of awards, the Committee
will receive a summary report of all incentive award payments.
4