Kan. Admin. Regs. § 40-12-16 - Agents' production stock option plans
In order to be authorized, each agent's stock option plan in a domestic insurer shall:
(a) Be clear
and unambiguous in its term and as simple as the subject matter permits;
(b) provide that the plan shall be
submitted to and approved by the company's directors and stockholders before it
becomes effective;
(c) provide
that no securities shall be issued without a prior permit of the commissioner
authorizing the issue. The company shall promptly and diligently endeavor to
process the necessary authorization contemplated by the plan;
(d) provide that business written shall serve
as a basis for earning options only after the business shall have been in force
and effect for two policy years and premiums for the same period shall have
been fully paid in cash. A policy that shall terminate by a death claim prior
to expiration of the persistency period shall be regarded as having run the
full two years;
(e) govern the
earning of conditional rights to options and the grant of options by a
conservative formula based on one of the following:
(1) Annual premiums written and paid on
policies issued during a given calendar quarter;
(2) commissions earned per calendar quarter;
or,
(3) another reliable criterion
of production of business, per calendar quarter, having intensive value to the
company;
(f) provide
for notifying each participating agent within 30 days after the close of each
calendar quarter of the number of shares to which conditional rights have been
earned by virtue of production for the calendar quarter, according to the
stated formula. Notification shall constitute evidence of the conditional
rights to receive options for an appropriate number of shares after expiration
of the persistency period and subject to all other conditions precedent. The
notification form shall not be used without prior approval in writing by the
commissioner;
(g) provide for the
issuance of an option with reasonable promptness after expiration of the
persistency period according to the formula chosen in subparagraph (e), and
subject to fulfillment of all other conditions outlined in this section;
(h) specify that an option to be
granted shall be exercisable for not longer than 180 days after issuance, after
which they shall become null and void;
(i) specify that an option granted shall be
nonassignable and nontransferable;
(j) limit the maximum number of shares
optionable at any given time to a number equivalent to 10 percent of the
company's then issued and outstanding or authorized shares;
(k) provide that options shall not be granted
to any agent on the basis of personal or controlled business;
(l) provide in effect that agents appointed
by the same company shall not transact insurance on each other or on each
other's families for the purpose of avoiding the foregoing provision;
(m) provide that no agent shall be
required to purchase any insurance personally, or that no agent's immediate
family shall be required to participate;
(n) state that the price for issuance of the
shares of stock shall be determined by the company's board of directors and
approved by the commissioner;
(o)
provide that rights to options for shares earned by an agent's production in
accordance with the production formula shall abate pro rata at conclusion of
the persistency period or prior to issuance of the actual options in any case
where issuance of options would exceed the amount authorized by permit of the
commissioner; and
(p) specify that
after due notice to the persons concerned the commissioner may modify or
terminate any or all of the following:
(1)
The plan when continuation of the plan is inequitable;
(2) rights to options when issuance of
options upon maturity is or shall be inequitable; and
(3) outstanding, issued but unexercised,
options when issuance of shares is or shall be inequitable.
Notes
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