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<SEC-DOCUMENT>0000950109-01-000845.txt : 20010411
<SEC-HEADER>0000950109-01-000845.hdr.sgml : 20010411
ACCESSION NUMBER:		0000950109-01-000845
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010510
FILED AS OF DATE:		20010410

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LINCOLN NATIONAL CORP
		CENTRAL INDEX KEY:			0000059558
		STANDARD INDUSTRIAL CLASSIFICATION:	LIFE INSURANCE [6311]
		IRS NUMBER:				351140070
		STATE OF INCORPORATION:			IN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		
		SEC FILE NUMBER:	001-06028
		FILM NUMBER:		1598809

	BUSINESS ADDRESS:	
		STREET 1:		1500 MARKET STREET STE 3900
		STREET 2:		CENTRE SQUARE WEST TOWER
		CITY:			PHILADELPHIA
		STATE:			PA
		ZIP:			19102
		BUSINESS PHONE:		2194552000

	MAIL ADDRESS:	
		STREET 1:		1500 MARKET STREET STE 3900
		STREET 2:		CENTRE SQUARE TOWER
		CITY:			PHILADELPHIA
		STATE:			PA
		ZIP:			19102*2706
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>

<PAGE>
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                           SCHEDULE 14A INFORMATION

          Proxy Statement Pursuant to Section 14(a) of the Securities
                    Exchange Act of 1934 (Amendment No.  )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_]  Preliminary Proxy Statement

[_]  CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
     14A-6(E)(2))

[X]  Definitive Proxy Statement

[_]  Definitive Additional Materials

[_]  Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12


- --------------------------------------------------------------------------------
               (Name of Registrant as Specified In Its Charter)

                         Lincoln National Corporation
- --------------------------------------------------------------------------------
   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)


Payment of Filing Fee (Check the appropriate box):

[X]  No fee required.

[_]  Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.


     (1) Title of each class of securities to which transaction applies:

     -------------------------------------------------------------------------


     (2) Aggregate number of securities to which transaction applies:

     -------------------------------------------------------------------------


     (3) Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11 (set forth the amount on which
         the filing fee is calculated and state how it was determined):

     -------------------------------------------------------------------------


     (4) Proposed maximum aggregate value of transaction:

     -------------------------------------------------------------------------


     (5) Total fee paid:

     -------------------------------------------------------------------------

[_]  Fee paid previously with preliminary materials.

[_]  Check box if any part of the fee is offset as provided by Exchange
     Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
     was paid previously. Identify the previous filing by registration statement
     number, or the Form or Schedule and the date of its filing.

     (1) Amount Previously Paid:

     -------------------------------------------------------------------------


     (2) Form, Schedule or Registration Statement No.:

     -------------------------------------------------------------------------


     (3) Filing Party:

     -------------------------------------------------------------------------


     (4) Date Filed:

     -------------------------------------------------------------------------

Notes:

<PAGE>

                                  ___________
                                  CORPORATION

                   PHILADELPHIA, PENNSYLVANIA


                                April 10, 2001


Dear Fellow Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
Lincoln National Corporation ("LNC") scheduled for Thursday, May 10, 2001, at
10:00 a.m., local time, at The Rittenhouse, 210 West Rittenhouse Square,
Philadelphia, Pennsylvania. LNC's Board of Directors and Management look forward
to greeting you.

The enclosed Notice of Meeting and Proxy Statement describe the matters to be
acted upon at the Annual Meeting. Please review these documents carefully.

It is important that you vote your shares of LNC stock, either in person or by
proxy. To assist you in voting your shares, LNC now offers, in addition to
voting through the use of a proxy card, voting via telephone and over the
Internet. If you are unable to attend, please sign, date and mail the enclosed
proxy card in the envelope provided, or vote your shares in any other manner
described in the enclosed proxy statement.

On behalf of the Board of Directors, thank you for your continued support.

                                            Sincerely,


                                            /s/ Jon A. Boscia

                                            Jon A. Boscia
                                            Chairman and Chief Executive Officer
<PAGE>

                         LINCOLN NATIONAL CORPORATION
                          PHILADELPHIA, PENNSYLVANIA


                                   NOTICE OF
                        ANNUAL MEETING OF SHAREHOLDERS


                                April 10, 2001

The Annual Meeting of Shareholders of LINCOLN NATIONAL CORPORATION will be held
on Thursday, May 10, 2001, at 10:00 a.m. at The Rittenhouse, 210 West
Rittenhouse Square, Philadelphia, Pennsylvania.

The items of business are:

     1.   to elect four directors for three-year terms expiring in 2004 and to
          elect one director for a two-year term expiring in 2003;
     2.   to approve the Lincoln National Corporation Incentive Compensation
          Plan, as amended and restated;
     3.   to vote on a shareholder proposal; and
     4.   to consider and act upon such other matters as may properly come
          before the meeting.

You have the right to receive this notice and vote at the Annual Meeting if you
were a shareholder of record at the close of business on March 16, 2001. Please
remember that your shares cannot be voted unless you cast your votes by one of
the following methods: (1) sign and return a proxy card; (2) call the 800 toll-
free number listed on the proxy card and vote your shares; (3) vote via the
Internet as indicated on the proxy card; (4) vote in person at the Annual
Meeting; or (5) make other arrangements to vote your shares.

                                        For the Board of Directors,


                                        /s/ C. Suzanne Womack
                                        ---------------------------
                                        C. Suzanne Womack
                                        Secretary
<PAGE>

                         LINCOLN NATIONAL CORPORATION

                        1500 MARKET STREET, SUITE 3900
                              CENTRE SQUARE WEST
                       PHILADELPHIA, PENNSYLVANIA 19102

                                PROXY STATEMENT
                        Annual Meeting of Shareholders
                                 May 10, 2001

The Board of Directors (the "Board") of Lincoln National Corporation ("LNC" or
the "Corporation") is soliciting proxies in connection with the proposals to be
voted on at the Annual Meeting of LNC shareholders scheduled for May 10, 2001
(the "Annual Meeting"). The matters to be voted upon are set forth in the
enclosed Notice of Annual Meeting of Shareholders (the "Notice"). We are first
mailing this Proxy Statement to our shareholders on or about April 10, 2001.

We encourage you to vote your shares, either by voting in person at the Annual
Meeting or by granting a proxy (i.e., authorizing someone to vote your shares).
If you execute the attached proxy card, the individuals designated on that card
(Jon A. Boscia, Jill S. Ruckelshaus, and C. Suzanne Womack) will vote your
shares according to your instructions. If any matter other than Item 1, Item 2
or Item 3 listed in the Notice is presented at the Annual Meeting, the
designated individuals will, to the extent permissible, vote all proxies in the
manner they perceive to be in the best interests of the Corporation.

To assist you in deciding how to vote, this Proxy Statement includes narrative
information about the Corporation, its officers and directors, nominees for
director, and related matters. In addition, a Performance Graph showing the
Corporation's performance over a five-year period is included on page 24. We
have supplemented the narrative disclosure in this Proxy Statement with the
following information, all of which is set forth in Tables A through G
(beginning on page 26):

       Table   Name of Table or Graph
       -----   ----------------------

         A     Security Ownership of Directors, Nominees and Executive Officers
         B     Security Ownership of Certain Beneficial Owners
         C     Summary Compensation Table
         D     Long-Term Incentive Plans - Awards in Last Fiscal Year
         E     Option/SAR Grants in Last Fiscal Year
         F     Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
               Year-End Option/SAR Values
         G     Pension Table

In addition, the following materials are attached as exhibits to this Proxy
Statement:

      Exhibit  Name of Exhibit
      -------  ---------------

         1     Bylaw provision regarding Notice of Shareholder Business
         2     Bylaw provision regarding Notice of Shareholder Nominees
         3     Amended and Restated Lincoln National Corporation Incentive
               Compensation Plan
         4     Charter of the Corporation's Audit Committee

Whenever we refer in this Proxy Statement to the "Annual Meeting," we are also
referring to any meeting that results from an adjournment of the Annual Meeting.

                                       1
<PAGE>

                               SOLICITATION OF PROXIES

INTRODUCTION

The attached proxy card allows you to instruct the designated individuals how to
vote your shares. You may vote in favor of, against, or abstain from voting on
any proposal. In addition, with respect to Item 1 (the election of directors),
you may, if you desire, indicate on the proxy card that you are not authorizing
the designated individuals to vote your shares for one or more particular
nominees.

If you sign a proxy card and deliver it to us, but then want to change your
vote, you may revoke your proxy at any time prior to the Annual Meeting by
sending us a written revocation or a new proxy, or by attending the Annual
Meeting and voting your shares in person.

WHO MAY SOLICIT PROXIES

Directors, officers and employees of the Corporation and Corporate Investor
Communications, Inc. ("CIC") may solicit proxies on behalf of the Board via
mail, telephone, fax, and personal contact.

COSTS OF SOLICITING PROXIES

The Corporation will pay the cost of soliciting proxies. Directors, officers and
employees of the Corporation will receive no additional compensation for
soliciting proxies. The Corporation has retained CIC to assist in the
solicitation process. The costs of retaining CIC are expected to be
approximately $5,500, plus reimbursement of out-of-pocket expenses. The
Corporation will reimburse certain brokerage firms, banks, custodians and other
fiduciaries for the reasonable mailing and other expenses they incur in
forwarding proxy materials to the beneficial owners of stock that those
brokerage firms, banks, custodians and fiduciaries hold of record.

                                    VOTING

SHAREHOLDERS ENTITLED TO VOTE AND SHARES OUTSTANDING

You may vote your shares at the Annual Meeting only if you were a shareholder of
record at the close of business on March 16, 2001 (the "Record Date"). As of the
Record Date, 188,118,801 shares of capital stock of the Corporation were issued,
outstanding, and entitled to vote as follows: 188,093,379 shares of Common Stock
and 25,422 shares of $3.00 Cumulative Convertible Preferred Stock, Series A (the
"Preferred Stock"). You are entitled to one vote for each share of Common Stock
and each share of Preferred Stock you own. The number of shares you own (and may
vote) is listed on the proxy card.

HOW TO SUBMIT YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET

As an alternative to submitting your proxy by mail, you may submit your proxy
with voting instructions, by telephone or through the Internet by following the
instructions set forth on the enclosed proxy card and the accompanying
information sheet. If you are a shareholder of record on the Record Date, you
may call 1-877-779-8683 (1-201-536-8073, outside the U.S. and Canada) or visit
the Web site listed on the enclosed proxy card and accompanying information
sheet. If you hold your shares through a broker, nominee, fiduciary or other
custodian, you should use the different toll-free telephone number and Web site
address provided on the accompanying information sheet for such beneficial
owners. If you choose to submit your proxy with voting instructions by telephone
or through the Internet, you will be required to provide your assigned control
number noted on the enclosed proxy card before your proxy will be accepted. In
addition to the instructions that appear on the enclosed proxy card and
information sheet,

                                       2
<PAGE>

step-by-step instructions will be provided by recorded telephone message or at
the designated Web site on the Internet.

INFORMATION FOR PARTICIPANTS IN CERTAIN PLANS

If you participate in the Lincoln National Corporation Employees' Savings and
Profit-Sharing Plan or The Lincoln National Life Insurance Company Agents'
Savings and Profit-Sharing Plan, the enclosed proxy card, when executed and
returned by you, will instruct the trustees of your plan how to vote the shares
of LNC Common Stock allocated to your account. If the Corporation's stock books
contain identical account information regarding Common Stock that you own
directly and Common Stock that you own through one or more of those plans, you
will receive a single proxy card representing all shares owned by you. If you
participate in an LNC plan and do not return a proxy card to the Corporation,
the trustees of your plan will vote the shares in your account in proportion to
shares held by your plan for which voting directions have been received.

If you own shares of the Corporation through an employee benefit plan other than
those plans mentioned above, you should contact the administrator of your plan
if you have questions regarding how to vote your shares.

QUORUM

A majority of all outstanding shares entitled to vote at the Annual Meeting
constitutes a quorum (i.e., the minimum number of shares that must be present or
represented by proxy at the Annual Meeting in order to transact business).
Subject to the rules regarding the votes necessary to adopt the proposals
discussed below, abstentions and broker non-votes will be counted for purposes
of determining whether a quorum is present. ("Broker non-votes" are proxies
returned by brokerage firms for which no voting instructions have been received
from their principals.) Once a share is represented for any purpose at the
Annual Meeting, it will be deemed present for quorum purposes for the remainder
of the meeting (including any meeting resulting from an adjournment of the
Annual Meeting, unless a new record date is set).

VOTES NECESSARY TO ADOPT PROPOSALS

A plurality of the votes cast is required for the election of directors (Item
1), which means that the five open director seats will be filled by the five
director nominees receiving the highest number of votes. With respect to Item 2,
the proposal will be approved if more shares are voted in favor of the proposal
than against it, provided that at least a majority of the shares eligible to
vote are actually voted on Item 2. For these purposes, abstentions, but not
broker non-votes, will be counted as "votes cast" on Item 2, and abstentions
will have the effect of a vote against the proposal. With respect to Item 3, and
if any other matters are properly presented at the meeting (assuming a quorum
exists with respect to such matter), a particular proposal will be approved if
the number of votes cast in favor of the proposal exceeds the number of votes
cast against the proposal. For purposes of Item 1 and Item 3, abstentions,
broker non-votes and, with respect to the election of directors, instructions on
a proxy card to withhold authority to vote for one or more of the director
nominees will have no effect on the outcome of the relevant vote.

CERTAIN SHAREHOLDER-RELATED MATTERS

Other than the shareholder proposal discussed in this Proxy Statement (see Item
3), no shareholder has raised an issue which is proper for consideration at the
Annual Meeting. To the extent permissible, your proxy will be voted in the
discretion of the proxy holders with respect to each matter properly brought
before the meeting that has not been enumerated in this Proxy Statement or for
which no specific direction was given on the proxy card. For information
regarding inclusion of shareholder proposals in future proxy statements, see
"Shareholder Proposals" on page 42. If shareholders at the Annual Meeting

                                       3
<PAGE>

approve the minutes of the 2000 annual meeting of shareholders, that approval
will not constitute approval of the matters referred to in those minutes.

                        ITEM 1 - ELECTION OF DIRECTORS

In connection with the nomination of Ms. Britell, the size of the Board was
increased to eleven members, thus creating one vacancy. If you sign the enclosed
proxy card and return it to the Corporation, your proxy will be voted for Jon A.
Boscia, Eric G. Johnson, John M. Pietruski and Gilbert R. Whitaker, Jr., for a
term expiring in 2004 and for Jenne K. Britell for a term expiring in 2003,
unless you specifically indicate on the proxy card that you are withholding
authority to vote for one or more of those nominees. Ms. Britell is being
nominated for a term expiring in 2003 rather than 2004 so that the Corporation
can balance the size of the various classes of directors.

All nominees, except Ms. Britell, are current directors of the Corporation. All
nominees have agreed to serve on the Board if they are elected. If any nominee
is unable (or for whatever reason declines) to serve as a director at the time
of the Annual Meeting, proxies will be voted for the election of a qualified
substitute nominee or else the size of the Board will be reduced.

More information concerning security ownership, compensation of officers and
directors, performance of the Corporation, and other important matters are set
forth below under "Additional Information" starting on page 10.

                       NOMINEES FOR TERMS EXPIRING IN 2004

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
                              Nominated for a Term Expiring in May 2004
- ------------------------------------------------------------------------------------------
<S>                     <C>
                        Principal Occupation :
                        Chairman of the Corporation [March 2001 - present]
                        Chief Executive Officer of the Corporation [July 1998 - present]
                        President of the Corporation [January 1998 - March 2001]

                        Five Year Business History:
                        President, The Lincoln National Life Insurance Company [December
                        1999 -present]
                        President and Chief Executive Officer, The Lincoln National Life
                        Insurance Company [October 1996 - January 1998]
   [PHOTO]              President and Chief Operating Officer, The Lincoln National Life
                        Insurance Company [May 1994 - October 1996]
JON A. BOSCIA
Director since 1998     Other Directorships of Public Companies:
Age 48                  None
- ----------------------------------------------------------------------------------------------
</TABLE>

                                       4
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                              Nominated for a Term Expiring in May 2004
- ----------------------------------------------------------------------------------------------
<S>                      <C>
A                        Principal Occupation :
                         President and Chief Executive Officer of Baldwin Richardson Foods
                         Company (a manufacturer of dessert products and liquid condiments
                         for retail and the food service industry) [December 1997 - present]

                         Five Year Business History:
                         President and Chief Executive Officer, Tri-Star Industries, Inc. (a
                         consumer/retail frozen dessert company) [March 1992 - December 1997]

      [PHOTO]            Other Directorships of Public Companies:
                         None
ERIC G. JOHNSON
Director since 1998
Age 50
- ----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
                              Nominated for a Term Expiring in May 2004
- ------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation and Five Year Business History
                         (chairman of Texas Biotechnology Corporation
                         a research and development company)[May 1990 - present]

                        Other Directorships of Public Companies:
                        Hershey Food Corporation [April 1987 - present]
                        GPU, INc. [January 1989 - present]
                        Professional Detailing Inc. [1998 - present]

   [PHOTO]
JOHN M. PIERTRUSKI
Director since 1989
Age 68
- ------------------------------------------------------------------------------------------
</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                                Nominated for a Term Expiring in May 2004
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Dean and Professor of Business Economics, Jesse H. Jones Graduate
                         School of Management, Rice University [July 1997 - present]

                         Five Year Business History:
                         Professor of Business Economics, School of Business Administration,
                         University of Michigan [January 1979 - July 1997]
                         Provost and Executive Vice President of Academic Affairs, University
                         of Michigan [September 1990 - August 1995]

                         Other Directorships Of Public Companies:
                         Handleman Company [June 1990 - September 1999]
     [PHOTO]             Structural Dynamics Research Corporation [July 1988 - present]
                         Johnson Controls, Inc. [January 1986 - present]
GILBERT R. WHITAKER, JR.
Director since 1986
Age 69
- ----------------------------------------------------------------------------------------------
</TABLE>

                       NOMINEE FOR TERM EXPIRING IN 2003

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                                Nominated for a Term Expiring in May 2003
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Chairman and Chief Executive Officer of Structured Ventures, Inc.
                         (a private company with focus on financial and management
                         restructuring, disposition and liquidation of portfolio companies for
                         venture capital firms and financial institutions in both U.S. and
                         foreign markets) [February 2001 -present]

                         Five Year Business History:
                         President of GE Capital Global Commercial & Mortgage Banking
                         (international commercial and mortgage banking) and Executive Vice
  [PHOTO]                President of GE Capital Global Consumer Finance (international
                         consumer finance) [July 1999 - March 2000) President and Chief Executive
Jenne K. Britell         Officer of GE Capital Central and Eastern Europe (consumer and commercial
Nominee                  businesses) [January 1998 - June 1999] President and General Manager of
Age 58                   GE Capital Mortgage Services, Inc. (residential mortgage banking) [July
                         1996 - January 1998]

                         Other Directorships of Public Companies:
                         Crown Cork & Seal Company, Inc.
- ----------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

                     OTHER DIRECTORS OF THE CORPORATION

The identity of, and certain biographical information relating to, the directors
of the Corporation who will continue in office after the Annual Meeting are set
forth below.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                                Continuing in Office for a Term Expiring in May 2003
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Principal of Lend Lease Real Estate Investments
                         (a global investment manager with about $37 billion of real estate
                         and mortgages under management) [November 1999 - present]

                         Five Year Business History:
                         Managing Director of Boston Financial (a national real estate investment
                         management firm) [January 1999 - November 1999]
                         Managing Partner, Schroder Real Estate Associates (a national real
   [PHOTO]               estate investment management firm) [April 1987 - January 1999]
                         Managing Director, Schroder Mortgage Associates (a national commercial
                         mortgage investment firm) [April 1993 - August 1998]
M. LEANNE LACHMAN
Director since 1985      Other Directorships of Public Companies:
Age 58                   Liberty Property Trust [June 1994 - present]
- ----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                               Continuing in Office for a Term Expiring in May 2003
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         President and Chief Executive Officer of Telecom, Media & Networks
                         Americas, A Cap Gemini Ernst & Young Company
                         (a telecommunications/internet consulting operation) [April 1999 - present]

                         Five Year Business History:
                         President and Chief Executive Officer of Beechwood Data Systems (a full-service
                         consulting and systems development company) [November 1997 -April 1999]
                         Executive Vice President, Operations & Service Management of AT&T Corp. (a
                         telecommunications corporation) [August 1995 - November 1997]

RON J. PONDER            Other Directorships of Public Companies:
Director since 2000      Atlantic Health Systems [1995 to present]
Age 58
- ----------------------------------------------------------------------------------------------
</TABLE>

                                       7
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                              Continuing in Office for a Term Expiring in May 2003
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Director of Costco, Inc.
                         (a membership warehouse retailer) [January 1996 - present]

                         Five Year Business History:
                         Director, Seattle First Bank Corporation [September 1977 - 2000]
                         Consultant, William D. Ruckelshaus Associates (environmental
                         consultants) [January 1989 - January 1997]

                         Other Directorships of Public Companies:
      [PHOTO]            None

JILL S. RUCKELSHAUS
Director since 1975
Age 64
- ----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                              Continuing in Office for a Term Expiring in May 2002
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation and Five Year Business History:
                         President of Telergy Inc.

                         (an applications infrastructure provider; serving the
                         telecommunications and energy industries) [April 1998 - present]
                         Chairman and Chief Executive Officer of CARPAT Investments
                         (a private investment company) [1987 - present]

                         Other Directorships Of Public Companies:
    [PHOTO]              Coyne International Enterprises Corporation [July 1998 - present]

J. PATRICK BARRETT
Director since 1990
Age 64
- ----------------------------------------------------------------------------------------------
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                              Continuing in Office for a Term Expiring in May 2002
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Partner of Forstmann Little & Co.
                         (private equity investment firm) [January 2001 - present]

                         Five Year Business History:
                         Chairman and Chief Executive Officer of Young & Rubicam, Inc. (the
                         parent company of international communications companies) [January
                         2000 -October 2000]
                         President and Chief Operating Officer of Young & Rubicam, Inc. (the
                         parent company of international communications companies) [August
                         1999 - December 1999]
                         Chairman and Chief Executive Officer of Young & Rubicam Advertising
                         (an advertising agency) [October 1998 - August 1999]
                         President and Chief Executive Officer, Burson-Marsteller (a perception
                         management firm) [May 1995 - October 1998]
                         Chairman and Chief Executive Officer, Diversified Communications Group
                         [November 1997 - October 1998]
                         Vice-Chairman, Gulfstream Aerospace Corporation (a manufacturer of
                         business aircraft) [March 1994 - May 1995]

                         Other Directorships of Public Companies:
    [PHOTO]              Cousins Properties Inc. [June 2000 - present] Young & Rubicam,
                         Inc. [May 1998 - October 2000]
THOMAS D. BELL, JR.      Gulfstream Aerospace Corporation [October 1996 - October 1999]
Director since 1988
Age 51
- ----------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
                              Continuing in Office for a Term Expiring in May 2002
- ----------------------------------------------------------------------------------------------
<S>                      <C>
                         Principal Occupation:
                         Chairman, Chief Executive Officer and President of Sunoco, Inc.
                         (manufacturer and marketer of petroleum and petrochemical products)
                         [May 2000 - present]

                         Five Year Business History:
                         President and Chief Operating Officer of Sunoco, Inc. (manufacturer
                         and marketer of petroleum and petrochemical products) [December
                         1996 -May 2000]
                         President and Chief Operating Officer of Ultramar Corporation [June
                         1992 -August 1996]
    [PHOTO]
                         Other Directorships of Public Companies:
JOHN G. DROSDICK         Hercules, Inc. [October 1998 - present]
Director since 2000
Age 57
- ----------------------------------------------------------------------------------------------
</TABLE>



                                       9
<PAGE>

                            ADDITIONAL INFORMATION

                              SECURITY OWNERSHIP

SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS

The Corporation has two classes of equity securities: Common Stock and Preferred
Stock. Table A on page 26 shows the number of shares of Common Stock and stock
units (i.e., non-transferable accounting-entry "units," the value of which is
the same as the value of the corresponding number of shares of Common Stock)
beneficially owned by each director, nominee for director, and "Named Executive
Officer," individually, and by all directors and executive officers as a group
(in each case as of March 1, 2001). As of that date, none of the persons listed
in that table owned more than 1% of the Corporation's issued and outstanding
Common Stock, nor did any of those persons own any Preferred Stock.

Whenever we refer in this Proxy Statement to the "Named Executive Officers," we
are referring to those executive officers of the Corporation that the
Corporation is required to identify in the Summary Compensation Table (Table C)
on page 28 and whose compensation is discussed in "Summary Annual and Long-Term
Compensation" on page 18. Those individuals are: Jon A. Boscia, Charles E.
Haldeman, Jr., Richard C. Vaughan, Jack D. Hunter, and John H. Gotta. For more
information regarding those officers and their compensation, see Table C and
"Summary Annual and Long-Term Compensation" below.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of the Record Date, the Corporation was not aware of anyone who beneficially
owned more than 5% of the Corporation's Common Stock or more than 5% of the
Corporation's Preferred Stock.

                            THE BOARD OF DIRECTORS

COMPOSITION OF THE BOARD OF DIRECTORS; COMPENSATION OF DIRECTORS

The members of the Board, their relevant term of office, and certain
biographical information are set forth above under "Item 1 - Election of
Directors." Compensation of the Corporation's directors is discussed below under
"Executive Compensation."

COMMITTEES

The Board currently has four standing committees (i.e., committees composed
entirely of Board members): the Audit Committee, the Compensation Committee, the
Development Committee, and the Nominating and Governance Committee. A brief
description of each committee is set forth below.

Audit Committee

The members of the Audit Committee are:

          J. Patrick Barrett (Chair)          Eric G. Johnson
          Thomas D. Bell, Jr.                 Gilbert R. Whitaker, Jr.
          John G. Drosdick

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Each of the foregoing individuals is a "Non-Employee Director" (i.e., not an
officer or employee of the Corporation). The principal functions of the Audit
Committee are to:

 .    assist the Board in its oversight of the Corporation's financial reporting
     process and systems of internal accounting and financial controls
 .    assist the Board in its oversight of the Corporation's consolidated
     financial statements and the independent audit thereof
 .    advise the Board in selecting, evaluating and replacing the independent
     auditors
 .    consult with the independent auditors and the Board regarding the
     independence of the independent auditors
 .    consult with management and/or the independent auditors regarding
     significant risks and exposures, if any, and the steps taken to monitor and
     minimize such risks
 .    review policies and procedures with respect to officers' expense accounts
     and perquisites
 .    prepare any report of the Audit Committee required to be included in the
     Corporation's annual proxy statement

The Board has adopted a written charter for the Audit Committee, a copy of which
is attached hereto as Exhibit 4. More information concerning the Audit
Committee, including an Audit Committee Report, is set forth below under "Audit
Committee Matters" on page 23.

Compensation Committee

The members of the Compensation Committee are:

          John M. Pietruski (Chair)                John G. Drosdick
          J. Patrick Barrett                       M. Leanne Lachman
          Thomas D. Bell, Jr.


Each of the foregoing individuals is a Non-Employee Director. The principal
functions of the Compensation Committee are to:

 .    review and confer on the selection and development of officers and key
     personnel
 .    select and recommend to the Board for approval candidates for chairman of
     the board and chief executive officer
 .    establish salaries for executive officers and approve salaries for other
     officers and key personnel
 .    approve the payment of bonuses (both discretionary and contractual) for
     officers and key personnel
 .    approve employment contracts and agreements for officers and key personnel
 .    recommend to the Board the establishment of employee and officer
     retirement, group insurance and other benefit plans
 .    approve certain modifications to employee benefit plans if the present
     value of all such modifications over the five calendar years after their
     effectiveness is not, according to actuarial estimates, greater than $10
     million
 .    administer benefit plans of the Corporation that are designed to
     comply with the provisions of Rule 16b-3(d) under the Exchange Act

 .    perform such other related functions as are necessary or desirable

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<PAGE>

Development Committee

The members of the Development Committee are:

          Eric G. Johnson (Chair)             Ron J. Ponder
          Jon A. Boscia                       Jill S. Ruckelshaus
          John M. Pietruski

The Development Committee generally may authorize the following transactions and
expenditures having a value greater than $10 million but not more than $20
million:

 .    acquisitions or divestitures of assets, blocks of business (excluding
     indemnity and financial reinsurance), and equity interests in corporations,
     partnerships and other legal entities.
 .    mergers, strategic investments and joint ventures
 .    capital commitments or expenditures for leases and asset purchases
 .    purchases by the Corporation or its affiliates of securities issued by the
     Corporation or any of its affiliates
 .    issuance of securities by the Corporation or any of its affiliates
 .    acquisitions or dispositions of information systems development projects
 .    other transactions referred to the Development Committee by the chief
     executive officer

The Development Committee also may authorize capital transactions between
affiliates (excluding dividends) having a value greater than $100 million but
not more than $200 million.

Nominating and Governance Committee

The members of the Nominating and Governance Committee are:

          Gilbert R. Whitaker, Jr. (Chair)    Ron J. Ponder
          M. Leanne Lachman                   Jill S. Ruckelshaus

The principal functions of the Nominating and Governance Committee are to:

 .    nominate directors for election by shareholders
 .    nominate directors to fill vacancies on the Board
 .    compensate and reimburse directors
 .    establish the retirement policy and benefit plans for directors
 .    determine the size of the Board
 .    review committee appointments
 .    develop Board governance principles

Although the Nominating and Governance Committee does not solicit shareholder
recommendations regarding director nominees to be proposed by the Board, it will
consider such recommendations if they are made. Recommendations regarding
director nominees to be proposed by the Board, along with relevant
qualifications and biographical material, should be sent to the Secretary of the
Corporation.

Director nominees to be proposed by a shareholder at a shareholders' meeting
must comply with the provisions of the Corporation's Bylaws (see "Shareholder
Proposals" on page 42 and Exhibits 1 and 2 on pages 44 and 45, respectively).

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<PAGE>

ATTENDANCE AT MEETINGS

During 2000, the Board held 5 regularly scheduled meetings. In addition, the
Audit Committee met 6 times; the Nominating and Governance Committee met 5
times; the Compensation Committee met 7 times; and the Development Committee met
5 times. All directors attended 75% or more of the aggregate meetings of the
Board and Board committees that he or she was eligible to attend. The
Corporation believes attendance at meetings is only one criterion for judging
the contribution of individual directors, and all directors have made
substantial and valuable contributions to the management of the Corporation.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The following persons served as members of the Corporation's Compensation
Committee during the 2000 fiscal year: J. Patrick Barrett, Thomas D. Bell, Jr.,
John G. Drosdick, M. Leanne Lachman, John M. Pietruski, and Jill S. Ruckelshaus.
No member of the Compensation Committee had an "interlock" reportable under
Section 402(j) of Regulation S-K, and no member was an employee, officer or
former officer of the Corporation or its subsidiaries.

                      SECTION 16(a) BENEFICIAL OWNERSHIP
                             REPORTING COMPLIANCE

Under Section 16(a) of the Exchange Act, the Corporation's directors, its
executive officers (including all Named Executive Officers), and any persons
beneficially owning more than ten percent of any class of the Corporation's
equity securities (collectively, "Reporting Persons") are required to report
their initial ownership of such securities (on Form 3) and any subsequent
changes in that ownership (on Form 4 or 5) to the Securities and Exchange
Commission ("SEC") and the New York Stock Exchange. Those reports must be filed
within a certain time period, and a copy of each report must be sent to the
Corporation. Based solely on written representations of the Reporting Persons,
and copies of the reports that were filed with the SEC, the Corporation is not
aware of any failure by a Reporting Person to timely file a Section 16(a)
report.

                            EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

Responsibilities and Composition of the Compensation Committee

The Corporation's executive compensation programs are administered by the
Compensation Committee (the "Committee"), a committee of the Board of Directors
comprised exclusively of Non-Employee Directors. The Committee approves all
compensation plans and awards for the Corporation's executive officers. No
Committee member has an interlocking or other relationship that would call into
question his or her independence as a Committee member, nor has any Committee
member ever served as an officer of the Corporation.

Compensation Philosophy

Compensation of the Company's executive officers is set at levels intended to:

 .    Attract and retain the most talented individuals in the financial services
     industry.

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<PAGE>

 .    Make base pay competitive with selected companies within the Corporation's
     market. To achieve this end, the Committee strives to ensure that total
     direct compensation will be below average for average or below average
     financial performance but will be above average for above average
     performance. The market to which the Committee compares compensation of the
     Company's executive officers includes the Peer Group companies set out in
     the Performance Graph on page 24, as well as other companies in the
     Corporation's industry. General industry comparisons are made for positions
     not requiring unique knowledge of the financial services industry.

The forms of compensation provided and the mix of those forms are designed to:

 .    Maximize the creation of long-term shareholder value. To accomplish this
     objective, the Committee develops executive compensation policies which are
     consistent with and linked to the Corporation's strategic business
     objectives.

 .    Provide a direct link between executive compensation and the Corporation's
     financial performance, appropriately balancing the rewards for short-term
     and long-term performance. Immediate linkage currently takes the form of
     annual incentive awards that are conditioned on the Corporation's financial
     performance in the previous year.

 .    Focus management on the long-term interests of the Corporation and its
     shareholders. This is accomplished by establishing three year performance
     cycles. Performance measures for the long-term performance cycles that
     begin in 2001 are linked to total shareholder return, growth in operating
     income per diluted share and return on equity during the performance
     cycles, as compared to a designated group of peer companies. Compensation
     under the long-term incentive cycles may be in the form of cash, stock,
     restricted stock or stock options. The Committee seeks to ensure that
     short-term gains do not come at the expense of long-term performance. It is
     the objective of the Committee that the executive officers have about 50%
     of their compensation at risk based on long-term performance.

 .    Align the continuing financial interests of executive officers with those
     of shareholders. To achieve this goal, the Corporation requires officers to
     meet specific share ownership requirements based upon a multiple of their
     base salary, as set forth below:

          Title of Officer                         Multiple of Base Salary
          ----------------                         -----------------------
          Chief Executive Officer                          8 times
          President                                        7 times
          Executive Vice President or equivalent           6 times
          Senior Vice President or equivalent              4 times
          Vice President or equivalent                     2 times
          Below Vice President                             1 time

     Newly appointed officers have five years to achieve the applicable
     multiple. All Named Executive Officers who currently are officers of the
     Corporation have met or exceeded their share ownership requirements.

Compensation Methodology

Each year the Committee reviews market data and assesses the Corporation's
competitive position in each component of executive compensation, including base
salary and incentive compensation. The primary market comparison used by the
Committee is a broad-based survey, conducted by a well-known and respected
compensation consulting firm, of companies in the financial services industry.
Target

                                       14
<PAGE>

compensation is based on the average of actual compensation, adjusted to reflect
differences in size among these companies.

The principal survey used by the Committee was selected primarily because the
companies covered by it operate in businesses similar to the Corporation's and
compete for executives with experience and skills similar to those the
Corporation requires. The Committee also considered the technical competence of
the survey firm. The Committee also consults several additional broad-based
surveys for purposes of verifying the findings of the primary survey and for a
broader analysis of trends in executive compensation, including those impacting
positions in the Corporation not requiring unique knowledge of the financial
services industry. Compensation decisions regarding individual executives are
also based on factors such as individual performance, level of responsibility
and unique skills.

Compensation Components and Process

The primary components of executive compensation used by the Committee are:

 .    Base Pay
 .    Incentive Compensation
 .    Benefits

These components are discussed below.

Base Pay

The Corporation has established executive base pay "bands" and assigned each
executive to a band of compensation based on his or her job responsibilities.
The Chief Executive Officer provides compensation recommendations for each
executive officer (except the Chief Executive Officer) to the Committee.

Annual base salary is designed to compensate executives for their sustained
performance. Salary is based on: (1) market compensation data; (2) individual
performance; and (3) increase guidelines approved by the Committee. The
Committee approves in advance all salary increases for executive officers.
Salaries for executive officers for 2000 were projected to be about the median
of the compensation peer group.

Incentive Compensation

Incentive awards comprise the largest portion of total compensation for
executive officers. Currently, incentive awards are made to the Corporation's
executive officers under the Lincoln National Corporation Incentive Compensation
Plan (the "ICP"), which was approved by the Corporation's shareholders on May
15, 1997. The ICP provides the Committee with the authority to grant annual
incentive awards, which represent a conditional right to receive cash, shares or
other awards upon achievement of preestablished performance goals during the
specified one-year period or "Performance Cycle." Long-term performance awards
under the ICP are based upon multiple-year Performance Cycles established by the
Committee. In the case of both annual and long-term incentive awards, the
Committee retains discretion, even if the relevant Corporate Performance
threshold is achieved, to reduce any award at the end of the relevant
Performance Cycle below the maximum amount payable, and such awards also may be
subject to additional criteria (e.g., continued service requirements).

Prior to the effective date of the ICP, awards were made under the Lincoln
National Corporation 1986 Stock Option Incentive Plan ("Stock Option Plan") and
the 1994 Amended and Restated Lincoln National Corporation Executive Value
Sharing Plan (the "EVSP"). Although those plans have been terminated, awards
granted prior to the termination of those plans remain outstanding in accordance
with their terms.

                                       15
<PAGE>

Under the ICP, the primary forms of incentives utilized for key executives
include stock options, restricted stock or restricted stock units, and cash
awards. The Committee also has the flexibility to grant other equity-based
awards under the ICP. In any given year, an executive may receive a combination
of all or some of these incentives, depending on circumstances such as
individual and corporate performance. For 2000, approximately eighty nine
percent (89%) of the value of the Named Executive Officers' total compensation
was variable (i.e., was tied to the performance of the Corporation and/or its
Common Stock).

Awards under the 2000 ICP Performance Cycle were made by the Committee in March
2001 and are reflected in the Summary Compensation Table. For awards under the
three-year (1998-2000) ICP Performance Cycle, the Committee determined in March
2001 that the corporate performance criteria applicable to the restricted shares
previously granted to its executive officers had been fully achieved and, in
light of the Corporation's performance chose not to reduce awards at the end of
the Performance Cycle. These restricted shares will vest only if the relevant
executive satisfies the "continued service" requirements that generally lapse
after three years. Dividends will be paid to executive officers during the
period of "continued service."

The number of restricted shares held by the Named Executive Officers, including
those subject to the "continued service" requirements set forth above, are
reflected in Table A ("Security Ownership of Directors, Nominees and Executive
Officers") on page 26.

Awards under one-year (2001), two-year (2001-2002) and three-year (2001-2003)
long-term performance cycles were designated by the Committee in March 2001.
These awards are in the form of conditional rights to receive cash or stock upon
the achievement of pre-established performance goals during the performance
cycle periods (based upon the Corporation's total shareholder return, growth in
operating income per diluted share and return on equity during the cycle, as
compared to a designated group of peer companies). These awards will be reported
in the 2002 proxy. The designation of the one-year (2001) and two-year
(2001-2002) long-term performance cycles are intended as a transition to a
program of annually designated overlapping three-year performance cycles.

Stock Options: Stock option grants provide the opportunity to purchase shares of
the Corporation's Common Stock at Fair Market Value (the average of the high and
low trading prices on the day preceding the date of the grant). The objective of
these grants is to increase the executive officers' equity interest in the
Corporation and to allow them to share in the appreciation of the Corporation's
Common Stock. Stock options have value for the executive officers only if the
stock price appreciates in value from the date the options are granted. Stock
options become exercisable in four equal annual installments beginning on the
first anniversary of the grant and have a ten-year term. The Committee has
typically granted stock options each year to executive officers. Option grants
are for shares of Common Stock authorized under shareholder-approved plans.
Executives are encouraged to hold shares received upon the exercise of the
options, linking their interests to those of shareholders. Executives who sell
shares prior to reaching the share ownership guidelines (discussed above) may
have future stock option awards reduced or eliminated.

In granting stock options to executive officers, including the Named Executive
Officers, the Committee takes into account the executive's level of
responsibility, individual contribution and appropriate total compensation
relative to the market. In addition, the Committee takes into account the Chief
Executive Officer's award recommendation for the Named Executive Officers. The
Committee considers the amounts and terms of option grants as an important
component in designing a competitive total compensation package.

Restricted Stock: Awards of shares of restricted stock typically are restricted
from sale or trade for three years after the grant, or in the case of those
granted under the three year (1998-2000) ICP Performance

                                       16
<PAGE>

Cycle, the end of the performance cycle, except in certain situations relating
to retirement (with Committee consent), death, disability, termination without
cause, or change of control of the Corporation. Executives may vote the shares
during the period that the shares are issued but restricted and are generally
paid dividends on the shares or compensated for dividends that would have been
paid if the shares had not been restricted. The Committee may impose additional
restrictions (in addition to lapse of time) on the vesting of restricted stock
awards.

Stock Units: Stock units are a form of deferred compensation, the value of which
mirrors the value of a corresponding number of shares of Common Stock. Stock
Units may be awarded as "restricted" stock units, similar to restricted stock
awards. The "restrictions" on restricted stock units typically lapse three years
from the date of grant. Stock units and restricted stock units have no voting
rights and dividend equivalents are converted to additional stock units. As with
restricted stock awards, the Committee may impose restrictions in addition to
lapse of time on the vesting of restricted stock units.

Other Awards: The Committee also has the flexibility to grant other awards under
the ICP, including bonus stock, stock appreciation rights (or "SARs"),
convertible securities and cash awards.

Benefits

Benefits offered to key executives are largely those that are offered to the
general employee population (with some variation, largely to promote tax
efficiency and replacement of benefit opportunities lost due to regulatory
limits). In general, these benefits provide a safety net for protection against
the financial catastrophes that can result from illness, disability or death.

2000 Compensation for the Chief Executive Officer

The total salary for the Corporation's Chief Executive Officer, Jon A. Boscia,
for 2000 was $750,000. In March of 2001, Mr. Boscia received an award of
$3,500,000 with respect to the one-year ICP Performance Cycle ended in 2000. In
making decisions with respect to 2000 compensation for Mr. Boscia and his March
2001 ICP award, the Committee reviewed the Corporation's excellent 2000
financial results. The Committee also considered key strategic actions taken to
build a stronger Corporation for the future and to build a strong base from
which to accelerate earnings growth. These actions included implementing talent
management initiatives, including talent assessment, selection and development
throughout the Corporation, implementing successful branding initiatives,
introducing a number of new products in the Annuities, Life Insurance and
Investment Management segments, obtaining a high rating in the Dalbar survey (a
rating of services provided by financial services institutions) for both
Annuities and Delaware, and forming Lincoln Financial Distributors (the
Corporation's wholesale distribution arm). Additionally, Lincoln UK was
restructured to enhance future overall performance.

Impact of Tax Deduction Limitations on Executive Compensation

The Committee is responsible for addressing tax deduction limitations which make
"non-performance-based" compensation to certain executives of the Corporation in
excess of $1,000,000 nondeductible to the Corporation. To qualify as
"performance-based" compensation, payments must be based on achieving objective
performance goals established under a plan that is administered by a committee
of "outside directors." In addition, the material terms of the plan must be
disclosed to and approved by shareholders and the Committee must certify that
the performance goals were achieved before payments may be made.

The Committee has taken several steps to minimize the effect of these tax
deduction limits on the Corporation's deduction for compensation to be paid to
the Named Executive Officers listed on the Summary Compensation Table. The Stock
Option Plan was amended to place maximums on the number of stock options awarded
to any officer, the EVSP was approved by shareholders in 1994, and the successor
ICP was approved by shareholders in 1997. The ICP, as amended and restated, is
being

                                       17
<PAGE>

submitted to shareholders for re-approval in this proxy statement. Stock options
awarded under the Stock Option Plan, awards paid under the amended EVSP, and
amounts awarded pursuant to the ICP have generally been designed as performance-
based compensation not subject to the $1,000,000 limit. In addition, for EVSP
Performance Cycles that began before 1994, certain officers received awards in
the form of restricted stock units under a deferred compensation arrangement
designed to assure deductibility by the Corporation. Currently the maximum
annual incentive and long-term performance awards for the Named Executive
Officers are limited to specified percentages of the Corporation's income from
operations.

Although the plans referenced above satisfy the requirements for payments to be
deductible, the Committee may make payments of compensation to executives that
are not deductible in order to recognize exceptional service or to correct below
market compensation. Should compliance with the $1,000,000 limit conflict with
the Committee's compensation philosophy, the Committee will act in the manner it
perceives to be in the best interests of shareholders. The Committee continues
to monitor the level of compensation paid to executive officers in order to take
any steps which may be appropriate to comply with applicable tax deduction
limitations relating to executive compensation.

Conclusion

Executive compensation is designed to be linked to, and commensurate with, the
Corporation's performance. The Committee believes that the Corporation's
performance validates the success of its compensation philosophy and that its
executive compensation policies and programs serve the best interests of the
Corporation and its shareholders./1/

                                    John M. Pietruski, Chair J.
                                    Patrick Barrett Thomas D. Bell,
                                    Jr. John G. Drosdick M. Leanne
                                    Lachman

SUMMARY ANNUAL AND LONG-TERM COMPENSATION

The Corporation's compensation program for executive officers for the fiscal
year ended December 31, 2000 consisted primarily of salaries, bonuses, and other
compensation. Table C on page 28 includes information concerning the annual
compensation for services in all capacities to the Corporation and its
subsidiaries for the fiscal years ended December 31, 2000, 1999, and 1998 of the
Corporation's Named Executive Officers. Under SEC rules, the "Named Executive
Officers" include:

 .    each person who acted as the Corporation's chief executive officer at any
     time during 2000,
 .    the four other most highly compensated executive officers employed by the
     Corporation (or its subsidiaries) on December 31, 2000, and

 .    up to two additional executive officers who would have been required to be
     listed in the Summary Compensation Table had they been employed by the
     Corporation (or its subsidiaries) on December 31, 2000.

___________________
/1/Pursuant to item 402(a)(9) of Regulation S-K promulgated by the Securities
and Exchange Commission ("SEC"), the "Compensation Committee Report" shall not
be deemed to be filed with the SEC for purposes of the Securities Exchange Act
of 1934 nor shall such report or such material be deemed to be incorporated by
reference in any past or future filing by the Corporation under the Securities
Exchange Act of 1934 or the Securities Act of 1933, as amended.

                                       18
<PAGE>

LONG-TERM INCENTIVE PLAN AWARDS

No awards were made in 2000 for performance periods extending beyond 2000 under
the long-term incentive plans.

STOCK OPTION PLANS

Set forth in Table E on page 31 is information on grants of stock options
pursuant to the ICP during fiscal year 2000 to the Named Executive Officers. No
stock appreciation rights were granted to the Named Executive Officers during
fiscal 2000.

OPTION EXERCISES AND FISCAL YEAR-END VALUES

Table F on page 32 includes information with respect to option exercises in
fiscal year 2000 and unexercised options to purchase the Corporation's Common
Stock granted to the Named Executive Officers in fiscal year 2000 under the ICP
and in prior years under the Stock Option Plan.

RETIREMENT PLANS

Table G on page 33 shows the estimated annual retirement benefits payable on a
straight life annuity basis to participating employees, including the Named
Executive Officers, under the Corporation's retirement plans which cover most
officers and other employees on a non-contributory basis. Such benefits reflect
a reduction to recognize in part the Corporation's cost of Social Security
Benefits related to service for the Corporation.

SUPPLEMENTAL RETIREMENT ARRANGEMENTS

Certain officers of the Corporation and its subsidiaries, including all the
Named Executive Officers, have entered into salary continuation agreements under
the terms of the Salary Continuation Plan for Executives of Lincoln National
Corporation and Affiliates ("Salary Continuation Plans"). Under the Salary
Continuation Plans, the amount each officer is entitled to receive upon
retirement is 2% of his or her final monthly compensation multiplied by the
number of years the agreement has been in effect (up to a maximum of 10% of
final monthly salary), so long as the officer agrees to an exclusive consulting
arrangement with the Corporation until the earlier of the waiver of such
arrangement or attainment of age 65. This amount will be paid in the form of a
120-month certain and life annuity. In the event of death prior to retirement, a
designated beneficiary of executives who were participating in the Salary
Continuation Plans on December 31, 1991, will instead receive annual payments
each equal to 25% of the employee's final annual salary until the later of the
date on which the employee would have attained age 65 or the date on which a
minimum of ten payments have been made. These agreements automatically terminate
upon the officer's termination of service for reasons other than death,
disability or retirement; except that in the event of a change in control of the
Corporation, as defined in the Severance Plan (discussed below), and a
subsequent voluntary or involuntary termination of the employee's employment
within two years of the change in control, such employee shall be treated as
continuing employment with the Corporation and its affiliates until age 65 at
which time benefits shall begin. The Salary Continuation Plan caps compensation
used to determine benefits at the greater of $200,000 or the annual base
compensation in effect on December 31, 1991 for executives participating on that
date. Effective December 31, 1993 the exclusive consulting arrangement was
waived for Mr. Hunter.

CHANGE-IN-CONTROL ARRANGEMENTS

Recognizing that an unforeseen change of control is unsettling to the
Corporation's key executives, the Board adopted the Lincoln National Corporation
Executives' Severance Benefit Plan (the "Severance Plan"). The objectives of the
Severance Plan are to:

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<PAGE>

 .    attract certain qualified executives and encourage their continued
     employment in the face of an actual or threatened change of control

 .    enable such executives to help the Board assess any proposed change of
     control of the Corporation and advise the Board regarding whether such
     proposal is in the best interests of the Corporation, its shareholders, and
     the policyholders and customers of its affiliates without being unduly
     influenced by the uncertainty of continued employment

 .   demonstrate to those executives the Corporation's desire to treat them
     fairly

 .    provide those executives with compensation and benefits upon a change of
     control which are designed to ensure that expectations of the executives
     will be satisfied

Executives eligible for participation in the Severance Plan ("Eligible
Executives") are the members of the Corporation's Senior Management Committee
and other employees as determined by the Compensation Committee. All Named
Executive Officers were Eligible Executives during 2000. Pursuant to the
Severance Plan, the Corporation may enter into agreements (which are not
employment agreements) with Eligible Executives to provide severance benefits in
the event that, within three years after a change of control of the Corporation
has occurred (i) the Corporation terminates their employment for any reason
other than cause, death or disability, or (ii) the Eligible Executive terminates
employment for good reason, such as a change in the Eligible Executive's
responsibilities, a reduction in salary or benefits, or relocation. Any
termination of employment by the chief executive officer or the chief operating
officer during such three-year period is deemed to be for good reason under the
Severance Plan.

The benefit to which an Eligible Executive would be entitled under the terms of
the Severance Plan is the greater of (1) 299.9% of the Eligible Executive's
average annual compensation for the period consisting of the five most recent
taxable years ending before the change of control and (2) 200% of the Eligible
Executive's annual compensation (including all forms of compensation reportable
on a Form W-2) based on the highest amount of consideration paid during (a) the
calendar year preceding termination or (b) either of the two calendar years
immediately preceding the year in which the change of control occurred. In
addition, an Eligible Executive would be entitled to benefits such as the
continuation of certain benefits under the welfare benefit plans in which he or
she participates, immediate and 100% vesting in all retirement benefits,
payments with respect to incentive plans, the value of restricted stock and
unexercisable stock options, relocation benefits, outplacement services and an
after-tax payment to cover any excise tax and related assessments, but not
regular income taxes, on amounts deemed to be "excess parachute payments" under
the Internal Revenue Code of 1986, as amended (i.e., a lump sum payment in an
amount sufficient, after the payment of all taxes on the lump-sum payment
itself, to pay the excise tax and related assessments, if any, to which the
executive becomes subject as a result of receiving the change-of-control
payments). The Corporation must reimburse an Eligible Executive any and all
legal fees and expenses incurred by the Eligible Executive relating to enforcing
the Corporation's obligations under the Severance Plan. The Severance Plan
supplements and does not supersede other plans, contracts of employment, or
other arrangements which Eligible Executives may have with the Corporation or
its affiliates.

EMPLOYMENT CONTRACTS

The Corporation has no employment agreement with any Named Executive Officer.
Mr. Vaughan has a severance agreement which provides that from June 18, 1996
until the first month following his 55th birthday, if his employment is
involuntarily terminated by the Corporation, he will be entitled to one year of
severance pay at his then base salary. This arrangement does not apply to
voluntary termination or if termination is for cause. In connection with Mr.
Haldeman's employment, the Corporation has agreed that, if during the first year
of his employment, Mr. Haldeman is terminated for reasons other than cause, or
if there is a substantial diminution of his responsibilities resulting in his
leaving the company, he will

                                       20
<PAGE>

receive severance in the amount of one year's base salary. In addition, his
grant of 100,000 restricted shares (given as a sign-on bonus related to
financial losses incurred in leaving his previous employer) will immediately
vest. If his employment is terminated other than for cause during the second or
third year of his employment, he will not be entitled to severance (except
pursuant to the Severance Plan described above, if its terms are applicable to
the severance), but the Corporation could, as with all restricted stock awards,
decide to vest the restricted stock prior to the date the restrictions lapse in
connection with a severance.

COMPENSATION OF DIRECTORS

Compensation Philosophy

The Board considers a variety of outside sources (e.g., comparisons with peer
companies and third party studies on director compensation) when determining the
levels and types of compensation to be paid to directors. Of particular
relevance, the Board endorses each of the six "Best Practices" recommended in
the Report of the Blue Ribbon Commission on Director Compensation of the
National Association of Corporate Directors. Consistent with those practices,
the Board adheres to the following guidelines in establishing director
compensation:

 .    a substantial portion of each director's compensation is paid in LNC Common
     Stock or stock units

 .    in order to avoid the appearance of employee-like tenure or compromised
     independence, generally directors are not eligible for defined benefit
     pensions

 .    directors are expected to achieve stock ownership of 5 times their annual
     retainer within 5 years of election to the Board

LNC pays retainer and meeting fees to Non-Employee Directors. Non-Employee
Directors are also eligible to receive bonus awards and service awards or
certain other retirement benefits. The Board believes that the fees of Non-
Employee Directors are comparable to the fees paid to directors of similar
companies.

Retainer and Meeting Fees

The Corporation pays retainer fees under the Lincoln National Corporation 1993
Stock Plan for Non-Employee Directors (the "Stock Plan"). Under the Stock Plan,
the Corporation pays each Non-Employee Director an annual retainer of $55,000
($18,000 in cash and $37,000 in LNC restricted stock). If a Non-Employee
Director is elected to a new three-year term, the Corporation pays that director
an additional $10,000 in restricted stock (rounded up to the nearest whole
share). The restrictions on shares awarded under the Stock Plan will lapse on
the earliest of the Non-Employee Director's death, disability, retirement from
the Board at age 70 or, if specifically approved by the Board, other events of
resignation or retirement from the Board. Under the Stock Plan, the Corporation
has authorized the granting of 3,000 stock options per year to each Non-Employee
Director through the year ending June 30, 2004.

In addition to the retainer fee, the Corporation paid each Non-Employee Director
$1,100 for each Board and Board committee meeting he or she attended during
2000. Committee chairpersons received an additional annual fee of $5,000 for
their services. The Corporation also reimburses directors (and sometimes their
spouses) for the reasonable travel expenses they incur when attending Board and
Board committee meetings. In January 1999, John M. Pietruski was designated the
"lead director" of the independent directors and was paid an additional $25,000
for his services in that regard for fiscal year 2000.

                                       21
<PAGE>

Non-Employee Directors may defer the cash portion of their annual retainer and
fees in stock units, as provided in the Stock Plan. When a director retires, he
or she can receive the value of those units in LNC Common Stock or in cash,
either in a lump sum payment or in annual installments over a period of up to
fifteen years.

Bonus Awards, Service Awards and Other Benefits

Non-Employee Directors are eligible to receive Bonus Awards, Service Awards, and
certain other benefits under the LNC Directors' Value Sharing Plan (the "DVSP").

Bonus Awards. In addition to annual retainer fees and meeting fees, the
Non-Employee Directors participate in the DVSP. Previously the DVSP had been
amended to more effectively align criteria used for Director's compensation with
the criteria applicable to the compensation of the Corporation's executives by
mirroring the long-term incentive cycle (1998-2000) and goals under the ICP.
This long-term cycle has been completed with the performance goals being fully
achieved. New one-year (2001), two-year (2001-2002) and three-year (2001-2003)
overlapping long-term performance cycles and performance goals that mirror the
cycles and goals established for the executives' plan have been added to the
DVSP.

Service Awards. Except as discussed below under "Retirement Benefits," each
Non-Employee Director receives a quarterly Service Award in the form of LNC
stock units (up to a maximum of 40 Service Awards). As with Bonus Awards,
Service Awards are credited to a non-qualified deferred compensation account
established for each Non-Employee Director. Service Awards are based upon a
formula that takes into account the Non-Employee Director's age upon election to
the Board, the annual retainer and an assumed minimum return on LNC Common
Stock.

Certain Death Benefits. If a Non-Employee Director was a director on January 1,
1996, he or she could choose either to receive Service Awards under the DVSP or
to continue participating in the Retirement Plan (described below). However, if
a Non-Employee Director has elected to receive Service Awards, but dies prior to
retirement from the Board, the value of his or her Service Award account will
not be less than the lump sum death benefit that would have been payable under
the Retirement Plan.

Retirement Benefits

Non-Employee Directors who were directors on January 1, 1996 and did not elect
                                                                     ---
to receive Service Awards under the DVSP continue to be eligible for retirement
benefits under the Retirement Plan. The annual benefit payable to a Non-Employee
Director under the Retirement Plan is 0.833% of the director's retainer during
the last year he or she was a director, multiplied by the number of months he or
she served on the Board (up to a maximum of 120 months). A director may receive
his or her retirement benefit under the Retirement Plan either in a single lump
sum or in monthly payments beginning at the later of retirement from the LNC
Board or age 65. If the director dies prior to the date retirement benefits
start, the death benefit will be paid to his or her beneficiary. Only one
director participates in the Retirement Plan. Non-Employee Directors who were
first elected to the Board after January 1, 1996 have no right to retirement
benefits other than Service Awards, as discussed above.

                     Fees Payable to Independent Auditors

Below are fees incurred by LNC and its affiliates for fiscal year 2000
professional services provided by Ernst & Young LLP ("E&Y"), LNC's independent
auditors.

Audit Fees - Fees for the annual audit and interim reviews of the consolidated
- ----------
financial statements of LNC for fiscal year 2000 were $2,052,699, or 24.72% of
total E&Y fees.

                                       22
<PAGE>

Financial Information Systems Design and Implementation Fees - No fees were
- ------------------------------------------------------------
incurred for Financial Information Systems Design and Implementation for fiscal
year 2000.

All Other Fees - Fees for the "All Other" category ($6,249,679 or 75.28% of
- --------------
total E&Y fees) consist of: (1) $5,255,455 (63.3%) for audit related services,
primarily audits of financial statements of subsidiaries and other affiliated
entities that are required by law, (e.g., audits of financial statements of
insurance companies, separate accounts, investment companies, investment
advisors and broker dealers) and (2) $994,224 (11.98%) for all other fees,
consisting principally of tax compliance and advisory services.

The Audit Committee of the Board has considered whether the provision of
services covered by the above SEC-defined service fee categories, "Financial
Information Systems Design and Implementation Fees" and "All Other Fees," is
compatible with maintaining E&Y's independence.

                            AUDIT COMMITTEE MATTERS

GENERAL

The Corporation's securities are listed on the New York Stock Exchange (the
"NYSE") and are governed by its listing standards. All the members of the Audit
Committee meet the independence standards of Sections 303.01(B)(2)(a) and (3) of
the NYSE listing standards. The Board has adopted a written charter for the
Audit Committee, a copy of which is attached to this Proxy Statement as Exhibit
4.

AUDIT COMMITTEE REPORT

The Audit Committee has reviewed and discussed with management the audited
financial statements for the fiscal year ended December 31, 2000. The Audit
Committee has also discussed with the Corporation's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communications with Audit Committees. Additionally, the Audit Committee has
received the written disclosures and representations from the independent
auditors required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with the independent
auditors the independent auditor's independence.

Based upon the review and discussions referred to in this report, the Audit
Committee recommended to the Board that the audited financial statements for the
fiscal year ended December 31, 2000 be included in the Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 2000 for filing with
the Securities and Exchange Commission./2/

                                      J. Patrick Barrett, Chair
                                      Thomas D. Bell, Jr.
                                      John G. Drosdick
                                      Eric G. Johnson
                                      Gilbert R. Whittaker, Jr.

_____________________________
/2./ Pursuant to Item 306(c) of Regulation S-K and Item 7(e)(3)(v) of Schedule
14A promulgated by the Securities and Exchange Commission ("SEC"), the
information included under "Audit Committee Matters," including the Audit
Committee Report, shall not be deemed to be "soliciting material" or to be
"filed" with the SEC, except to the extent the Corporation specifically requests
that such information be treated as soliciting material or specifically
incorporates such information by reference into a document filed with the SEC
under the Exchange Act or under the Securities Act of 1933, as amended.

                                       23
<PAGE>

                            COMPARISON OF FIVE-YEAR
                            CUMULATIVE TOTAL RETURN

The graph set forth below shows a five-year comparison of the yearly performance
of the Corporation's cumulative total shareholder return (change in the year-end
stock price plus reinvested dividends), based on a hypothetical investment of
$100, with the S&P 500 Composite Index and an index of peer companies selected
by the Corporation.

                               PERFORMANCE GRAPH
                         AMONG LNC, S&P 500 PEER GROUP

                                    [GRAPH]

                                 1995    1996    1997    1998    1999    2000
               LNC              100.00  101.50  156.11  167.62  167.93  204.80
               S&P 500          100.00  122.96  163.98  210.84  255.22  231.98
               Peer Group       100.00  130.17  187.55  233.63  197.45  238.78

Companies in the Peer Group are as follows:

          American General Corporation     Liberty Financial Companies, Inc.
          AmerUs Group Co.                 Nationwide Financial Services, Inc.
          Conseco, Inc.                    Reinsurance Group of America
          Jefferson-Pilot Corporation      Torchmark Corporation

Companies in the Peer Group are publicly traded companies with business units
which are considered to be significant competitors of major business units of
the Corporation, and their returns have been weighted for stock market
capitalization. The Peer Group is the same as last year's Peer Group except for
Equitable Companies, Inc., Hartford Life, Inc., and Reliastar Financial
Corporation. Equitable Companies, Inc., was acquired by AXA Group. Hartford Life
Inc. was acquired by Hartford Financial Group. Reliastar Financial Corporation
was acquired by ING Groep NV. Because financial information

                                       24
<PAGE>

for these three companies on a stand alone basis is no longer publicly
available, these three companies are no longer part of LNC's Peer Group.

The Performance Graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Corporation specifically incorporates this
graph by reference, and shall not otherwise be deemed filed under such Acts.

There can be no assurance that the Corporation's stock performance will continue
into the future with the same or similar trends depicted in the preceding graph.
The Corporation will not make or endorse any predictions as to future stock
performance.

The Corporation's long term incentive programs are designed to reward management
for consistently high financial performance relative to peers. Performance
measures for long term incentive cycles beginning in 2001 and running through
2003 are total shareholder return, growth in operating income per diluted share
and return on equity. Peer companies used for these relative performance
measures are selected with a view toward picking companies that represent the
strongest performers in the markets in which the Corporation competes.
Consistent with this philosophy, appropriate changes in the peer group for the
Corporation's long term incentive programs will occasionally be necessary to
reflect current competitive conditions. Based upon current conditions, the
Corporation anticipates that peer company comparisons for these long term
incentive programs will include: Allmerica Financial Corporation, American
General Corporation, John Hancock Financial Services, Inc., MetLife, Inc.,
Jefferson Pilot Corporation, Manulife Financial Corporation, Sun Life Financial
Services CDA, Inc., MONY Group, Inc., Nationwide Financial Services and Hartford
Financial Services Group, Inc.

                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                   TABLE A
- ------------------------------------------------------------------------------------------------------
                                            SECURITY OWNERSHIP OF
                                   DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
======================================================================================================

          NAME                   AMOUNT OF LNC               LNC STOCK           TOTAL OF LNC
                                 COMMON STOCK                  UNITS                COMMON
                                 AND NATURE OF                                    STOCK AND
                                  BENEFICIAL                                     STOCK UNITS
                                 OWNERSHIP/1/
=====================================================================================================
    <S>                          <C>                         <C>                 <C>
    J. Patrick Barrett                  16,501                     14,454               30,955
- -----------------------------------------------------------------------------------------------------
    Thomas D. Bell, Jr.                  5,501                      3,363                8,864
- -----------------------------------------------------------------------------------------------------
    Jon A. Boscia                      629,118                     40,559              669,677
- -----------------------------------------------------------------------------------------------------
    Jenne K. Britell                         0                          0                    0
- -----------------------------------------------------------------------------------------------------
    John G. Drosdick                       686                        244                  930
- -----------------------------------------------------------------------------------------------------
    John H. Gotta                       65,677                      2,323               68,000
- -----------------------------------------------------------------------------------------------------
    Charles E. Haldeman, Jr.           162,625                      4,062              166,687
- -----------------------------------------------------------------------------------------------------
    Jack D. Hunter                     345,133                      5,496              350,629
- -----------------------------------------------------------------------------------------------------
    Eric G. Johnson                      2,745                      2,732                5,477
- -----------------------------------------------------------------------------------------------------
    M. Leanne Lachman                    7,461                     14,543               22,004
- -----------------------------------------------------------------------------------------------------
    John M. Pietruski                    9,551                      9,569               19,120
- -----------------------------------------------------------------------------------------------------
    Ron J. Ponder                        1,286                        586                1,872
- -----------------------------------------------------------------------------------------------------
    Lawrence T. Rowland                153,993                      3,999              157,992
- -----------------------------------------------------------------------------------------------------
    Jill S. Ruckelshaus                  5,461                        569                6,030
- -----------------------------------------------------------------------------------------------------
    Richard C. Vaughan                 256,472                     42,495              298,967
- -----------------------------------------------------------------------------------------------------
    Gilbert R. Whitaker, Jr.             5,551                     13,215               18,766
- -----------------------------------------------------------------------------------------------------
    Directors and Executive
    Officers as a group - 24         2,189,993                    231,757            2,421,750
    persons
- -----------------------------------------------------------------------------------------------------
</TABLE>

_______________________________
/1/ Each of these amounts represents less than 1% of the outstanding shares of
the Corporation's Common Stock as of March 1, 2001. As to shares beneficially
owned, each person has sole voting and investment power except that the
following persons each share voting and investment power with another person as
to the number of shares indicated: Mr. Boscia, 29,302 shares and Mr. Gotta,
2,665 shares. The number of shares which each person named in this table has a
right to acquire pursuant to Rule 13d-3(d)(1) is as follows: Mr. Boscia, 448,000
shares; Mr. Gotta, 38,050 shares; Mr. Haldeman, 50,625 shares; Mr. Hunter,
195,340 shares; and Mr. Vaughan, 213,415 shares. In addition, the following
persons have sole voting power (and no investment power) as to the number of
shares indicated: Mr. Barrett, 5,501 shares; Mr. Bell, 5,501 shares; Mr. Boscia,
100,000 shares; Mr. Drosdick, 686 shares; Mr. Gotta, 20,486 shares; Mr.
Haldeman, 112,000 shares, Mr. Hunter, 25,000 shares; Mr. Johnson, 2,745 shares;
Ms. Lachman, 5,461 shares; Mr. Pietruski, 5,551 shares; Mr. Ponder, 1,286
shares; Ms. Ruckelshaus, 5,461 shares; Mr. Vaughan, 36,000 shares and Dr.
Whitaker, 5,551 shares. In addition, the shares listed above include certain
shares over which the individual exercises no formal voting or investment power:
Mr. Boscia, 22,168 shares (held directly by spouse); Mr. Hunter, 61,485 shares
(held by spouse's estate) and Mr. Vaughan, 5,702 shares (held in spouse's
trust).

                                       26
<PAGE>

                                    TABLE B

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Based solely on a review by the Corporation of the filings of Schedules 13G and
13D filed with the Securities and Exchange Commission and provided to the
Corporation, the Corporation was not, as of the Record Date, aware of anyone who
owned greater than 5% of the Corporation's Common Stock or more than 5% of the
Corporation's Preferred Stock.

                                       27
<PAGE>

<TABLE>
<CAPTION>
                                                              TABLE C
- ------------------------------------------------------------------------------------------------------------------------------------
                                            SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                     LONG-TERM COMPENSATION
                                             ANNUAL COMPENSATION              --------------------------------------
                                                                                        AWARDS             PAYOUT
- ------------------------------------------------------------------------------------------------------------------------------------
        (a)                   (b)         (c)       (d)          (e)              (f)            (g)         (h)            (i)
                                                                                             SECURITIES
                                                                OTHER         RESTRICTED     UNDERLYING                   ALL OTHER
     NAME AND                                                   ANNUAL        STOCK           OPTIONS/       LTIP          COMPEN-
PRINCIPAL POSITION            YEAR      SALARY    BONUS/2/      COMPEN-       AWARDS/4/        SARs/6/     PAYOUT(S)       SATION/9/
                                          ($)       ($)         SATION/3/        ($)             (#)        ($)/7,8/          ($)
                                                                 ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>           <C>           <C>            <C>           <C>            <C>
JON A. BOSCIA                 2000      750,000   3,500,00           -0-           -0-         300,000     4,697,691         55,969
Chairman and CEO              1999      751,548   1,100,00       212,194           -0-         204,228        33,455        138,215
of LNC                        1998      655,769   3,624,00           -0-           -0-         220,000           -0-         92,904

- ------------------------------------------------------------------------------------------------------------------------------------
CHARLES E.                    2000      800,000   5,710,85           -0-     3,965,625/5/      202,500       540,612        134,750
HALDEMAN, JR./1/              1999          n/a        n/a           n/a           n/a             n/a           n/a            n/a
President and CEO,            1998          n/a        n/a           n/a           n/a             n/a           n/a            n/a
Lincoln National
Investments and
Delaware Management

- ------------------------------------------------------------------------------------------------------------------------------------
RICHARD C.                    2000      496,000    882,841           -0-           -0-         100,000     1,717,041         24,749
VAUGHAN                       1999      468,133    253,000           -0-           -0-          60,000        24,579         65,451
Executive Vice                1998      430,000   1,040,00           -0-           -0-          52,000           -0-         43,087
President and CFO of LNC

- ------------------------------------------------------------------------------------------------------------------------------------
JACK D. HUNTER                2000      435,000    764,497           -0-           -0-          66,198     1,174,390         20,101
Executive Vice                1999      411,272    272,000           -0-           -0-          60,548        24,774         57,037
President and General         1998      387,000    880,000           -0-           -0-          57,840        28,337         37,343
Counsel of LNC

- ------------------------------------------------------------------------------------------------------------------------------------
JOHN H. GOTTA                 2000      371,346    720,638           -0-           -0-          70,000       921,751          7,009
CEO, Life Insurance,          1999      260,000    290,000           -0-           -0-          23,800           -0-         17,644
The Lincoln National          1998      210,615    258,000           -0-       208,144          25,200           -0-         16,765
Life Insurance Company


- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

__________________________
/1/ Mr. Haldeman's employment with the Corporation commenced in 2000; therefore,
no information is disclosed for 1999 and 1998.

/2/ Includes annual incentive awards for 2000, 1999 and 1998 awarded under the
1997 Incentive Compensation Plan ("ICP"). In addition to the ICP awards, the
amounts shown for 1998 reflect discretionary bonuses awarded for 1998 as
follows: Mr. Boscia, $124,000; Mr. Vaughan, $25,000; and Mr. Hunter, $15,000.

/3/ Perquisites and other personal benefits of the Named Executive Officers,
other than Mr. Boscia in 1999, did not exceed the lesser of $50,000 or 10% of
the total base salary and annual bonus for the relevant Named Executive Officer
during the years reported in the table and, therefore, are not included in the
table. Amounts reflected for Mr. Boscia for 1999 include reimbursement of
moving-related expenses incurred in connection with the relocation of the
Corporation's executive offices from Fort Wayne, Indiana to Philadelphia,
Pennsylvania during 1999; in addition, the amount shown for Mr. Boscia reflects
the difference ($141,747) between the cost to Mr. Boscia of his home and the
price at which his home was sold in connection with such relocation. Amounts (if
any) received by the other Named Executive Officers in connection with such
relocation did not exceed the thresholds described above.

                                       28
<PAGE>

/4/ See note 7 for a description of shares of restricted stock awarded in 1998
for a 1998-2000 Performance Cycle under the ICP. The number and aggregate value
of restricted stock holdings, including restricted stock units, of the Name
Executive Officers as of December 31, 2000, are as follows: Mr. Boscia, 108,055
shares ($5,112,082); Mr. Haldeman, Jr., 116,063 shares, ($5,490,941); Mr.
Vaughan, 38,900 shares ($1,840,359); Mr. Hunter, 27,014 shares ($1,278,032); and
Mr. Gotta, 22,509 shares ($1,064,901). As of December 31, 2000, the number and
value of the aggregate restricted stock holdings (including restricted stock
units) of all employees of the Corporation were 801,509.53 shares representing a
total value of $37,919,416.

/5/ Represents hiring bonus awarded on January 3, 2000 in connection with Mr.
Haldeman's employment. Those shares, which are subject to lapse of time and
continued service requirements, are scheduled to vest on January 3, 2003.

/6/ Reflects the impact of a 2-for-1 stock split effected during 1999.

/7/ During 1998, the Compensation Committee awarded to certain of the Named
Executive Officers shares of restricted stock under the ICP relating to a
1998-2000 Performance Cycle, which shares were subject to performance-based
conditions to vesting, in addition to lapse of time and/or continued service
with the Corporation. Certain of those awards were reported in the 1998 proxy
statement. Consistent with the 1998 Compensation Committee resolution
establishing the 1998-2000 Performance Cycle, Mr. Gotta was awarded an
additional 8,000 shares in 2000 (subject to the same terms and conditions as
other shares awarded for the 1998-2000 Performance Cycle) to reflect his
promotion in 1999 to his current position, and, in January 2000, Mr. Haldeman
received a grant of 12,000 shares (subject to the same terms and conditions as
other shares awarded for the 1998-2000 Performance Cycle) in connection with his
employment with the Corporation. In March 2001, the Compensation Committee
determined that the corporate performance criteria applicable to the restricted
shares under the 1998-2000 Performance Cycle had been fully achieved and chose
not to reduce the amount of those awards. Accordingly, those awards are being
reported in the LTIP Payout(s) column based on the "fair market value" of those
awards (i.e., the average of the high and low trading price on the day
immediately preceding the date of the Compensation Committee's decision
($43.475) multiplied by the number of restricted shares). However, those shares
are still subject to lapse of time and continued service requirements that
generally lapse on the third anniversary of January 1 of the year next
succeeding the applicable performance cycle. Awards made under the ICP for the
one-year Performance Cycles that ended in 2000, 1999 and 1998 are reflected in
the "Bonus" column (column b).

/8/ The amounts shown in column h for 2000, 1999 and 1998 include dividend
equivalents paid in cash (or credited to the Corporation's deferred compensation
plan) with respect to restricted stock or restricted stock units that vested
during the relevant year. The amounts shown for 2000 include dividend
equivalents credited on restricted shares that vested during 2000 as follows:
Mr. Vaughan, $25,907; and Mr. Gotta, $7,906. All amounts shown for 1999 and 1998
represent dividend equivalents.

/9/ Amounts included in the All Other Compensation column are amounts
contributed or accrued for the Named Executive Officers under the Corporation's
Employee's Savings and Profit-Sharing Plan, the related supplemental savings
plans and the dollar value of insurance premiums paid by the Corporation. The
amounts contributed to the Profit-Sharing Plan and accrued supplements for
fiscal 2000 are as follows: Mr. Boscia, $2,500; Mr. Haldeman, $0; Mr. Vaughan,
$7,440; Mr. Hunter, $5,615; and Mr. Gotta, $5,479. The amounts of insurance
premiums for fiscal 2000 are as follows: Mr. Boscia, $49,740; Mr. Haldeman, Jr.,
$130,865; Mr. Vaughan, $15,779; Mr. Hunter, $12,851; and Mr. Gotta, $0. In
addition, the amounts shown for 1999 include additional amounts contributed to
the Profit-Sharing Plan and accrued supplements for fiscal 2000 after last
year's proxy statement was mailed to stockholders. Those amounts are as follows:
Mr. Boscia, $42,500; Mr. Vaughan, $22,006; and Mr. Hunter, $19,445.

                                       29
<PAGE>

                                    TABLE D

            Long-Term Incentive Plans -- Awards in Last Fiscal Year

No awards were made by the Corporation during 2000 under its Long-Term Incentive
Plans with respect to performance of the Corporation after 2000. For information
regarding awards made under the ICP in connection with a 1998-2000 Performance
Cycle, reference should be made to the LTIP Payout(s) column (column h) of the
Summary Compensation Table.

                                       30
<PAGE>

                                    TABLE E

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                    OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                             POTENTIAL REALIZABLE VALUE
                                    INDIVIDUAL GRANTS                                        AT ASSUMED ANNUAL RATES OF
                                                                                              STOCK PRICE APPRECIATION
                                                                                                  FOR OPTION TERM
- ------------------------------------------------------------------------------------------------------------------------------------
       (a)                  (b)                 (c)              (d)             (e)             (f)             (g)

                          NUMBER OF
                          SECURITIES        % OF TOTAL
                          UNDERLYING        OPTIONS/SARs
                          OPTIONS/SARs      GRANTED TO       EXERCISE OR
                          GRANTED/1,2/      EMPLOYEES IN     BASE PRICE/      EXPIRATION
       NAME                 (#)             FISCAL YEAR/3/   ($/SHARES)         DATE/5/         5%/($)/            10%/($)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>              <C>              <C>              <C>                <C>
 Jon A. Boscia                 300,000             2.773%        24.72         3/09/10         4,663,272          11,818,221

- ------------------------------------------------------------------------------------------------------------------------------------
 Charles E.
 Haldeman, Jr.                 202,500            1.8718%        24.72         3/09/10         3,147,708           7,977,299
- ------------------------------------------------------------------------------------------------------------------------------------

 Richard C. Vaughan            100,000            0.9243%        24.72         3/09/10         1,554,424           3,939,407

- ------------------------------------------------------------------------------------------------------------------------------------
 Jack D. Hunter                 60,000            0.5546%        24.72         3/09/10           932,654           2,363,644
                                 6,198            0.0573%        44.72         5/13/02            25,192              51,350
                                 -----            -------                                         ------              ------
                          total 66,198      total 0.6119%                                  total 957,846     total 2,414,994
- ------------------------------------------------------------------------------------------------------------------------------------

 John H. Gotta                  70,000            0.6470%        24.72         3/09/10         1,088,097           2,757,585

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

_____________________
/1/  Options granted on March 9, 2000 are exercisable starting 12 months after
the grant date with respect to 25% of the shares granted and with an additional
25% of the option shares granted becoming exercisable on each successive
anniversary, with full vesting occurring on the date of the first to occur of
death, disability, retirement or a change of control of the Corporation.

/2/  On July 31, 2000, Mr. Hunter received a reload grant of 6,198 options in
connection with his exercise of 20,000 options granted on May 13, 1992. Reload
options are exercisable two years from the date of grant of the reload option if
the fair market value of LNC stock is 125% or more of the reload option price,
with earlier exercise permitted on the date of the first to occur of death,
disability, retirement, one month prior to the end of the ten-year term of the
initial option or a change of control of the Corporation.

/3/  The Corporation granted options and SARs representing 10,818,555 shares to
employees in fiscal year 2000.

/4/  The exercise price and tax withholding obligations related to exercise may
be paid by delivery of mature shares or by offset of the underlying shares,
subject to certain conditions.

/5/  The options granted March 9, 2000 were granted for a term of 10 years,
subject to earlier forfeiture in certain events related to termination of
employment. The reload options discussed in footnote 2 above were granted for
the term of the initial options, subject to earlier forfeiture in certain events
related to termination of employment.

                                       31
<PAGE>

                                    TABLE F

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                        AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                               AND FISCAL YEAR-END OPTION/SAR VALUES
- ------------------------------------------------------------------------------------------------------------------------------------
      (a)                  (b)                (c)                      (d)                                   (e)

                                                               NUMBER OF UNEXERCISED             VALUE OF UNEXERCISED IN-THE-
                                                            OPTIONS HELD AT DECEMBER 31,            MONEY OPTIONS HELD AT
                                                                       2000                          DECEMBER 31, 2000/1/
- ------------------------------------------------------------------------------------------------------------------------------------
                          SHARES
                          ACQUIRED       VALUE REALIZED
        NAME                ON                ($)           EXERCISABLE    UNEXERCISABLE         EXERCISABLE        UNEXERCISABLE
                          EXERCISE
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>            <C>                <C>            <C>                   <C>                <C>
     Jon A. Boscia            8,000          185,380            373,000          573,000           5,898,800            7,271,270

- ------------------------------------------------------------------------------------------------------------------------------------

     Charles E.
     Haldeman, Jr.                0                0                  0          202,500                   0            4,574,475

- ------------------------------------------------------------------------------------------------------------------------------------

     Richard C. Vaughan           0                0            173,648          183,500           3,232,548            2,544,010

- ------------------------------------------------------------------------------------------------------------------------------------

     Jack D. Hunter          20,000          617,175            180,340          146,698           3,303,948            1,656,463

- ------------------------------------------------------------------------------------------------------------------------------------

     John H. Gotta                0                0             18,550          100,450              55,111            1,636,411

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

_______________________
/1/  Based on the closing price on the New York Stock Exchange Composite
Transactions ("NYSE") of the Corporation's Common Stock on December 31, 2000
($47.31).

                                       32
<PAGE>

                                    TABLE G

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
                                                           PENSION TABLE
- -------------------------------------------------------------------------------------------------------------------------
                               ESTIMATED ANNUAL RETIREMENT BENEFIT FOR CREDITED YEARS OF SERVICE/1,3/
               ----------------------------------------------------------------------------------------------------------
Final
Average                 10           15           20           25           30           35           40           45
Salary/2/              Years        Years        Years        Years        Years        Years        Years        Years
- -------------------------------------------------------------------------------------------------------------------------
<S>                  <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
$  300,000           $ 49,512     $ 74,267     $ 99,023     $123,779     $148,535     $173,290     $180,790     $188,290
- -------------------------------------------------------------------------------------------------------------------------
   350,000             58,012       87,017      116,023      145,029      174,035      203,040      211,790      220,540
- -------------------------------------------------------------------------------------------------------------------------
   400,000             66,512       99,767      133,023      166,279      199,535      232,790      242,790      252,790
- -------------------------------------------------------------------------------------------------------------------------
   450,000             75,012      112,517      150,023      187,529      225,035      262,540      273,790      285,040
- -------------------------------------------------------------------------------------------------------------------------
   500,000             83,512      125,267      167,023      208,779      250,535      292,290      304,790      317,290
- -------------------------------------------------------------------------------------------------------------------------
   550,000             92,012      138,017      184,023      230,029      276,035      322,040      335,790      349,540
- -------------------------------------------------------------------------------------------------------------------------
   600,000            100,512      150,767      201,023      251,279      301,535      351,790      366,790      381,790
- -------------------------------------------------------------------------------------------------------------------------
   650,000            109,012      163,517      218,023      272,529      327,035      381,540      397,790      414,040
- -------------------------------------------------------------------------------------------------------------------------
   700,000            117,512      176,267      235,023      293,779      352,535      411,290      428,790      446,290
- -------------------------------------------------------------------------------------------------------------------------
   750,000            126,012      189,017      252,023      315,029      378,035      441,040      459,790      478,540
- -------------------------------------------------------------------------------------------------------------------------
   800,000            134,512      201,767      269,023      336,279      403,535      470,790      490,790      510,790
- -------------------------------------------------------------------------------------------------------------------------
   850,000            143,012      214,517      286,023      357,529      429,035      500,540      521,790      543,040
- -------------------------------------------------------------------------------------------------------------------------
   900,000            151,512      227,267      303,023      378,779      454,535      530,290      552,790      575,290
- -------------------------------------------------------------------------------------------------------------------------
   950,000            160,012      240,017      320,023      400,029      480,035      560,040      583,790      607,540
- -------------------------------------------------------------------------------------------------------------------------
 1,000,000            168,512      252,767      337,023      421,279      505,535      589,790      614,790      639,790
- -------------------------------------------------------------------------------------------------------------------------
 1,050,000            177,012      265,517      354,023      442,529      531,035      619,540      645,790      672,040
- -------------------------------------------------------------------------------------------------------------------------
 1,100,000            185,512      278,267      371,023      463,779      556,535      649,290      676,790      704,290
- -------------------------------------------------------------------------------------------------------------------------
 1,150,000            194,012      291,017      388,023      485,029      582,035      679,040      707,790      736,540
- -------------------------------------------------------------------------------------------------------------------------
 1,200,000            202,512      303,767      405,023      506,279      607,535      708,790      738,790      768,790
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

___________________
/1/  Amounts shown reflect estimated annual retirement benefits payable on a
straight life annuity basis to participating employees, including the Named
Executive Officers, under the Corporation's retirement plans, which cover most
officers and other employees on a non-contributory basis. Such benefits reflect
a reduction to recognize in part the Corporation's cost of Social Security
Benefits related to service for the Corporation. This table assumes retirement
at age 65 (current normal retirement date), and at age 65, the following
individuals will have the number of years credit service indicated: Mr. Boscia,
34; Mr. Haldeman, 13; Mr. Vaughan, 24; Mr. Hunter, 40; and Mr. Gotta, 22.

/2/  Final average salary is the average of an employee's base salary paid in
any consecutive 60-month period during an employee's last ten years of active
employment which produces the highest average salary. The base salary for the
Named Executive Officers is reflected in Column (c) of the Summary Compensation
Table on page 28.

/3/  As a result of limitations under the Internal Revenue Code, a portion of
these amounts will be paid under supplemental benefit plans established by the
Corporation to provide benefits (included in this table) which would exceed
these limits.

                                       33
<PAGE>

           ITEM 2 - AMENDED AND RESTATED INCENTIVE COMPENSATION PLAN

In 1997, the Board of Directors adopted, and the stockholders of the Corporation
approved, the 1997 Incentive Compensation Plan (the "1997 ICP"). That plan, as
amended and restated (entitled the "Amended and Restated Lincoln National
Corporation Incentive Compensation Plan" and referred to in this Proxy Statement
as the "Amended and Restated Plan"), is being submitted for reapproval by the
Corporation's shareholders. Reapproval by shareholders once every five years is
required under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), in order to satisfy the conditions necessary for the Corporation
to exclude awards under the plan from the $1 million limit on the Corporation's
federal income tax deductions for compensation payable to certain executive
officers. The only material difference between the 1997 ICP and the Amended and
Restated Plan is that the number of shares authorized to be awarded under the
Amended and Restated Plan is being increased by authorizing an additional
9,000,000 shares. As of March 20, 2001, 542,020 shares remained available (i.e.,
not issued or allocated to satisfy outstanding awards) under the 1997 ICP./3/
Approval of the Amended and Restated Plan requires that the votes cast for
approval of the Amended and Restated Plan exceed the votes cast against approval
of the Amended and Restated Plan, provided that at least a majority of the
shares eligible to be voted on Item 2 are actually cast. For these purposes
abstentions, but not broker non-votes, will be treated as votes cast on Item 2.

The Board of Directors believes that attracting and retaining key employees is
essential to the Corporation's growth and success. In addition, the Board
believes that the long term success of the Corporation is enhanced by a
competitive and comprehensive compensation program, which may include tailored
incentives designed to motivate and reward such persons for outstanding service,
including awards that link compensation to applicable measures of the
Corporation's performance and the creation of shareholder value. Such awards
will enable the Corporation to attract and retain key employees and enable such
persons to acquire and/or increase their proprietary interest in the Corporation
and thereby align their interests with the interests of the Corporation's
shareholders. In addition, the Board has concluded that the Compensation
Committee of the Board (the "Committee") should be given as much flexibility as
possible to provide for annual and long-term incentive awards contingent on
performance.

The following is a brief description of the material features of the Amended and
Restated Plan. Such description is qualified in its entirety by reference to the
full text of the Amended and Restated Plan, which is attached hereto as Exhibit
3.

Types of Awards. The terms of the Amended and Restated Plan provide for grants
of stock options, stock appreciation rights ("SARs"), restricted stock, deferred
stock units, other stock-related awards, and performance or annual incentive
awards that may be settled in cash, stock, or other property ("Awards").

Shares Subject to the Amended and Restated Plan; Annual Per-Person Limitations.
Under the Amended and Restated Plan, the total number of shares of the
Corporation's Common Stock reserved and available for delivery to participants
in connection with Awards (including the shares remaining available for issuance
under the 1997 ICP, the additional shares being approved hereunder, and shares
relating to previous awards) is 32,226,512. The total number of shares of Common
Stock with respect to which incentive stock options ("ISOs") may be granted
shall not exceed 2,000,000, and the total number of shares of Restricted Stock
that may be granted shall not exceed 5,889,512. Any shares of Common Stock
delivered under the Plan shall consist of authorized and unissued shares.

________________
/3/  The number of shares issuable under the 1997 ICP was adjusted in accordance
with the terms of the 1997 ICP to reflect the impact of a 2-for-1 stock split
effected in 1999.

                                       34
<PAGE>

In addition, the Amended and Restated Plan imposes individual limitations on the
amount of certain Awards in order to comply with Section 162(m) of the Code.
Under these limitations, during any fiscal year the number of options, SARs,
shares of restricted stock, units of deferred stock, shares of Common Stock
issued as a bonus or in lieu of other obligations, and other stock-based Awards
granted to any one participant shall not exceed 2,000,000 shares for each type
of such Award, subject to adjustment in certain circumstances. The maximum
amount that may be earned as an annual incentive award or other cash Award
(payable currently or on a deferred basis) in any fiscal year by any one
participant is $8,000,000, and the maximum amount that may be earned as a
performance award or other cash Award (payable currently or on a deferred basis)
in respect of a performance period by any one participant is $8,000,000.

The Committee is authorized to adjust the number and kind of shares subject to
the aggregate share limitations and annual limitations under the Amended and
Restated Plan and subject to outstanding Awards (including adjustments to
exercise prices and number of shares of options and other affected terms of
Awards) in the event that a dividend or other distribution (whether in cash,
shares, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event affects the
Common Stock so that an adjustment is appropriate. The Committee is also
authorized to adjust performance conditions and other terms of Awards in
response to these kinds of events or in response to changes in applicable laws,
regulations, or accounting principles.

Eligibility. Executive officers and other officers and employees, agents and
brokers of the Corporation or any subsidiary, including any such person who may
also be a director of the Corporation, shall be eligible to be granted Awards
under the Amended and Restated Plan. It is anticipated that approximately 1,200
persons will be eligible to receive Awards under the Amended and Restated Plan.

Administration. The Amended and Restated Plan will be administered by the
Committee. Subject to the terms and conditions of the Amended and Restated Plan,
the Committee is authorized to interpret the provisions of the plan, select
participants, determine the type and number of Awards to be granted and the
number of shares of Common Stock to which Awards will relate, specify times at
which Awards will be exercisable or settleable (including performance conditions
that may be required as a condition thereof), set other terms and conditions of
such Awards, prescribe forms of Award agreements, adopt, amend and rescind rules
and regulations relating to the Amended and Restated Plan, and make all other
determinations that may be necessary or advisable for the administration of the
Amended and Restated Plan. The Committee may, in its discretion, convert any
Award or the value of any Award under the Amended and Restated Plan, subject to
applicable laws and regulations, into Deferred Stock Units which will be
administered under the Lincoln National Corporation Deferred Compensation Plan
for Employees (the "Deferred Compensation Plan"). The Amended and Restated Plan
provides that Committee members shall not be personally liable, and shall be
fully indemnified, in connection with any action, determination, or
interpretation taken or made in good faith under the Amended and Restated Plan.
No award of stock options, SARs, restricted stock, deferred stock units or other
stock-related awards may be made under the Amended and Restated Plan prior to
the date on which the shareholders of the Corporation approve the adoption of
the Amended and Restated Plan.

Stock Options and SARs. The Committee is authorized to grant stock options,
including both ISOs that can result in potentially favorable tax treatment to
the participant and non-qualified stock options (i.e., options not qualifying as
ISOs), and SARs entitling the participant to receive the excess of the Fair
Market Value of a share of Common Stock on the date of exercise over the grant
price of the SAR. The exercise price per share subject to an option and the
grant price of a SAR is determined by the Committee, but must not be less than
the Fair Market Value of a share of Common Stock on the date of grant. On March
16, 2001, the fair market value of Common Stock (as determined in the manner set
forth in the Amended and Restated Plan) was $44.96 per share. The maximum term
of each option or SAR, the times at which each option or SAR will be
exercisable, and provisions requiring forfeiture of unexercised options or SARs
at or following termination of employment generally are fixed by the Committee,
except no option or SAR

                                       35
<PAGE>

may have a term exceeding ten years. Options may be exercised by payment of the
exercise price in cash, Common Stock, outstanding Awards, or other property
(possibly including notes or obligations to make payment on a deferred basis)
having a Fair Market Value equal to the exercise price, as the Committee may
determine from time to time. Methods of exercise and settlement and other terms
of the SARs are determined by the Committee. The Committee may include a
provision in an option permitting the grant of a new option when payment of the
exercise price of an option is made in shares of Common Stock. However, as
discussed below, the exercise price of an option may not be reduced (except as a
result of a change in the Corporation's capitalization) without shareholder
approval. See "Other Terms of Awards; No Repricing," below.

Restricted Stock and Deferred Stock Units. The Committee is authorized to grant
restricted stock and deferred stock units. Restricted stock is a grant of Common
Stock which may not be sold or disposed of, and which may be forfeited in the
event of certain terminations of employment and/or failure to meet certain
performance requirements, prior to the end of a restricted period specified by
the Committee. A participant granted restricted stock generally has all of the
rights of a shareholder of the Corporation, including the right to vote the
shares and to receive dividends thereon, unless otherwise determined by the
Committee. An Award of deferred stock units is credited to a bookkeeping reserve
account under the Deferred Compensation Plan. Such an Award confers upon a
participant the right to receive shares at the end of a specified deferral
period, subject to possible forfeiture of the Award in the event of certain
terminations of employment and/or failure to meet certain performance
requirements prior to the end of a specified restricted period (which restricted
period need not extend for the entire duration of the deferral period). Prior to
settlement, an Award of deferred stock units carries no voting or dividend
rights or other rights associated with share ownership, although dividend
equivalents may be granted, as discussed below.

Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is authorized
to grant shares as a bonus free of restrictions, or to grant shares or other
Awards in lieu of obligations to pay cash under other plans or compensatory
arrangements, subject to such terms as the Committee may specify.

Other Stock-Based Awards. The Amended and Restated Plan authorizes the Committee
to grant Awards that are denominated or payable in, valued by reference to, or
otherwise based on or related to shares. Such Awards might include convertible
or exchangeable debt securities, other rights convertible or exchangeable into
shares, purchase rights for shares, Awards with value and payment contingent
upon performance of the Corporation or any other factors designated by the
Committee, and Awards valued by reference to the book value of shares or the
value of securities of or the performance of specified subsidiaries. The
Committee determines the terms and conditions of such Awards, including
consideration to be paid to exercise Awards in the nature of purchase rights,
the period during which Awards will be outstanding, and forfeiture conditions
and restrictions on Awards.

Performance Awards, Including Annual Incentive Awards. The right of a
participant to exercise or receive a grant or settlement of an Award, and the
timing thereof, may be subject to such performance conditions as may be
specified by the Committee. In addition, the Amended and Restated Plan
authorizes specific annual incentive awards, which represent a conditional right
to receive cash, shares or other Awards upon achievement of preestablished
performance goals during a specified one-year period. Performance awards and
annual incentive awards granted to persons the Committee expects will, for the
year in which a deduction arises, be among the Chief Executive Officer and four
other most highly compensated executive officers (the "Named Executive
Officers"), will, if so intended by the Committee, be subject to provisions that
should qualify such Awards as "performance-based compensation" not subject to
the limitation on tax deductibility by the Corporation under Code Section
162(m).

The performance goals to be achieved as a condition of payment or settlement of
a performance award or annual incentive award will consist of (i) one or more
business criteria and (ii) a targeted level or levels of performance with
respect to each such business criterion. In the case of performance awards
intended to meet the requirements of Code Section 162(m), the business criteria
used must be one of those

                                       36
<PAGE>

specified in the Amended and Restated Plan, although for other participants the
Committee may specify any other criteria. The business criteria specified in the
Amended and Restated Plan are, as defined by the Committee: (1) earnings per
share; (2) revenues; (3) cash flow; (4) cash flow return on investment; (5)
return on assets, return on investment, return on capital, return on equity; (6)
economic value added; (7) operating margin; (8) net income; pretax earnings;
pretax earnings before interest, depreciation and amortization; pretax operating
earnings after interest expense and before incentives, service fees, and
extraordinary or special items; operating earnings; income from operations; (9)
total shareholder return; (10) any of the above goals as compared to the
performance of a published or special index deemed applicable by the Committee
including, but not limited to, the Standard & Poor's 500 Stock Index or a group
of comparator companies; and (11) any criteria comparable to those listed above
that shall be approved by the Committee.

In granting annual incentive or performance awards, the Committee may establish
unfunded award "pools," the amounts of which will be based upon the achievement
of a performance goal or goals using one or more of the business criteria
described in the preceding paragraph. During the first 90 days of a fiscal year
or performance period, the Committee will determine who will potentially receive
annual incentive or performance awards for that fiscal year or performance
period, either out of the pool or otherwise. After the end of each fiscal year
or performance period, the Committee will determine the amount, if any, of the
pool, the maximum amount of potential annual incentive or performance awards
payable to each participant in the pool, and the amount of any potential annual
incentive or performance award otherwise payable to a participant. The Committee
may, in its discretion, determine that the amount payable as an annual incentive
or performance award will be increased or reduced from the amount of any
potential Award, but may not exercise discretion to increase any such amount
intended to qualify as performance-based compensation under Code Section 162(m).

Subject to the requirements of the Amended and Restated Plan, the Committee will
determine other performance award and annual incentive award terms, including
the required levels of performance with respect to the business criteria, the
corresponding amounts payable upon achievement of such levels of performance,
termination and forfeiture provisions, and the form of settlement. Because of
the discretionary nature of the awards that may be made under the Amended and
Restated Plan, the benefits available under the plan are not readily
determinable. However, the Awards that may be made under the Amended and
Restated Plan are subject to the limitations discussed above under "Shares
Subject to the Amended and Restated Plan; Annual Per Person Limitations."

Other Terms of Awards; No Repricing. Awards may be settled in the form of cash,
Common Stock, other Awards, or other property, in the discretion of the
Committee. The Committee may require or permit participants to defer the
settlement of all or part of an Award in accordance with such terms and
conditions as the Committee may establish, including payment or crediting of
interest or dividend equivalents on deferred amounts, and the crediting of
earnings, gains, and losses based on deemed investment of deferred amounts in
specified investment vehicles. The Committee is authorized to place cash,
shares, or other property in trusts or make other arrangements to provide for
payment of the Corporation's obligations under the Amended and Restated Plan.
The Committee may condition any payment relating to an Award on the withholding
of taxes and may provide that a portion of any shares or other property to be
distributed will be withheld (or previously acquired shares or other property
surrendered by the participant) to satisfy withholding and other tax
obligations. Awards granted under the Amended and Restated Plan generally may
not be pledged or otherwise encumbered and are not transferable except by will
or by the laws of descent and distribution, or to a designated beneficiary upon
the participant's death, except that the Committee may, in its discretion,
permit transfers for estate planning or other purposes.

Awards under the Amended and Restated Plan are generally granted without a
requirement that the participant pay consideration in the form of cash or
property for the grant (as distinguished from the exercise), except to the
extent required by law. The Committee may, however, grant Awards in exchange for
other Awards under the Amended and Restated Plan, awards under other plans of
the Corporation, or

                                       37
<PAGE>

other rights to payment from the Corporation, and may grant Awards in addition
to and in tandem with such other Awards, awards, or rights as well.

Unless the Award agreement specifies otherwise, the Committee may cancel or
rescind Awards if the participant fails to comply with certain noncompetition,
confidentiality or intellectual property covenants. For instance, Awards may be
canceled or rescinded if the participant engages in competitive activity while
employed with the Corporation or within a specified period following termination
of employment. The Corporation may, in its discretion, in any individual case
provide for waiver in whole or in part of compliance with the noncompetition,
confidentiality or intellectual property covenants.

Notwithstanding any other provision of the Amended and Restated Plan, no option
that has been granted under the Amended and Restated Plan may be repriced,
replaced or regranted through cancellation, or otherwise modified without
shareholder approval (except in connection with a change of the Corporation's
capitalization), if the effect would be to reduce the exercise price for the
shares underlying the option.

Acceleration of Vesting. The Committee may, in its discretion, accelerate the
exercisability, the lapsing of restrictions, or the expiration of deferral or
vesting periods of any Award, and such accelerated exercisability, lapse,
expiration and vesting shall occur automatically in the case of a "change of
control" of the Corporation except to the extent otherwise determined by the
Committee at the date of grant. In addition, the Committee may provide that the
performance goals relating to any performance-based award will be deemed to have
been met upon the occurrence of any change of control. Upon the occurrence of a
change of control, except to the extent otherwise determined by the Committee at
the date of grant, options will become fully vested and exercisable and
restrictions on restricted stock and deferred stock units will lapse. "Change of
Control" is defined in the Amended and Restated Plan to include a variety of
events, including significant changes in the stock ownership of the Corporation
or a significant subsidiary, changes in the Corporation's board of directors,
certain mergers and consolidations of the Corporation or a significant
subsidiary, and the sale or disposition of all or substantially all the
consolidated assets of the Corporation.

Amendment and Termination of the Amended and Restated Plan. The Board of
Directors, or the Committee acting pursuant to authority delegated to it by the
Board, may amend, alter, suspend, discontinue, or terminate the Amended and
Restated Plan or the Committee's authority to grant Awards without further
shareholder approval, except shareholder approval must be obtained for any
amendment or alteration if required by law or regulation or under the rules of
any stock exchange or automated quotation system on which the shares are then
listed or quoted. Shareholder approval will not be deemed to be required under
laws or regulations, such as those relating to ISOs, that condition favorable
treatment of participants on such approval, although the Board may, in its
discretion, seek shareholder approval in any circumstance in which it deems such
approval advisable. Thus, shareholder approval will not necessarily be required
for amendments that might increase the cost of the Amended and Restated Plan or
broaden eligibility. Unless earlier terminated by the Board, the Amended and
Restated Plan will terminate at such time as no shares remain available for
issuance under the Amended and Restated Plan and the Corporation has no further
rights or obligations with respect to outstanding Awards under the Amended and
Restated Plan.

Federal Income Tax Implications of the Amended and Restated Plan. The following
is a brief description of the federal income tax consequences generally arising
with respect to Awards under the Amended and Restated Plan.

The grant of an option or SAR will create no tax consequences for the
participant or the Corporation. A participant will not recognize taxable income
upon exercising an ISO (except that the alternative minimum tax may apply). Upon
exercising an option other than an ISO, the participant must generally recognize
ordinary income equal to the difference between the exercise price and Fair
Market Value of the freely transferable and nonforfeitable shares acquired on
the date of exercise. Upon exercising a SAR, the

                                       38
<PAGE>

participant must generally recognize ordinary income equal to the cash or the
Fair Market Value of the freely transferable and nonforfeitable shares received.

Upon a disposition of shares acquired upon exercise of an ISO before the end of
the applicable ISO holding periods, the participant must generally recognize
ordinary income equal to the lesser of (i) the Fair Market Value of the shares
at the date of exercise of the ISO minus the exercise price, or (ii) the amount
realized upon the disposition of the ISO shares minus the exercise price.
Otherwise, a participant's disposition of shares acquired upon the exercise of
an option (including an ISO for which the ISO holding periods are met) or SAR
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis in such
shares (the tax basis generally being the exercise price plus any amount
previously recognized as ordinary income in connection with the exercise of the
option or SAR).

The Corporation generally will be entitled to a tax deduction equal to the
amount recognized as ordinary income by the participant in connection with an
option or SAR. The Corporation generally is not entitled to a tax deduction
relating to amounts that represent a capital gain to a participant. Accordingly,
the Corporation will not be entitled to any tax deduction with respect to an ISO
if the participant holds the shares for the ISO holding periods prior to
disposition of the shares.

With respect to Awards granted under the Amended and Restated Plan that result
in the payment or issuance of cash or shares or other property that is either
not restricted as to transferability or not subject to a substantial risk of
forfeiture, the participant must generally recognize ordinary income equal to
the cash or the Fair Market Value of shares or other property received. Thus,
deferral of the time of payment or issuance will generally result in the
deferral of the time the participant will be liable for income taxes with
respect to such payment or issuance. The Corporation generally will be entitled
to a deduction in an amount equal to the ordinary income recognized by the
participant.

With respect to Awards involving the issuance of shares or other property that
is restricted as to transferability and subject to a substantial risk of
forfeiture, the participant must generally recognize ordinary income equal to
the Fair Market Value of the shares or other property received at the first time
the shares or other property becomes transferable or is not subject to a
substantial risk of forfeiture, whichever occurs earlier. A participant may
elect to be taxed at the time of receipt of shares or other property rather than
upon lapse of restrictions on transferability or substantial risk of forfeiture,
but if the participant subsequently forfeits such shares or property, the
participant would not be entitled to any tax deduction, including as a capital
loss, for the value of the shares or property on which he previously paid tax.
The participant must file such election with the Internal Revenue Service within
30 days of the receipt of the shares or other property. The Corporation
generally will be entitled to a deduction in an amount equal to the ordinary
income recognized by the participant.

Awards that are granted, accelerated or enhanced upon the occurrence of a change
of control may give rise, in whole or in part, to "excess parachute payments"
within the meaning of Code Section 280G and, to such extent, will be non-
deductible by the Corporation and subject to a 20% excise tax payable by the
participant.

The foregoing summary of the federal income tax consequences in respect of the
Amended and Restated Plan is for general information only. Interested parties
should consult their own advisors as to specific tax consequences, including the
application and effect of foreign, state and local tax laws.

The Board of Directors recommends a vote FOR approval of the Amended and
Restated Plan.

                                       39
<PAGE>

                      ITEM 3 - 2001 SHAREHOLDER PROPOSAL

SHAREHOLDER PROPOSAL RELATING TO TOBACCO INVESTMENTS

Catholic Healthcare West of 1700 Montgomery Street, Suite 300, San Francisco,
California, is the holder of 400 shares of Common Stock and has caused the
following proposal to be included in this Proxy Statement. The Corporation is
not responsible for any of the contents of the language of the shareholder's
proposal which is set out below between the quotation marks. The Board of
Directors unanimously opposes this proposal for the reasons set forth in
Management's Statement in Opposition of the Shareholder Proposal which follows
the shareholder's proposal.

               "WHEREAS a July 7-9, 1995 editorial in USA Today declared:

                    Here's a grubby little health-care new item: According to a
                    commentary in the upcoming edition of the British medical
                    journal Lancet, major U.S. health insurers are large
                    investors in major U.S. tobacco companies. In other words,
                    the nation's merchants of care are partners with the
                    nation's merchants of death. . . . These investments grate
                    and gall. Every year, tobacco use is fatal for thousands of
                    Americans. For insurers to provide health care for those
                    suffering smokers on the one hand while investing in the
                    source of their misery on the other is unconscionable. And
                    hypocritical.

               - As shareholders, we are concerned about the ethical
               implications of investments in the tobacco industry by companies
               that sell life insurance, especially when they are paying out
               hundreds of millions of dollars to patients who are sick and
               dying as a result of tobacco use.
               - A March 1998 analysis by the U.S. Treasury Department found the
               nation loses $80 billion a year on goods and services otherwise
               produced by Americans who die prematurely or retire early because
               of smoking-related ills. The American Lung Association estimates
               the annual cost of treating tobacco-related illnesses to be $50
               billion a year for adult smokers and babies of women who smoke. -
               In 1996 the AMA called for mutual funds and health-conscious
               investors to refuse to own stock in tobacco companies, and for
               those same investors to divest from stocks and bonds in tobacco
               companies.
               - We believe it is inconsistent for an insurance company that
               sells life insurance to invest in tobacco equities and yet give
               preferential rates to non-smokers. Therefore we believe that the
               company should seriously review its stand related to these
               apparently contradictory positions on tobacco.

               RESOLVED: that shareholders request the Board to initiate a
               policy mandating no further purchases of tobacco equities in any
               of the portfolios under our direct unless it can be proven that
               tobacco use does not cause the illnesses and deaths that have
               been attributed to it. If the company cannot produce such proof,
               it shall divest itself of all tobacco stocks by January 1, 2002.

                                       40
<PAGE>

                             Supporting Statement

               Our Company exists to help people keep healthy. We support people
               not using tobacco, yet have no policy against investing in
               companies producing its products. Allstate, Chubb, UNUM, and
               other companies that sell life insurance have policies and/or
               practices that have resulted in prohibitions or limitations on
               their various investments in tobacco companies. Institutions like
               Harvard and Johns Hopkins, as well as The Maryland Retirement and
               Pension Systems have divested from all tobacco stocks. As the
               editorial noted above concludes: `Insurers have a responsibility
               to maximize returns. But they have a responsibility to hold down
               costs too.' Investing in tobacco while charging premiums based in
               part on the cost of treating tobacco-related illness mocks that
               obligation. If you think our Company should not contribute to
               peoples' illness and death by investing in tobacco, please vote
               YES for this resolution."

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THE
SHAREHOLDER PROPOSAL RELATING TO TOBACCO INVESTMENTS.

MANAGEMENT'S STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL

The Corporation's investment operations and policies are fundamental to the
Corporation's business and subject to the supervision of the Board of Directors
of the relevant subsidiary and various investment committees. The Corporation's
investment operations are focused upon providing customers with competitive
products and shareholders with an attractive investment. In managing the
Corporation's investments, management considers many factors that may affect the
current and future values of portfolio investments. Social policy considerations
are one of the many considerations that are taken into account in managing the
portfolios.

The shareholder proposal suggests that certain social policies should be the
principal factors considered in the Corporation's investment policies, limiting
the role that other investment and social factors play in the Corporation's
policies. The Board of Directors believes that such an approach is inconsistent
with sound investment practices. In that regard, the Corporation believes that
the shareholder proposal is inconsistent with the interests of the Corporation's
shareholders and customers.

For these reasons, the Board recommends a vote AGAINST the Proposal and your
proxy will be so voted unless you indicate otherwise on the proxy.

                                    GENERAL

RELATIONSHIP WITH INDEPENDENT AUDITORS

Ernst & Young LLP has been selected by the Board to be the independent auditors
to audit the consolidated financial statements of the Corporation for fiscal
year 2001. This firm and its predecessors have been engaged by the Corporation
in that capacity continuously since January 17, 1968. Fees paid to Ernst &Young
LLP during 2000 are disclosed above under "Fees Paid to Independent Auditors."
Representatives of Ernst & Young LLP will be present at the annual meeting of
shareholders, will be given an opportunity to make a statement if they so
desire, and will be available to respond to appropriate questions relating to
the audit of the Corporation's 2000 consolidated financial statements.

                                       41
<PAGE>

SHAREHOLDER PROPOSALS

To Be Included in the Corporation's Proxy Materials

Any shareholder proposals intended to be considered for inclusion in the proxy
materials for the Corporation's 2002 annual meeting of shareholders must be
received by the Corporation no later than December 11, 2001. All such proposals
should be sent to the Secretary of the Corporation.

To Be Presented In-Person at Shareholder Meetings

Shareholders wishing to propose matters for consideration at a meeting of
shareholders or to propose nominees for election as directors must follow the
procedures contained in the Corporation's Bylaws. Such procedures include giving
notice to the Secretary of the Corporation at least 90 and not more than 120
days prior to the first anniversary date of the annual meeting for the preceding
year. However, if and only if the annual meeting is not scheduled to be held
within a period that commences thirty (30) days before such anniversary date and
end thirty (30) days after such anniversary date (an annual meeting date outside
such period being referred to herein as an "Other Annual Meeting Date"), such
shareholder notice shall be given by the close of business on the later of (i)
the date ninety days prior to such Other Annual Meeting Date or (ii) the tenth
day following the date such Other Annual Meeting Date is first publicly
announced or disclosed. That notice must include:

 .    the name and address of the proposing shareholder (as it appears on the
     Corporation's stock records)

 .    a brief description of the business desired to be brought before the
     meeting

 .    the class and number of shares of the Corporation which are beneficially
     owned by the proposing shareholder

 .    a description of any interest of such proposing shareholder in the business
     proposed

There are additional requirements which may be applicable. The applicable bylaw
requirements are set forth in Exhibit 1 on page 44.

In the case of a shareholder-proposed nominee for director, the required notice,
in addition to meeting the above notice requirements, must also contain as to
each such person:

 .    the name, age, business address and residence address of such person

 .    the principal occupation or employment of such person

 .    the class and number of shares of the Corporation which are beneficially
     owned by such person

 .    any other information relating to such person that is required to be
     disclosed in solicitation of proxies for election of directors, or is
     otherwise required, in each case pursuant to Regulation 14A under the
     Exchange Act (including without limitation such person's written consent to
     being named in the proxy statement as a nominee and to serving as a
     director if elected)

 .    the qualifications of the nominee to serve as a director of the Corporation

The applicable Bylaw requirements regarding shareholder proposed nominees is set
forth in Exhibit 2 on page 45.

                                       42
<PAGE>

In the event any such matter is not brought before the meeting in accordance
with the Corporation's Bylaws, the individuals identified on the proxy card may,
if the matter will be voted on, vote the shares represented by proxies in their
discretion in the manner they believe to be in the best interests of the
Corporation. However, the person presiding at a meeting of shareholders (the
chairman) is authorized by the Bylaws, if the facts warrant, to determine that
the proposed business was not properly brought before the meeting, or was not
lawful or appropriate for consideration at the meeting or that a nomination for
director was not properly made. Upon a declaration of such determination by the
chairman, the proposed business shall not be transacted or the defective
nomination shall be disregarded, as the case may be. There are additional
requirements which may be applicable.

2001 Shareholder Proposals

Other than the shareholder proposal discussed in this Proxy Statement (see Item
3), no shareholder has raised an issue which is proper for consideration at the
Annual Meeting. To the extent permissible, your proxy will be voted in the
discretion of the proxy holders with respect to each matter properly brought
before the meeting that has not been enumerated in this Proxy Statement or for
which no specific direction was given on the proxy card.

ANNUAL REPORT

The Corporation's Annual Report to Shareholders for the fiscal year 2000 has
previously been mailed to shareholders of record at the relevant addresses
appearing on the Corporation's stock books. A copy of the Annual Report on Form
10-K will be provided on written request and without charge to each shareholder
requesting it. Write to Corporate Secretary, Lincoln National Corporation, 1500
Market Street, Suite 3900, Centre Square West, Philadelphia, Pennsylvania
19102-2112.

                                          For the Board of Directors,


                                          /s/ C. Suzanne Womack
                                          ----------------------------
                                          C. Suzanne Womack, Secretary
                                          April 10, 2001

                                       43
<PAGE>

                                   EXHIBIT 1

     Section 10. Notice of Shareholder Business. At any meeting of the
shareholders, only such business may be conducted as shall have been properly
brought before the meeting, and as shall have been determined to be lawful and
appropriate for consideration by shareholders at the meeting. To be properly
brought before an annual meeting, business must be (a) specified in the notice
of meeting given in accordance with Section 4 of this Article I, (b) otherwise
properly brought before the meeting by or at the direction of the board of
directors or the chief executive officer, or (c) otherwise properly brought
before the meeting by a shareholder. For business to be properly brought before
an annual meeting by a shareholder pursuant to clause (c) above, the shareholder
must have given timely notice thereof in writing to the secretary of the
corporation. To be timely, a shareholder's notice must be delivered to or mailed
and received at the principal office of the corporation, not less than ninety
days nor more than one hundred twenty days prior to the first anniversary date
of the annual meeting for the preceding year; provided, however, if and only if
the annual meeting is not scheduled to be held within a period that commences
thirty days before such anniversary date and ends thirty days after such
anniversary date (an annual meeting date outside such period being referred to
herein as an "Other Annual Meeting Date"), such shareholder notice shall be
given in the manner provided herein by the close of business on the later of (i)
the date ninety days prior to such Other Annual Meeting Date or (ii) the tenth
day following the date such Other Annual Meeting Date is first publicly
announced or disclosed. A shareholder's notice to the secretary shall set forth
as to each matter the shareholder proposes to bring before the meeting (a) a
brief description of the business desired to be brought before the meeting,
including the text of any proposal to be presented, (b) the name and address, as
they appear on the corporation's stock records, of the shareholder proposing
such business, (c) the class and number of shares of the corporation which are
beneficially owned by the shareholder, and (d) any interest of the shareholder
in such business. Only such business shall be brought before a special meeting
of shareholders as shall have been specified in the notice of meeting given in
accordance with Section 4 of this Article I. In no event shall the adjournment
of an annual meeting or special meeting, or any announcement thereof, commence a
new period for the giving of a shareholder's notice as provided in this Section
10. Notwithstanding anything in these bylaws to the contrary, no business shall
be conducted at a meeting except in accordance with the procedures set forth in
this Section 10. The person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the bylaws, or that business was
not lawful or appropriate for consideration by shareholders at the meeting, and
if he should so determine, he shall so declare to the meeting and any such
business shall not be transacted.

                                       44
<PAGE>

                                   EXHIBIT 2

     Section 11. Notice of Shareholder Nominees. Nominations of persons for
election to the board of directors of the corporation may be made at any annual
meeting of shareholders by or at the direction of the board of directors or by
any shareholder of the corporation entitled to vote for the election of
directors at the meeting. Such shareholder nominations shall be made pursuant to
timely notice given in writing to the secretary of the corporation in accordance
with Section 10 of this Article I. [Corporation's Note: Section 10 is attached
to this Proxy Statement as Exhibit 1.] Such shareholder's notice shall set
forth, in addition to the information required by Section 10, as to each person
whom the shareholder proposes to nominate for election or re-election as a
director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the corporation which are beneficially owned by
such person, (iv) any other information relating to such person that is required
to be disclosed in solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including without limitation such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director if elected), and (v) the qualifications of the nominee to
serve as a director of the corporation. In the event the board of directors
calls a special meeting of shareholders for the purpose of electing one or more
directors to the board of directors, any shareholder may nominate a person or
persons (as the case may be) for election to such position(s) as specified in
the notice of meeting, if the shareholder's notice of such nomination contains
the information specified in this Section 11 and shall be delivered to the
secretary of the corporation not later than the close of business on the tenth
day following the day on which the date of the special meeting and either the
names of the nominees proposed by the board of directors to be elected at such
meeting or the number of directors to be elected are publicly announced or
disclosed. In no event shall the adjournment of an annual meeting or special
meeting, or any announcement thereof, commence a new period for the giving of a
shareholder's notice as provided in this Section 11. No shareholder nomination
shall be effective unless made in accordance with the procedures set forth in
this Section 11. The person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that a shareholder nomination was
not made in accordance with the bylaws, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be disregarded.

                                       45
<PAGE>

                                   EXHIBIT 3

              Amended and Restated Lincoln National Corporation
                          Incentive Compensation Plan


                         LINCOLN NATIONAL CORPORATION
- --------------------------------------------------------------------------------

                          INCENTIVE COMPENSATION PLAN
- --------------------------------------------------------------------------------
                    (As Amended and Restated March 8, 2001)

                                       46
<PAGE>

1.    Purpose.................................................................

2.    Definitions.............................................................

3.    Administration..........................................................
      (a)   Authority of the Committee........................................
      (b)   Manner of Exercise of Committee...................................
      (c)   Limitation of Liability...........................................

4.    Stock Subject to Plan...................................................
      (a)   Overall Number of Shares Available for Delivery...................
      (b)   Application of Limitation to Grants of Awards.....................
      (c)   Availability of Shares Not Delivered Under Awards.................

5.    Eligibility; Per-Person Award Limitations...............................

6.    Specific Terms of Awards................................................
      (a)   General...........................................................
      (b)   Options...........................................................
      (c)   Stock Appreciation Rights.........................................
      (d)   Restricted Stock..................................................
      (e)   Deferred Stock Units..............................................
      (f)   Bonus Stock and Awards in Lieu of Obligations.....................
      (g)   Other Stock-Based Awards..........................................

7.    Certain Provisions Applicable to Awards.................................
      (a)   Stand-Alone, Additional, Tandem, and Substitute Awards;
            No Repricing......................................................
      (b)   Term of Awards....................................................
      (c)   Form and Timing of Payment Under Awards; Deferrals................
      (d)   Exemptions from Section 16(b) Liability...........................
      (e)   Cancellation and Rescission of Awards.............................

8.    Performance and Annual Incentive Awards.................................
      (a)   Performance Conditions............................................
      (b)   Performance Awards Granted to Designated Covered Employees........
      (c)   Annual Incentive Awards Granted to Designated Covered Employees...
      (d)   Written Determinations............................................
      (e)   Status of Section 8(b) and 8(c) Awards Under Code Section 162(m)..

                                       47
<PAGE>

9.     Change of Control......................................................
       (a)    Options and SARs................................................
       (b)    Restricted Stock and Deferred Stock Units.......................
       (c)    Other Awards....................................................

10.    General Provisions.....................................................
       (a)    Compliance with Legal and Other Requirements....................
       (b)    Limits on Transferability; Beneficiaries........................
       (c)    Adjustments.....................................................
       (d)    Taxes...........................................................
       (e)    Changes to the Plan and Awards..................................
       (f)    Limitation on Rights Conferred Under Plan.......................
       (g)    Unfunded Status of Awards; Creation of Trusts...................
       (h)    Nonexclusivity of the Plan......................................
       (i)    Payments in the Event of Forfeitures; Fractional Shares.........
       (j)    Governing Law...................................................
       (k)    Awards Under Preexisting Plans..................................
       (l)    Plan Effective Date and Shareholder Approval....................

                                       48
<PAGE>

                         LINCOLN NATIONAL CORPORATION

                          INCENTIVE COMPENSATION PLAN

       1. Purpose. The purpose of this Incentive Compensation Plan (the "Plan")
is to assist Lincoln National Corporation, an Indiana corporation (the
"Corporation"), and its subsidiaries in attracting, retaining, and rewarding
high-quality executives, employees, and other persons who provide services to
the Corporation and/or its subsidiaries, enabling such persons to acquire or
increase a proprietary interest in the Corporation in order to strengthen the
mutuality of interests between such persons and the Corporation's shareholders,
and providing such persons with annual and long-term performance incentives to
expend their maximum efforts in the creation of shareholder value. The Plan is
also intended to qualify certain compensation awarded under the Plan for tax
deductibility under Code Section 162(m) (as hereafter defined) to the extent
deemed appropriate by the Committee (or any successor committee) of the Board of
Directors of the Corporation.

       2.  Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof:

       (a) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

       (b) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock Units, Stock granted as a bonus or in lieu of another
award, Other Stock-Based Award, Performance Award or Annual Incentive Award,
together with any other right or interest granted to a Participant under the
Plan.

       (c) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon
a Participant's death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the person, persons,
trust or trusts entitled by will or the laws of descent and distribution to
receive such benefits.

       (d) "Board" means the Corporation's Board of Directors.

       (e) "Change of Control" shall have the same meaning ascribed to such term
in the Lincoln National Corporation Executives' Severance Benefit Plan (the
"Severance Benefit Plan") on the date immediately preceding the Change of
Control.

       (f) "Change of Control Price" means an amount in cash equal to the higher
of (i) the amount of cash and Fair Market Value of property that is the highest
price per share paid (including extraordinary dividends) in any transaction
triggering the Change of Control or any liquidation of shares following a sale
of substantially all assets of the Corporation, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding and 60-day period
following the Change of Control.

       (g) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.

       (h) "Committee" means at any date each of those members of the
Compensation Committee of the Board who shall be (i) a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act, unless administration
of the Plan by "non-employee directors" is not then required in order

                                       49
<PAGE>

for exemptions under Rule 16b-3 to apply to transactions under the Plan, and
(ii) an "outside director" as defined under Code Section 162(m), unless the
action taken pursuant to the Plan is not required to be taken by "outside
directors" in order to qualify for tax deductibility under Code Section 162(m).
Unless otherwise designated by the Board, the Committee shall include not fewer
than three members. In the event that fewer than three members of the
Compensation Committee are eligible to serve on the Committee, the Board may
appoint one or more of its other members who is otherwise eligible to serve on
the Committee until such time as three members of the Compensation Committee are
eligible to serve.

       (i) "Covered Employee" means an Eligible Person who is a Covered Employee
as specified in Section 8(e) of the Plan.

       (j) "Deferred Stock Unit" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.

       (k) "Effective Date" means January 1, 1997.

       (l) "Eligible Person" means each Executive Officer and other officers and
employees of the Corporation or of any subsidiary, including employees, agents
and brokers who may also be directors of the Corporation. An employee on leave
of absence may be considered as still in the employ of the Corporation or a
subsidiary for purposes of eligibility for participation in the Plan.

       (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and rules
thereto.

       (n) "Executive Officer" means an executive officer of the Corporation as
defined under the Exchange Act.

       (o) "Fair Market Value" means the Fair Market Value of Stock, Awards or
other property as determined by the Committee or under procedures established by
the Committee. Unless otherwise determined by the Committee the Fair Market
Value of Stock shall be the average of the highest and lowest prices of a share
of Stock, as quoted on the composite transactions table on the New York Stock
Exchange, on the last trading day prior to the date on which the determination
of Fair Market Value is being made.

       (p) "Incentive Stock Option" or "ISO" means any Option intended to be and
designated as an incentive stock option within the meaning of Code Section 422
or any successor provision thereto.

       (q) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.

       (r) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.

       (s) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(g) hereof.

       (t) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an Eligible
Person.

       (u) "Performance Award" means a right, granted to a Participant under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.

       (v) "Preexisting Plans" mean the Lincoln National Corporation 1986 Stock
Option Incentive Plan (the "Stock Option Plan") and the 1994 Amended and
Restated Lincoln National Corporation Executive Value Sharing Plan (the "EVSP").

       (w) "Restricted Stock" means Stock granted to a Participant under Section
6(d) hereof, that is

                                       50
<PAGE>

subject to certain restrictions and to a risk of forfeiture.

       (x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act or any similar law or
regulation that may be a successor thereto.

       (y) "Stock" means the Corporation's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.

       (z) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.

       3.  Administration.

       (a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority, in each case
subject to and consistent with the provisions of the Plan, to interpret the
provisions of the Plan, select Eligible Persons to become Participants, grant
Awards, determine the type, number and other terms and conditions of, and all
other matters relating to, Awards, prescribe Award agreements (which need not be
identical for each Participant), adopt, amend and rescind rules and regulations
for the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile inconsistencies
therein, ensure that awards continue to qualify under Rule 16b-3, and make all
other decisions and determinations as the Committee may deem necessary or
advisable for the administration of the Plan.

       (b) Manner of Exercise of Committee. Any action of the Committee shall be
final, conclusive and binding on all persons, including the Corporation, its
subsidiaries, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant, and
shareholders. The Committee shall exercise its authority only by a majority vote
of its members at a meeting or without a meeting by a writing signed by a
majority of its members. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee. The Committee may delegate
to officers or managers of the Corporation or any subsidiary, or committees
thereof, the authority, subject to such terms as the Committee shall determine,
(i) to perform administrative functions, (ii) with respect to Participants not
subject to Section 16 of the Exchange Act, to perform such other functions as
the Committee may determine, and (iii) with respect to Participants subject to
Section 16, to perform such other functions of the Committee as the Committee
may determine to the extent performance of such functions will not result in the
loss of an exemption under Rule 16b-3 otherwise available for transactions by
such persons, in each case to the extent permitted under applicable law and
subject to the requirements and restrictions set forth in Section 8(e). The
Committee may appoint agents to assist it in administering the Plan.

       (c) Limitation of Liability. The Committee and each member thereof shall
be entitled, in good faith, to rely or act upon any report or other information
furnished to it, him or her by any executive officer, other officer or employee
of the Corporation or a subsidiary, the Corporation's independent auditors,
consultants or any other agents assisting in the administration of the Plan.
Members of the Committee and any officer or employee of the Corporation or a
subsidiary acting at the direction or on behalf of the Committee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Corporation with respect to any such action or
determination.

       4.     Stock Subject to Plan.

       (a) Overall Number of Shares Available for Delivery. Subject to
adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be 32,226,512; provided, however, that the total number of shares of
Stock with respect to which ISOs may be granted shall not exceed 2,000,000; and
provided, further, that

                                       51
<PAGE>

the total number of shares of Stock that may be granted in payment of Awards
other than Options and SARs shall not exceed 5,889,512. Shares of Stock with
respect to Awards granted prior to the March 8, 2001 amendment and restatement
of the Plan which were counted against the shares reserved and available for
delivery under the Plan, as in effect prior to that date, shall be counted
against the shares reserved and available for delivery under the Amended and
Restated Plan.

       (b) Application of Limitation to Grants of Awards. No Award may be
granted if the number of shares of Stock to be delivered in connection with such
Award or, in the case of an Award measured solely by the increase in value of
shares of Stock but settleable only in cash (such as cash-only SARs), the number
of shares to which such Award relates, exceeds the number of shares of Stock
remaining available under the Plan minus the number of shares of Stock issuable
in settlement of or relating to then-outstanding Awards. The Committee may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.

       (c) Availability of Shares Not Delivered Under Awards. Shares of Stock
subject to an Award under the Plan or award under a Preexisting Plan that is
canceled, expired, forfeited, settled in cash or otherwise terminated without a
delivery of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or award or
taxes relating to Awards or awards, and (ii) the number of shares surrendered in
payment of any exercise or purchase price of an Award or award or taxes relating
to any Award or award, will again be available for Awards under the Plan, except
that if any such shares could not again be available for Awards to a particular
Participant under any applicable law or regulation, such shares shall be
available exclusively for Awards to Participants who are not subject to such
limitation.

       5. Eligibility; Per-Person Award Limitations. Awards may be granted under
the Plan only to Eligible Persons. In each fiscal year during any part of which
the Plan is in effect, an Eligible Person may not be granted Awards relating to
more than 2,000,000 shares of Stock, subject to adjustment as provided in
Section 10(c), under each of the following separate provisions: Sections 6(b),
6(c), 6(d), 6(e), 6(f), 6(g), 8(b) and 8(c). In addition, the maximum cash
amount that may be earned under Section 8(c) of the Plan as an Annual Incentive
Award or other cash annual Award payable in cash (currently or on a deferred
basis) in respect of any fiscal year by any one Participant shall be $8,000,000,
and the maximum cash amount that may be earned under Section 8(b) of the Plan as
a Performance Award or other cash Award payable in cash (currently or on a
deferred basis) in respect of any individual performance period by any one
Participant shall be $8,000,000.

       6.  Specific Terms of Awards.

       (a) General. Awards may be granted on the terms and conditions set forth
in this Section 6, provided, however, that no Award shall be made under this
Section 6 prior to the date on which shareholders of the Corporation approve the
adoption of the Plan. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 10(e)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms requiring forfeiture
of Awards in the event of termination of employment by the Participant and terms
permitting a Participant to make elections relating to his or her Award. The
Committee shall retain full power and discretion to accelerate, waive or modify,
at any time, any term or condition of an Award that is not mandatory under the
Plan. Except in cases in which the Committee is authorized to require other
forms of consideration under the Plan, or to the extent other forms of
consideration must be paid to satisfy the requirements of Indiana law, no
consideration other than services may be required for the grant (but not the
exercise) of any Award. Any Award or the value of any Award that is made under
this Plan may, subject to any requirements of applicable law or regulation, in
the Committee or its designee's sole discretion, be converted into Deferred
Stock Units and treated as provided in Section 6(e) below.

       (b) Options. The Committee is authorized to grant Options to Participants
on the following terms

                                       52
<PAGE>

and conditions:

              (i)   Exercise Price. The exercise price per share of Stock
       purchasable under an Option shall be determined by the Committee,
       provided that such exercise price shall be not less than the Fair Market
       Value of a share of Stock on the date of grant of such Option.

              (ii)  Time and Method of Exercise. The Committee shall determine,
       at the date of grant or thereafter, the time or times at which or the
       circumstances under which an Option may be exercised in whole or in part
       (including based on achievement of performance goals and/or future
       service requirements), the methods by which such exercise price may be
       paid or deemed to be paid, the form of such payment, including, without
       limitation, cash, Stock, other Awards or awards granted under other plans
       of the Corporation or any subsidiary, or other property (including notes
       or other contractual obligations of Participants to make payment on a
       deferred basis), and the methods by or forms in which Stock will be
       delivered or deemed to be delivered to Participants.

              (iii) ISOs. The terms of any ISO granted under the Plan shall
       comply in all respects with the provisions of Code Section 422. Anything
       in the Plan to the contrary notwithstanding, no term of the Plan relating
       to ISOs (including any SAR in tandem therewith) shall be interpreted,
       amended or altered, nor shall any discretion or authority granted under
       the Plan be exercised, so as to disqualify either the Plan or any ISO
       under Code Section 422, unless the Participant has first requested the
       change that will result in such disqualification.

       (c)    Stock Appreciation Rights. The Committee is authorized to grant
SARs to Participants on the following terms and conditions:

              (i)   Right to Payment. A SAR shall confer on the Participant to
       whom it is granted a right to receive, upon exercise thereof, the excess
       of (A) the Fair Market Value of one share of Stock on the date of
       exercise (or, in the case of a "Limited SAR," the Fair Market Value
       determined by reference to the Change of Control Price) over (B) the
       grant price of the SAR as determined by the Committee.

              (ii)  Other Terms. The Committee shall determine, at the date of
       grant or thereafter, the time or times at which and the circumstances
       under which a SAR may be exercised in whole or in part (including based
       on achievement of performance goals and/or future service requirements),
       the method of exercise, method of settlement, form of consideration
       payable in settlement, method by or forms in which any Stock payable will
       be delivered or deemed to be delivered to Participants, whether or not a
       SAR shall be in tandem or in combination with any other Award, and any
       other terms and conditions of any SAR. Limited SARs that may only be
       exercised in connection with a Change of Control or other events as
       specified by the Committee may be granted on such terms, not inconsistent
       with this Section 6(c), as the Committee may determine. SARs and Limited
       SARs may be either freestanding or in tandem with other Awards.

       (d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:

              (i)   Grant and Restrictions. Restricted Stock shall be subject to
       such restrictions on transferability, risk of forfeiture and other
       restrictions, if any, as the Committee may impose, which restrictions may
       lapse separately or in combination at such times, under such
       circumstances (including based on achievement of performance goals and/or
       future service requirements), in such installments or otherwise, as the
       Committee may determine at the date of grant or thereafter. Except to the
       extent restricted under any Award agreement relating to the Restricted
       Stock, a Participant granted Restricted Stock shall have all of the
       rights of a shareholder, including the right to vote the Restricted Stock
       and the right to receive dividends thereon (subject to any mandatory
       reinvestment or other requirement imposed by the Committee). During the
       restricted period applicable to the Restricted Stock, subject to Section
       10(b) below, the Restricted Stock may not be sold, transferred, pledged,
       hypothecated, margined or otherwise encumbered by the Participant.

                                       53
<PAGE>

              (ii)  Forfeiture. Except as otherwise determined by the Committee,
       upon termination of employment during the applicable restriction period,
       Restricted Stock that is at that time subject to restrictions shall be
       forfeited and reacquired by the Corporation; provided that the Committee
       may, in its discretion, in any individual case provide for waiver in
       whole or in part of restrictions or forfeiture conditions relating to
       Restricted Stock.

              (iii) Certificates for Stock. Restricted Stock granted under the
       Plan may be evidenced in such manner as the Committee shall determine. If
       certificates representing Restricted Stock are registered in the name of
       the Participant, the Committee may require that such certificates bear an
       appropriate legend referring to the terms, conditions and restrictions
       applicable to such Restricted Stock, that the Corporation retain physical
       possession of the certificates, and that the Participant deliver a stock
       power to the Corporation, endorsed in blank, relating to the Restricted
       Stock.

              (iv)  Dividends and Splits. As a condition to the grant of an
       Award of Restricted Stock, the Committee may require that any cash
       dividends paid on a share of Restricted Stock be automatically reinvested
       in additional shares of Restricted Stock or applied to the purchase of
       additional Awards under the Plan. Unless otherwise determined by the
       Committee, Stock distributed in connection with a Stock split or Stock
       dividend, and other property distributed as a dividend, shall be subject
       to restrictions and a risk of forfeiture to the same extent as the
       Restricted Stock with respect to which such Stock or other property has
       been distributed.

       (e)    Deferred Stock Units. The Committee is authorized to grant to
Participants Deferred Stock Units, which are rights to receive Stock, cash, or a
combination thereof at the end of a specified deferral period. Unless otherwise
specified by the Committee, Deferred Stock Units shall be credited as of the
date of award to a bookkeeping reserve account maintained by the Employer under
the Lincoln National Corporation Executive Deferred Compensation Plan for
Employees or its successor (the "Deferred Compensation Plan") in units which are
equivalent in value to shares of Common Stock ("Deferred Stock Units"). Once
credited to such account, Deferred Stock Units shall be governed by the terms of
the Deferred Compensation Plan.

       (f)    Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu
of obligations to pay cash or deliver other property under the Plan or under
other plans or compensatory arrangements, provided that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Stock or other Awards do not impair a participant's
exemption from liability under Section 16(b) of the Exchange Act. Stock or
Awards granted hereunder shall be subject to such other terms as shall be
determined by the Committee.

       (g)    Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Corporation or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of or the performance of specified
subsidiaries. The Committee shall determine the terms and conditions of such
Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(g) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(g).

                                       54
<PAGE>

     7.   Certain Provisions Applicable to Awards.

     (a)  Stand-Alone, Additional, Tandem, and Substitute Awards; No Repricing.
Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Corporation, any subsidiary, or any business entity to be acquired by the
Corporation or a subsidiary, or any other right of a Participant to receive
payment from the Corporation or any subsidiary. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the
grant of the new Award. Notwithstanding any other provision of this Plan, no
Option that has been granted by the Corporation or a subsidiary thereof shall be
thereafter repriced, replaced or regranted through cancellation, or otherwise
modified without shareholder approval (except in connection with a change in the
Corporation's capitalization), if the effect would be to reduce the exercise
price for the shares underlying such Option.

     (b)  Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided that in no event shall the term of any
Option or SAR exceed a period of ten years (or such shorter term as may be
required in respect of an ISO under Code Section 422).

     (c)  Form and Timing of Payment Under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Corporation or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including, without limitation, cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis. The settlement of any Award may be accelerated, and cash
paid in lieu of Stock in connection with such settlement, in the discretion of
the Committee or upon occurrence of one or more specified events (in addition to
a Change of Control). Installment or deferred payments may be required by the
Committee (subject to Section 10(e) of the Plan, including the consent
provisions thereof) in the case of any deferral of an outstanding Award not
provided for in the original Award agreement, except that this provision shall
not prevent the Committee or its designee from converting an Award to Deferred
Stock Units as provided under Section 6(a) above or permitted at the election of
the Participant on terms and conditions established by the Committee. Payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of dividend equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

     (d)  Exemptions from Section 16(b) Liability. It is the intent of the
Corporation that the grant of any Awards to or other transaction by a
Participant who is subject to Section 16 of the Exchange Act shall be exempt
under Rule 16b-3 (except for transactions acknowledged in writing to be non-
exempt by such Participant). Accordingly, if any provision of this Plan or any
Award agreement does not comply with the requirements of Rule 16b-3 as then
applicable to any such transaction, unless the Participant shall have
acknowledged in writing that a transaction pursuant to such provision is to be
non-exempt, such provision shall be construed or deemed amended to the extent
necessary to conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under Section 16(b) of the Exchange Act.

     (e)  Cancellation and Rescission of Awards. Unless the Award agreement
specifies otherwise, the Committee may cancel any unexpired, unpaid, or deferred
Awards at any time, and the Corporation shall have the additional rights set
forth in Section 7(e)(iv) below, if the Participant is not in compliance with
all applicable provisions of the Award agreement and the Plan including the
following conditions:

          (i) A Participant shall not render services for any organization or
     engage directly or indirectly in any business which, in the judgment of the
     Chief Executive Officer of the Corporation or other senior officer
     designated by the Committee, is or becomes competitive with the
     Corporation. For Participants whose employment has terminated, the judgment
     of the Chief Executive Officer or other senior officer designated by the
     Committee shall be based on the Participant's position and responsibilities
     while employed by the Corporation, the Participant's post-employment

                                       55
<PAGE>

     responsibilities and position with the other organization or business, the
     extent of past, current and potential competition or conflict between the
     Corporation and the other organization or business, the effect on the
     Corporation's shareholders, customers, suppliers and competitors of the
     Participant assuming the post-employment position and such other
     considerations as are deemed relevant given the applicable facts and
     circumstances. A Participant who has terminated employment shall be free,
     however, to purchase as an investment or otherwise, stock or other
     securities of such organization or business so long as they are listed upon
     a recognized securities exchange or traded over-the-counter, and such
     investment does not represent a greater than five percent equity interest
     in the organization or business.

          (ii)  A Participant shall not, without prior written authorization
     from the Corporation, disclose to anyone outside the Corporation, or use in
     other than the Corporation's business, any confidential information or
     material relating to the business of the Corporation that is acquired by
     the Participant either during or after employment with the Corporation.

          (iii) A Participant shall disclose promptly and assign to the
     Corporation all right, title, and interest in any invention or idea,
     patentable or not, made or conceived by the Participant during employment
     by the Corporation, relating in any manner to the actual or anticipated
     business, research or development work of the Corporation and shall do
     anything reasonably necessary to enable the Corporation to secure a patent
     where appropriate in the United States and in foreign countries.

          (iv)  Upon exercise, settlement, payment or delivery pursuant to an
     Award, the Participant shall certify on a form acceptable to the Committee
     that he or she is in compliance with the terms and conditions of the Plan.
     Failure to comply with the provisions of this Section 7(e) prior to, or
     during the six months after, any exercise, payment or delivery pursuant to
     an Award shall cause such exercise, payment or delivery to be rescinded.
     The Corporation shall notify the Participant in writing of any such
     rescission within two years after such exercise, payment or delivery;
     provided, however, that the Corporation may, in its discretion, in any
     individual case provide for waiver in whole or in part of compliance with
     the provisions of this Section 7(e). Within ten days after receiving such a
     notice from the Corporation, the Participant shall pay to the Corporation
     the amount of any gain realized or payment received as a result of the
     rescinded exercise, payment or delivery pursuant to an Award. Such payment
     shall be made either in cash or by returning to the Corporation the number
     of shares of Stock that the Participant received in connection with the
     rescinded exercise, payment or delivery. In the case of any Participant
     whose employment is terminated by the Corporation and its subsidiaries
     without "cause" (as defined in the Award agreement), however, a failure of
     the Participant to comply with the provisions of Section 7(e)(i) after such
     termination of employment shall not in itself cause rescission or require
     repayment with respect to any Award exercised, paid or delivered before
     such termination.

     8.   Performance and Annual Incentive Awards.

     (a)  Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and other measures of performance as it
may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 8(b)
and 8(c) hereof in the case of a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m).

     (b)  Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an Eligible
Person who is or may become a Covered Employee should qualify as "performance-
based compensation" for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Performance Award shall be contingent upon achievement
of preestablished performance goals and other terms set forth in this Section
8(b).

                                       56
<PAGE>

          (i)   Performance Goals Generally. The performance goals for such
     Performance Awards shall consist of one or more business criteria and a
     targeted level or levels of performance and associated maximum Award
     payments with respect to each of such criteria, as specified by the
     Committee consistent with this Section 8(b). Performance goals shall be
     objective and shall otherwise meet the requirements of Code Section 162(m)
     and regulations thereunder (including Regulation 1.162-27 and successor
     regulations thereto), including the requirement that the level or levels of
     performance targeted by the Committee result in the achievement of
     performance goals being "substantially uncertain." The Committee may
     determine that such Performance Awards shall be granted, exercised and/or
     settled upon achievement of any performance goal or that more than one
     performance goal must be achieved as a condition to grant, exercise and/or
     settlement of such Performance Awards. Performance goals may differ for
     Performance Awards granted to any one Participant or to different
     Participants.

          (ii)  Business Criteria. One or more of the following business
     criteria for the Corporation, as defined by the Committee, on a
     consolidated basis, and/or for specified subsidiaries or business units of
     the Corporation (except with respect to the total shareholder return and
     earnings per share criteria), shall be used by the Committee in
     establishing performance goals for such Performance Awards: (1) earnings
     per share; (2) revenues; (3) cash flow; (4) cash flow return on investment;
     (5) return on assets, return on investment, return on capital, return on
     equity; (6) economic value added; (7) operating margin; (8) net income;
     pretax earnings; pretax earnings before interest, depreciation and
     amortization; pretax operating earnings after interest expense and before
     incentives, service fees, and extraordinary or special items; operating
     earnings; income from operations; (9) total shareholder return; (10) any of
     the above goals as compared to the performance of a published or special
     index deemed applicable by the Committee including, but not limited to, the
     Standard & Poor's 500 Stock Index or a group of comparator companies; and
     (11) any criteria comparable to those listed above that shall be approved
     by the Committee. One or more of the foregoing business criteria shall also
     be exclusively used in establishing performance goals for Annual Incentive
     Awards granted to a Covered Employee under Section 8(c) hereof.

          (iii) Performance Period; Timing for Establishing Performance Goals.
     Achievement of performance goals in respect of such Performance Awards
     shall be measured over a performance period, which may overlap with another
     performance period or periods, of up to ten years, as specified by the
     Committee. Performance goals shall be established not later than 90 days
     after the beginning of any performance period applicable to such
     Performance Awards, or at such other date as may be required or permitted
     for "performance-based compensation" under Code Section 162(m).

          (iv)  Performance Award Pool. The Committee may establish a
     Performance Award pool, which shall be an unfunded pool, for purposes of
     measuring performance of the Corporation in connection with Performance
     Awards. The amount of such Performance Award pool shall be based upon the
     achievement of a performance goal or goals based on one or more of the
     business criteria set forth in Section 8(b)(ii) hereof during the given
     performance period, as specified by the Committee in accordance with
     Section 8(b)(iii) hereof. The Committee may specify the amount of the
     Performance Award pool as a percentage of any of such business criteria, a
     percentage thereof in excess of a threshold amount, or as another amount
     which need not bear a strictly mathematical relationship to such business
     criteria.

          (v)   Settlement of Performance Awards; Other Terms. Settlement of
     such Performance Awards shall be in cash, Stock, other Awards or other
     property, including deferred payments in any such forms, in the discretion
     of the Committee. The Committee may, in its discretion, reduce the amount
     of a settlement otherwise to be made in connection with such Performance
     Awards, but may not exercise discretion to increase any such amount payable
     to a Covered Employee in respect of a Performance Award subject to this
     Section 8(b). The Committee shall specify the circumstances in which such
     Performance Awards shall be paid or forfeited in the event of termination
     of employment by the Participant prior to the end of a performance period
     or settlement of Performance Awards.

                                       57
<PAGE>

     (c)  Annual Incentive Awards Granted to Designated Covered Employees. If
the Committee determines that an Annual Incentive Award to be granted to an
Eligible Person who is or may become a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Annual Incentive Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(c).

          (i)   Annual Incentive Award Pool. The Committee may establish an
     Annual Incentive Award pool, which shall be an unfunded pool, for purposes
     of measuring performance of the Corporation in connection with Annual
     Incentive Awards. The amount of such Annual Incentive Award pool shall be
     based upon the achievement of a performance goal or goals based on one or
     more of the business criteria set forth in Section 8(b)(ii) hereof during
     the given performance period, as specified by the Committee in accordance
     with Section 8(b)(iii) hereof. The Committee may specify the amount of the
     Annual Incentive Award pool as a percentage of any of such business
     criteria, a percentage thereof in excess of a threshold amount, or as
     another amount which need not bear a strictly mathematical relationship to
     such business criteria.

          (ii)  Potential Annual Incentive Awards. Not later than the end of the
     90th day after the beginning of each fiscal year, or at such other date as
     may be required or permitted in the case of Awards intended to be
     "performance-based compensation" under Code Section 162(m), the Committee
     shall determine the Eligible Persons who will potentially receive Annual
     Incentive Awards, and the amounts potentially payable thereunder, for that
     fiscal year, either out of an Annual Incentive Award pool established by
     such date under Section 8(c)(i) hereof or as individual Annual Incentive
     Awards. In the case of individual Annual Incentive Awards intended to
     qualify under Code Section 162(m), the amount potentially payable shall be
     based upon the achievement of a performance goal or goals based on one or
     more of the business criteria set forth in Section 8(b)(ii) hereof in the
     given performance year, as specified by the Committee; in other cases, such
     amount shall be based on such criteria as shall be established by the
     Committee. In all cases, the maximum Annual Incentive Award of any
     Participant shall be subject to the limitation set forth in Section 5
     hereof.

          (iii) Payout of Annual Incentive Awards. After the end of each fiscal
     year, the Committee shall determine the amount, if any, of (A) the Annual
     Incentive Award pool, and the maximum amount of potential Annual Incentive
     Award payable to each Participant in the Annual Incentive Award pool, or
     (B) the amount of potential Annual Incentive Award otherwise payable to
     each Participant. The Committee may, in its discretion, determine that the
     amount payable to any Participant as a final Annual Incentive Award shall
     be increased or reduced from the amount of his or her potential Annual
     Incentive Award, including a determination to make no final Award
     whatsoever, but may not exercise discretion to increase any such amount in
     the case of an Annual Incentive Award intended to qualify under Code
     Section 162(m). The Committee shall specify the circumstances in which an
     Annual Incentive Award shall be paid or forfeited in the event of
     termination of employment by the Participant prior to the end of a fiscal
     year or settlement of such Annual Incentive Award.

     (d)  Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards and as to the achievement of performance
goals relating to Performance Awards under Section 8(b), and the amount of any
Annual Incentive Award pool or potential individual Annual Incentive Awards and
the amount of final Annual Incentive Awards under Section 8(c), shall be made in
writing in the case of any Award intended to qualify under Code Section 162(m).
The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.

     (e)  Status of Section 8(b) and Section 8(c) Awards Under Code Section
162(m). It is the intent of the Corporation that Performance Awards and Annual
Incentive Awards under Sections 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder (including Regulation 1.162-27

                                       58
<PAGE>

and successor regulations thereto) shall, if so designated by the Committee,
constitute "performance-based compensation" within the meaning of Code Section
162(m) and regulations thereunder. Accordingly, the terms of Sections 8(b), (c),
(d) and (e), including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. If any provision of the Plan as in effect on the
date of adoption or any agreements relating to Performance Awards or Annual
Incentive Awards that are designated as intended to comply with Code Section
162(m) does not comply or is inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements.

     9.   Change of Control. In the event of a "Change of Control," the
following provisions shall apply unless otherwise provided in the Award
agreement:

     (a)  Options and SARs. Any Option or SAR carrying a right to exercise that
was not previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change of Control and shall remain exercisable and
vested for the balance of the stated term of such Option or SAR without regard
to any termination of employment by the Participant, subject only to applicable
restrictions set forth in Section 10(a) hereof;

     (b)  Restricted Stock and Deferred Stock Units. The restrictions, deferral
of settlement, and forfeiture conditions applicable to any Restricted Stock or
Deferred Stock Unit granted under the Plan shall lapse and such Awards shall be
deemed fully vested as of the time of the Change of Control, except to the
extent of any waiver by the Participant and subject to applicable restrictions
set forth in Section 10(a) hereof; and

     (c)  Other Awards. The rights and obligations respecting, and the payment
of, all other Awards under the Plan shall be governed solely by the provisions
of the Severance Benefit Plan.

     10.  General Provisions.

     (a)  Compliance with Legal and Other Requirements. The Corporation may, to
the extent deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required
action under any federal or state law, rule or regulation, listing or other
required action with respect to any stock exchange or automated quotation system
upon which the Stock or other securities of the Corporation are listed or
quoted, or compliance with any other obligation of the Corporation, as the
Committee may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The
foregoing notwithstanding, in connection with a Change of Control, the
Corporation shall take or cause to be taken no action, and shall undertake or
permit to arise no legal or contractual obligation, that results or would result
in any postponement of the issuance or delivery of Stock or payment of benefits
under any Award or the imposition of any other conditions on such issuance,
delivery or payment, to the extent that such postponement or other condition
would represent a greater burden on a Participant than existed on the 90th day
preceding the Change of Control.

     (b)  Limits on Transferability; Beneficiaries. No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party (other than the Corporation or a subsidiary), or
assigned or transferred by such Participant otherwise than by will or the laws
of descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or her guardian or
legal representative, except that Awards and other rights (other than ISOs and
SARs in tandem therewith) may be transferred to one or more Beneficiaries or
other transferees during the lifetime of the Participant, and may be exercised
by such transferees in accordance with the terms of such Award, but only if and
to the

                                       59
<PAGE>

extent such transfers are permitted by the Committee pursuant to the express
terms of an Award agreement (subject to any terms and conditions which the
Committee may impose thereon). A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee.

     (c)  Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that an adjustment
is determined by the Committee to be appropriate under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock which may be delivered in connection
with Awards granted thereafter, (ii) the number and kind of shares of Stock by
which annual per-person Award limitations are measured under Section 5 hereof,
(iii) the number and kind of shares of Stock subject to or deliverable in
respect of outstanding Awards and (iv) the exercise price, grant price or
purchase price relating to any Award and/or make provision for payment of cash
or other property in respect of any outstanding Award. In addition, the
Committee is authorized to make adjustments in the terms and conditions of, and
the criteria included in, Awards (including Performance Awards and performance
goals, and Annual Incentive Awards and any Annual Incentive Award pool or
performance goals relating thereto) in recognition of unusual or nonrecurring
events (including, without limitation, events described in the preceding
sentence, as well as acquisitions and dispositions of businesses and assets)
affecting the Corporation, any subsidiary or any business unit, or the financial
statements of the Corporation or any subsidiary, or in response to changes in
applicable laws, regulations, accounting principles, tax rates and regulations
or business conditions or in view of the Committee's assessment of the business
strategy of the Corporation, any subsidiary or business unit thereof,
performance of comparable organizations, economic and business conditions,
personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to
the extent that such authority or the making of such adjustment would cause
Options, SARs, Performance Awards granted under Section 8(b) hereof or Annual
Incentive Awards granted under Section 8(c) hereof to Participants designated by
the Committee as Covered Employees and intended to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder to otherwise
fail to qualify as "performance-based compensation" under Code Section 162(m)
and regulations thereunder.

     (d)  Taxes. The Corporation and any subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Corporation and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
However, this authority shall not include withholding of taxes above the
statutorily required withholding amounts where such excess withholding would
result in an earnings charge to the Corporation under U.S. Generally Accepted
Accounting Principles.

     (e)  Changes to the Plan and Awards. The Board, or the Committee acting
pursuant to such authority as may be delegated to it by the Board, may amend,
alter, suspend, discontinue or terminate the Plan or the Committee's authority
to grant Awards under the Plan without the consent of shareholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Corporation's shareholders not later than the
annual meeting next following such Board action if such shareholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to shareholders for approval; provided that,
without the consent of an affected Participant, no such Board action may

                                       60
<PAGE>

materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee may waive any conditions
or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award agreement relating thereto, except as
otherwise provided in the Plan; provided that, without the consent of an
affected Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award. Notwithstanding anything
in the Plan to the contrary, if any right under this Plan would cause a
transaction to be ineligible for pooling of interest accounting that would, but
for the right hereunder, be eligible for such accounting treatment, the
Committee may modify or adjust the right so that pooling of interest accounting
shall be available, including the substitution of Stock having a Fair Market
Value equal to the cash otherwise payable hereunder for the right which caused
the transaction to be ineligible for pooling of interest accounting.

     (f)  Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Corporation or a subsidiary, (ii) interfering in any
way with the right of the Corporation or a subsidiary to terminate any Eligible
Person's or Participant's employment or service at any time, (iii) giving an
Eligible Person or Participant any claim to be granted any Award under the Plan
or to be treated uniformly with other Participants and employees, or (iv)
conferring on a Participant any of the rights of a shareholder of the
Corporation unless and until the Participant is duly issued or transferred
shares of Stock in accordance with the terms of an Award.

     (g)  Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Corporation; provided that the Committee may authorize the
creation of trusts and deposit therein cash, Stock, other Awards or other
property, or make other arrangements to meet the Corporation's obligations under
the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.

     (h)  Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Corporation for approval
shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other compensation and incentive arrangements
for employees, agents and brokers of the Corporation and its subsidiaries as it
may deem desirable.

     (i)  Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration. No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

     (j)  Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with Indiana law, without giving effect to principles
of conflicts of laws, and applicable federal law.

     (k)  Awards Under Preexisting Plans. No further awards shall be granted
under the Preexisting Plans, after the Effective Date with respect to the EVSP
and after Midnight, May 15, 1997 with respect to the Stock Option Plan. The
Committee may waive any conditions or rights under or amend or alter any awards
granted under the Preexisting Plans to the extent provided in either (i) the
Preexisting Plan under which the award was made or (ii) Section 10(e) hereof.

                                       61
<PAGE>

     (l)  Plan Effective Date and Shareholder Approval. The Plan as originally
adopted by the Board as of the Effective Date, subject to approval by the
shareholders of the Corporation on May 15, 1997, was amended and restated to its
current form by the Board on March 8, 2001, subject to approval of the amendment
and restatement by the shareholders of the Corporation.

                                       62
<PAGE>

                                   EXHIBIT 4

                         LINCOLN NATIONAL CORPORATION
                            AUDIT COMMITTEE CHARTER

I.    Purposes of the Audit Committee: The primary purpose of the Audit
      -------------------------------
      Committee is to assist the Board of Directors of Lincoln National
      Corporation (the "Corporation"):

      1.   in its oversight of the Corporation's financial reporting process and
           systems of internal accounting and financial controls;

      2.   in its oversight of the Corporation's consolidated financial
           statements and the independent audit thereof;

      3.   in selecting, evaluating and, if deemed appropriate, replacing the
           independent auditors; and

      4.   in evaluating the independence of the independent auditors.

      The Audit Committee is a board committee and as such shall also have such
      other responsibilities as the Board of Directors may specify from time to
      time.

      The primary function of the Audit Committee is oversight. In fulfilling
      their responsibilities hereunder, it is not the duty or responsibility of
      the Audit Committee or its members to conduct "field work" or other types
      of auditing, accounting reviews, or procedures.

II.   Composition of the Audit Committee: The Audit Committee shall be comprised
      ----------------------------------
      of at least three directors, each of whom shall have no relationship to
      the Corporation that may interfere with the exercise of their independence
      from management and the Corporation. Each member of the Audit Committee
      shall be financially literate, and at least one member of the Audit
      Committee shall have accounting or related financial management expertise,
      as such requirements are interpreted by the Board of Directors in its
      business judgment, and each member shall otherwise satisfy the applicable
      membership requirements under the rules of the New York Stock Exchange.

      Prospective members shall be recommended by the Nominating and Governance
      Committee of the Board of Directors, and elected annually by resolution of
      the Board of Directors at its first meeting following the annual meeting
      of shareholders. One member shall be designated from time to time by the
      Board of Directors as Chair of the Audit Committee ("Chair").

III.  Meetings of the Audit Committee: The Audit Committee shall hold meetings
      -------------------------------
      as deemed necessary or desirable by the Chair. In addition to such
      meetings of the Audit Committee as may be required with respect to the
      matters set forth in Article IV, the Audit Committee shall meet at least
      annually with the Chief Financial Officer, the General Auditor, and the
      independent auditors to discuss any matters that the Audit Committee or
      any of these persons or firms believe should be discussed. The independent
      auditors, Chief Financial Officer, General Counsel, General Auditor, and
      Corporate Secretary shall customarily attend meetings of the Audit
      Committee. The Audit Committee may, at its discretion, meet in executive
      session with or without the presence of the independent auditors or
      corporate officers. The Chair shall provide reasonable notice of and set
      an agenda for all meetings.

                                       63
<PAGE>

IV.   Duties and Powers of the Audit Committee: To carry out its purposes, the
      ----------------------------------------
      Audit Committee shall have the following duties and powers:

      1.  with respect to the independent auditors,

          (i)   to provide advice to the Board of Directors in selecting,
                evaluating or replacing independent auditors;

          (ii)  to ensure that the independent auditors prepare and deliver at
                least annually a formal written statement delineating all
                relationships between the independent auditors and the
                Corporation addressing at least each non-audit service provided
                to the Corporation as well as the matters set forth in
                Independence Standards Board, Standard No. 1, Independence
                                                              ------------
                Discussions with Audit Committees, as amended, and to discuss
                ---------------------------------
                with the independent auditors any disclosed relationships or
                services that may impact the objectivity and independence of the
                Corporation's independent auditors and to recommend that the
                Board of Directors take appropriate action in response to the
                independent auditors' report to satisfy itself of the
                independent auditors' independence;

          (iii) to consider whether the independent auditors' provision to the
                Corporation of financial information systems design and
                implementation services and other non-audit services is
                compatible with maintaining the independence of the independent
                auditors; and

          (iv)  to review the fees charged by the independent auditors;

      2.  with respect to the General Auditor,

          (i)   to consult with management before the appointment or replacement
                of the General Auditor; and

          (ii)  to receive from the General Auditor and review summaries of and,
                as appropriate, the significant reports to management prepared
                by the internal audit department and management's responses
                thereto, and also such other reports from the General Auditor as
                he or she deems necessary or desirable;

      3.  with respect to the Corporation's consolidated financial statements,
          financial reporting process, and systems of internal accounting and
          financial controls,

          (i)   to receive and review from management and the independent
                auditors a timely analysis of significant financial reporting
                issues and practices;

          (ii)  to discuss with the independent auditors the matters required to
                be discussed by Statement on Auditing Standards No. 61,
                Communications with Audit Committees, as amended;
                ------------------------------------

          (iii) to meet with management, the General Auditor and/or the
                independent auditors:

                .   to review the respective annual audit plans of the
                    independent auditors and internal auditors;

                .   to discuss the annual consolidated financial statements and
                    the quarterly consolidated financial statements;

                                       64
<PAGE>

                .   to discuss any significant matters arising from any audit or
                    report or communication referred to in items 2(ii) or 3(ii)
                    above relating to the consolidated financial statements;

                .   to discuss significant proposed or contemplated changes to
                    the Corporation's accounting principles, policies, controls,
                    procedures, practices, and auditing plans; and

                .   to inquire about significant risks and exposures, if any,
                    and the steps taken to monitor and minimize such risks; (iv)
                    to obtain from the independent auditors assurance that the
                    audit was conducted in accordance with auditing standards
                    generally accepted in the United States and rules and
                    regulations set forth in Section 10A of the Securities
                    Exchange Act of 1934, as amended;

          (v)   to review policies and procedures with respect to officers'
                expense accounts and perquisites and the results of audits of
                these areas; and

          (vi)  to discuss with the General Counsel any significant legal
                matters that may have a material effect on the consolidated
                financial statements; and

      4.  with respect to reporting and recommendations,

          (i)   to prepare any report, including any recommendation of the Audit
                Committee, required by the rules of the Securities and Exchange
                Commission to be included in the Corporation's annual proxy
                statement;

          (ii)  to review and reassess this Charter at least annually and
                recommend any changes to the Board of Directors; and

          (iii) to report its activities to the Board of Directors on a regular
                basis and to make such recommendations with respect to the above
                and other matters and to take such other actions as the Audit
                Committee or the Board of Directors may deem necessary or
                appropriate.

V.    Resources and Authority of the Audit Committee: The Audit Committee shall
      ----------------------------------------------
      have the resources and authority appropriate to discharge its
      responsibilities, including the authority to engage independent auditors
      for special audits, reviews and other procedures and to retain special
      counsel and other experts or consultants.

      The independent auditors for the Corporation are ultimately accountable to
      the Board of Directors and the Audit Committee.
<PAGE>

                        [LOGO] Lincoln Financial Group

          "Lincoln Financial Group" is the marketing name for Lincoln
                   National Corporation and its affiliates.
<PAGE>

                          LINCOLN NATIONAL CORPORATION

                                PHILADELPHIA, PA

     The undersigned shareholder in LINCOLN NATIONAL CORPORATION (the
"Corporation"), an Indiana corporation, appoints JON A. BOSCIA, JILL S.
RUCKELSHAUS and C. SUZANNE WOMACK or any one or more of them, the true and
lawful attorney in fact and proxy of the undersigned, with full power of
substitution to all or any one or more of them, to vote as proxy for and in the
name, place and stead of the undersigned at the ANNUAL MEETING of the
shareholders of the Corporation, to be held at The Rittenhouse, 210 West
Rittenhouse Square, Philadelphia, PA, 10:00 a.m., local time, Thursday, May 10,
2001, or at any adjournment thereof, all the shares of stock in the Corporation
shown on the other side (whether Common Stock or $3.00 Cumulative Convertible
Preferred Stock, Series A) which the undersigned would be entitled to vote if
then personally present, revoking any proxy previously given.

     A majority of such attorneys and proxies who shall be present and shall act
as such at the meeting or any adjournment thereof, or if only one such attorney
and proxy be present and act, then that one, shall have and may exercise all the
powers hereby conferred.

     This proxy is being solicited by the Corporation's Board of Directors. This
proxy when properly executed will be voted in the manner directed herein by the
undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
ALL NOMINEES LISTED IN ITEM 1, FOR THE AMENDED AND RESTATED INCENTIVE
COMPENSATION PLAN IN ITEM 2, AGAINST THE SHAREHOLDER PROPOSAL IN ITEM 3 AND
AUTHORIZATION WILL, TO THE EXTENT PERMISSIBLE, BE GIVEN TO THE NAMED PROXIES, OR
ANY ONE OR MORE OF THEM, IN THEIR DISCRETION TO ACT OR VOTE UPON OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.

                                                                    -----------
                                                                    SEE REVERSE
               (Continued, and to be Signed, on reverse side)          SIDE
                                                                    -----------

- --------------------------------------------------------------------------------
                            . FOLD AND DETACH HERE .











                                2000 Business Highlights

 . Income from operations for 2000 reached a record $719.1 million, or $3.69 per
  diluted share. This reflects an earnings per share growth rate of 18% over
  1999.

 . Lincoln National Corporation's return on equity, which reached a record 14.9%
  for the year, is now among the highest in the industry.

 . The quarterly dividend on the Corporation's common stock was increased 5.2% to
  $.305 cents, representing the 16/th/ consecutive year of increased dividends.
<PAGE>

[X]  Please mark your
     votes as in this
     example

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
  The Board of Directors recommends a vote FOR proposals 1 and 2 and AGAINST
                                  proposal 3
- -----------------------------------------------------------------------------------------
<S>                                          <C>
                      FOR  WITHHELD
1. To elect directors [_]    [_]             Nominees for three-year terms expiring 2004:
                                             01. Jon A. Boscia
                                             02. Eric G. Johnson
                                             03. John M. Pietruski
For all nominees except as noted below.      04. Gilbert R. Whitaker, Jr.

                                             Nominee for two-year term expiring in 2003:
______________________________________       05. Jenne K. Britell

- -----------------------------------------------------------------------------------------
                                                  FOR   AGAINST   ABSTAIN
2. To approve or disapprove an Amended and        [_]     [_]       [_]
   Restated Incentive Compensation Plan.

3. Shareholder proposal.                          [_]     [_]       [_]

4. In their discretion, to act or vote upon other matters which may properly
   come before the meeting or any adjournment thereof.
- -----------------------------------------------------------------------------------------

                                                MARK HERE FOR    [_]    MARK HERE IF  [_]
                                              ADDRESS CHANGE AND        YOU PLAN TO
                                                NOTE AT LEFT               ATTEND
                                                                       ANNUAL MEETING

                                             All of the above in accordance with the
                                             Notice of Annual Meeting of Shareholders and
                                             Proxy Statement for the meeting, receipt of
                                             which is hereby acknowledged.

                                             Signature must be that of the Shareholder. If
                                             shares are held jointly, each shareholder
                                             named should sign. If the signer is a
                                             corporation, please sign full corporate name by
                                             duly authorized officer. If signer is a partnership,
                                             please sign partnership name by authorized person.
                                             Executors, administrators, trustees, guardians,
                                             attorneys in fact, etc. should so indicate when signing.

                                             ____________________________________________

                                             ____________________________________________
                                               SIGNATURE                   DATE

- -----------------------------------------------------------------------------------------
                                 /\FOLD AND DETACH HERE/\
</TABLE>




                         LINCOLN NATIONAL CORPORATION

   Now Offering Telephone or Internet Voting Services--Fast and Convenient!

- --------------------------------------------------------------------------------
                      VOTE BY TELEPHONE (1-877-779-8683)
- --------------------------------------------------------------------------------

 .    Shareholders from the United States, Canada, Puerto Rico, and the U.S.
     Virgin Islands may call toll-free 1-877-779-8683.

 .    Shareholders from other locations may dial 201-536-8073.

 .    Follow the simple recorded instructions.

 .    When prompted for your "Voter Control Number," enter the series of numbers
     printed in the box above using your touch-tone telephone.

- --------------------------------------------------------------------------------
                   VOTE BY INTERNET (www.eproxyvote.com/Inc)
- --------------------------------------------------------------------------------

 .    Shareholders with Internet access may go to http://www.eproxyvote.com/Inc

 .    Follow the simple on-line Instructions.

 .    When prompted for your "Voter Control Number," enter the series of numbers
     printed in the box above.

   ------------------------------------------------------------------------
    Telephone or Internet voting authorizes the named proxies to represent
   you at the meeting in the same manner as if you completed, signed, dated
                          and mailed your proxy card.
      IF YOU VOTE BY TELEPHONE OR INTERNET, DO NOT MAIL YOUR PROXY CARD.
   ------------------------------------------------------------------------
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
