First BanCorp Executive Short-Term Incentive Program, as amended on March 16, 2023

Contract Categories: Human Resources - Bonus & Incentive Agreements
EX-10.1 2 exhibit101.htm EX-10.1 exhibit101
 
1
EXHIBIT
 
10.1
FIRST BANCORP
 
EXECUTIVE SHORT-TERM INCENTIVE PROGRAM
This document outlines the First BanCorp Executive Short-term Incentive Program (the “Program”) by and between First BanCorp
and its subsidiaries,
 
including FirstBank
 
Puerto Rico (the
 
“Bank,” and collectively
 
with First BanCorp
 
and any other
 
subsidiaries, the
“Corporation”)
 
and
 
the
 
Corporation’s
 
executives
 
(the
 
“Participant”)
 
approved
 
by
 
the
 
Board
 
of
 
Directors
 
(the
 
“Board”)
 
of
 
the
Corporation. The Program has been modified from time to time, with last modification
 
dated March 16, 2023.
1.
 
Purpose
The purpose of the Program is to reward the performance of the Participant in a manner
 
that is consistent with the Bank’s strategic
plan and
 
the attainment
 
of a
 
growing return
 
to the
 
shareholders of
 
the Corporation.
 
The Program
 
is further
 
intended to
 
assist the
Corporation in its ability to motivate, attract and retain qualified executives.
2.
 
Effective Date
 
The Program, in effect since January 1,
 
2018 through December 31, 2018, continues to
 
renew for successive one-year periods (each
calendar year being
 
a “Program Year”),
 
unless otherwise terminated
 
or modified in
 
accordance with the
 
Program and specifically
approved
 
by
 
the
 
Compensation
 
and
 
Benefits
 
Committee
 
(the
 
“Committee”)
 
of
 
the
 
Corporation’s
 
Board.
 
In
 
March
 
2023,
 
the
Committee approved certain modifications to the Program, effective for the Program
 
Year from January 1, 2023 through December
31, 2023, and onward.
 
3.
 
Eligibility for Participation
 
Participation is limited to
 
those approved by the
 
Committee during the first
 
90 days of each Program
 
Year.
 
Executives that would
otherwise be eligible who are hired or
 
promoted after the commencement of a
 
Program Year
 
may be included in the Program on
 
a
case-by-case basis with the approval of the Committee. In general,
 
new hires must be employed prior to October
 
1st of the Program
Year
 
to be eligible to participate in the Program for the performance period.
4.
 
Basis of Incentive Compensation Award
The Program is paid in cash. The Participant’s
 
potential incentive compensation award under the Program is based on
 
an incentive
target for his or
 
her position that
 
is approved at the
 
beginning of the
 
Program Year by the Committee (or
 
its delegee) in
 
its discretion.
The potential incentive compensation award is expressed
 
as a percentage of the Participant’s
 
base salary at the end of the Program
Year.
 
In no event shall a Participant receive payment under the Program that exceeds 150% of the Participant’s
 
incentive target for
the Program Year.
 
The amount of any incentive compensation award to be paid to a Participant is approved by
 
the Committee.
 
5.
 
Program Details
The Program uses a balanced scorecard structure with Corporate and Individual Goals. The Program allows flexibility to select key
Corporate metrics and adjust weightings year-over-year based on the Corporate
 
strategy.
The
 
amount
 
of
 
incentive
 
compensation
 
that
 
a
 
Participant
 
is
 
entitled
 
to
 
receive
 
under
 
the
 
Program
 
is
 
determined
 
based
 
on
 
the
Participant’s award target multiplied by his or
 
her base salary as
 
of December 31 of
 
the Program Year and the weighting (as
 
detailed
in Exhibit
 
A) and
 
achievement of
 
the approved
 
performance goals
 
(as detailed
 
in Exhibit
 
B). The
 
period for
 
achievement of
 
any
performance goal(s) is the Program Year.
 
 
 
 
 
 
2
A.
Corporate Goals
The Corporate Goals for the Program Year
 
will be recommended by the Chief Executive Officer and approved in
 
writing by
the Committee.
B.
Individual Goals
Individual Goals are comprised of two components:
●
 
Individual performance
 
– Quantitative
 
and milestone
 
goals based
 
on the
 
Participant’s
 
line of
 
business or
 
functional
area as established
 
in the approved
 
annual budget and
 
specify high level
 
targets included in
 
each of the
 
Participant's
scorecard for the year.
●
 
Leadership
 
and
 
Core
 
Competencies
 
–
 
Qualitative
 
assessment
 
of
 
leadership
 
as
 
well
 
as
 
a
 
qualitative
 
assessment
 
of
established core competencies as set forth by the Corporation.
Individual Goals
 
for the
 
Program Year
 
will be
 
recommended by
 
the Chief
 
Executive Officer
 
and approved
 
in writing
 
by the
Committee.
C.
Determination of Incentive Compensation Award
Within the first 90 days following the end of
 
the Program Year,
 
the Corporation will review performance against the
Corporate Goals, certify in writing that the applicable performance goals
 
were satisfied, and determine the amount of the
incentive compensation award, if any,
 
to be paid to each Participant under the Program. For performance between threshold
and target or target and maximum levels, the incentive
 
calculation uses straight-line interpolation.
6.
 
Adjustments
In determining the level of performance achieved, the Committee may permit certain adjustments to
 
the performance metrics based
on nonrecurring
 
events such
 
as: (a) asset
 
write-downs not
 
in the
 
ordinary course
 
of business, (b)
 
litigation or
 
claim judgments
 
or
settlements, (c) the effect of changes in tax
 
laws, accounting principles or regulations, or other laws
 
or provisions affecting reported
results, (d) mergers,
 
acquisitions or divestitures,
 
(e) foreign exchange
 
gains and losses,
 
or (f) other
 
extraordinary,
 
unusual, and/or
nonrecurring items of gain or loss.
 
The Committee
 
and Board
 
have the
 
discretion to
 
modify payouts
 
for other
 
factors in
 
which they
 
deem relevant
 
including 1)
 
any
regulatory agency
 
issues a
 
formal, written
 
enforcement
 
action, memorandum
 
of understanding
 
or other
 
negative directive
 
action
where the
 
Committee considers
 
it imprudent
 
to provide
 
awards under
 
the Program,
 
2) after
 
a review
 
of the
 
Corporation’s
 
credit
quality measures the Committee considers it imprudent to provide awards
 
under the Program (please see Section 8).
7.
 
Termination
 
Events
In the event
 
the Participant’s
 
employment ceases
 
prior to the
 
Payment Date (as
 
defined below) for
 
any reason, including,
 
without
limitation, a voluntary termination of employment by the Participant, as defined by the personnel policies of the Corporation, or an
involuntary termination with
 
cause, the Participant
 
shall not be
 
entitled to, and
 
shall not have earned,
 
any incentive compensation
award under the Program. However, on a case-by-case basis, the Committee may allow
 
an incentive compensation award in its sole
discretion as deemed appropriate.
Additionally, Participants on a performance improvement program, have an unsatisfactory performance rating or have given notice
of resignation shall not be entitled to, and shall not have earned, any incentive
 
compensation award under the Program.
If
 
the
 
Participant
 
has
 
an
 
employment
 
or
 
change-in-control
 
agreement
 
that
 
indicates
 
different
 
terms
 
than
 
this
 
Section
 
7,
 
the
employment agreement will govern the terms for payment.
 
3
8.
 
Administration of the Program
The Committee is
 
responsible for the
 
oversight, supervision and
 
existence of
 
the Program.
 
The Chief
 
Executive Officer shall
 
monitor
performance
 
and make
 
recommendations
 
to the
 
Committee concerning
 
award
 
opportunities and
 
the
 
amount
 
of the
 
Participants’
awards under
 
the Program.
 
The Chief
 
Executive
 
Officer
 
has been
 
delegated
 
discretion
 
to interpret
 
the terms
 
of the
 
Program,
 
to
determine
 
eligibility
 
for
 
benefits, and
 
to calculate
 
the incentive
 
compensation
 
awards under
 
the Program,
 
with the
 
exception
 
of
matters
 
concerning
 
his
 
or her
 
own
 
eligibility
 
or
 
awards under
 
the
 
Program.
 
The Committee
 
will make
 
decisions
 
concerning
 
all
matters relating
 
to the
 
Chief Executive
 
Officer’s
 
award, approve
 
all opportunities,
 
goals and
 
award payments
 
made to
 
executive
officers and
 
approve the aggregate
 
value of opportunities
 
and award payout
 
under the Program.
 
The Committee,
 
in its discretion,
makes
 
all
 
final
 
determinations
 
including
 
those
 
not
 
herein
 
specifically
 
authorized
 
which
 
may
 
be
 
necessary
 
or
 
desirable
 
for
 
the
effective administration of the Program.
 
Unless the Committee deems otherwise, awards will not be earned or paid, regardless of Corporate or individual performance, if 1)
any regulatory
 
agCency Cissues
 
a formal,
 
written enforcement
 
action, memorandum
 
of understanding
 
or other negative
 
directive
action where
 
the Committee
 
considers it
 
imprudent to
 
provide awards
 
under the
 
Program, 2)
 
after a
 
review of
 
the Corporation’s
credit quality measures the Committee considers it imprudent to provide
 
awards under the Program.
Any decision or interpretation of any provision of the Program adopted by the
 
Committee shall be final and conclusive.
9.
 
Modification and Termination
 
of Program
The Program may be modified or terminated at any time by the Committee
 
in its discretion, followed by written notification to
 
the
Participant as soon as reasonably practicable. In the event of a Program termination, the Participant shall continue to be eligible for
incentive
 
compensation
 
awards
 
for
 
the
 
Program
 
Year
 
prorated
 
through
 
the
 
Program’s
 
termination
 
date,
 
unless
 
the
 
Committee
determines in its discretion that no incentive compensation should be paid. Any incentive compensation awards shall be calculated
through the date of the Program termination on such basis as the Committee deems appropriate in its discretion and will be
 
payable
as soon as practicable after the
 
termination of the Program but in
 
no event later than 90
 
days following the end of the
 
Program Year.
10.
 
Ethical Statement
The Corporation
 
is committed
 
to doing
 
business in
 
an honest
 
and ethical
 
manner and
 
to complying
 
with all
 
applicable laws
 
and
regulations. Participant actions are expected to
 
comply with the policies
 
established by the Corporation, including ethics
 
and insider
policies. The Committee may
 
determine on a case-by-case
 
basis any adjustments or eliminations
 
of incentive payments under
 
this
Program due to violations of policies or noncompliance.
11.
 
Clawback
Awards
 
are subject to any clawback policy established by the Corporation.
12.
 
Participant Rights Not Assignable; Program Not a Contract
Any awards made pursuant to the Program shall not be subject to assignment, pledge or other disposition. Nothing contained in the
Program shall confer upon any employee any right to continued employment or to receive or continue
 
to receive any rate of pay or
other compensation, nor does the Program affect the right
 
of the Corporation to terminate a Participant’s employment. Participation
in the
 
Program does
 
not confer
 
rights to
 
participation in
 
other Corporation
 
programs or
 
Programs, including
 
annual or long-term
incentive Programs, non-qualified retirement or deferred compensation
 
Programs or other executive perquisite programs.
13.
 
Governing Law and Venue
The parties agree that the interpretation and enforcement of the Program shall be governed by the laws of Puerto Rico, and that any
action to enforce or determine any rights under the Program shall be brought exclusively in
 
a court of competent jurisdiction in San
Juan, Puerto Rico. The Participant consents and waives any objection
 
to personal jurisdiction and venue in such court.
 
4
14.
 
Attorney’s Fees and Costs
The parties agree that in the event of any legal action arising out
 
of or relating to the interpretation or enforcement of
 
the Program,
the
 
Corporation
 
shall
 
be
 
entitled
 
to
 
recover
 
their
 
attorney’s
 
fees
 
and
 
costs
 
in
 
the
 
event
 
that
 
they
 
are
 
(or
 
either
 
of
 
them
 
is)
 
the
prevailing party.
15.
 
No Oral or Written Representations
The parties agree that they have relied on no oral or written representation or
 
promises not set forth herein, and that the terms of the
Program are
 
set forth
 
solely in
 
the written
 
Program document
 
and it
 
constitutes the
 
complete and
 
entire agreement
 
of the
 
parties
relating to the subject matter hereof.
16.
 
Banking Regulatory Provision
All incentive
 
compensation awards
 
under the
 
Program are
 
subject to
 
any condition,
 
limitation or
 
prohibition under
 
any financial
institution regulatory policy or rule to which the Corporation is subject.
Ratified by the Committee of the Board of First BanCorp on March 16, 2023.
 
 
 
5
Exhibit A: Participants, Target
 
Opportunity and Weightings
The following is
 
a summary of current
 
Program Participants together
 
with each Participants’
 
opportunities at target
 
level performance
(expressed as a percentage of base salary) and weightings for each performance
 
component. Corporate Metric weighing is effective for
awards made for the 2023 performance year and onward.
 
 
6
Exhibit B: Metrics and Calculation