First Bancorp Annual Incentive Plan
EX-10.A 2 ex10a.htm EX-10(A)
First Bancorp
Annual Incentive Plan
Introduction
The First Bancorp Annual Incentive Plan (“AIP”) is a bonus plan that links compensation to the achievement of performance goals. The performance goals will generally include business measures that improve both the short-term earnings and long-term earnings of the company and/or contribute to shareholder value.
| Plan Features | |
| Measurement Period | Calendar Year |
| Eligible Participants | Executive officers, and other employees of the Company designated by the Chief Executive Officer |
| Participation Categories | Branch – includes branch employees and Regional Executives. |
| Corporate – includes all other individuals, including executive officers, the audit department, the deposit and loan operations departments, the credit card department, collections, human resources, Montgomery Data Services, First Bank Insurance Services, and the Appraisal Department. | |
| Performance Goals | One or more performance goals will be established related to consolidated corporate performance (“Corporate Performance Goals”) and related to regional and branch specific performance (“Regional/Branch Performance Goals”) – collectively “Performance Goals.” |
| The Corporate Performance Goals will be determined annually by the Compensation Committee and reported to the Board of Directors. The specific Regional/Branch Performance Goals will be determined annually by the Chief Executive Officer. There may be Corporate Performance Goals that are measured differently for Branch participants than for Corporate participants, and certain Corporate Performance goals may apply to only one category of participants. |
| Performance Goals may include, but are not limited to, the following business measures: net income, deposit growth, loan growth, noninterest income growth, and expense growth. | |
| Calculation of Awards | Each participant is assigned a Target Award, which is expressed as a percent of their annual salary. The Compensation Committee determines the Target Award for the Company’s executive officers and officers classified as “Regional Executives.” The Company’s Chief Executive Officer establishes the Target Award for all other participants. The Target Award for a given year for any or all employees may be adjusted by the Compensation Committee as deemed appropriate. |
| The Target Award is then adjusted by multiplying it times the sum of the Performance Percentages (defined below) that apply to the individual. | |
| Performance Goal Weight | Each Performance Goal will have an assigned weight (“Performance Goal Weight”) determined by the Compensation Committee and reported to the Board of Directors. The total of the assigned weights for all Performance Goals will be 100%. |
| For Branch participants, the sum of the Performance Goal Weights related to Regional/Branch Performance Goals will generally total 75% and the sum of the Performance Goal Weights related to Corporate Performance Goals will be 25%. | |
| For Corporate participants, 100% of the Performance Goal Weights will be comprised of Corporate Performance Goals. | |
| Performance Percentage | The Performance Percentage is a percentage reflecting actual performance in relation to the Performance Goal. |
| For each Performance Goal, a threshold goal, target goal, and maximum goal will be set on an annual basis. | |
| Achievement of less than the threshold goal will result in a zero percent Performance Percentage. Achievement of the goal at the threshold level will result in a 50% percent Performance Percentage for that goal. Achievement of the Target Goal will result in 100% being applied to the Performance Goal Weight to determine the Performance Percentage, and achievement of the Maximum Goal will result in 200% being applied to the Performance Goal Weight to determine the Performance Percentage. |
| Pro-rata extrapolation will be utilized to determine a Performance Percentage that is between the Threshold Goal and the Target Goal or the Target Goal and the Maximum Goal. See Exhibit A for a table illustrating the extrapolation at various intervals of performance. | |
| Discretionary Awards | The Compensation Committee shall have the ability to adjust any award paid under this plan upward or downward in its discretion at any time. Examples of factors that the Compensation Committee may consider when adjusting an award include, but are not limited to: unusual items of income or expense, results of internal audit reports, and regulatory exam reports. This can include minimum triggers for any payments to be paid under this plan. |
| Payment of Awards | All awards will be paid within 90 days after each fiscal year end. Any employee who terminates employment prior to December 31 of the Measurement Period is not eligible to receive an award. Employees who become participants in the plan during the year will receive a pro-rata bonus based on the amount of time they were in the plan during the Measurement Period. |
| Payments may be made in any combination of cash and common stock, as the Compensation Committee determines. The Compensation Committee may impose vesting requirements on the stock that are applicable to certain or all employees receiving stock. All stock awards will be made pursuant to shareholder approved equity plans. | |
Exhibit A
First Bancorp Annual Incentive Plan
| Performance Achieved in Relation to the Performance Goal |
Performance Percentage |
| At Threshold Goal | 50 |
| Halfway Between Threshold Goal and Target Goal |
75 |
| At Target Goal | 100 |
| Halfway Between Target Goal and Maximum Goal |
150 |
| At Maximum Goal | 200 |
