Keystone Savings Bank Senior Management Variable Compensation Program (2002)

Summary

Keystone Savings Bank has established a variable compensation program for its senior management team, including the CEO, COO, and CFO. The program links annual bonus payouts to the achievement of specific business plan objectives, such as loan growth, deposit growth, and return on equity (ROE). Payouts are determined as a percentage of base salary and depend on both corporate and individual performance, with minimum, target, and peak payout levels. The plan is designed to reward long-term performance, retain flexibility, and ensure that only those who significantly contribute to the bank’s success are eligible.

EX-10.7 17 dex107.txt SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM Exhibit 10.7 KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM 2002 KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM PROGRAM OBJECTIVES ESTABLISH A FORMAL LINK BETWEEN THE BUSINESS PLAN AND THE COMPENSATION PLAN REFLECT MUTUALITY CREDO REWARD ACHIEVEMENT OF LONG TERM PERFORMANCE OBJECTIVES IN ANNUAL INCREMENTS RETAIN FLEXIBILITY TO ADAPT TO UNFORESEEN EVENTS AND CHANGE IN DIRECTION INCORPORATE INDIVIDUAL PERFORMANCE EVALUATION -1- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM GENERAL STRUCTURE VARIABLE PAYOUTS WILL BE BASED ON BANK PERFORMANCE AGAINST BUSINESS PLAN BUSINESS PLAN WILL BE DEVELOPED WITH DUE CONSIDERATION OF PEER PERFORMANCE PROGRAM LIMITED TO SENIOR MANAGEMENT WHO CAN SIGNIFICANTLY CONTRIBUTE TO ACHIEVEMENT OF BUSINESS PLAN VARIABLE PAYOUTS WILL BE DETERMINED BASED ON PERFORMANCE RESULTS AFTER PROGRAM COSTS -2- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM VARIABLE PAYOUT TARGETS EACH POSITION HAS A TARGET VARIABLE PAYOUT TARGETS ARE SET AS A PERCENTAGE OF PARTICIPANTS BASE SALARY EACH POSITION ASSESSED TO HAVE EQUAL POTENTIAL TO AFFECT ACHIEVEMENT OF BUSINESS PLAN ACTUAL VARIABLE PAYOUTS WILL DEPEND ON ACTUAL CORPORATE AND INDIVIDUAL PERFORMANCE -3- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM INITIAL TARGET VARIABLE PAYOUTS (As A Percentage of Base Salary) Chief Executive Officer 15% Chief Operating Officer 15% Chief Financial Officer 15% -4- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM TWO CORPORATE PERFORMANCE THRESHOLDS All thresholds must be achieved to activate the Plan VARIABLE COMPENSATION ACTUAL PLAN 2001 ---- ---- CAPITAL RATIO 9.00% (10.39%) NON-PERFORMING LOANS 1.20% (0.50%) -5- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM THREE KEY CORPORATE PERFORMANCE MEASURES THREE KEY CORPORATE PERFORMANCE MEASURES DETERMINE ACTUAL VARIABLE PAYOUT MEASURE WEIGHTING ------- --------- LOAN GROWTH 30% DEPOSIT GROWTH 30% ROE 40% --- 100% -6- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM CORPORATE PERFORMANCE OBJECTIVES SUMMARY Performance Measure Minimum TARGET Peak and Weight Performance Performance Performance - ----------- ----------- ----------- ----------- LOAN GROWTH (30% Weight) 2002 $34 million $49 million $59 million (5.1%) (7.3%) (8.8%) DEPOSIT GROWTH (30% Weight) 2002 $28 million $58 million $68 million (3.6%) (7.5%) (9.0%) ROE (40% Weight) 2002 7.80% 8.87% 10.00% -7- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM VARIABLE PAYOUT DETERMINATION VARIABLE PAYOUTS ARE COMPRISED OF THREE "COMPONENTS" (ONE FOR EACH KEY AREA OF THE BANK'S STRATEGIC PLAN) VARIABLE COMPONENTS BEGIN TO PAYOUT AT MINIMUM CORPORATE PERFORMANCE FOR THE COMPONENT PAYOUTS INCREASE SUBSTANTIALLY AS PERFORMANCE FOR THE MEASURE APPROACHES TARGET AT TARGET PERFORMANCE, TARGET PAYOUTS WILL BE EARNED FOR THE MEASURE PAYOUTS CONTINUE TO INCREASE OVER TARGET PAYOUTS SLOW AFTER TARGET PERFORMANCE IS REACHED PAYOUTS STOP AT PEAK STRONG MOTIVATION TO ACHIEVE TARGETS BENEFITS FROM WINDFALLS AND LOW BALL TARGETS ARE LIMITED -8- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM VARIABLE PAYOUT PARAMETERS TOTAL PAYOUT PARAMETERS (Each Position Level) (As a Percentage of Base Compensation) Minimum Payout 5.0% Performance Achieved TARGET Payout 15.0% Performance Achieved Peak Payout 30.0% Performance Achieved -9- KEYSTONE SAVINGS BANK SENIOR MANAGEMENT VARIABLE COMPENSATION PROGRAM VARIABLE PAYOUT PARAMETERS COMPONENT PAYOUT PARAMETERS (Each Position Level) (As a Percentage of Base Compensation) Minimum TARGET Peak Component Performance Performance Performance --------- ----------- ----------- ----------- LOAN GROWTH 1.50% 4.50% 9.00% DEPOSIT GROWTH 1.50% 4.50% 9.00% ROE 2.00% 6.00% 12.00% ----- ------ ------ COMPONENTS TOTAL PAYOUT 5.00% 15.00% 30.00% -10-