Lake Shore Savings Bank Annual Incentive Plan
Exhibit 10.14
Lake Shore Savings Bank
Annual Incentive Plan
Annual Incentive Plan
The Annual Incentive Plan is designed to compensate plan participants for the attainment of specified bank, department or division, and individual goals. The objective is to align the interests of our executives with the interests of the Bank and our shareholders in obtaining superior financial results.
The Plan operates on a calendar year basis (January 1st to December 31st). This same calendar year is the performance-period for determining the amount of incentive awards to be paid following year end.
PERFORMANCE CRITERIA
PERFORMANCE STANDARDS
For each performance factor (Overall Bank, Dept, Branch, and Individual), an appropriate standard of performance must be established with three essential performance points:
PLAN PAYOUTS
Participants must be in good standing with the Bank. If an employee is on probation or receives an unsatisfactory performance review, he or she may forfeit any award payouts that performance year.
After all performance results are available at year-end, the awards will be calculated for each Plan participant and approved by the Compensation Committee. The Compensation Committee may, at their discretion, allow participants to receive their award in cash, stock, or a combination.
The actual award payouts will be calculated using a ratable approach, where award payouts are calculated as a proportion of minimum, target, maximum and superior award opportunities. If actual performance falls between a performance level, the payout will also fall between the pre-defined performance level on a pro-rated basis. A Plan participant must be an employee at the time of the award payout in order to receive a payout. The result of the performance criteria is calculated as a percent of base salary for participants during the current Plan year. Plan payouts will be made no later than 75 days after the year end.
Lake Shore Savings Bank has the right to recover any incentive payments that were made based on material misstatements or inaccurate performance metrics.
PLAN ADMINISTRATION
Responsibilities of the Compensation Committee: The Compensation Committee has the responsibility to approve, amend, or terminate the Plan as necessary. The actions of the Compensation Committee shall be final and binding on all parties. The Compensation Committee shall also review the operating rules of the Plan on an annual basis and revise these rules if necessary. The Compensation Committee also has the sole ability to decide if an extraordinary event totally outside of management’s influence, be it a windfall or a shortfall, has occurred during the current Plan year, and whether the figures should be adjusted to neutralize the effects of such events. After approval by the Compensation Committee, management shall, as soon as practical, inform each of the Plan participants under the Plan of their potential award under the operating rules adopted for the Plan year.
Responsibilities of the CEO: The CEO of the Company, at the direction of the Compensation Committee, administers the program and provides liaison to the Compensation Committee, including the following specific responsibilities: recommend the participants to be included in the Plan each year (this includes determining if additional employees should be added to the Plan and if any Plan participants should be removed from participating in the Plan); provide recommendations for the award opportunity amounts at threshold, target, maximum and superior for employees other than himself; review the objectives and evaluations, adjust guideline awards for performance and recommend final awards to the Compensation Committee; and, provide other appropriate recommendations that may become necessary during the life of the Plan. This could include such items as changes to Plan provisions.
Amendments and Plan Termination: The Company has developed the Plan on the basis of existing business, market and economic conditions, current services, and staff assignments. If substantial changes occur that affect these conditions, services, assignments, or forecasts, the Company may add to, amend, modify, or discontinue any of the terms or conditions of the Plan at any time with approval from the Compensation Committee. The Compensation Committee may, at its sole discretion, terminate, change, or amend any of the Plan as it deems appropriate.
MISCELLANEOUS
Reorganization: If the Company shall merge into or consolidate with another company, reorganize, or sell substantially all of its assets to another company, firm, or person, such succeeding or continuing company, firm, or person shall succeed to, assume, and discharge the obligations of the Company under this Plan. Upon the occurrence of such event, the term “Company”, as used in this Plan, shall be deemed to refer to the successor or survivor company.
Tax Withholding: The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Plan.
Designated Fiduciary: The Company shall be the named fiduciary and Plan Administrator under the Plan. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Plan, including the employment of advisors and the delegation of ministerial duties to qualified individuals.
No Guarantee of Employment: This Plan is not an employment policy or contract. It does not give the Plan participant the right to remain an employee of the Company, nor does it interfere with the Company's right to discharge the Plan participant.