(b) Absolute Award Limit. Because a potential short-term cash incentive award can encourage excessive risk-taking if the potential award constitutes a dominant or excessively large portion of an employees total compensation, under no circumstance may the maximum potential cash award under this Plan to a Participant for a Plan Year exceed 36% of the Participants annual compensation (without taking the incentive award under this Plan into account), or 36% of salary in the case of a salaried officer.
(c) Awards Are Based on Full-Year Results Only. No incentive awards shall be made for performance measured over a period less than a full Plan Year, except as may be specifically allowed by this Plan.
(d) Awards. A Participants award under this Plan shall be based on two principal variables: the maximum potential award, stated as a percentage of annual compensation, or a percentage of annual salary in the case of a salaried employee, and the specific performance criteria and goals that must be satisfied in a Plan Year in order for the Participant to actually receive the incentive award payment.
(1) The first variable, the maximum potential award, is established by the nonemployee directors of the Board of Directors that are considered independent directors by Proxy Advisory Firms, and may change from one Plan Year to the next, subject to the 36% absolute award limit stated in section 5(b). For purposes of determining the maximum potential award, the nonemployee directors may for convenience segregate employees into categories or tiers. The maximum potential award of one category or tier of employee may be different from the maximum potential award of another category or tier of employee, and in the discretion of the nonemployee directors the maximum potential award may even be different from one employee to the next within the same category or tier.
(2) The second variable, the award performance criteria and the specific goals to be achieved, is likewise established by the nonemployee directors of the Board of Directors that are considered independent directors by Proxy Advisory Firms, may change from one Plan Year to the next, and likewise may be different for one employee category or tier from the performance criteria and goals applicable to another category or tier, and may even be different for one employee within a particular category or tier from the performance criteria and goals applicable to another employee within that same category or tier. Performance criteria can be divided into three distinct classes: (x) bank-wide performance criteria, (y) business unit or departmental performance criteria, and (z) individual performance criteria, with each employee category or tier being subject to varying combinations of any one or more of these three classes of performance criteria, as determined by the nonemployee directors.
The performance criteria and goals may take into account factors such as total revenue, revenue growth, net income, earnings, earnings growth, earnings per share, cash flow, efficiency ratio, total deposits, deposit growth, fee income, non-interest income, total loans, loan growth, loan charge offs, nonperforming assets-to-assets ratio, classified asset coverage ratio, return on assets, return on equity, customer satisfaction, peer data, market data, management input, and other factors.