Form of Popular, Inc. 2024 Long-Term Equity Incentive Award and Agreement

Contract Categories: Human Resources - Bonus & Incentive Agreements
EX-10.1 2 d799277dex101.htm EX-10.1 EX-10.1
 
 
 
 
 
 
 
 
1
Exhibit 10.1
FORM OF POPULAR, INC.
2023 LONG-TERM EQUITY INCENTIVE AWARD
 
AND AGREEMENT
 
Recipient:
 
The Talent
 
and Compensation Committee
 
of the
 
Board of Directors
 
of Popular,
 
Inc. (the
“
Committee
”)
 
awarded
 
you
 
on
 
February
 
27,
 
2023
(the
“Grant
 
Date”
)
a
 
Long-Term
 
Incentive
 
Award
consisting of Restricted
 
Stock (“
Restricted Stock
”) and Performance
 
Shares (“
Performance Shares
” and, in
conjunction with the Restricted Stock, the “
Award”
).
 
This award agreement (the “
Award Agreement
”), dated as of the Grant Date, sets forth
 
the
terms and conditions of your
 
Award.
 
This Award is made under the Popular, Inc. 2020 Omnibus
 
Incentive
Plan, as amended
 
(the “
Plan
”), and, except
 
as otherwise provided
 
herein, is subject
 
to the terms
 
of the Plan.
Capitalized terms used but not otherwise defined in this
 
Award Agreement have the meanings given in the
Plan.
 
1.
Award.
 
The number of
 
shares of Restricted
 
Stock and Performance
 
Shares subject
to this Award is set forth in Annex 1 hereto.
 
The Award will vest as set forth below.
 
2.
Vesting;
 
Payout.
Subject to Section 6 of this Agreement, you will be entitled
 
to the following
:
(a)
Restricted Stock
 
Vesting.
 
Except as
 
otherwise stated in
 
this Section
 
2, your
 
Restricted Stock
shall vest
 
in four
 
substantially equal
 
annual installments
 
on each
 
of the
 
dates specified
 
in Annex
1 (each of the dates described therein, a
“Restricted Stock
Vesting
 
Date
”).
(b)
Performance Shares Vesting
 
.
 
Except as otherwise
 
stated in this
 
Section 2, you
 
shall become
vested in the
 
Performance Shares on the
 
day of the first
 
scheduled meeting of the Committee
taking place in the month of February 2026, subject
 
to the achievement by Popular, Inc. of the
Performance
 
Goals
 
specified in
 
Annex
 
1
 
during
 
the
 
Performance
 
Cycle,
 
as
 
certified
 
by
 
the
Committee in such meeting
 
(hereinafter the
 
“Performance Shares Vesting Date”
and, together
with the Restricted Stock Vesting
 
Date, the
 
“Vesting
 
Date”)
.
 
The Performance Goals will be
based
 
on two
 
performance metrics
 
weighted equally:
 
the
 
Relative Total
 
Shareholder Return
(the “
TSR
”) and the Absolute Return
 
on Average
 
Tangible Common Equity
 
(the “
ROATCE
”)
goals. The Performance Cycle
 
is a three (3)
 
year period beginning on
 
January 1 of the
 
calendar
year of the Grant Date and ending on December 31 of the third year.
 
Each Performance Goal
will have a defined minimum threshold (i.e., minimum result for which an incentive would be
earned), target
 
(i.e.,
 
result
 
at
 
which 100%
 
of
 
the
 
incentive would
 
be earned)
 
and maximum
level of performance (i.e., result at which 1.5 times the incentive
 
target would be earned).
(c)
Approved Retirement.
 
Upon an Approved Retirement after attaining (x) age 55 with 10 years
of service with Popular, Inc. or
 
its subsidiaries (the “
Corporation
”) or (y) age 60 with 5 years
of service with the Corporation: (1) your outstanding Restricted Stock shall fully vest; and (2)
your
 
outstanding
 
Performance
 
Shares
 
shall
 
continue
 
outstanding
 
and
 
vest
 
in
 
full
 
on
 
the
 
 
 
 
 
 
 
 
 
 
 
 
 
2
Performance
 
Shares
 
Vesting
 
Date
 
in
 
accordance
 
with
 
the
 
actual
 
results
 
of
 
the
 
Performance
Goals during the Performance Cycle.
(d)
Vesting
 
upon Retirement
 
on or
 
after age
 
50 before
 
attaining age
 
55 and
 
10 years
 
of service.
The Committee,
 
at its
 
discretion, may
 
accord the
 
same treatment
 
accorded in
 
Section 2(c)
 
above
if you retire
 
from your employment
 
on or after
 
age 50, and
 
before attaining age
 
55 and 10
 
years
of service, provided the sum of your age and years of service is at least 75.
(e)
Death. Provided that on
 
the date of your
 
death you are still
 
employed by the Corporation and
your rights in respect
 
of your Award
 
have not been previously
 
terminated, any then unvested
outstanding
 
Award
 
shall
 
immediately
 
vest
 
and
 
be
 
paid
 
to
 
the
 
representative
 
of
 
your
 
estate
promptly after your death.
 
In the case of the
 
Performance Shares, the
 
number of shares will
 
be
calculated as if the target number of Performance Shares had in fact been earned.
(f)
Disability.
 
If you
 
become subject
 
to Disability
 
while you
 
are still
 
employed by
 
the Corporation,
any then unvested outstanding Award shares shall vest and shall be paid to you promptly after
you become subject to Disability.
 
In the case of the
 
Performance Shares, the
 
number of shares
will be calculated as if the target number of Performance Shares had in fact been
 
earned.
(g)
Change
 
of
 
Control.
 
If
 
your employment
 
is terminated
 
by the
 
Corporation or
 
any successor
entity thereto without
 
Cause, or if
 
you terminate your employment
 
for Good Reason,
 
in each
case upon or within two years
 
after a Change of Control, prior
 
to a Vesting Date, and provided
your rights in
 
respect of the
 
shares of your
 
unvested Award have not previously
 
terminated, the
shares of your unvested Award
 
shall immediately vest and be delivered to
 
you promptly after
such
 
termination
 
of
 
employment;
provided
 
that
,
 
as
 
of
 
the
 
Change
 
of
 
Control
 
date,
 
any
outstanding Performance
 
Shares shall
 
be deemed
 
earned at
 
the greater
 
of the
 
target
 
level or
actual performance level through the Change of Control date (or if no target level is specified,
the maximum
 
level) with
 
respect to all
 
open performance
 
periods and
 
such Performance
 
Shares
shall be
 
subject to
 
time-based vesting
 
through the
 
end of
 
the original
 
Performance Cycle
 
for
each such
 
Award,
 
subject to
 
accelerated vesting
 
in accordance
 
with the
 
first sentence
 
of this
clause.
(h)
Termination
 
without Cause.
 
If the
 
Corporation terminates
 
your employment
 
without Cause
you will receive payment
 
of the Award on a prorated basis based on
 
the number of full
 
months
in the
 
vesting schedule
 
in which
 
you were
 
an active
 
employee (with
 
a partial
 
month worked
counted as a full month if you were an active employee for 15 days
 
or more in the month) and
such reduced Award
 
will vest immediately upon
 
your termination of employment,
 
calculated
in the
 
case of
 
Performance Shares as
 
if the
 
target number
 
of Performance
 
Shares had
 
in fact
been earned, as provided in the Plan.
(i)
Payout.
 
The transfer restrictions
 
on the applicable number
 
of whole shares of
 
Restricted Stock
shall lapse on each Vesting Date or such other vesting date as determined
 
in this Section 2 and
in the terms of the
 
Plan. The payout with respect to vested
 
Performance Shares shall be made
on
 
the
 
Performance Shares
 
Vesting
 
Date, on
 
which date
 
the
 
Committee shall
 
determine the
total
 
number
 
of
 
shares
 
earned
 
based
 
upon
 
the
 
actual
 
performance
 
results
 
during
 
the
Performance Cycle.
 
The vested
 
shares will
 
be delivered
 
to
 
you as
 
soon as
 
administratively
practicable, generally within 45 days following each Vesting Date.
3.
Termination of Award
 
.
 
 
 
3
(a)
Except
 
as
 
provided
 
herein,
 
your
 
rights
 
in
 
respect
 
of
 
your
 
outstanding
 
unvested
Award
 
shares shall
 
immediately terminate,
 
and no
 
shares shall
 
be paid
 
in respect
 
thereof, if
 
at any
 
time
prior to the respective Vesting Date you terminate your employment.
 
(b)
If
 
the
 
Corporation
 
terminates
 
your
 
employment
 
for
 
Cause, your Award shares shall be cancelled and the provisions under the Plan will apply.
4.
Non-transferability.
 
This Award (or any
 
rights and
 
obligations hereunder)
 
may not
be sold,
 
exchanged, transferred,
 
assigned, pledged,
 
hypothecated or
 
otherwise disposed
 
of or
 
hedged, in
any manner (including
 
through the use
 
of any cash-settled
 
instrument), whether
 
voluntarily or involuntarily
and whether by operation of
 
law or otherwise, other than
 
by will or by the laws
 
of descent and distribution.
 
5.
Withholding, Consents and Legends.
(a)
You
 
shall
 
be
 
solely
 
responsible
 
for
 
any
 
applicable
 
taxes
 
(including,
 
without
limitation,
 
income
 
and
 
excise
 
taxes)
 
and
 
penalties,
 
and
 
any
 
interest
 
that
 
accrues
 
thereon,
 
incurred
 
in
connection with your Award.
 
The Corporation will withhold shares of Common Stock
 
for the payment of
taxes
 
in
 
connection
 
with
 
the
 
vesting
 
of
 
your
 
Award
 
or
 
upon
 
the
 
occurrence
 
of
 
any
 
other
 
event
 
that,
 
in
accordance with applicable law,
 
will generate a tax liability with regards to
 
your Award.
 
The Corporation
will
 
withhold shares
 
of
 
Common
 
Stock
 
with
 
a
 
value
 
equal
 
to
 
the
 
amount
 
of
 
taxes
 
that
 
the
 
Corporation
determines it is
 
required to withhold under
 
applicable laws (with such
 
withholding obligation determined
based on any
 
applicable minimum statutory withholding rates).
 
The Corporation will use
 
the Fair Market
Value
 
of the
 
Common Stock on
 
the Vesting
 
Date or such
 
other date, as
 
applicable, in order
 
to determine
the number
 
of shares
 
to be
 
withheld. If
 
you wish
 
to remit
 
cash to
 
the Corporation
 
(through payroll
 
deduction
or
 
otherwise),
 
in
 
each
 
case
 
in
 
an
 
amount
 
sufficient
 
in
 
the
 
opinion
 
of
 
the
 
Corporation
 
to
 
satisfy
 
such
withholding
 
obligation,
 
you
 
must
 
notify
 
the
 
Corporation
 
in
 
advance
 
and
 
do
 
so
 
in
 
compliance
 
with
 
all
applicable laws and pursuant
 
to such rules as
 
the Corporation may establish from
 
time to time, including,
but not limited to, the Corporation’s Insider Trading Policy.
 
(b)
Your right to receive shares pursuant to the Award is conditioned on the receipt to
the reasonable satisfaction of
 
the Committee of
 
any required consent
 
that the Committee
 
may reasonably
determine to be necessary or
 
advisable.
 
By accepting delivery of the
 
shares, you acknowledge that you
 
are
subject to the Corporation’s Insider Trading Policy.
6.
Restrictive Covenants.
 
(a)
In consideration of the terms of
 
the Award,
 
you agree to the restrictive covenants
and associated remedies as set forth below,
 
which exist independently of and in addition to any obligation
to which you are
 
subject under the
 
terms of any other
 
agreement you may have
 
with the Corporation
 
or any
of its subsidiaries (“
Popular
”).
(b)
For a period
 
of one year immediately
 
following termination of your
 
employment
with Popular for
 
any reason, you
 
will not do
 
any of the
 
following, either directly or
 
indirectly or through
associates, agents, or employees:
 
(i)
solicit,
 
recruit
 
or
 
assist
 
in
 
the
 
solicitation
 
or
 
recruitment
 
of
 
any
 
employee
 
or
consultant
 
of
 
Popular
 
(or
 
who
 
was
 
an
 
employee
 
or
 
consultant
 
of
 
Popular
 
within
 
the
 
prior
 
six
months) for the purpose of encouraging that employee or
 
consultant to leave Popular’s employ or
sever an agreement for services; or
 
 
 
 
 
 
4
(ii)
solicit,
 
participate
 
in
 
or
 
assist
 
in
 
the
 
solicitation
 
of
 
any
 
of
 
Popular’s
 
customers
serviced
 
by
 
you
 
or
 
with
 
whom
 
you
 
had
 
Material
 
Contact
 
and/or
 
regarding
 
whom
 
you
 
received
Confidential Information
 
(as defined
 
in Popular’s
 
Code of
 
Ethics) during
 
the three-year
 
period prior
to
 
your
 
employment
 
termination
 
who
 
were
 
still
 
customers
 
of
 
Popular
 
during
 
the
 
immediately
preceding 12-month period, for the purpose of
 
providing products or services in competition with
Popular’s products
 
or services.
 
"Material Contact"
 
means interaction
 
between you
 
and the
 
customer
within the three-year prior
 
to your last day as
 
a team member which
 
takes place to manage,
 
service
or further the business relationship.
 
The term “Solicit”, when used in this section, will mean any
 
direct or indirect communication of any kind
regardless of
 
who initiates
 
it, that
 
in any
 
way invites,
 
advises, encourages
 
or requests
 
any person
 
to take
any
 
action;
 
provided
 
that
 
such
 
term
 
will
 
not
 
be
 
deemed
 
to
 
include
 
solicitation
 
by
 
public
 
advertisement
media of general distribution (i.e., not targeted to present employees, consultants or customers of Popular)
without specific instruction or direction by you.
If you breach
 
any of
 
the terms
 
of this
 
restrictive covenant,
 
all outstanding
 
Restricted Stock
 
and Performance
Shares awarded hereunder, whether vested
 
or unvested, held by you shall be
 
immediately and irrevocably
forfeited for
 
no consideration.
 
For any
 
Restricted Stock
 
and Performance
 
Shares awarded
 
hereunder that
vested within one
 
(1) year prior
 
to the termination
 
of your employment
 
with Popular or
 
at any time
 
between
your termination
 
of employment and
 
the date
 
of said breach,
 
you shall
 
be required to
 
repay or
 
otherwise
reimburse Popular an amount having
 
a value equal to the aggregate
 
fair market value (determined as of
 
the
date of vesting)
 
of such vested
 
shares. This paragraph does
 
not constitute Popular’s
 
exclusive remedy for
violation of your
 
restrictive covenant obligations, and
 
Popular may seek
 
any additional legal
 
or equitable
remedy, including injunctive relief, for any such violation.
7.
Section 409A.
 
Shares awarded
 
under this
 
Award
 
Agreement are
 
intended to
 
be
exempt from
 
Section 409A
 
of the
 
U.S. Code,
 
to the
 
extent applicable,
 
and this
 
Award Agreement is
 
intended
to, and
 
shall be
 
interpreted, administered and
 
construed consistent
 
therewith.
 
The Committee
 
shall have
full authority to give effect to the intent of this Section 7.
8.
No Rights to Continued Employment.
 
Nothing in this Award Agreement shall be
construed as
 
giving you
 
any right
 
to continued
 
employment by
 
the Corporation
 
or any
 
of its
 
affiliates or
affect any
 
right that
 
the Corporation
 
or any
 
of its
 
affiliates may
 
have to
 
terminate or
 
alter the
 
terms and
conditions of your employment.
 
9.
Successors
 
and
 
Assigns
 
of
 
the
 
Corporation.
 
The
 
terms
 
and
 
conditions
 
of
 
this
Award Agreement shall be binding
 
upon, and shall
 
inure to the
 
benefit of, the
 
Corporation and its
 
successor
entities.
10.
Committee Discretion.
 
Subject to the terms of the
 
Plan, the Committee shall have
full discretion with respect to any actions to be taken or determinations to be made in connection with this
Award Agreement, and its determinations shall be final, binding and conclusive.
11.
Amendment.
 
The Committee
 
reserves the
 
right at
 
any time
 
to amend
 
the terms
and conditions
 
set forth
 
in this
 
Award
 
Agreement;
provided
 
that, notwithstanding the
 
foregoing, no such
amendment
 
shall
 
materially
 
adversely
 
affect
 
your
 
rights
 
and
 
obligations
 
under
 
this
 
Award
 
Agreement
without
 
your
 
consent
 
(or
 
the
 
consent
 
of
 
your
 
estate,
 
if
 
such
 
consent
 
is
 
obtained
 
after
 
your
 
death),
 
and
provided
,
further
, that the Committee may not postpone the payout of shares to occur at any time after the
applicable time provided for in this Award Agreement. Any amendment of this
 
Award Agreement shall be
in
 
writing signed
 
by
 
an
 
authorized member
 
of
 
the
 
Committee
 
or
 
a
 
person
 
or
 
persons
 
designated
 
by the
Committee.
 
 
 
 
5
12.
Adjustment; Other
 
Plan Provisions.
 
Subject to
 
Section 11,
 
the Committee
 
shall
adjust equitably the terms of this
 
Award
 
in accordance with Section 5.3 of the
 
Plan, if applicable. Subject
to
 
the
 
terms
 
of
 
this
 
Award
 
Agreement,
 
the
 
Restricted
 
Stock
 
shall
 
be
 
subject
 
to
 
the
 
terms
 
of
 
the
 
Plan,
including,
 
but
 
not
 
limited
 
to,
 
the
 
provisions
 
of
 
Section 8.4
 
related
 
to
 
dividends and
 
voting
 
rights.
 
Cash
dividends paid on the Restricted
 
Stock and on all of the
 
Common Stock that may be subsequently
 
acquired
with such
 
cash dividends,
 
will be
 
invested in
 
the purchase
 
of additional
 
shares of
 
Common Stock
 
of the
Corporation
 
in
 
accordance with
 
the
 
Popular,
 
Inc.
 
Dividend Reinvestment
 
and
 
Stock
 
Purchase
 
Plan
 
(the
“
DRIP
”); such shares
 
are not subject to
 
the restrictions and are
 
immediately vested. The Restricted
 
Stock
shall be held in custody by the Fiduciary Services Division of Banco Popular
 
de Puerto Rico.
Performance
 
Shares
 
will
 
accrue
 
Dividend
 
Equivalents
 
prior
 
to
 
the
 
Performance
 
Shares
 
Vesting
 
Date.
Accrued Dividend Equivalents with
 
respect to the Performance
 
Shares will be invested
 
in additional shares
of Common Stock
 
of the Corporation in
 
accordance with the formula
 
set forth in
 
the DRIP.
 
All shares of
Common
 
Stock
 
acquired
 
pursuant
 
to
 
the
 
reinvestment
 
of
 
dividends
 
will
 
be
 
subject
 
to
 
the
 
terms
 
and
conditions of Section
 
2 and will
 
be paid out
 
on the Performance
 
Shares Vesting
 
Date based on
 
the actual
number of Performance Shares earned on that date.
13.
Governing Law.
 
This award
 
shall be
 
governed by
 
and construed
 
in
 
accordance
with the laws of Puerto Rico, without regard to principles of conflicts of
 
laws.
14.
Incentive Recoupment.
 
This award
 
shall be
 
subject to
 
the terms
 
of the
 
Popular, Inc.
Incentive Recoupment Guideline
 
in effect as of the
 
Grant Date and as
 
such guideline may be
 
required to be
modified in accordance with applicable law or regulation.
15.
Headings.
 
The
 
headings
 
in
 
this
 
Award
 
Agreement
 
are
 
for
 
the
 
purpose
 
of
convenience only and are not intended to define or limit the construction of the
 
provisions hereof.
 
IN WITNESS WHEREOF,
 
POPULAR, INC. and the
 
Recipient caused this Award
 
Agreement to
be duly executed and delivered as of the Grant Date.
POPULAR, INC.
 
ACCEPTED:
 
By:
 
[Insert Name of Representative]
 
By:
 
[Insert Name of Recipient]
Title:
 
[Insert Name of Representative]
 
Title: [Insert Name of Recipient]
_________________________
 
___________________________
Signature
 
Signature
 
 
 
 
 
 
 
6
ANNEX 1
POPULAR, INC.
2023 LONG-TERM EQUITY INCENTIVE AWARD
Recipient:
 
Employee Number:
 
Grant Date: February 27, 2023
Total Dollar Value
 
of Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Restricted Stock
Dollar Value
 
of Restricted Stock Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Total Shares of Restricted Stock Awarded:
 
Restricted Stock Vesting Dates:
 
Shares
Shares
Shares
Shares
February 23, 2024
 
February 23, 2025
February 23, 2026
February 23, 2027
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7
Performance Shares
 
Dollar Value
 
of Performance Shares Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Total Target
 
Number of Shares:
 
(50% Total Shareholder
 
Return / 50% ROATCE)
Relative Total Shareholder Return (TSR)
1
 
–
 
Opening Price =
 
Percentile Rank among
Comparator Group
Shares Earned
(% of Target)
75
th
 
Percentile or above
(maximum)
(1.5x target shares)
50th Percentile
(target)
(1x target shares)
25
th
 
Percentile
(threshold)
(0.5x target shares)
Below 25
th
 
Percentile
0
Absolute
 
Return
 
on
 
Average
 
Tangible
 
Common
 
Equity
(ROATCE)
2
 
–
 
ROATCE
Shares Earned
(% of Target)
3-year simple average ROATCE 2023-2025
15.0% or above
(maximum)
(1.5x target shares)
13.0%
(target)
(1x target shares)
9.8%
(threshold)
(0.5x target shares)
Lower than 9.8%
0
Results between threshold, target and maximum performance
 
will be interpolated to determine vesting award
1
 
TSR will be calculated as [(Closing Price
 
at end of period * (1 + number of shares
 
purchased assuming reinvestment of
 
dividends))/Opening Price at
beginning of period] – 1
●
Closing Price and Opening Price are based
 
on the preceding 60 trading days average daily
 
close price to mitigate against share price
 
volatility of
point-in-time metrics.
o
Opening price = average price 10/06/2022
 
– 12/31/2022
o
Closing price = average price based on the
 
60-day trading period ending December 31,
 
2025
●
TSR calculations shall assume that dividends
 
are reinvested on the ex-dividend date
 
(i.e., the date a dividend asset is guaranteed).
Comparator Group -- U.S. Banks (GICS Code
 
401010) with Assets between $25B - $500B
 
– Performance will be based on the composition
 
of the group at
the beginning
 
of the 3-year Performance Cycle.
If Popular’s absolute TSR is negative, payout
 
will be limited to a maximum of 100%
 
of target.
2
3-year simple average ROATCE for 3 years (2023-2025).
 
The Committee may adjust the goal or results
 
to reflect a core profitability that would
 
not be
unduly inflated or deflated by certain transactions
 
that do not reflect the underlying performance
 
of Popular’s ongoing operations, including,
 
but not limited
to, the impact of significant tax reform,
 
sales of non-earning assets, sales of
 
branches or other businesses, unanticipated changes
 
in capital actions, certain
business acquisition costs and revenues,
 
extraordinary events or charitable contributions,
 
severance costs and certain litigation
 
and settlement costs, among
others.