Executive Officer Management Incentive Plan for 2021
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Human Resources
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EX-10.2 3 exhibit10220210211.htm EX-10.2 Document
EXHIBIT 10.2
SUMMIT FINANCIAL GROUP, INC. Executive Officer Management Incentive Plan
for 2021
OBJECTIVE
The objective of the Executive Officer Management Incentive Plan for 2021 (“2021 MIP”) is to incent and reward select members of Summit Financial Group, Inc.’s and its subsidiaries’ (collectively hereafter, “Summit’s”) management team for their exceptional performance, while still balancing risk with reward.
PARTICIPANT ELIGIBILITY
Eligibility for participation in the 2021 MIP is extended to the following executive officers (“Eligible Participants”):
| Summit Financial Group, Inc | Summit Community Bank, Inc. | |||||||||||||
| Chief Executive Officer | President | |||||||||||||
| Chief Financial Officer | Chief Operating Officer | |||||||||||||
| Chief Accounting Officer | Chief of Credit Administration | |||||||||||||
| Chief Banking Officer | ||||||||||||||
To be eligible to receive a 2021 MIP payment, Eligible Participants must be employed for the entirety of 2021. If an otherwise Eligible Participant separates from employment at Summit for any reason, voluntarily or involuntarily, prior to January 1, 2022, no incentive will be paid to such Eligible Participant.
MIP COMPUTATION
The 2021 MIP computation is based upon Summit achieving a targeted annual return on average tangible equity (“ROATE”). For purposes of the 2021 MIP, Summit’s ROATE is to be calculated on a consolidated basis for the year ended 2021, as follows:
| Net Income + (Amortization of Intangibles x 0.765) | ||||||||||||||
| Average Shareholders’ Equity - Average Intangibles | ||||||||||||||
For purposes of the 2021 MIP, Summit’s targeted ROATE for 2021 is 12.50 to 13.49 percent (the “Targeted Range”). If Summit’s actual ROATE for 2021 is within the Targeted Range, Eligible Participants will receive an incentive payment varying between 15% and 30% of their respective annual base salary as of January 1, 2021 (the “Targeted Incentive”).
If Summit’s actual ROATE for 2021 is greater than the Targeted Range, Eligible Participants will be eligible to receive an incentive that is greater than the Targeted Incentive; conversely, if
Summit’s actual ROATE for 2021 is less than the Targeted Range, Eligible Participants will be eligible to receive an incentive that is less than the Targeted Incentive.
The formula to compute each Eligible Participant’s incentive payment under the 2021 MIP is as follows:
| Eligible Participant’s Annual Base Salary on January 1, 2021 | X | 15% to 30% | X | MIP Multiplier | = | Eligible Participant’s 2021 MIP Incentive | ||||||||||||||
The MIP Multiplier to be used for purposes of the above formula varies based upon Summit’s actual ROATE for 2021, as follows:
| Summit’s Actual ROATE for 2021 | MIP Multiplier | |||||||
| Less than 10.50% | 0.00 | % | ||||||
| 10.50% to 11.49% | 63.00 | % | ||||||
| 11.50% to 12.49% | 78.20 | % | ||||||
| 12.50% to 13.49% | Target | 100.00 | % | |||||
| 13.50% to 14.49% | 129.60 | % | ||||||
| 14.50% to 15.49% | 162.40 | % | ||||||
| 15.50% to 16.49% | 186.00 | % | ||||||
| 16.50% and greater | 198.00 | % | ||||||
In addition to the 2021 MIP incentives which may be awarded to Eligible Participants in accordance with the above formula, an additional incentive(s) totaling no more than $100,000 may be awarded at the discretion of Summit’s Chief Executive Officer, in whole or in part, to one or more deserving Summit employees who are not Eligible Participants.
OTHER MIP TERMS
No incentive under the 2021 MIP will be made, if at December 31, 2021 through the time of payment of the 2021 MIP incentive, Summit or any affiliate is subject to any active or pending, formal or informal, agreement or enforcement action to which any bank regulatory authority is a party, including but not limited to a memorandum of understanding, written agreement, or order of cease and desist.
PAYMENT OF INCENTIVES
The 2021 MIP incentive will be calculated after January 1, 2022 and paid as soon as practicable following Summit’s public release of its 2021 earnings, but in no event later than March 31, 2022.
INTERPRETATIONS, AMENDMENTS OR DISCONTINUATION
All interpretations of or amendments to the 2021 MIP will be made at the sole discretion of Compensation and Nominating Committee of the Summit Financial Group, Inc. Board of Directors. The 2021 MIP may be discontinued or revised by the Compensation and Nomination Committee at any time.
