First Bancorp

 

Annual Incentive Plan

 

 

 

Introduction

 

The First Bancorp Annual Incentive Plan (“AIP”) is a bonus plan that links
compensation to the achievement of performance goals. The performance goals will
generally include business measures that improve both the short-term earnings
and long-term earnings of the company and/or contribute to shareholder value.

 

 

Plan Features       Measurement Period Calendar Year     Eligible Participants
Executive officers, and other employees of the Company designated by the Chief
Executive Officer     Participation Categories Branch – includes branch
employees and Regional Executives.         Corporate – includes all other
individuals, including executive officers, the audit department, the deposit and
loan operations departments, the credit card department, collections, human
resources, Montgomery Data Services, First Bank Insurance Services, and the
Appraisal Department.     Performance Goals One or more performance goals will
be established related to consolidated corporate performance (“Corporate
Performance Goals”) and related to regional and branch specific performance
(“Regional/Branch Performance Goals”) – collectively “Performance Goals.”      
The Corporate Performance Goals will be determined annually by the Compensation
Committee and reported to the Board of Directors.  The specific Regional/Branch
Performance Goals will be determined annually by the Chief Executive
Officer.  There may be Corporate Performance Goals that are measured differently
for Branch participants than for Corporate participants, and certain Corporate
Performance goals may apply to only one category of participants.

 

 

 

      Performance Goals may include, but are not limited to, the following
business measures:  net income, deposit growth, loan growth, noninterest income
growth, and expense growth.     Calculation of Awards Each participant is
assigned a Target Award, which is expressed as a percent of their annual
salary.  The Compensation Committee determines the Target Award for the
Company’s executive officers and officers classified as “Regional
Executives.”  The Company’s Chief Executive Officer establishes the Target Award
for all other participants.  The Target Award for a given year for any or all
employees may be adjusted by the Compensation Committee as deemed appropriate.  
    The Target Award is then adjusted by multiplying it times the sum of the
Performance Percentages (defined below) that apply to the individual.      
Performance Goal Weight Each Performance Goal will have an assigned weight
(“Performance Goal Weight”) determined by the Compensation Committee and
reported to the Board of Directors.  The total of the assigned weights for all
Performance Goals will be 100%.       For Branch participants, the sum of the
Performance Goal Weights related to Regional/Branch Performance Goals will
generally total 75% and the sum of the Performance Goal Weights related to
Corporate Performance Goals will be 25%.         For Corporate participants,
100% of the Performance Goal Weights will be comprised of Corporate Performance
Goals.         Performance Percentage The Performance Percentage is a percentage
reflecting actual performance in relation to the Performance Goal.         For
each Performance Goal, a threshold goal, target goal, and maximum goal will be
set on an annual basis.       Achievement of less than the threshold goal will
result in a zero percent Performance Percentage.  Achievement of the goal at the
threshold level will result in a 50% percent Performance Percentage for that
goal.  Achievement of the Target Goal will result in 100% being applied to the
Performance Goal Weight to determine the Performance Percentage, and achievement
of the Maximum Goal will result in 200% being applied to the Performance Goal
Weight to determine the Performance Percentage.

 

 

 

      Pro-rata extrapolation will be utilized to determine a Performance
Percentage that is between the Threshold Goal and the Target Goal or the Target
Goal and the Maximum Goal.  See Exhibit A for a table illustrating the
extrapolation at various intervals of performance.     Discretionary Awards The
Compensation Committee shall have the ability to adjust any award paid under
this plan upward or downward in its discretion at any time.  Examples of factors
that the Compensation Committee may consider when adjusting an award include,
but are not limited to:  unusual items of income or expense, results of internal
audit reports, and regulatory exam reports. This can include minimum triggers
for any payments to be paid under this plan.     Payment of Awards All awards
will be paid within 90 days after each fiscal year end.  Any employee who
terminates employment prior to December 31 of the Measurement Period is not
eligible to receive an award.  Employees who become participants in the plan
during the year will receive a pro-rata bonus based on the amount of time they
were in the plan during the Measurement Period.         Payments may be made in
any combination of cash and common stock, as the Compensation Committee
determines.  The Compensation Committee may impose vesting requirements on the
stock that are applicable to certain or all employees receiving stock.  All
stock awards will be made pursuant to shareholder approved equity plans.        

 

 

 

Exhibit A

 

First Bancorp Annual Incentive Plan

 

 

 

Performance Achieved in Relation

to the Performance Goal

 

Performance Percentage

At Threshold Goal 50

Halfway Between Threshold Goal

and Target Goal

 

75

At Target Goal 100

Halfway Between Target Goal

and Maximum Goal

 

150

At Maximum Goal 200