Exhibit 10.1
FARMERS NATIONAL BANC CORP.
CASH INCENTIVE PLAN
Amended and Restated June, 2011

I.  
Term of Plan

The Farmers National Banc Corp. Cash Incentive Plan (the “Plan”) is effective as
of January 1, 2011, and will remain in effect until revised or terminated by the
recommendation of the Compensation Committee and approved by the Board of
Directors of Farmers National Banc Corp. (“Farmers”).

II.  
Objective

Farmers is making available to eligible executives and employees of Farmers and
its subsidiaries, through this Plan, compensation designed to foster superior
financial results for Farmers by providing an equitable corporate-wide incentive
that awards individual and team effort to achieve specified performance
objectives. The objectives of the Plan are: (1) to foster superior financial
results for Farmers, producing a financial benefit to Farmers shareholders;
(2) to motivate and reward executives toward superior financial performance;
(3) attracting and retaining skilled executives and employees upon whose
judgment, interest and special efforts the successful conduct of Farmers’
business is largely dependent; and (5) appropriately balance and manage risk to
promote the overall safety and soundness of Farmers.

III.  
Participants

Full-time and part-time, regular, non-commissioned-based associates and
executives of Farmers and its subsidiaries and affiliates are generally eligible
to participate in the Plan. Participation determinations regarding executive
officers (“Executive Participants”) shall be established by the Compensation
Committee in its sole discretion. Participation determinations regarding
associates and other non-executive personnel (“Non-Executive Participants” and
together with Executive Participants, “Participants” ) shall be established by
the Senior Management Committee (as defined hereafter).

IV.  
Opportunity Levels

Participant opportunity levels (as a percentage of base salary) shall be
determined on an annual basis by the Compensation Committee with respect to
Executive Participants or the Senior Management Committee with respect to
Non-Executive Participants, as the case may be, and will generally be determined
by the Participant’s title and functional responsibility as well as other
considerations, including, but not limited to, external market competitiveness,
retention considerations as well as corporate and individual performance.

 

 

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V.  
Performance Goals and Metrics

In order to receive an award under the Plan, the Participant and/or Farmers must
attain specified performance metrics in applicable performance goal categories.
Performance goals may be set in any of following five general categories with
performance metrics and targets set forth in individual scorecards developed for
each Participant: (i) corporate goals; (ii) district goals; (iii) branch goals;
(iv) group goals; and (v) individual goals.
Each year in the first quarter of the calendar year (or, for 2011, upon adoption
of the Plan) the Compensation Committee with respect to Executive Participants
or the Senior Management Committee with respect to Non-Executive Participants,
as the case may be, shall determine individual performance goals and metrics for
each Participant. For purposes of determining performance metrics for each
Participant, the Compensation Committee with respect to Executive Participants
and the Senior Management Committee with respect to Non-Executive Participants,
as the case may be, shall establish metrics relating to one or several of the
following corporate performance measures:

1.  
Revenue;
  2.  
Net earnings or net income (before or after taxes);
  3.  
Earnings per share;
  4.  
Deposit or asset growth;
  5.  
Net operating income;
  6.  
Return measures (including return on assets and equity);
  7.  
Fee income;
  8.  
Earnings before or after taxes, interest, depreciation and/or amortization;
  9.  
Interest spread;
  10.  
Productivity ratios;
  11.  
Share price (including, but not limited to, growth measures and total
shareholder return);
  12.  
Expense targets;
  13.  
Credit quality;
  14.  
Efficiency ratio;
  15.  
Market share;
  16.  
Customer satisfaction;
  17.  
NIACC (net income after cost of capital);
  18.  
Texas ratio; and
  19.  
Strategic objectives (including, branding, mergers and acquisitions, succession
management, dynamic market response, new product development, expense reduction
initiatives, risk management and regulatory compliance).

VI.  
Goal Achievement

For purposes of determining goal achievement, the Compensation Committee with
respect to Executive Participants and the Senior Management Committee with
respect to Non-Executive Participants, as the case may be, shall (i) establish
the performance period for determining goal achievement for each Participant;
(ii) establish threshold, target and maximum performance goals for each
performance metric; and (iii) determine the respective weighting for performance
metrics for each Participant. The mix and weighting of the performance metrics
established for determining awards need not be the same for all Participants or
any group of Participants.

 

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A Participant’s final award will be based on achievement of the established
corporate and individual performance metrics, subject to the approval of the
Compensation Committee with respect to Executive Participants or the Senior
Management Committee with respect to Non-Executive Participants, as the case may
be. Awards for results achieved between specified performance levels will be
paid out on an interpolated basis. Notwithstanding anything else in the Plan, in
their sole discretion, the Compensation Committee with respect to Executive
Participants or the Senior Management Committee with respect to Non-Executive
Participants, as the case may be, may adjust any one or more award amounts
before or after the applicable performance period, change goals or waive any
requirements for awards pursuant to the Plan.
For purpose of determining the amount of any award, the base salary utilized for
award calculations will be the annualized base salary of the Participant on the
last day of the applicable calendar year, adjusted to reflect the Participant’s
tenure with the Company during the year.

VII.  
Payments

Subject to applicable withholding, payments under the Plan will be made as soon
as reasonably practicable following the completion of the performance period and
following approval by the Compensation Committee with respect to Executive
Participants or Senior Management Committee with respect to Non-Executive
Participants, as the case may be, for awards to Participants. The accrual for
Plan incentive payments will be established in accordance with generally
accepted accounting principles.

VIII.  
NEWLY HIRED, TRANSFERRED, PROMOTED AND TERMINATED PARTICIPANTS

If a Participant is transferred or promoted or becomes totally disabled in
accordance with the Company’s long-term disability plan before the last day of
the calendar year, the Participant will be eligible to receive payment under the
Plan only if: (1) the Participant is employed on the last day of the calendar
year; (2) the Participant remains employed through the payment date; and (3) the
stated threshold goals have been achieved by the last day of the performance
period, as such goals may be revised for the individual based upon a change in
position. Payments will be prorated based upon the tenure of the Participant in
the eligible position. Newly hired eligible Plan Participants may receive a
prorated incentive payout based on their tenure or a predetermined payout amount
agreed upon as part of their initial employment terms.
If the Participant’s employment is terminated before the payment date for any
reason other than retirement, the Participant will not be eligible for any
payment under the Plan regardless of employment status on the last day of the
calendar year.
If a Participant dies before the end of the calendar year, neither the
Participant nor their estate will be eligible to receive any payment under the
Plan. If a Participant dies after the end of the calendar year, but before the
payment date, the Participant, through their estate, will be eligible to receive
payment of an award amount under the Plan.

 

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If a Participant retires (as retirement is defined under any Farmers benefit
plan providing for the earliest possible retirement) effective before the end of
the calendar year, the Participant will not be entitled to payment under the
Plan. If the Participant retires effective at any time after the end of the
calendar year, but before the payment date, the retiring Participant will be
entitled to payment in accordance with the terms of the Plan.
At the discretion of the Compensation Committee with respect to Executive
Participants or the Senior Management Committee with respect to Non-Executive
Participants, as the case may be, Participants may be eligible to participate in
the Plan during a Plan year in which he or she takes a leave of absence.
Farmers reserves the right to withhold or decrease payments to any Participant
under the Plan based on a Participant’s violation of any of Farmers’ policies
and procedures or failure to achieve an adequate annual performance evaluation.

IX.  
OTHER EMPLOYEE BENEFITS

Benefits to Participants under other benefit plans will not be affected by
payments under this Plan to the extent benefits under the other plans are based
upon base salary, but will be affected by payments under this Plan to the extent
benefits under the other plans are based upon Form W-2 earnings. Farmers retains
the right to amend, cancel or change any other benefit plans. Nothing in this
Plan shall change the normal employee/employer relationship or be interpreted as
a guarantee of continued employment to any Participant and no award payment
under this Plan shall be construed as an indication of over-all job performance.

X.  
SENIOR MANAGEMENT COMMITTEE

For purposes of Non-Executive Participant Plan administration, the Senior
Management Committee shall consist of the following persons: (1) Chief Executive
Officer; (2) Chief Financial Officer; (3) Director of Retail; (4) Director of
Human Resources; and (5) Chief Credit Officer.

XI.  
AMENDMENT AND ADMINISTRATION OF THE PLAN

The Plan may be terminated or amended by the recommendation of the Compensation
Committee, subject to the approval of the Board of Directors. Any question of
interpretation of the Plan will be determined by the Compensation Committee and
its determinations are final, binding and non-appealable. Notwithstanding
anything else in the Plan, in their sole discretion, the Compensation Committee
with respect to Executive Participants or the Senior Management Committee with
respect to Non-Executive Participants, as the case may be, may adjust any one or
more award amounts before or after the applicable performance period, change
goals or waive any requirements for awards pursuant to the Plan.

 

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