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Exhibit 10.7

 
January 2008

NBT BANCORP INC. AND SUBSIDIARIES

2008 EXECUTIVE INCENTIVE COMPENSATION PLAN

 

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NBT BANCORP INC. AND SUBSIDIARIES
2008 EXECUTIVE INCENTIVE COMPENSATION PLAN

Table of Contents

 
      Page
 
 
Appendix A
3
Introduction
  4
Plan Highlights
   5
Incentive Plan
 
Section I - Definitions
6-7
Section II - Participation
  7
Section III - Activating the Plan
7-8
Section IV - Calculation of Awards
8
Section V - President's Special Recommendations
  8
Section VI - Distribution of Awards
  9
Section VII - Plan Administration
  9
Section VIII - Amendment, Modification, Suspension or Termination 
   9
Section IX - Exclusivity
  10
Section X - Effective Date
  10
Section XI - Employer Relations with Participants
 10
Section XII - Governing Law
 10

 
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Appendix A - Incentive Plan Participants and Distribution of Awards
 
APPENDIX A
 
2008 Executive Incentive Compensation Plan Pay-out Detail - 90% Baseline Budget
EPS Threshold
 
Corporate Performance/Personal Goals % Split
 
Level
Executive
 
Corporate
   
Personal
   
Total
 
Level A
Dietrich
   
100%
     
0%
     
100%
 
Level B-1
Chewens
   
66%
     
34%
     
100%
 
Level B-2
Raven
   
50%
     
50%
     
100%
 
Level C
Levy
   
50%
     
50%
     
100%
 
Level C
Scarlett
   
50%
     
50%
     
100%
 
Level C
Stagliano
   
50%
     
50%
     
100%
 

 

   
Total Level A*
Incentive Threshold Payout - $1.472
 
48.0%
Level 2 - $1.512
 
51.0%
Level 3 - $1.553
 
54.0%
Level 4 - $1.594
 
57.0%
Base Line Budget - $1.635
 
60.0%
Level 6 - $1.717
 
70.0%
Level 7 - $1.799
 
80.0%
Level 8 - $1.880
 
90.0%
Maximum Incentive Payout - $1.962
 
100.0%

 

   
Corp. Payout Level B-1
Pers. Payout Level B-1
Total Level B-1*
 
Corp. Payout Level B-2
Pers. Payout Level B-2
Total Level B-2*
Incentive Threshold Payout - $1.472
 
24.8%
12.8%
37.6%
 
18.8%
18.8%
37.6%
Level 2 - $1.512
 
26.4%
13.6%
40.0%
 
20.0%
20.0%
40.0%
Level 3 - $1.553
 
27.9%
14.4%
42.3%
 
21.2%
21.1%
42.3%
Level 4 - $1.594
 
29.5%
15.2%
44.7%
 
22.3%
22.4%
44.7%
Base Line Budget - $1.635
 
31.0%
16.0%
47.0%
 
23.5%
23.5%
47.0%
Level 6 - $1.717
 
38.8%
20.0%
58.8%
 
29.4%
29.4%
58.8%
Level 7 - $1.799
 
46.5%
24.0%
70.5%
 
35.3%
35.2%
70.5%
Level 8 - $1.880
 
54.3%
28.0%
82.3%
 
41.1%
41.2%
82.3%
Maximum Incentive Payout - $1.962
 
62.0%
32.0%
94.0%
 
47.0%
47.0%
94.0%

 

   
Corp. Payout Level C
Pers. Payout Level C
Total Level C*
Incentive Threshold Payout - $1.472
 
12.4%
12.4%
24.8%
Level 2 - $1.512
 
13.2%
13.2%
26.4%
Level 3 - $1.553
 
14.0%
13.9%
27.9%
Level 4 - $1.594
 
14.7%
14.8%
29.5%
Base Line Budget - $1.635
 
15.5%
15.5%
31.0%
Level 6 - $1.717
 
19.4%
19.4%
38.8%
Level 7 - $1.799
 
23.3%
23.2%
46.5%
Level 8 - $1.880
 
27.1%
27.2%
54.3%
Maximum Incentive Payout - $1.962
 
31.0%
31.0%
62.0%

         
* % of base salary at appropriate level
       

 
 
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NBT BANCORP INC. AND SUBSIDIARIES

Introduction

It is important to examine the benefits that accrue to the organization through
the operation of the Executive Incentive Compensation Plan (EICP).  The Plan
impacts directly on the success of the organization and its purpose can be
summarized as follows:

*      Provides Motivation:  The opportunity for incentive awards provides
Executives with the impetus to "stretch" for challenging, yet attainable, goals.

*      Provides Retention:  By enhancing the organization's competitive
compensation posture.

*      Provides Management Team Building:  By making the incentive award
dependent on the attainment of organization goals, a "team orientation" is
fostered among the participant group.

*      Provides Individual Motivation:  By encouraging the participant to make
significant personal contribution to the corporate effort.

*   Provides Competitive Compensation Strategy:  The implementation of incentive
arrangements is competitive with current practice in the banking industry.

 
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Highlights of the 2008 Executive Incentive Compensation Plan (EICP) are listed
below:

1.
The Plan is competitive compared with similar sized banking organizations and
the banking industry in general.

2.
The Compensation Committee of the Board of Directors controls all aspects of the
Plan.

3.
All active Executives are eligible for participation.

4.
The financial criteria necessary for Plan operation consist of achieving certain
levels of Earnings Per Share (EPS) for the Company and its Subsidiaries as
applicable.   The Committee may provide in any such Award that any evaluation of
performance may include or exclude any of the following events that occur during
a Performance Period: (a) asset write-downs; (b) litigation or claim judgments
or settlements; (c) the effect of changes in tax laws, accounting principles, or
other laws or provisions affecting reported results; (d) any reorganization and
restructuring programs; (e) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to shareholders for the applicable year; (f)
acquisitions or divestitures and related expenses; and (g) foreign exchange
gains and losses. To the extent such inclusions or exclusions affect Awards to
Covered Employees; they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

5.
Incentive distributions will be made during the first quarter of the year
following the Plan Year and will be based on the matrix in Appendix A.

6.
Incentive awards will be based on attainment of corporate goals.  Total
incentive awards may contain Corporate, Subsidiary, Divisional and Individual
components.  The Corporate, Subsidiary and Divisional components are awarded by
virtue of performance related to pre-established goals and the Individual
component is awarded by virtue of individual performance related to individual
goals.  No bonus will be paid unless the Corporation achieves the threshold EPS
goal set forth in Appendix A.

 
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NBT BANCORP INC. AND SUBSIDIARIES

The Board of Directors has established this 2008 Executive Incentive
Compensation Plan.  The purpose of the Plan is to meet and exceed financial
goals and to promote a superior level of performance relative to the competition
in our market areas.  Through payment of incentive compensation beyond base
salaries, the Plan provides reward for meeting and exceeding financial goals.

SECTION I – DEFINITIONS

Various terms used in the Plan are defined as follows:

Award:  An award granted under this Plan.

Base Salary: The base salary at the end of the Plan Year, excluding any bonuses,
contributions to Executive benefit programs, or other compensation not
designated as salary.

Board of Directors:  The Board of Directors of NBT Bancorp Inc.

CEO:  The CEO of NBT Bancorp Inc.

Code:  The Internal Revenue Code of 1986, as now in effect or as hereafter
amended.

Corporate, Subsidiary and Divisional Goals:  Those pre-established objectives
and goals of NBT Bancorp Inc. or its Subsidiaries and Divisions which are
required to activate distribution of awards under the Plan.

Covered Employee:  A Participant who is a Covered Employee within the meaning of
Section 162(m)(3) of the Code.

Individual Goals:    Refers to the performance standards established by the plan
participant and agreed to by the supervisor.  The participant shall stray from
using standards tied to day to day responsibilities and shall strive to achieve
such goals that shall be considered value-added and, where possible, support the
strategic objectives of the Company.

 
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Compensation Committee:  The Compensation and Benefits Committee of the NBT
Bancorp Inc. Board of Directors.

Plan Participant:  An eligible Executive as recommended by the CEO and approved
by the Compensation Committee for participation for the Plan Year.

Plan Year:  The 2008 calendar year.

SECTION II - ELIGIBILITY TO PARTICIPATE

To be eligible for an award under the Plan, a Plan participant must be an
Executive in full-time service at the start and close of the calendar year and
at the time of the award unless mutually agreed upon prior to the Executive
leaving the company.  Newly hired employees may be recommended by the CEO and
approved by the Compensation Committee as eligible for an award as determined by
their date of hire or any relevant employment agreement.  A Plan participant
must be in the same or equivalent position, at year-end as they were when named
a participant or have been promoted during the course of the year, to be
eligible for an award.  If a Plan participant voluntarily leaves the company
prior to the payment of the award, he/she is not eligible to receive an award
unless mutually agreed upon prior to the Executive leaving the
company.  However, if the active full-time service of a participant in the Plan
is terminated by death, disability, retirement, or if the participant is on an
approved leave of absence, an award may be recommended for such a participant
based on the proportion of the Plan Year that he/she was in active service.

SECTION III - ACTIVATING THE PLAN

If and to the extent that the Committee determines that a bonus to be granted
under the Plan to a Plan participant who is designated by the Compensation
Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the bonus
as to that Plan participants shall be determined consistently with the terms of
the NBT Bancorp Inc. 2008 Omnibus Incentive Plan.

The operation of the Plan is predicated on attaining and exceeding management
performance goals.  The goals will consist of the attainment of certain Earnings
Per Share (EPS) levels as applicable.  Non-recurring events including changes in
tax laws and accounting rules may be excluded from the financial results at the
discretion of the CEO and upon approval of the Compensation Committee; subject
to the terms of the NBT Bancorp Inc. 2008 Omnibus Incentive Plan as applied to
any Covered Employee whose bonus is intended to qualify for purposes of Code
Section 162(m).

 
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EPS goals shall be established not later than 90 days after the beginning of any
performance period applicable to the bonus, or at such other date as may be
required or permitted for “performance-based compensation” under Code Section
162(m).  In addition, the maximum value of a bonus awarded under the Plan to a
single Covered Employee may not exceed $2,000,000 per Plan Year.

Prior to payment of any bonus amount under the Plan to a Covered Employee whose
bonus is intended to qualify for purposes of Code Section 162(m), the
Compensation Committee shall certify in writing that the EPS goal(s) and all
other material terms stated herein have been attained.  For this purpose, the
approved minutes of a Compensation Committee meeting in which a certification is
made shall be treated as a written certification.

The Corporation must achieve a threshold EPS goal set forth in Appendix A to
trigger an award pursuant to the terms of this Plan.  The bonus awards can range
from 0 to 200% of the target award for Plan participants.

SECTION IV - CALCULATION OF AWARDS

The Compensation Committee designates the incentive formula as shown in Appendix
A.  The Compensation Committee will make final decisions with respect to all
incentive awards and will have final approval over all incentive awards.  Prior
to payment of any bonus amount under the Plan to a Covered Employee whose bonus
is intended to qualify for purposes of Code Section 162(m), the Compensation
Committee shall certify in writing that the EPS goal(s) and all other material
terms stated herein have been attained.  For this purpose, the approved minutes
of a Compensation Committee meeting in which a certification is made shall be
treated as a written certification. The individual participant data regarding
maximum award and formulas used in calculation has been customized and appears
as Appendix A.

SECTION V - SPECIAL RECOMMENDATIONS

As long as the threshold EPS goal is met, the CEO will recommend to the
Compensation Committee the amounts to be awarded to individual participants in
the incentive Plan.  The CEO may recommend a change outside the formula to a
bonus award (increase or decrease) to an individual participant by a specified
percentage based on assessment of special individual performance outside the
individual goals or based on special circumstances that may have occurred during
the plan year; provided, however that as to a Covered Employee whose bonus is
intended to qualify for purposes of Code Section 162(m), only the Compensation
Committee has the authority to make a change outside the formula to a bonus
award and it may exercise its discretion only to reduce the bonus award.

 
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SECTION VI - DISTRIBUTION OF AWARDS

Distribution of the EICP will be made during the first quarter of the year
following the plan.  Distribution of the award must be approved by the
Compensation Committee.

In the event of death, any approved award earned under the provisions of this
plan will become payable to the designated beneficiary of the participant as
recorded under the Company’s group life insurance program; or in the absence of
a valid designation, to the participant's estate.

SECTION VII - PLAN ADMINISTRATION

The Compensation Committee shall, with respect to the Plan have full power and
authority to construe, interpret, manage, control and administer this Plan. The
Committee shall decide upon cases in conformity with the objectives of the Plan
under such rules as the Board of Directors may establish.

Any decision made or action taken by NBT Bancorp Inc., the Board of Directors,
or the Compensation Committee arising out of, or in connection with, the
administration, interpretation, and effect of the Plan shall be at their
absolute discretion and will be conclusive and binding on all parties.  No
member of the Board of Directors, Compensation Committee, or employee shall be
liable for any act or action hereunder, whether of omission or commission, by a
Plan participant or employee or by any agent to whom duties in connection with
the administration of the Plan have been delegated in accordance with the
provision of the Plan.
 
SECTION VIII - AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION

NBT Bancorp Inc. reserves the right, by and through its Board of Directors to
amend, modify, suspend, reinstate or terminate all or part of the Plan at any
time.  The Compensation Committee will give prompt written notice to each
participant of any amendment, suspension or termination or any material
modification of the Plan.  In the event of a merger or acquisition, the Plan and
related financial formulas may be reviewed and adjusted to take into account the
effect of such activities.

 
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SECTION IX – NONEXCLUSIVITY

NBT Bancorp Inc. reserves the right, by and through its Board of Directors and
Compensation Committee to award bonus and other forms of incentive compensation
outside the terms of this Plan.

SECTION X - EFFECTIVE DATE OF THE PLAN

The effective date of the Plan shall be January 1, 2008.

SECTION XI - EMPLOYER RELATION WITH PARTICIPANTS

Neither establishment nor the maintenance of the Plan shall be construed as
conferring any legal rights upon any participant or any person for a
continuation of employment, nor shall it interfere with the right of an employer
to discharge any participant or otherwise deal with him/her without regard to
the existence of the Plan.

SECTION XII - GOVERNING LAW

Except to the extent pre-empted under federal law, the provisions of the Plan
shall be construed, administered and enforced in accordance with the domestic
internal law of the State of New York.  In the event of relevant changes in the
Internal Revenue Code, related rulings and regulations, changes imposed by other
regulatory agencies affecting the continued appropriateness of the Plan and
awards made thereunder, the Board may, at its sole discretion, accelerate or
change the manner of payments of any unpaid awards or amend the provisions of
the Plan.

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