Exhibit 10(xi)

Bank of North Carolina

 

Performance Compensation for Stakeholders

POLICY DOCUMENT FOR

PERFORMANCE COMPENSATION FOR

STAKEHOLDERS

BNC Bancorp

Bank of North Carolina

 

This document is prepared to serve Bank of North Carolina and BNC Bancorp who
have chosen PERFORMANCE COMPENSATION FOR STAKEHOLDERS as their primary
compensation program. Within this policy are the official regulations, rules and
expectations residing over the framework of this program.

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

OBJECTIVES

Bank of North Carolina has implemented a compensation program because its
primary principles were founded upon the following criteria:

 

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All employees participate equally in reward, which is awarded as a percent of
salary.

 

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The reward program is a self-funding program, based entirely upon the results of
measurable and predetermined goals within the context of growth, profit, asset
quality, and productivity.

 

  •  

Reward is distributed relative to organization-wide results; that is, upon
improvement in pretax income, rather than inter-organization activity or
subjective merits.

 

  •  

The program would increase every employee’s understanding of how our
organization works and performs, so then to provide a greater “business
literacy” for all employees.

 

  •  

This gained literacy would lead to comprehensive improvement in
organization-wide performance.

 

  •  

This program embodies the ability to extract the untapped contributions and
ideas from employees and remove the traditional “top-down” style of management
in order to make greater use of our resources.

 

  •  

Base salary, and thus, quality of life, is never put at risk.

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

THE PROGRAM

PERFORMANCE COMPENSATION FOR STAKEHOLDERS is the reward compensation program
that our organization adopted because its primary goals are to maximize
shareholder value and ensure long-term viability of the company by balancing
multiple goal achievement within the context of growth, profit, asset quality
and productivity. These goals, called Key Performance Indicators, are all
measurable goals set within mathematical matrices called Performance Models.
These models are developed for the organization as a whole which reconcile with
the performance of the organization-wide model. In this way, the models maintain
great mathematical accuracy and integrity and provide fairness to everyone.

The level of expected performance which justifies base salaries under a normal
banking environment is called Baseline. Rather than being the first hurdle to
achieve on the model, this is a level that is expected to be achieved without
changing the behaviors or activities within our organization. However, this is
the level of demarcation: performance that falls below baseline will negatively
impact the reward pool, but it affects the reward pool only. All performance
achieved above baseline will be shared as reward compensation provided the
minimum performance criteria, called Triggers, have been met. Triggers in our
program are a Satisfactory Compliance Rating, an Overall 2 Rating on the Bank’s
Safety and Soundness Examination, and a minimum Return on Beginning Tangible
Equity.

Each Key Performance Indicator has a weighting, which is formulated
mathematically to ensure that the reward value is tied explicitly to the level
of increased performance. This mathematical integrity is the key in that it
insures that the payout is only from funds created by the improvement in pretax
income. Thus, the rewards awarded under the plan cannot exceed the values
approved by the board of directors. The Key Performance Indicators of the Bank’s
plan are:

 

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Average Loans

 

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Average Core Deposits

 

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Average Time Deposits

 

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Noninterest Income

 

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Net Interest Margin

 

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Efficiency Ratio

 

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Past Due Loan Percentage

 

  •  

Net Charge-offs

 

  •  

Non-performing Assets

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

POLICY, EXPECTATIONS, STANDARDS

The following guidelines are to serve as policy for PERFORMANCE COMPENSATION FOR
STAKEHOLDERS program:

 

  1. Plan Year

Results of this plan will be measured on a fiscal year basis, from January 1 to
December 31. Payout for the fiscal year will be made during the period ranging
from December 15 to January 15 of the following year.

 

  2. Plan Administration

The Compensation Committee of BNC Bancorp will review and approve the
STAKEHOLDER policy and the model for the coming year. This policy and model
shall also be approved by the Board of Directors. On-going program
administration shall become the responsibility of the Human Resources Department
and the Chief Financial Officer. Responsibilities for the administration of the
program and policy include:

 

  •  

Determining eligibility criteria and approving which employees shall participate
in the plan.

 

  •  

Approving plan content prior to the beginning of each fiscal year.

 

  •  

Approving the amount of the payout at the end of each fiscal year.

 

  •  

Reviewing and approving the procedures used in administering the program.

 

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Rendering any decisions necessary with regard to the interpretation of the
plan’s content.

 

  •  

Day to day administration of the plan shall be delegated to those in the bank
responsible for the Human Resources function.

 

  3. Participants

It is decided upon by the Senior Management and the Board of Directors that all
regular full-time and part-time employees shall fully take part in PERFORMANCE
COMPENSATION FOR STAKEHOLDERS. Exclusion to the program will apply in the
following circumstances only:

 

  •  

An employee is hired as a “Temporary” employee, or is a “Contract” or “Temporary
Agency” employee.

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

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An employee is in a unique or separate compensation program, such as a Sales
Commission Program. Such Programs will be identified and expressed by Senior
Management.

 

  •  

An employee is taking part in another Incentive or other compensation plan.

 

  •  

An employee is compensated uniquely per job description which will not
compliment or work in conjunction with the STAKEHOLDER program. Such unique
positions will be identified by Senior Management.

 

  4. The Payout Relative to Hire Date

The payout is awarded as a percent of the employee’s annual base salary.
Employees that have hire dates prior to the kick-off date of that year’s plan
will receive a full payout. Employees whose hire date falls after the beginning
of that year’s program will receive a prorated payout based upon the salary
and/or wages earned during the year. For example, an employee who was hired at
an ANNUAL salary of $30,000 exactly six months after the program was kicked off,
would use $15,000 as the basis for their reward.

 

  5. Payout Eligibility

There is no term, condition, or period of time required after being hired for
any employee to complete in order to participate in the PERFORMANCE COMPENSATION
FOR STAKEHOLDERS program. Senior management believes that all regular full-time
and part-time employees should take part in the program immediately upon hiring.
Employees who take an approved leave of absence for an amount of time during the
reward period will take part in reward on a prorated basis relative to the
amount of salary and/or wages earned during the fiscal year. Unapproved leaves,
disciplinary actions, and probationary status will be left to the discretion of
Senior Management and may disqualify an employee. Employee’s resignation or
termination renders loss of eligibility in this program.

 

  6. Payout Timeframe

When results from increased performance result with a reward pool, reward
compensation will be distributed on an annual basis. Senior Management will
communicate the payout timeline before the beginning of the fiscal year or at
the kick-off meeting for that year. Exact or approximate dates for the payout
will be expressed at this time.

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

  7. Multi-Model Payout

Some employees will take part only in the organization-wide model. Other Senior
Level Managers will take part in the organization-wide model and a Senior
Management Overlay which is a parallel model to more highly reward those within
the Bank that have the most influence on driving results. In all cases, Senior
Management will inform all employees which models they will be taking part in.
In any case, multiple-model reward does not diminish potential for payout from
those that take part in fewer models (see operations manual).

 

  8. Projected Payout

At Monthly Status Report Meetings, annualized results will be shared based on
year-to-date achievement. This projected payout in no way guarantees the amount
to be paid out at year’s end. This is a purely mathematical approximation and
cannot account for unexpected financial anomalies. It will be reminded at each
Monthly Status Report Meeting that this projection is not a guarantee and is
merely an approximation.

 

  9. Triggers

Triggers are criteria that must be met in order for the program to be in effect
to offer reward compensation. Corporate trigger(s) are found on the
organization-wide model. In any case, the corporate trigger must be met in order
for anyone to receive reward from any models.

 

  10. Monthly Status Report Meetings & STAKEHOLDER Coaching

Each month employees may expect a regular meeting to discuss STAKEHOLDER
year-to-date achievement and continue STAKEHOLDER Coaching. Meetings are to
include the discussion of new ideas and action plans, creating enthusiasm,
answering questions, and increasing business literacy. There are no topics
relative to STAKEHOLDERS or our organization’s performance that are not relevant
in these meetings. Coaching materials will be made available to all employees.

 

  11. STAKEHOLDER Materials

The following materials will be made available to all managers and coaches:

 

  •  

Coaching Workbook: Methodology review, agendas, and exercises.

 

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Bank of North Carolina

 

Performance Compensation for Stakeholders

 

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Coaching Audio Tapes: review for Kick-Off Meeting, Coaching, and methodology.

 

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Operations Manual: available through (individual/department) for methodology
review.

DISCRETIONARY PROVISION

Only the Bank’s President and CEO may make recommendations for exceptions to
this policy, and will be made to the Compensation Committee. Additionally, the
Compensation Committee, at its sole discretion, may make awards to key
management for “extenuating” or “extraordinary” circumstances.

This plan is entirely discretionary and may be discontinued at any time upon
review of the Executive Management and the Board of Directors. At such time all
participants would receive immediate notification. It is not intended to create
any vested rights to employees or their beneficiaries. This plan document may be
amended or terminated by the Board of Directors at any time. At such time, all
participants would receive immediate notification.

This plan shall not be considered a contract and nothing in the plan shall be
construed as providing participants any assurance of continued employment for
any definite period of time, nor any assurance of current or future earnings.
This plan shall not, in any manner, limit the Bank’s rights to terminate
compensation and/or employment at its will, with or without cause.

 

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