Exhibit 10.1.23

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2006

HIGH PERFORMANCE INCENTIVE PROGRAM

The High Performance Incentive Program (HPIP) is designed to recognize and
reward those employees of Pacific Capital Bancorp (the Company) who have
contributed meaningfully to the increase in shareholder value, profitability and
customer centricity of the Company. Additionally, the plan’s objectives include
the following:

 

  •   Create greater alignment with the Core Bank Performance*

 

  •   Encourage teamwork within departments and across business units

 

  •   Increase shareholder value through Employees’ performance

 

  •   Ensure that our total compensation is competitive

The High Performance Incentive Program is linked directly to achieving the
Company’s annual Core Bank Net Income goal. Every employee is important in
achieving our goal.

 

* Does not include revenue and expenses from Refund Anticipation Loan and Refund
Transfer business.

KEY ELEMENTS

Success Factors

Three Success Factors determine an annual Incentive award:

 

  •   Company Performance

 

  •   Business Unit Performance

 

  •   Individual Performance

 

•   Company Performance: Growth in our Core Bank net income.

Through the Company’s annual business planning and budgeting process, a
percentage of growth in the Core Bank’s net income is established. For 2006,
that growth percentage is targeted at a minimum of 6.3%, which represents net
income after tax of $68 Million or above.

 

•   Business Unit Performance

The performance of each Business Unit is dependent upon the combined efforts and
focus of all its employees. To ensure that there is a common framework, the
following metrics will apply to all Business Units:

 

  •   Revenue Generation

 

  •   Expense Management

 

  •   Customer Value Added

 

  •   Risk Management (e.g. Regulatory and Governance Compliance)

Business Units may have different components for these metrics depending upon
their function. It is important that all employees understand their role in
achieving

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the Business Unit goals and how attainment of Business Unit goals impact our
Core Bank performance.

 

•   Individual Performance

In addition to the responsibilities each individual has in performing his or her
job, individual goals will be established that contribute directly to the
Company’s annual business goals. The individual’s goals should

 

  •   support the Business Unit’s business plan success metrics

 

  •   represent accomplishments beyond average performance

 

  •   must be significant, and directly support the profitability or
contribution of the business unit’s achievement of the annual business plan

 

  •   ensure compliance and risk mitigation is adhered to

 

  •   measure leadership and development of employees if the individual is in a
leadership role.

Goals

The goals utilized in HPIP should be consistent with the goals that are outlined
in the employee’s Performance Agreement, Coaching & Evaluation (PACE). Positions
in higher grade levels generally have the responsibility to guide a business
unit and to more directly impact the overall Bank performance. The goals in the
higher grade levels, therefore, should be focused more heavily to the overall
Bank performance. The goal setting process should correlate directly to the
individual’s responsibility level and ability to measure his or her impact on
company performance. It is recommended that not more than three to five goals
are established to ensure that the employee has the right focus.

Plan Funding

Our ability to fund incentive payouts is dependent upon our overall success in
achieving the Core Bank’s net income goals. Funding levels will reflect the
degree of success in attaining or exceeding the Core Bank’s goal and in turn,
will establish the dollar level of the incentive pool. If the Core Bank does not
achieve the Threshold level, there will be no payout of incentives even if a
Department and/or Individual has met or exceeded his or her goals.

 

Levels

  

Bank Goal Achievement

  

Funding Level of Pool

Below Threshold

  

< 95% of Goal

  

No funding

Threshold

  

At least 95% of Goal

  

75% funded

Target

  

At least 100% of Goal

  

100% funded

Stretch

  

At least 110% of goal

  

120%

Super Stretch Company level only

  

120% of goal or more

  

Funded up to a cap of 150%

 

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Incentive Pool Allocation

If the Company is successful in meeting its goals, the funded pool amount will
be distributed to the Senior Leaders of the divisions. In turn, the Senior
Leader of each division will partner with his/her direct reports to allocate the
incentives to the key contributors within the division.

Guidelines for Determining Individual Award

The award is not based on a formula but is rather a blend of the individual’s
results and subjective factors. The subjective factors must include Risk
Management, Commitment to Excellence, and Leadership (if appropriate). Other
factors, which may be considered, are project management, cross-functional
teaming, and special assignments.

The department leader is responsible for recommending the appropriate incentive
awards based upon the individual contributions of each eligible employee. Award
percentages will differ based upon the level of goal achievement and performance
of the employee. An individual must have achieved an “Expectations Achieved”
overall PACE rating for the past 12 months to be considered for any award. An
award also should take into account the length of time that the employee has
been employed during the plan year and be prorated accordingly.

Base compensation rewards the employee for performing his or her
responsibilities; the HPIP incentive recognizes the “above and beyond”
contributions of the employee.

TERMS AND CONDITIONS

Eligible Participants

All regular status employees of Pacific Capital Bancorp who are paid on a 100%
salaried basis through the program year and who are actively employed at the
time of distribution are eligible for consideration. Eligibility, however, does
not guarantee payment. Employees who participate in variable or commission pay
programs or the RAL department incentive program are not eligible for the HPIP
Program.

Employees who are hired during the year but prior to October 1, 2006, will be
eligible on a prorated basis. Employees who change from a 100% salaried position
to a variable or commission pay plan during the business year may be eligible
for HPIP on a prorated basis.

 

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When an employee transfers to a new business unit during the year, it is
important that the new leader collaborates with the former leader to document
accomplishment level for the previously set individual goals and business unit
goals. The new leader and employee will then determine and document new
individual and department goals for the balance of the year.

Program Year

The HPIP is effective January 1, 2006 and will be in effect during the plan year
defined as January 1 through December 31, 2006. The Program will be reviewed and
updated annually to ensure alignment with the Bank’s strategic plan and business
goals.

Program Administrator

The Program Administrator is the Director of Human Resources of Pacific Capital
Bancorp. The Program Administrator reviews all recommendations with the
President and CEO for approval prior to submission to the Compensation Committee
of the Board of Directors and has responsibility to ensure fair and consistent
consideration of participants. The Program Administrator may recommend
modifications in the program design and review the effectiveness of the plan on
an annual basis.

Payment

Funding of the program and payments are subject to approval by the Compensation
Committee of the Board of Directors, and if approved, payment will be made in
February 2007. The Compensation Committee also has the discretion to approve
certain awards in the event that the Company does not meet the threshold goal.

Termination of Employment

To encourage employees to remain in the employment of the Company, a participant
must be employed on the date of the actual incentive payout. Any termination
(except by reason of death), prior to the incentive payment date will serve as a
forfeiture of any award.

Disability or Death

If a participant is disabled by an accident or illness, and is disabled long
enough to be placed on long-term disability as defined by the Company’s LTD
plan, his or her incentive award for the Program period shall be pro-rated so
that no award will be earned during the period of long-term disability.

In the event of death, the Company will pay to the participant’s estate the
pro-rata portion of the award that the participant would have received if he or
she had lived to the end of the Plan year.

 

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Miscellaneous

The Program will not be deemed to give any participant the right to be retained
in the employ of the Company, nor will the Program interfere with the right of
the Company to discharge any participant at any time.

Pacific Capital Bancorp reserves the right to modify this program at any time.

Revised 3/06

 

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