Exhibit 10.11

LOGO [g75245ex10_12cov.jpg]

Executive Incentive Compensation Plan

(“EICP”)

2009 Plan

May 1, 2009

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2009 Executive Annual Incentive Plan

 

 

Introduction and Objective

Fox Chase Bank’s Executive Incentive Compensation Plan (“EICP”) is designed to
recognize and reward executives for their performance and contribution to
Company performance. The Plan is designed to reward predefined performance goals
that are critical the Bank’s growth and profitability. This document summarizes
the elements and features of the Plan.

In short, the objectives of the Incentive Plan are to:

 

  •  

Focus executive attention on key business metrics that support the Bank’s
business plan.

 

  •  

Align pay with Bank and individual performance.

 

  •  

Encourage teamwork and collaboration across all areas of the Bank. Our
collective contributions will drive improved business results.

 

  •  

Motivate and reward the achievement of specific, measurable performance
objectives that are aligned with the key strategic business objectives for the
Bank.

 

  •  

Provide competitive total cash compensation at targeted performance levels with
an opportunity to receive significant rewards for exceeding performance goals

 

  •  

Enable the Bank to attract and retain the talent needed to drive success.

Eligibility

 

  •  

Eligibility will be limited to executive positions that have a significant
impact on the success of the organization. Participants will be nominated by the
CEO and approved by the Compensation Committee. Participants for 2009 include
the CEO, COO, CFO, CCO and CPO.

 

  •  

Employees must be employed by July 1 of the plan year in order to be eligible
for that year’s incentive. New employees will receive pro-rated awards based on
date of hire.

 

  •  

Participants must be an active employee as of the date of award payout to
receive an award, unless they terminate due to reasons of death, disability (as
determined by the company) or retirement. Individuals who terminate for any of
these reasons during the plan year will receive a pro-rated award.

Performance Period

The performance period and plan operates on a calendar year basis (January 1 –
December 31st). Actual payout awards are made in cash following year-end after
Fox Chase Bank’s audited financial results and performance are known.

Incentive Payout Opportunity

Each participant will have a target incentive opportunity based on his/her role.
The target incentive will reflect a percentage of base salary and be determined
consistent with competitive market practices. The incentive opportunity reflects
a range of potential awards. Actual awards may range from 0% of target (for not
achieving minimal performance) to 150% of target (for exceptional performance).

The table on the following page summarizes the incentive target and opportunity
ranges for each participant during the 2009 Plan year.

 

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Incentive Payout Opportunity (continued)

 

2009 Short-Term Incentive Targets Role    Below
Threshold        

Threshold

(50% of Target)

       

Target

(100%)

       

Stretch1

(150% of Target)

    

CEO

   0%        17.5%        35.0%        52.5%    

Chief Operating Officer

   0%        15.0%        30.0%        45.0%    

Chief Financial Officer

   0%        15.0%        30.0%        45.0%    

Chief Credit Officer

   0%        12.5%        25.0%        37.5%    

Chief Payments Officer

 

   0%

 

       12.5%

 

       25.0%

 

       37.5%

 

   

 

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In order to achieve stretch payouts, the Bank must at least achieve the
predefined threshold level of net income.

Actual payouts will vary depending on performance relative to the specific
performance measures identified for each participant (i.e. the total opportunity
will be divided according to the number of performance measures selected for
each participant.)

Performance Measures

Incentives for all participants will be based on a combination of Bank and
Individual performance. The specific measures and the weights for each measure
will vary based on the participant’s role. The table below shows the allocation
of the incentive relative to Bank and Individual performance:

 

Role    Bank         Individual     

CEO

   100%          0%    

Chief Operating Officer

   80%        20%    

Chief Financial Officer

   70%        30%    

Chief Credit Officer

   35%        65%    

Chief Payments Officer

 

   35%

 

       65%

 

   

In order to focus all participants on the Bank’s overall success and reinforce
our team approach, all participants will be measured relative to two categories
of Bank performance (which range from 35% - 55% of each participant’s incentive
award):

Long-Term Value of the Company

This measure reflects the executive team’s performance on the following factors:
1) Deploy capital effectively, b) Hire and retain the right people, c) Make
sound and prudent financial/strategic choices about capital outlays, d) Make
good judgments about risk and pricing and 3) Build high quality earnings.

Achieve Profit Plan Objectives

This measure reflects our performance relative to several key financial
measures.

þ Core Net Income

þ Increase in Net Interest Income

þ Increase in Non-Interest Expense

þ Core ROA

þ Core ROE

þ Non Performing Loans to Loan Ratio

 

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Performance Measures (continued)

 

Performance on Long-term Value of the Company will be assessed based on
Committee discretion and is intended to provide flexibility to consider factors
that are critical to our long-term success.

Performance on Profit Plan Objectives will be evaluated by the Committee at the
end of the year.

The remaining portion of the incentive awards (range from 45% - 65% depending on
the participant) is based on a combination of other Bank and/or Individual
goals.

SEE APPENDIX A FOR A DETAILED SUMMARY OF THE BANK AND INDIVIDUAL GOALS FOR EACH
PARTICIPANT FOR 2009.

Performance Gate

In order to ensure incentives are funded based on our profits, the Bank must
achieve at least threshold level of Net Income for any performance component to
pay above target levels. Threshold Net Income is defined as 80% of our
budget/plan for the year. Stretch is defined as 110% of our budget/plan for the
year. The plan may be adjusted for extraordinary items at the discretion of the
Committee with Board approval.

Incentive Payouts

Awards will be paid as a cash bonus within 75 days and following the Plan
year-end after Fox Chase Bank’s audited financial results and performance are
known. These awards are based on performance relative to the defined goals. Each
participant’s award opportunity is allocated according to the weights for each
core performance measure. Performance of each specific goal (i.e. Long-term
Value to the Company, Achieve Profit Plan Objectives, Drive Efficiency, Achieve
Targeted Deposit Growth, Achieve Targeted Loan Growth, Individual Performance)
is calculated independently to determine the payout for the goal. The sum of the
awards for each performance measure determines the total incentive award.

As described above, if the Bank does not achieve at least 80% of target Net
Income, incentive payouts for any one performance measure will be capped at
target level.

Board Discretion

The Committee reserves the right to apply positive or negative discretion to the
plan as needed to reflect business environment and market conditions that may
affect the Bank’s performance and incentive plan funding. The Compensation
Committee reserves the right to amend, modify and adjust payouts as necessary.
See “Terms and Conditions” for further details on the Plan provisions.

SEE APPENDIX B FOR AN ILLUSTRATION OF A SAMPLE PERFORMANCE SCORECARD.

 

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Terms and Conditions

 

 

Effective Date

This Program is effective January 1, 2009 to reflect plan year January 1, 2009
to December 31, 2009. The Plan will be reviewed annually by the Bank’s
Compensation Committee and Executive Management to ensure proper alignment with
the Bank’s business objectives. The Committee retains the rights as described
below to amend, modify or discontinue the Plan at any time during the specified
period. The Incentive Plan will remain in effect until December 31, 2009.

Program Administration

The Plan is authorized by the Compensation Committee, which reports to the Board
of Directors. The Compensation Committee has the sole authority to interpret the
Plan and to make or nullify any rules and procedures, as necessary, for proper
administration. Any determination by the Committee will be final and binding on
all participants.

Program Changes or Discontinuance

Fox Chase Bank has developed the plan based on existing business, market and
economic conditions. If substantial changes occur that affect these conditions,
the Committee may add to, amend, modify or discontinue any of the terms or
conditions of the plan at any time. The Committee retains the discretion to
adjust results for one-time extraordinary events or adjust the revised the
budget/plan (with Board approval).

The Compensation Committee may, at its sole discretion, waive, change or amend
the Plan as it deems appropriate.

Incentive Award Payments

Awards will be paid as a cash bonus within 75 days following the Plan year.
Awards will be paid out as a percentage of a participant’s base salary earned
during the year as of December 31 for a given calendar year. Incentive awards
will be considered taxable income to participants in the year paid and will be
subject to withholding for required income and other applicable taxes.

Any rights accruing to a participant or his/her beneficiary under the Plan shall
be solely those of an unsecured general creditor of Fox Chase Bank. Nothing
contained in the Plan, and no action taken pursuant to the provisions hereof,
will create or be construed to create a trust of any kind, or a pledge, or a
fiduciary relationship between Fox Chase Bank and the participant or any other
person. Nothing herein will be construed to require Fox Chase Bank to maintain
any fund or to segregate any amount for a participant’s benefit.

New Hires, Promotions, and Transfers

Participants who are not employed by Fox Chase Bank at the beginning of the Plan
year will receive a pro rata incentive award based on their length of employment
during a given year.

A participant whose work schedule changes during the year will be eligible for
prorated treatment that reflects his/her time in the different schedules.

If a participant changes his/her role or is promoted during the Plan year,
he/she will be eligible for the new role’s target incentive award on a pro rata
basis (i.e. the award will be prorated based on the number of months employed in
the respective positions.)

Termination of Employment

If a Plan participant is terminated by the Bank, no incentive award will be
paid. To encourage employees to remain in the employment of Fox Chase Bank, a
participant must be an active employee of the Bank at the time of the award.
(See exceptions for death, disability and retirement.)

 

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Disability, Death and Retirement

If a participant is disabled by an accident or illness, and is disabled long
enough to be placed on long-term disability, his/her bonus award for the Plan
period shall be prorated so that no award will be earned during the period of
long-term disability. Participation during short-term disability is at the
discretion of the Compensation Committee.

In the event of death, Fox Chase Bank will pay to the participant’s estate the
pro rata portion of the award that had been earned by the participant.

Individuals who will be retiring will receive a prorated award based on their
date of retirement. For the purposes of this Plan, retirement is defined as age
65, consistent with guidelines established in Fox Chase Bank’s existing
retirement plan.

Ethics and Interpretation

If there is any ambiguity as to the meaning of any terms or provisions of this
plan or any questions as to the correct interpretation of any information
contained therein, the Bank’s interpretation expressed by the Board of Directors
will be final and binding.

The altering, inflating, and/or inappropriate manipulation of
performance/financial results or any other infraction of recognized ethical
business standards, will subject the employee to disciplinary action up to and
including termination of employment. In addition, any incentive compensation as
provided by the plan to which the employee would otherwise be entitled will be
revoked.

Participants who have willfully engaged in any activity, injurious to the Bank,
will upon termination of employment, death, or retirement, forfeit any incentive
award earned during the award period in which the termination occurred.

Miscellaneous

The Plan will not be deemed to give any participant the right to be retained in
the employ of Fox Chase Bank, nor will the Plan interfere with the right of Fox
Chase Bank to discharge any participant at any time.

In the absence of an authorized, written employment contract, the relationship
between employees and Fox Chase Bank is one of at-will employment. The Plan does
not alter the relationship.

This incentive plan and the transactions and payments hereunder shall, in all
respect, be governed by, and construed and enforced in accordance with the laws
of the state of Pennsylvania.

Each provision in this Plan is severable, and if any provision is held to be
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not, in any way, be affected or impaired thereby.

This plan is proprietary and confidential to Fox Chase Bank and its employees
and should not be shared outside the organization.

 

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APPENDIX A:

2009 Performance Measures and Weights

Note: This is a high-level summary to provide a comparison of goals across
participants. Each participant will receive Individual Performance Scorecards
that will summarize his specific goals, targets and weights.

 

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2009 Performance Goals and Weights

Below is a summary of each participant’s preliminary performance goals and
weightings for 2009:

 

2009 Performance Measures1    2009 Performance Goals1        
Weightings of Performance Measures         Threshold / Target / Stretch        
CEO           COO           CFO           CCO           CPO  

BANK PERFORMANCE MEASURES

   100 %         80 %         70 %         35 %         35 % 

Long Term Value of Company2

   Committee Discretion        30 %         20 %         20 %         15 %     
   15 % 

Achieve Profit Plan Objectives

            25 %         20 %         20 %         20 %         20 % 

Core Net Income

   $2.32m / $2.90m / $3.19m                                                     
 

Increase Net Interest Income

   14%                                                       

Increase Non-Interest Expense

   5%                                                       

Core ROA

   0.29%                                                       

Core ROE

   2.13%                                                       

NPL to Loan Ratio

   Performance Relative to Peers                                                
      

Drive Efficiency

            15 %         20 %         30 %                       

Efficiency Ratio

   78%                                                       

Revenue / FTE

   $192m                                                       

Expense / FTE

   $149m                                                       

Net Interest Margin

   2.61%                                                       

Achieve Targeted Deposit Growth

            15 %         20 %                                  

Average YTD Deposit Growth

   $650m                                                       

Core Deposits/Total

   38.9%                                                       

Achieve Targeted Loan Growth

            15 %                                             

Comm’l RE Avg

   $282.8mm                                                       

C&I Avg

   $42.5mm                                                       

Comm’l Loans/RM Avg

   $31.4mm                                                       

TEAM / INDIVIDUAL PERFORMANCE MEASURES

   0 %         20 %         30 %         65 %         65 % 

Loan Growth

                       20 %                    20 %            

Avg Loans

   $646.2m                                                       

3rd Party Loan Review

   Satisfactory or Better                                                       

C&I Growth

   $17.6mm                                                       

CRE Growth

   $52.1mm                                                       

Internal Controls

                                  30 %                       

Material Weaknesses

   None                                                       

Summary of Uncorrected Differences

   1% of Net Income                                                       

Annual Client Review

   Top 20 Borrowers                                         20 %            

Credit / Asset Quality

                                             25 %            

OTS Asset Quality

   3 or Better                                                       

3rd Party Loan Review

   Satisfactory or Better                                                       

Launch Internet Banking

   TBD                                                    20 % 

Fidelity Re-Conversion System Upgrades

   TBD                                                    20 % 

Deposit Growth

                                                        25 % 

Avg Deposits

   $12.2mm                                                       

CY Deposits

   $22.5mm                                                       

Cash Mgmt Fees

   $110k                                                       

 

1

Performance measures/goals are pending Board approval.

2

This measure will require subjective Board discretion and reflects how the
executives achieved the following to enhance the long-term value: of the
Company: a) Deploy capital effectively, b) Hire and retain the right people, c)
Make sound and prudent financial/strategic choices about capital outlays, d)
Make good judgments about risk and pricing, e) Build high quality earnings.

 

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APPENDIX B:

Illustration of a Sample Performance Scorecard

 

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ILLUSTRATION OF SAMPLE PERFORMANCE SCORECARD

Given the large number of goals, we recommend evaluating the overall performance
of each broader category, taking into consideration performance on the sub
factors. Evaluation considers specific performance achievements but allows
discretion to assess performance in a more holistic manner.

Using the CEO performance measures and weightings provided to us by FCB, the
following provides an example of this approach. Actual performance and the
ratings are examples only. For the purposes of the illustration, we assume a
base salary of $280,000, with an incentive opportunity of 35%, or $98,000.

 

      Performance Rating Scale (Used to Evaluate Each Performance Category)   
   Did Not Meet         Meets
Minimum         Meets
Some         Meets
All         Exceeds Some         Exceeds All     

Payout as % of Target

   0%        50%        75%        100%        125%        150%    

 

Performance Measures

   Target
Goal3     Weight     Target
Incentive
Opportunity   

Actual
Performance

  

Rating

   Actual
Payout

Long-Term Value of Company4

     n/a      30 %    $ 29,400    Committee Discretion   

Meets Some

(75% of target)

   $ 22,050                            

Achieve Profit Plan Objectives

     25 %    $ 24,500      

Meets Minimum

(50% of target)

   $ 12,250                            

“Core Net Income”

   $ 2.8m           $2.3m                                  

Increase Net Interest Income

     14 %         13%                                  

Increase Non-Interest Expense

     5 %         4%                                  

Core ROA

     0.29 %         0.28%                                  

Core ROE

     2.13 %         1.90%                                  

NPL to Loans (vs. Peer Group)

     TBD           35th %ile                                  

Drive Efficiency

     15 %    $ 14,700      

Did Not Meet

(0% of target)

   $ 0                            

Efficiency Ratio

     78 %         84%                                  

Revenue / FTE

   $ 192m           $190m                                  

Expense / FTE

   $ 149m           $140m                                  

Net Interest Margin

     2.61 %         2.6%                                  

Deposit Growth

     15 %    $ 14,700      

Meets All

(100% of target)

   $ 14,700                            

YTD Avg

   $ 650m           $650m                                  

Core Deposits/Total

     38.9 %         38%                                  

Loan Growth

     15 %    $ 14,700      

Exceeds Some

(125% of target)

   $ 18,375                            

CRE Lending Avg

   $ 282.8mm           $300mm                                  

C&I Lending Avg

   $ 42.5mm           $44mm                                  

Comm Loans/RM Avg

   $ 31.4mm           $30.9mm                                  

Total

     100.0 %    $ 98,000          $ 67,375                            

 

 

3

Performance measures/goals are pending Board approval.

4

This measure will require subjective Board discretion and reflects how the
executives achieved the following to enhance the long-term value: of Company: a)
Deploy capital effectively, b) Hire and retain the right people, c) Make sound
and prudent financial/strategic choices about capital outlays, d) Make good
judgments about risk and pricing, e) Build high quality earnings.

 

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