Exhibit 10.6

People’s United Bank Short Term Incentive Plan for Key Employees

People’s United Bank maintains a Short Term Incentive Plan (the STIP) for
certain key employees of the company. The STIP is administered under the
authority of the Human Resources Committee (HRC) of the Bank’s Board of
Directors.

Eligibility. All employees who are classified as Grade 45 or higher, and who are
not participants in any other management, production or sales incentive plan are
eligible to participate. The Chief Executive Officer and all other executive
officers of the company are participants in the STIP.

Target Awards. A target payout amount is established for each STIP participant
on an annual basis. The target amount is expressed as a percentage of the
participant’s base salary for the applicable fiscal year. In general, target
award percentages increase as seniority levels increase within the company.

Performance Priorities. Generally, three performance priorities are set for each
STIP participant (including the Chief Executive Officer) for the applicable
fiscal year. Individual performance priorities relate to the company’s strategic
business objectives for that year.

Company Performance Measure(s). The availability of funds for payment of STIP
awards is dependent on the company’s attainment of a specified level of
performance compared to objective performance measure (e.g., earnings per share)
or measures over the course of the company’s fiscal year. No funds are available
for the payment of STIP awards if the company’s performance does not meet or
exceed a specified minimum performance level(s). Conversely, the amount
available for the payment of STIP awards is capped once the company’s
performance exceeds a specified level compared to the objective measure(s). The
performance measure(s), minimum performance level(s), and cap level(s) are
determined by the HRC on an annual basis.

Payouts. STIP payouts are determined following the close of the applicable
fiscal year. No payouts are made to any STIP participant unless (a) the company
has attained at least the minimum performance level specified for the applicable
fiscal year, and (b) the Bank’s regulatory capital ratios meet or exceed their
required levels. Assuming these conditions have been met, each participant’s
achievement of his or her performance priorities is evaluated and the amount of
his or her STIP award payment is calculated. The participant must demonstrate a
specified minimum percentage achievement of his or her performance priorities,
with the amount of the payout dependent on the degree of achievement attained.
Preliminary payout calculations for a participant may then be increased or
decreased by as much as 30% (in 10% increments) after evaluating the
participant’s leadership behaviors.

Reserved Authority. The HRC and the full Board of Directors of the Bank reserve
the authority to approve, modify, or disallow any payment proposed to be made
pursuant to the STIP.