Exhibit 10(h)

 

1st Franklin Financial Corporation

Executive Bonus Plan:  2006

Plan Overview:

 

As we analyze the results from 2005, and the success of the year, our key
challenge still remains the same for 2006: to balance the need for short-term
results – growth and profit, with the need for long-term positioning – new
product development and improved systems.  Both of these issues remain critical
to 1st Franklin’s success.

 

The goal of our five-year strategic plan, which we are 4 years into at this
point, is designed to map out what direction we want the Company to go.  The
goals that are set for the Company each year, which are reflected in the
Executive Bonus Plan, are the milestones which will drive the overall
performance to achieve the current five-year plan and lay the groundwork and
positioning for the new plan and 5 year goals to be set during the 3rd quarter
of this year.  

 

The Executive Bonus Plan for 2006 will focus first on ONE “threshold” goal, and
secondly four strategic goals.  The combination of these goals will provide a
balance measurement of 1st Franklin’s Company performance and also support the
achievement of long term goals.

 

The goals that are set are identified and agreed upon by the Executive
Management Team.  These goals are based on achieving the five-year Corporate
goals set in conjunction with our Strategic Plan.  Below are the four strategic
goals, as well as the threshold goal for 2006.

THRESHOLD GOAL:  The Company must achieve certain pre-tax income for 2006.  

1.

Corporate Net Receivables Growth

2.

Corporate Delinquency Control

3.

Corporate Expenses to Revenue

4.

Corporate Return on Assets (ROA)

  

PROGRAM ELIGIBILITY:

 

Company:  The threshold goal of pre-tax income must be achieved for the
Executive Bonus Plan to be activated.  After this goal is reached, the
achievement of the strategic goals will be paid according to the following scale
on an individual basis as a percentage paid of their annual salary.

No. of Strategic Goals Met

% Bonus Paid Based on Annual Salary

 

(in increments of 5 percentage points)

1

Up to 35% (5% - 35%)

2

Up to 45% (5% - 45%)

3

Up to 60% (5% - 60%)

4

Up to 75% (5% - 75%)

The range of percentage is based on many factors, including but not limited to:
achieving budget projections, achieving monthly / quarterly objectives, training
(both individually and their employees), IPDR ratings and achievement of IPDR
goals, employee retention, managing human resources issues, audit and compliance
guidelines, etc.

 

Example:  if we achieve the threshold goal and two strategic goals, the range of
bonus paid will be from 5% to 45% of a participant’s annual salary.

INDIVIDUAL EXCEPTIONS:

 

If 1st Franklin fails to achieve the threshold goal – the Executive Bonus Plan
will not be activated.  However, the Executive Management Team, consisting of;
 Ben Cheek, Chairman; Buddy Cheek, Vice-Chairman; Ginger Herring, President;
Roger Guimond, EVP/Chief Financial Officer; Mike Culpepper, EVP/Chief Operating
Officer; Kay Lovern, EVP/Strategic and Operational Development, and Mike Haynie,
EVP/Human Resources, may choose to award individual bonuses to a select number
of executives.  These exceptions will only be made if those said individuals
have achieved an outstanding year by ALL standards.  In such a case, a bonus may
be awarded but based on a lower scale than the above plan.

Executive Management Team Review

 

The Executive Management Team will review all executive and Regional Directors
performance ratings and bonus recommendations and determine the final bonus
awarded:

AREA

RECOMMENDATION

COMMITTEE MEMBERS

Regional Operations Directors

Direct Report Vice President

Mike Culpepper, Ginger Herring, Buddy Cheek, Roger Guimond, Mike Haynie, Kay
Lovern

Field Vice Presidents

Mike Culpepper

Mike Culpepper, Ginger Herring, Buddy Cheek, Roger Guimond, Mike Haynie, Kay
Lovern

Home Office Supervisors, Area Vice Presidents, Vice Presidents

Direct Report

Mike Culpepper, Ginger Herring, Buddy Cheek, Roger Guimond, Mike Haynie, Kay
Lovern

Mike Culpepper, Roger Guimond, Mike Haynie, Kay Lovern

Ginger Herring

Ginger Herring, Buddy Cheek, Ben Cheek

Communication of Measurement

 

How well the Company is doing in achieving its goals will be communicated to all
employees on a periodic basis monthly through e-mail. This progress will need to
be communicated to the branch employees as well, through the Regional Directors.