CONFIDENTIAL TREATMENT REQUESTED

 

Exhibit 10.24

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan

January, 2019

      Approved by
Board of Directors:                                               Approved by  
Compensation Committee:     CONFIDENTIAL TREATMENT REQUESTED  

  

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

 

I.Introduction

The success of both PeoplesBank and Codorus Valley Bancorp, Inc. (“the Company”)
is dependent upon the Company’s ability to meet and exceed financial and
strategic objectives, increase the value of the franchise and operate in the
best long-term interests of the shareholders. This success is dependent upon the
contributions of each individual executive which collectively impact the
Company’s performance and results.

 

PeoplesBank intends to provide executives with a structured incentive
compensation opportunity in order to recognize the contribution that each makes
to the overall performance of the organization. The purpose of this incentive
plan is to motivate, reward and reinforce performance and achievement of
corporate goals and individual performance/contributions in support of the
Company’s strategic objective for growth and profitability.

 

While risk is an inherent aspect of business, this compensation plan is designed
to reward executives for certain levels of performance without encouraging undue
risk-taking which could materially threaten the safety and soundness of the
Company or business unit.

 

This Executive Incentive Plan (“the Plan”) has been developed as a meaningful
compensation tool to encourage and reward participants for the part that they
play in the overall success of the Company. The Plan is designed to:

 

●provide a form of results-oriented variable compensation which is directly
linked to overall Company performance, and,

 

●provide for recognition of individual contribution to the Company’s performance

 

II.Plan Year

The plan year for this program will be the calendar year, January 1 – December
31. The Plan will pay out annually based on achievement of established goals and
performance measures. The performance measures for the Plan will be determined,
calculated and approved annually.

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 2

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

III.Eligibility for Participation

 

All PeoplesBank executives who meet the criteria below will be eligible to
participate in the Executive Incentive Plan. A listing of participant categories
by grouping appears in Exhibit A.

 

Eligibility for incentive payout will be determined by the participant’s most
recent performance rating. To be eligible, individuals must have a minimally
satisfactory rating and not be on probation and/or written warning during the
plan year or at the time of award payment. Newly hired executives will be
eligible for participation in the Plan providing they started employment prior
to October 1 of the plan year. Payout for current year hires will be pro-rated
based on their actual pay during the plan year. If the individual started
employment after October 1, the executive will be eligible for the next plan
year.

 

A participant’s eligibility ceases at termination of employment (except in the
case of retirement, death or disability) and the participant will not receive
any awards under the Plan beyond those already received. To be eligible for an
award, an employee must be employed as of the payout date.

 

IV.Incentive Opportunities

Each participant will have a target incentive opportunity based on his/her role
and competitive market practice. Incentive opportunities will be defined as a
percentage of base pay. Base pay is actual base salary earned as of December 31
of the plan year. See Exhibit A for targets by participant categories.

 

V.Payout Range

Actual awards will pay out at a reduced level (i.e.50% of target) for threshold
performance, at 100% for target performance and at higher level (i.e.150% of
target) for stretch/maximum or above performance. Performance below threshold
will be zero.

 

VI.Performance Goals

Each participant will have defined performance goals. The goals and weights are
determined at the beginning of each plan year and may change from year to year.
The goals are established by the Compensation Committee and Executive Management
in conjunction with the annual budget process. Company goals are selected to be
aligned with business/strategic plan and reflect annual financial measures such
as net income, return on assets, return on equity, earnings per share, balance
sheet growth or similar indicators. Personal goals generally reflect each
participant’s unique role and responsibilities and may include Action Plan
objectives as deemed appropriate. Threshold, target, and maximum goals will be
defined for quantifiable goals.

 

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 3

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

The performance goals for the plan year are found in Exhibit B. Individual
participant performance measures will be documented in the format that is
specific, measurable, time bound, and directly tied to the budget and or action
plan item for the calendar year.

 

VII.Award Calculation and Distribution

Payout amounts are calculated according to the level of overall performance
achievement as compared to goals as explained in Exhibit B. Payout for
performance between the threshold and target and target and maximum is
interpolated.

 

Incentive payouts will be approved by the Compensation Committee. Final
incentive payouts can be adjusted downward based on an assessment of risk by the
Compensation Committee.

 

Actual individual payouts are then distributed to eligible participants based on
payout percentage of base pay (defined as actual base salary earned as of
December 31 of the plan year) for the year.

 

Payment will be made following the release of the prior year financials by the
external auditors. This will occur no later than March 15 of the following year.
The Company will deduct from all payments under this plan any federal, state or
local taxes required by law to be withheld from such payments. Any participant
terminating employment (except retirement, death, or disability) prior to actual
payment of award will forfeit that award.

 

VIII.Administration

 

Effective Date

This Plan is effective January 1, 2019 for the performance period of January 1,
2019 to December 31, 2019. The Plan will be reviewed annually by the
Compensation Committee to ensure proper alignment with the Company’s objectives.
The Company’s Compensation Committee retains the right as described below to
amend, modify or discontinue the Plan at any time during the specified period.
The Plan will remain in effect until earned incentive compensation is paid to
participants.

 

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 4

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

Plan Authorization and Oversight

 

This Plan is authorized by 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 and/or Board of Directors will be final and binding. The
Compensation Committee may, in its sole discretion, terminate or modify any
aspect of the Plan. However, no Plan amendment or termination will adversely
affect an outstanding award.

 

The Compensation Committee shall have full power and authority to construe,
interpret, manage and control this plan. The plan administrator shall be
designated at the discretion of the Compensation Committee. The Compensation
Committee may also terminate, modify, or amend this plan. Amendments can include
adjustments to award calculations for any significant extraordinary financial
items occurring in any given time period.

 

Any decisions made or action taken by the Committee arising out of, or in
connection with, the administration, interpretation and effect of the Plan shall
be at their absolute discretion and will be conclusive and binding on all
parties. The Company reserves the right to amend, suspend, reinstate or
terminate all or any part of the Plan at any time.

 

The Company will give prompt written notice to each participant of any
amendment, suspension, termination or any material modification of the Plan. The
Compensation Committee also reserves the right to withhold or amend award
payments based on performance or circumstances deemed highly unusual.

 

Risk Assessment

At least annually, the Director of Human Resources or Chief Administrative
Officer and Chief Risk Officer (who has responsibility for risk assessment) will
review this plan and provide a report including a detailed assessment regarding
any risk issues inherent in the Plan. This risk report and the plan document in
full will be reviewed by the Compensation Committee of the Board of Directors to
ensure that the plan design is consistent with the compensation philosophy of
the Company and that the Plan does not motivate undue risk taking. The annual
review will also include the market competitiveness of the Plan, the plan’s
alignment with the Company’s strategic plan, an assessment of how the Plan meets
the objectives in the Introduction of this document, plus the Plan’s impact on
the overall safety and soundness of the Company. The Committee will then provide
a report and recommendations to the full Board of Directors who are responsible
to approve the Plan.

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 5

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

Leave of Absence

Employees on a leave of absence (including FMLA, Long Term Disability, Short
Term Disability, etc.) will be eligible; however, their distribution will be
pro-rated based upon the number of full months of work completed during the plan
year under consideration.

 

Termination of Employment

If a participant is terminated by the Company or resigns, no incentive award
will be distributed except death, disability or retirement.

 

If a participant ceases to be employed by the Company due to death, disability
or retirement, his/her incentive award distribution for the Plan year will be
pro-rated based on the number of full months of work completed during the plan
year under consideration.

 

Miscellaneous

The Plan does not constitute a contract of employment, and participation in the
Plan does not give any employee the right to be retained in the service of the
Company or any right or claim to an award under the Plan unless specifically
accrued under the terms of this plan. Designation as a plan participant conveys
the opportunity, but not the right, to any awards conferred under the Plan.

 

Any right of a participant or his or her beneficiary to the payment of an award
under this plan may not be assigned, transferred, pledged or encumbered.

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 6

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

IX.Governing Law

 

Except as preempted under federal law, the provisions of the Plan shall be
construed, administered and enforced in accordance with the domestic internal
law of the Commonwealth of Pennsylvania.

 

X.Plan Approval

This plan has been approved by the Board of Directors of Codorus Valley Bancorp,
Inc. on January 8, 2019.

      By        Board of Directors     Codorus Valley Bancorp, Inc.        
Compensation Committee     Codorus Valley Bancorp, Inc.  

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 7

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

Exhibit A

 

Executive Incentive Plan 

Participants and Incentive Opportunities

 

Category Participants Incentive Opportunities

Threshold

(50% of Target)

Target

(100% of Target)

Maximum 

(150% of Target) 

1 Executive Chair 12.5% 25% 37.5%   President & CEO 2 Chief Information Officer
10% 20% 30% Chief Counsel Chief Financial Officer Chief Lending Officer Chief
Administrative Officer SVP – Retail Sales & Service SVP – Wealth Management
Chief Operating/Risk Officer Chief Credit Officer 3 SVP, General Services 7.5%
15% 22.5%   VP, Marketing    

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 8

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

Exhibit B 

Performance Goals - Plan Year 2019

 

                    Corporate Pre-Tax, Pre-Prov. Income * $[redacted]**
$[redacted]** $[redacted]**   ROE * [redacted]**% [redacted]**% [redacted]**%  
Efficiency Ratio * [redacted]**% [redacted]**% [redacted]**% Individual
Individual Performance * TBD Total   100%      

*Assigned per below

**Portions of this exhibit have been redacted and are subject to a confidential
treatment request filed with the Secretary of the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934. The
redacted material has been filed separately under the request for confidential
treatment.

 

2019 Performance Measure Weightings                                            
2018   2019   All Participants receive     Performance Measure   Weight   Weight
  the same weighting                       Pre-Tax, Pre-Provision Income   50%  
40%         ROE     15%   25%         Efficiency Ratio   20%   20%        
Personal     15%   15%               100%   100%  

 

Parameters for 2019

1.Base pay is defined as actual base salary earned as of December 31 of plan
year.

2.Generally, Company performance factor(s) must meet or exceed threshold to
initiate an award in the Plan. Each performance factor is assessed independently
from the other performance factors.

3.Awards for performance above threshold but between defined points (threshold,
target, maximum) will be interpolated.

4.Performance above maximum level will be paid at maximum award level.

5.The Compensation Committee has the discretion to adjust incentive payments
down by as much as 100% if it is determined that excessive risk has been taken.
This can be done on an individual or overall basis, as appropriate.

6.Pre-Tax, Pre-Provision Income is defined as net income after all expenses
including the dividend paid on the preferred shares and the expense of the
awards under this plan and before taxes and provision for loan loss.

7.Return on Equity is the amount of Net Income available to common shareholders
as a percentage of average common shareholders’ equity.

 

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 9

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

PeoplesBank, A Codorus Valley Company

Executive Incentive Plan 

8.Efficiency Ratio is the amount of the Bank’s total noninterest expenses
(“overhead”) as a percentage of total revenues. The determination of total
revenues excludes the impact of ALLL provision and gain on sales of investment
securities

  

January 2019CONFIDENTIAL TREATMENT REQUESTEDPage 10