Exhibit 10.1
CapitalSource Bank
Chief Executive Officer and Chief Financial Officer 2011 Cash Bonus Compensation
Program
The following compensation program (the “Program”) covers cash bonuses for
fiscal year 2011 for each of the President and Chief Executive Officer (the
“CEO”) and the Chief Financial Officer (“CFO”) of CapitalSource Bank (the
“Bank”), and is intended to reflect a comprehensive view of the Bank’s
performance. The Program will be administered by the Compensation Committee of
the Bank’s Board of Directors (the “Bank Committee”), provided that all
decisions hereunder will be made independently by each of the Bank Committee and
the Compensation Committee of the Board of Directors of CapitalSource Inc. (the
“Parent Committee,” and together with the Bank Committee, the “Committees”). All
compensation decisions under this Program for the CEO and, if applicable, the
CFO, also are subject to the satisfaction of the Internal Revenue Service Code
Section 162(m) performance criteria established by the Parent Committee.
Determinations of 2011 cash bonuses for the CEO and the CFO of CapitalSource
Bank shall be made solely pursuant to this Program and not pursuant to any other
compensation program or plan whether applicable to employees of CapitalSource
Bank or otherwise.
The Program reflects a combination of success factors, including Primary
Financial Goals and Other Performance Measures, some of which will require
subjective determinations by the Committees. Success factors are intended to
align with and appropriately measure the successful implementation and
accomplishment of the Bank’s business plan including the achievement of critical
goals at both the corporate and the departmental levels. The CEO’s individual
success factors are set by the Committees, and the CFO’s success factors are
recommended by the CEO and reviewed and approved by the Committees. The success
factors for the CEO and the CFO of the Bank appear in Exhibit A and Exhibit B,
respectively.
CEO 2011 Cash Bonus Target
The Committees may use their respective discretion to adjust — up or down — the
following bonus targets and to determine whether the CEO success factors
outlined on Exhibit A have been achieved to the extent there are judgments to be
employed, subjective determinations to be made or mitigating factors exist.
To achieve a 2011 Cash Bonus at or above 100% of Base Salary:

  ▪   All of the Primary Financial Goals and at least the first two of the Other
Performance Measures must be met.

To achieve a 2011 Cash Bonus at or above 75% of Base Salary:

  ▪   At least three of the four Primary Financial Goals, the first of the Other
Performance Measures, and at least one of the remaining Other Performance
Measures must be met.

CFO 2011 Cash Bonus Target
To achieve a 2011 Cash Bonus at or above 100% of Base Salary:

  ▪   All of the Primary Financial Goals and all of the Other Performance
Measures must be met.

To achieve a 2011 Cash Bonus at or above 75% of Base Salary:

  ▪   At least one of the two Primary Financial Goals and at least the first two
of the Other Performance Measures must be met.

 

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Exhibit A
2011 Success Factors for CapitalSource Bank’s CEO
Primary Financial Goals:

  1.   Pretax Net Income — Achieving pretax net income for 2011 of $150 million
for CapitalSource Bank.     2.   Credit Losses:

  a.   Experiencing during 2011 aggregate credit losses (charge offs and
specific reserves) of less than 1% of the original outstanding balances for
2009, 2010 and 2011 vintage originations owned by CapitalSource Bank. For
purposes of losses on portfolio acquisitions, only losses in excess of the
purchase discount will be counted as credit losses.     b.   Reducing the
classified asset ratio of CapitalSource Bank as of December 31, 2011 to 60% or
less.

  3.   Operating Expenses — Maintaining the operating expense ratio (total
expenses/average assets) for CapitalSource Bank at 2.10% or less for 2011 absent
the impact of significant corporate reorganizations.     4.   Average Risk
Ratings — Pursuant to the CapitalSource Bank risk rating system, having an
average risk rating of 2.75 or less for all loans owned by CapitalSource Bank
that were closed or acquired during 2011.

Other Performance Measures:

  1.   Regulatory Ratings — Maintaining acceptable safety and soundness,
compliance and CRA ratings for CapitalSource Bank as determined by the Bank
Committee.     2.   Funding — Operating CapitalSource Bank’s retail banking
operation to provide adequate funding for CapitalSource Bank’s planned closing
and acquisition of up to $1.8 billion of loans in 2011 while minimizing funding
and operational costs and organically growing deposits only within the existing
branch structure.     3.   Bank Charter — Converting CapitalSource Bank’s
Charter from a California Industrial Bank to a Commercial Bank, or continuing to
make significant progress toward such a conversion as determined by the Bank
Committee.     4.   Operating Structure — Simplifying the management structure
of CapitalSource Bank with the goal of making CapitalSource Bank capable of
functioning as a stand-alone entity (to the extent permitted by applicable law,
regulation and regulators).

 

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Exhibit B
2011 Success Factors for CapitalSource Bank’s CFO
Primary Financial Goals:

  1.   Pretax Net Income — Achieving pretax net income for 2011 for
CapitalSource Bank of $150 million.     2.   Operating Expenses — Maintaining
the operating expense ratio (total expenses/average assets) for CapitalSource
Bank at 2.10% or less for 2011 absent the impact of significant corporate
reorganizations.

Other Performance Measures:

  1.   Regulatory Ratings — Maintaining acceptable safety and soundness,
compliance and CRA ratings for CapitalSource Bank as determined by the Bank
Committee.     2.   Regulatory Business Plan(s) — Developing and timely filing
with applicable regulatory authorities appropriate revised regulatory business
plans for CapitalSource Bank, to be used in conjunction with a charter change
application and/or the Bank’s extended de novo period or other regulatory
requirements.     3.   Policy Limits — Adhering to the quarterly limits for
liquidity risk, interest rate risk, investment policy compliance and capital
compliance, in each case as established from time to time by the Asset Liability
Committee of the Bank’s Board of Directors and measured as of the last business
day of each quarter during 2011.     4.   Accounting Integration — Successfully
combining (to the extent permitted by applicable law, regulation and regulators)
the operations of the accounting departments of the Parent Company and
CapitalSource Bank into a single department within CapitalSource Bank, or
continuing to make significant progress toward such combination as determined by
the Bank Committee.     5.   IT Integration — Successfully combining (to the
extent permitted by applicable law, regulation and regulators) the operations of
the information technology departments of the Parent Company and CapitalSource
Bank into a single department within CapitalSource Bank, or continuing to make
significant progress toward such combination as determined by the Bank
Committee.