Exhibit 10(e)

 

1st Franklin Financial Corporation

Executive Bonus Plan:  2010

Plan Overview:

 

As we analyze the results from 2009, and review the budget set for 2010 and
weigh in the economic forecast for the year, we recognize the need today, more
than ever, to balance short-term results – growth and profit, with long-term
positioning – new product development and improved systems.  This balance is
expected to provide the foundation that remains critical for the future success
of the Company.

 

Our long-range strategic plan, scheduled to take us into 2011 with rotating
progress charted annually, will serve as a directional guide that we, as a
Company, will use to obtain our Corporate Goals, our Mission Statement and our
sustaining Core Values.   The short term bonus goals that are set for the
Company each year, which are reflected in this Executive Bonus Plan, are the
milestones which will drive the overall performance to achieve the long range
goals and plans.

 

The Executive Bonus Plan for 2010 will focus first on meeting a minimum income
requirement threshold, and thereafter meeting five strategic goals.  The
combination of these goals is expected to provide a balanced measurement of 1st
Franklin’s performance and will also support the achievement of our long term
goals.

 

DISCLAIMERS:

“The Company must be in compliance with all credit line debt covenants prior to
the disbursement of any bonus.”

Right to Alter Program

The Company reserves the right, at any time, or from time to time during the
year, with or without notice, to continue or discontinue this program, or to
alter it as necessary in the best interest of the Company.

The goals that are set were identified and agreed upon by the Executive
Management Team.  Below are the five strategic goals, as well as the minimum
income requirement for the 2010 bonus to be paid.

THRESHOLD:  The Company must achieve minimum pre-tax income based on the average
pre-tax income for three years ended December 31, 2009 plus the accrued
incentive bonus at December 31, 2010 divided by 2.

STRATEGIC GOALS:

 

 

 

 

1.

Corporate Net Receivables Growth – a target of 4.0% annual growth;

 

2.

Corporate Delinquency Control – 30 days or more delinquency (including bankrupt
accounts) not to exceed 11.5% of receivables;

 

3.

Corporate Expenses to Revenue – less than or equal to 92.5%;

 

4.

Corporate Return on Assets (ROA) – greater than or equal to 2.55%;

 

5.

Corporate Pre-tax Income (separate from the threshold goal) - $12.0 million plus
accrual for bonus.

PROGRAM ELIGIBILITY:

 

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

No. of Strategic Goals Met

% Bonus Paid Based on Annual Salary

 

(in increments of 5 percentage points)

1

Up to 25% (0% - 25%)

2

Up to 35% (0% - 35%)

3

Up to 45% (0% - 45%)

4

Up to 55% (0% - 55%)

5

Up to 65% (0% - 65%)

The percentage range is based on many factors, including but not limited to:
achieving budget projections, achieving monthly / quarterly objectives, training
(both individually and for the respective participant’s employees), performance
management review (“PMR”) ratings and achievement of PMR goals, employee
retention, managing human resource issues, audit and compliance guidelines, etc.

 

Example:  if the Company achieves the threshold, which will then activate the
bonus plan, and any two strategic goals, the range of bonus paid will be from 0%
to 35% of their annual salary depending on their performance.

 

INDIVIDUAL EXCEPTIONS:

If 1st Franklin fails to achieve the minimum requirement of pre-tax profit – the
Executive Bonus Plan, which is an incentive bonus plan based on performance,
will not be paid.  However, the Executive Compensation Committee, which consists
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 Organizational Development, and Mike
Haynie, EVP/Human Resources, may chose 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 may be based on a lower scale than the above plan.

Executive Compensation Committee Review

 

The Executive Compensation Committee will review all executive, performance
ratings and bonus recommendations and determine the final bonus awarded.

AREA

RECOMMENDATION

COMMITTEE MEMBERS

Home Office Supervisors, Home Office Vice Presidents

Direct Report

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

Executive Vice Presidents, General Counsel

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 and a “dashboard”
analysis sent out with month-end statistics.  It can be located through our
internal website:  Accounting / Month-end STATS button / 2010 folder / Corporate
Financials and Goals for each month.  This file is usually available by the 20th
of the following month.  This progress will then need to be communicated to the
branch employees as well, through the Regional Directors.