Exhibit 10.2

 

 

 

Written Description of

2015 Executive Incentive Compensation Annual Plan –

Chief Financial Officer

 

 

The following is a description of the material terms of the 2015 Executive
Incentive Compensation Annual Plan (the “Plan”) that was adopted by the
Compensation Committee (the “Committee”) of the Board of Directors of Guaranty
Federal Bancshares, Inc. (the “Company”) with respect to the bonus payable to
Carter Peters, the Company’s Chief Financial Officer (the "Executive"), for
2015:

 

The Plan will pay a maximum of $72,000 of which fifty percent (50%) of the bonus
amount will be paid in cash and fifty percent (50%) will be paid in the form of
restricted stock grants. There are three possible levels of incentive awards:
threshold (25%); target (50%); and maximum (100%). For any bonus amount to be
paid, the threshold level of performance must be achieved. The bonus amount will
be prorated for performance achievements between the threshold and target levels
and between the target and maximum levels. The four performance measurements of
the Company (and the weight given to each measurement) applicable to each award
level are as follows: (i) revenue growth (30%); (ii) net interest margin (20%);
(iii) efficiency ratio (20%); and (iv) pre-tax net income (30%). The following
minimum criteria must all be satisfied before an award is paid under the Plan:
(i) net income of the Company for calendar year 2015 of at least 75% of approved
budget to receive full performance incentive and incentive will be reduced by
50% if Company achieves between 50% and 74.99% of budget net income; No
incentive will be paid if net income is below 50% of budget; (ii) satisfactory
audits as determined by the Board of Directors of the Company after review of
findings from regulatory examination reports and applicable audits and reviews;
(iii) the bank’s tier 1 leverage capital and total risk-based capital ratios
must not fall below 9% and 12%, respectively, and adversely classified assets to
tier 1 capital and allowance for loan losses must not exceed 35%; and (iv)
satisfactory performance appraisal, actively employed by Guaranty Bank, and in
good standing at the time the bonus is paid, which will not be prior to the
public release of earnings in 2016 for the calendar year 2015. The Board of
Directors of the Company retains the right to make the final determination of
the bonus payment and amount, if any, and may consider other pertinent facts
prior to making an award of restricted stock. All incentive payments shall be
subject to the Company’s Compensation Clawback Policy.

 

The Plan also includes vesting and holding periods for the restricted stock
grants. The vesting period for these grants shall be three (3) years from the
date of grant. Also, the Executive agrees not to sell, transfer or otherwise
dispose of such shares for a period of three (3) years from the date of the
award. Exceptions to such restriction on sale, transfer or disposition may be
granted for hardship circumstances to be determined by the Committee.