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EXHIBIT 10.9  


 
 

Central Pacific Financial Corp.
  2004 Annual Executive Incentive Plan    
    


Purpose:  


        The purpose of this plan is to reinforce the mission and corporate goals of Central Pacific Financial Corp. and its subsidiaries. The plan is designed to help the
Company attract, retain and motivate a talented executive team. This team's performance, both as a team and as individuals, contributes directly to serving the Company's customers and communities,
sustaining the Company's strong financial performance, and adding value for the shareholders. 


Definitions:  


        The following terms will have the indicated meanings throughout this document. Whenever appropriate, words used in the singular may include the plural and
vice-versa. 


        "Base
Salary" means the annual base salary (excluding, for the avoidance of doubt, any bonus, commission payments or other extra cash compensation on an annualized basis) paid to the
Participant on the last day of the Plan Year. For example, a Participant who is paid a monthly salary of $10,000 as of the last day of the Plan Year will have an annualized base salary of $120,000 for
purposes of calculating any annual incentive payment under the Plan. 


        "Board"
means the Board of Directors of Central Pacific Financial Corp. 


        "CEO"
means the Chief Executive Officer of Central Pacific Financial Corp. 


        "Company"
means Central Pacific Financial Corp. and its subsidiaries. 


        "Committee"
means the Compensation Committee of the Board. However, if a member of the Compensation Committee is not an "outside director" within the meaning of Section 162(m) of
the Code or is not a "non-employee director" within the meaning of Rule 16b-3 under the Exchange Act, the Compensation Committee may from time to time delegate some or
all of its functions under the Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term "Committee" includes any such committee or subcommittee, to the
extent of the Compensation Committee's delegation. 


        "Covered
Employee" means a Participant who is a "covered employee" as defined in Section 162(m) of the Internal Revenue Code and the regulations promulgated under
Section 162(m) of the Internal Revenue Code, or any successor statute. 


        "Participant"
means the individual in a given position who is selected to participate in this Plan in accordance with the terms of the Plan. 



        "Plan"
means this 2004 Annual Executive Incentive Plan. 


        "Plan
Year" means Central Pacific Financial Corp.'s fiscal year, unless otherwise determined by the Committee or the Board. 


Administration:  


        The Plan will be administered by the Committee. The Committee may, in its sole discretion, delegate certain aspects of recordkeeping and administration to
specified individuals. 


        The
Committee is given full authority to develop such rules, regulations, procedures and communications as it deems necessary or advisable to administer the Plan and interpret its
provisions. Any determination, decision, interpretation or other action of the Committee, after ratification by the Board, will be considered final and binding upon all Participants and any person
claiming entitlement to an award under the Plan. 







 



Participation:  


        In order to be considered for participation in the Plan, an employee of the Company must have been placed on full-time active status with the
corporate title of Executive Vice President or above, no later than January 1st of the Plan Year. For each Plan Year, the CEO will recommend to the Committee the employees (by
name and/or by class) who should participate in the Plan for that Plan Year and the Committee will approve the CEO's recommended list of the Participants (with such modifications as it determines)
within the first 90 days of the Plan Year. 


        The
selected Participants will be notified in writing by April 30th of the Plan Year. This communication will notify Participants of their participation and the
target percentages of their incentive. 


        A
Participant must receive at least a "Meets Expectations" performance appraisal rating during the Plan Year in order to receive any payment under the Plan. Any exceptions from this
provision must be recommended by the CEO and approved by the Committee. 


        Participants
in this Plan are ineligible for participation in any other Company annual incentive cash bonus programs for the applicable Plan Year. 


Performance Period:  


        Unless otherwise determined by the Committee the term over which performance shall be evaluated shall be the Plan Year. 


Actual Awards:  


        Actual awards will be calculated according to the following performance measures: (a) corporate performance objectives, and (b) individual
unit/production objectives. The weight each measure is accorded for the applicable Participant is set forth on the table below. 


        Corporate Performance Objectives.    Corporate performance will be measured by one or more of the following targets selected by
the Committee: 



	•
	Earnings
per share (actual or targeted growth);



	•
	Net
income after capital costs;



	•
	Net
income (before or after taxes);



	•
	Return
measures (including, but not limited to, return on assets, risk-adjusted return on capital, or return on equity);



	•
	Efficiency
ratio;



	•
	Full-time
equivalency control;



	•
	Stock
price (including, but not limited to, growth measures and total shareholder return);



	•
	Non-interest
income compared to net interest income ratio;



	•
	Expense
targets;



	•
	Margins;



	•
	Operating
efficiency;



	•
	EVA®;



	•
	Credit
quality measures; 



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	•
	Customer
satisfaction;



	•
	Loan
growth;



	•
	Deposit
growth;



	•
	Net
interest margin;



	•
	Fee
income;



	•
	Operating
expense; and



	•
	Credit
quality. 




        The
target performance objectives will be established in writing by the Committee within the first 90 days of the Plan Year. 


        Individual Unit/Production Performance Objectives.    The individual unit/production performance will be measured by one or more
of the following targets selected by the Committee: cost per dollar loan growth; cost per dollar deposit growth; revenue per personnel; operating expense to group budget and service levels (group);
and personal performance. 


        The
target performance objectives (if applicable) will be established by the Committee within the first 90 days of the Plan Year. 


        Target Bonus and Maximum Bonus.    Within the first 90 days of the Plan Year, the Committee will establish for each
Participant a target bonus and a maximum bonus for the Plan Year, each as expressed as a percentage of the Participant's Base Salary. In all cases, the maximum bonus established by the Committee for
any participant shall be less than or equal to the maximum bonus specified in the table below, but there shall not be any expectation or requirement that the maximum bonus established by the Committee
will be the full amount of the maximum bonus specified in the table. 


        Participant Payout.    Each Participant's actual award will be based upon the extent to which the applicable performance
measures, as outlined in the table below, are achieved (i.e., if 80% of the Participant's target measures are achieved, the Participant will receive 80% of the Participant's target bonus), subject
to the Participant's achieved performance exceeding any minimum threshold established by the Committee. In no case will the actual award amount payable under the Plan to any Participant exceed the
maximum bonus established for the Participant by the Committee (in accordance with the table below). The Committee has no discretion to increase any award amount payable under the Plan but may reduce
or eliminate the amount payable under any award in its discretion (for any reason or no reason). Payment of any award amounts will be made after audited financial statements are made available, but no
later than April 1 of the year following the Plan Year. 


Performance Measure Weighting and Maximum Bonus  



	 
	 	Groups
	 
	Measures
 
	 
	 	CEO
	 	President
	 	EVP
	 
	Corporate Performance Weighting	 	100	%	100	%	60	%
	Individual Unit/Production Objectives (KPI) Weighting	 	0	%	0	%	40	%
	 	Total	 	100	%	100	%	100	%
	Maximum Bonus as a % of Base Salary	 	100	%	100	%	100	%





Termination of Employment:  


        The Participant must remain actively employed by the Company on the last day of the designated Plan Year to be considered eligible for any potential payment under
this Plan and must remain actively 


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employed
by the Company on the date the award is paid. Any exceptions to this provision must be approved by the Committee, in its sole discretion. 


Non-Transferability of Award:  


        An award, or potential award, granted under this Plan shall not be assignable or transferable by the Participant other than by will or the laws of descent and
distribution. 


No Right to Employment:  


        This Plan does not constitute a contract between the Company and its employees. Neither establishing this Plan nor taking any action as a result of the Plan shall
be construed as giving any employee the right to be retained by the Company for any period of time, or to be employed in any particular position, at any particular rate of pay, or to provide any other
job-related benefits. 


Plan is Unfunded:  


        All payments to be made under the Plan shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts. 



Amendment or Termination of Plan:  


        The Committee, with ratification from the Board, may from time to time or at any time amend or terminate the Plan without notice to Participants. 


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Central Pacific Financial Corp. 2004 Annual Executive Incentive Plan