Exhibit 10.1


 


NetBank, Inc.


Management
Incentive Plan


 

















 


NetBank, Inc,


Management Incentive Plan


Plan
Document


 


Plan Purpose


 


The following is a description of the NetBank, Inc. (“NBI”) Management
Incentive Plan (“MIP”). The purpose of the MIP is to:


 


•                  Support the
achievement of key business objectives (i.e., earnings per share (EPS),
ensuring that Participants are stakeholder in achieving key Company goals)


•                  Motivate
participants to accomplish specific goals and provide significant rewards for
high performers


•                  Attract and
retain well-qualified associates


•                  Ensure that
total cash compensation (salary plus variable pay) is affordably competitive,
objectively determined and directly linked to realize performance.


 


Effective Date


 


The Plan Year shall be from January 1 through December 31. The Plan
will be reviewed annually to ensure proper alignment with NBI’s business
objectives.


 


Eligible Participants


 


NBI Officers to include the following positions:


 


•                  Chief Executives


•                  Senior Officers


•                  Officers


 


Plan Components


 


The goal of the plan structure is to provide an appropriate balance
between Company, Line of Business and Individual results consistent with each
Participant’s impact and to encourage teamwork and cooperation in goal
planning, execution, and successful results.


 


The plan structure is made up
of 3 components:  Target incentive,
Section weight, and Section goals. Guidelines for determining Officer level
targets and weights are provided by the Human Resources department. The
Division Executive and the Chief Human Resources Executive approve exceptions
to the guidelines for Levels 4 and below.


 


I. Target Incentive Opportunity


 


Each participant has an opportunity for an
MIP which represents a percentage of base salary. The percentage of salary is
the “target”, and represents the amount payable if goals are met. In addition,
the participant may achieve a higher MIP payout by exceeding the “target” goal.
The “maximum potential payout” is represented as 150% of the “target” payout. Conversely,
meeting goal below expectation provides a reduced payout.


 


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The chart below illustrates sample target
payout at various Officer and performance levels.


 


	
   

  	
   

  	
  0%

  	
   

  	
  80%

  	
   

  	
  100%

  	
   

  	
  125%

  	
   

  	
  150%

  	
   

  
	
  Performance Level

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3 (Target)

  	
   

  	
  4

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
  Does Not Meet

  	
   

  	
  Meets Most

  	
   

  	
  Meets All

  	
   

  	
  Exceeds Most

  	
   

  	
  Exceeds All

  	
   

  
	
   

  	
   

  	
  Expectations

  	
   

  	
  Expectations

  	
   

  	
  Expectations

  	
   

  	
  Expectations

  	
   

  	
  Expectations

  	
   

  
	
  Level V

  	
   

  	
  Executive Level

  	
   

  
	
  Level III
  and IV *

  	
   

  	
  0%

  	
   

  	
  16%

  	
   

  	
  20%

  	
   

  	
  25%

  	
   

  	
  30%

  	
   

  
	
  Level II and
  III *

  	
   

  	
  0%

  	
   

  	
  12%

  	
   

  	
  15%

  	
   

  	
  19%

  	
   

  	
  23%

  	
   

  
	
  Level I and
  II *

  	
   

  	
  0%

  	
   

  	
  8%

  	
   

  	
  10%

  	
   

  	
  13%

  	
   

  	
  15%

  	
   

  
	
  Level I *

  	
   

  	
  0%

  	
   

  	
  6%

  	
   

  	
  8%

  	
   

  	
  10%

  	
   

  	
  12%

  	
   

  



 










*  Targets are
set, based on level of experience, tenure, and performance


 


II. Section Weight


 


The MIP is comprised of three separate sets of goals, divided on the scorecard
into three Sections – Company goals, Line of Business goals, and Individual
goals. Each section is weighted separately for a total scorecard weight of 100%.
Weights for each section are based on the organizational level of the Officer.


 


As illustrated below, the higher the organizational level of the
participant, the more heavily the Company section should be weighted on the
scorecard. The minimum weight for the company section is 20%.


 




	
  Organizational

  Level

  	
   

  	
  Company

  Weight

  	
   

  	
  Line of

  Business

  Weight

  	
   

  	
  Individual

  Weight

  	
   

  
	
  Chief Executives

  	
   

  	
  Higher

  	
   

  	
  Varies

  	
   

  	
  Lower

  	
   

  
	
  Senior Officers

  	
   

  	
  

  	
   

  	
  

  	
   

  	
  

  	
   

  
	
  Officer 3

  	
   

  	
   

  	
   

  	
   

  
	
  Officer 2

  	
   

  	
   

  	
   

  	
   

  
	
  Officer 1

  	
   

  	
  Lower

  (Minimum
  20%)

  	
   

  	
  Varies

  	
   

  	
  Higher

  	
   

  






 


III. Scorecard Section Goals


 


Goals will be set by the participant and his/her supervisor near the
beginning of the plan year. Specific goals will be assigned to each of the
three MIP sections (Company, Line of business, Individual).


 


Participants should be assigned up to four goals in each section. These
goals should reflect the most critical and relevant “Key Performance Measures”
representing the participant’s planned activities for the year. The use of more
than four measures will dilute the significance of any one goal. All goals
should be given a percentage weight to reflect their relative priority and the
Participant’s overall impact on each. The total of the goals within each
section should equal 100%.


 


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MIP goals should conform to SMART principals, as follows:


 


	
  Specific

  	
   

  	
  The goal relates to a desirable product of effort/contribution, which
  is clearly understood by all.

  
	
   

  	
   

  	
   

  
	
  Measurable

  	
   

  	
  The goal can be readily and objectively assessed relative to degree
  of attainment.

  
	
   

  	
   

  	
   

  
	
  Achievable

  	
   

  	
  The goal is set based on a realistic chance for achievement.

  
	
   

  	
   

  	
   

  
	
  Results Based

  	
   

  	
  The goal relates to products of effort or conclusions, which add
  value rather than focus on activities performed.

  
	
   

  	
   

  	
   

  
	
  Time Focused

  	
   

  	
  The time period for completion is specified when the goal is
  established.

  



 


Defining Scorecard Targets and Ratings


 


At the beginning of the plan year, each Key
performance measure should be clearly defined at the “target” level and at all
other performance levels as follows:


 


“5” – Greatly Exceeds
Target


“4” – Exceeds Target


“3” – Meets Target


“2” – Below Target


“1” – Outside of
acceptable target range


 


Example of Key Performance measure targets
ratings:


 


	
   

  	
   

  	
  Rating

  	
   

  
	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3 (Target)

  	
   

  	
  4

  	
   

  	
  5

  	
   

  
	
  Key Performance

  Measures

  	
   

  	
  Unacceptable

  results

  	
   

  	
  Below Target

  	
   

  	
  Meets Target

  	
   

  	
  Exceeds Target

  	
   

  	
  Greatly

  Exceeds Target

  	
   

  
	
  Time Based Goal

  	
   

  	
  On or after November 1st

  	
   

  	
  Sept 1st

  	
   

  	
  July 1st

  	
   

  	
  May 1st

  	
   

  	
  on or before March 1st

  	
   

  
	
  Dollar Based Goal

  	
   

  	
  < $1.0MM

  	
   

  	
  $1.25MM

  	
   

  	
  $1.5MM

  	
   

  	
  $1.75MM

  	
   

  	
  > $2.0MM

  	
   

  



 


Year End Scoring and Payout Process


 


At the end of the plan year, key performance measures are scored and
incentives are calculated. Each of the scorecard sections will results in a
separate incentive amount, which then are combined into one payment.


 


Section
Scoring The Key Performance
Measures in each section are scored, and a weighted rating is determined for
each measure based on the weight assigned. The total of the weighted ratings
determines the section score. The weighted section score determines the
weighted percent earned, which is multiplied by the plan target incentive to
determine the section payout. The salary amount used for the purposes of MIP
calculations is based on the annual base salary at the beginning of the plan
year.


 


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Plan
Administration


 


1.              Plan Administrator


 


The Chief Human Resources Executive will
serve as the Plan Administrator with responsibility for ongoing Plan
administration and implementation. The Chief Executive Officer will have final
approval for all Plan policy issues, disputes and decisions. Questions
regarding the interpretation of this Plan should first be referred to the
Division Executive.


 


2.              Plan Duration


 


NBI’s intent is to provide Officers and other
selected associates with an incentive opportunity for achieving worthwhile
goals; however, management reserves the right to amend, change and/or terminate
this Plan at any time, without prior notice.


 


3.              Employment Contract


 


The Plan does not create, nor
should it be construed to constitute, a contract of employment between the
Company and any of its associates.


 


4.              Payment Eligibility


 


To be eligible for an incentive award
payment, the Plan Participant must be employed by NBI at the time of payout.
Any exceptions to Payment Eligibility must be approved by the Chief Executive
Officer and the Chief Human Resources Executive.


 


5.              Incentive Payments


 


Earned incentive awards will be paid within two and one half months
after the end of the plan year.


 


6.              New Officers – New
Hires and Promotions


 


Upon hire or promotion, new Officers will be
nominated and approved on a quarterly basis and are eligible to participate in
a prorated MIP. The salary amount used for the purposes of MIP calculations is
the annual base salary at the beginning of the plan year or at hire. In the
case of newly promoted officers, the promotional increase salary will be used
if applicable.


 


7.              Re-assignment of
Duties


 


In the event that an officer is reassigned
during the Plan year, earned awards will be prorated for the number of months
in each position.


 


8.              Termination


 


If the Plan Participant terminates before incentive payout, no
incentive award will be paid.


 


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9.              Plan Interpretation


 


The
Compensation Committee of the Board of Directors establishes the annual Company
Key Performance Weights. Any revisions to the Plan’s methodology must be
approved by the Compensation Committee.


 


If there is
any ambiguity as to the meaning of any terms or provisions of this plan, the
interpretation of any information contained therein, the Company’s
interpretation will be determined by the Compensation Committee and will be
final and binding.


 


The altering,
inflating, and/or inappropriate manipulation of performance/sales results or
any other infraction of recognized ethical business standards, will subject the
employee to disciplinary action up to and including termination of employment. In
addition, any incentive compensation as provided by this plan to which the
employee would otherwise be entitled will be revoked.


 


Participants
who have willfully engaged in any activity, injurious to the Company, will upon
termination of employment, death, or retirement, forfeit any incentive award
earned during the award period in which the termination occurred.


 


10.       General Conditions


 


•                  This
Management Incentive Plan, and the transactions and payments hereunder shall,
in all respects, be governed by, and construed and enforced in accordance with
the laws of the state of Georgia.


•                  Each
provision of this Management Incentive Plan is severable, and if any provision
is held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not, in any way, be affected
or impaired thereby.


 


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