Exhibit 10.1


 


NetBank, Inc,


Management Incentive Plan


Plan


2005 Plan Year


 


Plan Purpose


 


The following is a description of the NetBank, Inc. (“NBI”) 2005
Management Incentive Plan (“MIP”). The purpose of the MIP is to:


 


•                  Support the
achievement of key business objectives (i.e., earnings per share (EPS)).


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


•                  Attract and
retain well-qualified personnel.


•                  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


 


 I. 
Annualized Base Compensation


 


The salary amount used for the purposes of MIP calculations will be
based on the annual base salary as of the January 1st effective
date for the Plan Year.


 


II. 
Incentive Opportunity


 


The following guidelines summarize variable
pay opportunity as a percentage of base salary. 
The Division Executive and the Chief Human Resources Executive


 


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will determine Organizational Levels
(Target/Potential) and approve exceptions to the guidelines for Levels IV and
below.


 


 


	
  Organizational

  Level

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3-Target

  	
   

  	
  4

  	
   

  	
  5-Potential

  	
   

  
	
  Level V *

  	
   

  	
  Executive Level

  	
   

  
	
  Level IV *

  	
   

  	
  0

  	
  %

  	
  16.00

  	
  %

  	
  20.00

  	
  %

  	
  25.00

  	
  %

  	
  30.00

  	
  %

  
	
  Level III *

  	
   

  	
  0

  	
  %

  	
  12.00

  	
  %

  	
  15.00

  	
  %

  	
  18.75

  	
  %

  	
  22.50

  	
  %

  
	
  Level II *

  	
   

  	
  0

  	
  %

  	
  8.00

  	
  %

  	
  10.00

  	
  %

  	
  12.50

  	
  %

  	
  15.00

  	
  %

  
	
  Level I *

  	
   

  	
  0

  	
  %

  	
  4.00

  	
  %

  	
  5.00

  	
  %

  	
  7.50

  	
  %

  	
  10.00

  	
  %

  



 










*  Based on
level of responsibility


 


III.  Incentive Goals


 


Each MIP participant will have up to five goals, which 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.

  



 


Each MIP participant will be provided a MIP Scorecard to be completed.
Goals will be established based on the organization level of each participant
considering three (3) Sections – Company goals, Line of Business goals,
and Individual goals with relative emphasis, as follows:


 


The table below outlines a mix of weight importance and is to be used
as a guideline for goal planning and guiding a Participant’s work focus.


 


	
  Organizational

  Level

  	
   

  	
  Company

  Goals

  	
   

  	
  Line of

  Business

  Goals

  	
   

  	
  Individual

  Goals

  
	
  Chief Executives

  	
   

  	
  High

  	
   

  	
  Varies

  	
   

  	
  Light

  
	
  Senior Officers

  	
   

  	
   

  	
   

  	
  

  	
   

  	
  

  
	
  Officers

  (More Responsible)

  	
   

  
	
  Officers

  	
   

  
	
  Officers

  (Less Responsible)

  	
   

  	
  Light

  	
   

  	
  Varies

  	
   

  	
  High

  



 


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The intent is to provide an incentive plan which:


 


•                  Ensures that all
Participants are stakeholders in achieving key Company goals.


•                  Provides an
appropriate balance between Company, Line of Business and Individual results
consistent with each Participant’s impact.


•                  Encourages
cross-functional sharing, teamwork and cooperation in goal planning and
execution.


 


Goal Weighting


 


Participants should have between three and five goals in each Section (Company,
Line of Business, and Individual).  All
goals should be given a percentage weight to reflect their relative priority
and the Participant’s overall impact on each. 
The total weighting should be 100% with a minimum of 20% being assigned
to the Company Weight.


 


Incentive Payments


 


Earned incentive awards will be paid within ninety (90) days after the
end of the calendar year.


 


Rating Process


 


The MIP Plan Ratings are:


 


“5” – Exceeds All Expectations


 


“4” – Exceeds Most
Expectations


 


“3” – Meets All Expectations


 


“2” – Meets Most Expectations


 


“1” – Does Not Meet Expectations


 


Targets should be stated in a way that avoids
using ratings of less than “1” and greater than “5”.


 


Examples of Target setting:


 


	
  Rating

  	
   

  	
  Example of Dollar

  Targets

  	
   

  	
  Example of Date

  Targets

  
	
  “5”
  – Exceeds All Expectations

  	
   

  	
  3 

  	
  $

  	
  2.0MM

  	
   

  	
  3/1/2005
  or sooner

  
	
  “4”
  – Exceeds Most Expectations

  	
   

  	
   

  	
  $

  	
  1.75MM

  	
   

  	
  6/1/2005

  
	
  “3” – Meets All Expectations

  	
   

  	
   

  	
  $

  	
  1.5MM

  	
   

  	
  7/1/2005

  
	
  “2” – Meets Most Expectations

  	
   

  	
   

  	
  $

  	
  1.25MM

  	
   

  	
  8/1/2005

  
	
  “1”
  – Does Not Meet Expectations

  	
   

  	
  £ 

  	
  $

  	
  1.0MM

  	
   

  	
  On
  or After 9/1/2005

  



 


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Scoring Process


 


The Raw Score for each Section is calculated using the formula
below:


 


•                  The rating of
each objective on the Scorecard is multiplied by the weight of the specific
objective resulting in a Weighted Rating.


 


•                  The Weighted
Ratings are then added together within each of the three (3) Sections
(Company, Line of Business and Individual) to develop the Section’s Raw Score.


 


Payout Process


 


The Amount of MIP payout is calculated using the process outlined
below:


 


•                  Each Section (Company,
Line of Business and Individual) will receive a payout percentage based on the
Raw Score rating for that individual Section.


•                  The Sections
(Company, Line of Business, and Individual) will stand alone and payouts will
be calculated independently for each.


•                  In addition,
payout levels will be based on a scale of 1 to 5, not 0.


•                  The Section payout
percentage is determined by interpolating each Section Raw Score as it relates
to the target/potential payout percentages (Level 1, 2, 3, 4, 5 target payout
%). The  MIP Spreadsheet is designed to
calculate the amount.


•                  The total annual
Amount of MIP dollars are determined by adding the payout dollars in each Section (Company,
Line of Business, and Individual).


•                  For those who
are only participants for a partial year, there is a Proration process
incorporated to ensure that the associate is being paid for the full months
worked during the Plan Year. The actual Amount of MIP payout that the associate
receives is determined by taking the annual incentive dollars and dividing it
by 12 (12 months per year) and then multiplying that number by the actual
number of months the associate is participating in the plan.


 


Plan Administration


 


1.              Plan Administrator


 


The Chief
Human Resources Executive will serve as the Plan Administrator with
responsibility for on-going 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.


 


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2.              Plan Duration


 


While it is
NBI’s intent to provide officers and other selected personnel with an incentive
opportunity for achieving worthwhile goals, 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.              New Hires, Transfers
and Promotions


 


Newly hired
Plan Participants will be eligible to participate effective the 1st
of the month following the commencement of employment or the occurrence of a
status change.  The award will be
prorated for the first year, based on the number of months in the position as
of December 31 of the Plan year.


 


6.              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.


 


7.              Termination


 


If the Plan
Participant terminates during the plan year, no incentive award will be paid.


 


8.              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.


 


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


 


9.              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.


•                  The
terms and conditions set forth in this document are limited to the plan year
set forth above.


 


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