exv10w7





Exhibit
10.7




STANDARD BANK, PaSB




Chief Financial Officer’s

Performance Based Compensation Plan



December 2000



 









 





Chief Financial Officer’s

Performance Based Compensation Plan




Purpose



The purpose of this plan is to reward the extra efforts of the Chief Financial Officer (the “CFO”).
Standard Bank, PaSB (“Standard Bank” or the “Bank”) believes that this reward will provide
incentive for the participant to develop and promote the full potential of the Bank.




Effective Date



The effective date of this plan is January 2001.




Participation



The plan is limited to the Bank’s CFO.




Base Salary



The base salary of the participant will depend on the market value of the position, its job
content, and the performance of the person in the position. Base salary will be determined in
accordance with the normal administrative policies of the Bank.




Incentive Plan and General Conditions





	1.	 	Compensation earned under this plan will supplement base salary.
	 
	2.	 	The potential incentive compensation to be earned under this plan is based upon a
percentage of the participant’s base salary.
	 
	3.	 	Incentive payments under this plan will be based entirely upon performance against
pre-designated criteria.
	 
	4.	 	Pre-designated criteria in this plan will be classified into two groups.
	 
	5.	 	The Bank will provide the participant with an annual performance report.





Time of Plan Payments



Payments under this plan will be made once every 12 months, although the Board of Directors may
choose to make payments more frequently.




Plan Features



The plan will have the following features:





	1.	 	Payments under this plan are based upon the achievement of pre-designated qualitative and
quantitative goals.






	 	•	 	Qualitative - The qualitative portion of this plan will set a minimal baseline
of achievement which must be accomplished before any incentive payment under this plan
is considered. The criteria should include:




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	 	a)	 	The contribution of the executive to the effective functioning
of the executive team.
	 
	 	b)	 	Teamwork within the executive’s department.
	 
	 	c)	 	The quality of working relationship between the executive’s
department and other Bank departments.
	 
	 	d)	 	The quality of service in the executive’s department and other
Bank departments.
	 
	 	e)	 	The perceptions that external customers (if applicable) have of
the specific department’s services.
	 
	 	f)	 	The contribution of the executive to the development of new
Bank programs and products.
	 
	 	g)	 	The quality of the working relationship between the department
and its external contacts.
	 
	 	h)	 	The development of staff in the executive’s department.






	 	•	 	Quantitative - The quantitative portion of this plan has a target level of 10%
of base pay. (Note: It is possible to exceed target.) Quantitative measures in this
plan include:
	 
	 	 	 	See attached Exhibit A for specific details of the quantitative goals for the
current year and the weights assigned to each.






	 	 	 	The plan has two components that provide for a four-tier incentive structure:






	 	•	 	Component I (includes Tier I) is based entirely upon the achievement of the
qualitative goals portion of the plan.
	 
	 	•	 	Component II (including Tiers II, III, and IV) is based entirely upon the
achievement of the quantitative goals portion of the plan. The achievement of the
goals associated with Tiers II, III, and IV becomes progressively more difficult.






	3.	 	Incentive payments associated with each tier represent a percentage of the participant’s
base salary:





	 	 	 	 	 
	 	 	% of Base	 	 
	 	 	Salary	 	 
	Tier I

	 	0% )
	 	Tier I goals must be achieved before payment is made
under any other tier.
	Tier II

	 	5% )	 	 
	Tier III

	 	10% )
	 	Tiers II, III and IV are mutually exclusive.
	Tier IV

	 	15% )	 	 







Tiers II, III, and IV represent relative degrees of accomplishment. (For example, an 80%
accomplishment level for a specific goal would place the performance based compensation
payment in the Tier II range. A 100% accomplishment level would place the performance based
compensation payment in the Tier III range, etc.)




	4.	 	Quantitative goals selected and recommended for this plan will be weighted. The sum total
of the plan’s weighted criteria will equal 1.00. The incentive pay-out will be based on a
weighted average of all the goals across the three tiers which comprise Component II.




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	5.	 	Figure I represents a sample incentive plan matrix:





Figure 1 — Sample Calculation



Quantitative Goals Table

(Incentive Component II)



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Tier II	 	Tier III	 	Tier IV	 	Weighted Average
	Criterion No.	 	Weight	 	(5%)	 	(10%)	 	(15%)	 	Percent of Base Award1
	1

	 	 	0.20	 	 	Goal2
	 	Goal
	 	Goal
	 	Value1&3

	2

	 	 	0.15	 	 	”
	 	”
	 	”
	 	”

	3

	 	 	0.05	 	 	”
	 	”
	 	”
	 	”

	4

	 	 	0.05	 	 	”
	 	”
	 	”
	 	”

	5

	 	 	0.35	 	 	”
	 	”
	 	”
	 	”

	6

	 	 	0.10	 	 	”
	 	”
	 	”
	 	”

	7

	 	 	0.05	 	 	”
	 	”
	 	”
	 	”

	8

	 	 	0.05	 	 	”
	 	”
	 	”
	 	”

	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sum total
critical
weight:

	 	 	1.00	 	 	 	 	 	 	Total weighted
average percent
of base4:
	 	%5;

	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Incentive
Pay-out = Base Salary X Total Weighted Average Percent of
Base6




     Notes:




	 	1	 	Weight of criterion x percent award of tier goal achieved.
	 
	 	2	 	The goals are developed from the criteria; it may be necessary to have more
than one goal for a specific criterion.
	 
	 	3	 	Example for Criterion 1, assuming an 80% achievement of Goal:
Value = 0.20 X 5% (Tier II Level) = 1.00%
	 
	 	4	 	Total weighted average percent of base (“TWAPB”) = sum of “Value” (weighted
average percent column) for each of the eight criteria.
	 
	 	5	 	Example, assuming participant achieves all goals at Tier II level of
accomplishment:
	 
	 	 	 	TWAPB = 1.00 = .75 = .25 = .25 = 1.75 = .50 = .25 = .25 = 5.00%
	 
	 	6	 	Example: Incentive Pay-out = Base Salary x TWAPB = $60,000 X 5% = $3,000






Therefore, if Incentive Component I (Qualitative Goals) is accomplished, then payment is
derived from Incentive Component II (Quantitative Goals), for total compensation as follows:




Total Compensation = Base Salary + Incentive Pay-out = $60,000 + $3,000 = $63,000



Approval for Payment Under the Plan



Approval for all payments under the plan will be given by the President within
a sixty (60) day period of the close of a performance year. The President will report the results of the plan to
the Board prior to paying any incentives.






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Special Awards



The President reserves the right, with approval of the Board, to authorize the payment of special
bonus awards beyond those called for by this plan if, in his estimation, an individual’s
contribution calls for such an award.




Plan Review



This plan may be reviewed periodically by the President and the Board and changed as circumstances
warrant.




Termination



In the event that the participant leaves the Bank prior to an incentive payment, the Bank is under
no obligation for any payment under the plan. All forms of compensation, including salary and
incentive payments, are not automatically payable beyond the date of termination of employment
unless otherwise defined by individual arrangement.



Reviewed and acknowledged:




	 	 	 	 	 
	 	(Signed)	 
	 	 	 
	 	 	 
	 	(Date)	 
	 	 	 



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