Exhibit 10.1


MERCANTILE
BANKSHARES CORPORATION

ANNUAL CASH INCENTIVE PLAN


1.             Purpose.
The purpose of the Mercantile Bankshares Corporation (the “Corporation”)
Annual Cash Incentive Plan (the “Incentive Plan” or “Plan”)
is to provide senior management of the Corporation and its Affiliates annual
cash awards that recognize and reward the achievement of performance goals. “Affiliates” are those corporations or other forms of
business entities, more than 50% of the voting interest of which is owned or
controlled, directly or indirectly, from time to time, by the Corporation.


2.             Effective
Date of Plan. The Incentive Plan shall be effective as of
January 1, 2006, but any payments under the Incentive Plan to individuals
a portion of whose compensation would be subject to Section 162(m) of
the Internal Revenue Code of 1986, as amended, (the “Code”)
and the related regulations (“Section 162(m) Participants”)
shall be contingent on the Incentive Plan’s approval by the Corporation’s
shareholders.


3.             Plan Administrator. The
Corporation’s Compensation Committee shall administer the Incentive Plan. The
Compensation Committee consists of members appointed by the Board of Directors
of the Corporation (the “Board”) from
time to time. Each member of the Compensation Committee shall be an “outside
director” within the meaning of Section 162(m). The Compensation Committee
shall have full power and authority, subject to the provisions of the Plan and
applicable law, to (a) establish, amend, suspend, or waive rules and
regulations and appoint agents it deems necessary or advisable for the Plan’s
proper administration, (b) construe, interpret, and administer the Plan
and any instrument or agreement relating to the Plan, and (c) take all
other determinations and take all other actions necessary or advisable for the
Plan’s administration. Unless the Incentive Plan expressly provides otherwise,
each determination the Compensation Committee makes and each action it takes
pursuant to the Plan or any instrument or agreement relating to the Plan shall
be within the Compensation Committee’s sole discretion and shall be final,
binding, and conclusive for all purposes on all persons, including participants
in the Plan, their legal representatives, and beneficiaries and employees of
the Corporation and its Affiliates. The Committee may, at the expense of the
Corporation, retain counsel to advise it. No member of the Board or the
Compensation Committee shall be liable for any action or determination made in
good faith, or upon the advice of counsel, with respect to the Plan or any
award made under the Plan.


4.             Participants. Individuals
eligible to be participants in the Plan, and to receive awards under the Plan,
shall be those key executive employees of the Corporation and its Affiliates as
the Compensation Committee, in its sole discretion, shall select.


5.             Awards.


5.1           Non-Section 162(m) Participants.
For each calendar year (a “Plan Year”),
at such times as the Compensation Committee determines, it shall establish the 



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basis and terms of
participation of participants who are not Section 162(m) Participants.
In doing so, the Compensation Committee may establish one or more quantitative
or qualitative performance or other goals or criteria as the basis for awarding
such participants bonuses under the Incentive Plan.


5.2           Section 162(m) Participants.
For Section 162(m) Participants, within 90 days
after the commencement of each Plan Year, the Compensation Committee shall
designate:


(a)           The officers who will be deemed Section 162(m) Participants
for that Plan Year;


(b)           The Financial Criteria that will
apply to awards to Section 162(m) Participants for the Plan Year; and


(c)           The Performance Goals the Corporation
must meet with respect to the Financial Criteria designated for Section 162(m) Participants
to earn awards for the Plan Year and a payout matrix or formula for those
Performance Goals.


After the 90th day of a Plan Year, the Compensation Committee
may designate newly-hired officers as participants in the Plan for that Plan
Year. The Performance Goals for those additional Section 162(m) Participants
will be established before 25% of the days remaining in that partial Plan Year
have expired.


5.3           Sale of the Corporation. The
targeted Performance Goals for a Plan Year shall be deemed to have been met at
a 100% level of base salary for Class I participants and a 60% level of
base salary for Class II participants, and the Plan Year ended upon a Sale
of the Corporation. For purposes of the Plan, “Sale of the
Corporation” means:


(a)          The acquisition by any person, entity
or “group”, within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act, (excluding for this purpose, the Corporation or its
Affiliates, and excluding any acquisition of securities by any employee benefit
plan of Corporation or its Affiliates) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more of either the then outstanding shares of common stock or
Corporation or the combined voting power of the Corporation’s then outstanding
voting securities entitled to vote generally in the election of directors (such
common stock or then outstanding voting securities being referred to herein as “Voting Securities”), calculated on the date of the
transaction causing the foregoing fifty percent (50%) test to be met, without
regard to any limitation upon the voting rights of any acquiring person under
Maryland statutes and without regard to the potential exercisability of rights,
not exercised on such date, pursuant to any Stockholder Protection Rights
Agreement of the Corporation then in effect; or


(b)         Consummation of (A) a
reorganization, merger, consolidation or statutory share exchange, in each
case, with respect to which persons who are the 



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holders of the outstanding Voting Securities of the
Corporation immediately prior to such reorganization, merger, consolidation or
statutory share exchange do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally in the
election of directors of the entity resulting from such reorganization, merger,
consolidation or statutory share exchange, or (B) a liquidation or
dissolution of the Corporation  or the
sale of all or substantially all of the assets of the Corporation to an entity
other than an Affiliate.


5.4           Group Classifications. The
Committee shall designate participants in the Plan as being in Class I or Class II,
with such designation made within 90 days of the commencement of each Plan
Year for officers who are deemed Section 162(m) Participants for that
Plan Year or, if applicable, in the case of a newly hired Section 162(m) Participant,
before 25% of the days remaining in that partial Plan Year including the hire
date have expired.


Class I Participants
shall be eligible for an award under the Plan for a Plan Year of up to 100% of
base salary for meeting targeted Performance Goals and up to 150% of base
salary for exceeding targeted Performance Goals in a truly outstanding and
unusual manner, all as determined by the Committee and set forth in the matrix
and formula for the Performance Goals which, in the case of Section 162(m) Participants,
are with respect to the Financial Criteria for the Plan Year. Class II
Participants shall be eligible for an award under the Plan for a Plan Year of
up to 60% of base salary for meeting targeted Performance Goals and up to 100%
of base salary for exceeding targeted Performance Goals in a truly outstanding
and unusual manner, all as determined by the Committee and set forth in the
matrix and formula for the Performance Goals which, in the case of Section 162(m) Participants,
are with respect to the Financial Criteria for the Plan Year. In each case base
salary shall be that which is in effect as of the date the respective
Performance Goals and, if applicable, Financial Criteria, are determined by the
Compensation Committee for the respective participant for the respective Plan
Year.


5.5           The maximum award payable for a Plan
Year under the Plan to a Section 162(m) Participant shall be Five Million
Dollars ($5,000,000).


6.             Financial Criteria. For
each Plan Year, the Compensation Committee shall designate one or more
financial criteria (the “Financial Criteria”) set forth in this Section 6
for use in determining awards for Section 162(m) Participants for
that Plan Year. Financial Criteria shall consist of one or more of the
following financial measures:  operating
income, net income, growth in operating income or net income, earnings per
share, growth in earnings per share, cash flow measures, credit quality
measures, efficiency measures, interest margin measures, expenses, return on
equity, return on assets, stockholder returns, stock price, and achievement of
balance sheet or income statement objectives. Any of the Financial Criteria may
be Corporation-wide or on a departmental, divisional, or regional basis. In
addition, any of the Financial Criteria may be measured in absolute terms, by
references to internal performance targets, or as compared to another company
or companies, and may be measured by the change in that performance target
compared to a previous period. The Compensation Committee retains the
discretion to determine whether an award will be paid under any one or more of
the Financial Criteria.



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7.             Performance Goals. Within
90 days of the beginning of each Plan Year, the Compensation Committee shall
establish specific, objective performance goals (the “Performance
Goals”), the outcome of which is substantially uncertain at the time
they are established, for the Financial Criteria the Compensation Committee
designates for that Plan Year against which actual performance is to be
measured to determine the amount of Awards to Section 162(m) Participants.
Performance Goals the Compensation Committee establishes may be described by
means of a matrix or formula providing for goals resulting in the payment of
awards under the Plan. As to participants not subject to Code Section 162(m) for
the Plan Year, the Performance Goals shall be established at such time during
the Plan Year as determined by the Compensation Committee and may be based on
the Financial Criteria or such other qualitative or quantitative criteria as
the Compensation Committee determines appropriate in its sole discretion.


8.             Determination and Payment of
Awards. As soon as practicable after the end of a Plan
Year, the Compensation Committee will determine the amount of the award each
participant has earned. For Section 162(m) Participants, that
determination will be made based on application of the Performance Goals to the
Financial Criteria in Section 6 designated by the Compensation Committee
for the Plan Year. However, the Compensation Committee may, in its sole and
absolute discretion, reduce the amount that would otherwise be payable for a
Plan Year under the Incentive Plan, except for a Plan Year that ends on the
Sale of the Corporation. Payments will be made in cash promptly after the
Compensation Committee determines the amount of the awards and no later than March 15th
following the end of the Plan Year for which paid, unless deferred under
another plan of the Corporation which complies with Code Section 409A. The
Compensation Committee’s determination with respect to Section 162(m) Participants
must include its certification in writing that the Performance Goals with
respect to the Financial Criteria and any other terms of the award were
satisfied. Minutes of the Compensation Committee’s meeting or any action by
written consent shall satisfy the written certification requirement.


A Participant for any
Plan Year shall be eligible to receive an award under the Plan for that year. However,
the Committee may, in its sole discretion, deny any such award or authorize
payment of part thereof to any Participant for any Plan Year who is not a full
time employee on the last day of a Plan Year or whose employment terminates for
any reason during that Plan Year, or who is granted a leave of absence during
that Plan Year.


9.             Taxes. The
Corporation and any Affiliate shall be entitled to withhold the amount of any
withholding or other tax required by law to be withheld from the payment of an
award.


10.          Termination, Suspension, or
Modification of the Plan. The Board may at any time, with
or without notice, terminate, suspend, or modify the Incentive Plan in whole or
in part; provided that no such action may be taken that will materially
adversely affect the awards for a Plan Year that began prior to such action
without the consent of the participants for such Plan Year. The Board shall not
amend the Incentive Plan in violation of law or in contravention of Code Section 162(m).
The Board may make any amendments to the Incentive Plan required to conform the
Incentive Plan to the requirements of Code Section 162(m).



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11.          Miscellaneous.


11.1         Nontransferable.
No award under the Incentive Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any liability which is for alimony or other payment for the
support of a spouse or former spouse, or for any other relative of a
participant, prior to actually being received by the participant or his or her
designated beneficiary. Any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge, or otherwise dispose of any right to an award
hereunder shall be void.


11.2         Continued Employment. Neither
the adoption of the Incentive Plan, the determination of eligibility to
participate in the Incentive Plan, nor the granting of an award under the
Incentive Plan shall confer upon any participant any right to continue in the
employ of the Corporation or any of its Affiliates or interfere in any way with
the right of the Corporation or its Affiliates to terminate that employment at
any time.


11.3         Governing Law. The
Incentive Plan and all determinations under it shall be governed by and
construed in accordance with Maryland law.


11.4         Other Plans. Nothing
in the Incentive Plan shall be construed as limiting the authority of the
Compensation Committee, the Board, the Corporation, or any Affiliate to
establish any other compensation plan or as in any way limiting its or their
authority to pay bonuses or supplemental compensation to any persons employed
by the Corporation or an Affiliate, whether that person is a participant and
regardless of how the amount of that compensation or bonus is determined.


11.5         Section 162(m).
It is the Corporation’s intention that all payments made under the Incentive
Plan to Code Section 162(m) Participants shall constitute, to the
greatest extent permitted by applicable law, “qualified performance-based
compensation” as that term is defined for purposes of Code Section 162(m).
Accordingly, unless the Board determines otherwise, if any provision of the
Incentive Plan is found not to be in compliance with Code Section 162(m),
that provision shall be deemed amended so that the provision does comply to the
extent permitted by law. In every event, the Incentive Plan shall be construed
in favor of those payments meeting the “qualified performance-based
compensation” exception contained in Code Section 162(m). Notwithstanding
anything to the contrary contained herein, the Compensation Committee retains
discretion to grant awards hereunder that do not comply with Code Section 162(m).


11.6         Section 409A.
It is the Corporation’s intention that in the event Code Section 409A
becomes applicable to the Incentive Plan, the Incentive Plan shall be
interpreted and administered in such manner as to comply with such provision. In
such event, the Board may make, retroactively if necessary, any amendments to
the Incentive Plan required to conform the Incentive Plan to the requirements
of Code Section 409A.



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