exv10w11






Exhibit 10.11




BANK MUTUAL CORPORATION

(BKMU)




MANAGEMENT INCENTIVE COMPENSATION

PLAN







 









 








BANK MUTUAL CORPORATION




Management Incentive Compensation Plan (MIP)



     This document describes the annual Management Incentive Compensation Plan (the Plan) of BANK
MUTUAL CORPORATION (“BKMU”).


PURPOSE




     Incentive compensation is an essential element of total annual cash compensation. The Plan is
designed to direct the efforts of those whose duties, responsibilities, and decisions have a
significant impact on the achievement of BKMU’s basic business objectives by initiating actions,
rather than merely responding to external conditions. Specific objectives of the Plan are to:




	 	•	 	Contribute toward achieving short-term performance goals;
	 
	 	•	 	Recognize and reward superior individual performance;
	 
	 	•	 	Assure corporate financial gain before incentive payments are earned;
	 
	 	•	 	Provide compensation which is competitive with the market place; and
	 
	 	•	 	Restrict participation to key officers.




PLAN DESCRIPTION




     To meet the above objectives, the Plan provides incentive reward opportunities in return for
outstanding performance. The Plan is a “look forward” plan which generates incentive funds based
on actual operating results measured against predetermined performance goals.



     The Plan is integrally related to the BKMU’s salary program in that the incentive award
opportunities are measured as a designated percent of each Participant’s Base Salary. The
combination of Base Salary and Target Incentive Award is designed to provide the Participant with
total annual cash compensation that is consistent with each Participant’s respective position and
individual performance.



     Under the Plan, two factors determine the amount of incentive awards each Participant will
receive:




	 	•	 	BKMU’s corporate performance measured against predetermined financial goals, and






	 	•	 	Each Participant’s individual performance measured against predetermined individual
goals.




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PLAN ADMINISTRATION




     The Bank Mutual Corporation Compensation Committee (the Committee) has final authority for
Plan provisions and has the responsibility for supervising the administration of the Plan.


ELIGIBILITY




     Eligible positions are those whose decisions have a material and direct impact on annual
operating results. Eligibility for participation does not necessarily mean participation every
year. Participants will be designated annually by the Committee. This designation will take place
prior to the beginning of BKMU’s fiscal year, except that if an officer is hired or promoted during
the program year, it is up to the discretion of the Committee to determine if that person is
included in the Plan and to what extent of the annual Base Salary.


SIZE OF AWARDS




     Target Incentive Awards should be consistent with the competitive labor market and should
reflect the responsibility levels of the Participants. The Participants are grouped into tiers to
reflect the various responsibility levels of the Participants, and a target incentive percentage of
Base Salary is established for each tier. The incentive percentages for the responsibility tiers
are shown below:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Incentive Award Opportunities	 	 	 	 
	 	 	(As a % of Salary)	 	 	 	 
	Responsibility	 	 	 	 	 	 	 	 	 
	Tier	 	Threshold	 	 	Target	 	 	Maximum	 
	Tier I
	 	 	14.0	%	 	 	20.0	%	 	 	40.0	%
	Tier II
	 	 	12.6	%	 	 	18.0	%	 	 	36.0	%
	Tier III
	 	 	10.5	%	 	 	15.0	%	 	 	30.0	%
	Tier IV
	 	 	7.0	%	 	 	10.0	%	 	 	20.0	%






     Target Incentive Awards represent incentive funds that will be earned for each position if
BKMU and the Participant achieved the predetermined goals. Participants’ base salaries are
multiplied by their respective target incentive percentage to determine their target incentive
award. Actual incentive awards may be higher or lower than target levels, depending on actual
operating results compared to predetermined goals.


INCENTIVE MIX




     A portion of each Participant’s incentive opportunities is based on corporate performance and



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a portion of individual performance. The following table shows the distribution of awards based on
corporate performance and awards based on individual performance.




Performance Mix 




	 	 	 	 	 	 	 	 	 
	Tier	 	Corporate	 	 	Individual	 
	I
	 	 	100	%	 	 	—	 
	II
	 	 	80	%	 	 	20	%
	III
	 	 	80-50	%	 	 	20-50	%
	IV
	 	 	80	%	 	 	20	%






     The individual portion of the Target Incentive Award will be based on the measured performance
of each Participant, based on the results of the goals performance appraisal process.


INCENTIVE POOL




     The size of the incentive pool will be based on BKMU’s operating success relative to goal.
The Plan requires establishing annual performance goals and measures actual operating results
relative to the established goals to generate the incentive awards.



     Goal Setting



     Annual performance goals will be established at the beginning of each year. The CEO will make
such recommendations to the Committee for subsequent approval. If mutually agreed upon performance
goals cannot be reached, the Committee has final authority to set the performance goals. The
performance criteria will be communicated in Appendix A to the Plan for that year.



     Incentive Matrix



     Each year, an incentive compensation matrix is prepared that relates the performance criteria
to the factor applied to the Target Incentive Award (the Factor). In the matrix, the performance
criteria are expressed as a percentage of the predetermined performance goals.



     At the beginning of each year, the CEO will recommend an incentive compensation matrix to the
Committee for their approval. The matrix approved by the Committee shall become Appendix A to the
Plan for that year.



     Performance Threshold



     To protect ownership interests, there will be a threshold performance level below which no
Incentive Awards will be earned.



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     Maximum



     The maximum incentive award that can be funded shall be no more than two times the Target
Incentive Award to protect against windfall profits and poor planning. The maximum Factor that may
be used in the incentive matrix is two times.


CORPORATE INCENTIVES




     If BKMU achieves or exceeds the predetermined performance goals, the incentive pool is
generated. The corporate portion of the incentive pool is automatically earned by Participants.


INDIVIDUAL INCENTIVES




     If an incentive pool is generated by BKMU performance, the individual portion for each
Participant is based on measured individual performance.



     Individual incentive awards will be based on measured performance of each Participant, as
reflected in BKMU’s performance evaluation process.


FORM AND TIMING




     Distribution of the earned Incentive awards shall be paid in cash to the Participants in one
installment within thirty (30) days following the close of BKMU’s fiscal year for which the
incentive was computed. To the extent that it is not possible to compute the incentive within
thirty (30) days following the close of BKMU’s fiscal year, an estimated payment may be made with
proper adjustment as soon as practical.



     In the case of death of a Participant, between the end of the fiscal year and the following 30
days, the total incentive earned shall be paid to the beneficiary designated in writing by the
Participant. In case of a failure of the Participant to designate a beneficiary, payment will be
made to the Participant’s estate.


TERMINATION




     Upon voluntary termination or involuntary termination during the year, all accrued benefits of
the Participant are lost. In the case of retirement, death, or permanent disability during the
Plan year, incentive awards will be paid at the end of the year, on a pro-rata basis.



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     If the Participant takes a leave of absence or a disability leave during the year, they will
not accrue any benefits for the time they are absent (adjusted to the nearest half-month).


AMENDMENT




     The Committee can change, amend, or terminate the Plan at any time, except that no such action
will adversely affect any accrued incentive awards that are earned up until the time of the
amendment.


NO EMPLOYMENT AGREEMENT INTENDED




     This Agreement does not confer upon Participants any right to continuation of employment
in any capacity by BKMU and does not constitute an employment agreement of any kind.


DEFINITIONS





	 	1.	 	Base Salary shall mean the total W-2 cash wages (excluding any awards
paid under the Plan for the prior year) earned by each Participant during the calendar
year of the Plan. Disability payments are excluded for the purpose of this
definition.
	 
	 	2.	 	Corporate Incentive Award shall mean the amount that is actually
accrued for and paid to each Participant based on BKMU’s performance.
	 
	 	3.	 	Individual Incentive Award shall mean the amount that is actually
accrued for and paid to each Participant based on each Participant’s individual
performance.
	 
	 	4.	 	Earnings per Share-diluted (EPS) shall mean net income after taxes,
before dividends, for the year, divided by the weighted-average number of common
shares outstanding for the period. Non-vested MRP and stock option shares are
considered dilutive potential common shares and are included in the weighted-average
number of shares outstanding for diluted EPS.
	 
	 	5.	 	Target Incentive Award shall mean the amount that would be earned if
BKMU and the individual achieved predetermined performance goals.




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