EX-10.2






Exhibit 10.2




KEYCORP




ANNUAL INCENTIVE PLAN




(November 14, 2008 Restatement)




     KeyCorp (the “Corporation”) hereby establishes this Annual Incentive Plan for the purpose of
providing a discretionary annual incentive to selected key officers of the Corporation and its
subsidiaries.



ARTICLE I




DEFINITIONS 




     For the purposes hereof, the following words and phrases
shall have the meanings indicated:



     1. A “Beneficiary” shall mean any person designated by a Participant in accordance with the
Plan to receive payment of all or a portion of any Incentive Award for which the Participant is
eligible at the time of the Participant’s death.



     2. A “Change of Control” shall mean a Change of Control under any of clauses (a), (b), (c), or
(d) below. A “Non-Initiated Change of Control” shall mean (i) a Change of Control under clause (c)
below (regardless of whether it also constitutes a Change of Control under any other clause below),
and (ii) a Change of Control under clause (a), (b), or (d) below if such Change of Control results
in whole or in any significant part, directly or indirectly, proximately or remotely, from or in
response or reaction to an offer or proposal (whether to the Board of Directors or the shareholders
of the Corporation) which was not solicited or invited by the management of the Corporation to
engage in a transaction with the Corporation that, if consummated, would result in a Change Event
under clause (c) below. An “Initiated Change of Control” shall mean all Changes of Control other
than a Non-Initiated Change of Control. The determination of the Committee whether a Change of
Control constitutes an Initiated or Non-Initiated Change of Control shall be final and conclusive.
For purposes of this definition, the Corporation will be deemed to have become a subsidiary of
another corporation if any other



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corporation (which term shall include, in addition to a corporation, a limited liability company,
partnership, trust, or other organization) owns, directly or indirectly,
50 percent or more of the total combined outstanding voting power of all classes of stock of the
Corporation or any successor to the Corporation.





(a) A Change of Control will have occurred under this clause (a) if the Corporation
is a party to a transaction pursuant to which the Corporation is merged with or
into, or is consolidated with, or becomes the subsidiary of another corporation and
either




(i) immediately after giving effect to that transaction, less than 65% of the
then outstanding voting securities of the surviving or resulting corporation or
(if the Corporation becomes a subsidiary in the transaction) of the ultimate
parent of the Corporation represent or were issued in exchange for voting
securities of the Corporation outstanding immediately prior to the transaction,
or




(ii) immediately after giving effect to that transaction, individuals who
were directors of the Corporation on the day before the first public
announcement of (x) the pendency of the transaction or (y) the intention of any
person or entity to cause the transaction to occur, cease for any reason to
constitute at least 51% of the directors of the surviving or resulting
corporation or (if the Corporation becomes a subsidiary in the transaction) of
the ultimate parent of the Corporation.




(b) A Change of Control will have
occurred under this clause (b) if a tender or exchange offer shall be made and
consummated for 35% or more of the outstanding voting stock of the Corporation
or any person (as the term “person” is used in Section 13(d) and Section
14(d)(2) of the 1934 Act) is or becomes the beneficial owner of 35% or more of
the outstanding voting



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stock of the Corporation or there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as adopted under the 1934
Act, disclosing the acquisition of 35% or more of the outstanding voting stock of
the Corporation in a transaction or series of transactions by any person (as
defined earlier in this clause (b)).




(c) A Change of Control will have occurred under this clause (c) if either




(i) without the prior approval, solicitation,
invitation, or recommendation of the Corporation Board of Directors any person or
entity makes a public announcement of a bona fide intention (A) to engage in a
transaction with the Corporation that, if consummated, would result in a Change
Event (as defined below in this clause (c)), or (B) to “solicit” (as defined in
Rule 14a-1 under the 1934 Act) proxies in connection with a proposal that is not
approved or recommended by the Corporation Board of Directors, or




(ii) any person or entity publicly announces a bona fide intention to
engage in an election contest relating to the election of directors of the
Corporation (pursuant to Regulation 14A, including Rule 14a-11, under the
1934 Act), and, at any time within the 24 month period immediately
following the date of the announcement of that intention, individuals who,
on the day before that announcement, constituted the directors of the
Corporation (the “Incumbent Directors”) cease for any reason to constitute
at least a majority thereof unless both (A) the election, or the nomination
for election by the Corporation’s shareholders, of each new director was
approved by a vote of at least two-thirds of the Incumbent Directors in
office at the time of the election or



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nomination for election of such new director, and (B) prior to the
time that the Incumbent Directors no longer constitute a majority of
the Board of Directors, the Incumbent Directors then in office, by a
vote of at least 75% of their number, reasonably determine in good
faith that the change in Board membership that has occurred before
the date of that determination and that is anticipated to thereafter
occur within the balance of the 24 month period to cause the
Incumbent Directors to no longer be a majority of the Board of
Directors was not caused by or attributable to, in whole or in any
significant part, directly or indirectly, proximately or remotely,
any event under subclause (i) or (ii) of this clause (c).




For purposes of this clause (c), the term “Change Event” shall mean any of the
events described in the following subclauses (x), (y), or (z) of this clause (c):




(x) A tender or exchange offer shall be made for 25% or more of the outstanding
voting stock of the Corporation or any person (as the term “person” is used in
Section 13(d) and Section 14(d)(2) of the 1934 Act) is or becomes the beneficial
owner of 25% or more of the outstanding voting stock of the Corporation or there is
a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form,
or report), each as adopted under the 1934 Act, disclosing the acquisition of 25%
or more of the outstanding voting stock of the Corporation in a transaction or
series of transactions by any person (as defined earlier in this subclause (x)).




(y) the Corporation is a party to a transaction pursuant to which the Corporation
is merged with or into, or is consolidated with, or becomes the subsidiary of
another corporation and, after giving effect to such transaction, less than 50% of
the then outstanding voting securities of the



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surviving or resulting corporation or (if the Corporation becomes a
subsidiary in the transaction) of the ultimate parent of the Corporation
represent or were issued in exchange for voting securities of the
Corporation outstanding immediately prior to such transaction or less than
51% of the directors of the surviving or resulting corporation or (if the
Corporation becomes a subsidiary in the transaction) of the ultimate parent
of the Corporation were directors of the Corporation immediately prior to
such transaction.




(z) There is a sale, lease, exchange, or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of the
Corporation.




(d) A Change of Control will have occurred under this clause (d) if
there is a sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Corporation.



     3. The “Committee” shall mean the Compensation and Organization Committee of the Board of
Directors of the Corporation or other Committee of the Board of Directors hereafter succeeding to
the responsibilities currently performed by the Compensation and Organization Committee with
respect to the Plan.



     4. “Grant Agreement” shall mean the agreement under which the Participant’s restricted stock
and/or restricted stock units are granted to the Participant in accordance with the requirements of
the KeyCorp 2004 Equity Plan, as may be amended from time to time.



     5. An “Incentive Award” shall mean the incentive which may be paid to a Participant pursuant
to the Plan.



     6. “Market Point” shall mean for any Participant for any calendar year the market point (as
determined under the Corporation’s salary administration program) of such Participant’s job grade
at the end of the calendar year; provided, however, that if the



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Corporation changes such Participant’s job grade during any such calendar year or such Participant
is promoted, transferred, or otherwise moves into a different job grade during such calendar year,
then such Market Point shall be calculated on a pro rata basis for each of the periods in which
such job grades were in effect for such Participant.




     7. A “Participant” shall mean a senior officer of the Corporation or one of its
subsidiaries who is selected by the Committee to participate in the Plan.



     8. The “Plan” shall mean this Annual Incentive Plan, together with all amendments hereto.




     9. “Plan Year” shall mean each calendar year for which the Plan remains in existence.



     10. “Subsidiary” shall mean a corporation organized and existing under the laws of the United
States or of any state or the District of Columbia of which 50 percent or more of the issued and
outstanding stock is owned by the Corporation or by a Subsidiary of the Corporation.



     11. The “Target Incentive Pool” shall mean the aggregate amount, as determined in accordance
with Article II of the Plan, of the aggregate individual target Incentive Awards of Participants.



     12. “Target Pool Percentage” shall mean the percentage determined pursuant to Article II,
Sections 3 and 4 below that will be used to establish the aggregate amount available for Incentive
Awards.



     13. The “1934 Act” shall mean the Securities Exchange Act of 1934 as from time to time
amended.



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ARTICLE II




INCENTIVE AWARDS




     1. Participation. Annually, the Committee shall select the Participants in the Plan
for the Plan Year. In general, the selection will be made prior to the beginning of each Plan Year
or as soon thereafter as is reasonably practicable; in addition, such selection may be made at any
time during a Plan Year in the case of a newly hired employee or an employee that receives a new
position. Not in limitation of the foregoing, the Committee shall have the authority to designate
at the beginning of a Plan Year, or as soon thereafter as is reasonably practicable, employees in
selected job grades as Participants, including any employee that may later be hired or promoted
into any such job grade during the Plan Year, without further action on behalf of the Committee.
Participants shall be notified of their selection in writing. In the event that employees are
determined to be Participants by job grade, the Chief Executive Officer, or his or her designee,
may select, subject to the approval of the Committee or in accordance with guidelines established
by the Committee, additional eligible employees for Plan participation notwithstanding their job
grade. Employees otherwise eligible for participation because of their job grade may be excluded,
by action of the Committee or the Chief Executive Officer (or his or her designee), if they are
participants in business unit or other incentive compensation plans.



     2. Incentive Pool. The Committee shall approve on an annual basis the
recommended target incentives for persons selected to be in the Plan. Target incentives for
Participants who are eligible for part of the Plan Year or whose incentive group assignment changed
during the Plan Year will be calculated on a pro rata basis for both the period of each incentive
group assignment and the period during the Plan Year in which the Participant was an eligible
employee. In the event that an individual whose job does not have an assigned salary grade is
approved for participation in the Plan, the Chief Executive Officer, or his or her designee, is
authorized to select a target incentive percentage for such individual and base the



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calculation of target incentive and other calculations under this Plan on such individual’s base
salary.




     3. Formula for Target Pool Percentage; Knock-Out Factor. Prior to each Plan Year or as
soon as practical thereafter, the Committee shall devise a formula to determine the Target Pool
Percentage which formula shall be based on one or more financial criteria or other performance
goals. The Committee shall have the discretion to set minimal performance goals which must be met
before any Incentive Awards will be made under the Plan. In its sole discretion the Committee may
revise or waive one or more of such minimal performance goals as a result of any change in
conditions or the occurrence of any events or other factors which make such goal or goals
unsuitable or undesirable. Notwithstanding that the Corporation has not met a minimal performance
goal, if the Committee determines that one or more lines of business of the Corporation have had a
level of performance deserving of Incentive Awards, the Committee may establish a pool for
Incentive Awards utilizing a Target Pool Percentage fixed at 25% (or such higher or lower
percentage as the Committee, in its sole discretion, shall determine).



     4. Incentive Awards. As soon as practical after the end of the Plan Year, the
Committee shall determine the Target Pool Percentage (not to exceed 300%) to be applied to the
Target Incentive Pool to establish the maximum aggregate amount to be distributed as Incentive
Awards. The percentage shall be based on the formula established in Section 3 hereof but the
Committee shall have the discretion to decrease or increase the otherwise determined Target Pool
Percentage for the Plan Year by not more than thirty per cent (30%) of such Target Pool Percentage.
(For example, if the Target Pool Percentage is established at 120%, the Committee would have the
discretion to increase the Target Pool Percentage to not more than 156% or to decrease the Target
Pool Percentage to not less than 84%.) In determining whether, and the extent to which, the formula
established in Section 3 hereof has been achieved, the Committee shall have the discretion to
disregard changes in accounting rules or practices, gains from the sale of subsidiaries or assets
outside the ordinary course of



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business, or restructuring or other nonrecurring charges or similar adjustments. It is
contemplated that Incentive Awards may, depending upon the responsibilities of the Participant, be
based wholly on corporate performance, partially on corporate performance and partially on line of
business or business unit performance, or wholly on line of business or business unit performance.
Ordinarily, the Committee will delegate to management responsibility for determining Target Pool
Percentages for each line of business or business unit provided that the aggregate weighted
average Target Pool Percentages for all lines of business and business units shall be
substantially equivalent to the Target Pool Percentage established by the Committee.




     The Committee shall determine or approve the amount of the Incentive Award for each Participant
above such job grade level as the Committee shall from time to time select and, with respect to all
other Participants, the Committee shall approve the Incentive Awards based on the methodology
utilized by management consistent with the Committee’s overall discretion.


     It may be determined
that a Participant shall receive no Incentive Award for the Plan Year. In addition, the Plan does
not restrict the maximum amount of an Incentive Award that may be paid to an individual
Participant.



     5. Active Employment Requirement. Ordinarily, Incentive Awards shall be made
only to Participants who are actively employed at the end of the Plan Year; however, Participants
who retire at age 65 or over or become disabled during a Plan Year, or the Beneficiary(s) or estate
of a Participant whose death occurs during a Plan Year shall be entitled to, on a pro rata basis
(for the period of time the Participant was in the Plan for the Plan Year) the lesser of (i) the
Participant’s target incentive or (ii) the Participant’s target incentive times the Target Pool
Percentage if the Committee determines a Target Pool Percentage of less than 100%. Except as
provided in Section 5 hereof, no other Participant who is not actively employed at the end of the
Plan Year shall receive an Incentive Award unless the Committee, in its sole discretion, so
determines that an Incentive Award shall be made.




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     6. Effect of Change of Control. Upon the occurrence of a Non-Initiated Change of
Control during the Plan Year, this Plan shall terminate and each Participant immediately prior to
the occurrence of such Non-Initiated Change of Control shall 60 days following the Plan’s
termination date receive 300% of such Participant’s target incentive payable under the Plan for the
full Plan Year. In the event of the occurrence of an Initiated Change of Control during the Plan
Year, the Committee, in its sole discretion, shall determine whether the Plan should terminate and
the manner of calculating, and the time for payment, of Incentive Awards (if any) to be made under
the Plan for the Plan Year.



     7. Payment of Incentive Award. Except as provided in the first sentence of Section 6
hereof, Incentive Awards shall be paid by March 15, of the year following the applicable
performance Plan Year. Notwithstanding any other provision of the Plan, the Committee, in its sole
discretion, shall have the authority to authorize payment of all or a portion of all Incentive
Awards prior to the end of the performance Plan Year, and if a portion, the Corporation shall pay
the remaining portion of the Award as provided for in this Section 7.



     Notwithstanding any other provision of the Plan, the Committee, in its sole discretion, shall
have the authority to require the deferral of payment of all or a portion of all Incentive Awards
due to any Plan Participant if the Committee determines that the Corporation would be denied a
deduction for federal income tax purposes for such Award or the portion thereof by reason of
Section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations issued
thereunder, if the Award or the portion thereof were not so deferred. Such deferred Incentive
Awards, or the portion thereof, shall be deferred in accordance with the provisions of the KeyCorp
Deferred Savings Plan.



ARTICLE III




Allocation of Restricted Shares. Any Incentive Award payable to a
Participant in excess of $100,000 will have a percentage of the Award in excess of $100,000 paid to



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the Participant in KeyCorp time-lapsed restricted common shares or restricted units, under the
following allocation structure:





	 	•	 	Twenty percent (20%) of the Participant’s Award amount between $100,000 up to and
    including $500,000 will be paid to the Participant in restricted shares/units.
	 
	 	•	 	Twenty five percent (25%) of the Participant’s Award amount between $500,000 up to
and including $1,000,000 will be paid to the Participant in restricted shares/units.
	 
	 	•	 	Thirty percent (30%) of the Participant’s Award amount greater than $1,000,000 will
be paid to the Participant in restricted shares/units.




All restricted shares/units awarded to the Participant in accordance with provisions of this
Section 6 will be subject to a three-year graded vesting period, which will commence as of the date
of the restricted stock/units grant. The vesting period will be measured based on consecutive full
calendar months. In the event of the Participant’s death or disability, or in the event the
Participant is terminated under limited circumstances, the Participant’s restricted shares/units
shall vest in accordance with the provisions of the applicable Grant Agreement.



All restricted shares and units shall be granted under the KeyCorp 2004 Equity Compensation Plan,
and the terms and conditions of each individual Grant Agreement shall control the disposition and
payment of all vested restricted shares/units, including all restrictions mandated under the
Emergency Economic Stabilization Act of 2008 and the requirements of Section 409A of the Code.




ARTICLE IV




ADMINISTRATION 




     The Corporation shall be responsible for the general
administration of the Plan and for carrying out the provisions hereof. The Committee shall have all
such powers as may be necessary to carry out its duties under the Plan, including the power to
determine all questions pertaining to claims for benefits and procedures for claim review, and the
power to resolve all




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other questions arising under the Plan, including any questions of construction. The Corporation
and the Committee may take such further action as the Corporation and the Committee shall deem
advisable in the administration of the Plan. The actions taken and the decisions made by the
Corporation and the Committee hereunder shall be final and binding upon all interested parties. In
accordance with the provisions of Section 503 of the Employee Retirement Income Security Act of
1974, as amended, the Committee shall provide a procedure for handling claims of Participants or
their Beneficiaries under this Plan. Such procedure shall be in accordance with regulations issued
by the Secretary of Labor and shall provide adequate written notice within a reasonable period of
time with respect to the denial of any such claims as well as a reasonable opportunity for a full
and fair review by the Committee of any such denial. Notwithstanding anything to the contrary
contained herein, the Corporation shall be the “administrator” for the purpose of the Employment
Retirement Income Security Act of 1974, as amended. Any action authorized under the Plan to be done
by the Committee may be done by the Board of Directors or any other Board committee authorized by
the Board of Directors.




ARTICLE V




AMENDMENT AND TERMINATION 




     The Corporation reserves the right to amend or
terminate the Plan at any time by action of the Board of Directors or the Committee, but, from and
after the occurrence of a Non-Initiated Change of Control, no such amendment or termination shall
adversely affect the rights of a Participant which have accrued prior to such amendment or
termination except with the written consent of such Participant.



ARTICLE VI




MISCELLANEOUS




     1. Not An Employment Agreement. Nothing herein contained shall be construed as
a commitment to or agreement with any person employed by the Corporation or a Subsidiary to



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continue such person’s employment with the Corporation or Subsidiary, and nothing herein contained
shall be construed as a commitment or agreement on the part of the Corporation or any Subsidiary
to continue the employment or the annual rate of compensation of any such person for any period.
All Participants shall remain subject to discharge to the same extent as if the Plan had never
been put into effect.




     2. Unfunded for Tax and ERISA Purposes. It is the intention of the Corporation and
the Participants that the Plan be unfunded for tax purposes and for the purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended.



     3. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any person, firm, or corporation any legal or equitable right against the Corporation or
any Subsidiary, their officers, employees, agents, or directors, except any such rights as are
specifically provided for in the Plan or are hereafter created in accordance with the terms and
provisions of the Plan.



     4. Absence of Liability. No member of the Board of Directors of the Corporation or a
Subsidiary or any officer or employee of the Corporation or a Subsidiary shall be liable for any
act or action hereunder, whether of commission or omission.



     5. Severability. The invalidity or unenforceability of any particular provisions of
the Plan shall not affect any other provision hereof, and the Plan shall be construed in all
respects as if such invalid or unenforceable provision were omitted herefrom.



     6. Governing Law. The provisions of the Plan shall be governed and construed in
accordance with the laws of the State of Ohio.






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ARTICLE VII




CLAWBACK OF PLAN PAYMENTS



Notwithstanding any provision in the Plan to the contrary, in the event that a payment or payments
are made to “senior executive officer(s)” (as that term is defined in accordance with Section
111(b)(3) of the Emergency Economic Stabilization Act of 2008 (“EESA”)) and it is later determined
that the payment or payments were based on materially inaccurate financial statements or on any
other materially inaccurate performance metric criteria, then in such event, to the extent
necessary to comply with Section 111(b)(2)(B) of EESA, shall the full amount of any and all
payment(s) that have been made to such senior executive officer(s) become immediately due and owing
to KeyCorp, and the senior executive officer(s) who received such payment(s) shall repay the full
amount of such payment(s) to KeyCorp, in accordance with and in a manner that complies with the
requirements of Section 111(b)(2)(B) of EESA.




	 	 	 	 	 
	 	KEYCORP

 	 
	 	By:  	/s/  Thomas E. Helfrich
 	 
	 	 	Thomas E. Helfrich, Executive Vice President 	 
	 	 	 	 
	 




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