Short Term Incentive Compensation Plan



 Exhibit 10.5 
  

			
	[GRAPHIC]	  	First Midwest Bancorp, Inc.

  
 SHORT TERM INCENTIVE
COMPENSATION 
 PLAN 
  
 PLAN DOCUMENT 
  
 Revised May 2003 
  

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 FIRST MIDWEST BANCORP, INC. 
 SHORT TERM INCENTIVE COMPENSATION PLAN 
 PLAN DOCUMENT 
  

					
	 	  	 	  	PAGE


			
	1.	  	Concept	  	3
			
	2.	  	Eligibility and Participation	  	3
			
	3.	  	Target Award	  	3
			
	4.	  	Performance Categories	  	4
			
	5.	  	Consolidated Company Performance Measurements	  	5
			
	6.	  	Individual Performance Measurements	  	5
			
	7.	  	Minimum Required Level of Consolidated Company Performance	  	6
			
	8.	  	Calculation of a Participant’s Award	  	7
			
	9.	  	Discretionary Awards	  	7
			
	10.	  	Effect of Termination of Employment on Award Payment	  	7
			
	11.	  	Maximum Amount of Awards Paid in a Plan Year	  	8

  

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 FIRST MIDWEST BANCORP, INC. (“COMPANY”) 
 SHORT TERM INCENTIVE COMPENSATION PLAN 
 PLAN SPECIFICATIONS AND PROCEDURES 
  
 * * *

  

	1.	Concept 

  
 The Short Term Incentive Compensation Plan (the “Plan”) is intended to be an annual incentive plan for key managers and employees of the Company
where Target Awards are established and communicated to each Participant each Plan year. Based on the level of achievement of predetermined performance goals for both the Company and the Participants, an amount less than or greater than the Target
Award can be earned. 
  

	2.	Eligibility and Participation 

  
 Participation in the Plan will be limited to key managers and employees of the Company. At present, all key managers and employees in salary range 7 and
above are eligible for Plan participation as set forth below. Should a Participant’s salary range change during a Plan year, his/her award will be prorated based on length of time (to the nearest week) at each salary range. 
  

			
	 Participant
 Category

	 	 Salary
 Range


		
	 AA
	 	17 & 18
		
	 A
	 	16
		
	 B
	 	14 & 15
		
	 C
	 	13
		
	 D
	 	12
		
	 E
	 	11
		
	 F
	 	10
		
	 G
	 	9
		
	 H
	 	7 & 8

  

	3.	Target Award 

  
 Each Plan year, a Target Award will be established for each Participant category. Target Awards will be expressed as a percentage of base salary
earned during the Plan year (excluding overtime, where applicable, and any other components of compensation). Based on the achievement of predetermined performance goals set for the Plan year, an amount less than or greater than the Target
Award can be earned. The maximum award is currently 150% of the Target Award. 
  

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 Current levels of Target Awards are detailed below: 
  

					
	 Participant
 Category

	 	 Salary
 Range

	 	 Target Award as a
 Percentage of Base Salary
 Individual Performance


			
	 AA
	 	17 & 18	 	60%
			
	 A
	 	16	 	40%
			
	 B
	 	14 & 15	 	40%
			
	 C
	 	13	 	30%
			
	 D
	 	12	 	20%
			
	 E
	 	11	 	15%
			
	 F
	 	10	 	12%
			
	 G
	 	9	 	8%
			
	 H
	 	7 & 8	 	5%

  

	4.	Performance Categories 

  
 Performance will be measured in two categories of performance: Consolidated Company and Individual; these levels are defined and discussed further
in Sections 5, 6 and 7. 
  
 For each Plan year, the Chief
Executive Officer (“CEO”) of the Company, with appropriate input, will approve the allocation of the Target Awards for that Plan year by performance category. The current allocation is illustrated below: 
  

							
	 	 	 	 	 Percent of Target Award Allocable to:


				
	 Participant
 Category

	 	 Salary
 Range

	 	 Consolidated
 Performance

	 	 Individual
 Performance


				
	 AA
	 	17 & 18	 	100%	 	—  
				
	 A
	 	16	 	70%	 	30%
				
	 B
	 	14 & 15	 	60%	 	40%
				
	 C
	 	13	 	60%	 	40%
				
	 D
	 	12	 	60%	 	40%
				
	 E
	 	11	 	60%	 	40%
				
	 F
	 	10	 	50%	 	50%
				
	 G
	 	9	 	50%	 	50%
				
	 H
	 	7 & 8	 	50%	 	50%

  

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	5.	Consolidated Company Performance Measurements 

  
 Each Plan year, the CEO of the Company, with appropriate input, will establish performance measurements for the Consolidated Company. 
  
 A “Target Level” of performance will be established at which 100%
of each Participant’s Target Award applicable to Consolidated performance will be earned. “Threshold” performance (the level below which no award is earned—see Section 7 for discussion) and “Maximum” performance
(currently 150% of the Target Award) levels will also be established in relation to Target Level performance. 
  
 The performance measurements will not be modified or adjusted once they are established for the Plan year unless: (i) unforeseen circumstances occur which
would have influenced the setting of the measurements, had such circumstances been known at that time; or (ii) significant unusual activity occurs during the course of the Plan year that had not been known or anticipated when setting the performance
measurements. Any such change will require the approval of the CEO of the Company. 
  

	6.	Individual Performance Measurements 

  
 The percent of Target Award earned for Individual performance will be based on the achievement of predetermined negotiated performance standards as
determined by each Participant’s supervisor. Such negotiated performance standards should primarily consider the Participant’s area of responsibility (where the participant is responsible for management of a department, division, banking
center or other business unit) or the Participant’s individual performance (where such Participant has little or no management responsibilities). 
  
 The negotiated performance standards should be: 
  
 Supportive of the Company’s Mission Statement; 
  
 Varied in scope and complexity in relation to the Participant’s level of responsibility within the Company; and 
  
 Controllable by the Participant. 
  
 The portion of a Participant’s Target Award attributable to Individual
performance will be based upon the Supervisor’s recommended percentage, within the parameters established by the Participant’s performance rating level (see table below). The performance rating (Far Exceeds Expectations, Exceeds
Expectations, Meets Expectations, Does Not Meet Expectations), used to 

  

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determine this portion of a Participant’s award must be the same as the evaluator’s “Overall Performance Rating” as indicated on
the First Midwest Performance Evaluation Form. Furthermore, any Participant who receives an overall performance rating of Does Not Meet Expectations will also experience a reduction in that Participant’s Consolidated Company performance
award, as outlined below: 
  

					
	 Performance
 Rating

	  	 % of
Individual
Performance
Award
Earned
Rating Level

	  	 % of
Consolidated
Company
Performance
Award
Earned
Rating Level


	 Far Exceeds Expectations
	  	150%	  	100%
			
	 Exceeds Expectations
	  	101 - 125%	  	100%
			
	 Meets Expectations
	  	51 - 100%	  	100%
			
	 Does Not Meet Expectations
	  	0 - 50%	  	50%

  

	*	Represents % of calculated Consolidated Company award that may be paid for each corresponding Performance Rating. 

  

	7.	Minimum Required Level of Consolidated Company Performance 

  
 As indicated in Section 5, Consolidated Company performance measurements will be set for each Plan year. Additionally, a minimum level of
performance, defined as the “Threshold”, will be established for each such performance measurement. Performance below the Threshold will result in no award being paid under that performance measurement, and may impact
Individual performance awards as explained below. 
  
 In order
for the Individual portion of each Participant’s Target Award to be paid for the Plan year, the Consolidated performance must have reached the Threshold performance for at least one of the performance measurements as follows: 

 
 In order for the Individual performance award to be paid, the
Consolidated Company must achieve “Threshold” on at least one of the performance measurements for the Plan year. In other words, if two performance measurements are established for Consolidated Company performance in a Plan year and
“Threshold” performance is not achieved for either of the performance measurements, no Individual performance awards will be paid, regardless of whether they are earned. 
  

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	8.	Calculation of a Participant’s Award 

  
 The award payable to each Participant will be calculated based upon the results of each category (Consolidated Company and Individual) of performance
multiplied by the percent of Target Award applicable to that category. For actual performance between stated performance levels, awards will be interpolated. (See Exhibit 1 for an illustration of the award calculation). However, a reduction in
the calculated awards for Consolidated performance will be made for Participants receiving a Does Not Meet Expectations Individual Performance rating (see Section 6). 
  

	9.	Discretionary Awards 

  
 The purpose of the Plan is to reward key managers and employees of the Company based upon the level of achievement of predetermined performance goals.
Accordingly, the Company has provided, within the structure of the Plan, a mechanism to reward certain outstanding contributors, in addition to their Plan-calculated awards. 
  
 The following guidelines will be considered in the granting of Discretionary Awards to participants who were outstanding
contributors during the Plan year: 
  
 The minimum
performance rating for any participant recommended for discretionary award, as measured by the employee’s First Midwest Performance Evaluation Form, must be “Exceeds Expectations”. 
  
 The Company CEOs will be responsible for recommending the outstanding
performers for Discretionary Awards. 
  
 Discretionary Awards
will generally be in the range of 3-5% of base salary earned during the Plan year. No award will be less than $500. 
  
 Discretionary Awards for outstanding contributors will be paid from a Discretionary Award Pool determined annually by the Company CEO based upon certain
performance measurements. If such performance measurements are not attained and the Pool is not funded, no discretionary awards will be made in that year. 
  

	10.	Effect of Termination of Employment on Award Payment 

  
 Termination of employment prior to payment of an award (which will generally occur in mid-February following the end of each Plan year), even if it occurs
after the Plan year end, will result in forfeiture of the award. 
  

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	11.	Maximum Amount of Awards Paid in a Plan Year 

  
 The awards earned by Participants will generally be paid in accordance with the terms of the Plan as described above. However, the Compensation Committee
of the Board of Directors of First Midwest Bancorp, Inc. (the “Committee”) reserves the right to establish a maximum aggregate dollar amount of awards paid under the Plan in any year, regardless of the aggregate awards calculated based
upon the level of performance in any of the categories described above. If the aggregate Plan awards in any year exceed such amount, a reduction in aggregate Plan awards may be directed by the Committee. 
  

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