Document


2021 Variable Compensation Incentive Plan 


Purpose and Objective 
The 2021 Variable Compensation Incentive Plan (the Plan) incents and rewards for Bank and Individual performance.  
 
Participant Eligibility 
Regular team members who do not participate in an individual sales incentive plan or an individual commission plan are eligible to participate in the Plan.  Temporary and co-operative team members are ineligible to participate in the Plan.  If your hire date is after January 1 of the current plan year, you will be eligible for a pro-rata payout, based on wages earned during the plan year.   
 
Target Awards 
You will have a target variable compensation opportunity (target percentage), which is a percentage of your regular earnings (base salary) earned in the current plan year.   
 
Determination of Variable Compensation Incentive Payout  
You will be assigned to a variable compensation incentive group based upon your position and role.  The attached addendum outlines your specific performance factor(s). 
 
The Bank must attain the Plan threshold for the Income performance factor (the “threshold”) in the current plan year for a payout to be made.  If the threshold is achieved, the Plan payouts will be determined by the precise financial performance achieved in the plan applied to the target to determine the payout.  The maximum incentive opportunity to be paid under this plan is 150% of target.  


Timing of Payouts and Plan Payouts
The performance period is January 1 through December 31 of the current plan year.  If it is determined that participants will receive a payout under the Plan, payouts will be received on or before March 15, following the plan year.   


Payouts will be made in a cash lump sum. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes.


Team Member Individual Performance
Team member’s individual performance will be taken into consideration when determining final payouts under the 2021 Variable Compensation Incentive Plan based on results and impacts.  Team member’s individual performance may be reduced up to 25% of the total Plan payout if a team member is not meeting performance expectations.
 
Termination of Employment 
If a Plan participant terminates employment before the payout out date, an incentive award will not be paid.  Participants must be an active team member of the Bank on the date the Plan incentive is paid to receive the award. 


If a participant retires at or after the age of 62 and has been employed for at least three months in the current plan year, the participant is eligible to receive a pro-rata payout to be received within 30 days following the retirement date.  If a participant passes away or employment ends as a result of disability during the Plan year, the participant or the participant’s beneficiary is eligible to receive a pro-rata payout to be received within 30 days following death or disability.  Payouts will be based upon the participant’s wages earned in the current Plan year and management’s estimate of year-end results at the participant’s employment end date. 


Plan Authorization and Discretion 








This Plan was developed based on the Bank’s existing business, market and economic conditions, current services, and staff assignments and is authorized by the Board of Directors and administered by the Compensation and Human Resources Committee.  If changes occur that are substantial enough to affect these conditions, services, or assignments, the Compensation and Human Resources Committee may add to, amend, modify, or discontinue any of the terms and conditions of the Plan at any time as it deems appropriate.  The Compensation and Human Resources Committee will determine on at least an annual basis, those team members of the Bank that will be eligible to participate in the Plan.


Extraordinary Event 
An extraordinary event, such as a windfall, or a federal or state compliance, Community Reinvestment Act (CRA) or safety and soundness rating below satisfactory, or another unusual event, may either positively or negatively impact the Bank’s financial results and conditions.  The Compensation and Human Resources Committee will have discretion whether the extraordinary event will impact the payout under the Plan. 


Clawback Provision 
If the Bank’s reported financial or operating results are determined to be subject to material negative restatement due to material noncompliance with any financial reporting requirement under the securities laws, fraud, or misconduct (other than a restatement caused by a change in applicable accounting rules or interpretations), the Compensation and Human Resources Committee may require recoupment of full or partial payout made to participants with an officer status of Senior Vice President (SVP) or above. 


Ethics and Interpretation
If there is any ambiguity as to the meaning of any terms or provisions of this Plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Compensation and Human Resources Committee will be final and binding.


The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the team member to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the Plan to which the team member would otherwise be entitled will be revoked.


Miscellaneous 
The Plan will not be deemed to give any participant the right to be retained in the employ of the Bank nor will the Plan interfere with the right of the Bank to discharge any participant at any time.  The relationship between team members and the Bank is one of at-will employment.  


This Plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with applicable governmental laws and regulations.  Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not, in any way, be affected or impaired thereby.










Addendum:     Bankwide Group
                               


Participant Scorecard


																																	
	Performance Factor 
	Weight
	At 
Threshold
	

		  
	Target 
	  
		  
	Stretch 

	0%
	25%
	50%
	75%
	100%
	125%
	150%
	175%
	200%

	Income*	100%	44.9M	48.5M	52.1M	55.7M
	59.3M
	62.9M
	66.5M
	70.1M
	73.7M





Scorecard Calculation Information: 
The scorecard will be calculated using a precise payout level based on actual performance between levels.  For example, if the Bank’s Income result is $56.5M, which falls between the 75% and 100% payout levels, the Plan payout will be 81%, before the Provision for Credit Losses adjustor is applied.  Thus, before the impact of the adjustor and any individual performance adjustment, an individual’s incentive payout would be 81% of target.


Scorecard Adjustor for the Provision for Credit Losses: 
If the actual Provision for Credit Losses is at budget of $9 million, there will be no adjustment to the Income performance factor results.  Every dollar that the Provision for Credit Losses exceeds budget, the amount above $9 million is multiplied by 75% and applied as reduction to the Income performance factor results. For example, if the Provision for Credit Losses exceeds budget by $1 million, the Income performance factor results will be reduced by $750,000.


*    Income is defined as pre-tax income excluding variable compensation plan expense, the provision for credit losses, gains or losses on sales of investment securities, losses on the prepayment of borrowings or subordinated debt, and gains or losses on the early termination of hedged transactions.