EXHIBIT 10.12

 

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT.  THE COPY FILED HEREWITH OMITS THE INFORMATION SUBJECT TO THE CONFIDENTIALITY REQUEST. OMISSIONS ARE INDICATED BY INCLUSION OF THE SYMBOL *.  A COMPLETE UNREDACTED VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Eagle Bancorp, Inc.

Senior Executive Annual Incentive Plan

 

January 2010

 











 

Eagle Bank Executive Annual Incentive Plan

Plan Document and Administrative Guidelines

 

This Annual Incentive Plan is for the Executive Management Team of EGBN. The annual incentive plan is designed to compensate plan participants for the attainment of specified overall bank and individual goals. The objective is to align the interests of senior executives with the interests of the Bank in obtaining superior financial results.

 

The Plan operates on a calendar year basis (January 1st to December 31st). This same calendar year is the performance-period for determining the amount of incentive awards to be paid following year end.

 

PERFORMANCE CRITERIA

 

·                        Bank Performance - For all plan participants eighty percent (80%) of the annual incentive will be based on overall bank performance. The Compensation Committee will approve bank wide goals for each senior staff member on an annual basis. In addition, they will review the Bank’s annual incentive programs to ensure they do not encourage risky behavior.

 

·                        Individual Performance - For participants in tiers II-V, individual performance as determined by annual performance evaluations will be used to determine twenty percent (20%) of the plan participant’s incentive payout.

 

PERFORMANCE STANDARDS

 

For each performance factor (Overall Bank, and Individual), an appropriate standard of performance must be established with three essential performance points:

 

·                        Threshold Performance: That level of performance for each factor below which no award will be given. Threshold performance will be 85% of target expectations.

 

·                        Target Performance: The level of performance for each factor at budgeted goals. The budgeted, or expected, level of performance is based upon historical data, and management’s best judgment as to expected performance during the upcoming performance period. The Compensation Committee will approve bank wide goals on an annual basis.

 

·                        Maximum Expected Performance: The maximum performance level is 125% of target. There will be no payouts above the maximum level. In addition, while a TARP participant, maximum payouts may be reduced to ensure no payout exceeds 1/3 of total compensation.

 

PLAN PAYOUTS

 

The Net Operating Income, Threshold level, must be met for there to be any payment made for the Bank Performance category. Participants will still be eligible to receive a payout for Individual Performance.

 

After all performance results are available at year-end, the awards will be calculated for each Plan participant and approved by the CEO, Compensation Committee and Board of Directors. The Compensation Committee will reserve the discretion to pay  out  annual  incentives  in  cash  or  stock.  While  EGBN  is  a  TARP  participant,  stock  payouts  will  be  made  solely  in  restricted stock which will not fully vest until EGBN is no longer a TARP participant. In addition, while a TARP participant, maximum payouts may be reduced to ensure no payout exceeds 1/3 of total compensation or as specified in final guidance from the Treasury.

 

The actual award payouts will be calculated using a ratable approach, where award payouts are calculated as a proportion of minimum, target and maximum award opportunities. If actual performance falls between a performance level, the payout will also fall between the pre-defined performance level on a pro-rated basis. A Plan participant must be an employee at the time of the award payout in order to receive a payout. The result of the performance criteria is calculated as a percent of base salary for participants during the current Plan year. Plan payouts will be made no later than 2.5 months after the year end.

 

EGBN has the right to recover any incentive payments that were made based on material misstatements or inaccurate performance metrics.

 











 

Eagle Bank Executive Annual Incentive Plan

Plan Document and Administrative Guidelines

 

PLAN ADMINISTRATION

 

Responsibilities of the Compensation Committee and the Board of Directors: The Compensation Committee and the Board has the responsibility to approve, amend, or terminate the Plan as necessary. The actions of the Compensation Committee and the Board shall be final and binding on all parties. The Board shall also review the operating rules of the Plan on an annual basis and revise these rules if necessary. The Board also has the sole ability to decide if an extraordinary event(1) totally outside of management’s influence, be it a windfall or a shortfall, has occurred during the current Plan year, and whether the figures should be adjusted to neutralize the effects of such events. After approval by the Board, management shall, as soon as practical, inform each of the Plan participants under the Plan of their potential award under the operating rules adopted for the Plan year.

 

Responsibilities of the CEO: The CEO of the Company administers the program directly and provides liaison to the Compensation Committee and the Board, including the following specific responsibilities: recommend the Plan participants to be included in the Plan each year. This includes determining if additional employees should be added to the Plan and if any Plan participants should be removed from participating in the Plan. Provide recommendations for the award opportunity amounts at target and maximum for tiers II and below. The CEO will review the objectives and evaluations, adjust guideline awards for performance and recommend final awards to the Compensation Committee. Provide other appropriate recommendations that may become necessary during the life of the plan. This could include such items as changes to Plan provisions.

 

Amendments and Plan Termination: The Company has developed the Plan on the basis of existing business, market and economic conditions, current services, and staff assignments. If substantial changes occur that affect these conditions, services, assignments, or forecasts, the Company may add to, amend, modify or discontinue any of the terms or conditions of the Plan at any time with approval from the Compensation Committee and the Board of Directors. The Compensation Committee and the Board of Directors may, at its sole discretion, terminate, change or amend any of the Plan as it deems appropriate.

 

MISCELLANEOUS

 

Reorganization: If the Company shall merge into or consolidate with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person such succeeding or continuing company, firm, or person shall succeed to, assume and discharge the obligations of the Company under this Plan. Upon the occurrence of such event, the term “Company” as used in this Plan shall be deemed to refer to the successor or survivor company.

 

Tax Withholding: The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Plan.

 

Designated Fiduciary: The Company shall be the named fiduciary and Plan Administrator under the Plan. The named fiduciary may delegate to others certain aspects of the management and operation responsibilities of the Plan including the employment of advisors and the delegation of ministerial duties to qualified individuals.

 

No Guarantee of Employment: This Plan is not an employment policy or contract. It does not give the Plan participant the right to remain an employee of the Company, nor does it interfere with the Company’s right to discharge the Plan participant.

 




(1)  An extraordinary event may include a merger, acquisition or divestiture that was not outlined in strategic plan, investment gains or losses, changes in capital cost structure, unplanned branch openings, unexpected and strong sales oriented addition to staff, and increase of 50% or more of collection expenses.

 











 

INCENTIVE RANGES, AND AWARD OBJECTIVES

 

Eagle Bancorp, Inc.

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Proposed Incentive Ranges
    	
 
    	
Award Objectives
    	
 
    
	
Tier
    	
 
    	
Name
    	
 
    	
Position
    	
 
    	
Threshold
    	
 
    	
Target
    	
 
    	
Maximum
    	
 
    	
Bank
    	
 
    	
Ind*
    	
 
    
	
I
    	
 
    	
Ron   Paul
    	
 
    	
CEO
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
65
    	
%
    	
35
    	
%
    
	
II
    	
 
    	
Susan   Riel
    	
 
    	
Sr.   EVP & COO of the Bank
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
III
    	
 
    	
Martha   Foulon-Tonat
    	
 
    	
EVP &   Chief Lending Officer
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
IV
    	
 
    	
Thomas   Murphy
    	
 
    	
President   of Retail Banking
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
V
    	
 
    	
Janice   Williams
    	
 
    	
Chief   Credit Officer
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
VI
    	
 
    	
James   Langmead
    	
 
    	
Chief   Financial Officer
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
VII
    	
 
    	
Michael   Flynn
    	
 
    	
COO   of Eagle Bancorp
    	
 
    	
*
    	
 
    	
*
    	
 
    	
*
    	
 
    	
80
    	
%
    	
20
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Percent of Salary
    	
 
    	
Weighting of Award
    	
 
    


 

	
NOTE:
    	
Threshold,   Target and Maximum levels are based on the type of responsibility the members   of senior management have and the comparisons made to peers in the Overall   Compensation Review previously provided and reviewed by the Compensation   Committee. Additionally, these percentages have been used to bring certain   members of senior management’s base salary to competitive levels.
    


 

Threshold, target and maximum payout thresholds have been established for each tier in order to budget costs associated with this program.

 

Individual goals may reflect a discretionary factor from the Board’s review of performance.

 




* Certain information on this page as to which a request for confidential treatment has been submitted to the Securities and Exchange Commission has been omitted and filed separately with the Commission.

 











 

2010 Senior Management Incentive Measurements

 

	
 
    	
 
    	
CEO
    	
 
    	
COO
    	
 
    	
President
   Retail
   Banking
    	
 
    	
COO/HC
    	
 
    	
CLO
    	
 
    	
CFO
    	
 
    	
CCO
    	
 
    	
Target
    	
 
    
	
Net Operating Income
    	
 
    	
50
    	
%
    	
12
    	
%
    	
12
    	
%
    	
20
    	
%
    	
10
    	
%
    	
16
    	
%
    	
12
    	
%
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net Interest Margin
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
16
    	
%
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest Rate on Loans
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
15
    	
%
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest on Investments
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10
    	
%
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest paid on Liabilities
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8
    	
%
    	
15
    	
%
    	
 
    	
 
    	
12
    	
%
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Loan Growth
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
17
    	
%
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Core Deposit Growth from Lenders
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10
    	
%
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
DDAs/Total Deposits
    	
 
    	
 
    	
 
    	
 
    	
 
    	
16
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
MMAs/Total Deposits
    	
 
    	
 
    	
 
    	
 
    	
 
    	
16
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Service Charge Income
    	
 
    	
 
    	
 
    	
16
    	
%
    	
16
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Non Interest Loan Income
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
15
    	
%
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ALLL
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
14
    	
%
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Salaries/Benefit Expense
    	
 
    	
 
    	
 
    	
20
    	
%
    	
8
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Other expenses
    	
 
    	
 
    	
 
    	
16
    	
%
    	
4
    	
%
    	
 
    	
 
    	
 
    	
 
    	
10
    	
%
    	
8
    	
%
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Charge Offs
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
23
    	
%
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
NPAs
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
15
    	
%
    	
 
    	
 
    	
23
    	
%
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Efficiency Ratio
    	
 
    	
15
    	
%
    	
16
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
16
    	
%
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Annual Average Individual Deposit Goals
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
20
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
New Fee Income Products
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
25
    	
%
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
*
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Discretionary
    	
 
    	
35
    	
%
    	
20
    	
%
    	
20
    	
%
    	
20
    	
%
    	
18
    	
%
    	
20
    	
%
    	
20
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TOTAL
    	
 
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
100
    	
%
    	
 
    	
 
    


 




* Certain information on this page as to which a request for confidential treatment has been submitted to the Securities and Exchange Commission has been omitted and filed separately with the Commission.