Document:

exv10w16

 

Exhibit 10.16

SOVEREIGN BANCORP, INC.

LEADERS INCENTIVE PLAN

Amended and Restated as of January 1, 2005

 

 

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 - PURPOSES OF THE PLAN
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 2 - DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	ARTICLE 3 - ADMINISTRATION
	 	 	3	 
	 
	 	 	 	 
	ARTICLE 4 - PLAN OPERATION
	 	 	4	 
	 
	 	 	 	 
	ARTICLE 5 - MISCELLANEOUS PROVISIONS
	 	 	6	 

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SOVEREIGN BANCORP, INC.

LEADERS INCENTIVE PLAN

ARTICLE 1 — PURPOSES OF THE PLAN

     The Sovereign Bancorp, Inc. Leaders Incentive Plan is intended to provide incentive to
Participants to assist the Corporation and its Subsidiaries in meeting and exceeding their
corporate financial goals. By offering the potential to earn additional compensation beyond base
salary, the Corporation and its Subsidiaries also intend that their goal of providing a competitive
total compensation program for Participants will be achieved, thereby assisting in attracting,
retaining and motivating certain personnel.

ARTICLE 2 — DEFINITIONS

     2.1 “Award.” A bonus, payable to a Participant in cash and/or Restricted Common Stock, as
determined by the Committee in accordance with the provisions of the Plan.

     2.2 “Board.” The board of directors of the Corporation.

     2.3 “CEO.” The chief executive officer of the Corporation.

     2.4 “Code.” The Internal Revenue Code of 1986, as amended.

     2.5 “Committee.” The Compensation Committee of the Board, or such other committee as may be
determined under the provisions of Article 3.

     2.6 “Common Stock.” The common stock of the Corporation (no par value) as described in the
Corporation’s articles of incorporation, or such other stock as shall be substituted therefor.

     2.7 “Corporate Performance Factor.” One or more earnings per share goals, established by the
Committee prior to the commencement of each Plan Year, that must be achieved (unless waived by the
Board) as a condition precedent to the declaration and payment of an Award (or a type of Award) to
any Participant. The Corporate Performance Factor, including any detail regarding its
determination, established for a Plan Year shall be attached from time to time as an exhibit, or a
replacement exhibit, to this Plan document.

     2.8 “Corporation.” Sovereign Bancorp, Inc., a Pennsylvania corporation.

     2.9 “Employee.” A full-time or part-time common law employee of the Corporation or a
Subsidiary. Such term shall not include a temporary or “leased” employee.

     2.10 “Individual Performance Factor.” A number or other evaluation with respect to the
performance of a Participant in a relevant Plan Year. The factor for a Participant shall be
derived through application to him or her of the terms of the Corporation’s Performance Management
Program, which program sets forth objectives (Business MBOs, Human and Commitment

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MBOs, Critical Success Factors, and Human and Commitment Skills Criteria) to be met by a
Participant.

     2.11 “Participant.” With respect to a Plan Year, an Employee (i) who is classified in grade
10 or above under the Corporation’s personnel policies in effect at the beginning of such Plan
Year, or (ii) who is classified in grade 8 or 9 under such policies at such time and who, following
the recommendation of his or her department head or supervisor, is selected to participate prior to
the beginning of a Plan Year by the CEO and approved by the Committee. Additional individuals may
be specified as Participants after the beginning of a Plan Year in accordance with provisions set
forth elsewhere herein. Notwithstanding the preceding sentences, unless otherwise provided by the
Committee, no Employee who is a participant in any other incentive plan that provides for annual or
other period bonuses shall participate in this Plan during any Plan Year that overlaps with an
annual or other period under such other plan. The CEO shall not be eligible to participate in the
Plan.

     2.12 “Plan.” The Sovereign Bancorp, Inc. Leaders Incentive Plan, as amended and restated by
this document and as the same may be amended from time to time.

     2.13 “Plan Year.” A calendar year.

     2.14 “Restricted Common Stock.” Common Stock awarded to a Participant, the right to actual
unrestricted ownership of which is subject to satisfaction of such service or performance criteria
as may be specified by the Committee. The terms of any Restricted Common Stock awarded under the
Plan shall be as prescribed by the Committee.

     2.15 “Subsidiary.” A subsidiary corporation, as defined in Code Section 424(f), that is a
subsidiary of a relevant corporation.

     2.16 “Valuation Date.” The date as of which the Common Stock is valued for purposes of
determining how many shares are distributable to a Participant in connection with an Award declared
in monetary terms but payable in the form of equity. To the extent necessary with respect to a
Plan Year, such date shall be specified by the Committee at the time Awards are determined. If not
specified, the Valuation Date shall be December 31st of the applicable Plan Year.

ARTICLE 3 — ADMINISTRATION

     3.1 In General. The Plan shall be administered by the Committee. In the event the
Board determines, at any time, that it would in the best interest of the Corporation for the Plan
to be administered by a different group of individuals (including the Board itself), it may provide
for the administration of the Plan by such other individuals. In such event, all references to the
Committee herein shall be deemed to be references to such other individuals as a group.

     3.2 Powers of the Committee.

     (a) The Committee shall be vested with full authority to make such rules and
regulations as it deems appropriate to administer the Plan and to interpret the provisions

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of the Plan. Any determination, decision or action of the Committee in connection with
the construction, interpretation, administration or application of the Plan shall be final,
conclusive and binding upon each Participant and any person claiming under or through a
Participant. The Committee may specify such persons as it deems appropriate to assist it in
carrying out its responsibilities under the Plan.

     (b) Subject to the terms and conditions of the Plan, the Committee shall have exclusive
jurisdiction, among other things, to:

     (i) approve the recommendation of the CEO to provide for participation in the
Plan of grade 8 or 9 Employees;

     (ii) approve the recommendation of the CEO to provide for participation in the
Plan of grade 8 or higher Employees who are hired after the beginning of the
relevant Plan Year;

     (iii) approve the recommendation of the CEO to provide for the participation in
the Plan of Employees who are promoted to grade 8 or higher after the beginning of
the relevant Plan Year;

     (iv) determine the amount of each Award (if any) payable, or otherwise
allocable or distributable, to a Participant for a relevant Plan Year, and the form
in which such Award shall be made;

     (v) without any requirement to do so, waive strict application of any provision
of this Plan if, in its judgment, such waiver would be equitable under the
circumstances; and

     (vi) specify such conditions applicable to each Plan Award as it may deem
necessary, desirable or appropriate.

     3.3 Liability. No member of the Board, the Committee or any person (including the CEO
and any employee of Team Member Services) assisting the Board or the Committee in connection with
the administration of the Plan shall be liable for any act, whether of commission or omission, made
in reasonable good faith in connection therewith.

ARTICLE 4 — PLAN OPERATION

     4.1 In General. As soon as practical following the preparation of the Corporation’s
final audited financial statements for a relevant Plan Year, the Committee shall determine, or
cause to be determined under its supervision, whether the Corporate Performance Factor has been met
for the Plan Year.

     (a) In the event the Corporate Performance Factor is not achieved in whole or in part,
then, unless otherwise provided by the Board, no Awards shall be granted for the relevant
Plan Year.

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     (b) In the event the Corporate Performance Factor is achieved in whole or in part (or
is waived by the Board), Awards shall be determined by the Committee as provided in this
article.

     4.2 Evaluation of Participants and Determination of Awards. In the event Awards are
to be paid for a Plan Year, the CEO shall cause each Participant’s Individual Performance Factor to
be determined and applied by taking into account (i) the Leadership Performance Matrix in effect
for such year, which Matrix shall be attached from time to time as an appendix, or a replacement
appendix, to the Plan document, and (ii) the incentive ranges for such year, which shall be
attached from time to time as an appendix, or a replacement appendix, to the Plan document. The
determinations made shall initially be made under the supervision of, and approved by, the CEO and,
upon such approval, shall be subject to the further approval of the Committee. For Plan Years with
respect to which the Corporate Performance Factor is achieved (or otherwise waived), the maximum
number of Employee-Participants in Grades 8 and 9 in such year receiving Awards will not normally
exceed 30% of the number of such individuals.

     4.3 Additional Awards. A Participant may be granted an additional Award above the
amount determined pursuant to Section 4.2 if, in the judgment of the CEO and with the concurrence
of the Committee, such Participant has rendered extraordinary performance during the Plan Year.

     4.4 Form of Awards. Awards for a Plan Year shall be in such form as the Committee
shall specify and the Board shall approve. Except as otherwise provided by the Board or the
Committee at any relevant time, in the event a dual Corporate Performance Factor is specified,
whereby two earnings-per-share thresholds are targeted, if: (i) only the lower threshold is
achieved, all Awards shall be distributed in cash, and (ii) the higher threshold is achieved,
Awards shall be distributed partially in cash and partially in Restricted Common Stock (or wholly
in cash to selected persons). Where relevant, distributions in the form of Restricted Common Stock
shall be made with reference to the value of such stock on the applicable Valuation Date.

     4.5 Timing of Award Distributions. The determination and distribution of any Awards
payable with respect to a Plan Year shall be made as soon as administratively feasible following
the availability of financial information for such year. Without any obligation to do so, the
Committee will strive to determine and distribute such Awards no later than March 31st of the year
immediately following the relevant Plan Year.

     4.6 Certain Participation, Service and Distribution Rules.

     (a) Except as otherwise provided herein, no Participant shall be entitled to an Award
for any Plan Year unless he or she is an Employee on both the last day of such year and the
date on which Awards are paid for such year.

     (b) In the case of a Participant whose employment terminates during a Plan Year, but
after July 1st of such year, by reason of his or her death, disability or normal or early
retirement (as such terms are then defined in the Sovereign Bancorp, Inc. Employee

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Stock Ownership Plan or, if not then so defined, as otherwise defined by the
Committee), a prorated Award may, in the Committee’s sole discretion, be granted to or with
respect to such Participant. In the case of any Participant who terminates employment as
described in the preceding sentence after the close of a Plan Year, but before Awards for
such year are paid, a full or pro rated Award may, in the Committee’s sole discretion, be
granted to or with respect to such Participant.

     (c) No Employee shall be approved as a Participant for a Plan Year if his or her
employment commences after September 30th of such year. In the case of an Employee who
commences employment or is promoted to an Award-eligible position prior to October 1st of a
Plan Year and who is approved as a Participant for such year, any Award granted to him or
her for such year shall be prorated, as the Committee shall determine.

     (d) In the case of a Participant who is a part-time Employee during all or any portion
of a Plan Year, any Award granted to him or her for such year shall be pro rated, as the
Committee shall determine.

     (e) In the case of a Participant who is on a leave of absence for less than three
months during a Plan Year, any Award determined with respect to him or her may, at the
Committee’s discretion, be payable without being pro rated. In the case of a Participant
who is on a leave of absence for at least three, but less than 12, months, any Award granted
to him or her shall be pro rated.

     (f) Notwithstanding anything herein to the contrary, any Award declared but remaining
undistributed may be temporarily or permanently withheld from a Participant if adverse or
other special circumstances exist which, in the judgment of the Committee, justify such
action with respect to him or her.

     (g) The transfer of a Participant’s employment between and among the Corporation and
its Subsidiaries shall not be deemed a termination of employment, but, unless otherwise
provided by the Committee, a transaction pursuant to which a Subsidiary ceases to qualify as
such shall constitute a termination of employment of all of such former Subsidiary’s
Employees.

     (h) The payment of any Award, with respect to a deceased Participant, shall be made to
his or her surviving spouse or, if there is no such person at the time of distribution, to
the decedent’s estate.

ARTICLE 5 — MISCELLANEOUS PROVISIONS

     5.1 Effective Date. The effective date of this amended and restated Plan is as of
January 1, 2005.

     5.2 Amendment, Modification, Suspension, Reinstatement or Termination of the Plan.
The Corporation reserves the right, by action of the Board, to amend, modify, suspend, reinstate or
terminate the Plan at any time and from time to time, including during any Plan Year with

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retroactive effect. Any such action shall be communicated to Participants in writing by the
Committee as soon as administratively feasible.

     5.3 No Assurance of Entitlement to Award. Participation in the Plan shall not confer
upon any Participant the right to an Award, regardless of the satisfaction of any Corporate
Performance Factor or achievement of any level of individual performance. Any Award granted (or
not granted) under the Plan is subject to the absolute discretion of the CEO and the Committee.

     5.4 No Assurance as to Continued Employment. Participation in the Plan shall not
confer upon any Participant the right to continue in the employ of the Corporation or any
Subsidiary or limit in any respect the right of the Corporation or any Subsidiary to terminate a
Participant’s employment at any time and for any-reason.

     5.5 Withholding. The distribution of each Award hereunder (and the vesting in, or
other taxable event occurring with respect to, any Restricted Common Stock) shall be subject to
such federal, state and local income tax withholding as may be required by law. Where relevant,
the Corporation may require, as a condition of the distribution of an Award, that a Participant
make appropriate arrangements for the deposit of sufficient cash with the Corporation to satisfy
any tax withholding requirement.

     5.6 Obligation of Employer. The obligation to distribute an Award granted to a
Participant shall be an obligation to such Participant of his or her primary employer at the close
of a relevant Plan Year. Notwithstanding the preceding sentence, the Corporation and its
Subsidiaries may allocate the cost of Awards, as between and among themselves, as they may agree.

     5.7 Source of Shares. Except as otherwise required by law or the rules and
regulations of any exchange on which the Common Stock is listed, shares of Restricted Common Stock
distributable under the Plan may be (i) authorized but previously unissued shares or (ii) treasury
shares acquired by purchase or otherwise.

     5.8 Gender; Number. Words of one gender, wherever used herein, shall be construed to
include each other gender, as the context requires. Words used herein in the singular form shall
include the plural form, as the context requires, and vice versa.

     5.9 Applicable Law. Except to the extent preempted by federal law, this Plan document
shall be construed, administered and enforced in accordance with the domestic internal law of the
Commonwealth of Pennsylvania.

     5.10 Headings. The headings of the several articles and sections of this Plan
document have been inserted for convenience of reference only and shall not be used in the
construction of the same.

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EXHIBIT

CORPORATE PERFORMANCE GOALS FOR 2005 PLAN YEAR

[The Corporate Performance Goals for the 2005 Plan Year are the attainment by the
Corporation for calendar year 2005 of certain operating earnings per share goals.]

Approval

This Plan as amended and restated has been approved by the Board of Directors on 02/16/05.

	 	 	 	 	 
	/s/ Jay Sidhu

	 		 	/s/ Cheryl Patnick

	 
	Jay Sidhu

	 	Approval As Noted Above
	 	Cheryl Patnick

	Chairman, President & CEO

	 	Board of Directors
	 	SVP, Managing Director Team
	Member Services
	 	 	 	 
	Sovereign Bancorp, Inc.

	 	02/16/05
	 	Sovereign Bancorp, Inc.
	02/16/05

	 	 	 	02/16/05

8exv10w17

 

Exhibit 10.17

SOVEREIGN BANCORP, INC.

SENIOR OFFICERS BONUS AWARD PROGRAM

(As Amended Effective February 16, 2005)

     1. Definitions.

     (a) “Bank” means Sovereign Bank.

     (b) “Board” means the board of directors of the Corporation.

     (c) “Change in Control” has the same meaning as is ascribed to such term, as of the
Effective Date, in the Sovereign Bancorp, Inc. 2001 Stock Incentive Plan.

     (d) “Committee” means the Compensation Committee of the Board or such other committee
as may be appointed by the Board to administer this Program. Such term also includes the
whole Board to the extent it takes action with respect to administrative or operational
matters relating to the Program.

     (e) “Common Stock” means the common stock (no par value) of the Corporation.

     (f) “Corporation” means Sovereign Bancorp, Inc.

     (g) “Effective Date” means September 18, 2002.

     (h) “Fair Market Value” of a share of Common Stock on any given date means the closing
sale price for such shares on that date as listed on the New York Stock Exchange (or any
national securities exchange or quotation system on which the Common Stock is then listed or
reported). If a closing sale price for the Common Stock for the given date is not listed or
reported, or if there is none, the Fair Market Value shall be equal to the closing sale
price on the nearest trading day preceding such date. Notwithstanding the foregoing, if, in
the Committee’s judgment, there are unusual circumstances or occurrences under which the
otherwise determined Fair Market Value of the Common Stock does not represent the actual
fair value thereof, then the Fair Market Value of such Common Stock shall be determined by
the Committee on the basis of such prices or market quotations as it shall deem appropriate
and fairly reflective of the then fair value of such Common Stock.

     (i) “Participant” means a Senior Officer who is entitled to participate in the Program
in accordance with the provisions of Sections 2 and 4 and who has not terminated as a Senior
Officer. Notwithstanding the preceding sentence, a Participant who terminates as a Senior
Officer after having earned an award, but before its payment, shall remain a Participant
until payment is made.

     (j) “Program” means the Sovereign Bancorp, Inc. Senior Officers Bonus Award Program.

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     (k) “Senior Officer” means a member of the Office of the Chairman of Sovereign Bank.

     2. Participation. Each individual who is a Senior Officer on the Effective Date shall
become a Participant in the Program on such date. Any individual who becomes a Senior Officer
after December 31, 2003, may become a Participant subject to the provisions of Section 4.

     3. Operative Terms of the Program.

     (a) In the event the Corporation’s cash earnings, determined on a consolidated and
fully-diluted basis, for 2004 equal or exceed $1.70 per share, each Participant, who remains
as a Senior Officer as of December 31, 2004, shall receive a cash award equal to the Fair
Market Value of 10,000 shares of Common Stock.

     (b) In the event the Corporation’s cash earnings, determined on a consolidated and
fully-diluted basis, for 2005 equal or exceed $1.95 per share, each Participant, who remains
as a Senior Officer as of December 31, 2005, shall receive a cash award of $225,500.

     (c) In the event the Corporation’s cash earnings, determined on a consolidated and
fully-diluted basis, for 2006 equal or exceed a per share amount established by the
Committee prior to January 1, 2006, each Participant, who remains as a Senior Officer as of
December 31, 2006, shall receive a cash award of $225,500.

     (d) In the event the Corporation’s cash earnings, determined on a consolidated and
fully-diluted basis, for 2007 equal or exceed a per share amount established by the
Committee prior to January 1, 2007, each Participant, who remains as a Senior Officer as of
December 31, 2007, shall receive a cash award of $225,500.

     (e) In the event the Corporation’s cash earnings, determined on a consolidated and
fully-diluted basis, for 2008 equal or exceed a per share amount established by the
Committee prior to January 1, 2008, each Participant, who remains as a Senior Officer as of
December 31, 2008, shall receive a cash award of $225,500.

     (f) In addition to the target earnings per share objectives described above, an award
shall not be considered earned with respect to a relevant year, nor shall it be paid, in the
event the Corporation’s “Tier 1 capital” is less than 5.5% as of the close of such year or
the Bank’s asset quality is worse than the average of the top 25 banks in the United States
(by asset size), which banks have commercial loans making up at least 25% of their total
loan portfolios. Notwithstanding the foregoing, if one or more of the financial objectives
described in this section 3 are not achieved for a relevant year, the Committee may, after
review of all relevant facts and circumstances, determine that an award (or any portion
thereof) with respect to a relevant year is considered earned.

     (g) All amounts payable pursuant to the preceding provisions of this section shall be
distributed within 30 days following the filing by the Corporation of its Annual Report on
Form 10-K for the relevant year in which an award is earned.

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     (h) All financial calculations required in connection with this Program shall be
performed by, or under the supervision of, the Committee; provided, however, that the
calculation of cash earnings shall, in any event, be consistent with any year-end or other
public financial release, describing year-end cash earnings, made by the Corporation with
respect to the relevant year. The determination of the value of the award for 2004 shall be
based upon the Fair Market Value of Common Stock as of December 31, 2004.

     (i) Except as otherwise provided herein, no award shall be payable to any Participant
for a relevant year if he or she fails to remain as a Senior Officer, for any reason,
through the end of such year.

     (j) In the event of the occurrence of a stock split, stock dividend, reverse stock
split, or similar event with respect to the Common Stock following the adoption of this
Program and prior to a payment of an award earned with respect to any year, the amount
payable with respect to any earned award shall be appropriately adjusted to take into
account such occurrence.

     (k) Notwithstanding the provisions of this section, an award earned hereunder with
respect to a relevant year shall not be paid unless an award with respect to the same year
has been earned under the terms of the Sovereign Bancorp, Inc. Non-Employee Directors Bonus
Award Program.

     (l) Notwithstanding the preceding provisions of this section, in the event of the
occurrence of a Change in Control, all potential awards for any current or future fiscal
year shall be deemed earned as of the date of such Change in Control and shall be payable to
the Participants, who are serving as Senior Officers immediately prior thereto, within 30
days after such Change in Control.

     4. Future Participants. In the case of an individual who becomes a Senior Officer
following December 31, 2003, the Committee may provide, in its sole discretion, for his or her
participation in the Program. In the event the Committee provides for the participation of such an
individual, it may establish such additional or modified conditions on his or her participation as
it may deem equitable or appropriate under the circumstances.

     5. Administration. Except as otherwise provided herein, this Program shall be
interpreted and administered by the Committee. In furtherance of such authority, the Committee may
prescribe such rules, regulations, forms, and procedures as it deems necessary or appropriate for
the proper administration of the Program.

     6. Amendment. This Program may be amended at any time and from time to time by the
Board; provided, however, that no such amendment may be made which adversely affects the then
rights of a Participant under the Program without his or her consent; and provided further, that no
amendment may be made solely by the Board that requires the additional approval of the
Corporation’s shareholders for tax, securities law, exchange listing requirement, or other
purposes.

     7. Termination. This Program shall terminate upon the earliest to occur of the
following: (i) the distribution of earned awards (if any) for the year 2008, (ii) the determination

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by the Committee that the specified goals for the year 2008 were not met, or (iii) the
distribution of awards payable by reason of a Change in Control.

     8. Tax Withholding. Distribution of an award shall be subject to satisfaction by the
Participant of any tax withholding requirements that may apply at the relevant time.

     9. Number. Words used herein in the singular form shall include the plural form, as
the context requires, and vice versa.

     10. Headings. The headings of the several sections of this Program document have been
inserted for convenience of reference only and shall not be used in the construction of the same.

     11. Applicable Law. Except to the extent pre-empted by federal law, this Program
document shall be administered, construed and enforced in accordance with the domestic internal law
of the Commonwealth of Pennsylvania.

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