Document:

a1019longtermincentivepl

  Adopted: February 2018      Long-Term Incentive Plan  2020-2022  Exhibit 10.19 

 

  Long-Term Incentive Plan  Objectives  Eagle Bancorp, Inc. (the “Company”) is committed to rewarding executive officers of the Company and its  principal subsidiary EagleBank for their contributions to the Company’s success. The Company’s long-term  incentive plan (LTIP) is adopted under, and constitutes the basis under which the Company will establish the  equity based compensation awarded to executive officers pursuant to the Company’s then-applicable,  shareholder approved, equity compensation plan (the “Stock Plan”), and is part of a total compensation  package, which includes base salary, annual cash incentives (under the Senior Executive Incentive Plan –  “SEIP”), long-term equity incentives and benefits. The objectives of this Long-Term Incentive Plan are to:   Focus and reward participants for driving long-term, sustained performance.   Align executive officers with shareholder interests.   Enable the Company and its subsidiaries to attract and retain talent needed to drive the Company’s  success.   Ensure sound risk management by providing a balanced view of performance and aligning rewards with  the time horizon of risk.   Position EagleBank’s total compensation to be competitive with market for meeting performance goals.   Work with the SEIP to ensure a proper balance of performance goals and time horizons for overall  performance and compensation.  Participation   Participants are the executive officers of the Company and EagleBank, as designated by the Board of  Directors.   Time-Vested Awards: New participants hired July 1 or later will not be eligible to receive awards of RS for  the year in which they are hired but will become eligible for the next cycle.   Performance-Vested Awards: New participants must be an executive officer on the first business day of  the year to be eligible for performance-vested awards (made in the first quarter) relating to the  forthcoming three-year period. [Participants must be an active employee as of the last day of the  applicable performance period and on the date stock vests to receive the benefit of an award.    Participant’s performance must be in good standing (minimum rating of 3) for the PRSU Performance  Period and for the year of grant for Restricted Shares.  Program Components  The LTIP provides the opportunity to receive shares of time vested restricted stock (“RS”) and performance- vested restricted stock units (“PRSU”), to balance goals to reward for performance, retain executives and  align executives’ interests with shareholders. Each year, participants are eligible to receive:   Performance Shares (PSRU) (for 2020 this will be 50% of award value); PRSUs are performance-based  and align executives with shareholder interests since award value is based on Company performance- based metrics. PRSUs represent the right to receive shares of the Company’s common stock upon  certification of the achievement of specified performance based metrics over a three year performance  and vesting cycle (the “performance period”).   Restricted Stock (RS) (for 2020 this will be 50% of award value); RS supports executive ownership and  retention objectives since there is always some value retained (even if performance metric minimums are  not met).  

 

  Eagle Bancorp Long Term Incentive Plan  Page  4     PRSUs are granted at target, with the potential to achieve vesting at or above a lower (50% of target)  “threshold” level, or to achieve vesting up to a “stretch/maximum” (150% of target) level (with the award  value is focused on achievement of future performance based on predefined performance measures).  RS awards may be granted at target or could vary to allow for recognition/variation of Company and  Individual performance.    The number of Restricted Stock and PRSU shares will be determined by dividing the value of the  compensation award by the stock price on the date of grant (utilizing the formula contained in the applicable  Stock Plan then in effect). The number of Performance Shares (PRSUs) will be granted at target but will be  settled in Common Stock after the three year performance and vesting period.  Performance units promote pay for performance alignment and are intended to reward future performance  since the awards are only paid out when predefined performance goals are met. Performance units are  earned and cliff vest after three years. Earned performance units are paid within 75 days after the end of the  Performance Period or as soon as practicable thereafter if the measurement data was not yet readily  available, and vest on the date the Compensation Committee certifies the performance data.  The grants of RS and PRSUs under this Plan are under and a part of the applicable Company Stock Plan  and not outside thereof, and are subject to all terms and conditions of such Plan.  Individual grant agreements will be provided to each individual upon grant and will specify the terms and  conditions of the grant.  Participation in the Plan does not guarantee an award at the target levels detailed in Appendix A. The  Compensation Committee of the Company (the “Committee”) will have the discretion to grant above or below  target for RS to allow for appropriate reflection of the Company’s performance, business environment, risk  mitigating factors, affordability and individual performance and contribution.  Award Opportunities   Each participant will have a target equity award that reflects being a part of a competitive total compensation  package for his/her role. LTIP targets will be communicated to each participant at the start of each  performance period. (See Appendix A for current target opportunities.) LTIP targets are estimates only,  subject to adjustment as set forth herein and are not committed amounts until awards are actually made and  vested.  Restricted Stock (Time Vested) Shares – How They Work  RS grants are awarded based on a holistic view of performance that recognizes individual and Company  performance. Actual awards can vary +/- 25% from target to reflect performance. Once awarded, RS vests  one-third per year for three years, beginning on the first anniversary after the grant date.  Performance Shares – How they Work  Performance Period  Each performance cycle (i.e., performance period) is three years. Performance goals and target  opportunities are communicated at the start of each performance period. For the 2020 Plan, the performance  period will be January 1, 2020 to December 31, 2022. The payout of the award is contingent on actual  performance of pre-defined measures at the end of the performance period. The result is a rolling series of  annual awards, each earned over three years.    The diagram below shows how the annual award process results in overlapping cycles.  

 

  Eagle Bancorp Long Term Incentive Plan  Page  5    2017 2018 2019 2020 2021 2022                                   Performance Measures  The Committee shall establish one or more Performance Goals for each grant of PRSUs. The selected  performance measures are intended to reflect the Company’s strategic plan as well as shareholder  expectations.  It is intended that target goals will reflect performance that is attainable with reasonable stretch. Stretch  (maximum) goals will reflect challenge goals that require superior performance. Performance of each goal is  measured independently.  Actual payout after three years will be interpolated on a straight-line basis between threshold, target and  maximum to reward incremental performance. Performance will range from 50% of target for achieving  threshold performance to 150% of target for achieving stretch performance.  The table below establishes two performance goals and ranges for 2020.  Measures Weight Threshold Target Stretch/Maximum        Return on Average Assets (KRX Index) 50% Median 62.5% Percentile 75% Percentile  Tangible Book Value (X Index)Total Shareholder Return 50% Median 62.5% Percentile 75% Percentile  Payout Range (% of Target) 100% 50% 100% 150%  The Index is the KBW Regional Bank Index (KRX)   Awards Payouts  The Company’s performance in respect of each of the performance measures will be calculated following the  end of each performance cycle to determine the portion of an award of PRSUs that has vested. Vested  PRSUs will be settled in the Company’s common stock.  In light of extraordinary regional economic or business circumstances of a force majeure nature (such as a  result of a terrorist act or new government sequestration), the grant may provide that the Committee retains  the right to apply positive discretion to vesting as appropriate to normalize for such extraordinary regional  circumstance. The factors listed above will be considered before vesting is approved by the Committee.  Terms and Conditions  Performance share grants Performance Period  Evaluate performance results and vest earned performance shares              

 

  Eagle Bancorp Long Term Incentive Plan  Page  6    This section provides a general overview of the major terms and conditions for the Long-Term Incentive  Plan. Information represented below is subject to change and does not constitute a binding agreement.  Effective Date  This LTIP is effective initially to reflect a performance period of January 1, 2020 to December 31, 2022. The  LTIP will be reviewed annually by the Company’s Compensation Committee of the Board to ensure proper  alignment with the Company’s business objectives. The Company retains the rights as described below to  amend, modify or discontinue the Plan at any time during the specified period regarding future grants. The  Plan will remain in effect until outstanding awards are vested.  Plan Administration  The LTIP is authorized by the Board and administered by the Compensation Committee. The Compensation  Committee has the sole authority to interpret the LTIP and to make or nullify any rules and procedures, as  necessary, for proper administration of the LTIP. The Compensation Committee will make all final  determinations regarding long-term incentive awards to participants. Any determinations by the  Compensation Committee will be final and binding on all participants. The Compensation Committee may, in  its sole discretion, terminate or modify the LTIP, however, no amendment or termination of this LTIP will  adversely affect an outstanding award.  Plan Changes or Discontinuance  The Company has developed the LTIP 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 (for example, mergers, dispositions or other corporate transactions, changes in  laws or accounting principles or other events that would in the absence of some adjustment, frustrate the  intended operation of this arrangement), the Company may add to, amend, modify or discontinue any of the  terms or conditions of the LTIP at any time regarding future grants.  Termination of Employment  To encourage executive retention, a participant must be an active employee of the Company or Bank on the  vesting date. (See exceptions for death, disability, retirement, termination for good reason or without cause  and change in control below). PRSUs will be forfeited by participants who terminate employment during the  performance cycle except as otherwise set forth in this LTIP.   Death, Disability, Retirement   If a participant ceases to be employed by the Company or Bank due to death, disability or retirement (as  defined in the applicable Stock Plan), his/her RS shares will immediately vest, and his/her performance- vested PRSUs vesting will be the greater of (i) based on actual performance measured on the most recent  completed fiscal quarter, without proration or (ii) based on an assumed “at target” performance for the entire  Performance Period, but then prorated for the period between grant and DDR.  Pro ration shall be computed  based on full months, including any partial month of service.  Change in Control (CIC)  Upon a change in control (as defined in, and subject to any conditions contained in, the Stock Plan then in  effect), (a) an executive’s RS shares will vest and (b) his/her performance-vested PRSUs vesting will be the  greater of (i) based on actual performance measured on the most recent completed fiscal quarter, without  proration or (ii) based on an assumed “at target” performance for the entire Performance Period, but then  

 

  Eagle Bancorp Long Term Incentive Plan  Page  7    prorated for the period between grant and CIC.  Pro ration shall be computed based on full months, including  any partial month of service.   Clawback  All awards under this Plan are subject to clawback in accordance with the requirements of the applicable  award agreement and applicable Stock plan, applicable law and regulation and the listing requirements of  any exchange on which the Company’s common stock is listed for trading.  Ethics and Interpretation  If there is any ambiguity as to the meaning of any terms or provisions of the Plan or any questions as to the  correct interpretation of any information contained therein, the interpretation expressed by the Compensation  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 standard, will subject a participant to disciplinary action up to and  including termination of employment. In addition, any incentive compensation under the Plan to which the  participant would otherwise be entitled may be revoked.  Miscellaneous  The LTIP will not be deemed to give any participant the right to be retained in the employ of the Bank, nor  will the LTIP interfere with the right of the Company or Bank to discharge any participant at any time for any  reason. Receipt of an award in one year does not guarantee the eligibility of a participant to receive, or entitle  a participant to receive, an award in any subsequent year.  Each provision in this LTIP 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.  This incentive plan and the transactions and payments hereunder shall, in all respects, be governed by, and  construed and enforced in accordance with the laws of the state of Maryland (without regard to its conflicts of  laws provisions).    

 

  Eagle Bancorp Long Term Incentive Plan  Page  6    Appendix A  2019 LTI Target Opportunity                Tiers reflect SEIP Tiers.  Tier  Target LTI   RS and PRSU  (% of Salary)  Tier 1 300%  Tier 2 155%  Tier 3 145%a1023directoragreement

A-1    #116181231 v1  EXHIBIT A   TO RESTRICTED STOCK GRANT NOTICE  AWARD AGREEMENT  1. Award of Restricted Stock.  Effective as of the Grant Date set forth in the Grant Notice,  the Company has granted to Participant the number of Shares set forth in the Grant Notice, subject to the  restrictions and on the terms and conditions set forth in the Grant Notice, the Plan and this Agreement.  2. Vesting of Restricted Stock.    a. Vesting.  Each Share of Restricted Stock is subject to forfeiture until it becomes  vested in accordance with the Grant Notice. During the vesting period, the Participant shall have all of the  rights of a shareholder with respect to the Restricted Stock, including, without limitation, the right to receive  dividends thereon (whether in cash or Shares).  b. Service with Affiliates.  Solely for purposes of this Agreement, service with the  Company will be deemed to include service with an Affiliate of the Company (for only so long as such  entity remains an Affiliate of the Company).  c. Effect of Termination of Service on the Restricted Stock.  Unless otherwise  provided in the Grant Notice, if Participant’s service ceases for any reason, the treatment of unvested Shares  of Restricted Stock shall be determined in accordance with Section 8(c)(iii) of the Plan.     3. Certificates. The Shares of Restricted Stock may be certificated in accordance with Section  8(b) of the Plan.  4. Non-Transferability of Restricted Stock.  Except as may be permitted by the Committee in  accordance with Section 14 of the Plan, unvested Shares of Restricted Stock may not be sold, pledged,  assigned, hypothecated, gifted, transferred or disposed of in any manner, either voluntarily or involuntarily,  other than by will or by the laws of descent and distribution.  5.  Tax Consequences.  Participant understands that Participant may elect to timely file an  election under Section 83(b) of the Code within thirty days following the grant of the Shares hereunder.  Participant acknowledges that the Company has not advised Participant regarding Participant’s tax liability  in connection with the Restricted Stock or with respect to an election under Section 83(b) of the Code.   Participant acknowledges that Participant has reviewed with Participant’s own tax advisors the tax  treatment of the Restricted Stock and is relying solely on those advisors in that regard.   6. No Continuation of Service.  Neither the Plan nor this Agreement will confer upon   Participant any right to continue in the employment or service of the Company or any of its Affiliates, or  limit in any respect the right of the Company or its Affiliates to discharge Participant at any time, for any  reason.  7. The Plan.  Participant has received a copy of the Plan, has read the Plan and is familiar  with its terms, and hereby accepts the Option subject to the terms and provisions of the Plan.  Pursuant to  the Plan, the Committee is authorized to interpret the Plan and to adopt rules and regulations not inconsistent  with the Plan as it deems appropriate.  Participant hereby agrees to accept as binding, conclusive and final  all decisions or interpretations of the Committee with respect to questions arising under the Plan, the Grant  Notice or this Agreement.  Exhibit 10.23 

 

A-2    #116181231 v1  8. Company Policies.  Participant agrees, in consideration for the grant of the Restricted  Stock, to be subject to any policies of the Company and its Affiliates regarding clawbacks, securities  trading, and hedging or pledging of securities that may be in effect from time to time, or as may otherwise  be required by applicable law, regulation or exchange listing standard.  9. Entire Agreement.  The Grant Notice and this Agreement, together with the Plan, represent  the entire agreement between the parties with respect to the subject matter hereof and supersede any prior  agreement, written or otherwise, relating to the subject matter hereof.  10. Amendment.  This Agreement may only be amended by a writing signed by each of the  parties hereto; provided that the Company may amend this Agreement without Participant’s consent, if the  amendment does not materially impair Participant’s rights hereunder.  11. Governing Law.  This Agreement will be construed in accordance with the laws and  judicial decisions of the State of Maryland, without regard to the application of the principles of conflicts  of laws.    12. Headings.  The headings in this Agreement are for convenience only.  They form no part  of the Agreement and will not affect its interpretation.  13. Electronic Delivery of Documents.  Participant authorizes the Company to deliver  electronically any prospectuses or other documentation related to the Option and any other compensation  or benefit plan or arrangement in effect from time to time (including, without limitation, reports, proxy  statements or other documents that are required to be delivered to participants in such arrangements  pursuant to federal or state laws, rules or regulations).  For this purpose, electronic delivery will include,  without limitation, delivery by means of e-mail or e-mail notification that such documentation is available  on the Company’s Intranet site.  Upon written request, the Company will provide to Participant a paper  copy of any document also delivered to Participant electronically.  The authorization described in this  paragraph may be revoked by Participant at any time by written notice to the Company.

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