Document:

exv10w2

Exhibit 10.2

BANK MUTUAL CORPORATION

OUTSIDE DIRECTORS’ RETIREMENT PLAN

Preamble

The Mutual Savings Bank Outside Directors’ Retirement Plan was initially established effective as
of February 16, 1998. The plan was previously amended and restated to designate Bank Mutual
Corporation (the “Company”) as the plan sponsor and is now being amended and restated to make
certain other changes.

	1.	 	Purpose. The Bank Mutual Corporation Outside Directors’ Retirement Plan (the “Plan”)
is maintained by Bank Mutual Corporation (the “Company”) for the purpose of providing
retirement benefits to its outside directors. The objective of the Plan is to provide an
incentive for individuals to become and remain directors of the Company by providing them with
a retirement benefit in addition to their annual cash retainer fees.

	2.	 	Participation. The term “Participant” as used herein refers to any member of the
Company’s Board of Directors (the “Board”) who has been designated by the Board as a
Participant, but it shall not include any director who (i) is a current or former officer or
employee of the Company or any of its affiliates or (ii) is or was covered under any other
similar retirement plan for directors of the Company or any of its affiliates. A schedule of
the current Participants is attached to this Plan as Exhibit A.

	3.	 	Benefits Upon Retirement. Upon the Participant’s retirement or other termination from
the Board of Directors, the Participant shall be entitled to receive a monthly retirement
benefit provided that (i) the Participant had completed at least 5 years of service as a
Director or (ii) the Participant’s retirement or termination of service as a Director follows
a Change in Control. The monthly retirement benefit shall be payable commencing with the
first of the month following the Participant’s retirement from the Board or, if later, the
first day of the month following the Participant’s 65th birthday. The monthly retirement
benefit shall be payable for a period of 120 months or for such lesser number of months which
is equal to the number of whole months of the Participant’s service as a Director. The amount
of the monthly retirement benefit shall be 1/12th of the annual cash retainer in effect for
the Participant at the time of his termination of service as a Director.

	 	 	A “Change in Control” shall be deemed to have occurred if: (a) any “person” (as such term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
beneficial owner, directly or indirectly, of more than 25% of the capital stock of the Company
in a transaction or transactions subject to the notice provisions of the Change in Bank Control
Act of 1978, (12 USC § 1817(j)) as amended from time to time, or approval under the Savings and
Loan Holding Company Act (12 USC § 1467a), as amended from time to time; (ii) during any period
of two (2) consecutive years, the individuals, who at the beginning of any such period
constituted the directors of the Company, cease for any reason to constitute at least a
majority thereof; or (iii) the Company files a report or proxy statement with the Securities
and Exchange Commission and/or the Office of Thrift Supervision disclosing in response to the
appropriate item of

 

 

	 	 	Form 8-K or Form 10-Q, each promulgated pursuant to the Securities Exchange
Act of 1934, as amended (“Exchange Act”) or Item 6(e) of Schedule 14A promulgated thereunder,
or successor Items, that a change in control of the Company has or may have occurred pursuant
to any contract or transaction.

	4.	 	Death Benefits. In the event of a Participant’s death before the completion of all
payments due him/her under Section 3 above, the remaining balance of such payments shall be
made to the beneficiary or beneficiaries designated by the Participant in a written document
filed with the Board prior to the Participant’s death. If the Participant has made no such
designation or no beneficiary survives, such payments shall be made to the Participant’s
estate. In either case, such payments shall be made in the same manner as provided with
respect to payments to the Participant.

	5.	 	General Creditor Status. Nothing contained in this Plan, and no action taken
pursuant to the provisions of this Plan, shall create or be construed to create a funded
obligation of any kind, or fiduciary relationship between the Company and Participant, his/her
designated beneficiary or any other person. Any funds which may be invested or assets which
may be acquired by the Company relating to this Plan shall continue for all purposes to be a
part of the general funds of the Company and no person other than the Company shall by virtue
of the provisions of this Plan have any interest in such funds or assets. To the extent that
any person acquires a right to receive payment from the Company under this Plan, such right
shall be no greater than the right of any unsecured general creditor of the Company.

	6.	 	Nonassignment. No benefit(s) under the Plan, nor any other interest hereunder of any
Participant or beneficiary shall be assignable, transferable, or subject to sale, mortgage,
pledge, hypothecation, anticipation, garnishment, attachment, execution, or levy of any kind.

	7.	 	Government Regulations. It is intended that the Plan will comply with all applicable
laws and governmental regulations, and the Company shall not be obligated to perform an
obligation hereunder in any case where, in the opinion of the Company’s legal counsel, such
performance would result in violation of any law or regulation.

	8.	 	Taxes. To the extent required by law, the Company shall withhold any taxes required
to be withheld by the federal or any state or local government from accruals or payments
hereunder.

	9.	 	No Right to Continued Service. Participation in this Plan shall not be construed as
giving to the Participant any right to be retained in the service of the Company as a
Director, limiting in any way the right of the Company to terminate the Participant’s service
as a Director at any time or evidencing any agreement or understanding, express or implied,
that the Company will provide Participant a particular rate of compensation for his service as
a Director.

	10.	 	Termination or Modification of Plan. The Board shall have the right to terminate or
modify the Plan or the payments made to any persons under the Plan at any time and from time
to time; provided, however, that such termination shall not affect the accrued

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	 	 	benefit(s) of any Participant. Notwithstanding the foregoing, in the event that the Board should terminate
the Plan and if the termination is of the type permitting immediate lump sum distribution
under Section 409A of the Internal Revenue Code, the Board also has the right at any time
thereafter to accelerate the remaining payments due any individual hereunder by paying the
lump sum present value of those payments to that individual. Lump present value shall be
calculated using an interest discount factor equal to the same interest rate which would be
used under the Company’s Pension Plan as then in effect in determining the amount of a lump
sum distribution to be made under that plan payable on the same date as the lump sum present
value payment in question is payable hereunder.

	11.	 	Claims Procedure. If the Participant or the Participant’s beneficiary believes there
has been an error of interpretation of the Plan provisions as applicable to such person, he or
she may file a claim with the Board. The decision of the Board with respect to such claim
shall be final and binding on all parties hereunder and it is not intended that such decision
shall be subject to de novo review in any legal proceeding.

	12.	 	Legal Fees and Expenses. It is the intent of the Company that Participants not be
required to incur the expenses associated with the enforcement of rights under this Plan
because the cost and expense thereof would substantially detract from the benefits intended to
be extended to Participants hereunder. Accordingly, if the Company has failed to comply with
any of its obligations under this Plan or in the event that the Company or any other person
takes any action of declare this Plan void or unenforceable, or institutes any legal action
designed to deny, or to recover, the benefits intended to be provided to Participant
hereunder, the Company irrevocably authorizes the Participant to retain counsel of his choice,
at the expense of the Company as hereafter provided, to represent Participant in connection
with the initiation or defense of any legal action, whether by or against the Company or any
Director, officer, shareholder or other person affiliated with the Company, in any
jurisdiction. The Company shall pay and be solely responsible for any and all attorneys’ and
related fees and expenses incurred by Participant as a result of the Company’s failure to
perform its obligations under this Plan or any provision thereof or as a result of the Company
or any person contesting the validity or enforceability of this Plan or any provision thereof as aforesaid. All such fees and expenses shall be
paid, or reimbursed to Participant if paid by Participant, on a regular, periodic basis
upon presentation by Participant to the Company of a statement or statements prepared by
such counsel in accordance with its customary practices.

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EXHIBIT A

SCHEDULE OF CURRENT PARTICIPANTS

David C. Boerke

Richard A. Brown

Thomas H. Buestrin

Raymond W. Dwyer, Jr.

Mark C. Herr

Dorothea Isermann

William J. Mielke

David J. Rolfs

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Exhibit 10.11

BANK MUTUAL CORPORATION

(BKMU)

MANAGEMENT INCENTIVE COMPENSATION

PLAN

 

 

BANK MUTUAL CORPORATION

Management Incentive Compensation Plan (MIP)

     This document describes the annual Management Incentive Compensation Plan (the Plan) of BANK
MUTUAL CORPORATION (“BKMU”).

PURPOSE

     Incentive compensation is an essential element of total annual cash compensation. The Plan is
designed to direct the efforts of those whose duties, responsibilities, and decisions have a
significant impact on the achievement of BKMU’s basic business objectives by initiating actions,
rather than merely responding to external conditions. Specific objectives of the Plan are to:

	 	•	 	Contribute toward achieving short-term performance goals;
	 
	 	•	 	Recognize and reward superior individual performance;
	 
	 	•	 	Assure corporate financial gain before incentive payments are earned;
	 
	 	•	 	Provide compensation which is competitive with the market place; and
	 
	 	•	 	Restrict participation to key officers.

PLAN DESCRIPTION

     To meet the above objectives, the Plan provides incentive reward opportunities in return for
outstanding performance. The Plan is a “look forward” plan which generates incentive funds based
on actual operating results measured against predetermined performance goals.

     The Plan is integrally related to the BKMU’s salary program in that the incentive award
opportunities are measured as a designated percent of each Participant’s Base Salary. The
combination of Base Salary and Target Incentive Award is designed to provide the Participant with
total annual cash compensation that is consistent with each Participant’s respective position and
individual performance.

     Under the Plan, two factors determine the amount of incentive awards each Participant will
receive:

	 	•	 	BKMU’s corporate performance measured against predetermined financial goals, and

	 	•	 	Each Participant’s individual performance measured against predetermined individual
goals.

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PLAN ADMINISTRATION

     The Bank Mutual Corporation Compensation Committee (the Committee) has final authority for
Plan provisions and has the responsibility for supervising the administration of the Plan.

ELIGIBILITY

     Eligible positions are those whose decisions have a material and direct impact on annual
operating results. Eligibility for participation does not necessarily mean participation every
year. Participants will be designated annually by the Committee. This designation will take place
prior to the beginning of BKMU’s fiscal year, except that if an officer is hired or promoted during
the program year, it is up to the discretion of the Committee to determine if that person is
included in the Plan and to what extent of the annual Base Salary.

SIZE OF AWARDS

     Target Incentive Awards should be consistent with the competitive labor market and should
reflect the responsibility levels of the Participants. The Participants are grouped into tiers to
reflect the various responsibility levels of the Participants, and a target incentive percentage of
Base Salary is established for each tier. The incentive percentages for the responsibility tiers
are shown below:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Incentive Award Opportunities	 	 	 	 
	 	 	(As a % of Salary)	 	 	 	 
	Responsibility	 	 	 	 	 	 	 	 	 
	Tier	 	Threshold	 	 	Target	 	 	Maximum	 
	Tier I
	 	 	14.0	%	 	 	20.0	%	 	 	40.0	%
	Tier II
	 	 	12.6	%	 	 	18.0	%	 	 	36.0	%
	Tier III
	 	 	10.5	%	 	 	15.0	%	 	 	30.0	%
	Tier IV
	 	 	7.0	%	 	 	10.0	%	 	 	20.0	%

     Target Incentive Awards represent incentive funds that will be earned for each position if
BKMU and the Participant achieved the predetermined goals. Participants’ base salaries are
multiplied by their respective target incentive percentage to determine their target incentive
award. Actual incentive awards may be higher or lower than target levels, depending on actual
operating results compared to predetermined goals.

INCENTIVE MIX

     A portion of each Participant’s incentive opportunities is based on corporate performance and

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a portion of individual performance. The following table shows the distribution of awards based on
corporate performance and awards based on individual performance.

Performance Mix 

	 	 	 	 	 	 	 	 	 
	Tier	 	Corporate	 	 	Individual	 
	I
	 	 	100	%	 	 	—	 
	II
	 	 	80	%	 	 	20	%
	III
	 	 	80-50	%	 	 	20-50	%
	IV
	 	 	80	%	 	 	20	%

     The individual portion of the Target Incentive Award will be based on the measured performance
of each Participant, based on the results of the goals performance appraisal process.

INCENTIVE POOL

     The size of the incentive pool will be based on BKMU’s operating success relative to goal.
The Plan requires establishing annual performance goals and measures actual operating results
relative to the established goals to generate the incentive awards.

     Goal Setting

     Annual performance goals will be established at the beginning of each year. The CEO will make
such recommendations to the Committee for subsequent approval. If mutually agreed upon performance
goals cannot be reached, the Committee has final authority to set the performance goals. The
performance criteria will be communicated in Appendix A to the Plan for that year.

     Incentive Matrix

     Each year, an incentive compensation matrix is prepared that relates the performance criteria
to the factor applied to the Target Incentive Award (the Factor). In the matrix, the performance
criteria are expressed as a percentage of the predetermined performance goals.

     At the beginning of each year, the CEO will recommend an incentive compensation matrix to the
Committee for their approval. The matrix approved by the Committee shall become Appendix A to the
Plan for that year.

     Performance Threshold

     To protect ownership interests, there will be a threshold performance level below which no
Incentive Awards will be earned.

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     Maximum

     The maximum incentive award that can be funded shall be no more than two times the Target
Incentive Award to protect against windfall profits and poor planning. The maximum Factor that may
be used in the incentive matrix is two times.

CORPORATE INCENTIVES

     If BKMU achieves or exceeds the predetermined performance goals, the incentive pool is
generated. The corporate portion of the incentive pool is automatically earned by Participants.

INDIVIDUAL INCENTIVES

     If an incentive pool is generated by BKMU performance, the individual portion for each
Participant is based on measured individual performance.

     Individual incentive awards will be based on measured performance of each Participant, as
reflected in BKMU’s performance evaluation process.

FORM AND TIMING

     Distribution of the earned Incentive awards shall be paid in cash to the Participants in one
installment within thirty (30) days following the close of BKMU’s fiscal year for which the
incentive was computed. To the extent that it is not possible to compute the incentive within
thirty (30) days following the close of BKMU’s fiscal year, an estimated payment may be made with
proper adjustment as soon as practical.

     In the case of death of a Participant, between the end of the fiscal year and the following 30
days, the total incentive earned shall be paid to the beneficiary designated in writing by the
Participant. In case of a failure of the Participant to designate a beneficiary, payment will be
made to the Participant’s estate.

TERMINATION

     Upon voluntary termination or involuntary termination during the year, all accrued benefits of
the Participant are lost. In the case of retirement, death, or permanent disability during the
Plan year, incentive awards will be paid at the end of the year, on a pro-rata basis.

5

 

     If the Participant takes a leave of absence or a disability leave during the year, they will
not accrue any benefits for the time they are absent (adjusted to the nearest half-month).

AMENDMENT

     The Committee can change, amend, or terminate the Plan at any time, except that no such action
will adversely affect any accrued incentive awards that are earned up until the time of the
amendment.

NO EMPLOYMENT AGREEMENT INTENDED

     This Agreement does not confer upon Participants any right to continuation of employment
in any capacity by BKMU and does not constitute an employment agreement of any kind.

DEFINITIONS

	 	1.	 	Base Salary shall mean the total W-2 cash wages (excluding any awards
paid under the Plan for the prior year) earned by each Participant during the calendar
year of the Plan. Disability payments are excluded for the purpose of this
definition.
	 
	 	2.	 	Corporate Incentive Award shall mean the amount that is actually
accrued for and paid to each Participant based on BKMU’s performance.
	 
	 	3.	 	Individual Incentive Award shall mean the amount that is actually
accrued for and paid to each Participant based on each Participant’s individual
performance.
	 
	 	4.	 	Earnings per Share-diluted (EPS) shall mean net income after taxes,
before dividends, for the year, divided by the weighted-average number of common
shares outstanding for the period. Non-vested MRP and stock option shares are
considered dilutive potential common shares and are included in the weighted-average
number of shares outstanding for diluted EPS.
	 
	 	5.	 	Target Incentive Award shall mean the amount that would be earned if
BKMU and the individual achieved predetermined performance goals.

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