Document:

Exhibit 10.7

Exhibit 10.7

Federal Home Loan Bank

of

Des Moines

Annual Incentive Plan

Document

 

 

 

CONTENTS

	 	 	 	 	 
	I. Purpose
	 	 	 	 
	 
	 	 	 	 
	II. Responsibility for Program Administration
	 	 	 	 
	 
	 	 	 	 
	III. Eligibility
	 	 	 	 
	 
	 	 	 	 
	IV. Goals
	 	 	 	 
	 
	 	 	 	 
	V. Payout Opportunity
	 	 	 	 
	 
	 	 	 	 
	VI. Payout Determination
	 	 	 	 
	 
	 	 	 	 
	VII. Miscellaneous Provisions
	 	 	 	 

 

 

 

I. PURPOSE

The purpose of this Annual Incentive Plan (“Plan”) is to focus the efforts of all employees of the
Federal Home Loan Bank of Des Moines (“Bank”) on the following:

	 	•	 	Fulfilling the Bank’s vision within the framework of the Bank’s shared values

	 	•	 	Recognizing Bank employees for their individual and/or team contributions to the Bank’s
achievement of the Strategic Imperative Action Steps listed in the Strategic Business Plan
for the calendar year for which a payout under the Plan is made

	 	•	 	Providing incentive awards that when combined with base salaries provide competitive
total cash compensation to Bank employees

The Program is effective for calendar years beginning after December 31, 2006.

II. RESPONSIBILITY FOR PLAN ADMINISTRATION

The Bank’s Board of Directors is ultimately responsible for the Plan. The Human Resources and
Compensation Committee (“Committee”) of the Board has the full power and authority of the Board to
construe, interpret and administer the Plan. Any decision arising out of or in connection with the
construction, interpretation or administration of the Plan lies within the Committee’s absolute
discretion and is binding on all parties.

The Committee shall:

	•	 	Approve Bank-wide financial and business maintenance/growth Plan goals.

	•	 	Approve the range of potential payout opportunities for Program participants.

	•	 	After the end of a calendar year, approve any payouts.

	•	 	Render any decisions necessary with regard to the interpretation of the Plan.

Day-to-day administration of the Plan is delegated to those in the Bank responsible for the Human
Resources function.

III. ELIGIBILITY

All regular full-time and part-time employees, except full-time and part-time employees in the
Internal Audit Department, temporary or contract employees or temporary agency employees are
eligible to participate in this Plan.

 

 

 

A participant must achieve a “meets expectations” or higher evaluation of overall performance for
the calendar year with respect to which a payout is being made to be eligible for any payout and
the participant must not be subject to any disciplinary action
or probationary status at the time of payout. Furthermore, if a participant fails to comply with
regulatory requirements or standards, internal control standards, the standards of his or her
profession, any internal Bank standard, or fails to perform responsibilities assigned under the
Bank’s Strategic Business Plan, the Committee may determine the participant is not eligible to
receive part or all of any payout depending on the severity of the failure, as determined by the
Committee.

IV. PLAN GOALS

Incentive awards under the Plan will be based on the attainment of annual financial (Part I) and
non-financial individual and/or team (Part II) objectives. Part I objectives will consist of
Bank-wide financial and business maintenance/growth, customer satisfaction and risk management
goals, and Part II objectives will consist of individual and/or team non-financial goals aimed at
achieving the Bank’s Strategic Business Plan. The total incentive target is a weighted average of
Parts I and II, and each part is calculated independently. An employee’s pay level determines the
target amount (as a percentage of an employee’s base pay) and how the total target is split between
Parts I and II.

Each calendar year the Committee shall establish one or more Plan goals for Part I, consistent with
the Strategic Business Plan for the calendar year. To the extent the Committee establishes more
than one goal, each goal will be weighted. Part I shall have a threshold, target and maximum level
of performance.

One or more Part II goals will be developed for each participant based upon the Strategic
Imperative Action Steps at the individual and/or team level. Managers shall establish such goals
and measurable target levels of performance, review goals with an employee on a regular basis, and
evaluate an employee’s performance at the end of the calendar year for purposes of determining the
award under Part II. Part II shall have a zero to maximum level of payout opportunity based on
performance in achieving Part II goals.

Parts I and II goals are established for a Plan Year. Recognizing that circumstances and
priorities may change, management may submit to the Committee revisions to Part I goals. The
Committee will evaluate and make a recommendation to the Board regarding whether the Part I goals
will be amended. Management may authorize changes to Part II goals throughout a Plan Year as
priorities and circumstances dictate.

V. PAYOUT OPPORTUNITY

Certain positions have a greater and more direct impact than others on the achievement of the
Bank’s performance. Varying the incentive opportunities for different participants recognizes
these differences.

 

 

 

The Plan is designed to emphasize overall Bank financial performance for higher-level positions in
the Bank, and to emphasize individual and/or team performance for lower-level positions.

VI. PAYOUT DETERMINATION

	1.	 	As soon as feasible after the conclusion of each calendar year, the Committee, after
considering the Bank’s performance against its Part I goals, shall approve the payout under
Part I, if any, to be paid for the preceding calendar year. No benefit is earned and payable
until the Committee approves the payout and no employee has any right to any Incentive payment
until that time.

	2.	 	As soon as feasible after conclusion of each calendar year, the responsible manager will
determine the achievement and performance levels of Part II goals for participants. Executive
Management of the Bank will review, approve and submit to Human Resources the Part II payouts
for their areas of responsibility. Executive Management and Human Resources will together
calibrate the Part II payouts across the Bank. Human Resources, after considering each
participant’s performance against that individual’s Part II goals, shall recommend to the
Committee for approval the payout levels under Part II. Each manager responsible for
developing Part II goals for participants is also responsible for submitting the employee’s
Part II goal results to Human Resources.

	 	 	If a member of the Leadership Team, or any of that Leadership Team member’s managers or
supervisors, fails to meet the deadline for completing employee performance reviews and
submitting them to the HR department, then that individual will have his/her Annual Incentive
Plan payout(s) withheld until such time that all performance reviews are completed and
submitted for the Leadership Team member’s department.

	3.	 	Payout amounts approved under Parts I and II are determined based on the participant’s base
pay for the calendar year with respect to which the payout is being made. A participant who
has a hire date prior to the beginning of the calendar year is eligible to receive a full
payout. A participant who has a hire date after the beginning of the calendar year with
respect to which the payment is being made is eligible to receive a prorated payout based on
the number of full months of service completed in the calendar year. A participant hired on
or after October 1 of the calendar year for which payment is being made is not eligible to
receive a payout for the calendar year in which they were hired.

	4.	 	Unless otherwise directed by the Committee, payments under the Plan shall be made as soon as
possible after payout approval has been received. All payments under the Plan shall in any
event be made by the end of the calendar year in which payout approval has been received.
Appropriate provisions shall be made for any taxes that the Bank determines are required to be
withheld from any payment under applicable laws or other regulations of any governmental
authority, whether federal, state or local.

 

 

 

	5.	 	A participant who terminates employment with the Bank for any reason other than death,
disability or attaining normal retirement age (or an agreed upon retirement
date) during a calendar year or after the calendar year but before approval of the payout for
the calendar year will not be eligible for a payout. If a participant ceases employment due to
death, disability or attaining normal retirement age (or an agreed upon retirement date) during
a calendar year or after the calendar year but before payout approval for the calendar year,
the Committee has the sole discretion to determine whether a payout is made to the participant.
For purposes of this paragraph, the terms “disability” and “normal retirement age” shall have
the same meaning as under the Bank’s pension plan.

	6.	 	A participant who is transferred, promoted, or demoted during a calendar year may receive a
payout with respect to that calendar year that is be prorated based on the actual months
worked in each position during the calendar year.

	7.	 	Each payment shall be from the general assets of the Bank.

VII. MISCELLANEOUS PROVISIONS

	1.	 	The Plan, in whole or in part, may at any time or from time to time be amended, suspended or
reinstated and may at any time be terminated.

	2.	 	No amendment, suspension or termination of the Plan shall, without the consent of the
participants, affect the rights of the participants to any payout previously approved by the
Committee.

	3.	 	Neither the adoption of the Plan nor its operation in any way affects the right and power of
the Bank to dismiss, or otherwise terminate the employment of any participant at any time for
any reason, with or without cause.

	4.	 	No participant has the right to alienate, assign, encumber, or pledge his or her interest in
any payout under the Plan, voluntarily or involuntarily, and any attempt to do so is void.

	5.	 	This document is a complete statement of the Plan and supersedes all prior plans,
representations and proposals written or oral relating to its subject matter. The Bank is not
bound by or liable to any participant for any representation, promise or inducement made by
any person which is not expressed in this document.

	6.	 	This Plan shall not be considered a contract of employment and nothing in the Plan shall be
construed as providing participants any assurance of continued employment for any definite
period of time, nor any assurance of current or future compensation. This Plan shall not, in
any manner, limit the Bank’s right to terminate compensation and/or employment at its will,
with or without cause.

 

 

 

	7.	 	Participation in the Plan and the right to receive awards under the Plan shall not give a
participant any proprietary interest in the Bank or any of its assets. Nothing contained in
the Plan shall be construed as a guarantee that the assets of the Bank
shall be sufficient to pay any benefits to any person. A participant shall for all purposes be
a general creditor of the Bank.

	8.	 	In the event that one or more of the provisions of this Plan shall become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.

	9.	 	Waiver by the Bank or any participant of any breach or default by the other of any of the
terms of this Plan shall not operate as a waiver of any other breach or default, whether
similar to or different from the breach or default waived. No waiver of any provision of this
Plan shall be implied from any course of dealing between the Bank or any participant or from
any failure by either to assert its or his rights hereunder on any occasion or series of
occasions.

	10.	 	The Plan shall be construed in accordance with and governed by the State of Iowa except to
the extent superseded by federal law.Exhibit 10.1

Exhibit 10.1

Robert K. Leonard

Independent Lead Director

Green Bankshares, GreenBank

Greeneville, TN 37743

[                                           ]

March 12, 2010

Mr. Stephen M. Rownd

[
                                   
          ]

[
                                   
          ]

Dear Mr. Steve:

I wanted to formalize our intentions with respect to your employment with Green Bankshares (the “Company”) and
GreenBank (the “Bank”). You are offered the position of Chief Executive Officer of the Company and the Bank. Your
starting date in this new position will be a date that is mutually agreeable to you and the Company but in no event
later than March 31, 2010. In your new position you will be responsible for executing the duties of the Chief Executive
Officer for the Company and the Bank.

Your initial salary will be $33,333 per month ($400,000 annualized), payable in accordance with the Company’s normal
payroll schedule and practices.

You will receive a Restricted Stock Grant equal to $200,000 of the Company’s common stock on the date of grant. The
vesting of such stock shall be subject to the restrictions and limitations of the Emergency Economic Stabilization Act
of 2008, as amended by the American Recovery and Reinvestment Act of 2009 and as implemented by the interim final rule
issued by the United States Treasury Department on June 15, 2009 (collectively, the “TARP Regulations”), which
restrictions and limitations include restrictions on vesting and transferability and will be set forth in the award
agreement related to such shares of Restricted Stock.

Additionally the Company will provide you a relocation package.

As an employee of the Company, you are eligible to participate, subject to any limitations and restrictions set out in
the TARP Regulations, in the Company’s health insurance, 401k retirement plan, and other broad-based benefit programs
according to their respective terms and conditions. The definitive terms of these plans, as such are from time to time
modified, will be made available to you.

As we have discussed, you have represented to us that you are not bound by any agreement (written or oral) with your
current employer, any previous employer or any other company, which would prevent or limit you from going to work for
the Company in the capacity as Chief Executive Officer. We have further discussed your duties and the requirements for
carrying out those duties. You acknowledge and agree that these duties and responsibilities will not require you to use
or rely on any information that is the property of your current or former employers, and you have assured me that you
will not rely on any materials or other property from your present or former employers to carry out these duties.

While it is our expectation that your employment relationship will continue, at all times you will remain an employee
at will and subject to the same rights, privileges and limitations of any other employee in the State of Tennessee.

This employment offer is contingent upon the Company’s review and completion, satisfactory to the Company in its sole
discretion, of credit, criminal, background checks, and other customary pre-employment testing for an employee
seeking a position as chief executive officer of a publicly traded financial institution.

This offer is governed by the internal laws of the State of Tennessee without regard to conflicts of law
provisions.

 

5

 

Exhibit 10.1

If the foregoing is agreeable, please execute and return a copy of this letter, which will serve as our
understanding of the terms of your employment with the Company.

Sincerely yours,

/s/ Robert K. Leonard

Robert K. Leonard

Lead Independent Director

Agreed to this 15th day of March, 2010

/s/ Stephen M. Rownd

Stephen M. Rownd

 

6

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