Document:

Exhibit

	
		
	
	Ned Linnen
Chief Human Resources Officer

    
    
    

February 12, 2015

Mr. Joseph Ferraro
Avis Budget Group
6 Sylvan Way
Parsippany, NJ 07054

Dear Joe:

We are pleased to confirm your new role with Avis Budget Car Rental, LLC, ("ABCR" or the "Company"), a subsidiary of Avis Budget Group, as President, North America. To comply with the requirements of Section 409A of the Internal Revenue Code and the regulations thereunder ("Section 409A"), the Company is hereby documenting the terms of our agreement.

Your salary will continue to be paid on a bi-weekly basis at a rate of $19,230.76 per pay period, which equates to an annual salary of $500,000. You will be eligible to receive a target bonus equal to no less than 100% of your regular base salary during the performance period, subject to the Company achieving performance goals as described in the Management Incentive Plan for ABG Senior Executive Leadership and you remaining employed with the Company through the payment date. The bonus distribution is typically in the first quarter of the next year.

The Compensation Committee approved and you have been awarded a 2015 Long Term Incentive (LTIP) award in the amount of $2,000,000 grant date value, which is comprised of a $1,000,000 promotion award and an annual award of $1,000,000. The award is split between time-based restricted stock units (50%) which vest 1/3 per year on the anniversary of the grant and performance-based restricted stock units (50%) which will vest on the third anniversary of the grant contingent upon Avis Budget Group performance metrics.

Per ABCR's standard policy, this letter is not intended, nor should it be considered, to be an employment contract for a definite or indefinite period of time. As you know, employment with ABCR is at will, and either you or ABCR may terminate your employment at any time, with or without cause.

If, however, your employment with ABCR is terminated by ABCR other than: (i) "for cause" (as defined below); (ii) in connection with your disability which prevents you or is reasonably expected to prevent you from performing services for ABCR for a period of 12 months (your "disability"); or (iii) death, you will receive (1) a lump-sum severance payment within 15 days following the Release Date (as defined below) equal to 200% of the sum of your base salary plus your target incentive (bonus) and (2) perquisites to include continued access to company car usage, financial planning and health coverage (Company-subsidized COBRA) for a period of 24 months. For purposes of this agreement 'company subsidized COBRA' shall mean that the Company shall subsidize the total cost of COBRA coverage such that the contributions required of you for health plan participation during the 24 month period shall be substantially equal to the contributions required of active employed
 executives of ABG. All other programs and perquisites would be governed by their respective plan documents; provided, however, that the provision of such severance pay is subject to, and contingent upon, your executing within forty-five days following your termination of employment and failing to revoke a separation agreement with ABCR (the date on which the release is no longer revocable, the "Release Date"), in such form determined by ABCR, which requires you, in part, to release all actual 

	
		
	 
	Avis Budget Group, Inc. 6 Sylvan Way Parsippany, New Jersey

 

Mr. Joseph Ferraro
February 12, 2015
Page 2

and purported claims against ABCR and its affiliates and which also requires you to agree to: (i) protect and not disclose all confidential and proprietary information of ABCR; (ii) not compete, directly or indirectly, against ABCR for a period of no longer than two years after your employment separation or for a period of time and within a geographic scope determined by ABCR to be reasonable to protect ABCR's business interests; and (iii) not solicit any ABCR employees, consultants, agents or customers during and for two years after your employment separation.

In addition, if your employment with ABCR is terminated by ABCR other than "for cause," and other than as a result of your "disability", death or resignation, your then outstanding unvested stock-based awards in Avis Budget Group, Inc. that would have vested in accordance with their original vesting schedule by the two (2)-year anniversary of such termination of employment will become vested effective as of the date of such termination, subject to the satisfaction of the release execution requirement set forth in the preceding paragraph of this letter; provided that, to the extent required to achieve deductibility under Section 162(m) of the Internal Revenue Code of awards that vest based on the achievement of specified objective performance goals, with respect to any awards that vest based on the achievement of specified objective performance goals during the two (2)-year period following such termination, such awards shall not vest as of the date of such termination, but instead, shall remain outstanding following such termination and become vested or be forfeited at such time(s) as provided in accordance with the terms and conditions of the applicable award agreement based on actual achievement of the performance goals applicable for purposes of vesting of such awards during the two (2)-year period following such termination.

In addition, if you experience a termination of employment from ABCR due to your "disability" or death, your then outstanding unvested stock-based awards in Avis Budget Group, Inc. will become fully vested effective as of the date of such termination, subject to the satisfaction of the release execution requirement set forth in the fourth paragraph of this letter."

"Termination for Cause" shall mean: (i) your willful failure to substantially perform your duties as an employee of the Company or any subsidiary (other than any such failure resulting from your incapacity due to physical or mental illness); (ii) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct against the Company or any subsidiary; or (iii) conviction of a felony or any crime involving moral turpitude (which conviction, due to the passage of time or otherwise, is not subject to further appeal).

The payments and benefits described in this letter are intended to comply with Section 409A and, accordingly, to the maximum extent permitted, the terms of this letter shall be interpreted and administered to be in compliance with Section 409A of the Internal Revenue you are considered to have incurred a "separation from service" from ACBR within the meaning of Section 409A. Each amount to be paid or benefit to be provided in this letter shall be construed as a separate identified payment for purposes of Section 409A. Any payments described in this Agreement that are paid pursuant to a "separation pay plan" as described in Treas. Reg. 1.409A-1(b)(9)(iii) or that are due within the "short term deferral period" as defined in Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything contained herein, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this letter (or any other plan or agreement of the Company proving you with payments or benefits upon your separation from service) during the six-month period immediately following your separation from service shall instead be paid or provided on the first business day after the date that is six months following your separation date (or death, if earlier).

Mr. Joseph Ferraro
February 12, 2015
Page 3

The by-laws of the Company provide that officers will be indemnified for their authorized actions on behalf of our Company to the fullest extent permitted under applicable law.

This severance pay as set forth in this letter is in lieu of and supersedes any other severance benefits otherwise payable to you under any other agreement or severance plan of ABCR or its affiliates.

Your employment with the Company is also contingent upon the following terms:

		
	1.
	During your employment with the Company you will not engage in any activity that competes with or adversely affects the Company, nor will you begin to organize or develop any competing entity (or assist anyone else in doing).

		
	2.
	You will not disclose at any time (except for business purposes on behalf of the Company) any confidential or proprietary material of the Company. That material shall include, but is not limited to, the names and addresses of customers, customer contacts, contracts, bidding information, business strategies, pricing information, and the Company’s policies and procedures.

		
	3.
	You agree that all documents (paper or electronic) and other information related in any way to the Company shall be the property of the Company, and will be returned to the Company upon the end of your employment with the Company.

		
	4.
	You agree that for a period of two years following the end of your employment with the Company (whether such termination is voluntary or involuntary), you will not become employed with a competitor of the Company, solicit business from the Company’s customers, or solicit business from an entity that was being solicited by the Company during that last year that you were employed by the Company.

		
	5.
	You agree that for a period of two years following the end of your employment with the Company (whether such termination is voluntary or involuntary), you shall not solicit or contact any employee of the Company to leave the Company, nor shall you do anything else (either directly or indirectly) to cause any employee of the Company to leave the Company.

		
	6.
	You agree that should a court issue injunctive relief to enforce any term of this Agreement, or if a court (or jury) determine that you breached any provision of this Agreement, you will reimburse the Company for all attorney’s fees and costs incurred in enforcing the terms of the Agreement, and you will also be liable for any other damages or relief permitted by law.

		
	7.
	You agree that any disputes over the above terms shall be governed by New Jersey law, shall be resolved in a New Jersey Court or in a federal Court located in New Jersey, and that the terms of this agreement may be enforced by the Company or its successors or assigns.

Mr. Joseph Ferraro
February 12, 2015
Page 4

Regards,

/s/ Ned Linnen        
Ned Linnen
Executive Vice President, Chief Human Resources Officer

Understood and accepted:

/s/ Joseph Ferraro    
Joseph Ferraro

2/12/2015        
DateExhibit 10.1

 

 

 

 

 

 

Long-Term Incentive Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 

Adopted: February 2016

 

 

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 2016 this will be 35% 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 2016 this will be 65% 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).

 

 

§                 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 2016 Plan, the performance period will be January 1, 2016 to December 31, 2018. 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  4

 

 

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 three performance goals and ranges, all relative to the Index, for 2016.

 

	
 
    	
 
    	
 
    	
 
    	
 
    
	
Measures
    	
Weight
    	
Threshold
    	
Target
    	
Stretch/Maximum
    
	
Average Annual Earnings Per Share Growth
    	
33 1/3%
    	
Median
    	
62.5% Percentile
    	
75% Percentile
    
	
Average Annual Total Shareholder Return
    	
33 1/3%
    	
Median
    	
62.5% Percentile
    	
75% Percentile
    
	
Average Annual Return on Average Assets
    	
33 1/3%
    	
Median
    	
62.5% Percentile
    	
75% Percentile
    
	
Payout Range (% of Target)
    	
100%
    	
50%
    	
100%
    	
150%
    

 

The Index is the KBW Regional Bank Index (KRX) .

 

EPS Growth shall be measured (after adjustment for intervening share issuances) by determining each year’s EPS Growth and then averaging the three years.

 

TSR shall be measured based on the change in stock price and the reinvested dividends, if any, as at period end, based on the twenty trading day moving average..

 

ROAA shall be measured by determining each year’s ROAA and then averaging the three years.

 

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.

 

Eagle Bancorp Long Term Incentive Plan

Page  5

 

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

 

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, 2016 to December 31, 2018. 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 CIC.  Pro ration shall be computed based on full months, including any partial month of service.

 

Eagle Bancorp Long Term Incentive Plan

Page  6

 

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 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  7

 

Appendix A
 2016 LTI Target Opportunity

 

 

	
 
    	
Target LTI
    
	
 
    	
RS and PRSU
    
	
Tier
    	
(% of Salary)
    
	
CEO
    	
275%
    
	
Tier   1
    	
145%
    
	
Tier 2
    	
125%
    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eagle Bancorp Long Term Incentive Plan

Page  6

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