Document:

a50770544ex10_2.htm

Exhibit 10.2

 

 

S.Y. BANCORP, INC.  

 

ANNUAL CASH BONUS PLAN

(as amended December 16, 2013)

 

SECTION 1--INTRODUCTION

 

1.1           Purpose.  The purpose of the S.Y. Bancorp, Inc.  Annual Cash Bonus Plan (the "Plan") is to

 

(a)           motivate and reward eligible executives by making a portion of their cash compensation dependent on the achievement of certain corporate, business unit and individual performance goals;

 

(b)           further link an executive's interests with those of S.Y.  Bancorp, Inc.  (the "Company") and its Affiliates by creating a direct relationship between key Company performance measurements and individual bonus payouts;

 

(c)           enable the Company to attract and retain superior employees by providing a competitive bonus program that rewards outstanding performance.

 

1.2           Performance-Based Compensation.  Awards under the Plan are intended to qualify as performance-based compensation deductible by the Company under the qualified performance-based compensation exception to Section 162(m) of the Code, but this shall not limit the Committee's ability to make Awards that do not so qualify.

 

1.3           Effective Date.  The Plan is effective as of the date approved by the Compensation Committee of the Board, as reflected by execution hereof (the "Effective Date"), subject to approval by the Company's shareholders at the first annual meeting of shareholders to occur after the Effective Date and before the first payments hereunder, and shall remain in effect until it has been terminated pursuant to Section 8.6.

 

SECTION 2—DEFINITIONS

 

As used in this Plan, the following terms shall have the following meanings:

 

2.1           "Affiliate" means the Bank and any other "subsidiary corporation" of the Company, as defined in section 424(f) of the Code, respectively.  "Subsidiary corporation" includes any entity which becomes a Subsidiary corporation after the date of adoption of this Plan.

 

2.2           "Award" means an award granted pursuant to the Plan, the payment of which shall be contingent on the attainment of Performance Goals with respect to a Performance Period, as determined by the Committee pursuant to Section 6.1.

 

2.3           "Bank" means Stock Yards Bank & Trust Company, a Kentucky banking corporation with its principal office located at 1040 East Main Street, Louisville, Kentucky 40206.

 

  

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2.4           "Base Salary" means the Participant's annualized rate of base salary on the last day of the Performance Period before (i) deductions for taxes or benefits and (ii) deferrals of compensation pursuant to any Company or Affiliate-sponsored plans.

 

2.5           "Board" means the Board of Directors of the Company, as constituted from time to time.

 

2.6           A "Change of Control" shall be deemed to have taken place for purposes of the Plan if

 

(a)           any Person (as defined below) is or becomes the Beneficial Owner (as defined in this Section 2.7) of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities (unless (A) such Person is the Beneficial Owner of 20% or more of such securities as of the Effective Date or (B) the event causing the 20% threshold to be crossed is an acquisition of securities directly from the Company);

 

(b)           during any period of two consecutive years beginning after the Effective Date, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i) (iii) or (iv) of this Change in Control definition) whose election or nomination for election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority of the Board;

 

(c)           the shareholders of the Company approve a merger or consolidation of the Company with any other corporation (other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the entity surviving such merger or consolidation), in combination with voting securities of the Company or such surviving entity held by a trustee or other fiduciary pursuant to any employee benefit plan of the Company or such surviving entity or of any Subsidiary of the Company or such surviving entity, at least 80% of the combined voting power of the securities of the Company or such surviving entity outstanding immediately after such merger or consolidation); or

 

(d)           the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets.

 

For purposes of the definition of Change in Control, "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended, as supplemented by Section 13(d)(3) of such Act; provided, however, that Person shall not include (i) the Company, any subsidiary or any other Person controlled by the Company, (ii) any trustee or other fiduciary holding securities under any employee benefit plan of the Company or of any subsidiary, or (iii) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of securities of the Company.

 

  

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For purposes of the definition of Change in Control, a Person shall be deemed the "Beneficial Owner" of any securities which such Person, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that: (i) a Person shall not be deemed the Beneficial Owner of any security as a result of an agreement, arrangement or understanding to vote such security (x) arising solely from a revocable proxy or consent given in response to a public proxy or consent solicitation made pursuant to, and in accordance with the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder or (y) made in connection with, or to otherwise participate in, a proxy or consent solicitation made, or to be made, pursuant to, and in accordance with, the applicable provisions of the Securities Exchange Act of 1934, as amended, and the applicable rules and regulations thereunder; in either case described in clause (x) or clause (y) above, whether or not such agreement, arrangement or understanding is also then reportable by such Person on Schedule 13D under the Securities Exchange Act of 1934, as amended (or any comparable or successor report); and (ii) a Person engaged in business as an underwriter of securities shall not be deemed to be the Beneficial Owner of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition.

 

2.7           "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations.

 

2.8           "Committee" means the Compensation Committee of the Board, which committee shall consist of three or more members of the Board, each of whom is both a "non-employee director" within the meaning of Rule 16b-3 promulgated under the Exchange Act and an "outside director" within the meaning of such term as contained in applicable regulations interpreting section 162(m) of the Code.  If for any reason the appointed Committee does not meet the requirements of Rule 16b-3 or section 162(m) of the Code, such noncompliance with such requirements shall not affect the validity of Awards, grants, interpretations or other actions of the Committee.

2.9            "Company" means S.Y. Bancorp, Inc., and any successor thereto.

 

2.10           "Covered Employee" has the meaning set forth in Section 162(m)(3) of the Code.

 

2.11           "Determination Date" means the latest date on which Performance Goals can be designated hereunder, which shall be the earlier of: (a) the 90th day of the Performance Period or (b) the date as of which 25% of the Performance Period has elapsed, provided, however, that, as of such date, the outcome of any such Performance Goal is substantially uncertain.

 

2.12           "Disability" unless otherwise defined in an employment agreement between the Participant and the Company, shall mean total and permanent disability in accordance with the Company's long-term disability plan, as determined by the Committee.

 

2.13           "Maximum Award" means as to any Participant for any Plan Year shall be no more than $750,000.   The Maximum Award limit shall be pro-rated for any Award payable with respect to a Performance Period that is shorter than one year.

 

  

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2.14           "Negative Discretion" means the discretion of the Committee to reduce or eliminate the size of an Award in accordance with Section 6.1(c) of the Plan, provided that, the exercise of such discretion with respect to one Participant shall not have the effect of increasing the amount payable hereunder to other Participants.

 

2.15           "Participant" means as to any Performance Period, the executive officers of the Company or an Affiliate who are deemed likely to be Covered Employees and other key employees of the Company or an Affiliate/the employees of the Company or an Affiliate who are designated by the Committee to participate in the Plan for that Performance Period.

 

2.16           "Performance Criteria" means the objective performance criteria upon which the Performance Goals for a particular Performance Period are based, which would allow a third party with knowledge of the relevant performance results to calculate an Award's value, are based and which include one of or any combination of the following "performance criteria" for the Company as a whole or any business unit, division, department or any combination of these and may be applied on an absolute basis and/or relative to one or more peer group companies or indices, or any combination thereof, as the Committee shall determine: 

 

	
  

	
(i)

	

earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis, diluted or undiluted,  and before or after adjustments for extraordinary items and business combination acquisition and restructuring costs);

 

	
  

	
(ii)

	
return on equity;

 

	
  

	
(iii)

	
return on assets;

 

	
  

	
(iv)

	
net or gross revenues or revenue growth over prior year or as compared to budget;

 

	
  

	
(v)

	
expenses or expense levels;

 

	
  

	
(vi)

	
one or more operating ratios;

 

	
  

	
(vii)

	
stock price (including, but not limited to, growth measures and total shareholder return);

 

	
  

	
(viii)

	
stockholder return;

 

	
  

	
(ix)

	
the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions;

 

	
  

	
(x)

	
economic value added;

 

	
  

	
(xi)

	
net or gross income or income growth over prior year or as compared to budget, which, if determined for a department or business unit, may be determined solely with reference to direct costs of that department or business unit.

 

  

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In addition to the criteria above, the term "Performance Criteria" may include non-objective criteria or criteria that are not within the specific list above, if and to the extent the Committee deems it important to  properly motivate a compensate a Participant, even though the bonus paid under such criteria will not be exempt from Code Section 162(m). Bonuses for all executive officers of the Company, even if so designed, will nonetheless be governed by other provisions of this Plan, especially terms regarding Committee grant and certification before payment.

2.17           "Performance Goals" means the goals selected by the Committee, in its discretion to be applicable to a Participant for any Performance Period.  Performance Goals shall be based upon the attainment of one or more Performance Criteria.  Performance Goals may include a threshold level of performance below which no Award will be paid and levels of performance at which specified percentages of the Target Award will be paid and may also include a maximum level of performance above which no additional Award amount will be paid.

 

2.18           "Performance Period" means the period for which performance is calculated, which unless otherwise indicated by the Committee, shall be no shorter than one year and otherwise be within the time period prescribed by, and shall otherwise comply with the requirements of, Code Section 162(m), or any successor provision thereto, and the regulations thereunder.

 

2.19            "Plan" means the S.Y. Bancorp, Inc. Annual Cash Bonus Plan, as hereafter amended from time to time.

 

2.20           "Plan Year" means the Company's fiscal year, which commences on January 1st and ends on December 31st.

 

2.21           "Pro-rated Award" means an amount equal to the Award otherwise payable to the Participant for a Performance Period in which the Participant was actively employed by the Company or an Affiliate for only a portion of the Performance Period, multiplied by a fraction, the numerator of which is the number of days the Participant worked during the Performance Period and the denominator of which is the number of days in the Performance Period.

 

2.22           "Target Award" means the target award payable under the Plan to a Participant for a particular Performance Period, expressed as a percentage of the Participant's Base Salary.  In special circumstances, the target award may be expressed as a fixed amount of cash.

 

SECTION 3—ADMINISTRATION

 

3.1           Administration.  The Plan shall be administered by the Committee.  Subject to the provisions of the Plan and applicable law, the Committee shall have the power, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the terms and conditions of any Award; (iii) determine whether, to what extent, and under what circumstances Awards may be forfeited or suspended; (iv) interpret, administer, reconcile any inconsistency, correct any defect and/or supply any omission in the Plan or any instrument or agreement relating to, or Award granted under, the Plan; (v) establish, amend, suspend, or waive any rules for the administration, interpretation and application of the Plan; and (vi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

 

  

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3.2           Decisions Binding.  All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, and shall be given the maximum deference permitted by law.

 

3.3           Delegation By the Committee.  The Committee, in its sole discretion, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may not delegate its responsibility to (i) make Awards to executive officers; (ii) make Awards which are intended to constitute qualified performance-based compensation under Section 162(m) of the Code; or (iii) certify the satisfaction of the Performance Goals pursuant to Section 6.1 in accordance with Section 162(m) of the Code.

 

3.4           Agents; Limitation of Liability.  The Committee may appoint agents to assist in administering the Plan.  The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to it or him by any officer or employee of the Company, the Company's certified public accountants, consultants or any other agent assisting in the administration of the Plan.  Members of the Committee and any officer or employee of the Company acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.

 

SECTION 4—ELIGIBILITY AND PARTICIPATION

 

4.1           Eligibility.  Only executive level and other key employees of the Company and its participating Affiliates are eligible to participate in the Plan

 

4.2           Participation.  The Committee, in its discretion, shall select, no later than the Determination Date, the persons who shall be Participants for the Performance Period.  Only eligible individuals who are designated by the Committee to participate in the Plan with respect to a particular Performance Period may participate in the Plan for that Performance Period.  An individual who is designated as a Participant for a given Performance Period is not guaranteed or assured of being selected for participation in any subsequent Performance Period.

 

4.3           New Hires; Newly Eligible Participants.  A newly hired or newly eligible Participant will be eligible to receive a Pro-rated Award reflecting participation for a portion of the Performance Period.  The amount of any Award paid to such Participant shall not exceed that proportionate amount of the Maximum Award set forth in Section 2.14.

 

  

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SECTION 5—TERMS OF AWARDS

 

5.1           Determination of Target Awards.  Prior to, or reasonably promptly following the commencement of each Performance Period, but no later than the Determination Date, the Committee, in its sole discretion, shall establish the Target Award for each Participant, the payment of which shall be conditioned on the achievement of the Performance Goals for the Performance Period.

 

5.2           Determination of Performance Goals and Performance Formula.  Prior to, or reasonably promptly following the commencement of, each Performance Period, but no later than the Determination Date, the Committee, in its sole discretion, shall establish in writing the Performance Goals for the Performance Period and shall prescribe a formula for determining the percentage of the Target Award which may be payable based upon the level of attainment of the Performance Goals for the Performance Period.  The Performance Goals shall be based on one or more Performance Criteria, each of which may carry a different weight, and which may differ from Participant to Participant.

 

5.3           Adjustments.  The Committee is authorized, in its sole discretion, to provide at the time an Award is made that some or all of the following events shall result in adjustment or modification to the calculation of a Performance Goal for a Performance Period, provided that the amount to be adjusted is objectively determinable:

 

	
●  

	
significant litigation or claim judgments or settlements;

 

	
●  

	
the effect of changes in tax laws, accounting standards or principles, or other laws or regulatory rules affecting reporting results;

 

	
●  

	
any reorganization and restructuring programs;

 

	
●  

	
extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor pronouncement thereto);

 

	
●  

	
transaction costs related to acquisitions or divestitures;

 

	
●  

	
any other specific unusual or nonrecurring events or objectively determinable category thereof; and

 

No adjustment shall be made if the effect would be to cause an Award to fail to qualify as performance-based compensation under Section 162(m).

 

SECTION 6—PAYMENT OF AWARDS

 

6.1           Determination of Awards; Certification.

 

(a)           Following the completion of each Performance Period, the Committee shall determine the extent to which the Performance Goals have been achieved or exceeded.   If the minimum Performance Goals established by the Committee are not achieved, then no payment will be made.

 

  

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(b)           To the extent that the Performance Goals are achieved, the Committee shall certify in writing, in accordance with the requirements of Section 162(m) of the Code, the extent to which the Performance Goals applicable to each Participant have been achieved and shall then determine, in accordance with the prescribed formula, the amount of each Participant's Award.

 

(c)           In determining the amount of each Award, the Committee may reduce or eliminate the amount of an Award by applying Negative Discretion if, in its sole discretion, such reduction or elimination is appropriate.

 

(d)           In no event shall the amount of an Award for any Plan Year exceed the Maximum Award.

 

6.2           Form and Timing of Payment.  Except as otherwise provided herein, as soon as practicable following the Committee's certification pursuant to Section 6.1 for the applicable Performance Period, each Participant shall receive a cash lump sum payment of his or her Award, less required withholding.  In no event shall such payment be made later than 21⁄2 months following the end of the Performance Period.

 

6.3           Employment Requirement.  Except as otherwise provided in Section 7, no Award shall be paid to any Participant who is not actively employed by the Company or an Affiliate on the last day of the Performance Period.

 

6.4           Deferral of Awards.  A Participant may defer the payment of an Award that would otherwise be paid under the Plan, but only if and to the extent such deferral is consistent with the terms of the Company's or Affiliate's separate Executive Deferred Compensation Plan.

 

SECTION 7—TERMINATION OF EMPLOYMENT

 

7.1           Employment Requirement.  Except as otherwise provided in Section 7.2, if a Participant's employment terminates for any reason prior to the last day of the Performance Period, all of the Participant's rights to an Award for the Performance Period shall be forfeited.

 

7.2           Termination of Employment Due to Death or Disability.  If a Participant's employment is terminated by reason of his or her death or Disability during a Performance Period, the Participant or his or her beneficiary will be paid a Pro-rated Award reflecting participation for a portion of the Performance Period.  In the case of a Participant's Disability, the employment termination shall be deemed to have occurred on the date that the Committee determines that the Participant is Disabled.  Payment of such Pro-rated Award will be made at the same time and in the same manner as Awards are paid to other Participants.

 

7.3           Change in Control.  If a Change in Control occurs during a Performance Period, Awards under the Plan will be calculated based on the Company's performance as of the date of the Change in Control, prorated, if appropriate based on the type of goal, of a period of shorter than the entire Performance Period.  If the minimum Performance Goals are achieved and certified by the Committee pursuant to Section 6.1, each Participant will receive an Award calculated based on the prescribed formula in accordance with Section 6.1(b).  Awards paid in connection with a Change in Control will be paid no later than 21⁄2 months following the date of the Change in Control.

 

  

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SECTION 8—GENERAL PROVISIONS

 

8.1           Compliance With Legal Requirements.  The Plan and the granting of Awards shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required.

 

8.2           Non-transferability.  A person's rights and interests under the Plan, including any Award previously made to such person or any amounts payable under the Plan may not be assigned, pledged, or transferred, except in the event of the Participant's death, to a designated beneficiary in accordance with the Plan, or in the absence of such designation, by will or the laws of descent or distribution.

 

8.3           No Right to Employment.  Nothing in the Plan or in any notice of Award shall confer upon any person the right to continue in the employment of the Company or any Affiliate or affect the right of the Company or any Affiliate to terminate the employment of any Participant.

 

8.4           No Right to Award.  Unless otherwise expressly set forth in an employment agreement signed by the Company and a Participant, a Participant shall not have any right to any Award under the Plan until such Award has been paid to such Participant and participation in the Plan in one Performance Period Year does not connote any right to become a Participant in the Plan in any future Performance Period.

 

8.5           Withholding.  The Company shall have the right to withhold from any Award, any federal, state or local income and/or payroll taxes required by law to be withheld and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to an Award.

 

8.6           Amendment or Termination of the Plan.  The Board or the Committee may, at any time, amend, suspend or terminate the Plan in whole or in part; provided, that, no amendment that requires shareholder approval in order for the Plan to continue to comply with Section 162(m) shall be effective unless approved by the requisite vote of the shareholders of the Company.  Notwithstanding the foregoing, no amendment shall adversely affect the rights of any Participant to Awards allocated prior to such amendment, suspension or termination.

 

8.7           Unfunded Status.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Participant, beneficiary or legal representative or any other person.  To the extent that a person acquires a right to receive payments under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.  The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA).

 

8.8           Governing Law.  The Plan shall be construed, administered and enforced in accordance with the laws of the Commonwealth of Kentucky, without regard to conflicts of law.

 

  

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8.9           Beneficiaries.  To the extent that the Committee permits beneficiary designations, any payment of Awards due under the Plan to a deceased Participant shall be paid to the beneficiary duly designated by the Participant in accordance with the Company's practices.  If no such beneficiary has been designated or survives the Participant, payment shall be made by will or the laws of descent or distribution.

 

8.10         Section 162(m) of the Code; Bifurcation of the Plan.  It is the intent of the Company that the Plan and the Awards made under the Plan to Participants who are or may become persons whose compensation is subject to Section 162(m) of the Code satisfy any applicable requirements to be treated as qualified performance-based compensation under Section 162(m) of the Code.  The provisions of the Plan may at any time be bifurcated by the Board or the Committee so that certain provisions of the Plan or any Award intended to satisfy the applicable requirements of Section 162(m) of the Code are only applicable to persons whose compensation is subject to Section 162(m) of the Code.

 

8.11         Section 409A of the Code.  It is intended that payments under the Plan qualify as short-term deferrals exempt from the requirements of Section 409A of the Code.  In the event that any Award does not qualify for treatment as an exempt short-term deferral, it is intended that such amount will be paid in a manner that satisfies the requirements of Section 409A of the Code.  The Plan shall be interpreted and construed accordingly.

 

8.12         Expenses.  All costs and expenses in connection with the administration of the Plan shall be paid by the Company.

 

8.13         Section Headings.  The headings of the Plan have been inserted for convenience of reference only and in the event of any conflict, the text of the Plan, rather than such headings, shall control.

 

8.14         Severability.  In the event that any provision of the Plan shall be considered illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, but shall be fully severable, and the Plan shall be construed and enforced as if such illegal or invalid provision had never been contained therein.

 

8.15         Gender and Number.  Except where otherwise indicated by the context, wherever used, the masculine pronoun includes the feminine pronoun; the plural shall include the singular, and the singular shall include the plural.

 

8.16         Non-exclusive.  Nothing in the Plan shall limit the authority of the Company, the Board or the Committee to adopt such other compensation arrangements, as it may deem desirable for any Participant.

 

8.17         Notice.  Any notice to be given to the Company or the Committee pursuant to the provisions of the Plan shall be in writing and directed to the Chairman of the Board of the Company at 1040 East Main Street, Louisville, Kentucky, 40206.

 

8.18         Successors.  All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding upon any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the assets of the Company.

 

  

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8.19         Term of Plan.  This Plan shall remain in full force and effect until five years after its Effective Date (the "Initial Term"), if not sooner terminated in accordance with Section 8.6, unless the shareholders of the Company re-approve it within the 12-month period following its expiration, in which case it shall remain in effect for an additional 5 years after the expiration of that Initial Term.

 

8.20.         Clawback. By accepting an Award made under this Plan, Agreement, each Participant agrees that the Company or an Affiliate may recover some or all of the amounts paid with respect to an Award, or recoup some or all of the value thereof via offset from other amounts owed to the Participant by the Company or an Affiliate, at any time in the three year calendar years following payment hereunder, if and to the extent that the Committee concludes that (i) federal or state law or the listing requirements of the exchange on which the Company's stock is listed for trading so require, (ii) the performance criteria required for the Award were not met, or not met to the extent necessary to support the amount of the Award that was paid, or (iii) as required by Section 304 of the Sarbanes-Oxley Act of 2002, after a restatement of the Company's financial results as reported to the Securities and Exchange Commission. Participants are deemed to have agreed to promptly comply with any Company demand for recovery or recoupment by accepting any payment or Awards hereunder.

 

 IN WITNESS WHEREOF, the Company has adopted this Plan as of the date set forth below.

 

 

	 	

S.Y. BANCORP, INC.

	 	 	 
	 	By: 	 
	 	 	 
	 	Title: 	 
	 	 	 
	 	Date: 	 

 

 

11a50770544ex10_3.htm

Exhibit 10.3

 

 

S.Y. BANCORP, INC.

RESTRICTED STOCK UNIT

GRANT AGREEMENT

This Restricted Stock Unit (" RSU") Grant Agreement (this "Agreement" or "Award") dated as of _____________________, 20___ (the "Grant Date"), is between S.Y. Bancorp, Inc. (the "Company") and _______________________________ (the "Grantee").

RECITALS

	
A.

	
The Company adopted the S.Y. Bancorp, Inc. 2005 Stock Incentive Plan (the "Plan").  The Plan is administered by the Compensation Committee of the Board of Directors (the "Committee").

	
B.

	
The Committee has designated the Grantee as a Participant in the Plan, and wishes to set forth in this Agreement the Grantee's a right to receive up to that number of RSUs set forth herein.  Each RSU represents the right to receive one share of the Company's Common Stock, subject to the terms and conditions set forth in this Agreement and the Plan.

AGREEMENTS

The Grantee and the Company agree as follows:

1.           Grant of Restricted Stock Units.  The Company grants to Grantee _____________ RSUs (the "Maximum Number") on the terms and conditions set forth below and in the Plan.

2.           Transfer Restriction. Until the delivery of shares of Common Stock with respect to the RSUs in accordance with the terms of this Award, the RSUs may not be sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws of descent and distribution.  Any attempted sale, transfer, pledge, exchange, hypothecation or other disposition of the RSUs not specifically permitted by the Plan or this Award shall be null and void and without effect.

3.           Performance Restrictions; Vesting and Payment.  Except as provided in Sections 4 and  5 below regarding Termination of Employment or a Change of Control, if and to the extent that the performance criteria set forth on Exhibit  A attached hereto are met as of the end of the Performance Period, as determined by the Committee, the resulting Applicable Percentage of the Maximum Number of RSUs shall vest and become nonforfeitable.  Any RSUs that do not vest in accordance with the foregoing provisions of this Section 3 shall terminate as of the end of the Performance Period.  The Applicable Percentage shall be determined by the Committee in March following the end of the Performance Period and applied to the Maximum Number then rounded down to a whole number of shares, and the resulting number of shares of Common Stock will be issued in satisfaction of the Award before the end of that month.  Any such determination by the Committee shall be final and binding.

4.           Termination of Employment Prior to the End of the Performance Period.  The following provisions shall apply in the event of Grantee's Termination of Employment prior to the end of the Performance Period:

4.1           Except as expressly provided below in Sections 4.2 or Section 6, in the event of Grantee's Termination of Employment for any reason prior to the end of the Performance Period, the RSUs held by Grantee shall be automatically forfeited by the Grantee as of the date of Grantee's Termination of Employment.  Neither the Grantee nor any of the Grantee's successors, heirs, assigns or personal representatives shall have any rights or interests in any RSUs that are so forfeited.

4.2           Notwithstanding Section 4.1, if a Grantee experiences a Termination of Employment is the result of  (i) the Grantee's death, Disability (as defined in the Company's long term disability Plan of general application), or (ii) on or after age 60 (a "Qualifying Termination"), a pro rata portion of Common Stock with respect to the RSUs shall be issued at the time set forth in Section 3 above, as set forth below:

  

  

  

 

4.2.1           In the event of a Qualifying Termination prior to completion of the Performance Period, the Applicable Percentage of RSUs shall be determined through the end of the Performance Period in the same manner as it would for a grantee who is still employed on that date, but that percentage shall be subject to further adjustment equal to (i) the number of RSUs subject to the Award that would have vested in accordance with Section 3 above (assuming no Termination of Employment had occurred), multiplied by (ii) a service fraction, the numerator of which is the number of full months the Grantee was employed or rendering services following the Grant Date through the date of Grantee's Termination of Employment, and the denominator of which is the number of months in the Performance Period. Any RSUs that do not vest in accordance with the foregoing provisions of this Section 4.2.1 shall terminate and be forfeited as of the end of the Performance Period.

4.2.2           Notwithstanding Section 4.2.1, if a 409A Change (as defined below) occurs after a Qualifying Termination and prior to completion of the Performance Period, upon the date of the 409A Change, the Grantee shall vest in a prorated number of RSUs determined as described in Section 5 below, but multiplied by a service fraction, the numerator of which is the number of full months the Grantee was employed or rendering services following the Grant Date through the date of Grantee's Termination of Employment, and the denominator of which is the number of months in the Performance Period that expired between the Grant Date and the 409A Change.  Such number of RSUs shall be paid in cash or by delivery of shares of stock as provided in Section 5 below.  Any RSUs that do not vest under this provision shall terminate and be forfeited as of the date of the Change of Control.

5.            Change of Control.  In the event a Change of Control which also constitutes a change in ownership or effective control or a change in ownership of a substantial portion of the assets of the Company within the meaning of Section 409A of the Code (a "409A Change") occurs prior to both completion of the Performance Period and a Termination of Employment (other than a Qualifying Termination, which shall be governed by Section 4.2.2 above), a number of RSUs shall become fully vested on the date of such 409A Change as if all performance were at the Target performance level set out on Exhibit A for the Performance Period. Absent a resolution of the Board consistent with Article 11 of the Plan to have the securities resulting from the Change in Control substituted for the number of shares of Common Stock that would otherwise have been issued based on such vesting, each vested RSU shall be converted to cash based on the Fair Market Value received by shareholders of record for Common Stock in the Change of Control, and within 5 days after the 409A Change, such cash amount shall be paid to the Grantee. Any RSUs that do not vest under this provision shall terminate and be forfeited as of the date of the Change of Control.

 

 

6.           Tax Withholding.  The Company (or Bank, as the employer) shall withhold from wages otherwise due, or retain from any payment to Grantee in respect of the RSUs, or take such other action which Company deems necessary to satisfy any income or other tax withholding requirements as a result of the vesting of RSUs and issuance of Common Stock related thereto.  Unless an affirmative election is made by the Participant before the end of the Performance Period (or Change in Control, if earlier) to remit already-owned shares of Common Stock or a cash payment or to have amounts debited from other wages due, or some combination thereof, Grantee shall be deemed to have elected to satisfy any federal and state tax withholding requirements through a reduction in the number of shares of Common Stock issuable upon vesting, equal to their Fair Market Value based on the amount of withholding taxes reasonably estimated by the Company to be due upon vesting.

7.           Delay in Payment to Specified Employees.  Notwithstanding anything herein to the contrary, the date of delivery of Common Shares (or cash in lieu thereof if required hereby) to the Grantee shall be delayed if payment would otherwise be required hereunder after Termination of Employment (other than on account of Death) and before 6 months have elapsed from that termination date, if the Grantee is a Specified Employee and the circumstances of payment require delay under 409A of the Code. "Specified Employee" shall have the meaning given in Treas. Reg. § 1.409A-1(i) (or any successor thereto) using the prior calendar year as the determination period.

 

  

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8.           Definitions.  Unless provided to the contrary in this Agreement, the definitions contained in the Plan and any amendments thereto shall apply to this Agreement.

9.           Restrictions Imposed by Law.  Notwithstanding any other provision of this Agreement, Grantee agrees that the Company will not be obligated to deliver any shares of Common Stock if counsel to the Company determines that such exercise, delivery or payment would violate any law or regulation of any governmental authority or any agreement between the Company and any national securities exchange upon which the Common Stock is listed.

10.           No Shareholder Status; No Dividends.  Grantee shall have no rights as a shareholder with respect to any RSUs or shares of Common Stock under this Agreement until such shares have been duly issued and delivered to Grantee, and no adjustment shall be made for dividends of any kind or description whatsoever or for distributions of other rights of any kind or description whatsoever respecting the shares prior to such issuance.  Grantee shall have no Cash Dividend Rights with respect to the RSUs.

11.           Modification, Amendment and Cancellation.  The Committee or Board of Directors of the Company shall have the right unilaterally to modify, amend or cancel this Award in accordance with the terms of the Plan.  This Award shall be subject to adjustment for changes in the Company's capitalization as provided in the Plan.

12.           Provisions Consistent with Plan.  This Agreement is intended to be construed to be consistent with, and is subject to, all applicable provisions of the Plan, including Section 9.5 thereof, and the Plan is incorporated herein by reference.  In the event of a conflict between the provisions of this Agreement and the Plan, the provisions of the Plan shall prevail.

13.           Clawback. By accepting the grant made under this Agreement, the Grantee agrees that the Company or its affiliate bank may recover some or all of the Common Stock transferred to Grantee under this Agreement, or recoup some or all of the value thereof via offset from other amounts owed to the Grantee by the Company or its affiliate bank, at any time in the three calendar years following such Common Stock's delivery to Grantee, if and to the extent that the Company's compensation committee concludes that (i) federal or state law or the listing requirements of the exchange on which the Company's stock is listed for trading so require, (ii) the performance criteria required herein were not met, or not met to the extent necessary to support delivery of the same number of shares, or (iii) as required by Section 304 of the Sarbanes-Oxley Act of 2002, after a restatement of the Company's financial results as reported to the Securities and Exchange Commission. Grantee agrees to promptly comply with any Company demand for recovery or recoupment.

 

	 	

S.Y. BANCORP, INC.

	 
	 	 	 	 
	 	By: 	 	 
	 	 	 	 
	 	Title: 	 	 
	 	 	 	 
	 	Date: 	 	 

 

	 	

GRANTEE:

	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 
[Name of Grantee]

(acknowledging receipt and conditions set out above)

	 	 
	 	 	 	 	 
	 	Date: 	 	 	 

  

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EXHIBIT A

PERFORMANCE-BASED VESTING

Subject to Sections 4 and 5 of this Grant Agreement, the RSUs shall vest and become nonforfeitable in the Applicable Percentage of the Maximum Number of RSUs. The Applicable Percentage shall range from 0-100% and shall be determined based on the Company's actual EPS Aggregate Annual Growth for the Performance Period, plus the Company's Percentile ROAA Ranking for the Performance Period, with the portion of the Applicable Percentage related to each performance measure as set forth in the charts below:

 

	  	
Percentile ROAA Ranking

	 	
Applicable Percentage

	  	
Maximum: 90th or higher

	 	
50%

	  	
Target: 75th - 89th

	 	
25%

	  	
Minimum: 51st - 74th

	 	
10%

	  	
50th or below

	 	
  0%

	  	  	 	  
	Plus
	  
	  	
EPS Aggregate

	 	  
	  	
Annual Growth

	Applicable Percentage
	  	
Maximum: 15% or higher

	 	
50%

	  	
Target: 10% - 14.99%

	 	
25%

	  	
Minimum: 5% - 9.99%

	 	
10%

	  	
Below 5%

	 	
 0%

For example, if at the end of the Performance Period the Committee determined that the Company ranked above the 90th percentile to peers in ROAA, and had EPS Aggregate Annual Growth of over 15%, the Applicable Percentage would be 100% and the Maximum Number of RSUs would be converted to and paid in shares of Common Stock.  The performance of the Company during the Performance Period shall be measured against the base EPS for the fiscal year immediately prior to the start of the Performance Period.

Any RSUs that do not vest based on the performance requirements set forth in this Exhibit A (and which have not previously terminated pursuant to the terms of the Grant Agreement) will automatically terminate as of the last day of the Performance Period.

For purposes of the Award, the following definitions shall apply:

	
●  

	
"EPS" means the diluted earnings per share of the Company as determined for financial reporting purposes consistent with Financial Accounting Standard 128 (now ASC 260), after any extraordinary items, if applicable, and excluding any acquisition costs and restructuring adjustments made to EPS as a result of a business combination that occurs during the Performance Period in accordance with Financial Accounting Standard 141 (revised; now ASC 805).

	
●  

	
"Beginning EPS" means the EPS for the fiscal year immediately preceding the Grant Date.

	
●  

	
"EPS Aggregate Annual Growth" means the total of the Company's EPS for each of the years in the Performance Period, as compared to what such total would be if the Company's Beginning EPS increased at a compound rate within the Minimum, Target or Maximum ranges set out above each year in the Performance Period.

For example, if 2010's Diluted EPS were $1.67, then the Target level Applicable Percentage would apply if the aggregate of 2011, 2012 and 2013 Diluted EPS were at least  $6.08 ($1.84 + $2.02 + $2.22-- exactly a 10% increase each year over the prior year, with each year rounded to nearest cent) and not at least $6.67 ($1.92 + $2.21 + $2.54-- exactly a 15% increase each year over the prior year, with each year rounded to nearest cent), and then the Grantee would have vested in 25% of the Maximum Number of RSUs granted.  Because of the aggregation of all years in the measurement, good EPS growth in one year in the Performance Period might be offset by lower EPS growth in another year, or vice versa.  Based on the example above, if actual EPS for 2011, 2012, and 2013 were $1.92 (15% over prior year), $2.30 (20% over prior year), and $2.30 (0% over prior year), the sum of which is $6.52, the Grantee would have an Applicable Percentage based on only Target level of performance (subject to additional RSUs vesting as a result of the Company's Percentile Ranking).

 

  

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●  

	
"Percentile Ranking" means the percentile ranking of the simple average of the Company's Return on Average Assets (ROAA) for the years in the Performance Period, as compared to the simple average ROAA of all public banks with between $1 billion and $2.5 billion in total assets, as measured and published by SNL Financial.

	
●  

	
"Performance Period" means the period commencing on the January 1 immediately prior to the Grant Date and ending three years thereafter.

	
●  

	
"ROAA" or Return on Average Assets" means the Company's (or peer companies') net income divided by average assets for a calendar year, with average assets determined based on assets as of the same reporting periods for the Company as is used in determining average assets in SNL Financial's rankings each year.

The Committee shall make all determinations regarding the achievement of Percentile ROAA Ranking and EPS Aggregate Annual Growth based on Company financial statements as filed with the Securities and Exchange Commission, and the peer group rankings based on publicly available information, and the determination of the Committee shall be final and binding on all parties.

*           *           *           *           *

 

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