Document:

Exhibit

Exhibit 10.3
Ally Financial Inc.

ALLY FINANCIAL INC.
ANNUAL INCENTIVE PLAN
(amended and restated as effective January 1, 2019)

1.    The purpose of the Ally Financial Inc. Annual Incentive Plan (the “Plan” or “AIP”) is to reward and retain select Employees (defined in Section 3(j) below) whose performance helps Ally Financial Inc. (the “Company”) and its Affiliates (defined in Section 3(a) below) achieve annual corporate, business unit, and functional performance goals.  The Plan works in conjunction with the Company’s other incentive compensation plans (see Section 2(e) below) to deliver total direct compensation consistent with the Company’s pay philosophy.

2.    The Plan has been adopted, may be amended, will be administered, and may be terminated by the Committee (defined in Section 3(g) below) or such other committee(s) or individual(s) as identified in the Plan or as the Committee or such other committee(s) or individual(s) may authorize to act on their behalf.  Subject to any requirements set forth in the Company’s by-laws or the Committee’s charter, which may be changed from time to time, as well as the other provisions of the Plan:

(a) The Committee, in its sole discretion, will establish annual incentive pools for the Company, the business units, or specific functions at the end of each year based on the recommendations of the Chief Executive Officer (“CEO”).  In establishing the incentive pools, the Committee will consider the Company’s performance, business unit performance, and functional performance compared with the respective annual goals and objectives of each, market factors, input from the Company’s control functions (Audit, Compliance, Risk and Loan Review), compliance with any applicable permitted activity regulations, and such other factors as the Committee or CEO deems appropriate.

		
	(b)
	The Committee, in its sole discretion, will determine the individual annual Awards (defined in Section 3(b) below) to the CEO, the Company’s executive officers, and any other Employees under its purview, as well as such other Employees as it may determine, taking into account the recommendations of the CEO (other than as to himself).  The CEO and such other Company, business unit, or specific function personnel whom the CEO authorizes to so act, will determine, within such limits as may be established by the Committee, individual Awards for all Employees below those under the purview of the Committee.   References throughout the Plan to the Committee’s and the CEO’s respective authority (i.e., “as applicable”) is intended to reflect this allocation of responsibilities between the Committee (on the one hand) and the CEO and/or his/her designates (on the other hand).  An Employee is eligible for consideration for an Award based on such criteria as the Committee or the CEO, as applicable, will determine.  No Employee is eligible for an Award as a matter of right.

 
		
	(c)
	No Award may be granted to any director of the Company who is not an Employee at the date of grant.

1

		
	(d)
	Incentive pools established pursuant to paragraph 2(a) will be measured after accrual of all incentive costs so that the Plan is self-funding.  The Committee may change the performance metrics and factors considered in establishing the incentive pools from year to year to ensure that the Plan appropriately reflects changing business conditions and the Company’s needs.  If any event occurs during a performance period that, in the Committee’s judgment, warrants changes to preserve the incentive features of this Plan, the Committee may make appropriate adjustments, including a determination that Awards will not be paid.

		
	(e)
	Except as otherwise provided in paragraph 4, the Award paid to any Employee will be determined by the Committee or the CEO, as applicable, on a discretionary basis taking into account evaluations of the individual Employee’s performance and achievement of personal goals and objectives established annually under the performance management system, as well as assessments of the relative value of each Employee’s contributions toward the achievement of the Company’s corporate, business unit, or functional performance goals for the year.  There will not be formulaic incentives that automatically pay out to any individuals.  Employees may receive an Award subject to the complete discretion of the Committee or CEO, as applicable.  Awards will be paid, if at all, in cash (U.S. dollars or local currency equivalent), deferred cash, or equity paid under the Ally Financial Inc. Incentive Compensation Plan or any successor plan thereto, net of tax withholdings, prior to March 15 of the calendar year following the end of the performance period.  The mix of cash, deferred cash, and equity will be designed to comply with the Executive Compensation Requirements described in section 13 below.  Equity compensation paid to certain Employees receiving Awards under this Plan may be subject to the Ally Financial Inc. Executive Performance Plan or any successor 162(m) plan.

		
	3.
	As used in the Plan, the following terms shall have the meanings set forth below:

		
	(a)
	"Affiliate” means (i) any entity that owns or controls, is owned or controlled by, or is under common control with the Company and (ii) any entity in which the Company, directly or indirectly, has a significant equity interest; in each case as determined by the Committee

		
	(b)
	“Award” means incentive compensation delivered under this Plan or through other Company incentive plan(s) for which an Employee is deemed eligible.

		
	(c)
	“Board” means the board of directors of the Company.

		
	(d)
	“Business Unit” means a single business or product line or related group of businesses or product lines of the Company that, in the ordinary course of the Company’s business, managerial and financial reporting are considered and managed as a division.

2

		
	(e)
	“Cause” means such Employee’s: (i) conviction for a felony indictment or misdemeanor conviction involving moral turpitude; (ii) failure to perform any material responsibility of the leadership position, unless due to death or Disability; (iii) a course of conduct, which would tend to hold the Company or any of its Affiliates in disrepute or scandal, as determined by the Board in its sole discretion; (iv) failure to follow lawful directions of the Board; (v) any material breach of fiduciary duty to the Company; (vi) gross negligence in the performance or nonperformance of duties to the Company or an Affiliate; (vii) willful misconduct in the performance or nonperformance of duties to the Company or an Affiliate; (viii) failure to comply with a material Company policy of the Company or an Affiliate; (ix) any act of fraud, theft, or dishonesty; (x) breach of any restrictive covenants set forth in Section 13; or (xi) failure to promptly repay any Award payment that is determined to be owed to the Company pursuant to Section 13 below.

		
	(f)
	“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules, regulations and guidance thereunder.

		
	(g)
	“Committee” means the Compensation, Nominating and Governance Committee of the Board or such other committee as may be designated by the Board to administer the Plan, or if no committee is designated, the Board.

		
	(h)
	“Competitive Activity” means activity that is in direct competition with the Company or any of its Affiliates in any of the states within the United States, or countries within the world, in which the Company or any of its Affiliates conducts business with respect to a business in with the Company or any of its Affiliates engaged or was preparing to engage during employment and on the date of the termination of employment.

		
	(i)
	“Disability” means, with respect to any Employee: (i) a long-term disability that entitles the Employee to disability income payments under any long-term disability plan or policy provided by the Company under which the Employee is covered, as such plan or policy is then in effect; or (ii) if such Employee is not covered under a long-term disability plan or policy provided by the Company at such time for whatever reason, then the term “Disability” means disability within the meaning of Treasury Reg. Sec. 1.409A3(i)(4).

		
	(j)
	“Employee” means a person who is or was employed by the Company or any Affiliate (as defined below), including an Employee who is also a director of the Company or any Affiliate.  The Committee or the CEO, as applicable, will determine when and to what extent Employees who have been advised that they are eligible for an Award cease to be eligible for an Award.  The Committee or the CEO, as applicable, will also determine when and under what circumstances any Employee is considered to have terminated employment for purposes of the Plan and is no longer eligible for an Award (see Section 4(a)(i) below).  To the extent determined by the Committee or the CEO, as applicable, former Employees or the executor(s), 

3

administrator(s), or other legal representative(s) of any deceased Employee’s estate, may be deemed eligible for an Award.

 
		
	4
	(a) Payment of any Award is subject to the satisfaction of the conditions precedent that such Employee:

(i)  continue to render services as an Employee (unless this condition is waived by the Committee or CEO, as applicable) (see Section 3(j) above);

(ii) refrain from engaging in any Competitive Activity and from otherwise acting, either prior to or after termination of employment, in any manner inimical or in any way contrary to the best interests of the Company;
 
(iii) has complied with applicable risk and permitted activity limitations; and

(iv) furnish to the Company such information with respect to the satisfaction of the foregoing conditions precedent as the Committee may reasonably request.

Except as otherwise provided under paragraph 4(c) below, the failure by any Employee to satisfy such conditions precedent will result in the immediate cancellation of any unpaid Award previously communicated to such Employee and such Employee will not be entitled to receive any consideration in respect of such cancellation.

(b)    If any Employee is dismissed for Cause or quits employment without the prior consent of the Company, any unpaid Award previously communicated to such Employee will be canceled as of the date of such termination of employment, and such Employee will not be entitled to receive any consideration in respect of such cancellation.

		
	(c)
	Upon termination of an Employee’s employment for any reason other than as described in 4(b) above, the Committee or CEO, as applicable, may, but is not required to, waive the condition precedent relating to the continued rendering of services in respect of all or any specified percentage of any unpaid Award, as the Committee or CEO, as applicable, may determine.  To the extent such condition precedent is waived, the Committee or CEO, as applicable, may, in its or his/her sole discretion, accelerate the payment of all or any specified percentage of an unpaid Award.  If implementation of this provision would cause an Employee to incur adverse tax consequences under Section 409A of the Code, the implementation of such provision may be delayed until, or otherwise modified to occur on, the first date on which such implementation would not cause adverse tax consequences under Section 409A.  Likewise, if Section 409A is deemed to apply, “termination” of an Employee’s employment will be defined as consistent with a “separation from service” as defined under Section 409A.

4

		
	(d)
	For purposes of the Plan, an approved leave of absence will not constitute a termination of employment, except that to the extent permissible by law, an Award may, at the Company’s discretion, not be paid until an Employee returns to active employment.

		
	(e)
	If employment of an Employee is terminated by death, an unpaid Award may, in the sole discretion of the Committee or CEO, as applicable, be payable on a pro rata basis, in whole, or not at all, taking into consideration the Employee’s contribution during the relevant period.

5.    If the Company has an unpaid claim against an Employee arising out of or in connection with the Employee’s employment, such claim may be offset against Awards under the Plan.  Such claim may include, but is not limited to, unpaid taxes or corporate business credit card charges.  Any such offset will be applied to the Award at the time such Award is paid.

6.    To the extent that any Employee, former Employee, or any other person acquires a right to receive payments or distributions under the Plan, such right may be no greater than the right of a general unsecured creditor of the Company.  All payments and distributions to be made hereunder will be paid from the general assets of the Company.  Nothing contained in this Plan, and no action taken pursuant to its provisions, may create or be construed to create a trust of any kind or a fiduciary relationship between the Company or any subsidiary and any Employee, former Employee, or any other person.

7.    The expenses of administering the Plan will be borne by the Company.

8.    Except as otherwise determined by the Committee, in its sole discretion, no Award is assignable or transferable and, during the lifetime of the Employee, any payment in respect of any Award will be made only to the Employee.

9.    Absent delegation, full power and discretionary authority to interpret, construe, apply, and make final determinations (including fact finding) regarding the Plan vest in the Committee or CEO, as applicable.  The Committee, with regard to the CEO, and the CEO or his/her designate(s), with regard to all other Employees, decides under what circumstances payments are made under the Plan, resolves questions relating to the Plan, and settles any disputes or controversies that may arise regarding the Plan.  Any person who accepts an Award agrees to accept as final, conclusive, and binding all determinations of the Committee or CEO, as applicable.  The Committee or the CEO, as applicable, has the right, in the case of Employees not employed in the United States, to vary from the provisions of the Plan in order to preserve its incentive features.
  
10.    The Committee, in its sole discretion, may, at any time, amend, modify, suspend, or terminate this Plan provided that no such action:

5

(a) adversely affects the rights of an Employee with respect to previous Award(s) paid under this Plan; or 

(b) without the approval of the Board renders any director of the Company, or any member of the Committee or the Audit Committee of the Board, who is not an Employee at the date of grant, eligible for an Award grant.  

No oral statements can change the terms of the Plan.  The Plan can only be amended, modified, suspended, or terminated in writing.  Absent an express delegation from the Committee or CEO, as applicable, no one has the authority to commit the Company to any payment under the Plan, change the eligibility criteria, or alter any other provisions of the Plan.

11.    Every right of action by, or on behalf of, the Company against any past, present, or future member of the Board, officer, Employee, or its Affiliates arising out of or in connection with this Plan will, irrespective of the place where action may be brought and irrespective of the place of residence of any such director, officer, Employee, or Affiliate, cease and be barred by the expiration of one (1) year from the date of the act or omission in respect of which such right of action arises.  Any and all right of action by any Employee (past, present, or future) against the Company, its Board, the Committee, its CEO, officers, or employees, arising out of or in connection with this Plan will, irrespective of the place where an action may be brought, cease and be barred by the expiration of one (1) year from the date of the act or omission in respect of which such right of action arises.

		
	12.
	(a) The Company may withhold from any amounts payable under the Plan such federal, state, and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

(b) It is intended that the Plan will fully comply with Section 409A of the Code and the provisions of the Plan and any Award Agreement shall be interpreted in a manner that satisfies the requirements of Section 409A of the Code, and the Plan shall be operated accordingly. If any provision of the Plan or any term or condition of any Award would otherwise frustrate or conflict with this intent, the provision, term or condition shall be interpreted and deemed amended so as to avoid this conflict.  The Company may unilaterally take whatever actions, or refrain from taking any action, that it considers in its sole discretion is necessary to avoid the imposition of tax, interest, and/or penalties upon any Employee under Section 409A.

(c) Notwithstanding anything contained in the Plan to the contrary, each and every payment made under the Plan will be treated as a separate payment and not as a series of payments.

(d) Notwithstanding anything contained in the Plan to the contrary, if any Employee is determined to be a “specified employee” (determined in accordance with Section 409A and Treasury Regulation Section 1.409A-3(i)(2)), and if any payment, benefit or entitlement provided for in the Plan both (i) constitutes a “deferral of compensation” 

6

within the meaning of Section 409A (“Nonqualified Deferred Compensation”) and (ii) cannot be paid or provided in a manner otherwise provided herein or otherwise without subjecting such Employee to additional tax, interest and/or penalties under Section 409A, then any such payment, benefit or entitlement that is payable during the first 6 months following the Employee’s “separation from service” (as such phrase is used in Section 409A) shall be paid or provided to the Employee in a lump sum cash payment to be made on the earlier of (x) the Employee’s death or (y) on or about the first business day of the seventh calendar month immediately following the month in which the Employee’s separation from service occurs.

(e) Notwithstanding the foregoing, the tax treatment of the benefits provided under the Plan is not warranted or guaranteed, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by any Participant on account of non-compliance with Section 409A of the Code.
    
(f)     Notwithstanding anything contained in the Plan to the contrary, any payment or benefit that (i) qualifies as Nonqualified Deferred Compensation and (ii) is paid or distributed due to a change in control of the Company, whether pursuant to the Plan or otherwise, will only be paid or distributed if such event qualifies as either a “change in the ownership or effective control of a corporation” or a “change in the ownership of a substantial portion of the assets of a corporation” in accordance with Treasury Regulation 1.409A-3(i)(5).

13.    It is intended that the Plan will fully comply with any and all federal and state rules, regulations, and policies, including but not limited to the Company’s Enterprise Compensation Policy as such may be amended from time to time, regulating employee compensation (collectively “Employee Compensation Requirements”).  The Company may unilaterally take whatever actions, or refrain from taking any action, that it considers in its sole discretion is necessary to comply with the Employee Compensation Requirements.  Such actions include, but are not limited to, designing Awards to reflect considerations relative to risk-taking and permitted activity or requiring cancellation, forfeiture, deferral, or repayment of any Award under circumstances set forth in the recoupment provisions of the Company’s Enterprise Compensation Policy.  The Committee may, in its discretion, demand repayment from other Award recipients based on the same determinations, and failure to promptly repay the Company upon demand will constitute cause for termination of employment.  Any repayment obligation will survive an Employee’s termination of employment.

14.    The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, will be governed by the laws of the State of Delaware, without regard to application of the conflicts of law principles thereof.

7Exhibit

Exhibit 10.8
Ally Financial Inc.

Ally Financial Inc.
500 Woodward Avenue, MC : MI-01-10-HR Detroit, MI 48226

<DATE>

<NAME>

Re:   Ally Financial Inc. Incentive Compensation Plan – PSU Award

Dear <FIRST NAME>:

		
	1.
	You have been granted an Award under the Ally Financial Inc. Incentive Compensation Plan (the “Plan”).  A copy of the Plan is included on the Shareworks website. Capitalized terms not defined in this Award Agreement will have the meaning set forth in the Plan.

		
	2.
	Your Award is granted to you as a matter of separate inducement and is not in lieu of salary or other compensation for your services. By accepting this Award, you consent to any and all Plan amendments, vesting restrictions, and revisions to any other term or condition of this Award Agreement that may be required to comply with federal law or regulation governing compensation, whether such amendments, restrictions, or revisions are applied prospectively or retroactively to this or prior Awards. By accepting this Award, you also acknowledge and agree that it is subject to all of the requirements set forth in the Enterprise Compensation Policy and that you are subject to all of the restrictive covenants set forth in Section 13 of the Plan (i.e., non-solicit, confidentiality, non-disparagement).

		
	3.
	Your Award is initially being made in the form of Performance Stock Units (“PSUs”). Your Award will vest 100% on the third anniversary of the Grant Date (the “Vesting Date”), subject to your continued employment with the Company or one of its Affiliates through the Vesting Date (or as otherwise set forth herein or in the Plan); provided, that the actual number of PSUs vesting and converting to Shares (such number of PSUs to be within a range of 0% to 150% of the number of the Target PSUs (as defined below)) (the “Adjusted PSUs”) will be determined based on the achievement of the Performance Metrics (as defined in Exhibit A attached hereto) during the Performance Period (as defined below). For purposes of this Award Agreement, the “Performance Period” means the period commencing on January 1, 2020 and ending on December 31, 2022. Immediately following the end of the Performance Period, your Adjusted PSUs may, at the discretion of the Company, convert into a number of Shares of Restricted Stock equal to the number of Adjusted PSUs. Your Adjusted PSUs or Shares of Restricted Stock (as the case may be) will remain subject to your continued employment with the Company and its Affiliates through the Vesting Date and will be forfeited and cancelled if you do not remain employed with the Company and its Affiliates through the Vesting Date, except as otherwise explicitly provided below.

Grant Date:    «Date»
Number of Target PSUs Granted: «Total_Shares» (“Target PSUs”)

		
	4.
	This Award Agreement will become effective after you have electronically accepted it via the Shareworks website. If you do not accept this Award Agreement within 45 days of notification, you will be deemed to have rejected the Award and this Award Agreement will be null and void and without any further force or effect.

		
	5.
	Subject to requirements of any federal laws or regulations and Ally policy that govern compensation (see paragraph 2 above), and subject to the terms of the Plan and this Agreement, the Company will deliver the Shares earned with respect to the Adjusted PSUs or will remove the restrictions imposed on any Shares of 

    

 

Restricted Stock delivered in respect of your Adjusted PSUs as of the Vesting Date, in accordance with paragraph 3 above.

		
	6.
	If on the Grant Date you are considered a material risk taker (“MRT”), in connection with regulatory guidance and in support of its corporate governance principles, to the extent that any portion of the Award remains unpaid, Ally reserves the right to adjust downward the amount of this Award without your consent to reflect adverse outcomes attributable to inappropriate, excessive, or imprudent risk taking in which you participated and which was the basis for this Award. Your Award is also subject to cancellation, recovery, forfeiture, or repayment consistent with Ally’s recoupment policy contained in the Enterprise Compensation Policy.

		
	7.
	Sections 11 and 12 of the Plan provide for the treatment of Awards in the event of a Termination of Service or Change in Control; provided, however:

If you experience a Termination of Service without Cause by the Company or a Qualifying Termination (whether as a result of a Sale of your Business Unit or otherwise), in each case, other than in connection with a Change in Control, your unvested PSUs or Shares of Restricted Stock under this Award (as the case may be) will become nonforfeitable on the date of such Termination of Service and your Award will continue to be earned and vest in accordance with paragraph 3 of this Award Agreement based on the achievement of the Performance Metrics (even though you are not employed by the Company or one of its Affiliates on the Vesting Date) and will be settled as of the Vesting Date in accordance with paragraph 5 above; provided, however, that if, as of the Vesting Date, the number of Shares underlying the Adjusted PSUs or the number of Shares of Restricted Stock that you hold under this Award (as the case may be) exceeds the number of Shares underlying the Target PSUs (the number of such excess Shares, the “Above Target Shares”), then the number of Above Target Shares that will be delivered to you will be determined by multiplying (a) the number of Above Target Shares by (b) a fraction, (i) the numerator of which is the number of calendar days during the Performance Period prior the date your termination of employment and (ii) the denominator of which is the number of calendar days during the Performance Period and any PSUs or Shares under this Award in excess of this amount will be forfeited and cancelled (the “Excess Adjustment”).
 
		
	8.
	If the Company pays a dividend on Shares prior to the Vesting Date, you will be entitled to a dividend equivalent payment in the same amount as the dividend you would have received if you held the number of Shares, if any, as earned and vested as of the Vesting Date. These dividends will vest and be paid to you on the Settlement Date (or such other vesting and settlement date applicable under paragraph 7 (above), subject to the vesting of your Award. No dividends or dividend equivalents will be paid to you with respect to any portion of your Award that is canceled or forfeited. The Company will decide on the form of payment and may pay dividends or dividend equivalents in Shares, in cash or in a combination thereof, subject to applicable law.

 
		
	9.
	You will have no voting rights with respect to the Shares underlying your Award unless and until you become the record owner of the Shares underlying your Award.

		
	10.
	You may designate a beneficiary using the Shareworks website. If no beneficiary is designated, or if the Ally determines that the beneficiary designation is unclear or that the designated beneficiary cannot be located, any settlement as a result of your death will be made to your estate. The Shareworks website may also be used for any subsequent change in your beneficiary designation.

		
	11.
	The restrictions in Section 13(a) of the Plan on your ability to solicit any Ally client, customer, or employee for 24 months following your Termination of Service is grounded in Ally’s significant investment of time, effort, and expense in establishing client, customer, and employee relationships across Ally’s lines of business. As this applies to you, the scope of the restriction on your ability to solicit Ally clients or customers will run commensurate with the scope of your responsibilities while employed by Ally. That is, the terms “client or customer” as used in Section 13(a) (i.e., “(i) solicit any client or customer of the Company or any Affiliate with respect to a Competitive Activity”) will mean those clients or customers (whether current or prospective): (i) with whom you had direct or indirect personal contact within the last 12 months of your 

 

employment with Ally; or (ii) about whom you learned confidential or proprietary information (including trade secrets) by virtue of your employment with Ally during the last 12 months of your employment with Ally. The term “solicit” also will include any communication or other interaction between you and a client or customer (whether current or prospective) that takes place to make sales to, perform services for, or otherwise further the business relationship with that client or customer (whether current or prospective). Notwithstanding Section 21 of the Plan, Section 13(a) is governed by Michigan law without regard to its conflict of laws provision. An action to enforce or seek damages for breach of Section 13(a) may only be brought in a federal or state court of competent jurisdiction in Michigan.

		
	12.
	By accepting this Award, you understand and acknowledge that your Award is subject to the rules under Internal Revenue Code Section 409A, and agree and accept all risks (including increased taxes and penalties) resulting from Internal Revenue Code Section 409A.

		
	13.
	Except as prohibited by any federal law or regulation that governs compensation, see paragraph 2 above, your Award is subject to and governed by the terms and conditions of this Award Agreement and the Plan.

		
	14.
	By accepting this Award, as evidenced by your signature below, you agree to abide by the terms and conditions of this Award Agreement and the Plan.

Sincerely yours,
                

                      Kathleen Patterson    
Chief HR Officer
«Date»

I HAVE READ THE PLAN DOCUMENT AND THIS AWARD AGREEMENT AND I ACCEPT THE AWARD REFERENCED ABOVE SUBJECT TO THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT AND THE ALLY FINANCIAL INC. INCENTIVE COMPENSATION PLAN. 

	
					
	 
	 
	 

	Participant Signature (Required)
	 
	Date (Required)

	 
	 
	 
	 
	 

	 
	 
	 

	Last Four Digits of SSN or National ID (Required)
	 
	 

EXHIBIT A

PERFORMANCE METRICS

The number of Adjusted PSUs will be based on the Company’s achievement during the Performance Period of the Core ROTCE and TSV (each as defined below) performance metrics (collectively, the “Performance Metrics”), determined in accordance with the following formula:
	
							
	Number of Target PSUs
	x
	Core ROTCE Adjustment 
Percentage
	x
	50%
	=
	Number of  
Core ROTCE Adjusted PSUs

	
							
	Number of Target PSUs
	x
	TSV
 Adjustment 
Percentage
	x
	50%
	=
	Number of  
TSV Adjusted PSUs

	
					
	Number of Core ROTCE Adjusted PSUs
	+
	Number of TSV Adjusted PSUs
	=
	Number of  
Adjusted PSUs

The “ROTCE Adjustment Percentage” and the “TSV Adjustment Percentage” will each be derived as set forth in the tables below and any fractional Shares resulting from the application of the ROTCE Adjustment Percentage or TSV Adjustment Percentage, as applicable, will be rounded up.
	
					
	Core ROTCE
	 
	TSV

	3-Year Average Annual Core ROTCE Achievement Level
(%)
	ROTCE Adjustment Percentage 
(%)
	 
	3-Year Average Annual TSV Growth Rate Achievement Level
(%)
	TSV Adjustment Percentage 
(%)

	>15.50
	150
	 
	>12.00
	150

	13.51 – 15.50
	125
	 
	9.01 – 12.00
	125

	12.51 – 13.50
	100
	 
	6.01 – 9.00
	100

	10.51 – 12.50
	75
	 
	3.01 – 6.00
	75

	8.51 – 10.50
	50
	 
	0.01 – 3.00
	50

	< 8.51
	0
	 
	< 0.01
	0

The below listed definitions will apply for purposes of this Award Agreement.
“Core ROTCE” means (i) Operating Net Income Available to Common divided by (ii) Normalized Common Equity.
“Core Net Income Available to Common” means: (i) pre-tax income from continuing operations, minus (ii) income tax expense, plus (iii) expense associated with original issue bond discount amortization (net of tax), minus (d) preferred dividends, plus (e) the impact of any disclosed repositioning items (net of tax).

    

 

“Normalized Common Equity” means the three-period average of: (i) shareholder equity, minus (ii) book value of preferred stock outstanding, minus (iii) goodwill and other intangibles, minus (iv) remaining original issue bond discount, minus (v) remaining net deferred tax asset.
“Total Shareholder Value” or “TSV” means the sum of (i) Adjusted Tangible Book Value Per Share Growth, Year over Year, and (ii) Dividends Per Share.
“Adjusted Tangible Book Value Per Share” means (i) Adjusted Tangible Book Value divided by (ii) end of period Shares outstanding.        
“Adjusted Tangible Book Value” means: (i) shareholder equity, minus (ii) book value of preferred stock outstanding, minus (iii) goodwill and other intangibles, minus (iv) remaining original issue bond discount (net of tax).
“End of Period Shares Outstanding” means the number of common shares (Shares) outstanding at the end of the period.
“Dividend Per Share” means (i) the total annual dividend payout ($) per share divided by (ii) Average Adjusted Tangible Book Value Per Share.
“Total Annual Dividend payout ($) per Share” means (i)Total dollars paid for Common Dividends in the period divided by (ii) End of Period Shares Outstanding
“Average Adjusted Tangible Book Value per Share” means three-period average of Adjusted Tangible Book Value.
The goals in setting target levels for ROTCE and TSV are to align the interests of management with those of Ally’s shareholders, to incent forward-looking and sustained performance, and to drive balanced risk-taking. Ally and its shareholders would not be well served by rewarding or penalizing management for items that impact ROTCE or TSV but that would not further the achievement of these goals. As a result, for purposes of calculating ROTCE and TSV for a fiscal year, each of the following items will be excluded to the extent such item is material and was not taken into account in establishing the target levels:
(i)litigation and regulatory judgments, charges or settlements and any accruals or reserves relating to litigation or regulatory matters;
(ii) the effect of changes in law applicable to Ally which will be measured based on the effect of the changes on revenue, income, assets and liabilities demonstrably caused by such changes in law;
(iii) the effect of changes in accounting principles, including any related accounting restatements;
(iv) income, expenses, gains or losses from discontinued operations;
(v) the charges and other costs and balance sheet impacts associated with any acquisition, divestiture, restructuring or pre-payment or other early retirement of outstanding debt, and, in the case of an acquisition, any income or loss associated with the acquired business or assets during the performance window; and
 (vi) any items that are categorized as unusual in nature or infrequently occurring within the meaning of GAAP.
Adjustments for these excluded items will be made in a manner so that participants are neither penalized nor rewarded for these items. Adjustments for these excluded items will be applied formulaically consistent with principles historically applied and in a manner that will not trigger a modification or new measurement date with respect to any award under GAAP.

 

The Compensation, Nominating and Governance Committee of the Board of Directors of the Company will have sole and exclusive authority and discretion to make all determinations and resolve all ambiguities, questions and disputes relating to the calculation of Core ROTCE and TSV and the level of earning and vesting of this Award.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00305-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00305-of-00352.parquet"}]]