Document:

Exhibit 10.3

 

ISIS PHARMACEUTICALS, INC.
 RESTRICTED STOCK UNIT GRANT NOTICE
 (AMENDED & RESTATED 2002 NON-EMPLOYEE DIRECTOR’S STOCK OPTION PLAN)

 

Isis Pharmaceuticals, Inc. (the “Company”), pursuant to its Amended & Restated 2002 Non-Employee Director’s Stock Option Plan (the “Plan”), hereby awards to Participant a Restricted Stock Unit Award for the number of stock units set forth below (the “Award”).  The Award is subject to all of the terms and conditions as set forth herein; and in the Plan and the Restricted Stock Unit Agreement, both of which are attached hereto and incorporated herein in their entirety.  Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan or the Restricted Stock Unit Agreement.  In the event of any conflict between the terms in the Award and the Plan, the terms of the Plan shall control.

 

	
Participant:
    	
 
    
	
Date of Grant:
    	
 
    
	
Vesting Commencement Date:
    	
 
    
	
Number of Stock Units Subject to Award:
    	
 
    
	
Consideration:
    	
Participant’s   Services
    

 

Vesting Schedule:                    25% of the Stock Units subject to this Award will vest on each of the first, second, third, and fourth anniversary of the Vesting Commencement Date.  Notwithstanding the foregoing, vesting shall terminate upon the Participant’s termination of Continuous Service.

 

Issuance Schedule:               The shares of Common Stock to be issued in respect of the Award will be issued in accordance with the issuance schedule set forth in Section 6 of the Restricted Stock Unit Agreement.

 

Additional Terms/Acknowledgements:  The undersigned Participant acknowledges receipt of, and understands and agrees to, this Restricted Stock Unit Grant Notice, the Restricted Stock Unit Agreement and the Plan.  Participant further acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant Notice, the Restricted Stock Unit Agreement and the Plan set forth the entire understanding between Participant and the Company regarding the Award and supersedes all prior oral and written agreements on that subject.

 

	
ISIS   PHARMACEUTICALS, INC.
    	
 
    	
PARTICIPANT:
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Signature
    	
 
    	
Signature
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
						

 

ATTACHMENTS:    Restricted Stock Unit Agreement, Amended & Restated 2002 Non-Employee Director’s Stock Option Plan

 

 

ISIS PHARMACEUTICALS, INC.

AMENDED & RESTATED 2002 NON-EMPLOYEE DIRECTOR’S 
 STOCK OPTION PLAN

 

RESTRICTED STOCK UNIT AGREEMENT

 

Pursuant to the Restricted Stock Unit Grant Notice (“Grant Notice”) and this Restricted Stock Unit Agreement and in consideration of your services, Isis Pharmaceuticals, Inc. (the “Company”) has awarded you a Restricted Stock Unit Award (the “Award”) under its Amended & Restated 2002 Non-Employee Director’s Stock Option Plan (the “Plan”). Your Award is granted to you effective as of the Date of Grant set forth in the Grant Notice for this Award.  This Restricted Stock Unit Award Agreement shall be deemed to be agreed to by the Company and you upon the earlier of (i) signing (or electronic acceptance) by you of the Restricted Stock Unit Grant Notice to which it is attached, and (ii) your receipt of shares of Common Stock under this Restricted Stock Unit Agreement.  Capitalized terms not explicitly defined in this Restricted Stock Unit Agreement shall have the same meanings given to them in the Plan or the Grant Notice, as applicable.  In the event of any conflict between the terms in this Restricted Stock Unit Agreement and the Plan, the terms of the Plan shall control.  The details of your Award, in addition to those set forth in the Grant Notice and the Plan, are as follows.

 

1.                                      GRANT OF THE AWARD.  This Award represents the right to be issued on a future date the number of shares of the Company’s Common Stock that is equal to the number of stock units indicated in the Grant Notice (the “Stock Units”).  As of the Date of Grant, the Company will credit to a bookkeeping account maintained by the Company for your benefit (the “Account”) the number of Stock Units subject to the Award.  This Award was granted in consideration of your services to the Company.  Except as otherwise provided herein, you will not be required to make any payment to the Company (other than past and future services to the Company) with respect to your receipt of the Award, the vesting of the Stock Units or the delivery of the Common Stock to be issued in respect of the Award.

 

2.                                      VESTING.

 

(a)                                 In General.  Subject to the limitations contained herein, your Award will vest, if at all, in accordance with the vesting schedule provided in the Grant Notice, provided that vesting will cease upon the termination of your Continuous Service.  Upon such termination of your Continuous Service, the Stock Units credited to the Account that were not vested on the date of such termination will be forfeited at no cost to the Company and you will have no further right, title or interest in the Stock Units or the shares of Common Stock to be issued in respect of the Award.

 

3.                                      NUMBER OF SHARES.

 

(a)                                 The number of Stock Units subject to your Award may be adjusted from time to time for Capitalization Adjustments, as provided in the Plan.

 

 

(b)                                 Any additional Stock Units that become subject to the Award pursuant to this Section 3 and Section 7, if any, shall be subject, in a manner determined by the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery as applicable to the other Stock Units covered by your Award.

 

(c)                                  Notwithstanding the provisions of this Section 3, no fractional shares or rights for fractional shares of Common Stock shall be created pursuant to this Section 3.  The Board shall, in its discretion, determine an equivalent benefit for any fractional shares or fractional shares that might be created by the adjustments referred to in this Section 3.

 

4.                                      SECURITIES LAW COMPLIANCE.  You may not be issued any shares in respect of your Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has determined that such issuance would be exempt from the registration requirements of the Securities Act. Your Award also must comply with other applicable laws and regulations governing the Award, and you will not receive such shares if the Company determines that such receipt would not be in material compliance with such laws and regulations.

 

5.                                      TRANSFER RESTRICTIONS.  Prior to the time that shares of Common Stock have been delivered to you, you may not transfer, pledge, sell or otherwise dispose of this Award or the shares issuable in respect of your Award, except as expressly provided in this Section 5.  For example, you may not use shares that may be issued in respect of your Award as security for a loan.  The restrictions on transfer set forth herein will lapse upon delivery to you of shares in respect of your vested Award.

 

(a)                                 Death.  Your Award is transferable by will and by the laws of descent and distribution.  In addition, upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form provided by or otherwise satisfactory to the Company and any broker designated by the Company to effect transactions under the Plan, designate a third party who, in the event of your death, shall thereafter be entitled to receive any distribution of Common Stock or other consideration to which you were entitled at the time of your death pursuant to this Agreement.  In the absence of such a designation, your executor or administrator of your estate shall be entitled to receive, on behalf of your estate, such Common Stock or other consideration.

 

(b)                                 Certain Trusts.  Upon receiving written permission from the Board or its duly authorized designee, you may transfer your Award to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable state law) while the Award is held in the trust, provided that you and the trustee enter into transfer and other agreements required by the Company.

 

(c)                                  Domestic Relations Orders.  Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your Award or your right to receive the distribution of Common Stock or other consideration thereunder, pursuant to a domestic relations order that contains the information required by the Company to effectuate the transfer.  You are encouraged to discuss the proposed terms of any division of this Award with the Company prior to finalizing the domestic relations order to help ensure the required information is contained within the domestic relations order.

 

 

6.                                      DATE OF ISSUANCE.

 

(a)                                 If the Award is exempt from application of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”), the Company will deliver to you a number of shares of the Company’s Common Stock equal to the number of vested Stock Units subject to your Award, including any additional Stock Units received pursuant to Section 3 above that relate to those vested Stock Units on the applicable vesting date(s).  However, if a scheduled delivery date falls on a date that is not a business day, such delivery date shall instead fall on the next following business day.  Notwithstanding the foregoing, in the event that (i) you are subject to the Company’s policy permitting officers and directors to sell shares only during certain “window” periods, in effect from time to time (the “Policy”) or you are otherwise prohibited from selling shares of the Company’s Common Stock in the public market and any shares covered by your Award are scheduled to be delivered on a day (the “Original Distribution Date”) that does not occur during an open “window period” applicable to you or a day on which you are permitted to sell shares of the Company’s common stock pursuant to a written plan that meets the requirements of Rule 10b5-1 under the Exchange Act, in each case as determined by the Company in accordance with the Policy, or does not occur on a date when you are otherwise permitted to sell shares of the Company’s common stock on the open market, and (ii) the Company elects not to satisfy its tax withholding obligations (if any) by withholding shares from your distribution, then such shares shall not be delivered on such Original Distribution Date and shall instead be delivered on the first business day of the next occurring open “window period” applicable to you pursuant to such policy (regardless of whether you are still providing continuous services at such time) or the next business day when you are not prohibited from selling shares of the Company’s Common Stock in the open market, but in no event later than the fifteenth day of the third calendar month of the calendar year following the calendar year in which the shares covered by the Award vest.  Delivery of the shares pursuant to the provisions of this Section 6(a) is intended to comply with the requirements for the short-term deferral exemption available under Treasury Regulation 1.409A-1(b)(4) and shall be construed and administered in such manner.  The form of such delivery of the shares (e.g., a stock certificate or electronic entry evidencing such shares) shall be determined by the Company.

 

(b)                                 The provisions of this Section 6(b) are intended to apply if the Award is subject to Section 409A because of the terms of a severance arrangement or other agreement between you and the Company, if any, that provides for acceleration of vesting of the Award upon your separation from service (as such term is defined in section 409A(a)(2)(A)(i) of the Code and applicable guidance thereunder (“Separation From Service”) and such severance benefit does not satisfy the requirements for an exemption from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4) or 1.409A-1(b)(9) (“Non-Exempt Severance Arrangement”).  If the Award is subject to and not exempt from application of Section 409A due to application of a Non-Exempt Severance Arrangement, the following provisions in this Section 6(b) shall supersede anything to the contrary in Section 6(a).

 

 

(i)                                    If the Award vests in ordinary course during your Continuous Service in accordance with the vesting schedule set forth in the Grant Notice, in no event will the shares to be issued in respect of your Award be issued any later than the later of: (i) December 31st of the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable vesting date.

 

(ii)                                If the Award accelerates vesting under the terms of your Non-Exempt Severance Arrangement in connection with your Separation From Service, and such vesting acceleration provisions of your Non-Exempt Severance Arrangement were in effect as of the date of grant of the Award and therefore part of the terms of the Award as of the date of grant, then the shares will be earlier issued in respect of your Award upon your Separation From Service in accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of your Separation From Service.  However, if at the time the shares would otherwise be issued you are subject to the distribution limitations contained in section 409A of the Code applicable to “specified employees” as defined in section 409A(a)(2)(B)(i) of the Code and applicable guidance thereunder, such share issuances shall not be made before the date which is six months following the date of your Separation From Service, or, if earlier, the date of your death that occurs within such six month period.

 

(iii)                            If the Award accelerates vesting under the terms of your Non-Exempt Severance Arrangement in connection with your Separation From Service, and such vesting acceleration provisions of your Non-Exempt Severance Arrangement were not in effect as of the date of grant of the Award and therefore not a part of the terms of the Award on the date of grant, then such acceleration of vesting of the Award shall not accelerate the issuance date of the shares, but the shares shall instead be issued on the same schedule as set forth on the Grant Notice as if they had vested in ordinary course during your Continuous Service, notwithstanding the vesting acceleration of the Award.  Such issuance schedule is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided under Treas. Reg. 1.409A-3(a)(4).

 

(c)                                  The provisions in this Agreement for delivery of the shares in respect of the Award are intended either to comply with the requirements of Section 409A or to provide a basis for exemption from such requirements so that the delivery of the shares will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so interpreted.

 

7.                                      DIVIDENDS.  You shall be entitled to receive payments equal to any cash dividends and other distributions paid with respect to  a corresponding number of shares to be issued in respect of the Stock Units covered by your Award, provided that if any such dividends or distributions are paid in shares, the Fair Market Value of such shares shall be converted into additional Stock Units covered by the Award, and further provided that such additional Stock Units shall be subject to the same forfeiture restrictions and restrictions on transferability as apply to the Stock Units subject to the Award with respect to which they relate.

 

8.                                      RESTRICTIVE LEGENDS.  The shares issued in respect of your Award shall be endorsed with appropriate legends determined by the Company.

 

 

9.                                      AWARD NOT A SERVICE CONTRACT.

 

(a)                                 Your Continuous Service with the Company or an Affiliate is not for any specified term and may be terminated by you or by the Company or an Affiliate at any time, for any reason, with or without cause and with or without notice.  Nothing in this Restricted Stock Unit Agreement (including, but not limited to, the vesting of your Award pursuant to the schedule set forth in Section 2 herein or the issuance of the shares in respect of your Award), the Plan or any covenant of good faith and fair dealing that may be found implicit in this Restricted Stock Unit Agreement or the Plan shall:  (i) confer upon you any right to continue in the employ of, or affiliation with, the Company or an Affiliate; (ii) constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work assignments, future compensation or any other term or condition of employment or affiliation; (iii) confer any right or benefit under this Restricted Stock Unit Agreement or the Plan unless such right or benefit has specifically accrued under the terms of this Agreement or Plan; or (iv) deprive the Company of the right to terminate you at will and without regard to any future vesting opportunity that you may have.

 

(b)                                 By accepting this Award, you acknowledge and agree that the right to continue vesting in the Award pursuant to the schedule set forth in Section 2 is earned only by continuing as an employee, director or consultant at the will of the Company (not through the act of being hired, being granted this Award or any other award or benefit) and that the Company has the right to reorganize, sell, spin-out or otherwise restructure one or more of its businesses or Affiliates at any time or from time to time, as it deems appropriate (a “reorganization”).  You further acknowledge and agree that such a reorganization could result in the termination of your Continuous Service, or the termination of Affiliate status of your employer and the loss of benefits available to you under this Restricted Stock Unit Agreement, including but not limited to, the termination of the right to continue vesting in the Award.  You further acknowledge and agree that this Restricted Stock Unit Agreement, the Plan, the transactions contemplated hereunder and the vesting schedule set forth herein or any covenant of good faith and fair dealing that may be found implicit in any of them do not constitute an express or implied promise of continued engagement as an employee or consultant for the term of this Agreement, for any period, or at all, and shall not interfere in any way with your right or the Company’s right to terminate your Continuous Service at any time, with or without cause and with or without notice.

 

10.                               WITHHOLDING OBLIGATIONS.

 

(a)                                 On or before the time you receive a distribution of the shares subject to your Award, or at any time thereafter as requested by the Company, you hereby authorize any required withholding (if any) from the Common Stock issuable to you and/or otherwise agree to make adequate provision in cash for any sums required to satisfy the federal, state, local and foreign tax withholding obligations (if any) of the Company or any Affiliate which arise in connection with your Award (the “Withholding Taxes”).  Additionally, the Company may, in its sole discretion, satisfy all or any portion of the Withholding Taxes obligation relating to your Award by any of the following means or by a combination of such means: (i) withholding from any compensation otherwise payable to you by the Company; (ii) causing you to tender a cash payment; or (iii) withholding shares of Common Stock from the shares of Common Stock issued or otherwise issuable to you in connection with the Award with a Fair Market Value (measured

 

 

as of the date shares of Common Stock are issued to pursuant to Section 6) equal to the amount of such Withholding Taxes; provided, however, that the number of such shares of Common Stock so withheld shall not exceed the amount necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

 

(b)                                 Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to you any Common Stock.

 

(c)                                  In the event the Company’s obligation to withhold arises prior to the delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the Company’s withholding obligation was greater than the amount withheld by the Company, you agree to indemnify and hold the Company harmless from any failure by the Company to withhold the proper amount.

 

(d)                                 If specified in your Grant Notice and permitted by the Company, you may direct the Company to withhold shares of Common Stock with a Fair Market Value (measured as of the date shares of Common Stock are issued pursuant to Section 6) equal to the amount of such Withholding Taxes; provided, however, that the number of such shares of Common Stock so withheld shall not exceed the amount necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income.

 

11.                               UNSECURED OBLIGATION.  Your Award is unfunded, and as a holder of a vested Award, you shall be considered an unsecured creditor of the Company with respect to the Company’s obligation, if any, to issue shares pursuant to this Agreement.  You shall not have voting or any other rights as a stockholder of the Company with respect to the shares to be issued pursuant to this Agreement until such shares are issued to you pursuant to Section 6 of this Agreement.   Upon such issuance, you will obtain full voting and other rights as a stockholder of the Company.  Nothing contained in this Agreement, 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 you and the Company or any other person.

 

12.                               OTHER DOCUMENTS.  You hereby acknowledge receipt or the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus.  In addition, you acknowledge receipt of the Company’s insider-trading policy and agree that you may sell shares only in compliance with such policy, in effect from time to time.

 

13.                               NOTICES.  Any notices provided for in your Award or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company to you, five days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company.  Notwithstanding the foregoing, the Company may, in its sole discretion, decide to deliver any documents related to participation in

 

 

the Plan and this Award by electronic means or to request your consent to participate in the Plan by electronic means.  You hereby consent to receive such documents by electronic delivery and, if requested, to agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

 

14.                               MISCELLANEOUS.

 

(a)                                 The rights and obligations of the Company under your Award shall be transferable to any one or more persons or entities, and all covenants and agreements hereunder shall inure to the benefit of, and be enforceable by the Company’s successors and assigns. Your rights and obligations under your Award may only be assigned with the prior written consent of the Company.

 

(b)                                 You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your Award.

 

(c)                                  You acknowledge and agree that you have reviewed your Award in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your Award, and fully understand all provisions of your Award.

 

(d)                                 This Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

 

(e)                                  All obligations of the Company under the Plan and this Agreement shall be binding on 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 business and/or assets of the Company.

 

15.                               GOVERNING PLAN DOCUMENT.  Your Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your Award, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan.  Except as expressly provided herein, in the event of any conflict between the provisions of your Award and those of the Plan, the provisions of the Plan shall control.

 

16.                               SEVERABILITY.  If all or any part of this Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

 

 

17.                               CHOICE OF LAW.  The interpretation, performance and enforcement of this Agreement will be governed by the law of the state of California without regard to such state’s conflicts of laws rules.

 

18.                               AMENDMENT.  This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by you and by a duly authorized representative of the Company. Notwithstanding the foregoing, this Agreement may be amended solely by the Board by a writing which specifically states that it is amending this Agreement, so long as a copy of such amendment is delivered to you, and provided that no such amendment adversely affecting your rights hereunder may be made without your written consent. Without limiting the foregoing, the Board reserves the right to change, by written notice to you, the provisions of this Agreement in any way it may deem necessary or advisable to carry out the purpose of the grant as a result of any change in applicable laws or regulations or any future law, regulation, ruling, or judicial decision, provided that any such change shall be applicable only to rights relating to that portion of the Award which is then subject to restrictions as provided herein.Exhibit 10.0

 

 

Executive Incentive Compensation Plan

(“EICP”)

2012 Plan

 

 

 

 

 

 

 

 

As Approved by Compensation Committee and Board

 

April 24, 2012

 

 

	
2012 Executive Annual Incentive Plan
    

 

Introduction and Objective

Fox Chase Bank’s Executive Incentive Compensation Plan (“EICP”) is designed to recognize and reward executives for their performance and contribution to Company performance. The Plan is designed to reward predefined performance goals that are critical the Bank’s growth and profitability. This document summarizes the elements and features of the Plan.

In short, the objectives of the Incentive Plan are to:

	
·
    	
 
    	
Focus executive attention on key   business metrics that support the Bank’s business plan.
    
	
·
    	
 
    	
Align pay with   Bank and individual performance.
    
	
·
    	
 
    	
Encourage   teamwork and collaboration across all areas of the Bank. Our collective   contributions will drive improved business results.
    
	
·
    	
 
    	
Motivate managers   and reward the achievement of specific, measurable performance objectives   that are aligned with the key strategic business objectives for the Bank.
    
	
·
    	
 
    	
Provide   competitive total cash compensation at targeted performance levels with an   opportunity to receive significant rewards for exceeding performance goals
    
	
·
    	
 
    	
Enable the Bank   to attract and retain the talent needed to drive success.
    

 

Eligibility

	
·
    	
 
    	
Eligibility will be limited to   executive positions that have a significant impact on the success of the   organization. Participants will be nominated by the CEO and approved by the   Compensation Committee. Participants for 2012 include the CEO, COO &   CCO, CFO, and CLO.
    
	
·
    	
 
    	
Employees must be   employed by July 1 of the plan year in order to be eligible for that   year’s incentive. New employees will receive pro-rated awards based on date   of hire.
    
	
·
    	
 
    	
Participants must   be an active employee as of the date of award payout to receive an award,   unless they terminate due to reasons of death, disability (as determined by   the company) or retirement. Individuals who terminate for any of these   reasons during the plan year will receive a pro-rated award.
    

Performance Period

The performance period and plan operates on a calendar year basis (January 1 — December 31st).  Actual payout awards are made in cash following year-end after Fox Chase Bank’s audited financial results and performance are known.

 

Incentive Payout Opportunity

Each participant will have a target incentive opportunity based on his/her role at the Bank.  The target incentive will reflect a percentage of base salary and be determined consistent with competitive market practices. The incentive opportunities listed on the table below reflect a range of potential awards.  Actual awards may range from 0% of target (for not achieving minimal performance) to 150% of target (for exceptional performance).

 

The table on the following page summarizes the incentive target and opportunity ranges for each participant during the 2012 Plan year.

 

1

 

Incentive Payout Opportunity (continued)

 

	
2012 Short-Term Incentive Targets
    
	
Role
    	
Below
   Threshold
    	
Threshold
   (50% of Target)
    	
Target
   (100%)
    	
Stretch1
   (150% of Target)
    
	
CEO
    	
0%
    	
17.5%
    	
35.0%
    	
52.5%
    
	
Chief Operating/Credit Officer
    	
0%
    	
17.5%
    	
35.0%
    	
52.5%
    
	
Chief Financial Officer
    	
0%
    	
15.0%
    	
30.0%
    	
45.0%
    
	
Chief Lending Officer 
    	
0%
    	
15.0%
    	
30.0%
    	
45.0%
    

 

1 In order to achieve stretch payouts, the Bank must at least achieve the predefined threshold level of net income.

 

Actual payouts will vary depending on performance relative to the specific performance measures identified for each participant (i.e. the total opportunity will be divided according to the number of performance measures selected for each participant.)

 

Performance Measures

Incentives for all participants will be based on a combination of Bank and Individual performance.  The specific measures and the weights for each measure will vary based on the participant’s role.  The table below shows the allocation of the incentive relative to Bank and Individual performance:

 

	
Role
    	
Bank
    	
Individual
    
	
CEO
    	
100%
    	
0%
    
	
Chief Operating/Credit Officer
    	
65%
    	
35%
    
	
Chief Financial Officer
    	
70%
    	
30%
    
	
Chief Lending Officer 
    	
65%
    	
35%
    

 

In order to focus all participants on the Bank’s overall success and reinforce our team approach, all participants will be measured relative to two categories of performance, Bank (which range from 65% to 100% of each participant’s incentive award) and Individual (which range from 0% to 35% of each participant’s incentive award):

Long-Term Value of the Company

This measure reflects the executive team’s performance on the following factors: 1) Deploy capital effectively, 2) Hire and retain the right people, 3) Make sound and prudent financial/strategic choices about capital raises and outlays, 4) Make good judgments about risk and pricing and 5) Build high quality earnings.

Achieve Profit Plan Objectives

This measure reflects our performance relative to several key financial measures.

R          Core Net Income

R           Earnings Per Share

R           Core Tangible Book Value Per Share

R           Increase in Net Interest Income

R           Limit Increase in Core Non-Interest Expense

R           Core ROA

R           Core ROE

R           Non Performing Assets to Total Assets Ratio

 

2

 

Performance Measures (continued)

Performance on Long-term Value of the Company will be assessed based on Committee discretion and is intended to provide flexibility to consider factors that are critical to our long-term success.

 

Performance on Profit Plan Objectives will be evaluated by the Committee at the end of the year.

 

The remaining portion of the incentive awards (range from 0% - 35% depending on the participant) is based on a combination of other Bank and/or Individual goals.

 

SEE APPENDIX A FOR A DETAILED SUMMARY OF THE BANK AND INDIVIDUAL GOALS FOR EACH PARTICIPANT FOR 2012.

 

Performance Gate

In order to ensure incentives are funded based on our profits, the Bank must achieve at least threshold level of Net Income for any performance component to pay above target levels.  Threshold Net Income is defined as 80% of our budget/plan for the year.  Stretch is defined as 110% of our budget/plan for the year.  The plan may be adjusted for extraordinary items at the discretion of the Committee with Board approval.

 

Incentive Payouts

Awards will be paid as a cash bonus within 75 days and following the Plan year-end after Fox Chase Bank’s audited financial results and performance are known. These awards are based on performance relative to the defined goals.  Each participant’s award opportunity is allocated according to the weights for each core performance measure.  Performance of each specific goal (i.e. Long-term Value to the Company, Achieve Profit Plan Objectives, Drive Efficiency, Achieve Targeted Deposit Growth, Achieve Targeted Loan and Fee Growth, Individual Performance) is calculated independently to determine the payout for the goal.  The sum of the awards for each performance measure determines the total incentive award.

As described above, if the Bank does not achieve at least 80% of target Net Income, incentive payouts for any one performance measure will be capped at target level.

Board Discretion

The Committee reserves the right to apply positive or negative discretion to the plan as needed to reflect business environment and market conditions that may affect the Bank’s performance and incentive plan funding.  The Compensation Committee reserves the right to amend, modify and adjust payouts as necessary. See “Terms and Conditions” for further details on the Plan provisions.

 

SEE APPENDIX B FOR AN ILLUSTRATION OF A SAMPLE PERFORMANCE SCORECARD.

 

3

 

	
Terms and Conditions
    

 

Effective Date

This Program is effective January 1, 2012 to reflect plan year January 1, 2012 to December 31, 2012.  The Plan will be reviewed annually by the Bank’s Compensation Committee and Executive Management to ensure proper alignment with the Bank’s business objectives.  The Committee retains the rights as described below to amend, modify or discontinue the Plan at any time during the specified period. The Incentive Plan will remain in effect until December 31, 2012.

Program Administration

The Plan is authorized and administered by the Compensation Committee, which reports to the Board of Directors.  The Compensation Committee has the sole authority to interpret the Plan and to make or nullify any rules and procedures, as necessary, for proper administration.  Any determination by the Committee will be final and binding on all participants.  The Bank’s Executive Management prepares a quarterly scorecard for each Plan participant and the Compensation Committee reviews and authorizes the payment of each Participant’s Incentive Award.

Program Changes or Discontinuance

Fox Chase Bank has developed the plan based on existing business, market and economic conditions.  If substantial changes occur that affect these conditions, the Committee may add to, amend, modify or discontinue any of the terms or conditions of the plan at any time. The Committee retains the discretion to adjust results for one-time extraordinary events or adjust the budget/plan (with Board approval).

The Compensation Committee may, at its discretion subject to Board approval, waive, change or amend the Plan as it deems appropriate.

Incentive Award Payments

Awards will be paid as a cash bonus within 75 days following the Plan year.   Awards will be paid out as a percentage of a participant’s base salary earned during the year as of December 31 for a given calendar year. Incentive awards will be considered taxable income to participants in the year paid and will be subject to withholding for required income and other applicable taxes.

The Compensation Committee, in its sole discretion, may elect to distribute all or a portion of an incentive award in Company common stock to satisfy the stock ownership guidelines of Plan participants.  All Company common stock distributed under this Plan will be duly authorized under a Stock benefit plan adopted by the Board of Directors of the Company and approved by its stockholders.

Any rights accruing to a participant or his/her beneficiary under the Plan shall be solely those of an unsecured general creditor of Fox Chase Bank. Nothing contained in the Plan, and no action taken pursuant to the provisions hereof, will create or be construed to create a trust of any kind, or a pledge, or a fiduciary relationship between Fox Chase Bank and the participant or any other person. Nothing herein will be construed to require Fox Chase Bank to maintain any fund or to segregate any amount for a participant’s benefit.

 

Clawback Provision

In the event the Company is required to restate its financial statements, the effect of which negatively impacts reported financial results, participants will be required to forfeit any incentive award earned or distributed during the period for which the restatement is required in excess of what they would have otherwise received based on restated results.  The Compensation Committee has discretion in determining the application of clawbacks and the amounts to be reclaimed under this provision.

 

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New Hires, Promotions, and Transfers

Participants who are not employed by Fox Chase Bank at the beginning of the Plan year will receive a pro rata incentive award based on their length of employment during a given year.

A participant whose work schedule changes during the year will be eligible for prorated treatment that reflects his/her time in the different schedules.

If a participant changes his/her role or is promoted during the Plan year, he/she will be eligible for the new role’s target incentive award on a pro rata basis (i.e. the award will be prorated based on the number of months employed in the respective positions.)

Termination of Employment - General

Unless otherwise specified in this Plan, since the Plan is designed to encourage employees to remain in the employment of Fox Chase Bank or its affiliates, a participant must be an active employee of the Bank at the time the award is paid.

Termination of Employment without Cause

Unless otherwise noted in the Plan, if a Plan participant is terminated by the Bank or the Company without “cause” (as defined below), the participant’s potential incentive award may be prorated by the Compensation Committee.  The Compensation Committee will consider the following factors in its pro-ration process: (i) reason for termination of employment, (ii) level of achievement of the participant’s goals as of the participant’s date of termination, and (iii) other factors the Committee deems relevant to the specific situation.

For purposes of this Plan, a termination for “cause” shall mean termination because of a participant’s personal dishonesty, incompetence, wilfull misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform his or her job functions, willful violation of any law, rule, regulations (other than a traffic violation or similar offenses) or the participant’s breach of any cease and desist order issued by the Office of Thrift Supervsion  (or any successor agency) or the U.S. Securities and Exchange Commission.

Voluntary Resignation of Employment or Termination for Cause

If a Plan participant voluntarily resigns or is terminated by the Bank or Company for cause, no incentive award will be paid to the participant.

Voluntary Resignation Upon an Event of Termination

If a Plan participant maintains an employment agreement with the Bank or the Company and terminates his or her employment with the Bank or the Company under the terms of Section 4 of his or her employment agreement, the participant will receive a prorated incentive award.  The Compensation Committee will prorate the award based on the participant’s base salary earned as of his or her termination date or other factors the Compensation Committee deems relevant to the proration process.

 

Disability, Death and Retirement

Plan participant’s on long-term disability are not considered “actively employed” for the purposes of the Plan and therefore are not eligible to receive incentive awards during the period in which the participant is on long-term disability, but may earn a pro-rata portion based on their period of active service.   Participant’s on short-term disability may be eligible to participate in the Plan during the period the Participant is on short-term disability, at the discretion of the Compensation Committee.

In the event of death, Fox Chase Bank will pay to the participant’s estate the pro rata portion of the award that had been earned by the participant as of his or her date of death.  The Compensation Committee will determine what portion of the award had been earned based on: (i) the base salary earned by the participant as of his or her date of death and (ii) such other factors as the Committee deems relevant.

 

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Individuals who retire during the Plan Year will receive a prorated award based on their base salary earned as of their retirement date and other factors the Committee deems relevan.  For the purposes of this Plan, retirement is defined as age 65, consistent with guidelines established in Fox Chase Bank’s existing retirement plan.

 

Ethics and Interpretation

If there is any ambiguity as to the meaning of any terms or provisions of this plan or any questions as to the correct interpretation of any information contained therein, the Bank’s interpretation expressed by the Board of Directors will be final and binding.

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the employee to disciplinary action up to and including termination of employment.  In addition, any incentive compensation as provided by the plan to which the employee would otherwise be entitled will be revoked.

Participants who have willfully engaged in any activity, injurious to the Bank, will upon termination of employment, death, or retirement, forfeit any incentive award earned during the award period in which the termination occurred.

Miscellaneous

The Plan will not be deemed to give any participant the right to be retained in the employ of Fox Chase Bank, nor will the Plan interfere with the right of Fox Chase Bank to discharge any participant at any time.

In the absence of an authorized, written employment contract, the relationship between employees and Fox Chase Bank is one of at-will employment. The Plan does not alter this relationship.

This incentive plan and the transactions and payments hereunder shall, in all respect, be governed by, and construed and enforced in accordance with the laws of the state of Pennsylvania.

Each provision in this Plan 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 plan is proprietary and confidential to Fox Chase Bank and its employees and should not be shared outside the organization.

 

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