Document:

ex10-1.htm

Exhibit 10.1

 

Park Sterling Corporation

 

Executive Incentive Program

 

November 22, 2016

 

This document outlines the Park Sterling Corporation Executive Incentive Program (the “Program”) pursuant to which selected key employees of Park Sterling Corporation (“Park Sterling”) and its Affiliates may earn annual cash incentive compensation upon the achievement of specified performance goals. This Program is offered by Park Sterling under the Park Sterling Corporation 2014 Long-term Incentive Plan, as may be amended or restated from time to time (the “2014 LTIP”) and the incentive compensation opportunities granted hereunder are considered Cash Performance Awards, as described in the 2014 LTIP. The terms and conditions of the 2014 LTIP are incorporated herein.

 

Capitalized terms not otherwise defined in this Program shall have the meanings given to them under the 2014 LTIP. 

 

	
1.
	
Purpose

 

The purpose of the Program is to provide Participants the opportunity to earn annual cash incentive compensation (a “Bonus”) based on the achievement of specified performance goals that will further Park Sterling’s strategic plan and generate value for Park Sterling’s shareholders. The Program is further intended to assist Park Sterling in its ability to motivate, attract and retain qualified executives.

 

	
2.
	
Effective Date; Performance Periods

 

This Program is effective November 22, 2016 (the “Effective Date”). The initial period over which performance will be measured under the Program will be from January 1, 2016 through December 31, 2016 (the “Initial Performance Period”). Following the Initial Performance Period, the Program shall automatically renew and continue for successive one-year periods (each such successive calendar year performance period being a “Program Year”) unless otherwise terminated or modified in accordance with the Program and specifically approved by the Committee. 

 

	
3.
	
Eligibility

 

Participation is limited to Park Sterling’s Chief Executive Officer (the “CEO”) and those executives or other employees of Park Sterling and its Affiliates recommended by the CEO and approved by the Committee (the CEO and selected executives and/or employees, collectively, “Participants”. The Committee shall retain the discretion to include a Participant and any otherwise-eligible executive hired or promoted after the commencement of a Program Year. In addition, the Committee shall retain the discretion to exclude any individual it determines appropriate; provided, that if such individual is already a Participant for a particular Program Year, the Committee may only exclude such individual on a prospective basis for future Program Years.

 

 

 

 

 

	
4.
	
Target Award; Performance Goals

 

The Committee shall establish the target amount of each Participant’s potential Award under this Program (the “Target Award”) and the applicable Performance Goals (as set forth in the 2014 LTIP) applicable to a Participant’s Award. The Target Amount and the specific formula and weighting for each Performance Goal shall be set forth on each Participant’s “Participation Notice,” a form of which is attached hereto as Attachment A. The Committee shall also establish whether any performance thresholds or maximum payments will apply to a particular Award. In the event the Committee establishes a performance threshold and/or maximum payment and the performance achievement falls between such threshold, target and/or maximum, a Participant’s Award will be calculated using linear interpolation.

 

	
5.
	
Administration

 

The Program shall be administered by the Committee in accordance with the terms and conditions of the 2014 LTIP. The Committee may consult with the CEO and other executives and employees of Park Sterling and its Affiliates with respect to establishing a Participant’s Target Award and Performance Goals (as described in Section 4 above); however, all decisions under this Program shall be made exclusively by the Committee.

 

For the 2017 Program Year and for each subsequent Program Year thereafter and in accordance with Section 3.1(b) of the 2014 LTIP, the Committee shall:

 

	
 
	
(a)
	
Establish the applicable Target Amount, Performance Goals and the specific formula and weighting for each Performance Goal with respect to each Participant before twenty-five percent (25%) of the performance period has elapsed, but in no event later than ninety (90) days after the first day of the applicable performance period;

 

	
 
	
(b)
	
Ensure that at the time any Performance Goals are established that the outcome with respect to such Performance Goals is substantially uncertain; and

 

	
 
	
(c)
	
Certify in writing following the end of the applicable performance period and prior to vesting, settlement or payment, whether or not and the degree to which any Performance Goals have been satisfied.

 

For purposes of clarity and in recognition of the Program’s Effective Date, the Committee shall not be required to take the actions described in Sections 5(a) and 5(b) above with respect to the 2016 Program Year; however, the Committee shall certify in writing the achievement of Performance Goals with respect to the 2016 Program Year, as described in Section 5(c).

 

Notwithstanding the foregoing, the Committee may determine either during an applicable Program Year or following the conclusion of an applicable Program Year and its determination of Performance Goal achievement, to exercise negative discretion, to decrease (but never increase), the amount of a Participant’s Bonus payable to the Participant pursuant to this Program. Any exercise of negative discretion by the Committee shall be performed in a manner consistent with the requirements of Code Section 162(m).

 

 

 

 

 

	
6.
	
Conditions to Payment

 

A Participant must remain continuously employed by Park Sterling or an Affiliate throughout the applicable Program Year and through the date of payment in order to receive any payment pursuant to this Program. Except as described below, in the event that a Participant ceases to remain continuously employed by Park Sterling or an Affiliate throughout the applicable Program Year and through the date of payment, the Participant shall not be entitled to any payment pursuant to this Program. Any payments made pursuant to this Program shall be made following the end of the applicable Program Year and the Committee’s written certification of the achievement of the applicable Performance Goals (as described in Section 5 above) but prior to March 15th of the year following the end of the Program Year.

 

Notwithstanding the foregoing, in the event that during a Program Year, (a) a Participant’s employment with Park Sterling and its Affiliates terminates due to the Participant’s (i) death, (ii) Disability, or (iii) Retirement (as defined below), or (b) the Participant transfer out of an eligible position prior to the end of the Program Year (for any reason), the Participant shall remain eligible to receive a Bonus for such Program Year. Any such Bonus shall be based on the achievement of the applicable Performance Goals and the amount of any such Bonus shall be prorated by the number of complete months the Participant was employed by Park Sterling or its Affiliates divided by the total number of months in the Program Year. For purposes of this Program, the term “Retirement” shall mean, upon the consent of the Committee, the Participant voluntary terminates their employment with Park Sterling and its Affiliates upon reaching the age of 55 with 10 years of credited service, or after reaching the age of 65.

 

In addition, a Participant shall forfeit any right to payment pursuant to this Program under the following circumstances:

 

	 	
(a)
	
The issuance by any regulatory agency of a formal, written enforcement action, memorandum of understanding or other negative directive action where the Committee determines it imprudent to pay Bonuses under this Program;

 

	 	
(b)
	
The Committee’s determination, after a review of Park Sterling’s and its Affiliate’s credit quality measures, that it is imprudent to pay Bonuses under this Program;

 

	 	
(c)
	
A Participant who receives a performance evaluation of “Below Expectations”;

 

	 	
(d)
	
A Participant is on “Corrective Action” at the time payments are to be made under this Program; or

 

	 	
(e)
	
The Committee’s determination that a Participant has materially violated any of Park Sterling’s or its Affiliate’s Code of Ethics, information security or other company policies.

 

	
7.
	
Cash Payments; Tax Withholding; Deferrals

 

Bonuses earned under the Program will be calculated and paid in cash, less deferrals and applicable federal, state and local taxes. 

 

 

 

 

 

	
8.
	
Modification and Termination of Program

 

The Program may be modified or changed at any time by the Committee in its discretion, followed by written notification to the Participant as soon as reasonably practicable. The Program may be terminated at any time by the Committee in its discretion, followed by written notification to the Participant as soon as reasonably practicable. In the event of a Program termination, the Participant shall continue to be eligible for incentive compensation awards for the Program Year based on the actual achievement of the applicable Performance Goals and prorated based on the number of full months prior to the Program’s termination date over the number of total months in the Program Year, unless the Committee determines in its discretion that no incentive compensation should be paid. Payment of any amounts due to Participants following the Program’s termination shall be paid at the time specified and according to the conditions set forth above.

 

	
9.
	
Participant Rights Not Assignable; Program not a Contract

 

Any Awards made or Bonuses paid pursuant to this Program shall not be subject to assignment, pledge or other disposition. Nothing contained in the Program shall confer upon any Participant any right to continued employment or to receive or continue to receive any rate of pay or other compensation, nor does the Program affect the right of Park Sterling or its Affiliates to terminate a Participant’s employment. Participation in the Program does not confer rights to participation in any other program or future Program Years, including annual or long-term incentive programs, non-qualified retirement or deferred compensation programs or other executive perquisite programs sponsored or maintained by Park Sterling or any of its Affiliates.

 

	
10.
	
Ethical Statement

 

The Participant is subject to Park Sterling’s and its Affiliates’ Code of Ethics and any violations of this code or any other policy of Park Sterling and its Affiliates, or any breach by the Participant of the provisions of the Program, as determined by the Committee in its discretion, may result in a reduction of or disqualification from payments under the Program and disciplinary action up to and including termination.

 

	
11.
	
Governing Law and Venue

 

The interpretation and enforcement of the Program shall be governed by the laws of the State of North Carolina, and any action to enforce or determine any rights under the Program shall be brought exclusively in the Circuit Court of Mecklenburg County, North Carolina. By participating in this Program, the Participant consents and waives any objection to personal jurisdiction and venue in such court. The Program, and any payments thereunder, shall not be subject to the Employee Retirement Income Security Act.

 

 

 

 

 

	
12.
	
Attorney’s Fees and Costs

 

In the event of any legal action arising out of or relating to the interpretation or enforcement of the Program, Park Sterling shall be entitled to recover any attorney’s fees and costs incurred by Park Sterling or its Affiliates in the event that they are (or either of them is) the prevailing party.

 

	
13.
	
No Oral or Written Representations

 

Each Participant, by participating in this Program, acknowledges and agrees that no oral or written representation or promises not set forth herein have been made by Park Sterling or any Affiliate, and that the terms of the Program are set forth solely in this written Program document and the 2014 LTIP, which together, constitutes the complete and entire terms and conditions relating to this Program.

 

	
14.
	
Clawback

 

Any payments made pursuant to this Program are subject to any clawback or compensation recoupment policy or program adopted or maintained by Park Sterling or its Affiliates.

 

	
15.
	
Banking Regulatory Provision

 

All incentive compensation awards under the Program are subject to any condition, limitation or prohibition under any financial institution regulatory policy or rule to which Park Sterling or its Affiliates are subject.

 

 

 

 

 

Attachment A

 

2016 Program Year Participation Notice

 

 

Performance Goal(s):

 

Target Award Opportunity:

 

 

 

 

 

ACKNOWLEDGEMENT

I acknowledge that I have read and understand the Program described above. I understand that the Program is not a contract and may be revised, amended, or terminated at any time as more fully set forth above. Information regarding this Program is confidential and should not be shared with others.

 

 

 

 

PARTICIPANT:

 

                                                          

Signature

 

  

                                                           

Print Name

 

 

                                                          

Dateex10-2.htm

Exhibit 10.2

 

FIRST AMENDMENT TO THE

PARK STERLING BANK 

DEFERRED COMPENSATION PLAN

 

THIS FIRST AMENDMENT (the “Amendment”) is adopted effective as of the 16th day of June, 2016, by Park Sterling Bank located in Charlotte, North Carolina (the “Bank). 

 

The Bank implemented a Deferred Compensation Plan effective December 19, 2012 (the “Plan”) to allow certain employees and directors of the Bank to defer their compensation in accordance with Internal Revenue Code Section 409A. The Bank now wishes to amend the Plan to incorporate certain election timing procedures for deferrals of compensation which meets the definition of Performance Based Compensation provided by the regulations implementing Internal Revenue Code Section 409A and to make certain other changes, as described herein.

 

NOW, THEREFORE, the Company adopts the following amendments to the Plan:

 

Section 1.7 of the Plan shall be deleted in its entirety and replaced by the following:

 

1.7     “Bonus” means the cash bonus, if any, awarded to the Participant for services performed for the Bank during the Plan Year. For purposes of clarity, a Participant’s Bonus may be considered Performance-Based Compensation.

 

Section 1.16 of the Plan shall be deleted in its entirety and replaced by the following:

 

1.16     “Deferrals” means the amount of Base Salary, Bonus (including Bonuses that qualify as Performance-Based Compensation), and/or Fees a Participant elects to defer according to the terms of this Plan.

 

The following Section 1.26a shall be added to the Plan immediately following Section 1.26:

 

1.26a     “Performance-Based Compensation” shall mean compensation the amount of which or entitlement to is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least 12 consecutive months, as determined by the Administrator in accordance with Treas. Reg. §1.409A-1(e).

 

Section 3.1 of the Plan shall be deleted in its entirety and replaced by the following:

 

3.1     Elections Generally. Each Participant may annually file a Deferral Election Form with the Administrator no later than the end of the Plan Year preceding the Plan Year in which services leading to the Base Salary, Bonus or Fees to be deferred will be performed. Notwithstanding the foregoing and solely with respect to Deferrals that qualify as Performance-Based Compensation, each Participant may file a Deferral Election Form with the Administrator no later than six months prior to the end of the performance period over which the Performance Based Compensation to be deferred may be earned, according to the terms of Treas. Reg. §1.409A-2(a)(8).

 

 

 

 

 

Section 3.2 of the Plan shall be deleted in its entirety and replaced by the following:

 

3.2     Initial Election. After being notified by the Administrator of becoming eligible to participant in this Plan, each Participant may make an initial deferral election by delivering to the Administrator a signed Deferral Election Form within thirty (30) days of becoming eligible. The Deferral Election Form shall set forth the amount of Base Salary, Bonus (which may include any Bonuses that qualify as Performance-Based Compensation) and/or Fees to be deferred. However, if the Participant was eligible to participate in any other account balance plans (as referenced in Code Section 409A) sponsored by the Bank or any other entity that would be, together with the Bank, be considered a “service recipient” as described in Treas. Reg. §1.409A-1(g), the initial election to defer under this Plan shall not be effective until the Plan Year following the Plan Year in which the Participant became eligible to participate in this Plan. Any initial election with respect to Deferrals shall be made in accordance with the requirements and be with respect to such amounts as permitted pursuant to Treas. Reg. §1.409A-2.

 

Section 3.3 of the Plan shall be deleted in its entirety and replaced by the following:

 

3.3     Election Changes. With respect to Deferrals other than Deferrals of Performance-Based Compensation, the Participant may modify the amount of Deferrals annually by filing a new Deferral Election Form with the Bank. With respect to Deferrals of Performance-Based Compensation, the Participant may modify the amount of Deferrals according to the rules set forth in Section 3.1 and Treas. Reg. §1.409A-2(a)(8). Any changes to an In Service Distribution election must comply with the restrictions described in Section 5.16.

 

Section 5.15 of the Plan shall be deleted in its entirety and replaced by the following:

 

5.15     Code Section 280G Provisions. Notwithstanding any other provision in this Plan to the contrary, any payment or benefit received or to be received by a Participant in connection with a “change in ownership or control” (as such term is defined under Section 280G of the Code — a “Corporate Transaction”) or the termination of employment (whether payable under this Plan or any other plan, arrangement or agreement with the Bank or its subsidiaries and affiliates (collectively, the “Payments”) that would constitute a “parachute payment” within the meaning of Section 280G of the Code, shall be reduced to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), but only if, by reason of such reduction, the net after-tax benefit received by the Participant shall exceed the net after-tax benefit that would be received by the Participant if no such reduction was made.  Whether and how the provisions of this Section 5.15 are applicable shall be determined as set forth below.

 

(a)     The “net after-tax benefit” shall mean (i) the Payments (as defined in this Section 5.15) which the Participant receives or is then entitled to receive from the Bank or a subsidiary or affiliate that would constitute “parachute payments” within the meaning of Code Section 280G, less (ii) the amount of all federal, state and local income and employment taxes payable by the Participant with respect to the foregoing calculated at the highest marginal income tax rate for each year in which the foregoing shall be paid to the Executive (based on the rate in effect for such year as set forth in the Code as in effect at the time of the first payment of the foregoing), less (iii) the amount of Excise Tax imposed with respect to the payments and benefits described in (i) above.

 

 

 

 

 

(b)     All determinations under this Section 5.15 will be made by an accounting firm or law firm that is selected for this purpose by the Bank prior to a Corporate Transaction (the “280G Firm”).  All fees and expenses of the 280G Firm shall be borne by the Bank.  The Bank will direct the 280G Firm to submit any determination it makes under this Section 5.15 and detailed supporting calculations to both the Participant and the Bank as soon as reasonably practicable.

 

(c)     If the 280G Firm determines that one or more reductions are required under this Section 5.15, the 280G Firm shall also determine which Payments shall be reduced (first from non-cash benefits and then from cash payments) to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code, and the Bank shall pay such reduced amount to the Participant.  The 280G Firm shall make reductions required under this Section 5.15 in a manner that maximizes the net after-tax amount payable to the Participant.

 

(d)     As a result of the uncertainty in the application of Section 280G of the Code at the time that the 280G Firm makes its determinations under this provision, it is possible that amounts will have been paid or distributed to the Particpant that should not have been paid or distributed (collectively, the “Overpayments”), or that additional amounts should be paid or distributed to the Participant (collectively, the “Underpayments”).  If the 280G Firm determines, based on either the assertion of a deficiency by the Internal Revenue Service against the Bank or the Participant, which assertion the 280G Firm believes has a high probability of success or controlling precedent or substantial authority, that an Overpayment has been made, the Participant must repay the Overpayment amount promptly to the Bank, without interest; provided, however, that no loan will be deemed to have been made and no amount will be payable by the Participant to the Bank unless, and then only to the extent that, the deemed loan and payment would either reduce the amount on which the Participant is subject to tax under Section 4999 of the Code or generate a refund of tax imposed under Section 4999 of the Code.  If the 280G Firm determines, based upon controlling precedent or substantial authority, that an Underpayment has occurred, the 280G Firm will notify the Participant and the Bank of that determination, and the Underpayment amount will be paid to the Participant promptly by the Bank.

 

(e)     The Participant will provide the 280G Firm access to, and copies of, any books, records and documents in the Participant’s possession as reasonably requested by the 280G Firm, and otherwise cooperate with the 280G Firm in connection with the preparation and issuance of the determinations and calculations contemplated by this Section 5.15.

 

 

 

 

 

Section 7.6 of the Plan shall be deleted in its entirety and replaced by the following:

 

7.6     Termination of Participation. If the Administrator determines in good faith that the Participant no longer qualifies as a member of a select group of management or highly compensated employees, as determined in accordance with ERISA, the Administrator shall have the right, in its sole discretion, to prohibit the Participant from future participation in the Plan and such Participant’s participation in the Plan shall cease in accordance at such a time and in such a manner as is compliant with Code Section 409A.

 

 

 

IN WITNESS WHEREOF, a representative of the Bank has executed this Amendment as indicated below and as of the date above:

 

Company:

 

 

 

By: James C. Cherry

Its: Chief Executive Officer

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