Attached files
| file | filename |
|---|---|
| 10-K - FORM 10-K - FIRST FINANCIAL CORP /IN/ | c14020e10vk.htm |
| EX-13 - EXHIBIT 13 - FIRST FINANCIAL CORP /IN/ | c14020exv13.htm |
| EX-21 - EXHIBIT 21 - FIRST FINANCIAL CORP /IN/ | c14020exv21.htm |
| EX-10.8 - EXHIBIT 10.8 - FIRST FINANCIAL CORP /IN/ | c14020exv10w8.htm |
| EX-31.1 - EXHIBIT 31.1 - FIRST FINANCIAL CORP /IN/ | c14020exv31w1.htm |
| EX-31.2 - EXHIBIT 31.2 - FIRST FINANCIAL CORP /IN/ | c14020exv31w2.htm |
| EX-10.1 - EXHIBIT 10.1 - FIRST FINANCIAL CORP /IN/ | c14020exv10w1.htm |
| EX-10.3 - EXHIBIT 10.3 - FIRST FINANCIAL CORP /IN/ | c14020exv10w3.htm |
| EX-32.2 - EXHIBIT 32.2 - FIRST FINANCIAL CORP /IN/ | c14020exv32w2.htm |
| EX-10.4 - EXHIBIT 10.4 - FIRST FINANCIAL CORP /IN/ | c14020exv10w4.htm |
| EX-32.1 - EXHIBIT 32.1 - FIRST FINANCIAL CORP /IN/ | c14020exv32w1.htm |
| EX-10.10 - EXHIBIT 10.10 - FIRST FINANCIAL CORP /IN/ | c14020exv10w10.htm |
Exhibit 10.9
FIRST FINANCIAL CORPORATION
2010 LONG-TERM INCENTIVE COMPENSATION PLAN
(Effective January 1, 2010)
ARTICLE I
ARTICLE I
Introduction
1.1 Objective. The First Financial Corporation 2010 Long-Term Incentive Compensation Plan is designed to
focus the efforts of key employees of the Company and its Subsidiaries on continued improvement in
the profitability of the Company and its Subsidiaries with the objective of providing an adequate
return to shareholders on their investment in the Company while at the same time assuring that
Awards under the Plan, in combination with the Company’s other compensation programs: (a) provide
Participants incentives that appropriately balance risk and reward; (b) are compatible with
effective controls and risk-management; and (c) are supported by strong oversight of the Board as
delegated to the Committee.
1.2 Administration of the Plan. The Plan will be administered by the Committee. The Committee will also (a) adopt such
rules and regulations as are appropriate for the proper administration of the Plan in a manner that
provides active and effective oversight of the Plan, and (b) make such determinations and take such
actions in connection with the Plan as it deems necessary provided that the Committee may take
action only upon the vote of a majority of its members. While the Committee may appoint
individuals to act on its behalf in the administration of the Plan, it will have the sole, final
and conclusive authority to administer, construe and interpret the Plan. The Committee’s
determinations and interpretations will be final and binding on all persons, including the Company,
its shareholders and persons having any interest in Awards. Any notice or document required to be
given to or filed with the Committee will be properly given or filed if delivered or mailed, by
certified mail, postage prepaid, to the Compensation Committee, First Financial Corporation Board
of Directors, at P.O. Box 540, Terre Haute, Indiana, 47808.
1.3 Definitions. Whenever the initial letter of the following words or phrases is capitalized in the Plan,
including any Supplements, they will have the respective meanings set forth below unless otherwise
defined herein:
| (a) | “Award” means the cash compensation awarded to a Participant pursuant to the
Plan. |
| (b) | “Award Rate” means the amount of cash, expressed as a percentage of a
Participant’s Base Salary as determined by the Committee. |
| (c) | “Base Salary” means the regular base salary and board of director fees actually
paid by the Company or a Subsidiary to an employee while such employee is a Participant
during calendar year 2010, exclusive of additional forms of compensation such as
bonuses, other incentive payments, automobile allowances, tax gross-ups and other
fringe benefits. Base Salary will include any board of director fees paid by the
Company, Subsidiary or affiliate as well as salary deferral contributions made pursuant
to Code Sections 401(k) and 125 and salary
deferral contributions made to the First Financial Corporation 2005 Executives’
Deferred Compensation Plan. |
| (d) | “Board” means the Board of Directors of the Company. |
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| (e) | “Cause” means: |
| (i) | An intentional act of fraud, embezzlement, theft or personal dishonesty;
willful misconduct, or breach of fiduciary duty involving personal profit by the
Participant in the course of his employment. No act or failure to act shall be deemed
to have been intentional or willful if it was due primarily to an error in judgment or
negligence. An act or failure to act shall be considered intentional or willful if it
is not in good faith and if it is without a reasonable belief that the action or
failure to act is in the best interest of the Company or a Subsidiary; |
| (ii) | Intentional wrongful damage by the Participant to the business or property of
the Company or a Subsidiary, causing material harm to the Company or a Subsidiary; |
| (iii) | Breach by the Participant of any confidentiality or non-disclosure agreement
in effect from time to time with the Company or a Subsidiary; |
| (iv) | Gross negligence or insubordination by the Participant in the performance of
his duties; or |
| (v) | Removal or permanent prohibition of the Participant from participating in the
conduct of Company’s or a Subsidiary’s affairs by an order issued under Section 8(e)(4)
or 8(g)(1) of the Federal Deposit Insurance Act, 12 USC 1818(e)(4) and (g)(1). |
| (f) | “Change in Control” means any of the following: |
| (i) | Change in Ownership. A change in the ownership of the
Company or a Subsidiary occurs on the date that any person, or group of
persons, as defined below, acquires ownership of stock of the Company or a
Subsidiary that, together with stock held by the person or group, constitutes
more than 50 percent of the total fair market value or total voting power of
the stock of the Company or a Subsidiary. However, if any person or group is
considered to own more than 50 percent of the total fair market value or total
voting power of the stock, the acquisition of additional stock by the same
person or group is not considered to cause a change in the ownership of the
Company or a Subsidiary (or to cause a change in the effective control of the
Company or a Subsidiary as defined in subsection 1.3(f)(ii). An increase in
the percentage of stock owned by any person or group, as a result of a
transaction in which the Company or a Subsidiary acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this
subsection 1.3(f)(i). This subsection 1.3(f)(i) only applies when there is a
transfer of stock of the Company or a Subsidiary (or issuance of stock of a corporation) and stock in
the Company or a Subsidiary remains outstanding after the transaction. |
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For purposes of subsections 1.3(f)(i) and 1.3(f)(ii), persons will not be
considered to be acting as a group solely because they purchase or own stock
of the Company or a Subsidiary at the same time, or as a result of the same
public offering. However, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock or similar business
transaction with the Company or a Subsidiary. If a person, including an
entity, owns stock in both corporations that enter into a merger,
consolidation, purchase or acquisition of stock or similar transaction, such
shareholder is considered to be acting as a group with other shareholders
only with respect to the ownership in that corporation before the
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation.
| (ii) | Change in the Effective Control. A change in the
effective control of the Company or a Subsidiary will occur when: (A) any
person or group acquires, or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person(s), ownership of stock
of the Company or a Subsidiary possessing 30 percent or more of the total
voting power; or (B) a majority of members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment or
election. However, if any person or group is considered to effectively control
the Company or a Subsidiary, the acquisition of additional control of the
Company or a Subsidiary by the same person(s) is not considered to cause a
change in the effective control. |
| (iii) | Change in the Ownership of a Substantial Portion of the
Subsidiary’s or Company’s Assets. A change in the ownership of a
substantial portion of the Company’s or a Subsidiary’s assets occurs on the
date that any person or group acquires, or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person(s),
assets from the Company or a Subsidiary that have a total gross fair market
value equal to or more than 40 percent of the total gross fair market value of
all of the assets of the Company or a Subsidiary immediately prior to such
acquisition(s). Gross fair market value means the value of the assets of the
Company or a Subsidiary, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such assets. |
However, there is no Change in Control under this subsection when there is a
transfer to an entity that is controlled by the shareholders of the Company
or a Subsidiary immediately after the transfer. A transfer of assets by the
Company or a Subsidiary is not treated as a change in the ownership of such
assets if the assets are transferred to: (A) a shareholder of the Company or
a Subsidiary (immediately before the asset transfer) in exchange for or with
respect to its stock; (B) an entity, 50 percent or more of the total value
or voting power of which is owned, directly or indirectly,
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by the Company or a Subsidiary; (C) a person, or group of persons, that
owns, directly or indirectly, 50 percent or more of the total value or
voting power of all the outstanding stock of the Company or a Subsidiary or
(D) an entity, at least 50 percent of the total value or voting power of
which is owned, directly or indirectly, by a person described in (C). For
purposes of this subsection 1.3(f)(iii), except as otherwise provided, a
person’s status is determined immediately after the transfer of the assets.
For example, a transfer to a corporation in which the Company or a
Subsidiary has no ownership interest before the transaction, but which is a
majority-owned subsidiary of the Company or a Subsidiary after the
transaction, is not treated as a change in the ownership of the assets of
the Company or a Subsidiary.
For purposes of this subsection 1.3(e)(iii), persons will not be considered
to be acting as a group solely because they purchase assets of the Company
or a Subsidiary at the same time. However, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of assets, or similar
business transaction with the Company or a Subsidiary. If a person,
including an entity shareholder, owns stock in both corporations that enter
into a merger, consolidation, purchase or acquisition of assets, or similar
transaction, such shareholder is considered to be acting as a group with
other shareholders in a corporation only to the extent of the ownership in
that corporation before the transaction giving rise to the change and not
with respect to the ownership interest in the other corporation.
Notwithstanding the foregoing, the acquisition of Company or Subsidiary stock by any
retirement plan sponsored by the Company or a Subsidiary or an affiliate of the
Company or a Subsidiary will not constitute a Change in Control.
| (g) | “Code” means the Internal Revenue Code of 1986, as amended. |
| (h) | “Company” means, unless otherwise stated, First Financial Corporation,
organized and existing under the laws of the State of Indiana, or any successor (by
merger, consolidation, purchase or otherwise) to such corporation which assumes the
obligations of such corporation under the Plan and the Subsidiaries of the Company. |
| (i) | “Committee” means the Compensation Committee of the Board. |
| (j) | “Effective Date” means January 1, 2010, which is the effective date of the
Plan. |
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| (k) | “Good Reason” means the occurrence of any of the following events, which has
not been consented to in advance by the Participant in writing: |
| (i) | The requirement that the Participant move his personal
residence; |
| (ii) | A reduction of ten percent or more in the Participant’s base
salary, unless part of an institution-wide reduction and similar to the
reduction in the base salary of all other similarly situated officers of the
Company or a Subsidiary; |
| (iii) | The removal of the Participant from participation in any
incentive compensation (including, but not limited to, the Plan) or
performance-based compensation plans or bonus plans unless the Company
terminates participation in the plan or plans with respect to all other
similarly situated officers of the Company or a Subsidiary; |
| (iv) | The assignment to the Participant of duties and
responsibilities materially different from those normally associated with his
position; or |
| (v) | A material diminution or reduction in the Participant’s
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Company or a Subsidiary. |
| (l) | “Notice of Award” means the notice provided to a Participant which outlines the
Award Rate, Performance Goals and other terms and conditions of their Award. |
| (m) | “Participant” means an individual who is employed by the Company and who is
designated as a Participant by the Committee. |
| (n) | “Performance Goals” means the financial performance levels with respect to the
Company and/or the Subsidiaries which must be met before an Award may be earned as set
forth in a Notice of Award. The Performance Goals will be determined by the Committee
utilizing the United States Treasury Department final “Guidance on Sound Incentive
Compensation Policies” and any subsequent guidance hereafter provided by applicable
statute, rule or regulation. |
| (o) | “Performance Period” means the period of time specified by the Committee during
which an Award may be earned |
| (p) | “Permanent and Total Disability” means a disability as determined under a
long-term disability insurance policy sponsored by the Company or a Subsidiary. |
| (q) | “Plan” means the long-term incentive compensation plan contained in this
instrument and any subsequent amendment to this instrument, which shall have been
adopted by the Board or Committee known as the First Financial Corporation 2010
Long-Term Incentive Compensation Plan. |
| (r) | “Retirement” or “Retires” means a Participant’s Termination of Service on or
after attaining age 65 for reasons other than death or Permanent and Total Disability. |
| (s) | “Subsidiary” means First Financial Bank and such other subsidiary corporations
of the Company which are designated by the Board or Committee as eligible to
participate in the Plan. |
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| (t) | “Termination of Service” means the occurrence of any act or event or any
failure to act, whether pursuant to an employment agreement or otherwise, that actually
or effectively causes or results in a Participant ceasing, for whatever reason, to be
an employee of the Company or a Subsidiary, including, but not limited to, death,
Permanent and Total Disability, Retirement, termination by the Company or a Subsidiary
of the Participant’s employment with the Company or a Subsidiary and voluntary
resignation or termination by the Participant of his or her employment with the Company
or a Subsidiary. |
ARTICLE II
Eligibility and Participation
Participation in the Plan is limited to those individuals who have been designated as
Participants by resolution of the Committee. A Participant will become covered by the Plan
effective as of the date on which the individual is designated a Participant by resolution of the
Committee.
ARTICLE III
Awards
3.1 Determination of Awards. The Committee shall determine (a) whether or not to make Awards, and (b) the terms and
conditions of an Award. The Committee may take into account such factors as it determines in its
discretion in determining the terms and conditions of an Award and the Award Rate. These factors
may include, but are not limited to, the nature of the services rendered by the Participant, his or
her current and potential contributions to the success of the Company, the Participant’s Base
Salary, and such other factors as the Committee, in its sole discretion, considers relevant.
3.2 Communication of Awards. The Committee will communicate to Participants in a Notice of Award the Award Rates,
Performance Goals (and their respective weightings) and any requirements or other criteria with
respect to an Award.
3.3 Considerations in Establishing Performance Goals. In determining appropriate Performance Goals and the relative weight accorded each Performance
Goal, the Committee must:
| (a) | Balance risk and financial results in a manner that does not encourage
Participants to expose the Company and its Subsidiaries to imprudent risks; |
| (b) | Make such determination in a manner designed to ensure that Participant’
overall compensation is balanced and that the Awards are consistent with the policies
and procedures of the Company and its Subsidiaries regarding such compensation
arrangements; and |
| (c) | Monitor the success of the Performance Goals and weighting, alone and in
combination with other incentive compensation awarded to the same Participants,
and make appropriate adjustments in future calendar years as needed so that payments
appropriately incentivize Participants and appropriately reflect risk. |
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3.4 Components of Calculation. The Committee, in its sole discretion, will establish the following business criteria for
calculating Awards to Participants with respect to the Company and the Subsidiaries:
| (a) | The Performance Goals; |
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| (b) | The relative weight accorded each Performance Goal; and |
| (c) | The threshold, target and maximum Award Rates for each Participant. The
calculation of Awards will be made by interpolating within the interval between the
target Award Rate and the threshold Award Rate and between the target Award Rate and
the maximum Award Rate, and rounding to the nearest dollar. |
3.5 Earning of Awards.
| (a) | An Award will be treated as earned to the extent: |
| (i) | The threshold, target or maximum Performance Goals are met; and |
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| (ii) | The Participant is employed on the last day of the Performance
Period. |
| (b) | In the event a Participant incurs a Termination of Service before the end of
the Performance Period, he will not earn any portion of his Award unless his employment
with the Company or a Subsidiary terminates for one of the following reasons: |
| (i) | The Participant dies. |
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| (ii) | The Participant incurs a Termination of Service due to a
Permanent and Total Disability. |
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| (iii) | The Participant Retires. |
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| (iv) | The Participant incurs a Termination of Service for Good
Reason. |
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| (v) | The Participant’s employment is terminated without Cause. |
| (c) | If at least the threshold Performance Goals are met but the Participant incurs
a Termination of Service due to one or more of the circumstances described in
subsections 3.5(b)(i) through 3.5(b)(v), he will earn a pro rata portion of the Award
that he would otherwise be entitled to for calendar year 2010. The Award will be
calculated at the level attained based on the ratio that the number of days during the
2010 calendar year in which he was actually employed bears to 365. |
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3.6 Vesting of Earned Awards.
| (a) | Except as set forth in subsection 3.6(b), a Participant will become vested in
his or her earned awards in accordance with the following schedule provided he or she
is employed on the applicable vesting date. |
| Anniversary of | Vested | Forfeited | ||||||
| Earning Date | Percentage | Percentage | ||||||
1st |
33 | % | 67 | % | ||||
2nd |
66 | % | 34 | % | ||||
3rd |
100 | % | 0 | % | ||||
| (b) | Notwithstanding subsection 3.6(a), in the event: |
| (i) | The Participant dies; |
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| (ii) | The Participant incurs a incurs a Termination of Service due to
a Permanent and Total Disability; |
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| (iii) | The Participant Retires; |
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| (iv) | The Participant incurs a Termination of Service for Good
Reason; or |
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| (v) | The Participant’s employment is terminated without Cause, |
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he will not forfeit his earned Award. In such cases, a Participant will be
100 percent vested in his earned Award and payment will made within 30 days
of the date of Termination of Service. |
| (c) | In the event of a Change in Control, a Participant will be 100 percent vested
in his earned Award and payment will be made as of the date of the Change in Control. |
3.7 Time and Form of Payment of Vested Awards. Except as otherwise provided in Section 3.6, the vested portion of Awards will be paid in
single sum in cash within 75 days after the time it becomes vested.
3.8 Clawback of Awards. In the event the Company is required to prepare an accounting restatement due to the
Company’s material noncompliance with any financial reporting requirement under securities laws,
and the Company paid an Award to a Participant which was based on the erroneous data within three
years preceding the date of the accounting restatement, then the Participant is required to repay
the Company the excess amount which would not have been paid to the Participant under the
accounting restatement.
3.9 Withholding of Taxes. Each Participant will be solely responsible for, and the Company will withhold from any
amounts payable under the Plan, all applicable federal, state, city and local income taxes and the
Participant’s share of applicable employment taxes.
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ARTICLE IV
Miscellaneous
4.1 Amendment or Termination. The Board or the Committee may, at any time, alter, amend, modify, suspend or terminate the
Plan, but may not, except as provided in Section 3.8, without the consent of a Participant to whom
an Award has been made, make any alteration which would adversely affect an Award previously
granted under the Plan.
4.2 Employment Rights. The Plan does not constitute a contract of employment, and participation in the Plan will
not give a Participant the right to be rehired or retained in the employ of the Company or any
Subsidiary, nor will participation in the Plan give any Participant any right or claim to any
benefit under the Plan, unless such right or claim exists under the terms of the Plan.
4.3 Evidence. Evidence required of anyone under the Plan may be by certificate, affidavit, document or
other information which the person relying thereon considers pertinent and reliable, and signed,
made or presented by the proper party or parties.
4.4 Gender and Number. Where the context permits, words in the masculine gender will include the feminine gender,
the plural will include the singular and the singular will include the plural.
4.5 Action by the Board or Committee. Any action required of or permitted by the Board or Committee under this Plan will be by
resolution of the Board, the Committee or by a person or persons authorized by resolution of the
Board or Committee.
4.6 Controlling Laws. Except to the extent superseded by laws of the United States, the laws of Indiana will be
controlling in all matters relating to the Plan. The Plan and all Awards are intended to be exempt
from the applicable provisions of Code Section 409A. To the extent Code Section 409A applies, the
Plan and all Awards intend to comply, and will be construed by the Board in a manner which complies
with the applicable provisions of Code Section 409A. To the extent there is any conflict between a
provision of the Plan or an Award and a provision of Code Section 409A, the applicable provision of
Code Section 409A will control.
4.7 Mistake of Fact. Any mistake of fact or misstatement of fact will be corrected when it becomes known and
proper adjustment made by reason thereof.
4.8 Severability. In the event any provision of the Plan is held to be illegal or invalid for any reason,
such illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be
construed and endorsed as if such illegal or invalid provision had never been contained in the
Plan.
4.9 Effect of Headings. The descriptive headings of the Articles and Sections of the Plan are inserted for
convenience of reference and identification only and do not constitute a part of the Plan for
purposes of interpretation.
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4.10 Nontransferability. No Award or Award payment will be transferable, except by the Participant’s will or the
applicable laws of descent and distribution. During the Participant’s lifetime, his Award will be
payable only to the Participant or his guardian or attorney-in-fact. The payment and any rights
and privileges pertaining thereto may not be transferred, assigned, pledged or hypothecated by him
in any way, whether by operation of law or otherwise and will not be subject to execution,
attachment or similar process.
4.11 No Liability. No member of the Board or the Committee or any officer or Participant of the Company or
Subsidiary will be personally liable for any action, omission or determination made in good faith
in connection with the Plan. The Company will indemnify and hold harmless the members of the
Committee, the Board and the officers and Participants of the Company and its Subsidiaries, and
each of them, from and against any and all loss which results from liability to which any of them
may be subjected by reason of any act or conduct (except willful misconduct or gross negligence) in
their official capacities in connection with the administration of the Plan, including all expenses
reasonably incurred in their defense, in case the Company fails to provide such defense. By
participating in the Plan, each Participant agrees to release and hold harmless each of the
Company, the Subsidiaries (and their respective directors, officers and employees), the Board and
the Committee, from and against any tax or other liability, including without limitation, interest
and penalties, incurred by the Participant in connection with his participation in the Plan.
4.12 Funding. All amounts payable under the Plan will be paid by the Company from its general assets.
The Company is not required to segregate on its books or otherwise establish any funding procedure
for any amount to be used for the payment of benefits under the Plan. The Company may, however, in
its sole discretion, set funds aside in investments to meet its anticipated obligations under the
Plan. Any such action or set-aside amount may not be deemed to create a trust of any kind between
the Company and any Participant or beneficiary or to constitute the funding of any Plan benefits.
Consequently, any person entitled to a payment under the Plan will have no rights against the
assets of the Company greater than the rights of any other unsecured creditor of the Company.
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