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EXHIBIT (10.8)
FIRST INTERSTATE
1995 MANAGEMENT INCENTIVE PLAN
Effective January 1, 1995
1. Objectives. The 1995 Management Incentive Plan is
designed to focus the efforts of certain key employees of
First Interstate on the continued improvement in the
performance of First Interstate and to aid in attracting,
motivating and retaining superior executives by providing an
incentive and reward for those key employees who contribute
most to the operating progress and performance of First
Interstate.
2. Definitions. The following definitions shall be
applicable to the terms used in the Plan:
(a) "Administrator" means the Chief Executive
Officer of Bancorp.
(b) "Award" means a cash distribution to be made
to a Participant for a Performance Year as determined in
accordance with the provisions of the Plan.
(c) "Award Fund" means the total of the Target
Awards for each Participant as determined and approved in
accordance with Section 5 hereof.
(d) "Bancorp" means First Interstate Bancorp, a
Delaware corporation.
(e) "Change in Control" shall have the meaning
set forth in Section 17.
(f) "Committee" means the Compensation Committee
of the Board of Directors of Bancorp.
(g) "First Interstate" means the consolidated
group of companies comprising First Interstate Bancorp.
(h) "Fiscal Year" means the customary fiscal year
of Bancorp.
(i) "Offset Value" shall have the meaning set
forth in Section 18(b) and (c).
(j) "Participant" means a person who, pursuant to
Section 4 hereof, is designated as a Participant in the Plan
for a Fiscal Year.
(k) "Performance Year" means the Fiscal Year.
(l) "Plan" means this First Interstate 1995
Management Incentive Plan, as set forth herein.
(m) "Policies" shall have the meaning set forth
in Section 18(a).
(n) "PSP" shall have the meaning set forth in
Section 7(c).
(o) "Split-Dollar Life Insurance Agreement" shall
have the meaning set forth in Section 18(a).
(p) "Subsidiary" means a bank, corporation,
association or similar organization of which the majority of
the outstanding shares of voting stock is owned directly or
indirectly by Bancorp, directly or indirectly.
(q) "Target Award" is determined for each
Participant by multiplying the Participant's base pay rate
in effect at the end of the Performance Year by the Target
Award Percentage applicable to the Participant set forth
under Item I of the Target Award Guidelines attached as
Table A.
3. Adoption and Administration of the Plan. The Plan
shall become effective as of January 1, 1995 upon adoption
by the Committee. Subject to the provisions of this Plan
and in the absence of specific action by the Committee, this
Plan shall be administered by the Administrator. The Plan
shall not be modified except with the consent of the
Committee. All decisions of the Administrator or the
Committee shall be final and binding.
4. Participation and Target Awards.
(a) Determination of Participants and Target
Awards. Prior to the beginning of each Performance Year, or
as soon as practicable thereafter, the Administrator shall
prepare a list of proposed Participants in the Plan for
such Performance Year and shall, for each such Participant
establish a preliminary Target Award Percentage. Each
Subsidiary shall be given an opportunity to make suggestions
with respect to both proposed Participants and their
preliminary Target Award Percentages. Any such suggestions
shall, however, not be binding on the Administrator.
Additional Participants may be included during the
Performance Year and, as provided in the Plan, participation
for an individual may be terminated. Except as provided in
Section 8(b) and 10, to be considered eligible for an Award,
a Participant must participate in the Plan for at least six
months during the Performance Year.
(b) Notification. Each Participant shall be noti-
fied of his or her participation in the Plan for such Per-
formance Year or shall be notified of his or her termina-
tion, as applicable, by a letter from the Administrator or
his or her designee. A summary of this Plan shall be pro-
vided to each Participant. A Participant shall have no
right to or interest in an Award unless and until the
Participant's Award has been determined and allocated to
the Participant.
5. Determination of Award Fund.
(a) Performance Review. As soon as practicable
after the close of each Performance Year, a determination of
the Corporation's performance and the performance of each
Region participating in this Plan shall be made by the
Administrator. The Administrator's determination shall be
subject to approval by the Committee.
(b) Award Fund. The Committee shall determine the
total amount of the Award Fund authorized for First
Interstate for the Performance Year. The Award Fund shall
contain a separate pool of funds for Bancorp and each
participating Subsidiary. The Award Fund amount for Bancorp
and each participating Subsidiary may be determined in any
manner the Committee deems appropriate from time to time.
Without limiting the Committee's discretion to choose other
methods to calculate the size of the Award Fund, it is
anticipated that the Award Fund amount for the Participants
employed by Bancorp or a participating Subsidiary will equal
the sum of the Target Awards for each Participant of Bancorp
or the participating Subsidiary, as applicable, multiplied
by the following percentage calculated for such a
Participant:
(AxC) + (BxD),
where A is the percentage, if any, of the Participant's
Award to be based on First Interstate's performance, B is
the percentage, if any, of the Participant's Award to be
based on a Region's performance, as such percentages are set
forth under Item II of the Target Award Guidelines attached
as Table A, C is a percentage representing the performance
of First Interstate determined by the Administrator, and D
is a percentage representing the performance of the Region
determined by the Administrator.
6. Allocation of Award Fund to Participants. The
Award Fund shall be available for allocation to Participants
on a totally discretionary basis in a manner designed to
give the Administrator the flexibility to take into account
the individual performance of each Participant. Based on
its evaluation of a Participant's performance, the
Administrator may determine an Award equal to any percentage
of the Participant's Target Award up to the maximum
percentage set forth under Item III of the Target Award
Guidelines attached as Table A. The total Awards determined
by the Administrator for Bancorp or a participating
Subsidiary for a Performance Year shall not exceed the
amount of the Award Fund for the particular employer for
such Performance Year. In the event the amount of the Award
Fund exceeds the total Awards for a Performance Year, such
excess shall not be carried forward for purposes of Awards
in future Performance Years. Award payments will be charged
against Bancorp or the Subsidiary for which the Participant
is an employee, as appropriate.
7. Time of Payment of Awards, Deferrals, Hardships.
(a) Payment Date. Except as provided in (b) below,
as soon as practicable after the allocation of Awards in
respect of Participants, any Award, less any legally
required withholding, shall be paid to the Participant or,
in the event of a Participant's death, in accordance with
Section 8 hereof.
(b) Deferrals. In the year prior to the year in
which the Award is earned, a Participant may elect, on a
form specified by Bancorp, to defer the receipt of any Award
to which he or she may be entitled for such Performance Year
until the earlier of (1) termination of employment (the
first to occur of retirement, death, disability, or
termination of employment) or (2) January 1 of a specified
calendar year. In such event:
(i) The amount the Participant elects, net
of any legally required withholding, shall become the
deferred Award;
(ii) Interest on such deferred Award will be
the Moody's Investment Grade Corporate Bond Yield as
shown in Moody's Yield Average for the last full month
of each previous calendar year and will be credited
quarterly; and
(iii) Such deferred Award, plus accumulated
interest, shall be paid upon the earlier of (1) or (2)
above, in the form of a lump sum, equal annual
installments over not more than 10 years, or such other
method as may be selected by the Participant and agreed
to by the Administrator.
(c) Deferrals into Performance Units. As an
alternative to a deferral payable in cash, as described in
subsection (b), the deferred Award may, if the Participant
elects and the Committee permits, be invested in Performance
Units under Section 7.3 of the First Interstate Bancorp 1991
Performance Stock Plan (the "PSP"). The amount deferred
shall be deemed to be converted into Performance Units under
Section 7.3 of the PSP as of the date the Award would have
been payable if no deferral had occurred, based on the fair
market value, determined in accordance with the terms of the
PSP, of the common stock of Bancorp on that date. The
timing and manner of payment of deferrals shall be governed
by a Performance Unit Agreement entered into by the
Participant under the PSP.
(d) Hardship Withdrawal. A Participant may request
in writing, citing the reasons for the request, that the
Committee permit the early payment of all or part of a De-
ferred Award. Within 90 days after receipt, the Committee
shall rule on the request. The Committee shall grant the re-
quest only if, in its sole discretion, the Committee makes a
specific finding of financial hardship that is an
unanticipated emergency caused by an event beyond the
control of the Participant. The amount payable hereunder
shall not exceed the amount necessary to avoid such
hardship.
(e) Acceleration of Deferrals. Anything in this
Plan to the contrary notwithstanding, the Committee may
accelerate the payment of all deferred Awards with respect
to Bancorp or any Subsidiary at any time in its sole
discretion. In addition, the Committee reserves the right to
pay any deferred Awards in the form of a lump sum if the
amount is less than $10,000.00.
8. Death of a Participant.
(a) Beneficiary Designation. A Participant may
file a designation of a beneficiary or beneficiaries on a
form to be provided which designation may be changed or
revoked by the Participant's sole action, provided that such
change or revocation is filed in written form.
(b) Death during Performance Year. In case of the
death of a Participant during a Performance Year, Bancorp or
the Subsidiary, as appropriate, may pay a pro rata portion
of the Award to which the Participant would have been
entitled for such Performance Year. Such pro rata portion
shall be equal to (1) the ratio which the Participant's
completed calendar months of participation during the
Performance Year bears to 12 multiplied by (2) the amount
the Committee determines the Participant would have been
entitled to had he or she lived.
(c) Death after Performance Year. In case of the
death of a Participant after the end of a Performance Year,
but before the delivery of an Award to which he or she may
be entitled, such Award shall be delivered to the
Participant's designated beneficiary.
(d) Failure to Designate Beneficiary. If a
Participant dies having failed to designate any beneficiary,
or if no beneficiary survives the Participant or survives to
the date of any payment in question, the amount otherwise
payable to such beneficiary shall be paid to the
Participant's surviving spouse, if any, and otherwise to the
Participant's heirs at law, as determined under the law
governing succession to personal property for the state in
which the Participant resided on the day the Participant
died.
9. Transfer of a Participant. In the event a
Participant for any Performance Year is transferred during
such Performance Year from Bancorp or a Subsidiary to
another Subsidiary or Bancorp, such Participant's Award,
consistent with Subsection 4(a), shall normally be
calculated as the sum of the following:
(a) the Award the Participant would have received
under the Plan, had he or she not been transferred, multi-
plied by the ratio which his or her completed months of
participation during such Performance Year prior to the
transfer bears to 12, plus
(b) the Award, if any, the Participant is entitled
to receive under the Plan based on service after the transf-
er determined on a Performance Year basis and then multi-
plied by the ratio which his or her completed months of
participation during such Performance Year subsequent to
such transfer bears to 12.
10. Retirement or Disability of Participant. In case
a Participant becomes totally and permanently disabled
during a Performance Year, or retires from active employment
after attaining age 55 during a Performance Year, the
Committee may but need not grant the Participant an Award.
Generally, if an Award is granted, it will be based on a pro
rata portion of the Award.
11. Termination of Employment. If the employment of a
Participant with First Interstate is terminated prior to the
approval of the Committee as specified in Section 5(a) for
reasons other than those specified in Sections 8, 9 or 10
hereof, the right to and the amount of an Award shall be
forfeited.
12. Termination and Modification. No Award shall be
granted under the Plan after any date as of which the Plan
shall have been terminated. The Board of Directors of
Bancorp or the Committee may at any time modify, terminate
or from time to time suspend and, if suspended, may
reinstate the provisions of this Plan, including Table A.
The Committee may consider but shall not be bound by sugges-
tions of participating Subsidiaries in connection with its
periodic amendment of relative weights set forth under Item
II of Table A.
13. Effect of Other Plans. Eligibility in or the
receipt of any Award under the Plan shall not be affected by
or affect any other compensation or benefit plans in effect
for First Interstate; provided, however that the receipt of
an Award under the Corporate Executive Incentive Plan in a
Performance year shall preclude participation in any Award
under this Plan for such year.
14. No Employment Rights. Nothing contained in nor
any action under the Plan will confer upon any individual
any right to continue in the employment of First Interstate
and does not constitute any contract or agreement of employ
ment or interfere in any way with the right of First
Interstate to terminate any individual's employment.
15. Withholding Tax. As required by law, federal,
state or local taxes that are subject to the withholding of
tax at the source shall be withheld by First Interstate as
necessary to satisfy such requirements.
16. Effective Date. This Plan shall be effective as
of January 1, 1995. The Plan, including Table A, shall
remain in effect as amended from time to time.
17. Provisions Applicable in the Event of a Change in
Control.
(a) In the event of a "Change in Control" (as de-
fined below), notwithstanding any provisions to the contrary
in this Plan, the operation of this Plan shall be modified
as set forth below in this Section 17. These modifications
shall only apply with respect to Target Awards for the
Performance Year in which a Change in Control occurs.
(b) Notwithstanding any provision to the contrary
in this Plan, within ten (10) days after the Change in Con-
trol of Bancorp each Participant shall be paid 100% of his
or her Target Award for the year in which the Change in
Control occurs, based on the base pay rate then in effect.
(c) A "Change in Control" of Bancorp means and
shall be deemed to have occurred if and when any one of the
following five events occurs: (i) within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, any
person or group becomes a beneficial owner, directly or
indirectly, of securities of First Interstate Bancorp
representing 20% or more of the combined voting power of
First Interstate Bancorp's then outstanding securities;
(ii) individuals who were members of the Board of Directors
of First Interstate Bancorp immediately prior to a meeting
of the stockholders of First Interstate Bancorp involving a
contest for the election of Directors shall not constitute a
majority of the Board of Directors following such election;
(iii) the stockholders of First Interstate Bancorp approve
the dissolution or liquidation of First Interstate Bancorp;
(iv) the stockholders of First Interstate Bancorp approve an
agreement to merge or consolidate, or otherwise organize,
with or into one or more entities which are not
subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by former stockholders of
First Interstate Bancorp (excluding from the term "former
stockholders" a stockholder who is, or as a result of the
transaction in question becomes, an "affiliate," as that
term is used in the Securities Exchange Act of 1934 and the
Rules promulgated thereunder, of any party to such merger,
consolidation or reorganization); or (v) the stockholders of
First Interstate Bancorp approve the sale of substantially
all of First Interstate Bancorp's business and/or assets to
a person or entity which is not a subsidiary.
(d) Any Participant shall be entitled to refuse
all or any portion of any Target Award under this Plan if he
or she determines that receipt of such payment may result in
adverse tax consequences to him or her. First Interstate
Bancorp shall be totally and permanently relieved of any
obligation to pay any Award which a Participant explicitly
so refuses in writing.
18. Provisions Applicable to Offsets for Split-Dollar
Life Insurance Agreements.
(a) Notwithstanding anything contained herein to
the contrary, any benefits payable under this Plan shall be
offset by the value of benefits received by the Participant
under certain life insurance policies as set forth in this
Section. Participants in this Plan may own life insurance
policies (the "Policies") purchased on their behalf by
Bancorp ("the Company"). The ownership of these Policies by
each Participant is, however, subject to certain conditions
(set forth in a "Split-Dollar Life Insurance Agreement"
between each Participant and Bancorp) and, if the
Participant fails to meet the conditions set forth in the
Split-Dollar Life Insurance Agreement, the Participant may
lose certain rights under the Policy.
(b) In the event that a Participant satisfies the
conditions specified in Section 4 or 5 of the Split-Dollar
Life Insurance Agreement, so that the Participant or his or
her beneficiary becomes entitled to benefits under one of
those sections, the value of those benefits shall constitute
an offset to any benefits otherwise payable under this Plan.
As the case may be, this offset (the "Offset Value") shall
be equal to the value of benefits payable under the Split-
Dollar Life Insurance Agreement and shall be determined as
of the date that the Participant satisfies the conditions
specified in Section 4 or 5 of the Split-Dollar Life Insur-
ance Agreement, that is, the cash value of the Policy or, in
the case of the Participant's death, the death benefit
payable to the beneficiary under the Policy reduced by one
times the Participant's annual base salary (maximum
$500,000) at the time of death. The Offset Value shall then
be compared to the Participant's deferred award (including
interest accumulated on such award) under this Plan, and
such amounts shall be reduced, but not to less than zero, by
the Offset Value.
(c) If the Policy in subsection (a) is not on the
life of the Participant and the insured dies prior to
distribution of benefits under this Plan, then the value of
the benefits received by the Participant under the Policy
will offset the Participant's deferred award (including
interest accumulated on such award) under this Plan. This
offset ("Offset Value") shall be equal to the amount of
death benefit payable to the Participant and shall be
determined as of the date of death of the insured. This
Offset Value shall then be compared to the Participant's
deferred award (including interest accumulated on such
award) under this Plan, and such amounts shall be reduced,
but not to be less than zero, by the Offset Value.
(d) Notwithstanding anything contained herein to
the contrary, if, in addition to the benefits otherwise
payable under this Plan, the Participant or his or her
beneficiary is entitled to benefits under (i) the First
Interstate Bancorp Annual Incentive Compensation Plans, (ii)
the First Interstate Bancorp Profit Improvement Plans, (iii)
the First Interstate Bancorp Management Incentive Plans,
(iv) the Supplemental Employee Savings Plan of First Inter-
state Bancorp, (v) the First Interstate Bancorp Excess
Benefit Retirement Plan, (vi) the First Interstate Bancorp
Supplemental Executive Retirement Plan; (vii) the First
Interstate Supplemental Retirement Program or (viii) the
First Interstate Executive Incentive Plans, the "Offset
Value" shall be applied to offset the benefits payable under
this Plan and such plans in the following order:
1. The First Interstate Bancorp Exces s Benefit
Retirement Plan;
2. The First Interstate Bancorp Supplemental
Executive Retirement Plan;
3. The Supplemental Employee Savings Plan of
First Interstate Bancorp;
4. The First Interstate Bancorp Management Incen-
tive Plans;
5. The First Interstate Bancorp Annual Incentive
Compensation Plans;
6. The First Interstate Bancorp Profit Improve-
ment Plans.
7. The First Interstate Bancorp Corporate Execu-
tive Incentive Plan.
8. The First Interstate Bancorp Regional Execu-
tive Incentive Plan.
9. The First Interstate Bancorp Supplemental
Retirement Program.
19. Dispute Resolution.
(a) If a Participant who has applied for
retirement under the Retirement Plan for Employees of First
Interstate Bancorp and Its Affiliates, or, in the case of
the Participant's death, his or her beneficiary, disagrees
with the Compensation Committee of the Board of Directors of
First Interstate Bancorp (the "Administrator") regarding the
interpretation of this Plan, and if the Participant or his
or her beneficiary has exhausted the claims review and
appeal procedure under Section 503 of the Employee
Retirement Income Security Act of 1974 with respect to his
or her claim for benefits under this Plan, then the
Participant or his or her beneficiary may, if he or she
desires, submit any claim for benefits under this Plan or
dispute regarding the interpretation of this Plan to arbi-
tration; provided that, the request for arbitration must be
brought within the time limit for bringing a judicial
proceeding with respect to such claim for benefits, or if
less, within one year after the Administrator's final denial
of such claim for benefits. This right to select
arbitration shall be solely that of Participant or his or
her beneficiary and Participant or his or her beneficiary
may decide whether or not to arbitrate in his or her discre-
tion. The "right to select arbitration" is not mandatory on
Participant or his or her beneficiary and Participant or his
or her beneficiary may choose in lieu thereof to bring an
action in an appropriate civil court. Once an arbitration
is commenced, however, it may not be discontinued without
the mutual consent of both parties to the arbitration.
During the lifetime of the Participant only he or she can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be filed in
writing with an arbitrator of Participant's or beneficiary's
choice who is selected by the method described in the next
four sentences. The first step of the selection shall
consist of Participant or his or her beneficiary submitting
a list of five potential arbitrators to the Administrator.
Each of the five arbitrators must be either (1) a member of
the National Academy of Arbitrators located in the State of
California or (2) a retired California Superior Court or
Appellate Court judge. Within one week after receipt of the
list, the Administrator shall select one of the five
arbitrators as the arbitrator for the dispute in question.
If the Administrator fails to select an arbitrator in a
timely manner, Participant or his or her beneficiary shall
then designate one of the five arbitrators as the arbitrator
for the dispute in question.
(c) The arbitration hearing shall be held within
seven days (or as soon thereafter as possible) after the
picking of the arbitrator. No continuance of said hearing
shall be allowed without the mutual consent of Participant
or his or her beneficiary and the Administrator. Absence
from or nonparticipation at the hearing by either party
shall not prevent the issuance of an award. Hearing
procedures which will expedite the hearing may be ordered at
the arbitrator's discretion, and the arbitrator may close
the hearing in his or her sole discretion when he or she
decides he or she has heard sufficient evidence to satisfy
issuance of an award.
(d) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than one
week after the close of the hearing. In the event the
arbitrator finds that Bancorp has violated the terms of this
Plan, he or she shall order Bancorp immediately to take the
necessary steps to remedy such violation. The award of the
arbitrator shall be final and binding upon the parties. The
award may be enforced in any appropriate court as soon as
possible after its rendition. If an action is brought to
confirm the award, both Bancorp and Participant agree that
no appeal shall be taken by either party from any decision
rendered in such action.
(e) Solely for purposes of determining the
allocation of the costs described in this Section 19(e), the
Administrator will be considered the prevailing party in a
dispute if the arbitrator determines (1) that Bancorp has
not violated the terms of this Plan, and (2) the claim by
Participant or his or her beneficiary was not made in good
faith. Otherwise, Participant or his or her beneficiary
will be considered the prevailing party. In the event that
Bancorp is the prevailing party, the fee of the arbitrator
and all necessary expenses of the hearing (excluding any
attorneys' fees incurred by Bancorp) including stenographic
reporter, if employed, shall be paid by the other party. In
the event that Participant or his or her beneficiary is the
prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all attorneys'
fees incurred by Participant or his or her beneficiary in
pursuing his or her claim), including the fees of a
stenographic reporter if employed, shall be paid by Bancorp.
IN WITNESS WHEREOF, Bancorp hereby adopts this
Restatement as of January 1, 1995.
FIRST INTERSTATE BANCORP
By ___________________________
TABLE A
1994 MANAGEMENT INCENTIVE PLAN
I. Target Award Percentage
Participant Level 1 Target Award Percentage
(the exact percentage to be selected by the Administrator)
Level A 60% to 75%
Level B 37.5% to 60%
Level C 25% to 50%
Level D 15% to 30%
II. Relative Performance Weights
Level A - [100% for Bancorp employees
40% Bancorp/60% Subsidiary for other employees]
Level B - [100% for Bancorp employees
25% Bancorp/75% Subsidiary for other employees]
Levels C & D - [100% for Bancorp employees
10% Bancorp/90% Subsidiary for other employees]
III. Actual Award Percentage
For any individual Participant, a percentage no less than 0% and
no more than 150% of his or her Target Award.
Level A: Bancorp Managing Committee (excluding
Chief Executive Officer and President)
Level B: Regional Managing Committee
Levels C & D: Other Participants