EXHIBIT 10.235
Executive Incentive Plan
of
U.S. Trust Corporation
As Amended and Restated effective as of January 1, 2001
1. Purpose
The Plan hereinafter set forth represents a continuation of the Executive
Incentive Plan maintained by U.S. Trust Corporation before its merger with The
Charles Schwab Corporation pursuant to the Agreement and Plan of Merger dated as
of January 12, 2000.
The purpose of the Executive Incentive Plan of U.S. Trust Corporation is to
encourage greater focus on performance among the key executives of U.S. Trust
Corporation and its Affiliated Companies by relating a significant portion of
their total compensation to the achievement of annual financial and strategic
objectives.
2. Definitions
As used herein, the following terms shall have the following meanings:
"Affiliated Companies" shall mean United States Trust Company of New York,
and each other direct or indirect subsidiary of U.S. Trust Corporation.
"Average Market Value" shall mean, with respect to one share of Common
Stock as of any date or with respect to any period, the mean between the
per-share high and low prices for the Common Stock on such date, or the
average of the mean between such prices on each day during such period, as
quoted on the New York Stock Exchange, or, if the Common Stock is not
traded on such system, on other such securities market or securities
exchange on which such shares are traded as the Committee shall determine.
"Award" shall mean a payment earned by a Participant in accordance with
the provisions of the Plan.
"Beneficiary" shall mean the person or persons designated by a Participant
in accordance with Section 10 to receive any amount, or Common Stock,
payable under the Plan upon the Participant's death.
"Board of Directors" shall mean the Board of Directors of the Corporation.
"Change in Control" shall mean that any of the following events has
occurred:
(i) A change in control of the Company required to be reported
pursuant to Item 6(e) of Schedule 14A of Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(ii) A change in the composition of the Board of Directors of the
Company, as a result of which fewer than two-thirds of the
incumbent directors are directors who either (i) had been
directors of the Company 24 months prior to such change or
(ii) were elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at
least a majority of the directors who had been directors of
the Company 24 months prior to such change and who were still
in office at the time of the election or nomination;
(iii) Any "person" (as such term is used in sections 13(d) and 14(d)
of the Exchange Act) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20
percent or more of the combined voting power of the Company's
then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote
at elections of directors (the "Base Capital Stock");
provided, however, that any change in the relative beneficial
ownership of securities of any person resulting solely from a
reduction in the aggregate number of outstanding shares of
Base Capital Stock, and any decrease thereafter in such
person's ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly,
such person's beneficial ownership of any securities of the
Company.
"Committee" shall mean the Committee, as constituted from time to time,
appointed by the senior management of the Corporation and or the Company
to administer the Plan.
"Common Stock" shall mean the common shares ($.01 par value per share) of
the Company.
"Company" shall mean The Charles Schwab Corporation, a Delaware
corporation.
"Corporation" shall mean the U.S. Trust Corporation, a wholly owned
subsidiary of the Company.
"Determined Value" shall mean the highest price per share of Common Stock
paid in connection with any Change in Control (including, without
limitation, prices paid in any subsequent merger or combination with any
entity that acquire control of the Company.
"Executive Deferred Compensation Plan" shall mean the Executive Deferred
Compensation Plan of U.S. Trust Corporation.
"401(k) Plan" shall mean the 401(k) Plan and ESOP of United States Trust
Company of New York and Affiliated Companies.
"Participant" shall mean an officer of the Corporation or any of its
Affiliated Companies who is selected to participate in the Plan.
"Plan" shall mean the Executive Incentive Plan of U.S. Trust Corporation,
as set forth herein and as amended from time to time.
"Plan Year" shall mean each calendar year.
"Prior Plan" shall mean the Executive Incentive Plan of U.S. Trust
Corporation, as in effect prior to January 1, 2001.
"Restricted Unit" shall mean a unit of measurement equivalent to one share
of Common Stock, with none of the attendant rights of a shareholder of
such share, including, without limitation, the right to vote such share
and the right to receive dividends thereon, except to the extent otherwise
specifically provided herein.
"Vesting Date" shall mean, with respect to any Restricted Units granted to
a Participant hereunder, the date on which such Restricted Units become
vested, as provided in Section 5(d) or Section 8(e).
3. Participation
Participants in the Plan shall be limited to those officers of U.S. Trust
Corporation and its Affiliated Companies who the Committee, in its sole
discretion, selects to participate in the Plan.
The Committee may select as a Participant for any Plan Year, any officer who, in
the sole judgment of the Committee, is expected to make contributions that are
critical to the success of U.S. Trust Corporation and its Affiliated Companies
and to the growth of their business.
Any person who has been selected as a Participant for any Plan Year shall
continue to be a Participant in the Plan for each subsequent Plan Year during
the period of his or her employment, subject, however, to the Committee's right
to terminate such individual's participation in the Plan as of any Plan Year
commencing after the date on which the Committee makes its determination to
terminate such individual's participation.
4. Awards
Awards for any Plan Year beginning on or after January 1, 2001 shall be made in
accordance with the following provisions:
(a) The Committee shall establish in writing (i) the corporate
performance goal (the "Performance Goal") that will apply in
determining the Awards for the year, (ii) the aggregate amount that
will be available for Awards for the year if the Performance Goal is
achieved (the "Target Awards Pool"), and (iii) the percentages of
the Target Awards Pool that will in fact be available for Awards for
the year based on the level of achievement of the Performance Goal,
which percentages may be greater than 100% if the Performance Goal
is exceeded and less than 100% if the Performance Goal has not been
fully achieved (the "Actual Awards Pool").
(b) The Performance Goal to be established for the year shall be the
achievement of such income goals for the Corporation as the
Committee shall determine.
(c) The Target Awards Pool to be established for the year shall be
determined by the Committee as a percentage or percentages of the
aggregate base salary earned for the year while a Participant of all
Participants, either individually or by categories of Participants,
provided that the Committee may, in its sole discretion, also apply
such percentage or percentages to other current or deferred
compensation shall be counted. The base salary of an employee who is
selected to become a Participant during a Plan Year in connection
with an acquisition of a company by the Corporation or an Affiliated
Company during such Plan Year may be adjusted in the discretion of
the Committee to include all or part of his or her base salary with
the acquired company for such Plan Year.
(d) As of the end of the Plan Year, the Committee shall determine the
extent to which the Performance Goal for the year has been met and,
based thereon, the amount of the Actual Awards Pool. The Committee
shall not have any discretion to increase the Actual Awards Pool, as
so determined, but the Committee may, in its discretion, reduce the
amount of the Actual Awards Pool, as so determined, to reflect any
events, circumstances or factors which the Committee believes to be
appropriate in determining the total amount to be made available for
Awards to Participants for the year.
(e) After determining the Actual Awards Pool in accordance with Section
4(d), the Committee shall determine the amount of the Award, if any,
earned for the year by each Participant, in accordance with the
following rules:
(i) The amount of the Award, if any, earned by a Participant other
than a covered employee of the Company for the year shall be
determined by the Committee, in its discretion, based on the
level of each such Participant's achievement of the goals and
objectives established for the Participant at the start of the
year and on such other factors as the Committee deems
appropriate. The individual goals for each such Participant
for each Plan Year shall be set, and such Participant's
performance relative to such goals shall be measured, by the
Committee based upon the recommendations of the Chief
Executive Officer.
(ii) The Committee may, in its discretion, make Awards to
Participants in an aggregate amount less than the amount of
the Actual Awards Pool. The Committee may also, in its
discretion, allocate any portion of the Actual Awards Pool for
use in making special additional Awards to any Participant who
is not a Covered Executive or to any group of such
Participants.
(iii) Notwithstanding any other provision herein to the contrary,
the amount of the Award payable to any Participant for any
year shall not exceed $2.5 million, as adjusted annually
beginning in 1998 to reflect percentage increases in the
Customer Price Index.
(iv) A Participant who terminates employment with the Corporation
and its Affiliated Companies prior to the end of any Plan Year
shall receive such portion of an Award, if any, for that year
as the Committee shall determine.
(f) All actions taken by the Committee hereunder in determining the
Awards payable to Participants for each year shall be reflected in
the minutes of the meetings of the Committee at which such actions
were taken.
5. Payment of Awards
The amount payable to a Participant with respect to an Award earned for any Plan
Year prior to January 1, 2000 shall be determined in accordance with the
provisions of the Prior Plan:
The amount payable hereunder to a Participant with respect to an Award earned
for any Plan Year beginning on or after January 1, 2000 shall be determined in
accordance with the following provisions:
(a) The amount payable with respect to a Participant's Award for any
Plan Year beginning on or after January 1, 1999 shall be the total
amount of the Award earned by the Participant.
(b) The amount payable with respect to a Participant's Award, as
determined under (a) above, shall be payable partly in cash and
partly in the form of a mandatory deferred contribution to the
Executive Deferred Compensation Plan of U.S. Trust Corporation (the
portions so payable are hereinafter referred to, respectively, as
the "Cash Portion" and the "Restricted Portion", of the
Participant's Award), in such percentages as the Committee in its
discretion shall determine; provided, however, that the Restricted
Portion shall be equal to at least 25%, and shall not exceed 50% of
the total amount so payable with respect to the Participant's Award.
Notwithstanding the foregoing and solely for the Plan Year ending
December 31, 2000, a Participant may elect to receive the Restricted
Portion of the Participant's Award in the form of Restricted Units.
The obligation of the Corporation and its Affiliated Companies under
this Plan with respect to the award of a mandatory deferred
contribution shall be fully discharged upon the crediting of such
mandatory deferred contribution to the Participant's Account under
the Executive Deferred Compensation Plan in accordance with the
applicable provisions of such plan.
(c) If a Participant elects to receive Restricted Units, the number of
Restricted Units to be granted to a Participant with respect to the
Restricted Portion of the Participant's Award shall be determined by
dividing the dollar amount of the Restricted Portion of the
Participant's Award by the Average Market Value of one share of
Common Stock on the date on which the Committee makes its
determination of the Awards earned by Participants for the Plan Year
in question.
(d) The mandatory deferred contribution or grant of Restricted Units
with respect to the Restricted Portion of a Participant's Award for
any Plan Year shall be evidenced by a written notice to the
Participant specifying the amount of the mandatory deferred
contribution or the number of Restricted Units granted to the
Participant, and the date of such contribution or grant. In addition
to other such terms and conditions as the Committee may require in
such notice, the Restricted Portion of each Participant's award
hereunder shall be subject to the following terms and conditions:
(i) The mandatory deferred contribution or Restricted Units
covered by such grant shall become vested on the fifth
anniversary of the date of award or grant, or if earlier, on
the date of the Participant's death, permanent disability, or
retirement on or after the date on which the Participant
attains age 65.
(ii) Until the Vesting Date for the Restricted Units covered by
such grant, additional Restricted Units shall be credited to
the Participant, with respect to the Restricted Units so
granted, as of each date on which the Corporation pays a
dividend on its Common Stock ("Dividend Payment Date"). The
number of additional Restricted Units to be credited shall be
determined by first multiplying (A) the sum of (1) the number
of Restricted Units covered by such a grant, plus (2) the
total number of additional Restricted Units credited to the
Participant with respect to such Restricted Units prior to
such Dividend Payment Date, by (B) the per-share dollar amount
of the dividend so paid, and then, dividing the resulting
amount by the Average Market Value of one share of Common
Stock on the Dividend Payment Date. Any additional Restricted
Units credited to the Participant with respect to the
Restricted Units covered by such grant shall become vested on
the Vesting Date for the Restricted Units so granted.
(iii) If the Restricted Units covered by such grant become vested,
payment with respect to such Restricted Units, and with
respect to the additional Restricted Units credited to the
Participant under (ii) above in respect of such Restricted
Units, shall be made as soon as practicable after the Vesting
Date for the Restricted Units so granted, except as otherwise
provided in (iv) below. Subject to provisions of Section 5(f),
payment shall be made in the form of a single lump sum payment
consisting of (A) a number of shares equal to the total number
of whole Restricted Units that become vested on such Vesting
Date, and (B) a cash payment in an amount determined by
multiplying (1) the fractional part of a Restricted Unit that
becomes vested on such Vesting Date, by (2) the Average Market
Value of one share of Common Stock on such Vesting Date.
(iv) To the extent that the Participant has elected, under the
applicable provisions of the Deferred Restricted Unit Plan of
U.S. Trust Corporation, to defer payment with respect to any
Restricted Units that become vested, the Corporation's
obligation under this Plan for making payment with respect to
such Restricted Units shall be fully discharged upon the
crediting of such Restricted Units to the Participant's
account under the Deferred Restricted Unit Plan in accordance
with the applicable provisions of such Plan.
(v) In the event that the Participant's employment terminates for
any reason prior to the Vesting Date for the Restricted Units
covered by such a grant, the Restricted Units covered by such
a grant, and any additional Restricted Units credited to the
Participant under (ii) above with respect to such Restricted
Units, shall be forfeited, except to the extent the Committee
in its discretion otherwise determines.
(e) The Cash Portion of a Participant's Award for any Plan Year shall be
paid in the form of a single lump sum cash payment as soon as
practicable after the end of such Plan Year, except to the extent
that the Participant (i) has elected, under the applicable
provisions of the 401(k) Plan, to have any part of such portion of
such Award reduced, and to have an amount equal to such part
contributed to the 401(k) Plan on the Participant's behalf and/or
(ii) has elected, under the applicable provisions of the Executive
Deferred Compensation Plan, to defer any part of such portion of
such Award.
(f) With respect to that part of the Cash Portion of any Award that is
subject to a Participant's election under the 401(k) Plan, an amount
equal to such part of the Cash Portion shall be contributed to the
401(k) Plan on behalf of the Participant; and thereupon, the
obligation of the Corporation and its Affiliated Companies with
respect to payment of such part of the Cash Portion of the Award
shall be fully discharged. However, no such contribution shall be
made to the extent it would cause any limitation applicable under
the 401(k) Plan to be exceeded.
(g) With respect to that part of the Cash Portion of any Award that is
subject to a Participant's election under the Executive Deferred
Compensation Plan, the obligation of the Corporation and its
Affiliated Companied under this Plan with respect to payment of such
part of the Cash Portion of the Award shall be fully discharged upon
the crediting of such part of the Cash Portion of the Award to the
Participant's account under the Executive Deferred Compensation Plan
in accordance with the applicable provisions of such Plan.
(h) All liabilities in respect to the Cash Portion of the Awards earned
by Participants under the Plan shall be discharged by the respective
Affiliated Companies employing such Participants.
6. Certain Adjustments to Plan Shares
In the event of any change in the Common Stock by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, combination
or exchange of shares, or and rights offering to purchase Common Stock at a
price substantially below fair market value, or any similar change affecting the
Common Stock, the number and kind of shares represented by Restricted Units
shall be appropriately adjusted consistent with such change in such manner as
the Committee, in its sole discretion, may deem equitable to prevent substantial
dilution or enlargement of the rights granted to, or available for, the
Participants hereunder. The Committee shall give notice to each Participant of
any adjustment made pursuant to this Section and, upon such notice, such
adjustment shall be effective and binding for all purposes.
7. Listing and Qualification of Common Stock
The Company, in its discretion, may postpone the issuance, delivery, or
distribution of Common Stock pursuant to a grant of Restricted Units until
completion of such stock exchange listing or other qualification of such shares
under any state or federal law, rule or regulation as the Company may consider
appropriate, and may require any Participant or Beneficiary to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations.
8. Change in Control
Notwithstanding any other provision in the Plan to the contrary, upon the
occurrence of a Change in Control, the following provisions shall apply.
(a) All Performance Goals and individual goals and objectives with
respect to the Plan Year in which the Change in Control occurs (the
"Year of Change") shall be deemed to have been attained to the full
and maximum extent, and the Actual Awards Pool for the Year of
Change shall be determined by multiplying the Target Awards Pool for
such year by the highest percentage thereof established by the
Committee under Section 4(a)(iii) for determining the amount of the
Actual Awards Pool for such year.
(b) Unless another formula shall have been designated by the Committee
prior to the Change in Control, each Participant shall be allocated
a portion of the Actual Awards Pool for the Year of Change, as
determined under (a) above, equal to the amount of such Actual
Awards Pool, multiplied by a fraction. The numerator of which is the
portion of the anticipated annual compensation of the Participant
which was taken into account by the Committee in determining the
Target Awards Pool for the Year of Change, and the denominator of
which is the sum of such amounts for all Participants.
(c) As soon as practicable following the Change in Control, all Awards
which are deemed to have been earned to the full and maximum extent
upon the occurrence of the Change in Control shall be payable in
full in single cash lump sums, reduced by any taxes withheld
pursuant to Section 9.
(d) No Awards payable in accordance with this Section shall be
forfeitable on account of a Participant's termination of employment
upon or following the Change in Control.
(e) All Restricted Units granted or credited to a Participant hereunder
that had not previously become vested shall become vested upon the
occurrence of the Change in Control.
(f) The Corporation shall make payment to each Participant with respect
to all of the Restricted Units standing to his or her credit under
the Plan at the time of the Change in Control. The amount to be paid
to each Participant shall be an amount determined by multiplying the
aggregate number of Restricted Units then standing to the
Participant's credit by the Determined Value of one share of Common
Stock. All amounts payable to the Participants pursuant to this
Section 8(f), reduced by any taxes withheld pursuant to Section 9,
shall be paid to such Participants as soon as practicable following
the Change in Control.
9. Taxes
The Corporation or any of its Affiliated Companies may make such provisions and
take such steps as it may deem necessary or appropriate for the withholding of
all federal, state and local taxes required by law to be withheld with respect
to amounts payable under the Plan including, but not limited to (i) deducting
the amount so required to be withheld from any other amount then or thereafter
payable to a Participant or Beneficiary, and/or (ii) requiring a Participant or
Beneficiary to pay to the Corporation or any of its Affiliated Companies the
amount so required to be withheld as a condition of the issuance, delivery, or
distribution of any Common Stock. The Committee may permit such amount to be
paid in Common Stock previously owned by the Participant, or a portion of the
Common Stock that otherwise would be distribution to such Participant in respect
to his or her vested Restricted Units, or a combination of cash and such Common
Stock.
10. Designation and Change of Beneficiary
Each Participant shall file with the Committee a written designation of one or
more persons as the Beneficiary who shall be entitled to receive any amount, or
any Common Stock, payable under the Plan upon his or her death. A Participant
may, from time to time, revoke or change his or her Beneficiary designation
without the consent of any previously designated Beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If at the date of a Participant's
death, there is no designation of a Beneficiary in effect for the Participant
pursuant to the provisions of this Section 10, or if no Beneficiary designated
by the Participant in accordance with the provisions hereof survives to receive
any amount, or any Common Stock, payable under the Plan by reason of the
Participant death, the Participant's estate shall be treated as the
Participant's Beneficiary for purposes of the Plan.
11. Payments to Persons Other Than Participant
If the Committee shall find that any person to whom any amount, or any Common
Stock, is payable under the Plan is unable to care for his or her affairs
because of illness, accident or legal incapacity, then, if the Committee so
directs, any payment due to such person may be paid to such person's spouse,
child or other relative, an institution maintaining or having custody of such
person, or any other person deemed by the Committee to be a proper recipient on
behalf of such person, unless a prior claim for payment of such amount, or
payment of such Common Stock, has been made by a duly appointed legal
representative of such person. Any such payment shall be a complete discharge of
the liability of the Corporation or the applicable Affiliated Company therefor.
12. Rights of Participants
A Participant's rights and interests under the Plan shall be subject to the
following provisions:
(a) A Participant shall have the status of a general unsecured creditor
of the Corporation with respect to his or her right to receive any
payment under the Plan. The Plan shall constitute a mere promise by
the Corporation or the applicable Affiliated Company to make
payments in the future of the benefits provided for herein. It is
intended that the arrangements reflected in this Plan be treated as
unfunded for tax purposes, as well as for purposes of any applicable
provisions of Title I of ERISA.
(b) A Participant's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Participant or his or her Beneficiary.
(c) Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employment
of the Corporation or any of its Affiliated Companies.
(d) No Participant shall have the right, by virtue of having been
selected as a Participant in the Plan, to be automatically entitled
to receive an Award for any Plan Year.
(e) No Award shall be considered as compensation under any employee
benefit plan of the Company, the Corporation or any of its
Affiliated Companies, except as specifically provided in any such
plan or as otherwise determined by the Board of Directors.
13. Administration of the Plan
The Plan shall be administered by the Committee. A majority of the members of
the Committee shall constitute a quorum. The Committee may act at a meeting,
including a telephone meeting, by action of a majority of the members present,
or without a meeting by unanimous written consent. In addition to the
responsibilities and powers assigned to the Committee elsewhere in the Plan, the
Committee shall have the discretionary authority and power to establish from
time to time guidelines or regulations for the administration of the Plan,
interpret the Plan, and make all determinations considered necessary or
advisable for the administration of the Plan. The Committee may delegate any
ministerial or nondiscretionary function pertaining to the administration of the
Plan to any one or more officers of the Corporation.
All decisions, actions or interpretations of the Committee under the Plan shall
be final, conclusive and binding upon all parties. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on his or her behalf in his or her capacity as a
member of the Committee nor for any mistake of judgment made in good faith, and
the Corporation shall indemnify and hold harmless each member of the Committee
and each employee, officer, director or trustee of the Corporation or any of its
Affiliated Companies to whom any duty or power relating to the administration or
interpretation of the Plan may be delegated, against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Board of Directors) arising out of any act or
omission to act in connection with the Plan, unless arising out of such person's
own fraud or bad faith.
14. Amendment or Termination
The Board of Directors may, with prospective or retroactive effect, amend,
suspend or terminate the Plan or any portion thereof at any time, provided,
however, that no amendment, suspension or termination of the Plan shall deprive
any Participant of any rights to Awards previously made under the Plan without
his or her written consent. Any amendment that the Board of Directors would be
permitted to make pursuant to the preceding sentence may also be made by the
Committee where appropriate to facilitate the administration of the Plan or to
comply with applicable law or any applicable rules and regulations of government
authorities, provided that the cost of the Plan to the Corporation and its
Affiliated Companies is not materially increased thereby.
15. Governing Law
The Plan shall be governed by and construed in accordance with the laws of the
State of New York.