EXHIBIT 10.4
NBT BANCORP INC. 2001 Executive Incentive Compensation Plan.
January 2001
NBT BANCORP INC.
Norwich, New York
2001 EXECUTIVE INCENTIVE COMPENSATION PLAN
NBT BANCORP INC.
Norwich, New York
2001 EXECUTIVE INCENTIVE COMPENSATION PLAN
Table of Contents
PAGE
Introduction...........................................................................................1-2
INCENTIVE PLAN
Section I - Definitions..................................................................................3
Section II - Participation...............................................................................4
Section III - Activating the Plan........................................................................4
Section IV - Calculation of Awards.......................................................................4
Section V - President's Special Recommendations..........................................................4
Section VI - Distribution of Awards......................................................................5
Section VII - Plan Administration........................................................................6
Section VIII - Amendment, Modification, Suspension or Termination........................................6
Section IX - Effective Date..............................................................................6
Section X - Employer Relations with Participants.........................................................6
Section XI - Governing Law...............................................................................6
Incentive Plan Participants.....................................................................Appendix A
Distribution of Awards..........................................................................Appendix B
Deferred Compensation Election Agreement
NBT BANCORP INC.
Norwich, New York
INTRODUCTION
It is important to examine the benefits which accrue to the organization through
the operation of the Executive Incentive Compensation Plan. The Plan impacts
directly on senior management - those critical to the organization's success -
and its purpose can be summarized as follows:
* PROVIDES MOTIVATION: The opportunity for incentive awards
provides executives with the impetus to "stretch" for
challenging, yet attainable, goals.
* PROVIDES RETENTION: by enhancing the organization's competitive
compensation posture.
* PROVIDES MANAGEMENT TEAM BUILDING: by making the incentive
award dependent on the attainment of organization goals, a
"team orientation" is fostered among the participant group.
* PROVIDES INDIVIDUAL MOTIVATION: by making a portion of the
incentive award dependent on the attainment of individual
goals, a participant is encouraged to make significant
personal contribution to the corporate effort.
* PROVIDES COMPETITIVE COMPENSATION STRATEGY: The implementation
of incentive arrangements is competitive with current
practice in the banking industry.
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Highlights of the 2001 Executive Incentive Compensation Plan included in the
following pages are below:
1. The Plan is competitive, if not more menerous, compared with
similar sized banking organizations and the banking industry
in general.
2. The Compensation Committee of the Board of Directors controls all
aspects of the Plan.
3. Management employees are eligible for participation.
4. The financial criteria necessary for Plan operation consists
of achieving certain levels of net income for the company
and/or its subsidiaries as applicable. Certain non recurring
events may be excluded from the financial results at the
discretion of the CEO and the Compensation Committee.
5. Incentive distributions will be made during the first quarter of
the year following the Plan Year.
6. Incentive awards will be based on attainment of corporate
goals. Total Incentive Awards may contain corporate,
subsidiary and individual components; the corporate and
subsidiary components awarded by virtue of their performance
related to their goals and the individual component awarded
by virtue of individual performance related to individual
goals. Component percentages are shown in Appendix B.
7. Incentive distributions will be based on the matrix in
Appendix B.
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NBT BANCORP INC.
Norwich, New York
The Board of Directors of NBT Bancorp Inc. has established this 2001 Executive
Incentive Compensation Plan. The purpose of the Plan is to meet and exceed
financial goals and to promote a superior level of performance relative to the
company's competition in its market area. Through payment of incentive
compensation beyond base salaries, the Plan provides reward for meeting and
exceeding the financial goals.
SECTION I - DEFINITIONS
Various terms used in the Plan are defined as follows:
BASE SALARY: the base salary at the end of the Plan year, excluding any
bonuses, contributions to employee benefit programs, or
other compensation not designated as salary.
BOARD OF DIRECTORS: The Board of Directors of NBT Bancorp Inc.
PRESIDENT & CEO: CEO of NBT Bancorp Inc.
CORPORATE GOALS: Those pre-set objectives and goals which are required to
activate distribution of awards under the Plan.
INDIVIDUAL GOALS: Key objectives mutually agreed upon between participants
and superior, and approved by the CEO.
COMPENSATION COMMITTEE: The Compensation Committee of the Board of
Directors of the Bank.
PLAN PARTICIPANT: An eligible employee of the company or its
subsidiaries as designated by the CEO and approved by the
Compensation Committee for participation for the Plan Year.
PLAN YEAR: The 2001 calendar year.
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SECTION II - ELIGIBILITY TO PARTICIPATE
To be eligible for an award under the Plan, a Plan participant must be an
officer in the full-time service of the company at the start and close of the
calendar year and at the time of the award unless the CEO by special exception
recommends to the Compensation Committee a special arrangement for a newly hired
executive who may be designated by the CEO and approved by the Compensation
Committee as eligible for an award as determined in the employment agreement. A
Plan participant must be in the same or equivalent position, at year end as they
were when named a participant or have been promoted during the course of the
year, to be eligible for an award. If a Plan participant voluntarily leaves the
employ of the company or its subsidiaries prior to the payment of the award,
he/she is not eligible to receive an award. However, if the active full-time
service of a participant in the Plan is terminated by death, disability,
retirement, or if the participant is on an approved leave of absence, an award
will be recommended for such a participant based on the proportion of the Plan
year that he/she was in active service with the company or its subsidiaries.
SECTION III - ACTIVATING THE PLAN
The operation of the Plan is predicated on attaining and exceeding management
performance goals. The goals will consist of the attainment of certain net
income levels. Non recurring events may be excluded from the financial results
at the discretion of the CEO and the Compensation Committee. The Corporation
must achieve a minimum net income set forth in Appendix B to trigger an award
pursuant to the terms of this plan.
SECTION IV - CALCULATION OF AWARDS
The Compensation Committee designates the incentive formula as shown in Appendix
B. The Compensation Committee will make final decisions with respect to all
incentive awards and will have final approval over all incentive awards. The
individual participant data regarding maximum award and formulas used in
calculation has been customized and appears as Appendix A.
SECTION V - SPECIAL RECOMMENDATIONS
The CEO will recommend to the Compensation Committee the amounts to be awarded
to individual participants in the incentive Plan. The CEO may recommend a change
beyond the formula to a bonus award (increase or decrease) to an individual
participant by a specified percentage based on assessment of special individual
performance beyond the individual goals. The Compensation Committee may amend
the CEO's bonus award. The amount of the adjustment is from 0%-20% of the actual
award. No award will be granted to an officer whose performance is unacceptable.
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SECTION VI - DISTRIBUTION OF AWARDS
Unless a participant elects the deferred option outlined in the following
paragraph, distribution of awards will be made during the first quarter of the
year following the Plan year. Distribution of the bonus award must be approved
by the Compensation Committee.
A participant may elect by written notice to the Committee at any time during
the month of December of the Plan Year preceding the year to which the award
relates to have all or a portion of his award deferred (Deferred Award). Any
such election shall be irrevocable except unforeseeable financial emergency.
Any portion of participant's award that is deferred shall bear interest
commencing on the Award Date based on the lowest balance in the participant's
account during the month, as if invested at an annual rate equal to the highest
annual rate offered at NBT on any customer deposit account in effect on the last
day of the preceding calendar year. Interest shall be computed monthly, and
credited to the participant's account as of the last day of each calendar month.
The Deferred Award shall be paid in five (5) annual installments upon the
participant's ceasing to be actively employed by the Company for any reason.
Payment shall begin on the 31st day of January following the year in which the
participant ceases to be actively employed with the Company. However, a
participant with the consent of the Committee, prior to termination of
employment, may elect in writing to have the aggregate amount in his or her
Deferred Award Account paid to him or her in a lump sum on a designated date.
Nothing contained in this Plan and no action taken pursuant to the provisions of
this Plan shall create or be constructed to create a trust of any kind, or a
fiduciary relationship between NBT and the participant, his or her designated
beneficiary or any other person, nor shall the participant or any designated
beneficiary have any preferred claim on, any title to, or any beneficial
interest in, the assets of NBT or the payments deferred hereunder prior to the
time such payments are actually paid to the participant pursuant to the terms
herein. To the extent that the participant, his or her designated beneficiary or
any person acquires a right to receive payments from NBT under this Plan, such
right shall be no greater than the right of any unsecured general creditor of
NBT.
The intent of this Section of the Plan is to create a voluntary, non-qualified,
unfunded, deferred executive incentive compensation Plan which will defer the
deduction of such incentive compensation for tax purposes by NBT and which will
correspondingly defer the recognition of such compensation by the participant
until such compensation is actually paid. It is therefore intended, and this
Plan shall be construed and where necessary modified, so that the participants
shall not be deemed to have constructively received such deferred compensation.
In the event of death, any approved award earned under the provisions of this
plan will become payable to the beneficiary designated under this Plan; or if no
such designation, to the designated beneficiary of the participant as recorded
under the bank's group life insurance program; or in the absence of a valid
designation, to the participant's estate.
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SECTION VII - PLAN ADMINISTRATION
The Compensation Committee shall, with respect to the Plan have full power and
authority to construe, interpret and manage, control and administer this Plan,
and to pass and decide upon cases in conformity with the objectives of the Plan
under such rules as the Board of Directors of the bank may establish.
Any decision made or action taken by the company, the Board of Directors, or the
Compensation Committee arising out of, or in connection with, the
administration, interpretation, and effect of the Plan shall be at their
absolute discretion and will be conclusive and binding on all parties. No member
of the Board of Directors, Compensation Committee, or employee of the company or
any of its subsidiaries shall be liable for any act or action hereunder, whether
of omission or commission, by a Plan participant or employee or by any agent to
whom duties in connection with the administration of the Plan have been
delegated in accordance with the provision of the Plan.
SECTION VIII - AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION
NBT reserves the right, by and through its Board of Directors to amend, modify,
suspend, reinstate or terminate all or part of the Plan at any time. The
Compensation Committee will give prompt written notice to each participant of
any amendment, suspension or termination or any material modification of the
Plan. In the event of a merger or acquisition, the Plan and related financial
formulas will be reviewed and adjusted to take into account the effect of such
activities.
SECTION IX - EFFECTIVE DATE OF THE PLAN
The effective date of the Plan shall be January 1, 2001.
SECTION X - EMPLOYER RELATION WITH PARTICIPANTS
Neither establishment nor the maintenance of the Plan shall be construed as
conferring any legal rights upon any participant or any person for a
continuation of employment, nor shall it interfere with the right of an employer
to discharge any participant or otherwise deal with him/her without regard to
the existence of the Plan.
SECTION XI - GOVERNING LAW
Except to the extent pre-empted under federal law, the provisions of the Plan
shall be construed, administered and enforced in accordance with the domestic
internal law of the State of New York. In the event of relevant changes in the
Internal Revenue Code, related rulings and regulations, changes imposed by other
regulatory agencies affecting the continued appropriateness of the Plan and
awards made thereunder, the Board may, at its sole discretion, accelerate or
change the manner of payments of any unpaid awards or amend the provisions of
the Plan.
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