EXHIBIT 10.19
SOVEREIGN BANCORP, INC.
SENIOR OFFICERS BONUS AWARD PROGRAM
(As Amended Effective February 18, 2004)
1. Definitions.
(a) "Bank" means Sovereign Bank.
(b) "Board" means the board of directors of the
Corporation.
(c) "Change in Control" has the same meaning as is
ascribed to such term, as of the Effective Date, in the
Sovereign Bancorp, Inc. 2001 Stock Incentive Plan.
(d) "Committee" means the Compensation Committee of the
Board or such other committee as may be appointed by the Board
to administer this Program. Such term also includes the whole
Board to the extent it takes action with respect to
administrative or operational matters relating to the Program.
(e) "Common Stock" means the common stock (no par value)
of the Corporation.
(f) "Corporation" means Sovereign Bancorp, Inc.
(g) "Effective Date" means September 18, 2002.
(h) "Fair Market Value" of a share of Common Stock on any
given date means the closing sale price for such shares on
that date as listed on the New York Stock Exchange (or any
national securities exchange or quotation system on which the
Common Stock is then listed or reported). If a closing sale
price for the Common Stock for the given date is not listed or
reported, or if there is none, the Fair Market Value shall be
equal to the closing sale price on the nearest trading day
preceding such date. Notwithstanding the foregoing, if, in the
Committee's judgment, there are unusual circumstances or
occurrences under which the otherwise determined Fair Market
Value of the Common Stock does not represent the actual fair
value thereof, then the Fair Market Value of such Common Stock
shall be determined by the Committee on the basis of such
prices or market quotations as it shall deem appropriate and
fairly reflective of the then fair value of such Common Stock.
(i) "Participant" means a Senior Officer who is entitled
to participate in the Program in accordance with the
provisions of Sections 2 and 4 and who has not terminated as a
Senior Officer. Notwithstanding the preceding sentence, a
Participant who terminates as a Senior Officer after having
earned an award, but before its payment, shall remain a
Participant until payment is made.
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(j) "Program" means the Sovereign Bancorp, Inc. Senior
Officers Bonus Award Program.
(k) "Senior Officer" means a member of the Office of the
Chairman of Sovereign Bank.
2. Participation. Each individual who is a Senior Officer on the
Effective Date shall become a Participant in the Program on
such date. Any individual who becomes a Senior Officer after
December 31, 2003, may become a Participant subject to the
provisions of Section 4.
3. Operative Terms of the Program.
(a) In the event the Corporation's cash earnings,
determined on a consolidated and fully-diluted basis, for 2004
equal or exceed $1.70 per share, each Participant, who remains
as a Senior Officer as of December 31, 2004, shall receive a
cash award equal to the Fair Market Value of 10,000 shares of
Common Stock.
(b) In the event the Corporation's cash earnings,
determined on a consolidated and fully-diluted basis, for 2005
equal or exceed $1.95 per share, each Participant, who remains
as a Senior Officer as of December 31, 2005, shall receive a
cash award equal to the Fair Market Value of 15,000 shares of
Common Stock.
(c) In the event the Corporation's cash earnings,
determined on a consolidated and fully-diluted basis, for 2006
equal or exceed a per share amount established by the
Committee prior to January 1, 2006, each Participant, who
remains as a Senior Officer as of December 31, 2006, shall
receive a cash award equal to the Fair Market Value of 15,000
shares of Common Stock.
(d) In the event the Corporation's cash earnings,
determined on a consolidated and fully-diluted basis, for 2007
equal or exceed a per share amount established by the
Committee prior to January 1, 2007, each Participant, who
remains as a Senior Officer as of December 31, 2007, shall
receive a cash award equal to the Fair Market Value of 15,000
shares of Common Stock.
(e) In the event the Corporation's cash earnings,
determined on a consolidated and fully-diluted basis, for 2008
equal or exceed a per share amount established by the
Committee prior to January 1, 2008, each Participant, who
remains as a Senior Officer as of December 31, 2008, shall
receive a cash award equal to the Fair Market Value of 15,000
shares of Common Stock.
(f) In addition to the target earnings per share
objectives described above, an award shall not be considered
earned with respect to a relevant year, nor shall it be paid,
in the event the Corporation's "Tier 1 capital" is less than
5.5% as of the close of such year or the Bank's asset quality
is worse than the average of the top 25 banks in the United
States (by asset size), which banks have commercial loans
making up at least 25% of their total loan portfolios.
Notwithstanding the foregoing, if one or more of the financial
objectives described in this section 3 are
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not achieved for a relevant year, the Committee, after review
of all relevant facts and circumstances, may determine that an
award (or any portion thereof) with respect to a relevant year
is considered earned if such determination, in the judgment of
the Committee, is reasonably consistent with the goals of the
Program.
(g) All amounts payable pursuant to the preceding
provisions of this section shall be distributed within 30 days
following the filing by the Corporation of its Annual Report
on Form 10-K for the relevant year in which an award is
earned.
(h) All financial calculations required in connection
with this Program shall be performed by, or under the
supervision of, the Committee; provided, however, that the
calculation of cash earnings shall, in any event, be
consistent with any year-end or other public financial
release, describing year-end cash earnings, made by the
Corporation with respect to the relevant year. The
determination of the value of an award hereunder shall be
based upon the Fair Market Value of Common Stock as of the
date determined by the Committee, provided, however, the
determination of the value of an award made pursuant to
Subsection (k) shall be based upon the Fair Market Value of
Common Stock as of the date of the Change in Control.
(i) Except as otherwise provided herein, no award shall
be payable to any Participant for a relevant year if he or she
fails to remain as a Senior Officer, for any reason, through
the end of such year.
(j) In the event of the occurrence of a stock split,
stock dividend, reverse stock split, or similar event with
respect to the Common Stock following the adoption of this
Program and prior to a payment of an award earned with respect
to any year, the amount payable with respect to any earned
award shall be appropriately adjusted to take into account
such occurrence.
(k) Notwithstanding the provisions of this section, an
award earned hereunder with respect to a relevant year shall
not be paid unless an award with respect to the same year has
been earned under the terms of the Sovereign Bancorp, Inc.
Non-Employee Directors Bonus Award Program.
(l) Notwithstanding the preceding provisions of this
section, in the event of the occurrence of a Change in
Control, all potential awards for any current or future fiscal
year shall be deemed earned as of the date of such Change in
Control and shall be payable to the Participants, who are
serving as Senior Officers immediately prior thereto, within
30 days after such Change in Control.
4. Future Participants. In the case of an individual who becomes
a Senior Officer following December 31, 2003, the Committee
may provide, in its sole discretion, for his or her
participation in the Program. In the event the Committee
provides for the participation of such an individual, it may
establish such additional or modified conditions on his or her
participation as it may deem equitable or appropriate under
the circumstances.
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5. Administration. Except as otherwise provided herein, this
Program shall be interpreted and administered by the
Committee. In furtherance of such authority, the Committee may
prescribe such rules, regulations, forms, and procedures as it
deems necessary or appropriate for the proper administration
of the Program.
6. Amendment. This Program may be amended at any time and from
time to time by the Board; provided, however, that no such
amendment may be made which adversely affects the then rights
of a Participant under the Program without his or her consent;
and provided further, that no amendment may be made solely by
the Board that requires the additional approval of the
Corporation's shareholders for tax, securities law, exchange
listing requirement, or other purposes.
7. Termination. This Program shall terminate upon the earliest to
occur of the following: (i) the distribution of earned awards
(if any) for the year 2008, (ii) the determination by the
Committee that the specified goals for the year 2008 were not
met, or (iii) the distribution of awards payable by reason of
a Change in Control.
8. Tax Withholding. Distribution of an award shall be subject to
satisfaction by the Participant of any tax withholding
requirements that may apply at the relevant time.
9. Number. Words used herein in the singular form shall include
the plural form, as the context requires, and vice versa.
10. Headings. The headings of the several sections of this Program
document have been inserted for convenience of reference only
and shall not be used in the construction of the same.
11. Applicable Law. Except to the extent pre-empted by federal
law, this Program document shall be administered, construed
and enforced in accordance with the domestic internal law of
the Commonwealth of Pennsylvania.
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