Exhibit 10.2
LEADERSHIP CASH INCENTIVE PLAN
EFFECTIVE FISCAL YEAR 2007 AND THEREAFTER
PURPOSE
The Boards of Directors (collectively the "Board") of PeoplesBank, A Codorus
Valley Company and Codorus Valley Bancorp, Inc, (collectively the "Company"),
have approved a Leadership Cash Incentive Plan (the "Plan"). The purpose of this
Plan is to sustain management's focus on the Company's fulfillment of its
strategic long range plan, and to encourage attainment of the Company's annual
performance goals. The Leadership Cash Incentive Plan supports a number of
objectives which are important to the continued success of the Company, as
follows:
- To attract, retain and reward well-qualified leadership staff;
- To provide a competitive compensation package for Plan participants;
and
- To motivate key leaders through a combination of appropriate
challenges and financial incentives for Company performance that meets
or exceeds expectations.
The primary purpose of the Plan is to provide competitive incentive
opportunities directly related to the Company's annual financial performance,
the execution of the Company's Strategic Plan and individual leader's
performance. The Company's financial performance goals and Strategic Plan will
be established annually and approved by the Board of Directors.
PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Company's Board of
Directors, the President & Chief Executive Officer and the Senior Vice President
of Human Resources.
A. Responsibilities of the Senior Vice President, Human Resources
The Senior Vice President of Human Resources will be responsible for
the daily administration of the Plan, and will provide requested
information to the President & Chief Executive Officer and to the
Compensation Committee.
B. Responsibilities of the President & Chief Executive Officer
The President & Chief Executive Officer will provide recommendations
to the Compensation Committee regarding Plan participants, Company and
individual performance and recommended incentive awards. The President
& Chief Executive Officer's responsibilities include monitoring the
effectiveness of the Plan and providing recommendations to the
Compensation Committee regarding modification to the Plan.
The President & Chief Executive Officer will not participate in any
discussion relating to any incentive awards for himself under this
Plan.
C. Responsibility of the Compensation Committee
The Compensation Committee will review and act on recommendations from
the President & Chief Executive Officer and the Senior Vice President
of Human Resources.
ELIGIBILITY
Individuals eligible to participate in the Plan are those who, in the
opinion of the President & Chief Executive Officer and as confirmed by
the Compensation Committee, hold positions which have the capacity to
significantly impact Company performance. Participation is recommended
by the President & Chief Executive Officer subject to approval by the
Compensation Committee. Eligibility will be reviewed annually to
assure appropriateness.
INCENTIVE COMPENSATION OPPORTUNITY
Certain positions have a greater and more direct impact than others on
the achievement of Company performance. Those differences are
recognized by varying the incentive opportunity, expressed as a
percentage of the Incentive Pool.
CONDITIONS FOR INCENTIVE COMPENSATION
The following conditions must be satisfied for incentives to be paid:
- Most recent CAMELS rating of 1 or 2
- Most recent CRA rating of "Satisfactory" or better
- Capital leverage ratio of greater than 7%
- Total risk based capital ratio of 10% or better
In addition, in order for the individual to be considered for
incentive compensation, the following criteria will be evaluated for
each group as outlined below:
GROUP A:
- Completion of the Company's Strategic Plan 70%
- Unit/Function goals and performance 0%
- Individual Performance (subjective) 30%
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GROUP B:
- Completion of the Company's Strategic Plan 60%
- Unit/Function goals and performance 30%
- Individual Performance (subjective) 10%
GROUP C:
- Completion of the Company's Strategic Plan 30%
- Unit/Function goals and performance 60%
- Individual Performance (subjective) 10%
GROUP D:
- Completion of the Company's Strategic Plan 50%
- Unit/Function goals and performance 40%
- Individual Performance (subjective) 10%
FORMULA FOR INCENTIVE AWARDS
A. INCENTIVE POOL:
The incentive pool will be formed by allocating 30% of the Company's
net income that is in excess of 90% of budgeted net income.
B. ALLOCATION OF TOTAL INCENTIVE:
The Incentive Pool will be allocated among groups of participants
using the following percentages for each participant within the group:
Group A 12.5% - 22.5%
Group B 7.5% - 15%
Group C 5% - 12.5%
Group D 0% - 10%
C. While the Compensation Committee reserves the right to grant cash
incentives outside the ranges described above, in no event shall a
participant receive cash compensation under variable compensation and
incentive Plans, collectively, in excess of 35% of their respective
annual base compensation.
D. INCENTIVE PAYMENT:
- The individual will receive 100% of the incentive award in the
form of cash under this plan.
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AWARD DETERMINATION
At the conclusion of each year, the President & Chief Executive Officer, after
considering the Company's performance against its financial and strategic
objectives, shall recommend to the Compensation Committee the Incentive Pool and
individual incentives to be paid for that plan year.
An individual must be in good standing to be eligible for any incentive payout
as determined by the Compensation Committee.
Unless otherwise directed by the Compensation Committee, payments under the Plan
shall be made as soon as possible after the Company's year-end audit, generally
by January 31st.
Individuals who terminate employment with the Company for any reason, other than
death, disability or retirement prior to the end of the plan year will not be
eligible for any incentives. If an individual ceases employment after the Plan
year-ends, but before the Compensation Committee approves the incentive payout,
the President & Chief Executive Officer will recommend to the Compensation
Committee whether the individual should receive their incentive.
TERMINATION OR AMENDMENT
The Plan, in whole or in part, may at any time or from time-to-time be amended,
suspended, or reinstated and may at any time be terminated by action of the
Compensation Committee. Until a determination of incentive payment has been made
by the Compensation Committee, no individual has a vested right to any incentive
under this Plan.
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