FIRST BANK SYSTEM, INC.
EXECUTIVE INCENTIVE PLAN
(including amendments effective February 19, 1997)
1. ESTABLISHMENT. On February 15, 1995, the Board of Directors of FIRST BANK
SYSTEM, INC., upon recommendation by the Compensation and Human Resources
Committee of the Board of Directors, approved an executive incentive plan for
executives as described herein, which plan shall be known as the "FIRST BANK
SYSTEM, INC. EXECUTIVE INCENTIVE PLAN." This Plan shall be submitted for
approval by the stockholders of First Bank System, Inc. at the 1995 Annual
Meeting of Stockholders. This Plan shall be effective as of January 1, 1995,
subject to its approval by the stockholders, and no benefits shall be issued
pursuant thereto until after this Plan has been approved by the stockholders.
2. PURPOSE. The purpose of this Plan is to advance the interests of First Bank
System, Inc. and its stockholders by attracting and retaining key employees, and
by stimulating the efforts of such employees to contribute to the continued
success and growth of the business of the Company.
3. DEFINITIONS. When the following terms are used herein with initial capital
letters, they shall have the following meanings:
3.1. BASE SALARY - a Participant's annualized base salary, as
determined by the Committee, as of the last day of a Performance
Period.
3.2. CODE - the Internal Revenue Code of 1986, as it may be amended
from time to time, and any proposed, temporary or final Treasury
Regulations promulgated thereunder.
3.3. COMMITTEE - the Compensation and Human Resources Committee of the
Board of Directors of the Company designated by such Board to
administer the Plan which shall consist of members appointed from time
to time by the Board of Directors. Each member of the Committee shall
be an "outside director" within the meaning of Section 162(m) of the
Code.
3.4. COMPANY - First Bank System, Inc. a Delaware corporation, and any
of its subsidiaries or affiliates, whether now or hereafter
established.
3.5. MAXIMUM AWARD - a dollar amount equal to thirty five
one-hundredths of one percent (0.35%) of the Company's Operating
Earnings for the Performance Period.
3.6. OPERATING EARNINGS - the Company's net income computed in
accordance with generally accepted accounting principles as reported in
the Company's consolidated financial statements for the applicable
Performance Period, adjusted to eliminate (1) the cumulative effect of
changes in generally accepted accounting principles; (2) gains and
losses from discontinued operations; (3) extraordinary gains or losses;
and (4) any other unusual or nonrecurring gains or losses which are
separately identified and quantified in the Company's financial
statements, including merger related charges.
3.7. PARTICIPANT - any executive officer of the Company who is also an
"officer" within the meaning of Section 16(a) of the Securities
Exchange Act of 1934 and who is designated by the Committee, as
provided for herein, to participate with respect to a Performance
Period as a Participant in this Plan. Directors of the Company who are
not also employees of the Company are not eligible to participate in
the Plan.
3.8. PERFORMANCE THRESHOLD - the preestablished, objective performance
goals selected by the Committee with respect to each Performance Period
and which shall be based solely on ROA.
3.9. PERFORMANCE PERIOD - each consecutive twelve-month period
commencing on January 1 of each year during the term of this Plan and
coinciding with the Company's fiscal year.
3.10. PLAN - this FIRST BANK SYSTEM, INC. EXECUTIVE INCENTIVE PLAN.
3.11. RETURN ON ASSETS OR ROA - a percentage computed as the Company's
Operating Earnings for its fiscal year divided by the Company's
consolidated total average assets for such fiscal year. The Company's
Return on Assets shall be computed in accordance with generally
accepted accounting principles, as in effect from time to time, as
reported in the Company's consolidated financial statements for the
applicable Performance Period, adjusted in the same fashion that
Operating Earnings are to be adjusted as provided in Section 3.6
hereof.
3.12. TARGET AWARD - a percentage, which may be greater or less than
100%, as determined by the Committee with respect to each Performance
Period.
4. ADMINISTRATION.
4.1. POWER AND AUTHORITY OF COMMITTEE. The Plan shall be administered
by the Committee. The Committee shall have full power and authority, subject to
all the applicable provisions of the Plan and applicable law, to (a) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it
deems necessary or advisable for the proper administration of the Plan, (b)
construe, interpret and administer the Plan and any instrument or agreement
relating to the Plan, and (c) make all other determinations and take all other
actions necessary or advisable for the administration of the Plan. Unless
otherwise expressly provided in the Plan, each determination made and each
action taken by the Committee pursuant to the Plan or any instrument or
agreement relating to the Plan (x) shall be within the sole discretion of the
Committee, (y) may be made at any time and (z) shall be final, binding and
conclusive for all purposes on all persons, including, but not limited to,
Participants and their legal representatives and beneficiaries, and employees of
the Company.
4.2. DETERMINATIONS MADE PRIOR TO EACH PERFORMANCE PERIOD. At any time
ending on or before the 90th day of each Performance Period, the Committee
shall:
(a) designate all Participants and their Target Awards for such
Performance Period; and
(b) establish one or more Performance Thresholds (including a
minimum level of achievement), based solely on ROA.
4.3. CERTIFICATION. Following the close of each Performance Period and
prior to payment of any amount to any Participant under the Plan, the Committee
must certify in writing the Company's Operating Earnings and ROA for that
Performance Period and certify as to the attainment of all other factors upon
which any payments to a Participant for that Performance Period are to be based.
4.4. STOCKHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by stockholders of the Company in accordance with
Section 162(m) of the Code. No amount shall be paid to any Participant under
this Plan unless such stockholder approval has been obtained.
5. INCENTIVE PAYMENT.
5.1. FORMULA. Each Participant shall receive a bonus payment for each
Performance Period in an amount not greater than:
(a) the Participant's Base Pay for the Performance Period,
multiplied by
(b) the Participant's Target Award for the Performance Period;
provided, however, that in the event that the Company's ROA for a Performance
Period is equal to or in excess of a designated Performance Threshold for that
Performance Period, then each Participant shall be entitled to a bonus payment
for that Performance Period which is not greater than the Maximum Award for that
Performance Period.
5.2. LIMITATIONS.
(a) MINIMUM ROA ACHIEVEMENT. In no event shall any Participant
receive any payment hereunder unless the Company's ROA for a
Performance Period is at least equal to a minimum percentage
as determined by the Committee for that Performance Period.
(b) DISCRETIONARY REDUCTION. The Committee shall retain sole and
full discretion to reduce by any amount the incentive payment
otherwise payable to any Participant under this Plan.
(c) CONTINUED EMPLOYMENT. Except as otherwise provided by the
Committee, no incentive payment under this Plan with respect
to a Performance Period shall be paid or owed to a Participant
whose employment terminates prior to the last day of such
Performance Period.
(d) MAXIMUM PAYMENTS. No Participant shall receive a payment under
this Plan for any Performance Period in excess of the Maximum
Award for that Performance Period.
6. BENEFIT PAYMENTS.
6.1. TIME AND FORM OF PAYMENTS. Subject to any deferred compensation
election pursuant to any such plans of the Company applicable hereto, benefits
shall be paid to the Participant in a single lump sum cash payment as soon as
administratively feasible upon the completion of a Performance Period, after the
Committee has certified that the Company Performance Threshold has been
attained, determined the Maximum Award for that Performance Period and made the
other certifications provided for in Section 4.3 hereof.
6.2. NONTRANSFERABILITY. Participants and beneficiaries shall not have
the right to assign, encumber or otherwise anticipate the payments to be made
under this Plan, and the benefits provided hereunder shall not be subject to
seizure for payment of any debts or judgments against any Participant or any
beneficiary.
6.3. TAX WITHHOLDING. In order to comply with all applicable federal or
state income, social security, payroll, withholding or other tax laws or
regulations, the Committee may establish such policy or policies as it deems
appropriate with respect to such laws and regulations, including without
limitation, the establishment of policies to ensure that all applicable federal
or state income, social security, payroll, withholding or other taxes, which are
the sole and absolute responsibility of the Participant, are withheld or
collected from such Participant.
7. AMENDMENT AND TERMINATION; ADJUSTMENTS. Except to the extent prohibited by
applicable law and unless otherwise expressly provided in the Plan:
(a) AMENDMENTS TO THE PLAN. The Committee may amend this Plan
prospectively at any time and for any reason deemed sufficient
by it without notice to any person affected by this Plan and
may likewise terminate or curtail the benefits of this Plan
both with regard to persons expecting to receive benefits
hereunder in the future and persons already receiving benefits
at the time of such action.
(b) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan in the manner and to
the extent it shall deem desirable to carry the Plan into
effect.
8. MISCELLANEOUS.
8.1. EFFECTIVE DATE. This Plan shall be deemed effective, subject to
stockholder approval, as of January 1, 1995.
8.2. HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
8.3. APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each Participant, the successors and
assigns of the Company, and the beneficiaries, personal representatives and
heirs of each Participant. If the Company becomes a party to any merger,
consolidation or reorganization, this Plan shall remain in full force and effect
as an obligation of the Company or its successors in interest.
8.4. EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of
this Plan shall not give any Participant any right to be retained in the
employment of the Company. In the absence of any specific agreement to the
contrary, this Plan shall not affect any right of the Company, or of any
affiliate of the Company, to terminate, with or without cause, any Participant's
employment at any time. This Plan shall not replace any contract of employment,
whether oral or written, between the Company and any Participant, but shall be
considered a supplement thereto. This Plan is in addition to, and not in lieu
of, any other employee benefit plan or program in which any Participant may be
or become eligible to participate by reason of employment with the Company. No
compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant's compensation
under any compensation-based retirement, disability, or similar plan of the
Company unless required by law or otherwise provided by such other plan.
8.5. NO TRUST OR FUND CREATED. This Plan shall not create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any affiliate and a Participant or any other
person. To the extent that any person acquires a right to receive payments from
the Company or any affiliate pursuant to this Plan, such right shall be no
greater than the right of any unsecured general creditor of the Company or of
any affiliate.
8.6. GOVERNING LAW. The validity, construction and effect of the Plan
or any incentive payment payable under the Plan shall be determined in
accordance with the laws of the State of Minnesota.
8.7. SEVERABILITY. If any provision of the Plan is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction, such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be so construed or deemed amended without, in the determination of
the Committee, materially altering the purpose or intent of the Plan, such
provision shall be stricken as to such jurisdiction, and the remainder of the
Plan shall remain in full force and effect.
8.8. QUALIFIED PERFORMANCE-BASED COMPENSATION. All of the terms and
conditions of the Plan shall be interpreted in such a fashion as to qualify all
compensation paid hereunder as "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.