EXHIBIT 10.6
EXECUTIVE AND SENIOR MANAGEMENT SHORT-TERM COMPENSATION
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INCENTIVE PLANS
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OBJECTIVES: These plans provide for short-term incentive compensation to
certain corporate officers of the Bank who, by their position,
ability and diligence in the performance of future services to
the Bank, are in a position to make important contributions to
the achievement of the Company's short- and long-term goals,
and enable the Company to retain such personnel.
ELIGIBILITY: Awards may be granted only to eligible officers of the Bank who
are full-time salaried employees. Executive officers and
senior officers are eligible to participate in the Incentive
Program. In addition, the Compensation Committee of the Board
may approve participation by other selected corporate officers
recommended by the Chief Executive Officer. Awards will be
prorated for those who start employment during the year.
Officers leaving the Bank, either voluntarily or involuntarily,
prior to the Board's review and approval of awards will not be
eligible for an award pursuant to these Plans.
ADMINISTRATION: The Plans are administered by the Compensation Committee of the
Board, consisting of non-employee members of the Board who are
selected by and serve at the pleasure of the Board.
The Compensation Committee is charged with the responsibility
of considering all relevant aspects of corporate and individual
performance, including the Company's financial and operating
results relative to its peer group, e.g., returns on average
assets and equity, and reviewing recommendations presented by
the Chief Executive Officer for the individuals eligible to
receive awards and the amounts thereof. The Compensation
Committee is solely responsible for recommending to the Board
the individuals who should receive awards and the amounts
thereof. The final determination regarding the individual
award amounts shall be made by the Board. A director eligible
for an award may not participate in the vote on any award
determination for such director.
Eligible participants will be evaluated by the Chief Executive
Officer and Chief Operating Officer following each Award Year
with respect to their individual performance and contributions
to the Bank's overall results. Evaluations of individual
performance will be based on achieving or exceeding the
predetermined levels of performance on a select number of
individual objectives. Based on the evaluation process, the
Chief Executive Officer may recommend that an individual
receive a reduced incentive award, no award at all, or a higher
than average award. Results of
these evaluations and preliminary recommendations will be
submitted by the Chief Executive Officer to the Compensation
Committee by February 15th.
GROUP For purposes of determining award recommendations, the
DESIGNATIONS: executive and senior officers will be separated into three
Groups as follows: Group I will be comprised of the Company's
Chief Executive Officer and Chief Operating Officer; Group II
will consist of the Company's Senior Executive Vice Presidents;
and Group III will be comprised of the Company's Senior Vice
Presidents and the President of the Bank's insurance service
corporation subsidiary (Coast Fed Insurance).
FORM OF PAYMENT: Awards as determined by the Board will be paid to individual
participants within 30 days of approval.
PERFORMANCE Corporate Performance Award Pools - For Groups I and II, the
CRITERIA AND short-term incentive award pools will be established based
AWARD POOLS: solely upon overall corporate performance. Overall performance
will be measured by the Bank's capital position, supervisory
subgroup, total problem asset ratio, operating expenses, and
net earnings. Certain thresholds of each of these five
performance criteria must be accomplished for a corporate
incentive award pool to be established. If the thresholds
(described below) for capital, supervisory subgroup, total
problem asset ratio and operating expenses are achieved, the
Corporate Incentive Award Pool for each Group will be
established at the levels set forth under "Net Earnings" below.
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Net Earnings: Net earnings, determined in accordance with
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generally accepted accounting principles, must be equal to or
greater than the levels specified below in order for the
Corporate Incentive Award Pools to be established.
As detailed in the following table, the Corporate Incentive
Award Pools are expressed as a percentage of base salaries and
will be calculated on a sliding scale, whereunder such pools
will be capped at the indicated maximum levels in the event
that Net Earnings exceed, and established at pro rata
levels within the sliding scale.
Individual Performance Award Pools (Group III only) - For Group
III officers, the Chief Executive Officer and the Chief
Operating Officer will develop recommended Individual
Performance Awards for each officer, depending upon each
officer's performance relative to the predetermined goals and
objectives established for his or her division. Such awards
will be limited to a maximum of 10% of base salaries.
MODIFICATION The Board in its sole discretion may modify the performance
AND TERMINA- criteria, eligibility requirements or any other provision of
TION OF THE the Plans, requirements or any other provision of the Plans,
PLANS including termination of the Plans. Therefore, regardless
of whether the performance criteria are achieved, the Board
may increase, curtail or eliminate award payments pursuant to
these Plans.
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