Exhibit 10(a)
RESTATEMENT
OF
TRUSTCO BANK
SENIOR
INCENTIVE PLAN
(Formerly, Trustco Bank Executive Incentive Plan)
January 1, 2006
TRUSTCO BANK
SENIOR INCENTIVE PLAN
Table of Contents
Page No.
ARTICLE I, PLAN OBJECTIVES 1
ARTICLE II, ELIGIBILITY FOR PLAN PARTICIPATION 2
ARTICLE III, PERFORMANCE INCENTIVE FUNDS 3
ARTICLE IV, DEVELOPMENT OF PERFORMANCE INCENTIVE FUND 3
ARTICLE V, DISTRIBUTION OF FUNDS 4
ARTICLE VI, PAYMENT OF INCENTIVE AWARDS 4
ARTICLE VII, PLAN ADMINISTRATION 6
RESTATEMENT OF
TRUSTCO BANK
SENIOR INCENTIVE PLAN
(Formerly, Trustco Bank Executive Incentive Plan)
WHEREAS, Trustco Bank (herein referred to as the "Bank") maintains the
Trustco Bank Executive Incentive Plan (herein referred to as the "Plan"); and
WHEREAS, the Bank desires to amend the Plan and to restate the Plan in
its entirety effective as of January 1, 2006;
NOW,THEREFORE, the Bank does hereby amend and restate the Plan in its
entirety effective as of January 1, 2006, to change the name to Trustco Bank
Senior Incentive Plan and so that it shall read as follows:
ARTICLE I
PLAN OBJECTIVES
Section 1.1. The underlying objective of this Plan is to assist the Bank
to attract, retain and motivate senior personnel by providing outstanding
incentive award opportunities and by linking incentive awards to
accomplishment of the Bank's overall business plans and objectives. The
senior incentive plan was developed in light of this central objective, as
well as the following specific objectives:
o To foster and reward teamwork, cohesiveness and collaboration among
senior officers in the performance of their assigned
responsibilities.
o To clearly identify expected performance levels and to provide a
mechanism for evaluating and acknowledging the collective effort.
o To maximize and focus effectiveness by providing incentives based
on a high level of performance.
o To ensure that the Bank's profit plan is used as an operational
plan in the management of the Bank.
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o To ensure stability among the Bank's senior executive positions.
Section 1.2. The Plan is designed to provide participants with the
opportunity for annual incentive awards for achievement of objectives as
established by the Chief Executive Officer ("CEO") of the Bank. In addition,
prior to payment of any annual incentive awards, a suitable return upon
assets will be required. Incentive award opportunities, therefore, are
contingent upon the attainment of performance targets, as well as a
reasonable return on equity. In this manner, the Plan is equitable to both
shareholders and the Bank's management team.
ARTICLE II
ELIGIBILITY FOR PLAN PARTICIPATION
Section 2.1. Participation in this Plan is limited to the following
employee positions:
1. Managers
2. Officers and Senior Officers
3. Administrative Vice Presidents and Vice Presidents
Executive officers of the Bank selected for participation in the Trustco
Bank Executive Officer Incentive Plan are not eligible to participate in this
Plan.
Section 2.2. Individuals assigned to a position included within the
Plan, during the course of a Plan year, will be eligible for receipt of
incentive awards even if they are in such positions only part of the year.
The incentive awarded to such participants will be prorated based upon the
number of months' service in each included position. This rule will also
apply in cases where Plan participants are promoted to a higher level
position, such promotion to this position would affect the size of the
incentive award.
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Section 2.3. Plan participants who leave the employ of the Bank prior to
the end of a Plan year (except in the case of retirement or disability)
forfeit all rights to incentive awards accrued during the Plan year in which
the termination occurs. Participants terminated because of retirement or
disability will receive all incentive awards proportionate to base
compensation paid or accrued during the course of the Plan year.
ARTICLE III
PERFORMANCE INCENTIVE FUNDS
Section 3.1. The percentage of the incentive award for a participant for
a Plan year (January 1st through December 31st) will be at the discretion of
the Chief Executive Officer. The dollar amount of the incentive award is
determined by multiplying the participant's base salary for the Plan year by
the percentage.
ARTICLE IV
DEVELOPMENT OF PERFORMANCE INCENTIVE FUND
Section 4.1. The profit plan of the Bank for a Plan year is developed
and submitted to the Board of Directors for approval prior to the
commencement of the year. As part of the profit plan development process, a
return on assets shall be included, as well as asset targets, deposit targets
and net income objectives.
The amount of a participant's incentive award for a Plan year shall be
determined prior to the end of the year in the sole discretion of the CEO,
and such determination shall take into account the Bank's performance in the
year just ended against targeted profit and goals in the profit plan and the
participant's contribution to such performance. The determination by the CEO
shall be final and conclusive.
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ARTICLE V
DISTRIBUTION OF FUNDS
Section 5.1. An amount equal to the incentive award shall be paid in a
single sum to Plan participants receiving the same as soon as practicable
following the end of the Plan year to which the award is attributable;
provided, however, in no event shall the payments be made later than two and
half months following the end of the Plan year for which the awards are
payable.
ARTICLE VI
PAYMENT OF INCENTIVE AWARDS
Section 6.1. In lieu of the single sum payment of the incentive award,
an Administrative Vice President or Vice President may elect on or before
December 31st of any year to defer receipt of all or a specific part of the
incentive award that he or she may earn the following Plan year. Any such
election must be in writing on forms provided by the Bank. In the event of a
Plan termination, the amount already deferred by the participant cannot be
paid to him until the participant ceases to be in the employ of the Bank and
shall be paid in accordance with Section 6.4. The deferral feature of this
Plan is an unfunded arrangement providing deferred compensation for a select
group of management or highly compensated employees of the Bank and is
intended to meet the requirements of The American Job Creation Act of 2004
and to be subject to Internal Revenue Code Section 409A. From its inception
through 2005 there will have been no deferrals made under the Plan.
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Section 6.2. The Bank will maintain general ledger accounts to reflect
its liability for deferred incentive awards, supported by memorandum accounts
for each Plan participant. The incentive awards deferred will be credited to
the Plan participant's deferred compensation account as of the date it would
have been payable. A Plan participant's deferred compensation account shall
be credited at the end of each calendar quarter with an amount calculated by
multiplying the Participant's deferred compensation account as of the first
day of the calendar quarter by a rate equal to one-fourth of the greater of
(i) six percent (6%), or (ii) the ten-year U.S. Treasury Bond rate on the
last business day of the quarter. Nothing contained in the Plan and no action
taken pursuant to the provisions of the Plan shall create or be construed to
create a trust of any kind or a fiduciary relationship between the Bank and
the Participant or any other person. To the extent that any person acquires
the right to receive payment from the Bank under the Plan such right shall be
no greater than the right of any unsecured general creditor of the Bank. This
Plan is unfunded and any amounts that become payable hereunder are payable
from the general assets of the Bank.
Section 6.4. In the event a Plan participant ceases to be an employee of
the Bank, an amount equal to the entire balance of his deferred incentive
account awards, including interest credited thereon, as of end of the month
in which his employment ceased shall be paid to the participant in a single
sum no later than sixty days following such cessation of employment;
provided, however, if such participant is a "specified employee" as defined
in Section 409A of the Internal Revenue Code, as amended, ("Code") such
amount shall be paid as of the last day of the month which is six months
after such participant's termination of employment. The determination of
whether a participant ceases to be an employee of the Bank shall be subject
to Section 409A of the Code and regulations promulgated thereunder.
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Section 6.5. Upon the death of a Plan participant, an amount equal to
the balance of his account shall be payable to the beneficiary designated by
him in the election filed with the Bank by such participant, or if no
beneficiary is named, to the trustee of the participant's revocable living
trust, and if none, to the trustee of the participant's testamentary trust,
and if none, to the personal representative of the participant's estate. Such
amount shall be paid on the first business day of the calendar year following
the year in which the participant died.
Section 6.6. The right to receive payment of deferred incentive awards
shall not be transferable or assignable by a Plan participant or named
beneficiary, except by will. or by the laws of descent and distribution.
Section 6.7. The Board of Directors reserves the right to amend, suspend
or terminate this Plan at any time. However, no amendment, suspension or
termination of the Plan may alter or impair any Plan participant's rights
previously granted under the Plan without his consent. Any such Amendment
shall be effective immediately upon adoption by the Board of Directors.
ARTICLE VII
PLAN ADMINISTRATION
Section 7.1. Overall policy direction shall be provided by the Board of
Directors. Plan administration shall be provided by the CEO.
Section 7.2. During the course of the Plan year, monthly accruals will
be established for estimated incentive award payments.
IN WITNESS WHEREOF, the Bank has caused this Restatement of the Plan to
be executed this 20th day of December, 2005.
TRUSTCO BANK
By: /s/ Robert J. McCormick
---------------------------
Title: President and CEO
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