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| Confidential |
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| The Ipswich Savings Bank |
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| Annual Incentive Plan Document |
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| BOARD OF DIRECTOR APPROVAL-- 08/16/95 |
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| EXECUTIVE COMMITTEE APPROVAL-- 09/19/95 |
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| September 15, 1995 |
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| Prepared by |
| THE EXECUTIVE STUDIES GROUP |
| A Division of BEN S. COLE FINANCIAL INCORPORATED |
| 130 High Street Boston, MA 02110 |
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| TEL: 617/350-9900 FAX:617/350-9909 |
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1. Purpose
The Ipswich Savings Bank (the "Bank) Annual Incentive Plan (the "Plan") is
intended to encourage and reward outstanding performance on the part of
participating executives.
2. Administration
The Plan will be administered by the Compensation Committee of the Bank
(the "Committee") and the Committee's interpretation and application of
the program of the Plan shall be final and binding on all concerned.
Applicable variables for the current Plan year are in Appendix A.
3. Participants
The executives who will be eligible to receive awards will be those
designated in writing by the Committee (a "Participant"). The Committee
may revise such designations from time to time at the beginning or during
the Bank's fiscal year.
4. Award Targets
Each participant will have an award target (a "Target Award") expressed as
a percentage of salary. Salary for this purpose will be the annualized
base salary in effect on the last day of the Bank's fiscal year.
5. Award Determination
Awards earned under the Plan will depend on Bank performance compared to
performance of all publicly held savings banks in Massachusetts based on
annual return on equity ("ROE").
6. Peer Banks
Peer banks will be all Massachusetts savings bank that are publicly held
during the whole Bank fiscal year. If a Peer bank has a fiscal year other
than a calendar year, the results used will be the fiscal year that ends
closest to the end of the Bank's fiscal year.
7. Performance Measure
The performance measure will be ROE as reported to stockholders using year
end equity. For the Bank ROE will be calculated after provision for any
payments under this Plan. Payments due will depend upon the ROE percentile
position the Bank achieves.
8. ROE/Target Award Relationship
The following schedule will determine the ROE percentile and Target Award
relationship.
% of Target
ROE Percentile Award Earned
Below 50th percentile 0%
At 50th percentile 50%
At 67th percentile 100%
At 75th percentile 125%
At 90th percentile 150%
Above 90th percentile 200%
For purposes of calculating the Bank's percentile among peer banks, actual
ROE rankings for the 50th, 75th and 90th percentiles must equal the next
highest whole number.
In between these percentiles, the actual Bank ROE percentile ranking would
be rounded to the nearest full percentile to interpolate the % of Target
Award Earned percentage amount to the nearest full percentage point. All
actual award amounts will be rounded to the nearest $100.
9. Bank/Individual Award Mix
Each Award will consist of a Bank portion that will be paid automatically
and an individual portion that will depend on achievement of other
objectives. The mix of Bank and individual awards will be 75% Bank and 25%
individual for the CEO, and 50% Bank and 50% individual for other
Participants.
10. Individual Awards
Individual awards will be based on achievement of goals established at the
beginning of the year. The Compensation Committee will determine the
individual award for the CEO and the CEO will recommend individual awards
to the Committee for all other Participants.
Individual awards may vary from zero to the maximum determined by the
combination of % of Target Award earned in Section 9 and the
Bank/Individual Award mix in Section 10.
Regardless of overall Bank results, up to a minimum of the individual
portion amount at 100% of Target Award may be paid based on individual
performance assessment.
11. Payment of Awards
Payment of all awards for the year will be made in cash as soon as
possible after peer group results are available. A participant must be an
employee of the Bank on the last day of the fiscal year to receive an
award payment under the Plan.
12. Extraordinary Items
The Committee may decide to include or exclude any profit or loss items
that are determined to be extraordinary. Such determination will be made
at the time of such event
13. Amendment
The Plan will be in effect for fiscal year 1995 and subsequent years. The
Committee may at any time amend or discontinue the plan, provided,
however, that no amendment may adversely affect the rights of any
Participant during a Plan year.
14. Employment Rights
The Plan does not confer upon any Participant any right to continued
employment nor does it interfere in any way with the right of the Bank to
terminate the employment of a Participant.
APPENDIX A
1. 1995 Annual Incentive Plan Participants
Participant Target Award (% Salary)
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Chief Executive Of ficer (Grey) 20%
Chief Financial Officer (Kenney) 10%
2. Peer Group
The 26 publicly-held savings banks in Massachusetts as delineated in the
SNL Securities September 1995 monthly market report.
3. 1995 ROE/Target Award Relationships (Assumes 26 banks.)
Bank Ranking ROE Percentiie % Target Award Earned
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1-13 Below 50th percentile 0 %
14 At 50th percentile 50
15 At 56th percentile 68
16 At 60th percentile 80
17 At 65th percentile 95
18 At 69th percentile 107
19 At 73rd percentile 119
20 At 75th percentile 125
21 At 81st percentile 135
22 At 85th percentile 142
23 At 88th percentile 147
24 At 90th percentile 150
25-26 Over 90th percentile 200