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Exhibit 10.6
PNC BANK CORP.
1994 ANNUAL INCENTIVE AWARD PLAN
1. GENERAL PURPOSE OF PLAN
The PNC Bank Corp. 1994 Annual Incentive Award Plan is designed to assist
PNC Bank Corp. and its Subsidiaries in attracting, retaining and providing
incentives to Eligible Employees and to promote the identification of their
interests with those of the Corporation's shareholders by providing for the
payment of Incentive Awards subject to the achievement of specified Performance
Goals.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following meanings:
2.1. "Award Period" means the calendar year, except to the extent the
Committee determines otherwise.
2.2. "Board" means the Board of Directors of the Corporation.
2.3. "Code" means the Internal Revenue Code of 1986, as amended.
2.4. "Committee" means the committee appointed by the Board to establish
and administer the Plan as provided herein. Unless otherwise determined by the
Board, the Personnel and Compensation Committee of the Board shall be the
Committee.
2.5. "Corporation" means PNC Bank Corp. and its successors and assigns and
any corporation which shall acquire substantially all of its assets.
2.6. "Covered Employee" means a "covered employee" within the meaning of
Section 162(m) of the Code.
2.7. "Eligible Employee" means an employee described in Section 4 hereof.
2.8. "Incentive Award" means a contingent award made to a Participant
that, subject to Section 5.3 hereof, entitles the Participant to a cash payment
equal to such Participant's Target Award for an Award Period, as increased or
decreased to reflect the relative level of attainment of Performance Goals
established by the Committee for an Award Period and such other factors as the
Committee may determine.
2.9. "Participant" means any Eligible Employee who receives an Incentive
Award under the Plan for an Award Period.
2.10. "Performance Goals" means (a) earnings per share, (b) return on
average equity in relation to a peer group (the "Peer Group") of bank holding
companies or other entities designated by the Company (c) return on average
assets in relation to the Peer Group, or (d) such other performance goals as
may be established by the Committee which may be based on earnings, earnings
growth, revenues, expenses, stock price, market share, charge-offs, reductions
in non-performing assets, return on assets, equity or investment, regulatory
compliance, satisfactory internal or external audits, improvement of financial
ratings, achievement of balance sheet or income statement objectives, or any
other objective goals established by the Committee, and may be absolute in
their terms or measured against or in relationship to other companies
comparably, similarly or otherwise situated. Such performance goals may be
particular to a Participant or the division, department, branch, line of
business, Subsidiary or other unit in which the Participant works, or may be
based on the performance of the Corporation generally, and may cover such
period as may be specified by the Committee.
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2.11. "Plan" means the PNC Bank Corp. 1994 Annual Incentive Award Plan.
2.12. "Subsidiary" means a corporation of which at least 50% of the total
combined voting power of all classes of stock is owned by the Corporation,
either directly or through one or more other Subsidiaries.
2.13. "Target Award" means the dollar amount to be paid to a Participant
if the Committee determines that the Corporation has achieved the target
Performance Goals established by the Committee for an Award Period. A
Participant's Target Award shall in no event exceed the greater of: (a) 100% of
a Participant's base salary as of the later of (i) the first day of the
applicable Award Period, or (ii) the date of grant of the Incentive Award; or
(b) the total dollar amount of the Participant's base salary during the Award
Period. The amount actually paid to a Participant pursuant to an Incentive
Award shall be based upon the Participant's Target Award, as adjusted to
reflect the relative level of attainment of the Performance Goals established
by the Committee and such other factors as the Committee may determine.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee shall have
plenary authority, in its discretion, to determine the terms of all Incentive
Awards, including, without limitation, the Eligible Employees to whom, and the
time or times at which, awards are made, the amount of a Participant's Target
Award, the Award Period to which each Incentive Award shall relate, the actual
dollar amount to be paid pursuant to an Incentive Award, the Performance Goals
to which payment of awards will be subject, and when payments pursuant to
Incentive Awards shall be made (which payments may, without limitation, be made
during or after an Award Period on a deferred basis or in installments). In
making such determinations, the Committee may take into account the nature of
the services rendered by the respective Eligible Employees, their present and
potential contributions to the success of the Corporation and its Subsidiaries,
and such other factors as the Committee in its discretion shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall have plenary
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it and to make all other determinations deemed
necessary or advisable for the administration of the Plan. The determinations
of the Committee pursuant to its authority under the Plan shall be conclusive
and binding. The Committee may, in its discretion, authorize the Chief
Executive Officer of the Corporation to act on its behalf, except with respect
to matters relating to such Chief Executive Officer.
4. ELIGIBILITY
Incentive Awards may be granted only to salaried employees of the
Corporation or a Subsidiary.
5. INCENTIVE SHARE AWARDS; TERMS OF AWARDS; PAYMENT
5.1. The Committee shall, in its sole discretion, determine which Eligible
Employees shall receive Incentive Awards. For each Award Period with respect to
which the Committee determines to make Incentive Awards, the Committee shall by
resolution establish one or more Performance Goals applicable to such awards,
the Target Award of each award, and the other terms and conditions of the
awards. Such Performance Goals and other terms and conditions shall be
established by the Committee in its sole discretion as it shall deem
appropriate and in the best interests of the Corporation.
5.2 After the end of each Award Period for which the Committee has granted
Incentive Awards, the Committee shall determine the extent to which the
Performance Goals established by the Committee for the Award Period have been
achieved and shall authorize the Corporation to make Incentive Award payments
to Participants in accordance with the terms of the awards. If the achievement
of applicable Performance Goals is below the minimum level specified by the
Committee, no Incentive Award payments shall be made to Participants. In no
event shall the amount paid to a Participant in accordance with the terms of an
Incentive Award by reason of Performance Goal achievement in excess of target
levels, or for any other reason, exceed the Participant's Target Award amount
by more than 50%. Unless otherwise determined by the Committee, no Incentive
Award payments shall be made to a Participant unless the Participant is
employed by the Corporation or a Subsidiary as of the date of payment.
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5.3 The Committee may at any time, in its sole discretion, cancel an
Incentive Award or reduce or eliminate the amount payable pursuant to the terms
of an Incentive Award without the consent of a Participant.
5.4 Incentive Award payments shall be subject to applicable federal, state
and local withholding taxes and other applicable withholding in accordance with
the Corporation's payroll practices as from time-to-time in effect.
6. TRANSFERABILITY
Incentive Awards shall not be subject to the claims of creditors and may
not be assigned, alienated, transferred or encumbered in any way other than by
will or pursuant to the laws of descent and distribution.
7. TERMINATION OR AMENDMENT
The Board may amend, modify or terminate the Plan in any respect at any
time without the consent of Participants.
8. EFFECTIVENESS OF PLAN AND AWARDS
The Plan and Incentive Awards granted hereunder shall be void ab initio
unless the Plan is approved by a vote of the Corporation's shareholders at the
first shareholders' meeting of the Corporation following adoption of the Plan
by the Board.
9. EFFECTIVE DATE; TERM OF THE PLAN
The Plan shall be effective as of January 1, 1994. Unless sooner terminated
by the Board pursuant to Section 7, to the extent necessary to ensure that
Incentive Award payments made to Covered Employees may be deductible for
federal income tax purposes, the Plan shall terminate as of the date of the
first meeting of the Corporation's shareholders occurring during 1999, unless
the term of the Plan is extended and reapproved at such shareholders' meeting.
No Incentive Awards may be awarded under the Plan after its termination.
Termination of the Plan shall not affect any Incentive Awards outstanding on
the date of termination and such awards shall continue to be subject to the
terms of the Plan notwithstanding its termination.
10. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they may have
as Directors or as members of the Committee, each of the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorneys' fees, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Incentive Award granted hereunder, and against all amounts reasonably paid
by them in settlement thereof or paid by them in satisfaction of a judgment in
any such action, suit or proceeding to the maximum extent permitted by law.
11. GENERAL PROVISIONS
11.1. The establishment of the Plan shall not confer upon any Eligible
Employee any legal or equitable right against the Corporation or any
Subsidiary, except as expressly provided in the Plan.
11.2. The Plan does not constitute an inducement or consideration for
the employment of any Eligible Employee, nor is it a contract between the
Corporation, or any Subsidiary and any Eligible Employee. Participation in the
Plan shall not give an Eligible Employee any right to be retained in the employ
of the Corporation or any Subsidiary.
11.3. Nothing contained in this Plan shall prevent the Board or
Committee from adopting other or additional compensation arrangements, subject
to shareholder approval if such approval is required, and such arrangements may
be either generally applicable or applicable only in specific cases.
11.4. The Plan shall be governed, construed and administered in
accordance with the laws of the Commonwealth of Pennsylvania.
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