Exhibit 10.19
"CONFIDENTIAL TREATMENT"
PLEASE NOTE: The only portions of this Plan for which the Applicant seeks
confidential treatment are the financial performance criteria set forth in
Schedule 3, Schedule 3A and Schedule 3B, which have been omitted from the public
filing and are indicated as follows: "(****)"
INDEPENDENT BANK CORP.
AND ROCKLAND TRUST COMPANY
EXECUTIVE OFFICER PERFORMANCE INCENTIVE PLAN
Plan Approval, Plan Year, and Defined Terms
This Independent Bank Corp. And Rockland Trust Company Executive Officer
Performance Incentive Plan (the "Plan") has been approved by the Board on
February 15, 2007, based upon the recommendation of the Compensation Committee,
for use in the 2007 calendar year.
Capitalized terms used in this Plan are defined as set forth below in
Section 5.
SECTION 1: PURPOSE
This Plan has been created to provide salaried Executive Officers of the
Holding Company and the Bank who are not entitled to sales commissions with a
cash incentive program designed to motivate them to perform to their full
potential and thereby assist the Holding Company and the Bank in achieving
financial success. The financial success of the Holding Company and the Bank
shall be determined by comparing the financial results of the Holding Company
with specific financial performance goals approved by the Board, based upon the
recommendation of the Compensation Committee.
A diagram depicting the process and computation used to determine a
Participant's Award, which is more fully described below, is attached hereto as
Schedule 1.
SECTION 2: AWARDS
Awards to Participants will be determined, and paid, as follows:
a. PARTICIPANTS. The persons eligible to receive Awards will consist of the
Executive Officers. ANY EXECUTIVE OFFICERS WHO ARE PAID SALES COMMISSIONS
ARE NOT ELIGIBLE TO PARTICIPATE IN THIS PLAN. Executive Officers will be
eligible to participate in this Plan upon their first date of employment.
Executive Officers with less than one year of service will receive a
prorated award based on length of service. Newly elected Executive Officers
will participate in this Plan upon election to Executive Officer status.
b. AWARD DETERMINATION. The Award for the CEO will be derived from the product
of the CEO's Target Award multiplied by the Bank Performance Factor. The
Award for all
Page 1 of 13
"CONFIDENTIAL TREATMENT"
Participants other than the CEO will be derived from the product of the
Participant's Target Award multiplied by the Bank Performance Adjustment
Factor and multiplied by the Individual Performance Adjustment Factor. The
Award payable to any Participant, therefore, may be less than or more than
the Participant's Target Award, depending upon whether, or the extent to
which, Bank Performance Goals and -- if applicable -- individual
Performance Goals and Objectives for the Plan Year have been achieved.
c. TARGET AWARDS. Target Awards will be established by the Board for each
Participant. The tiers of percentages used to determine Target Awards for
Executive Officers for the Plan Year is attached hereto as Schedule 2.
d. BANK PERFORMANCE GOALS. Bank Performance Goals will be established by the
Board as soon as practical. The Bank Performance Goals for the Plan Year
are attached hereto as Schedule 3. In general, Bank Performance Goals will
measure the Holding Company's financial performance and also, when
appropriate, the achievement of specified strategic goals and/or
operational objectives.
e. BANK PERFORMANCE ADJUSTMENT FACTOR. The Bank Performance Adjustment Factor
may be adjusted upward or downward within the parameters set forth on
Schedule 3 based upon the performance of the Holding Company as to a given
performance criteria set forth in the Bank Performance Goals. The range of
the Bank Performance Adjustment Factor for the CEO with respect to the
Earnings Per Share Measure is set forth on Schedule 3A. The range of the
Bank Performance Adjustment Factor for all Participants other than the CEO
with respect to the Earnings Per Share Measure is set forth on Schedule 3B.
The range of the Bank Performance Adjustment Factor set forth on Schedule
3A and Schedule 3B, however, is subject to a 75% reduction if the threshold
set forth on Schedule 3 for either the Return On Average Equity Measure or
the Return On Average Assets Measure is not met.
f. INDIVIDUAL PERFORMANCE ADJUSTMENT FACTOR. The Individual Performance
Adjustment Factor will not be applicable to the CEO. For all Participants
other than the CEO, the Individual Performance Adjustment Factor may be
adjusted upward or downward within the parameters set forth on Schedule 4
based upon an evaluation of their achievement of individual Performance
Goals and Objectives for the Plan Year.
g. PAYMENT OF AWARDS. Awards will be paid, in cash, as soon as practicable
after the close of the Plan Year. No Award will be payable to any
Participant who is not an Employee on the last day of the Plan Year except
that if, during the last eight months of the year, the Participant takes
normal retirement (as defined in the Bank's principal retirement program),
dies, or is involuntarily terminated other than for Cause, the Participant
may be entitled to a prorated Award as and to the extent determined by the
Board. If a Participant is on disability for more than four months of the
Plan Year, the Participant will be entitled to a prorated Award. If
disability lasts four months or less, there will be no reduction in the
amount of the Award. Participants who resign voluntarily after the end of
the year, but before Award payments are made, will be eligible for an Award
as and to the extent determined by the Board. Participants who leave after
the end of the Plan Year with an overall rating of "1" or "2" on their
Employee Performance Appraisal for the Plan Year will not be eligible for
an
Page 2 of 13
"CONFIDENTIAL TREATMENT"
Award. In the event of a Change of Control, the funds accrued by the Bank
to the date of the Change of Control will, subject to the approval of the
Board, be awarded to the Participants according to the terms of this Plan.
SECTION 3: ADMINISTRATION
This Plan will be administered by the Board, based upon the recommendations of
the Compensation Committee. All determinations regarding the achievement of any
Bank Performance Goals, the achievement of a Participant's individual
Performance Goals and Objectives, and the amount of any individual Award will be
made by the Board, in its sole and absolute discretion, based upon the
recommendations of the Compensation Committee. Notwithstanding any other
provision of this Plan to the contrary, the Board reserves the right, in its
sole and absolute discretion, to: make adjustments to the Bank Performance
Adjustment Factor within the parameters set forth on Schedule 3 based upon
either one-time, non-recurring, or extraordinary events or any other reason that
the Board deems appropriate; increase the Award for the CEO up to a maximum of
1.25 times the amount that would be called for by the product of the CEO's
Target Award multiplied by the Bank Performance Adjustment Factor; and, to
reduce, including a reduction to zero, any Award to a Participant otherwise
payable under this Plan.
a. AUTHORITY. The Board will have authority (i) to exercise all of the powers
granted under this Plan, (ii) to construe, interpret and implement this
Plan and any related document, (iii) to prescribe, amend and rescind rules
relating to this Plan, (iv) to make all determinations necessary or
advisable in administering this Plan, and (v) to correct any defect, supply
any omission and reconcile any inconsistency in this Plan. The Board shall
also have such other and further specified duties, powers, authority, and
discretion as are elsewhere expressly set forth in this Plan or as may be
conferred upon the Board by necessary implication.
b. DETERMINATIONS FINAL. The actions and determinations of the Board on all
matters relating to the Plan and any Awards will be final and conclusive,
except to the extent otherwise provided by law.
c. LIABILITY. The Board will not be liable for any action taken or
determination made in good faith with respect to this Plan or any Award
hereunder, and the Holding Company and the Bank will indemnify and hold the
Board harmless with respect to any actions taken or decisions made in good
faith under this Plan.
d. AWARDS. The Board will have authority to determine, among other things, the
Executive Officers to whom, and the time or times at which, Awards will be
made and the requisite conditions thereof.
SECTION 4: MISCELLANEOUS
a. NONASSIGNABILITY. No Award will be assignable or transferable (including
pursuant to a pledge or security interest) other than by will or by laws of
descent and distribution.
Page 3 of 13
"CONFIDENTIAL TREATMENT"
b. WITHHOLDING TAXES. Whenever payments under this Plan are to be made, the
Bank may withhold therefrom an amount sufficient to satisfy any applicable
governmental withholding tax requirements related thereto.
c. AMENDMENT OR TERMINATION OF THIS PLAN. The Board may from time to time
suspend or discontinue this Plan or revise, amend, or terminate this Plan.
d. NON-UNIFORM DETERMINATIONS. The Board's determinations under this Plan need
not be uniform and may be made selectively among persons who receive, or
are eligible to receive, Awards under this Plan, whether or not such
persons are similarly situated. Without limiting the generality of the
foregoing, the Board will be entitled, among other things, to make
non-uniform and selective determinations and to establish non-uniform and
selective Target Awards. Any non-uniform determinations known at the time
this Plan was approved are set forth on Schedule 5.
e. OTHER PAYMENTS OR AWARDS. Nothing contained in this Plan will be deemed in
any way to limit or restrict the Holding Company, the Bank, or the Board,
from making any award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
f. PAYMENTS TO OTHER PERSONS. If payments are legally required to be made to
any person other than the person to whom any amount is available under this
Plan, payments will be made accordingly. Any such payment will be a
complete discharge of the liability of the Holding Company, the Bank,
and/or the Board.
g. UNFUNDED PLAN. This is an unfunded Plan. No provision of this Plan will
require the Holding Company or the Bank, for the purpose of satisfying any
obligations under this Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to
segregate any assets, nor will the Holding Company or the Bank maintain
separate bank accounts, books, records or other evidence of the existence
of a segregated or separately maintained or administered fund for such
purposes. Participants will have no rights under this Plan other than as
unsecured general creditors of the Holding Company and the Bank, except
that insofar as they may have become entitled to payment of additional
compensation by performance of services, they will have the same rights as
other employees under generally applicable law.
h. LIMITS OF LIABILITY. Neither the Holding Company, the Bank, the Board, nor
any other person participating in any determination of any question under
this Plan, or in the interpretation, administration or application of this
Plan, will have any liability to any party for any action taken or not
taken in good faith under this Plan.
i. RIGHTS OF EMPLOYEES. Nothing contained in this Plan will confer upon any
Employee or Participant any right to continue in the employ or other
service of the Holding Company or the Bank or constitute any contract or
limit in any way the right of the Holding Company or the Bank to change
such person's compensation or other benefits or to terminate the employment
or other service of such person with or without Cause.
Page 4 of 13
"CONFIDENTIAL TREATMENT"
j. SECTION HEADINGS. The section headings contained herein are for the
purposes of convenience only, and in the event of any conflict, the text of
this Plan, rather than the section headings, will control.
k. INVALIDITY. If any term or provision contained herein will to any extent be
invalid or unenforceable, such term or provision will be reformed so that
it is valid, and such invalidity or unenforceability will not affect any
other provision or part hereof.
l. APPLICABLE LAW. The Plan will be governed by the laws of the Commonwealth
of Massachusetts without regard to the conflict of law principles thereof.
SECTION 5: DEFINITIONS
The following terms, as used herein, will have the meaning specified:
a. "AWARD" means a cash incentive payment made to a Participant pursuant to
this Plan.
b. "BANK" means Rockland Trust Company.
c. "BANK PERFORMANCE GOALS" means the criteria set forth on Schedule 3 that
have been selected to measure the Holding Company's financial performance
and also, when appropriate, the achievement of specified strategic goals
and/or operational objectives.
d. "BANK PERFORMANCE ADJUSTMENT FACTOR" means a factor determined by the level
of performance against the criteria set forth in the Bank Performance
Goals.
e. "BOARD" means the Board of Directors of the Holding Company, as it may be
comprised from time to time.
f. "CAUSE" means (i) a felony conviction of a Participant; (ii) the commission
by a participant of an act of fraud or embezzlement against the Bank or the
Holding Company; (iii) willful misconduct or gross negligence materially
detrimental to the Holding Company or the Bank; (iv) the Participant's
continued failure to implement reasonable requests or directions after
thirty (30) days written notice to the Participant; (v) the Participant's
wrongful dissemination or use of confidential or proprietary information;
(vi) the intentional and/or habitual neglect by the Participant of his or
her duties to the Holding Company or the Bank; or (vii) a breach of the
Code of Ethics for the Holding Company and the Bank; (viii) any other
reasons consistent with the Holding Company's and/or the Bank's policies
and procedures regarding dismissals as they are adopted and implemented
from time to time.
g. "CHANGE OF CONTROL" means that, prior to any payout under this Plan (a) any
"person" (as such term is defined in Section 13 (d) of the Securities
Exchange Act of 1934, as amended) is or becomes the beneficial owner,
directly or indirectly, of either (i) a majority of the outstanding common
stock of the Holding Company or the Bank, or (ii) securities of either the
Holding Company or the Bank representing a majority of the combined voting
power of
Page 5 of 13
"CONFIDENTIAL TREATMENT"
the then outstanding voting securities of either the Holding Company or the
Bank, respectively, or (b) during any period of two consecutive years
following the date of this Plan, individuals who at the beginning of any
such two year period constitute the Board of Directors of the Holding
Company cease, at any time after the beginning of such period, for any
reason to constitute a majority of the Board, unless the election of each
new director was nominated or approved by at least two thirds of the
directors of the Board then still in office who were either directors at
the beginning of such two year period or whose election or whose nomination
for election was previously so approved.
h. "CEO" shall mean the Chief Executive Officer of the Holding Company and of
the Bank.
i. "COMPENSATION COMMITTEE" means the Joint Compensation Committee of the
Boards of Directors of the Holding Company and the Bank.
j. "EXECUTIVE OFFICER" means the CEO and any other person who has been
identified as an Executive Officer of the Holding Company and/or the Bank
in filings with the Securities Exchange Commission.
k. "HOLDING COMPANY" means Independent Bank Corp.
l. "INDIVIDUAL PERFORMANCE ADJUSTMENT FACTOR" means a factor (or factors) that
will, when multiplied by a Participant's Target Award and the Bank
Performance Adjustment Factor, determine the amount of a Participant's
Award.
m. "PARTICIPANT" means an Executive Officer selected to participate in this
Plan whose cash compensation (other than salary) is not superseded by an
individual employment agreement or other incentive plan. If any employee is
governed by an individual employment agreement, such employee may be a
Participant in the Plan to the extent the terms of such agreement does not
supersede this Plan. EMPLOYEES WHO ARE PAID SALES COMMISSIONS ARE NOT
ELIGIBLE TO PARTICIPATE IN THIS PLAN.
n. "PLAN" means this Independent Bank Corp. And Rockland Trust Company
Executive Officer Performance Incentive Plan.
o. "PLAN YEAR" shall mean the calendar year for which this Plan has been
approved.
p. "TARGET AWARD" means the Participant's base salary on November 1st of the
Plan Year, multiplied by the target percentage established for that
Participant.
Page 6 of 13
"CONFIDENTIAL TREATMENT"
SCHEDULE 1
2007 Incentive Compensation Plan
{2007 Incentive flow chart}
THE INDIVIDUAL PERFORMANCE ADJUSTMENT FACTOR IS NOT APPLICABLE TO THE CEO.
Page 7 of 13
"CONFIDENTIAL TREATMENT"
SCHEDULE 2
PERCENTAGE TIERS USED TO DETERMINE
TARGET AWARDS FOR EXECUTIVE OFFICERS
President/CEO 45%
EVP - Commercial Loan 30%
EVP - Retail & Marketing 30%
Treasurer/Chief Financial Officer 30%
Director of Human Resources 20%
General Counsel 20%
Chief Technology & Operations Officer. 20%
Page 8 of 13
"CONFIDENTIAL TREATMENT"
SCHEDULE 3
BANK PERFORMANCE GOALS AND
BANK PERFORMANCE ADJUSTMENT FACTORS
BANK PERFORMANCE
GOALS & BANK PERFORMANCE
ADJUSTMENT FACTORS
----------------------------
MEASURE THRESHOLD TARGET MAXIMUM
- ------- --------- ------ -------
HOLDING COMPANY Performance Level (****) (****) (****)
OPERATING EARNINGS
PER SHARE BEFORE Adjustment:All but 50% 100% 125%
INCENTIVE PAYMENTS CEO
Adjustment: CEO 25% 100% 200%
HOLDING COMPANY Performance Level (****)
OPERATING RETURN
ON AVERAGE EQUITY* Adjustment 75% Not Applicable
HOLDING COMPANY Performance Level (****)
OPERATING RETURN
ON AVERAGE ASSETS* Adjustment 75%
CONSISTENT WITH THIS PLAN, THE BOARD RESERVES THE RIGHT TO ADJUST ANY AWARDS BY
CONSIDERING FACTORS INCLUDING - BUT NOT LIMITED TO - COMPLIANCE AND CREDIT
QUALITY
- ----------
* The greatest adjustment is a reduction to 75% of the Bank Performance if
one or both of the Thresholds is missed.
Page 9 of 13
"CONFIDENTIAL TREATMENT"
ROA AND ROE DEFINITION FOR SCHEDULE 3
For purposes of computing Holding Company Operating Return on Average Assets
("ROA") and Holding Company Operating Return on Average Equity ("ROE") for
purposes of this Plan, earnings are equal to net income as reflected on the
Company's audited consolidated statement of income adjusted, upwards or
downwards, for the after-tax effect of material non-recurring items.
EPS DEFINITION FOR SCHEDULES 3A AND 3B
For purposes of computing Operating Earnings Per Share Before Incentive Payment
("EPS") for purposes of this Plan, earnings are equal to net income as reflected
on the Company's audited consolidated statement of income excluding the
after-tax effect of the incentive expense for this Plan and adjusted, upwards or
downwards, for the after-tax effect of material non-recurring items.
SCHEDULE 3A
2007 BANK PERFORMANCE ADJUSTMENT FACTORS
FOR CEO AT SPECIFIED LEVELS OF EPS ATTAINMENT
Operating
Earnings Per
Share Before Bank
Incentive Performance
Payment Payout
- ------------ -----------
(****) THRESHOLD 25.0%
(****) 30.0%
(****) 35.0%
(****) 40.0%
(****) 45.0%
(****) 50.0%
(****) 55.0%
(****) 60.0%
(****) 65.0%
(****) 82.5%
(****) TARGET 100.0%
(****) 120.0%
(****) 140.0%
(****) 160.0%
(****) 180.0%
(****) MAXIMUM 200.0%
Page 10 of 13
"CONFIDENTIAL TREATMENT"
SCHEDULE 3B
2007 BANK PERFORMANCE ADJUSTMENT FACTORS
FOR PARTICIPANTS OTHER THAN CEO
AT SPECIFIED LEVELS OF EPS ATTAINMENT
Operating
Earnings Per
Share Before Bank
Incentive Performance
Payment Payout
- ------------ -----------
(****) THRESHOLD 50.0%
(****) 52.0%
(****) 54.0%
(****) 56.0%
(****) 58.0%
(****) 60.0%
(****) 62.0%
(****) 64.0%
(****) 66.0%
(****) 83.0%
(****) TARGET 100.0%
(****) 105.0%
(****) 110.0%
(****) 115.0%
(****) 120.0%
(****) MAXIMUM 125.0%
Page 11 of 13
"CONFIDENTIAL TREATMENT"
SCHEDULE 4
INDIVIDUAL PERFORMANCE ADJUSTMENT FACTORS
Individual Goals and Objectives Individual Performance
for Plan Year Adjustment Factor
- ------------------------------- ----------------------
Does Not Meet Most 0.0
Meets Most 0.6 - 0.8
Fully Meets All or all
the most important 0.8 - 1.05
Exceeds Most or most meaningful 1.05 - 1.30
Exceeds All or performs
beyond objectives 1.30 - 1.70
An Executive Officer's achievement of individual performance Goals and
Objectives will be measured at his/her broadest level of individual
responsibility, based upon the "Goals for Next Year" section of his/her
performance appraisal for the Plan Year. The evaluation as to achievement of
individual performance Goals and Objectives will be based on the Board's
judgment of the Executive Officer's performance on results goals only, not
overall performance rating. The Board may adjust an Executive Officer's entire
Award downward if non-goals aspects of performance (e.g., values) assessed with
the Bank's Employee Performance Appraisal are considered less than acceptable.
Awards, however, may not be increased for performance at or better than
acceptable levels on non-goals aspects of performance.
Page 12 of 13
SCHEDULE 5
NON-UNIFORM DETERMINATIONS FOR 2007
No non-uniform determinations have yet been made for 2007
Page 13 of 13