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EXHIBIT 10(T)
FIRST UNION CORPORATION
SENIOR MANAGEMENT INCENTIVE PLAN
1. Purpose. The purpose of the First Union Corporation Senior Management
Incentive Plan is to retain and motivate key executives of First Union
(as defined herein) by providing them with the opportunity to earn
incentive awards based upon the extent to which specified performance
goals for a Performance Period (as defined herein) have been achieved
or exceeded.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
(a) "1934 Act" means the Securities Exchange Act of 1934, as
amended, including the rules and regulations promulgated
thereunder.
(b) "Annual Base Salary" means the amount of base salary paid to a
Participant for a calendar year. This amount may be adjusted
to include the amount of any base salary deferrals for such
year, unless the Committee specifies otherwise at the time
that the Participant's award opportunity for a Performance
Period is established.
(c) "Applicable Period" means, with respect to any Performance
Period, a period commencing on or before the first day of the
Performance Period and ending the earlier of (i) the 90 days
after the commencement of the Performance Period or (ii) the
date on which 25% of the Performance Period has been
completed. Any action required within such period may be taken
at a later date if U.S. Treasury regulations under Section
162(m) of the Internal Revenue Code are amended or interpreted
to permit a later date.
(d) "Board" means the Board of Directors of the Company.
(e) "Change of Control" means a change in control of the Company
of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the 1934 Act; provided, however, that, without
limitation, such a Change of Control shall be deemed to have
occurred if (i) any one person, or more than one person acting
as a group, acquires "beneficial ownership" (as defined in
Rule 13d-3 of the 1934 Act) of shares of the Company's common
stock that, together with shares held by such person or group,
possesses more than 50 percent of the total fair market value
or total voting power of the shares of Company common stock
outstanding, (ii) any one person, or more than one person
acting as a group, acquires (or has acquired during the
12-month period ending on the date of the most recent
acquisition by such person or persons) "beneficial ownership"
of shares of Company common stock possessing 20 percent or
more of the total voting power of the shares of Company common
stock outstanding, or (iii) a majority of members of the Board
is replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Board prior to the date of such appointment or
election.
(f) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(g) "Committee" means the Human Resources Committee of the Board
or a subcommittee thereof that is comprised solely of two or
more non-employee directors (each of whom is intended to
qualify as an "outside director" within the meaning of Section
162(m) of the Code).
(h) "Company" means First Union Corporation, a corporation
organized under the laws of the State of North Carolina,
including any successor thereto.
(i) "Disability" means, with respect to an Employee, having
received long-term disability benefits under the Company's
Long-Term Disability Plan for a period of 12 consecutive
months.
(j) "Early Retirement" means termination of a Participant's
employment upon satisfaction of the requirements for early
retirement under the Company's pension plan.
(k) "Executive Officers" means those officers of the Company, as
designated from time to time by the Board, who are deemed to
come within the definitions set forth in Rule 3b-7 under the
1934 Act.
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(l) "First Union" means (i) the Company and (ii) any entity that
is directly or indirectly controlled by the Company.
(m) "Individual Award Opportunity" means the potential of a
Participant to receive an incentive award if the performance
goals for a Performance Period have been satisfied. An
Individual Award Opportunity may be expressed in dollars, as a
percent of annual base salary or on a formula basis that is
consistent with the provisions of the Plan.
(n) "Negative Discretion" means the discretion authorized under
the Plan that may be exercised by the Committee to eliminate,
or reduce the size of, an incentive award otherwise payable to
a Participant for a Performance Period. The exercise of this
discretion must be consistent with the Plan qualifying as
"performance-based compensation" under Section 162(m) of the
Code.
(o) "Normal Retirement" means termination of a Participant's
employment upon satisfaction of the requirements for normal
retirement under the terms of the Company's pension plan.
(p) "Operating Income" means the reported net income applicable to
the Company's common stockholders excluding reported (i)
extraordinary gains or losses or as a result of changes in
accounting principles, (ii) restructuring, merger-related or
restructuring-related charges, and (iii) similar one-time
accounting or operational charges.
(q) "Participant" means, for any given Performance Period, each
key employee of First Union who is an Executive Officer or is
recommended by the CEO and approved by the Committee to be a
Participant in the Plan for an identified Performance Period.
(r) "Performance Measures and Goals" means the objective
performance goals including, but not limited to, financial and
non-financial measures, established and approved by the
Committee for purposes of developing the size of incentive
awards under the Plan.
(s) "Performance Period" means any period commencing on or after
January 1, 2001, for which performance goals are established
pursuant to Section 5 of the Plan and during which performance
shall be measured to determine if any payment will be made
under the Plan. A Performance Period may be coincident with
one or more fiscal years of the Company, or a portion thereof.
(t) "Plan" means First Union Corporation's Senior Management
Incentive Plan as set forth herein, and as it may be amended.
(u) "Retirement" means either Early Retirement or Normal
Retirement.
3. Administration.
(a) General. The Plan shall be administered by the Committee
subject to the terms of the Plan and applicable law including,
but not limited to, Section 162(m) of the Code. In addition to
any other express powers and authorizations conferred on the
Committee by the Plan, the Committee shall have the full power
and authority, in its discretion:
(i) to designate, within the Applicable Period, the
Participants in the Plan and their Individual Award
Opportunities for the Performance Period;
(ii) to establish, within the Applicable Period, and
thereafter administer the performance goals and other
award terms and conditions that are to apply under
the Plan for the Performance Period;
(iii) to determine and certify (A) any amounts earned for
any Performance Period, based on actual performance
versus the performance goals set for such period, in
writing prior to the payment of any incentive awards
and (B) that any other material terms applicable to
incentive awards have also been satisfied;
(iv) to decide, within the Applicable Period, the extent
to which the grant or payment of any incentive award
hereunder shall be made to a Participant in the event
of (A) the Participant's termination of employment
due to death, Disability, Retirement or other
termination of employment with First Union, (B) the
occurrence of a Change of Control or (C) the
occurrence of any merger, consolidation, or
acquisition where the Company's stockholders on the
effective date of such merger, consolidation, or
acquisition do not own at least 50% of the
outstanding shares of voting stock of the surviving
corporation;
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(v) to decide under what circumstances and terms,
incentive awards are to be paid on a deferred basis,
including automatic deferrals at the Committee's
election, as well as elective deferrals at the
election of any Participant;
(vi) to adopt, revise, suspend, waive or repeal, when and
as appropriate, in its sole and absolute discretion,
such administrative rules, guidelines and procedures
for the Plan as it deems necessary or advisable to
implement the terms and conditions of the Plan;
(vii) to interpret and administer the terms and provisions
of the Plan and any incentive award granted under the
Plan (including reconciling any inconsistencies,
correcting any defaults and addressing any omissions
in the Plan or any related instrument or agreement);
and
(viii) to otherwise supervise the administration of the
Plan.
It is intended that all amounts payable to Participants under
the Plan who are "covered employees" within the meaning of
U.S. Treasury Regulation 1.162-27(c)(2) shall constitute
"qualified performance-based compensation" within the meaning
of U.S. Treasury Regulation 1.162-27(e), and, to the maximum
extent possible, the Plan and the terms of any awards
thereunder shall be so interpreted and construed.
(b) Binding Nature of Committee Decisions. Unless otherwise
expressly provided in the Plan, all designations,
determinations, interpretations and other decisions made under
or with respect to the Plan or any award under the Plan shall
be within the sole and absolute discretion of the Committee,
and shall be final, conclusive and binding on all persons,
including First Union, any Participant, and any beneficiary or
other person having, or claiming, any rights under the Plan.
(c) Delegation. The Committee may delegate to one or more officers
or employees of the Company the authority, subject to such
terms as the Committee shall determine, to perform such
functions, including the Committee's functions under the Plan,
as the Committee may determine, except that the Committee may
not delegate its authority for actions which would cause
awards intended to qualify as "performance-based compensation"
under Section 162(m) of the Code to fail to so qualify. In the
case of any such delegation, references to the Committee
herein shall be deemed to include any person to whom authority
has been delegated, unless the context otherwise requires.
(d) Limitation of Liability. The Committee, each member thereof,
and any other person acting pursuant to authority delegated by
the Committee shall be entitled, in good faith, to rely or act
upon any report or other information furnished by any officer
or employee of the Company, the Company's independent
auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee or any
other person acting pursuant to authority delegated by the
Committee, and any officer or employee of the Company acting
at the direction or on behalf of the Committee or other
delegee shall not be personally liable for any action or
determination taken or made in good faith with respect to the
Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any
such action or determination.
(e) Indemnification. Each person who is or shall have been a
member of the Committee or of the Board shall be indemnified
and held harmless by the Company against and from any loss,
cost, liability, or expense that may be imposed upon or
reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be
a party or in which he may be involved by reason of any action
taken or failure to act under the Plan and against and from
any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own
expense, to handle and defend the same before he undertakes to
handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or Bylaws, as a matter
of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.
4. Plan Participation.
(a) Annual Participant Designations by Committee. For each
Performance Period, the Committee, in its sole and absolute
discretion, within the Applicable Period, shall designate
those key employees of First Union who shall be Participants
in the Plan for such Performance Period. Such designations
shall be made by the Committee, in its sole and absolute
discretion, based primarily on its determination as to which
key employees:
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(i) are likely to be Executive Officers of the Company as
of the last day of the fiscal year for which the
Company would be entitled to a federal tax deduction
for payment of the award in respect of such
Performance Period; and
(ii) are likely to be "covered employees" (within the
meaning of Section 162(m)(3) of the Code) of the
Company and to have individual compensation in excess
of $1 million, excluding compensation that would be
considered "performance-based" for purposes of
Section 162(m);
as well as such other considerations as the Committee deems
appropriate, in its sole and absolute discretion.
(b) Other Plan Participation. Notwithstanding any provision in any
other plan of incentive compensation of the Company, an
employee who is a Participant in the Plan for any given
Performance Period shall not participate in any other plan
during a Performance Period if participation would cause any
award hereunder to fail to qualify as "performance-based"
under Section 162(m).
5. Performance Measures and Goals.
(a) Establishing Performance Goals. For each Performance Period,
the Committee shall establish, within the Applicable Period,
one or more objective performance measures and specific goals
for each Participant and/or each group of Participants. Such
goals shall be based exclusively on one or more of the
following objective corporate-wide, subsidiary, division or
operating unit measures:
(i) financial criteria - consisting of one or more
objectives including earnings per share, economic
profit, shareholder value added, return on equity,
return on assets, net income, pre-tax net income,
operating income, or revenue growth; and
(ii) strategic business criteria - consisting of one or
more objectives based on achieving specified goals
related to employee satisfaction and retention,
customer satisfaction, leadership and core values.
(b) The Committee may specify, within the Applicable Period, the
definition of these terms as well as any adjustments that may
be made in their calculation. Each goal may be expressed on an
absolute or relative basis, may include comparisons based on
current internal targets, the past performance of the Company
(including the performance of one or more subsidiaries,
divisions, and/or operating units) and/or the past or current
performance of other companies.
(c) Impact of Extraordinary Items or Changes in Accounting. The
measures utilized in establishing performance goals under the
Plan for any given Performance Period shall be determined in
accordance with generally accepted accounting principles and
in a manner consistent with the methods used in the Company's
audited financial statements, and may exclude the items
excluded in determining Operating Income.
6. Incentive Award Opportunities and Awards.
(a) Setting of Individual Award Opportunities. At the time
performance goals are established for a Performance Period,
the Committee also shall establish an Individual Award
Opportunity for such Performance Period for each Participant
or group of Participants. This Individual Award Opportunity,
which shall be based on the achievement of one or more of the
stated performance goals, may be expressed in dollars, as a
multiple of salary or on a formula basis. The Committee, in
all cases, shall have the sole and absolute discretion, based
on such factors as it deems appropriate, to apply Negative
Discretion to reduce the actual incentive awards that would
otherwise be payable to any Participant.
(b) Maximum Individual Award Opportunity. Notwithstanding any
other provision of the Plan, the maximum Individual Award
Opportunity under the Plan for any Participant in any one
calendar year shall be 0.25% of the Company's Operating Income
for the applicable Performance Period.
(c) Incentive Awards. Incentive awards determined under the Plan
for a Performance Period shall be paid to Participants in cash
or in shares of Company common stock or in any other form of
cash or stock as determined by the Committee as soon as
practicable following the end of the Performance Period to
which they apply, provided:
(i) that no such payment shall be made unless and until
the Committee, based on the Company's audited
financial results for such Performance Period (as
prepared and reviewed by the Company's independent
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public accountants), has certified in writing the
extent to which the applicable performance goals for
such Performance Period have been satisfied, and the
Committee has made its decisions regarding whether it
will exercise Negative Discretion to reduce any
incentive award;
(ii) that the Committee may specify that a portion of the
actual incentive award for any given Performance
Period shall be paid on a deferred basis, based on
such award payment rules as the Committee may
establish for such Performance Period;
(iii) that the Committee may require, within the Applicable
Period, that Participants must still be employed as
of the end of such Performance Period or such later
date that is identified in order to be eligible to
receive any award;
(iv) that the Committee may, subject to Section 6(c)(i) of
the Plan, adopt such forfeiture, pro-ration or other
rules as it sees appropriate regarding the affect of
certain events on the actual incentive awarded
including, but not limited to, a Participant's death,
Disability, Retirement, or voluntary or other
termination; and
(v) that in the case of shares and share-based awards,
the issuance of the shares or awards is authorized
under the applicable stock incentive plan maintained
by the Company and has been approved by any other
committee or body necessary to authorize the award
under such other plan. In such case, any shares of
Company common stock issued in connection with such
award will count against the aggregate number of
shares reserved and available for issuance under such
other plan in accordance with the applicable
provisions thereof. Unless otherwise specifically
authorized by the Committee, any such authorization
relating to a "covered employee" shall be undertaken
at such time and on such terms as will ensure that
the award hereunder and any award granted under such
other plan will continue to qualify as
"performance-based compensation" for purposes of
Section 162(m) of the Code or will not otherwise
result in payment of compensation for which the
Company may not claim a tax deduction under Section
162(m) of the Code.
7. Discretionary Pool.
Upon such terms and conditions as the Committee may impose and upon the
achievement of such Performance Measures and Goals as the Committee may
determine, the Company shall fund a bonus pool which may be allocated
to Participants in the sole discretion of the Chief Executive Officer
of the Company. Notwithstanding the foregoing, no award from such bonus
pool shall be made to a Participant (a) which, together with other
awards to such Participant, exceeds the limitations established in
Section 6(b) of the Plan, (b) which exceeds 25% of such Participant's
Individual Award Opportunity, or (c) if such Participant is a "covered
employee" under the Code and such payment causes any other payment
under the Plan to fail to qualify as tax deductible under Section
162(m) of the Code.
8. General Provisions.
(a) Plan Amendment or Termination. The Committee at any time may
amend or terminate the Plan, provided (i) that, without the
Participant's written consent, no such amendment or
termination shall adversely affect the right of any
Participant to receive an incentive award for a Performance
Period in effect as of the effective date of such amendment or
termination and (ii) that the Board shall be authorized to
make any amendments necessary to comply with applicable
regulatory requirements (including without limitation, Section
162(m) of the Code).
(b) Applicable Law. All issues arising under the Plan shall be
governed by, and construed in accordance with, the laws of the
State of North Carolina.
(c) Tax Withholding. The Company shall have the right to deduct
from any payment of any award a sufficient amount to cover
withholding of any federal, state or local or other
governmental taxes or charges required by law or such greater
amount of withholding as the Committee shall determine from
time to time and as permitted or required by applicable rules
and regulations, or to take such other action as may be
necessary to satisfy any such withholding obligations.
(d) No Employment Right Conferred. Participation in the Plan shall
not confer on any Participant the right to remain employed by
the Company, and the Company specifically reserves the right
to terminate any Participant's employment at any time with or
without cause or notice.
(e) Impact of Plan Award on Other Plans. Incentive awards
hereunder shall not be treated as compensation for purposes of
any other compensation or benefit plan, program or arrangement
of the Company, unless either (i) such other
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plan, program or arrangement provides that compensation as
incentive awards are to be considered as compensation
thereunder or (ii) the Board or the Committee so determines in
writing.
Neither the adoption of the Plan nor the submission of the
Plan to the Company's stockholders for their approval shall be
construed as limiting the power of the Board or the Committee
to adopt such other incentive arrangements as it may otherwise
deem appropriate.
(f) Costs and Expenses. All award and administrative costs and
expenses of the Plan shall be borne by the Company.
(g) Non-Transferability of Rights. Except as and to the extent
required by law, a Participant's rights under the Plan may not
be assigned or transferred in whole or in part either directly
or by operation of law.
(h) Binding Effect. The Plan shall be binding upon the Company and
its successors. If the Company becomes a party to any merger,
consolidation or reorganization, then the Plan shall remain in
full force and effect as an obligation of the Company.
(i) Unfunded Plan. Unless otherwise determined by the Committee,
the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The
Plan shall not establish any fiduciary relationship between
the Company and any Participant or other person. To the extent
any person holds any rights by virtue of an award, such rights
shall constitute general unsecured liabilities of the Company
and shall not confer upon any such person any right, title, or
interest in any assets of the Company.
(j) Deferrals of Awards. If permitted by the Committee, a
Participant may elect to defer payment of a cash award under
the Plan if deferral of an award under the Plan is permitted
pursuant to the terms of a deferred compensation program of
the Company existing at the time the election to defer is
permitted to be made, and the Participant complies with the
terms of such program.
9. Effective Date.
The Plan is effective for Performance Periods commencing on or after
January 1, 2001, subject to stockholder approval of the Plan. No
payments shall be made under the Plan prior to the time such
stockholder approval is obtained in accordance with applicable law.