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EXHIBIT 10.8.1
BANPONCE CORPORATION
SENIOR EXECUTIVE
LONG TERM INCENTIVE PLAN
DOCUMENT
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ARTICLE 1
PURPOSE
1.1 Effective as of January 1, 1994, BanPonce Corporation adopted the
BanPonce Corporation Senior Executive Long Term Incentive Plan to
provide incentive compensation to selected employees.
1.2 The purpose of the Plan is to promote the success of the
Corporation by:
(a) attracting, and retaining persons of ability as Senior
Executives of the Corporation;
(b) offering a long term incentive opportunity, that together with
other forms of remuneration, provides total compensation that
is similar to that of the Peer Group;
(c) motivating Senior Executives by rewarding good performance and
encouraging greater focus on the Corporation's long term
objectives; and
(d) providing Senior Executives with the opportunity to obtain an
interest in the Corporation parallel to that of the
Corporation's shareholders through stock ownership.
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ARTICLE 2
DEFINITIONS
2.1 "Average Closing Price" means the average of the closing price, as
reported in the NASDAQ National Market Issues, on each Friday of
the months of November and December preceding the beginning of the
Plan Year, and January and February following the Beginning of the
Plan Year.
2.2 "Beneficiary" means the beneficiary or beneficiaries designated by
the Participant to receive the amount, if any, payable under the
Plan upon the death of a Participant.
2.3 "Board of Directors" means the Board of Directors of BanPonce
Corporation.
2.4 "Committee" means the Human Resources and Compensation Committee.
2.5 "Corporation" means BanPonce Corporation and/or its divisions,
wholly-owned subsidiaries which adopt this Plan, and any successor
to Banponce Corporation by merger, purchase, reorganization, or
otherwise.
2.6 "Disability" means the total and permanent inability to perform
services for the Corporation as determined under the Long Term
Disability (LTD) plan which the Corporation sponsors, and the
receipt of benefits under that LTD plan.
2.7 "Discharge for Cause" means discharge from the Corporation because
of conviction of a felony, embezzlement of Corporation funds,
fraud, or repeated acts of willful dishonesty which have a material
adverse effect upon the Corporation.
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2.8 "Effective Date" means January 1, 1994.
2.9 "Employee" means an employee of the Corporation.
2.10 "Human Resources and Compensation Committee" means the committee
appointed by the Board of Directors to determine and administer
various human resource and compensation matters and plans for
Employees of the Corporation.
2.11 "Incentive Payment" means the award paid to the Participant at the
conclusion of a Plan Year as determined under the terms of Article
4.
2.12 "Measurement" means the definition of the full amount or multiple
of the Incentive Payment that may be made if the Target is attained
or is exceeded under the terms of Article 4.
2.13 "Participant" means a Senior Executive who has met the eligibility
requirements for participation in this Plan pursuant to Article 3.
2.14 "Peer Group" means the peer group of similar institutions selected
by the Committee for purposes of performance comparison in the
annual proxy.
2.15 "Plan Year" means a three year period beginning on January 1st of
the first year and ending on December 31st of the third year. The
first Plan Year is January 1, 1994 through December 31, 1996.
2.16 "President and CEO" means the President and CEO of BanPonce
Corporation.
2.17 "Plan" means the BanPonce Corporation Senior Executive Long Term
Incentive Plan.
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2.18 "Retirement" means separation from service as a retiree eligible to
immediately receive benefits under a qualified defined benefit
retirement plan (retirement benefits may be postponed without
affecting this definition of retirement) sponsored by the
Corporation, or if no such plan exists, separation from service
after age 55.
2.19 "Rules" means the Rules for the Plan Year as described in Article
4.
2.20 "Senior Executive" means the President and CEO of the Corporation,
those Employees with the title of Executive Vice- President who
report to the President and CEO. It also means other Employees of
the Corporation whose decisions determine the long term strategic
policies and performance of the Corporation who may be selected by
the President and CEO as potential Participants in the Plan
pursuant to the terms of Article 3.
2.21 "Stock" means the regular common stock of BanPonce Corporation.
2.22 "Target" means the goal to be reached to permit an incentive
payment under the Plan as determined under Article 4.
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ARTICLE 3
PARTICIPATION
3.1 Prior to the beginning of each Plan Year, or within three months
thereafter, the President and CEO shall select and recommend Senior
Executives (excluding the position of President and CEO) for
participation in the Plan for approval by the Committee. If an
Employee is promoted to a Senior Executive position, or if a Senior
Executive is hired after the President and CEO has made a
recommendation for the Plan Year and the Committee's approval has
been granted, the President and CEO may submit a subsequent
recommendation for approval by the Compensation Committee provided
that such submission is made within the first six months of the
Plan Year.
The Committee shall decide the eligibility of the President and CEO.
3.2 Upon qualifying for participation, the Senior Executive shall be
notified in writing by the President and CEO; or in regard to the
position of the President and CEO, by the Committee.
3.3 Once approved for participation in the Plan, a Senior Executive
shall continue as a Participant for:
(a) the Plan Year for which the Senior Executive was originally
recommended and approved for participation, and
(b) future Plan Years.
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3.4 Participation in future Plan Years will cease if:
(a) the Senior Executive changes position and is no longer a
Senior Executive at the beginning of a new Plan Year, or
(b) a specific recommendation is made by the President and CEO to
remove the Senior Executive from participation in future Plan
Years and that recommendation is approved by the Committee; or
in regard to the position of President and CEO, the Committee
decides that participation in future years shall cease.
The President and CEO, or the Committee in regard to the position
of President and CEO, shall notify the affected Senior Executive in
writing that participation in future Plan Years has ceased.
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ARTICLE 4
LONG TERM INCENTIVES
4.1 Prior to the beginning of a Plan Year, or within three months
thereafter, the President and CEO shall recommend Rules for the
Plan Year for approval by the Committee. The Rules shall include
all aspects of the Plan's operation for the Plan Year in question
as described in the following paragraph.
4.2 The Plan shall make Incentive Payments to the Participants based on
the following:
(a) at the beginning of each Plan Year, the Rules shall ascertain
a set percentage of base salary (in effect at the beginning of
the Plan Year) to be the basis for the initial step in the
determination of the Incentive Payment.
(b) the dollar amount calculated in (a) above shall be used to
determine the number of shares of Stock to be used as the
basis for the ultimate Incentive Payment for the Plan Year.
The number of shares shall be computed by dividing the dollar
amount in (a) above by the Average Closing Price. Fractional
shares will be permitted.
(c) the Rules shall define and set the Target to be used for the
Plan Year in the Rules. The Target shall be financial,
developmental, quantative, qualitative (or a combination of
such factors) in nature and if attained, shall promote the
long term success of the Corporation.
(d) the Rules shall define the Measurement to be used in relation
to the Target for each Plan Year. The Measurement is based on
the Target (the desired
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achievement level at which 100% of the Incentive Payment is
made), and a leverage factor (a factor or formula by which the
Incentive Payment is multiplied if the Target is exceeded).
(e) the President and CEO may make a recommendation, for all
positions except that of President and CEO, for approval by
the Committee, to change the Target or Measurement at any
time. Such change would only provide increased potential for
an Incentive Payment, to reflect special opportunities and/or
circumstances that were unknown at the beginning of the Plan
Year which would otherwise limit or prohibit an Incentive
Payment from being paid. The Committee may make a similar
decision with respect to the President and CEO.
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(f) dividends that would be payable on the shares of Stock, if
they were held by the Participant, will be credited to a
bookkeeping account maintained by the Committee and become
part of the Incentive Payment. Dividends will be reinvested
in shares of Stock using the closing price on the NASDAQ
National Market Issues on the day the dividend is paid.
Fractional shares are permitted.
(g) based on performance in relation to the Target and
Measurement, the Committee will calculate the Incentive
Payment to be made to each Participant. The Incentive Payment
shall equal: the number of shares of Stock computed for the
Participant (including shares equal to those representing
reinvested dividends) multiplied by the Measurement criteria.
(h) the President and CEO may recommend, for all positions except
that of President and CEO, a discretionary Incentive Payment
be paid, to reflect special opportunities and/or circumstances
that were unknown at the beginning of the Plan
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Year. The Committee shall have the ability to make a similar
decision with regard to the President and CEO.
4.3 The Incentive Payment shall be made within 60 days after the
results from BanPonce Corporation and the Peer Group of the last
fiscal year that makes up the Plan Year are known.
4.4 The Incentive Payment shall be made in Stock, or at the discretion
of the Participant, a portion may be paid in cash equal to the
estimated tax due on the Incentive Payment. The Committee shall
provide for the withholding of any income taxes as prescribed by
law or regulation, or as requested by the Participant.
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ARTICLE 5
SEPARATION FROM SERVICE
5.1 If a Participant separates from service due to Retirement,
Disability, or Death, the Participant or Beneficiary shall receive
each Plan Year's Incentive Payment. Incentive Payments will be
determined on a pro-rated basis as of the separation from service
date, or Payment for every Plan Year which had begun prior to
separation. It is assumed target was 100% met for every plan year
or percentage of completion.
5.2 If a Participant separates from service through resignation from
employment or is the subject of a Discharge for Cause, no Incentive
Payments shall be made subsequent to such separation from service.
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ARTICLE 6
GENERAL MATTERS
6.1 The Plan shall be administered by the Committee. As the
administrator, the Committee shall be vested with the general
administration of the Plan including the exclusive right to
interpret the Plan. The decisions, actions, and records of the
Committee shall be conclusive and binding upon the Corporation and
all persons having or claiming to have an interest in or under the
Plan.
6.2 The Committee shall be assisted by the Senior Vice President of
Human Resources, and may appoint another officer of the
Corporation, to attend to the day-to-day administration of the
Plan.
6.3 All expenses of the Plan will be paid by the Corporation.
6.4 The Corporation will purchase shares of Stock to act as the basis
for the Incentive Payments. Such shares shall be held as treasury
shares of the Corporation.
6.5 The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation. However, no Plan amendment or
termination may have an adverse impact upon the rights of any
Participant to any Incentive Payment yet to be paid.
6.6 If a Change of Control takes place, the full Incentive Payment for
all Plan Years that have not yet been made will be paid to the
Participants immediately upon the Change of Control. The Committee
in place prior to the Change of Control will continue to be the
Committee to administer the Plan until all such Incentive Payments,
now due, have been made.
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6.7 The Plan will not affect the Participant's rights to participate in
any other plan or program sponsored by the Corporation.
6.8 The Plan gives no employment rights to the Participant.
6.9 Participants shall have no right, title, or interest in any Stock
or dividends that may have been purchased by the Corporation to aid
it in meeting its obligations under the Plan. To the extent that
any person acquires a right to receive an Incentive Payment under
the Plan, such right shall be no greater than that of an unsecured
creditor of the Corporation.
6.10 Notwithstanding the preceding paragraph, if the Corporation shall
establish a trust to hold the assets of the Plan, if any, then the
terms and conditions of that trust shall govern the rights of
Participants to any funds or assets.
6.11 The Plan shall be binding on any successor company or companies in
the event of the sale, merger, or other restructuring of the
Corporation. In the event of the sale of a division or subsidiary
of the Corporation, the Plan shall be binding on the purchasing
company. For purposes of this paragraph, the word "sale" shall
include the sale of assets so as to in effect be a sale of the
division or subsidiary of the Corporation or the Corporation
itself.
6.12 The Plan is to be operated under the law of the Commonwealth of
Puerto Rico.
6.13 The Plan is not designed to fall under the law or regulations of
the Employee Retirement Income Security Act of 1974 (ERISA) as
amended from time to time.
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