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EXHIBIT 10.8.2
POPULAR, INC.
SENIOR EXECUTIVE
LONG TERM INCENTIVE PLAN
DOCUMENT
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ARTICLE 1
PURPOSE
1.1 Popular, Inc. has adopted the 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 as Senior Executives of the
Corporation competent and experienced individuals;
(b) offering a long term incentive opportunity to Senior
Executives, that, together with other forms of remuneration,
is comparable 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
additional interest in the Corporation through stock
ownership.
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ARTICLE 2
DEFINITIONS
2.1 "Average Closing Price" means the average of the closing price, as
reported on the national market where the Stock is traded or as
reported by a nationally recognized stock quotation service, 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 Popular, Inc.
2.4 "Change in Control" refers to change in ownership, control, or power
to vote 25 percent or more of the outstanding shares of any class of
voting securities of the Corporation, or the direct or indirect
acquisition of all or substantially all of the assets of the
Corporation, by an individual (or group of individuals acting in
concert), a partnership, corporation or any other business entity not
directly or indirectly controlled by the Corporation. A Change of
Control will not be deemed to have occurred solely because of the
acquisition of shares of stock of the Corporation by any employee
benefit plan maintained by the Corporation or other entity controlled
by the Corporation.
2.5 "Corporation" means Popular, Inc. and its divisions or wholly-owned
subsidiaries which adopt this Plan, and any successor to Popular, Inc.
by merger, purchase, reorganization, or otherwise.
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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
a conviction for a felony, embezzlement of Corporate funds, fraud, or
repeated acts of willful dishonesty which have a material adverse
effect on the Corporation.
2.8 "Employee" means an employee of the Corporation.
2.9 "Human Resources and Compensation Committee" or "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.
2.10 "Incentive Payment" means the award paid to the Participant at the
conclusion of a Plan Year as determined pursuant to the terms of
Article 4.
2.11 "Measurement" means the definition of the full amount or multiple of
the Incentive Payment that may be paid if the Target is attained or is
exceeded pursuant to the terms of Article 4.
2.12 "Participant" means the President and CEO of the Corporation and any
other Employee of the Corporation designated as a participant in the
Plan pursuant to the terms of Article 3.
2.13 "Peer Group" means the group of institutions of similar
characteristics, such as size, scope or business orientation, selected
by the Committee for purposes of performance comparison.
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2.14 "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.
2.15 "President and CEO" means the President and CEO of Popular, Inc.
2.16 "Plan" means the Popular, Inc. Senior Executive Long Term Incentive
Plan.
2.17 "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.
If no such plan exists, separation from service as a retiree after age
55 shall constitute a retirement under the Plan.
2.18 "Rules" refers to the rules that will direct the Plan Year as
described in Article 4.
2.19 "Senior Executive" refers to an Employee that reports to the President
and CEO, that participates or has authority to participate in major
policy making functions of the Corporation and whose decisions help
determine the long-term performance of the Corporation.
2.20 "Stock" means Popular, Inc.'s common stock.
2.21 "Target" means the goal that triggers 100% of the Incentive Payment
under the Plan as determined pursuant to Article 4.
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ARTICLE 3
PARTICIPATION
3.1 Prior to the beginning of a Plan Year, or within three months
thereafter, the President and CEO shall recommend for approval by the
Committee, Senior Executives as Participants (excluding the position
of President and CEO). The President and CEO may recommend for
approval by the Committee, additional Senior Executives as
Participants, provided, however, that such participation in the Plan
shall be prospective from the date the person becomes a Participant.
Prior to the beginning of a Plan Year, or within three months
thereafter, the Committee shall decide the eligibility of the
President and CEO.
3.2 The Committee shall issue a notification in writing to each person
selected as a Participant.
3.3 Once approved for participation in the Plan, the Participant shall
continue as such during:
(a) the Plan Year for which the Participant was originally
selected; and
(b) future Plan Years.
3.4 Participation in the Plan will cease if:
(a) the Participant 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 as Participant in future Plan
Years and the recommendation is approved
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by the Committee; or in regard to the position of President
and CEO, the Committee decides to remove the President and
CEO as Participant in future Plan Years.
The Committee 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 each fiscal year, or within three months
thereafter, the President and CEO shall recommend the Rules that shall
apply to the Plan Year commencing at such time, for approval by the
Committee.
4.2 The Rules shall provide for the Plan to make Incentive Payments to the
Participants based on the principles described hereunder.
(a) At the beginning of a Plan Year, the Rules shall ascertain
the percentage of the base salary in effect at the beginning
of the year or three months thereafter that will constitute
the basis for the determination of the Incentive Payment for
the Plan Year.
(b) The Committee shall calculate the Incentive Payment to be
made to each Participant based on achievement of the Target
and the Measurement. The Incentive Payment shall equal: the
dollar amount calculated in 4.2(a) divided by the Average
Closing Price to determine the number of shares of Stock to
be acquired at the beginning of the Plan Year, that after
adding reinvested dividends, will be multiplied by the
Measurement to determine the Incentive Payment for the Plan
Year. Fractional shares will be permitted.
(c) The Rules shall define and set the Target to be used for the
Plan Year. The Target shall be financial, developmental,
quantitative, qualitative, or a combination of such factors,
which, 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 may include
a leverage factor which shall be a factor or formula by which
the Incentive Payment is multiplied if the Target is exceeded
or
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a threshold factor which shall be a factor or formula by
which the Incentive Payment is multiplied if the Target is
not met.
(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. The Committee may make a similar decision with
respect to the President and CEO.
(f) Dividends payable on the shares of Stock acquired pursuant to
the Plan, will be reinvested in shares of Stock through such
reinvestment vehicle as shall be determined in the Rules.
Fractional shares are permitted.
(g) The President and CEO may recommend, for all positions except
that of President and CEO, a discretionary Incentive Payment,
to reflect special opportunities and/or circumstances that
were unknown at the beginning of the Plan 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 publication
of the financial results for Popular, and the Peer Group for the last
fiscal year that makes up the Plan Year.
4.4 The Incentive Payment shall be made in Stock. 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 that portion of
the Incentive Payment which corresponded to the time elapsed from the
beginning of the Plan Year to the time of separation of the
Participant. Incentive Payments shall be disbursed to the Participant
or Beneficiary at the end of the Plan Year pursuant to the terms
hereof. However, the Committee may, at its option, make the
corresponding payment prior to the termination of the Plan Year if as
of the time of separation the Target has been achieved or if a
determination is made that special circumstances merit such payment
prior to termination
5.2 If a Participant separates from service from the corporation through
resignation from employment or is subject to Discharge for Cause, no
Incentive Payments shall be made.
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ARTICLE 6
GENERAL MATTERS
6.1 The Committee shall be the administrator of the Plan. 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 provided,
however, that any such interpretation, decision, action or record,
shall be subject to revision by the Board of Directors of the
Corporation.
6.2 The Committee shall appoint the officers of the Corporation, that
shall 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 the Stock to act as the basis for the
Incentive Payments within three months of the date the Plan Year
commences. Participants shall have no right, title, or interest in
such Stock purchased hereunder, or dividends paid, until the
Participant acquires a right to receive an Incentive Payment under the
Plan. In the event a Participant does not acquire the right to
receive the Incentive Payment for a Plan Year, the Corporation may
roll-over to the Plan Year commencing immediately after the end of the
Plan Year for which no Incentive Payment is made, the total amount of
Shares acquired by the Corporation for the payment of the Incentive
Payment for the Plan Year for which no payment is made.
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6.5 The Corporation may establish a trust to hold the assets of the Plan,
if any. The terms and conditions of such trust shall govern the rights
of Participants to any funds or assets. Provided, however, that any
trust established by the Corporation pursuant hereto shall not
contravene the objectives of the Plan.
6.6 The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation provided, however, that no amendment or
termination may have an adverse impact upon the vested rights of any
Participant to any Incentive Payment.
6.7 In the event of a Change in Control, the Participant shall have the
right to the Incentive Payment, if any, for the current Plan Year
pursuant to the terms of the Plan. The Committee in place prior to the
Change in Control or such other persons designated by the Committee,
will continue to administer the Plan until the Incentive Payment, if
any, is calculated and disbursed to the Participant. The Plan shall be
binding on any successor or assign of the Corporation in the event of,
Change in Control of the Corporation.
6.8 The Plan will not affect the Participant's rights to participate in
any other plan or program sponsored by the Corporation.
6.9 The Plan gives no employment rights to the Participant.
6.10 To the extent that a Participant 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.
6.11 The Plan will be governed by and construed in accordance with the Laws
of the Commonwealth of Puerto Rico.
6.12 The Plan is not designed to fall under the law or regulations issued
pursuant to the Employee Retirement Income Security Act of 1974
(ERISA) as amended from time to time.