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SOCIETY CORPORATION
LONG TERM INCENTIVE COMPENSATION PLAN
(NOVEMBER 30, 1993 RESTATEMENT)
The Society Corporation Long Term Incentive Compensation Plan,
originally established effective as of January 1, 1987, is hereby amended and
restated in its entirety effective November 30, 1993.
Society Corporation hereby establishes this Long Term Incentive
Compensation Plan for the purpose of providing an incentive to selected senior
officers of Society Corporation and its subsidiaries who have major
responsibility for the long term performance of Society Corporation and its
Subsidiaries.
ARTICLE I
DEFINITIONS
For the purposes hereof, the following words and phrases shall
have the meanings indicated:
1. A "Beneficiary" shall mean any person designated by a
Participant in accordance with the Plan to receive payment of all or a portion
of any Incentive Compensation Award for which the Participant is eligible at
the time the Participant's death or the remaining balance of the Deferred
Compensation Account in the event of the death of the Participant prior to
receipt by such Participant of the entire amount credited to the Participant's
Deferred Compensation Account.
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2. "Change in Control" shall be deemed to have occurred if at
any time or from time to time:
(i) there is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form, or report),
each as adopted under the Securities Exchange Act of
1934, as amended, disclosing the acquisition of 25%
or more of the voting stock of the Corporation in a
transaction or series of transactions by any person
(as the term "person" is used in Section 13(d) and
Section 14(d)(2) of the Securities Exchange Act of
1934, as amended),
(ii) during any period of 24 consecutive calendar months,
individuals who at the beginning of such period
constitute the directors of the Corporation cease for
any reason to constitute at least a majority thereof
unless the election of each new director of the
Corporation was approved or recommended by the vote
of at least two-thirds of the directors of the
Corporation then still in office who were directors
of the Corporation at the beginning of any such
period,
(iii) The Corporation merges with or into or consolidates
with another corporation and, after giving effect to
such merger or consolidation, less than sixty percent
(60%) of the then outstanding voting securities of
the surviving or resulting corporation represent or
were issued in exchange for voting securities of the
Corporation outstanding immediately prior to such
merger or consolidation,
(iv) there is a sale, lease, exchange, or other transfer
(in one transaction or a series of related
transactions) of all or substantially all the assets
of the Corporation, or
(v) the shareholders of the Corporation shall approve any
plan or proposal for the liquidation or dissolution
of the Corporation;
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Notwithstanding the foregoing, the Corporation's merger with KeyCorp shall not
constitute a Change in Control hereunder.
3. The "Committee" shall mean the Compensation and Organization
Committee of the Board of Directors of the Corporation, or another Committee of
the Board of Directors hereafter succeeding to the responsibilities currently
performed by the Compensation and Organization Committee.
4. "Compensation Period" shall mean a period consisting of three
consecutive calendar years.
5. The "Corporation" shall mean Society Corporation, a bank
holding company and its corporate successors, including the surviving
corporation resulting from any merger of Society Corporation with any other
corporation or corporations.
6. A "Deferred Compensation Account" shall mean the bookkeeping
account on which the amount of the Incentive Compensation Award that is
deferred, pursuant to Section 4 of Article II, shall be recorded and on which
interest shall be credited in accordance with the Plan.
7. An "Eligible Employee" shall mean any senior officer of the
Corporation or of any Subsidiary who is determined by the Committee to have
major responsibility for the long term performance of the Corporation.
8. An "Incentive Compensation Award" shall mean the bonus which
may be paid to a Participant pursuant to the Plan for any Compensation Period.
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9. "Market Point" shall mean for any Participant the average
market point (as determined under the Corporation's salary administration
program) of such Participant's job grade during the applicable Compensation
Period; provided, however, that if (a) the Corporation changes such
Participant's job grade during any such Compensation Period, or such
Participant is promoted, transferred, or otherwise moves into a different job
grade during such Compensation Period then such Market Point shall be
calculated on a pro rata basis for each of the periods in which such job grades
were in effect for such participant.
10. A "Participant" shall mean an Eligible Employee who is
selected by the Committee to participate in the Plan.
11. The "Plan" shall mean this Long Term Incentive Compensation
Plan, together with all amendments hereto.
12. "Subsidiary" shall mean a corporation organized and existing
under the laws of the United States or of any state or the District of Columbia
of which 80 percent or more of the issued and outstanding stock is owned by the
Corporation or by a Subsidiary of the Corporation.
ARTICLE II
INCENTIVE COMPENSATION AWARDS
1. Participation. Annually, the Committee shall select the
Participants in the Plan for the Compensation Period and shall determine
whether such Participant shall be in Incentive Group I or Incentive Group II.
The selection will be made prior to the beginning of each Compensation Period
or as soon thereafter as is reasonably possible; additional selections for such
Compensation Period may not thereafter be made. Participants shall be notified
of their selection in writing.
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2. Incentive Compensation Awards. The Incentive Compensation
Awards are determined by applying a percentage to each Participant's target
bonus. The formula for determining the percentage shall be based on return on
common equity of the Corporation for the Compensation Period (i.e., average
annual return on common equity) and such formula shall be established by the
Committee prior to the beginning of a Compensation Period or as soon thereafter
as is reasonably possible. The Committee, in its sole discretion, may
discontinue the participation of an individual Participant; any such
discontinued Participant shall receive a pro rata Incentive Compensation Award
based on a fraction the numerator of which is the number of months of the
Compensation Period that are completed prior to such discontinuance and the
denominator of which is 36.
Individual target bonuses are as follows:
TARGET BONUS AS A
INCENTIVE GROUP PERCENT OF MARKET POINT
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I 25%
II 20%
In the event that the Committee approves participation in the Plan for an
individual whose job does not have an assigned salary grade, the Committee is
authorized to base the calculation of Target Bonus and other calculations under
this Plan on such individual's base salary. As soon as practical after the end
of each Compensation Period, the Corporation shall compute the amount of the
Incentive Compensation Awards payable under the Plan for such Compensation
Period in accordance with the percentage determined by the formula. The
Committee, after consulting with the Chief Executive Officer or in its sole
discretion, reserves the right to increase or decrease by the same percentage
the Incentive Compensation Awards of all Participants on the basis of
extraordinary circumstances that affected the Corporation's
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financial performance; provided, however, if there occurs a Change in Control,
such authority to increase or decrease the Incentive Compensation Awards shall
not apply to any Incentive Compensation Award, or any portion of Incentive
Compensation Award, earned on or prior to such Change in Control, but not yet
paid or deferred.
3. Payment upon death, disability, and plan termination.
Participants who retired or were disabled during a Compensation Period, or the
Beneficiary(s) or the estate of a Participant whose death occurred during a
Compensation Period, shall receive a pro rata Incentive Compensation Award;
such pro rata payment shall be based on a fraction the numerator of which is
the number of months of the Compensation Period that are completed prior to
such change in status and the denominator of which is 36. If a Participant
terminates employment during the Compensation Period for any reason other than
retirement, disability, or death, no Incentive Compensation Award shall be
payable to such Employee. In the event that a Participant dies prior to
receiving an Incentive Compensation Award, the Corporation shall pay any such
Incentive Compensation Award to the Participant's estate, unless the
Participant designates in writing that payment shall be made to a Beneficiary
or Beneficiaries; such designation of Beneficiary(s) shall be effective only if
acknowledged in writing by a duly authorized representative of the Corporation.
Such designation shall include the proportion to be paid to each Beneficiary
and indicate the disposition of such share if a Beneficiary does not survive
the Participant.
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In the event of any termination of this Plan for any reason, the
guidelines or formulas for determining the Incentive Compensation Awards shall
be based on the performance of the Corporation from the beginning of such
Compensation Period to the calendar month end occurring just prior to the
effective date of the termination of the Plan. In the event of any such
termination of the Plan, the Committee shall have no right to increase or
decrease the Incentive Compensation Awards computed in accordance with this
Section and Article II, Section 2 above. If this Plan is terminated during a
Compensation Period for any reason, including but not limited to a termination
caused by a Change In Control, each Participant shall receive a pro rata
Incentive Compensation Award based on the number of full months of the
Compensation Period that are completed prior to such termination of the Plan.
Notwithstanding any other provision of this Plan, in the event of any such
termination of the Plan, each Participant shall receive a pro rata Incentive
Compensation Award for each applicable Compensation Period in cash within sixty
days after the effective date of such Plan termination. In the event of any
such plan termination, the Corporation shall base such pro rata Incentive
Compensation Awards on the Corporation's performance for each full year of any
current Compensation Period and, for the year in which the termination occurs,
on the number of full months of such year prior to the effective date of such
Plan termination; the Corporation shall retain the services of the independent
public accountants used by the Corporation (prior to the plan termination) to
determine the financial performance for such partial year. The Corporation
shall then calculate such pro rata Incentive Compensation Award using the
Corporation's performance for each such full year and such partial year as
determined above (i.e., average monthly return on equity).
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4. Payment of Incentive Compensation Award. A Participant who
desires to defer payment of all or a portion of the Participant's Incentive
Compensation Award for a specific Compensation Period must complete and deliver
an election agreement to the Corporation within thirty (30) days after the
Participant is selected as a participant for such Compensation Period. Such
election agreement shall designate (a) the amount of the Participant's
Incentive Compensation Award to be deferred (which must be either a fixed
percentage of the Award, an amount in excess of a specific dollar amount, or up
to a specific dollar amount), (b) the type of deferral (which must be a one
year deferral, a three year deferral, or a retirement deferral), (c) for
retirement deferrals, the date to which the Participant's Incentive
Compensation Award shall be deferred (which must be either the first business
day of the quarter following retirement or the first business day of January in
the year following retirement), and (d) for retirement deferrals, whether the
distribution of the Incentive Compensation Award is to be paid in a lump sum or
installments, and if in installments, the number of annual or quarterly
payments; if the participant fails to file such an election agreement with the
Corporation within such thirty (30) day period, the Participant's Incentive
Compensation Award shall be paid in cash. The Corporation shall provide each
Participant with an appropriate election form at the time the Participant is
notified of the Participant's selection for the applicable Compensation Period.
Such election shall be irrevocable. Amounts deferred shall be credited to the
Deferred Compensation Account, and amounts paid in cash shall be paid, on or
prior to March 15 of the calendar year following the end of the Compensation
Period. If a Participant elects to defer payment of all or a portion of the
Incentive Compensation Award, the Corporation shall establish a Deferred
Compensation Account, and payment of the amounts reflected therein shall be in
accordance with Article II, Section 6.
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Notwithstanding any other provision of the Plan, the Committee, in its
sole discretion, shall have the authority to authorize payment or credit to a
Deferred Compensation Account, whichever the Participants shall have selected,
of all or a portion of all Incentive Compensation Awards prior to the end of
the Compensation Period, and if a portion, the Corporation shall pay or credit,
whichever the Participants shall have selected, the remaining portion of the
Award on or prior to March 15, as provided above.
Notwithstanding any other provision of the Plan, the Committee, in its
sole discretion, shall have the authority to require deferral of payment of all
or a portion of all Incentive Compensation Awards due to any Plan Participant
if the Committee determines that the Corporation would be denied a deduction
for federal income tax purposes for such Award or the portion thereof by reason
of Section 162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations issued thereunder, if the Award or the portion thereof were not so
deferred. Such deferred Incentive Compensation Awards, or the portion thereof,
shall be treated as Incentive Compensation deferred under Section 5 below and
shall be payable to the Participant at such time as the Committee, in its sole
discretion, believes that such Award, or the portion thereof, would be so
deductible, but not later than thirty (30) days following the fiscal year in
which the Participant terminates employment with the Corporation and its
subsidiaries.
All payments of Incentive Compensation Awards shall be in cash from
the general assets of the Corporation or a Subsidiary, and Participants shall
have the status of general unsecured creditors of the Corporation. Incentive
Compensation Awards payable under the Plan constitute a mere promise by the
Corporation to make such payments in the future. Finally, it is the intention
of the Corporation and the Participants that the Plan be unfunded for tax
purposes and for the purposes of Title I of the Employee Retirement Income
Security Act of 1974, as amended.
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5. Deferred Compensation Account. The amount of any Incentive
Compensation Award that is deferred shall be treated as if it were set aside in
a Deferred Compensation Account on the date the Incentive Compensation Award
would otherwise have been paid in cash to the Participant.
The balance of such Deferred Compensation Account shall be credited
with interest computed quarterly (based on calendar quarters) on the lowest
balance of the Deferred Compensation Account during each calendar quarter. The
interest credited to the Account shall be based on an annual rate (the "Base
Rate") equal to the highest annual rate paid by Society National Bank on new
IRA certificates of deposit issued on the last business day of such quarter, or
at such other rate as may be determined from time to time by the Committee. In
the event that the Participant remains employed with the Corporation or one of
its Subsidiaries until the Participant becomes eligible for retirement under
the Corporation's retirement plan, death, or disability, the interest rate
credited to that portion of the Participant's Deferred Compensation Account
that relates to any Retirement Deferral made under Section 6 below, from and
after January 1, 1993, shall be 2% in excess of the Base Rate (the "Bonus
Rate"). The Corporation shall credit interest to the Deferred Compensation
Account with respect to each calendar quarter on the first day of the following
calendar quarter. Deferred Compensation Accounts maintained on behalf of
Participants (or Beneficiaries of such Participants) who retired, died, or
became disabled prior to January 1, 1993, shall in no event be entitled to have
interest credited at the Bonus Rate. The Corporation may establish separate
Deferred Compensation Accounts for a particular Participant to properly account
for amounts deferred under different alternatives and amounts deferred under
different years.
6. Payment of Deferred Compensation Account. Payment of the
Deferred Compensation Account shall be made, depending upon the alternative
selected by the Participant, as follows:
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(a) One Year Deferral. The Deferred Compensation Account
shall be paid in a single cash lump sum on the first business day of the second
calendar year following the Compensation Period in which the Incentive
Compensation Award was earned.
(b) Three Year Deferral. The Deferred Compensation Account
shall be paid in three substantially equal consecutive annual installments, on
the first business day of the second through fourth calendar years following
the Compensation Period in which the Incentive Compensation Award was earned.
(c) Retirement Deferral. If a Participant retires or
terminates employment due to disability, the amount of a Deferred Compensation
Account paid under this alternative shall be paid to the Participant in such a
manner and at such time or times as the Participant selects pursuant to Article
II, Section 4 above.
The amount of any Deferred Compensation Account of a Participant whose
employment terminates for any reason other than retirement or disability shall
be paid to the Participant in a lump sum within ninety days after the date of
termination of employment.
Notwithstanding the foregoing, the Committee may, in its sole
discretion, accelerate the making of payment of all or any portion of the
amount of the Deferred Compensation Account to a Participant in the case of any
of the following events:
(a) An "unforeseeable emergency" of the Participant, which shall
mean an unanticipated emergency that is caused by an event
beyond the control of the Participant that would result in
severe financial hardship to the individual if such withdrawal
were not permitted. The amount of the withdrawal that is
permitted under this subparagraph (a) is limited to the amount
necessary to meet such emergency.
(b) Upon the written request of a Participant, provided that (i)
the Committee determines that such withdrawal would not be
adverse to the best interests of the Corporation, (ii) the
request is made ninety (90) days before the requested date of
payment, (iii) the Participant forfeits an amount equal to 10%
of the amount requested, and (iv) the Participant is
disqualified from deferring the next Incentive Compensation
Award for which the Participant would be eligible to defer
under this Plan.
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(c) Upon the written request of a Participant, provided that (i)
the Participant agrees to apply all of the net distributed
amount (after reduction for applicable payroll taxes) to
purchase the Corporation's Common Shares through the exercise
of stock options or otherwise, (ii) the Participant agrees to
hold the Corporation's Common Shares so purchased for a period
of time determined by the Committee, which period shall
terminate no earlier than the Participant's termination of
employment with the Corporation and any Subsidiary, and (iii)
the Participant agrees to such other limitations,
restrictions, and potential penalties as determined by
Committee to be applicable in connection with the
distribution.
Payment of any such withdrawal under this Section 6 will be paid out
of one year deferrals first, three year deferrals second, and retirement
deferrals last, and paid out among three year deferrals pro rata if there is
more than one such deferral.
7. Death of Participant. In the event of the death of a
Participant prior to receipt by such participant of the entire amount of the
Participant's Deferred Compensation Account, such amount shall be paid to the
Beneficiary or Beneficiaries designated in writing by the Participant; in the
event there is more than one Beneficiary, such designation shall include the
proportion to be paid to each Beneficiary and indicate the disposition of such
share if a Beneficiary does not survive the Participant. The Committee, in its
sole discretion, shall determine whether payment of the remaining amount of a
Participant's Deferred Compensation Account shall be in a lump sum or in a
number of substantially equal quarterly or annual installments over a period
not to exceed ten years; such payments shall commence on such date within one
year of the date of the Participant's death as shall be designated by the
Committee. A Participant's Beneficiary designation may be changed at any time
prior to the Participant's death by written notice signed by the Participant
and received by the Corporation. The Beneficiary designation on file with the
Corporation at the time of the Participant's death which bears the latest date
shall govern. In the absence of a Beneficiary designation or the failure of
all Beneficiaries to survive the Participant, the remaining amount of the
Deferred Compensation Account shall be paid to the Participant's estate in a
lump sum within ninety days after the appointment of an executor or
administrator. The Committee may, in its sole
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discretion, accelerate the making of payment to a Beneficiary of the amount of
a Deferred Compensation Account in the event of unforeseeable emergency as
defined in Section 6 above. In the event of the death of a Beneficiary after
payments to the Beneficiary have commenced, the remaining amount of the
Deferred Compensation Account payable to such Beneficiary shall be paid to such
Beneficiary's estate in a lump sum within ninety days after the appointment of
an executor or administrator.
ARTICLE III
ADMINISTRATION
The Corporation shall be responsible for the general administration of
the Plan and for carrying out the provisions hereof. The Committee shall have
all such powers as may be necessary to carry out its duties under the Plan,
including the power to determine all questions relating to eligibility for and
the amount in a Deferred Compensation Account, all questions pertaining to
claims for benefits and procedures for claim review, and the power to resolve
all other questions arising under the Plan, including any questions of
construction. The Corporation and the Committee may take such further action
as the Corporation and the Committee shall deem advisable in the administration
of the Plan. The actions taken and the decisions made by the Corporation and
the Committee hereunder shall be final and binding upon all interested parties.
In accordance with the provisions of Section 503 of the Employee Retirement
Income Security Act of 1974, as amended, the Committee shall provide a
procedure for handling claims of Participants or their Beneficiaries under this
Plan. Such procedure shall be in accordance with regulations issued by the
Secretary of Labor and shall provide adequate written notice within a
reasonable period of time with respect to the denial of any such claims as well
as a reasonable opportunity for a full and fair review by the Committee of any
such denial. Notwithstanding anything to the contrary contained herein, the
Corporation shall be the "administrator" for the purpose of the Employee
Retirement Income Security Act of 1974, as amended. Any action authorized
under this Plan to be done by the
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Committee may be done by the Board of Directors or any other Board Committee
authorized by the Board of Directors.
ARTICLE IV
AMENDMENT AND TERMINATION
The Corporation reserves the right to amend or terminate the Plan at
any time by action of its Board of Directors or a duly authorized Committee
thereof; provided, however, that no such action shall adversely affect any
Participant or Beneficiary with respect to the amount credited to a Deferred
Compensation Account. This Plan shall be automatically terminated on the
effective date of any Change in Control.
ARTICLE V
MISCELLANEOUS
1. Non alienation of Deferred Compensation Account. No
Participant or Beneficiary shall encumber or dispose of the right to receive
any payment of the amount of a Deferred Compensation Account hereunder without
the written consent of the Corporation. If a Participant or Beneficiary
without the written consent of the Corporation attempts to assign, transfer,
alienate, or encumber the right to receive the amount of a Deferred
Compensation Account hereunder or permits the same to be subject to alienation,
garnishment, attachment, execution, or levy of any kind, then the Committee, in
its discretion, may hold or pay such amount or any part thereof to or for the
benefit of such Participant or Beneficiary, the Participant's or Beneficiary's
spouse, children, blood relatives, or other dependents, or any of them, in such
manner and in such proportions as the Committee may consider proper. Any such
application of the amount of a Deferred Compensation Account may be made
without the intervention of a guardian. The receipt by the payee(s) of such
payment(s) shall constitute a complete acquittance to the Corporation with
respect thereto, and neither the Corporation, nor any Subsidiary, nor the
Committee, nor any officer, member, employee, or agent thereof, shall have any
responsibility for the proper application thereof.
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2. Plan Non contractual. Nothing herein contained shall be
construed as a commitment to or agreement with any person employed by the
Corporation or a Subsidiary to continue such person's employment with the
Corporation or Subsidiary, and nothing herein contained shall be construed as a
commitment or agreement on the part of the Corporation or any Subsidiary to
continue the employment or the annual rate of compensation of any such person
for any period. All Participants shall remain subject to discharge to the same
extent as if the Plan had never been put into effect.
3. Interest of Participants and Beneficiaries. The obligation of
the Corporation under the Plan to make payments of Incentive Compensation
Awards and amounts reflected on Deferred Compensation Accounts merely
constitute the unsecured promise of the Corporation to make payments from its
general assets as provided herein, and no Participant or Beneficiary shall have
any interest in, or a lien or prior claim upon, any property of the Corporation
or any Subsidiary.
4. Claims of Other Persons. The provisions of the Plan shall in
no event be construed as giving any person, firm, or corporation any legal or
equitable right as against the Corporation or any Subsidiary, their officers,
employees, agents, or directors, except any such rights as are specifically
provided for in the Plan or are hereafter created in accordance with the terms
and provisions of the Plan.
5. Absence of Liability. No member of the Board of Directors of
the Corporation or a Subsidiary or the Committee or any officer of the
Corporation or a Subsidiary shall be liable for any act or action hereunder,
whether of commission or omission, taken by any other member, or by any
officer, agent, or employee, or, except in circumstances involving his bad
faith or willful misconduct, for anything done or omitted to be done by
himself.
6. Severability. The invalidity or unenforceability of any
particular provisions of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or
unenforceable provision were omitted herefrom.
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7. Governing Law. The provisions of the Plan shall be governed
and construed in accordance with the laws of the State of Ohio.
EXECUTED AT Cleveland, Ohio, as of the 30th day of November, 1993.
SOCIETY CORPORATION
By: _____________________________
Roger Noall
Vice Chairman and
Chief Administrative Officer
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