1
EXHIBIT 10(j)(2)
HUNTINGTON BANCSHARES INCORPORATED
LONG-TERM INCENTIVE COMPENSATION PLAN
As Amended and Effective for Performance Cycles
beginning on or after January 1, 1996
(including amendment adopted February 21, 1996)
PURPOSE; EFFECTIVE DATE
-----------------------
1.1 The purpose of this Long-Term Incentive Compensation Plan (the "Plan")
is to provide incentive for key employees whose sustained performance directly
influences the creation of shareholder value.
1.2 The Plan, as amended, will become effective upon approval by a
majority of the votes cast by shareholders of the Corporation at the annual
Imeeting on April 25, 1996, but will relate to Performance Cycles beginning
January 1, 1996, and thereafter. No payments will be made under the Plan unless
shareholder approval is obtained.
DEFINITION OF TERMS
-------------------
2.1 As used herein, the following words shall have the meanings stated
after them, unless otherwise specifically provided:
(a) "U.S. BANKING ORGANIZATION" shall mean a bank or bank holding
company organized under the laws of the United States of America or any
state, territory or other
2
political subdivision thereof including the District of Columbia, whose
stock is publicly traded.
(b) "BASE SALARY" shall mean the annual cash salary payable to an
Officer excluding bonuses, incentive compensation, stock options, employer
contributions to pension or benefit plans, and other forms of irregular
payments and deferred compensation.
(c) "COMMITTEE" shall mean the Compensation and Stock Option Committee
of the Board of Directors of the Corporation, which shall be composed of
two or more "outside directors" within the meaning of Section 162(m) as
hereinafter defined.
(d) "CORPORATION" shall mean Huntington Bancshares Incorporated.
(e) "OFFICER" shall mean an officer of the Corporation or of a
Subsidiary.
(f) "PACESETTER GROUP" shall mean the U.S. Banking Organizations
selected by the Committee to be members of the Pacesetter Group in
accordance with Section 5.1.
(g) "PARTICIPANT" shall mean an Officer selected to participate in the
Plan in accordance with section 4.1.
(h) "PERFORMANCE CYCLE" OR "CYCLE" shall mean a period of three
calendar years. A new Performance Cycle begins on January 1 of each even
numbered year.
(i) "RETURN ON AVERAGE EQUITY" OR "ROAE" shall mean the annual return
on average shareholders' equity reported in publicly available financial
reports.
(j) "SECTION 162(M)" shall mean Section 162(m) of the Internal Revenue
Code of 1986, as amended, or any successor statute of similar import.
(k) "SUBSIDIARY" shall mean a subsidiary of the Corporation of which
at least 50% of the voting power is directly or indirectly owned or
controlled by the Corporation.
2
3
ADMINISTRATION
--------------
3.1 The Committee shall administer the Plan. The Committee is authorized to
interpret and construe the Plan and to adopt such rules, regulations, and
procedures for the administration of the Plan as the Committee deems necessary
or advisable. The Committee's interpretations of the Plan, and all decisions and
determinations made by the Committee, shall be conclusive and binding on all
parties including the Corporation and any person claiming an award under the
Plan.
PLAN PARTICIPANTS
-----------------
4.1 Participation in the Plan shall be limited to Officers who are
considered to be key employees whose performance may, in the opinion of the
Committee, significantly contribute to the long-term strategic performance and
growth of the Corporation. The Committee shall select those Officers who will
participate in the Plan for each Performance Cycle during the first 90 days of
the Cycle and may select Officers who are hired or promoted during a Cycle to
participate for the remainder of the Cycle.
PACESETTER GROUP
----------------
5.1 During the first 90 days of each Performance Cycle, the Committee shall
select the U.S. Banking Organizations comprising the Pacesetter Group for that
Cycle. If during any Performance Cycle a member of the Pacesetter Group for that
Cycle ceases to exist as an independent U.S. Banking Organization as a result of
a merger, purchase or exchange of stock or otherwise, that member shall be
included in the Pacesetter Group only for those full years during which it
existed as an independent U.S. Banking Organization.
3
4
PERFORMANCE CRITERIA AND GOALS
------------------------------
6.1 Awards under the Plan shall be based upon the Corporation's performance
during each Performance Cycle measured by Return on Average Equity relative to
the Return on Average Equity of the members of the Pacesetter Group. During the
first 90 days of each Performance Cycle, the Committee shall establish written
ROAE performance goals for the Corporation for that Cycle relative to the ROAE
performance of members of the Pacesetter Group.
6.2 Awards under the Plan shall be equal to a percentage of a
Participant's annual Base Salary as of December 31 of the last year of a
Performance Cycle determined by reference to the attainment of the
Corporation's performance goals for that Cycle. The Committee shall adopt a
written schedule of potential awards, expressed as a percentage of Base Salary,
during the first 90 days of each Performance Cycle. For an Officer who is
selected to participate after the first 90 days of a Cycle, the award shall be
pro-rated based upon the length of time the Officer is a Participant. No awards
shall be paid pursuant to the Plan with respect to a Performance Cycle if the
average annual ROAE of the Corporation for that Cycle is below the minimum
corporate performance goal established by the Committee. In addition,
notwithstanding the attainment of specified performance goals, the Committee
has the discretion to reduce or eliminate an award that would otherwise be
payable to any Participant. The maximum award payable under the Plan with
respect to a Performance Cycle shall be $1,000,000, notwithstanding that the
average annual ROAE of the Corporation for a Performance Cycle may exceed the
maximum performance goal.
4
5
PAYMENT OF AWARDS
-----------------
7.1 Awards will be made under the Plan in the form of shares of Common
Stock of the Corporation; provided, however, that the maximum amount of shares
of Common Stock to be issued after January 1, 1996 shall not exceed 400,000
shares (which number shall be adjusted to reflect future stock splits, stock
dividends, or other changes in capitalization of the Corporation); and provided
further that any Participant, with the approval of the Committee, may elect to
receive up to 50% of his or her award in cash, whereupon that Participant will
be entitled to receive only that number of shares of Common Stock determined as
set forth in Section 10.2 or 10.3 hereof. Payment of awards will be made as soon
as practicable following the end of each Performance Cycle; provided that
payments will be made only after the Committee has certified in writing, in the
minutes of a committee meeting or otherwise, that applicable performance goals
have been satisfied.
7.2 Except as provided in Sections 8.2 and 9.1 - 9.5 hereof, no award shall
be paid to an Officer who is not employed by the Corporation or a Subsidiary on
the day the award is paid.
7.3 If at the time Participants are to receive payment of awards, the
Corporation or any Participant is prohibited from trading in Common Stock under
applicable state or federal securities laws, the Committee may in its discretion
withhold distribution of stock until such time as distribution is permitted; or
imay in its discretion authorize the entire payment to be paid in cash. If
distribution of Common Stock is withheld, the Corporation shall make additional
cash payments to reflect dividends paid during the period in which distribution
was withheld.
7.4 The Corporation may deduct from any payment made under this Plan all
federal, state and local taxes required to be withheld with respect to such
payment or may require that the Participant pay to the Corporation an amount
equal to any such taxes.
5
6
TERMINATION OF EMPLOYMENT
-------------------------
8.1 If a Participant's employment is terminated for any reason other than
death, disability or retirement prior to receipt of payment of an award with
respect to a Performance Cycle, the Participant shall not receive any payment
under the Plan based upon that Cycle.
8.2 In the event a Participant dies, becomes disabled, or retires before
receipt of payment of an award, as determined in the sole discretion of the
Committee, the Committee may authorize payment to the Participant or the
Participant's estate or beneficiary in such amount as the Committee deems
appropriate.
CHANGE IN CONTROL OF THE CORPORATION
------------------------------------
9.1 In the event of a Change in Control of the Corporation, as hereinafter
defined, the provisions set forth below shall apply, and in the event of any
conflict between Sections 9.1 - 9.5 and any other section of the Plan, the
provisions of Sections 9.1 - 9.5 shall prevail.
9.2 Within 90 days after the Change in Control occurs, the persons who are
Participants immediately prior to the Change in Control shall receive payment of
awards under the Plan in cash determined as follows:
(a) If the Change in Control occurs before the end of the first year of a
Cycle, no payment shall be made with respect to that Cycle.
(b) If the Change in Control occurs during the second year of a Cycle,
Participants shall receive the full amount of the award for that Cycle
based upon ROAE of the Corporation and the Pacesetter Group for the
first year of the Cycle.
6
7
(c) If the Change in Control occurs during the third year of a Cycle,
Participants shall receive the full amount of the award for that Cycle
based upon average annual ROAE of the Corporation and the Pacesetter
Group for the first two years of the Cycle.
(d) If the Change in Control occurs after the third year of a Cycle,
Participants shall receive the full amount of the award for that Cycle
based upon the average annual ROAE of the Corporation and the
Pacesetter Group for the full Cycle.
9.3 Notwithstanding Section 8.1 hereof, Participants whose employment
terminates following a Change in Control shall receive payment of awards in
accordance with Section 9.2.
9.4 After a Change in Control has occurred, neither the Committee nor the
Board of Directors of the Corporation shall change the performance levels for a
Performance Cycle that began prior to the date the Change of Control occurred or
reduce or eliminate any awards otherwise payable to an Officer under this Plan.
9.5 For purposes of this section, a "Change in Control" of the Corporation
shall be deemed to have occurred if and when, after the date hereof, (i) subject
to the limitations set forth in this paragraph, any "Person" (as that term is
defined as of the date hereof in Section 225.2(k) of Regulation Y ("Regulation
Y") issued by the Board of Governors of the Federal Reserve System), other than
the Corporation or any employee stock ownership, profit-sharing, salary
adjustment or other employee benefit plan of the Corporation or of any
Subsidiary or any trustee or fiduciary with respect thereto solely by reason of
such capacity of such trustee or fiduciary, acquires, directly or indirectly, or
through or in concert with one or more Persons, "Control" (as that term is
defined as of the date hereof in Section 225.2(e) (1) of Regulation Y) of the
Corporation or control of, or the power to vote, 10% or more (but less than 25%)
of the votes attributable to the voting securities of
7
8
the Corporation if no other person will own a greater percentage of the votes
attributable to such voting securities immediately after the acquisition
transaction; (ii) the Corporation, or in one or more transactions 50% or more of
its assets or earning power, is acquired by or combined with another Person and
less than a majority of the outstanding voting shares of the Person surviving
such transaction (or the ultimate parent of the surviving Person) after such
acquisition or combination is owned, immediately after such acquisition or
combination, by the owners of the voting shares of the Corporation outstanding
immediately prior to such acquisition or combination; or (iii) any Person,
acting alone or through or in concert with one or more Persons, shall elect, at
one or more meetings of shareholders of the Corporation, a majority of the
members of the Board of Directors who were not members of, or elected or
recommended by, the previously existing Board of Directors of the Corporation.
In defining "Control," all voting securities of the Corporation shall be
considered to be a single class.
PURCHASE AND DELIVERY OF STOCK
------------------------------
10.1 Common Stock delivered to Participants under the Plan shall be issued
by the Corporation or, if the Committee so directs, shall be purchased in the
open market by an independent buying agent selected by the Corporation. In
either case if a Participant shall be entitled to receive a fractional share,
the Participant shall receive one whole share in lieu of that fractional share.
10.2 In the event that the Common Stock to be delivered hereunder shall be
issued by the Corporation, the number of shares to be issued and delivered to
each Participant shall be that number of shares which could be purchased at the
market price per share of Common Stock of the Corporation with the amount of the
award to be made to that Participant, calculated as provided in
8
9
Section 6.2, less the amount of such award that the Participant has elected to
receive in cash. The "market price per share" of the Common Stock for purposes
of this subsection shall be (1) the average of the highest and lowest sale
prices per share quoted in the NASDAQ National Market System, if the shares are
so quoted, (2) the mean between the bid and asked prices per share as reported
by NASDAQ, if the shares are publicly traded, but are not quoted in the National
Market System or listed on a securities exchange, or (3) if the shares are
listed on a securities exchange, the average of the high and low prices at which
such shares are quoted or traded on such exchange, in each case on a date which
shall be fixed by the Committee (and shall in no case be a date earlier than the
date when such determination is made), or if such date is not a trading day, the
next preceding trading day.
10.3 In the event that the Committee shall determine that the Common Stock
to be delivered shall be purchased in the open market, the Committee shall
select a buying agent which shall be a licensed securities broker that is not
affiliated with the Corporation. The Corporation or a Subsidiary shall pay to
the buying agent all awards under the Plan, except amounts which Participants
have elected to receive in cash, for the purchase of Common Stock in open market
purchases. The buying agent will perform all functions relating to the purchase
of Common Stock and will have complete discretion regarding the timing of
purchases; provided that purchases shall be made within thirty days after
receipt by the buying agent of funds representing awards unless such purchases
are restricted by federal or state securities laws. The buying agent shall not
purchase Common Stock directly from the Corporation. Certificates for Common
Stock shall be delivered to Participants promptly after purchases are made.
9
10
10.4 Neither the Corporation nor buying agent shall have any liability to a
Participant with respect to the timing of payment of awards or the timing of
purchases of Common Stock.
MISCELLANEOUS PROVISIONS.
-------------------------
11.1 BINDING UPON SUCCESSORS - The obligations of the Corporation under the
Plan shall be binding upon any successor corporation or organization which
succeeds to substantially all of the assets and/or business of the Corporation.
The term Corporation, whenever used in this Plan, shall mean and include any
such corporation or organization after such succession.
11.2 RESTRICTIONS ON TRANSFER - Any benefits to which a Participant or his
or her beneficiary may become entitled under this Plan shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to so transfer or encumber such benefits
shall be void. This Plan does not give a Participant any interest, lien, or
claim against any specific asset of the Corporation. No Participant or
beneficiary shall have any rights under this Plan other than as a general
creditor of the Corporation.
11.3 EXPENSES OF PLAN - The costs and expenses of administering the Plan,
including brokerage fees and commissions, if any, will be borne by the
Corporation.
11.4 NO EMPLOYMENT RIGHTS - No Participant has any right to be retained in
the employ of the Corporation or any Subsidiary by virtue of participation in
the Plan.
11.5 GOVERNING LAW - The Plan shall be governed by and construed according
to the laws of the State of Ohio.
10
11
AMENDMENT AND TERMINATION
-------------------------
12.1 The Corporation may at any time terminate, or from time to time, amend
the Plan by action of the Board of Directors or by action of the Committee
without shareholder approval unless such approval is required to satisfy the
applicable provisions of Section 162(m).
11