WACHOVIA CORPORATION
SENIOR MANAGEMENT INCENTIVE PLAN
(As amended through January 1, 1999)
WACHOVIA CORPORATION
SENIOR MANAGEMENT INCENTIVE PLAN
(As amended through January 1, 1999)
1. PURPOSE.
The purposes of the Wachovia Corporation Senior Management Incentive Plan
(the "Plan") are to motivate and reward a greater degree of excellence and
teamwork among the senior officers of Wachovia Corporation (the "Corporation")
and related corporations by providing incentive compensation award
opportunities; to provide attractive and competitive total cash compensation
opportunities for exceptional corporate, organizational unit and personal
performance; to reinforce the communication and achievement of the mission,
objectives and goals of the Corporation; and to enhance the Corporation's
ability to attract, retain and motivate the highest caliber senior officers. The
purposes of the Plan shall be carried out by payment to eligible participants of
annual incentive cash awards (individually, an "Award" and collectively,
"Awards"), subject to the terms and conditions of the Plan and the discretion of
the Committee.
2. EFFECTIVE DATE AND PLAN YEAR.
The Wachovia Corporation Senior Management Incentive Plan was originally
adopted by the Board of Directors of the Corporation (the "Board") effective
January 1, 1987. The Plan was amended and became effective as of April 22, 1994
and was further amended effective as of January 1, 1999. The plan year shall be
the calendar year (the "Plan Year").
3. ADMINISTRATION OF THE PLAN.
Subject to Section 11 herein, the Plan shall be administered by the
Management Resources and Compensation Committee of the Board of Directors, or
such other committee as the Board of Directors may from time to time designate
(the "Committee"). The Committee has full authority and responsibility for the
establishment and administration of the Plan, including, without limitation, the
authority (i) to determine all matters relating to Awards, including selection
of individuals to be granted Awards and the terms, conditions, restrictions and
limitations of Awards; (ii) to establish, amend and rescind rules and
regulations for the administration of the Plan; and (iii) to construe and
interpret the Plan and any agreements related to Awards, to establish and
interpret rules and regulations for administering the Plan and to make all other
determinations deemed necessary or advisable for administering the Plan. All
determinations and decisions of the Committee must be made by a majority of the
members present and shall be final and binding on all persons, except that no
member of the Committee may at any time participate in any decision affecting
the bonus of such member. Should the Committee be unable to render any decision
by reason of a deadlock, the majority vote of the entire Board of Directors
shall govern and be final and binding upon all parties.
4. ELIGIBILITY.
An individual shall be eligible to become a participant in the Plan (a
"Participant") who satisfies the following requirements:
(a) The individual is an employee of the Corporation or a related
corporation. For this purpose, an individual shall be considered to be an
"employee" if there exists between the individual and the Corporation or a
related corporation the legal and bona fide relationship of employer and
employee.
(b) The individual is a senior officer of the Corporation or a related
corporation. For the purposes herein, a "senior officer" of the Corporation or a
related corporation shall mean an officer who is deemed to have sufficient
responsibility, ability and potential to make significant contributions to the
success of the Corporation or a related corporation.
(c) The individual is recommended each year by the Chief Executive Officer
of the Corporation (the "Chief Executive Officer") and considered and approved
by the Committee as a Participant in the Plan.
5. PARTICIPATION.
Prior to the beginning of each Plan Year, the Chief Executive Officer
shall recommend to the Committee each senior officer of the Corporation or a
related corporation who is eligible to become a Participant in the Plan with
respect to such Plan Year. Participants shall be approved by the Committee in
its sole and absolute discretion. In the event of the promotion of an employee
or the hiring of a new employee during the Plan Year, the Committee, upon the
recommendation of the Chief Executive Officer, may approve the entry of a
Participant into the Plan during the Plan Year. In such case, the Award
determined pursuant to the terms of the Plan with respect to such Participant
shall be multiplied by a fraction, the numerator of which is the number of full
calendar months during the Plan Year in which he is a Participant and the
denominator of which is twelve. Participation in the Plan shall be subject to
the provisions of the Plan and such other terms and conditions as the Committee
shall provide. Notwithstanding any provision in Section 5 to the contrary, the
Committee shall have authority to modify the participation provisions contained
herein in a manner consistent with Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), or the regulations thereunder.
6. PERFORMANCE CRITERIA AND EVALUATION.
(a) PERFORMANCE GOALS. The performance goals upon which Awards shall be
made shall be based upon business criteria applicable to the Corporation, the
business unit to which the Participant is assigned and the Participant
individually. The corporate business criteria upon which such Awards shall be
based shall include the following earnings factors, weighted as indicated: net
income per diluted share (50%); return on assets (net income) (25%); and return
on equity (net income) (25%).
The three earnings measures will be combined to produce a composite
corporate performance evaluation percentage factor (the "Composite Percentage
Factor") to be used along with the individual performance evaluation percentage
factor (the "Individual Percentage Factor") in calculating individual awards.
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(b) INDIVIDUAL PERFORMANCE CRITERIA AND EVALUATION. A Participant's
Individual Percentage Factor will be based on a composite rating of (i) relevant
performance of the organizational unit to which the Participant is assigned (the
"Unit") as compared to goals for the Plan Year and (ii) quantitative and
qualitative elements of personal performance of the Participant in relation to
goals and expectations established for the Plan Year. Each of these two
components will have a 50% weighing in determining a Participant's Individual
Percentage Factor.
(i) The evaluation of the performance of the Unit will be based
primarily on the degree of success in achieving the Unit's annual profit
and business plan. The assessment will include, as applicable to the Unit,
such factors as business development, expense management, earnings growth,
credit quality, investment results, audit findings, affirmative action
goals, staff development, operational efficiency and strategic planning.
For purposes of this evaluation, the Unit will be the assigned
responsibility area of the Participant. In the case of Participants in
administrative and support functions, the evaluation will include the
performance of line business units whose results can be influenced
significantly by such persons.
(ii) The evaluation of a Participant's personal performance will be
based on the Participant's success in meeting expectations of subjective,
qualitative and quantitative goals for the Plan Year. A Participant's
personal performance evaluation will include an assessment of performance
relative to the Corporation's standards in such areas as leadership,
initiative, professional skills, teamwork, problem solving, personal
behavior and advancement and achievement of the Corporation's mission and
objectives. The following criteria shall apply in measuring a
Participant's personal performance:
(A) Performance Level IV -- Superior: Participants performing
at this level would be rated in the range of 90% to 100%. With
little guidance, a Participant at this level consistently performs
in the superior manner that always exceeds normal requirements and
expectations. The Participant's performance clearly is a model of
excellence.
(B) Performance Level III -- Exceptional: Participants
performing at this level would be rated in the range of 75% to 89%.
A Participant at this level consistently performs in an exceptional
manner in which requirements and expectations are always
accomplished. The Participant frequently accomplishes more than is
expected.
(C) Performance Level II -- Satisfactory: Participants
performing at this level would be rated in the range of 50% to 74%.
The Participant performs in an overall satisfactory manner,
generally accomplishing requirements and expectations. The
Participant does not always perform in an exceptional manner and
needs guidance with certain tasks.
(D) Performance Level I -- Meets Minimum Level: No Award will
be paid to Participants at this performance level. The Participant
generally meets minimum levels of performance but sometimes has
difficulty in achieving requirements and
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expectations. The Participant is capable of satisfactory performance
with additional effort, guidance, training and experience.
7. RECOMMENDATION AND DETERMINATION OF AWARDS.
In December of each Plan Year, the responsible managers and executives
will evaluate each Participant's performance in meeting Unit and personal goals
and objectives for the Plan Year. A recommended composite individual performance
evaluation factor for each Participant with appropriate supporting documentation
will be submitted by Division Executives of the Corporation to the Personnel
Director of the Corporation for a review of completeness and compliance with the
Plan. The recommended composite individual performance evaluation percentage
factor to be used in calculating Awards for Participants shall be subject to
review and approval by the Chief Executive Officer and the Committee. The
composite corporate performance evaluation percentage factor will be calculated
using net income per diluted share, return on assets and return on equity as
plotted in the benchmark table. The resulting percentage representing the
composite corporate performance evaluation factor will be multiplied by the
composite individual performance evaluation percentage factor and the
Participant's base salary paid during the Plan Year to determine the amount of
each Participant's Award. Amounts that would otherwise have been payable to a
Participant if the composite corporate performance evaluation factor had been
higher or if the Participant had received a higher performance on the individual
performance evaluation percentage factor shall not be reallocated to other
Participants, except as may otherwise be permitted under Section 162(m) of the
Code and the regulations thereunder.
8. PAYMENT OF AWARDS.
Unless otherwise determined by the Committee, the Committee will determine
the Participants entitled to receive Awards and, subject to the terms of Section
11(b) herein, the amount of such Awards. The Committee will make such
determinations in January following the end of the Plan Year, and the Awards for
a Plan Year shall be paid by the Corporation to the Participant (or his
beneficiary) on or about February 1 following the end of the Plan Year. Payment
of Awards shall be made by a deposit to the Corporation's payroll system, with a
written statement of the amount of each Award provided to each Participant. The
amount of each Award shall be rounded to the nearest $100.
9. TERMINATION OF EMPLOYMENT.
(a) TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT. If termination of
employment occurs during a Plan Year as the result of death, disability or
approved retirement, a proportional award shall be paid to the Participant (or
his estate in the event of death) for the period of active employment during the
Plan Year. In such event, the Award determined pursuant to the terms of the Plan
with respect to such Participant shall be multiplied by a fraction, the
numerator of which is the number of full calendar months during the Plan Year in
which the employee is a Participant and the denominator of which is twelve, and
such Award shall be paid in accordance with Section 8 herein. In the event of a
Participant's death, any Award payable under the Plan shall be paid to the
Participant's estate.
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(b) OTHER TERMINATION. Except to the extent otherwise provided in Section
10, if termination occurs during the Plan Year for any reason other than death,
disability or approved retirement, no Award shall be paid.
(c) TERMINATION AFTER END OF PLAN YEAR. If termination occurs between the
end of the Plan Year and the date of payment of an Award, the full amount of the
Award shall be paid in accordance with Section 8 herein unless the termination
was the direct result of dishonesty or misconduct.
(d) CERTAIN DEFINITIONS. For the purposes herein:
(i) "Disability" shall mean the inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death, or
which has lasted or can be expected to last for a continuous period of not
less than twelve months.
(ii) "Approved retirement" shall mean early or normal retirement as
provided under the Retirement Incentive Plan of Wachovia Corporation or
any successor plan thereto applicable to a Participant or the retirement
date under a contract, if any, between a Participant and the Corporation
or a related corporation providing for the Participant's retirement from
the employment of the Corporation or a related corporation prior to the
normal retirement date.
10. CHANGE OF CONTROL.
(a) In the event of a Change of Control (as defined in Section 10(b)
herein), all Awards made pursuant to the Plan shall be deemed earned and shall
become immediately due and payable for the full Plan Year (notwithstanding the
date of the Change of Control event during the Plan Year), subject to the
following: (i) the corporate Composite Percentage Factor shall be based on
corporate performance on an annualized basis as of the date of the Change of
Control, and (ii) each Participant shall receive the highest Award that may be
granted based on the individual Participant's job classification. Awards that
become due and payable upon a Change of Control shall be deemed earned, due and
payable regardless of whether the Participant continues service in the same
position following the Change of Control, has a change in position or
responsibility, or is terminated from employment with the Corporation or a
related corporation.
(b) A "Change of Control" shall be deemed to have occurred on the earliest
of the following dates:
(i) The date any entity or person shall have become the beneficial
owner of, or shall have obtained voting control over, 30% or more of the
outstanding Common Stock of the Corporation;
(ii) The date the shareholders of the Corporation approve a
definitive agreement (A) to merge or consolidate the Corporation with or
into another corporation, in which the
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Corporation is not the continuing or surviving corporation or pursuant to
which any shares of Common Stock of the Corporation would be converted
into cash, securities or other property of another corporation, other than
a merger of the Corporation in which holders of Common Stock immediately
prior to the merger have the same proportionate ownership of Common Stock
of the surviving corporation immediately after the merger as immediately
before, or (B) to sell or otherwise dispose of substantially all the
assets of the Corporation; or
(iii) The date there shall have been a change in a majority of the
Board of Directors of the Corporation within a twelve-month period unless
the nomination for election by the Corporation's shareholders of each new
director was approved by the vote of two-thirds of the directors then
still in office who were in office at the beginning of the twelve-month
period.
(For the purposes herein, the term "person" shall mean any
individual, corporation, partnership, group, association or other person,
as such term is defined in Section 13(d)(3) or Section 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other
than the Corporation, a subsidiary of the Corporation or any employee
benefit plan(s) sponsored or maintained by the Corporation or any
subsidiary thereof, and the term "beneficial owner" shall have the meaning
given the term in Rule 13d-3 under the Exchange Act.)
(c) Notwithstanding the foregoing, in the event of a merger, share
exchange, reorganization or other business combination affecting the Corporation
or a related corporation, the Committee may, in its sole and absolute
discretion, determine that any or all Awards shall not be paid, if the Board of
Directors or the surviving or acquiring corporation, as the case may be, shall
have taken such action, including but not limited to the making of substitute
Awards, as in the opinion of the Committee is equitable or appropriate to
protect the rights and interests of participants in the Plan.
11. PERFORMANCE-BASED COMPENSATION. To the extent to which it is necessary to
comply with Section 162(m) of the Code and the regulations thereunder, the
following provisions shall apply:
(a) COMPLIANCE WITH CODE SECTION 162(M). It is the intent of the
Corporation that Awards conferred under the Plan to Covered Employees, as such
term is defined in Section 19(e) herein, shall comply with the qualified
performance-based compensation exception to employer compensation deductions set
forth in Section 162(m) of the Code and related regulations, and the Plan shall
be construed in favor of meeting the requirements of Section 162(m) of the Code
and the regulations thereunder to the extent practicable.
(b) MAXIMUM AWARD. The maximum amount of an Award that may be payable to
any participant for any Plan Year may not exceed the lesser of (i) 250% of the
participant's base salary for the Plan Year or (ii) $2,500,000.
(c) COMMITTEE AUTHORITY AND COMPOSITION. The Committee shall be
authorized to establish performance goals, certify satisfaction of performance
goals and other material terms and to take such other action as may be necessary
in order to qualify for the performance-based compensation
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exception. The Committee shall be comprised of two or more outside directors (as
such term is defined in Section 162(m) of the Code and the regulations
thereunder), or as may otherwise be permitted or required under Section 162(m)
and the related regulations. Without limiting the foregoing, the committee
authorized to take such actions may be comprised of a subcommittee of the
Committee or other directors who qualify as outside directors (as such term is
defined in Section 162(m) of the Code and the regulations thereunder), and the
actions taken by such subcommittee or other group of outside directors shall be
effective as the action of the Committee to the extent permitted under the Plan
and Section 162(m) of the Code and the regulations thereunder.
(d) COMMITTEE DISCRETION. The Committee shall not have discretion to
increase the amount of an Award payable to an employee under the Plan over the
amount that is determined in accordance with Sections 6, 7 and 11(b) herein. The
Committee shall, in any event, have the discretion to reduce or eliminate the
amount of an Award that would otherwise be payable to any Participant.
(e) SHAREHOLDER APPROVAL. The material terms of the performance goal or
goals pursuant to which Awards are to be made shall be disclosed to, and subject
to the approval of, the shareholders of the Corporation. Material terms of a
performance goal or goals, the targets of which may be changed by the Committee,
shall be disclosed to, and subject to the reapproval of, the shareholders of the
Corporation upon a change of the material terms of a performance goal or goals
by the Committee or as may be otherwise required by Section 162(m) of the Code
or the regulations thereunder.
12. NONASSIGNABILITY OF INCENTIVE AWARDS.
The right to receive payment of an Award shall not be assignable or
transferable (including by pledge or hypothecation) other than by will or the
laws of intestate succession.
13. NO TRUST FUND; UNSECURED INTEREST.
A Participant shall have no interest in any fund or specified asset of the
Corporation. No trust fund shall be created in connection with the Plan or any
Award, and there shall be no required funding of amounts which may become
payable under the Plan. Any amounts which are or may be set aside under the
provisions of this Plan shall continue for all purposes to be a part of the
general assets of the Corporation, and no person or entity other than the
Corporation shall, by virtue of the provisions of this Plan, have any interest
in or right to such assets. No right to receive payments from the Corporation
pursuant to this Plan shall be greater than the right of any unsecured creditor
of the Corporation.
14. NO RIGHT OR OBLIGATION OF CONTINUED EMPLOYMENT.
Nothing contained in the Plan shall require the Corporation or a
related corporation to continue to employ a Participant, nor shall the
Participant be required to remain in the employment
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of the Corporation or a related corporation.
15. WITHHOLDING.
The Corporation shall withhold all required local, state and federal taxes
from any amount of an Award.
16. RETIREMENT PLANS.
In no event shall any amounts accrued or payable under this Plan be
treated as compensation for the purpose of determining the amount of
contributions or benefits to which a Participant shall be entitled under any
retirement plan to which the Corporation or a related corporation may be a
party.
17. DILUTION OR OTHER ADJUSTMENTS.
If there is any change in the Corporation because of a merger, share
exchange, reorganization or other business combinations affecting the
Corporation or a related corporation, or if extraordinary items of income or
expense of the Corporation or a related corporation occur, the Committee may
make such adjustments to any provisions of this Plan, including but not limited
to adjustments to determinations of performance and Awards, as the Committee
deems desirable to prevent the dilution or enlargement of rights granted
hereunder.
18. AMENDMENT AND TERMINATION OF THE PLAN.
The Plan may be amended or terminated at any time by the Board or by the
Committee as delegated by the Board, provided that such termination or amendment
shall not, without the consent of the Participant, affect such Participant's
rights with respect to Awards previously awarded to him. With the consent of the
Participant affected, the Board, or by delegation of authority by the Board, the
Committee, may amend outstanding Awards in a manner not inconsistent with the
Plan.
19. CERTAIN DEFINITIONS.
For purposes of the Plan, the following terms shall have the meaning
indicated:
(a) "Related corporation" means any parent, subsidiary or predecessor of
the Corporation.
(b) "Parent" or "parent corporation" shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations ending with the
Corporation if each corporation other than the Corporation owns stock possessing
50% or more of the total combined voting power of all classes of stock in
another corporation in the chain.
(c) "Subsidiary" or "subsidiary corporation" means any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation if each corporation other than the last corporation in the unbroken
chain owns stock possessing 50% or
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more of the total combined voting power of all classes of stock in another
corporation in the chain.
(d) "Predecessor" or "predecessor corporation" means a corporation which
was a party to a transaction described in Section 429(a) of the Code (or which
would be so described if a substitution or assumption under that Section had
occurred) with the Corporation, or a corporation which is a parent or subsidiary
of the Corporation, or a predecessor of any such corporation.
(e) "Covered Employee" shall mean any individual who, on the last day of
the taxable year, is (i) the Chief Executive Officer or is acting in such
capacity or (ii) among the four highest compensated officers (other than the
Chief Executive Officer), as determined in accordance with the executive
compensation disclosure rules under the Exchange Act; provided, however, that if
such term is defined otherwise in Section 162(m) of the Code or the regulations
thereunder, then it shall have the meaning set forth in Section 162(m) or the
related regulations.
20. BINDING ON SUCCESSORS.
The obligations of the Corporation under the Plan shall be binding upon
any organization which shall succeed to all or substantially all of the assets
of the Corporation, and the term "Corporation," whenever used in the Plan, shall
mean and include any such organization after the succession.
21. APPLICABLE LAW.
The Plan shall be governed by and construed in accordance with the laws of
the State of North Carolina.
IN WITNESS WHEREOF, the Wachovia Corporation Senior Management Incentive
Plan, as amended, is, by the authority of the Board of Directors of the
Corporation, executed effective as of January 1, 1999.
WACHOVIA CORPORATION
By:___________________________
L.M. Baker, Jr.
Attest: Chief Executive Officer
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William M. Watson, Jr.
Secretary
[Corporate Seal]