Exhibit 10.1
PACIFIC CENTURY FINANCIAL CORPORATION
ONE-YEAR INCENTIVE PLAN
(Effective as of January 1, 1999)
Contents
Article 1. Establishment, Objectives, and Effective Date 1
Article 2. Definitions 1
Article 3. Administration 3
Article 4. Eligibility and Participation 4
Article 5. Contingent Awards 4
Article 6. Determination and Payment of Final Awards 5
Article 7. Termination of Employment 6
Article 8. Beneficiary Designation 6
Article 9. Rights of Employees 6
Article 10. Change in Control 7
Article 11. Amendment, Modification, and Termination 8
Article 12. Withholding 8
Article 13. Indemnification 8
Article 14. Successors 9
Article 15. Legal Construction 9
PACIFIC CENTURY FINANCIAL CORPORATION
ONE-YEAR INCENTIVE PLAN
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ARTICLE 1. ESTABLISHMENT, OBJECTIVES, AND EFFECTIVE DATE.
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1.1. ESTABLISHMENT OF THE PLAN. Pacific Century Financial Corporation, a
Delaware corporation ("PCFC"), hereby establishes an incentive compensation plan
to be known as the "Pacific Century Financial Corporation One-Year Incentive
Plan" ("Plan"), as set forth in this document.
1.2. OBJECTIVES OF THE PLAN. The objectives of the Plan are to optimize
the profitability and growth of PCFC and its Subsidiaries through incentives for
each current annual period which are consistent with PCFC's goals and which link
the personal interests of Participants to those of PCFC's stockholders; to
provide Participants with an incentive for excellence in individual performance;
and to promote teamwork among Participants.
1.3. EFFECTIVE DATE. The Plan shall become effective as of January 1, 1999
("Effective Date"). The Plan shall commence on the Effective Date and shall
remain in effect, subject to the right of the Board of Directors to amend or
terminate the Plan at any time pursuant to Article 11 hereof, until January 1,
2009.
ARTICLE 2. DEFINITIONS.
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Whenever used in the Plan, the following capitalized terms shall have
the meanings set forth below:
2.1. "AWARD AGREEMENT" shall mean an agreement entered into by PCFC and
each Participant setting forth the terms and conditions applicable to an Award
granted under this Plan.
2.2. "BOARD OF DIRECTORS" or "BOARD" shall mean the Board of Directors of
PCFC.
2.3. "CHANGE IN CONTROL" of PCFC shall mean any one or more of the
following: (i) any person, including a "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, becomes the beneficial owner of shares
of PCFC having 25% or more of the total number of votes that may be cast for the
election of Directors of PCFC; or (ii) as a result of, or in connection with,
any cash tender or exchange offer, merger
or other business combination, sale of assets or contested election, or any
combination of the foregoing transactions, the persons who were Directors of
PCFC before the transaction shall cease to constitute a majority of the Board of
Directors of PCFC or any successor to PCFC.
2.4. "CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
2.5 "COMMITTEE" shall mean the Compensation Committee of the Board of
Directors of PCFC.
2.6. "CONTINGENT AWARD" or "AWARD" shall mean an award which is contingent
on the achievement of designated performance goals which is granted to an
Eligible Employee at the outset of the Performance Period.
2.7. "DISABILITY" shall have the meaning ascribed to such term under the
long-term disability plan sponsored by PCFC or a Subsidiary and applicable to
the Participant, or if no such plan exists, the meaning as determined at the
sole discretion of the Committee.
2.8. "EFFECTIVE DATE" shall have the meaning ascribed to such term in
Article 1.3 hereof.
2.9. "ELIGIBLE EMPLOYEES" shall mean officers or other employees of PCFC
or any Subsidiary, who, in the opinion of the Committee, are or give promise of
becoming of exceptional importance to PCFC or any Subsidiary, and of making
substantial contributions to the success, growth, and profit of PCFC and its
Subsidiaries. Neither members of the Committee nor any member of the Board who
is not an employee of PCFC or a Subsidiary shall be an Eligible Employee.
2.10. "FINAL AWARD" shall mean the award ultimately paid out to each
Participant based on the Committee's determination under Article 6.
2.11. "NAMED EXECUTIVE OFFICER" shall mean a Participant who, as of the
date of vesting or payout of an Award, as applicable, is one of the group of
"covered employees" as defined under Code Section 162(m) and regulations
thereunder.
2.12. "NET INCOME" shall mean PCFC's consolidated net income before taxes
for the Performance Period, as reported in the annual report to shareholders (or
as otherwise reported to shareholders) adjusted as described in this Section.
The
Committee may, in its sole discretion, adjust PCFC's reported net income for the
following in determining Net Income:
(a) Expenses associated with this incentive plan;
(b) Any extraordinary or unusual gain or loss transaction;
(c) Securities gains or losses; and
(d) Dividends on preferred shares.
The Committee will, in its sole discretion, determine any adjustments
to be made pursuant to this definition.
2.13. "PARTICIPANT" shall mean a person that the Committee, in its sole
discretion, selects from among the Eligible Employees to be granted a Contingent
Award.
2.14. "PERFORMANCE-BASED EXCEPTION" means the performance-based exception
from the tax deduction limitations of Code Section 162(m).
2.15. "PERFORMANCE PERIOD", with respect to any Award, shall mean PCFC's
fiscal year.
2.16. "PLAN" shall mean this PCFC One-Year Incentive Plan, as it may be
amended from time to time.
2.17. "RETIREMENT" shall mean the termination of a Participant's
employment with PCFC or a Subsidiary under circumstances where the Participant
terminates on or after the retirement dates specified under the Employees'
Retirement Plan of Bank of Hawaii.
2.18. "SALARY" shall mean the actual base salary for the Performance
Period.
2.19. "SUBSIDIARY" shall mean any corporation in which PCFC or any
Subsidiary (as defined hereby) owns 50 percent or more of the total combined
voting power of all classes of stock.
ARTICLE 3. ADMINISTRATION.
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3.1. THE COMMITTEE. The Plan shall be administered by the Committee. The
members of the Committee shall be appointed from time to time by, and shall
serve at the discretion of, the Board of Directors.
3.2. AUTHORITY OF THE COMMITTEE. Except as limited by law
or by the articles of incorporation or bylaws of PCFC, and subject to the
provisions herein, the Committee shall have full power to interpret and
administer the Plan, including to: identify and designate Eligible Employees and
Participants under the Plan; determine the size of Awards; determine the terms
and conditions of Awards in a manner consistent with the Plan; construe and
interpret the Plan and any Award Agreement or any other agreement or instrument
entered into under the Plan; establish, amend, or waive rules and regulations
for the Plan's administration; amend the terms and conditions of any outstanding
Award or Award Agreement to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan; and amend, modify, or
terminate the Plan in the manner described in Article 11. As permitted by law,
the Committee may delegate its authority as identified herein.
3.3. DECISIONS BINDING. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders and resolutions of
the Committee shall be final, conclusive, and binding on all persons, including
PCFC and its Subsidiaries, their shareholders, their employees, and the
directors, Eligible Employees, Participants, and their estates and
beneficiaries.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION.
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4.1. ELIGIBILITY. Eligible Employees of PCFC or any Subsidiary shall be
eligible to participate in the Plan.
4.2. PARTICIPATION. Subject to the provisions of the Plan, the Committee
may, from time to time and at its sole discretion, designate the Eligible
Employees who shall be Participants and receive grants of Contingent Awards
under the Plan.
ARTICLE 5. CONTINGENT AWARDS.
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5.1. GRANT. The Committee may, from time to time and at its sole
discretion, make a grant of a Contingent Award to each Participant. The
Contingent Award for any Participant shall be an amount or range of amounts
(expressed either in dollars or as percentages of Salary for the Performance
Period). The Committee shall cause notice to be given to each Participant of his
or her participation under the Plan.
In the event that the Committee determines that it is advisable to
grant Awards to Named Executive Officers which do not qualify for the
Performance-Based Exception, the Committee
may make such grants without satisfying the requirements of Code Section 162(m).
5.2. INCENTIVE POOL. In the case of a Contingent Award to a Named Executive
Officer which is intended by the Committee to qualify for the Performance-Based
Exception, the Contingent Award shall be determined by the Committee by the end
of the first quarter of the applicable Performance Period and shall not exceed a
percent of the Incentive Pool for the Performance Period specified by the
Committee. The Incentive Pool shall be established for each Performance Period
and shall be an amount designated as a percent of PCFC's Net Income for the
Performance Period, which percent of PCFC's Net Income shall be determined by
the Committee prior to the end of the first quarter of the Performance Period.
The aggregate of Contingent Awards made to Named Executives for a Performance
Period that are intended to qualify for the Performance-Based Exception shall
not exceed the Incentive Pool for the Performance Period. The Committee may, but
need not, grant such Contingent Awards up to the full amount of the Incentive
Pool.
5.3. VALUE. A Contingent Award shall be of no immediate and certain value,
and rather the amount payable to a Participant with respect to a Contingent
Award for any given Performance Period shall be the Final Award as determined
under Article 6.
ARTICLE 6. DETERMINATION AND PAYMENT OF FINAL AWARDS.
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6.1. DETERMINATION OF FINAL AWARDS. Subject to the terms and conditions of
the Plan, after the applicable Performance Period has ended, the Committee shall
determine the Final Award to be paid to each Participant. Each Participant's
performance during the Performance Period shall be assessed by the Participant's
manager, who shall make a recommendation of Final Award to the Chief Executive
Officer of PCFC. The Chief Executive Officer shall thereafter also assess each
Participant's performance during the Performance Period and shall make a
recommendation of Final Award to the Committee. However, the determination of
Final Award for a Participant shall be within the sole discretion of the
Committee. In this regard, the Committee may follow the recommendation by the
Chief Executive Officer or may make a lesser or greater Final Award, taking into
account the Participant's overall contribution to PCFC and its Subsidiaries for
the Performance Period, the corporate performance of PCFC and its Subsidiaries
for the Performance Period, and such other criteria as the Committee may
determine to promote the objectives of the Plan
in an individual case. The Committee may determine the amount of any Final Award
to a Participant without regard to the amount of the Participant's Contingent
Award. Except as otherwise provided in the case of a Change in Control or other
event as described in Article 10, the Committee may modify or repeal the
Contingent Award of any Participant at any time before the determination of the
Participant's Final Award. However, in the case of a Contingent Award which is
designed to qualify for the Performance-Based Exception with respect to a Named
Executive Officer, the Final Award shall not result in an upward adjustment of
the Contingent Award to an amount greater than the maximum percent of the
Incentive Pool determined pursuant to Article 5.2 (although the Committee shall
retain the discretion to adjust such the Contingent Award downward).
6.2. MAXIMUM AWARDS. Notwithstanding any other provision of the Plan, the
maximum aggregate payout with respect to a Contingent Award granted in any one
Plan Year to any one Participant shall be $2,000,000.
6.3. PAYMENT. Payment of Final Awards shall be made in a single lump sum as
soon practicable following the close of the applicable Performance Period and
the determination of the Final Awards.
However, a Participant may make a request, on a form approved by the
Committee, for the deferral of all or part of any payment he or she may receive,
provided that such request is delivered to the Human Resources Division no later
than November 1 of the Performance Period. The Committee may accept or reject
any such request for a deferral and may determine the conditions of such
deferral at the Committee's sole discretion.
Payment of Final Awards shall be made normally in the form of cash.
However, the Committee, in its sole discretion, may provide for payment of Final
Awards in the form of PCFC stock, restricted stock or nonqualified stock
options.
6.4. PARTICIPATION DURING PERFORMANCE PERIOD. Unless determined otherwise
by the Committee and set forth in the Participant's Award Agreement, in the
event that an Eligible Employee's participation commences or terminates (for
reason other than a termination of employment as described in Article 7) mid-
term during a Performance Period, the Participant shall receive a payout of the
Award which is prorated in a manner determined by the Committee in its sole
discretion.
ARTICLE 7. TERMINATION OF EMPLOYMENT.
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7.1. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT.
Unless determined otherwise by the Committee and set forth in the Participant's
Award Agreement, in the event the employment of a Participant is terminated by
reason of death, Disability, or Retirement during a Performance Period, the
Participant shall receive a payout of the Final Award which is prorated in a
manner determined by the Committee in its sole discretion. Payments of any
prorated Final Awards shall be made at the similar time as payments are made to
Participants who did not terminate employment during the applicable Performance
Period.
7.2. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. Unless determined
otherwise by the Committee and set forth in the Participant's Award Agreement,
in the event that a Participant's employment terminates during a Performance
Period for any reason other than those reasons set forth in Article 7.1, all
Awards for that Performance Period shall be forfeited by the Participant.
ARTICLE 8. BENEFICIARY DESIGNATION.
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Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by PCFC, and shall be effective only when filed by the Participant in
writing with PCFC during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.
ARTICLE 9. RIGHTS OF EMPLOYEES.
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9.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of PCFC or a Subsidiary to terminate any Participant's
employment at any time, nor confer upon any Participant any right to continue in
the employ of the of PCFC or a Subsidiary.
9.2. PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having
been so selected, to be selected to receive a future Award.
9.3. NONTRANSFERABILITY. No Award shall be sold, assigned, transferred,
encumbered, hypothecated, or otherwise anticipated by a Participant and, during
the lifetime of a Participant, any payment shall be payable only to the
Participant.
ARTICLE 10. CHANGE-IN-CONTROL.
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10.1. TREATMENT OF OUTSTANDING AWARDS. Notwithstanding any other
provision of the Plan to the contrary, in the event of a dissolution or
liquidation of PCFC, or a Change in Control of PCFC, the amount of cash
payable with respect to any Contingent Award for a Performance Period that ends
after such event shall be determined and payable as if the Performance Period
ended on the date of such event and a Final Award shall be calculated and paid
under the Plan in an amount equal to two times the Contingent Award. The
Contingent Award shall be calculated based on the annualized Salary of the
Participant for the shortened Performance Period. The Final Award calculated
under this Article 10 shall be multiplied by a fraction, the numerator of which
shall be the number of full months of the Performance Period, as adjusted under
this Article 10, and the denominator of which shall be the number of full months
in the intended Performance Period. The Final Award under this Article 10 shall
be paid to such Participant within ten days of the end of the shortened
Performance Period.
10.2. TERMINATION, AMENDMENT, AND MODIFICATIONS OF CHANGE IN CONTROL
PROVISIONS. Notwithstanding any other provision of the Plan or any Award
Agreement provision, the provisions of this Article 10 may not be terminated,
amended, or modified on or after the date of a Change in Control to affect
adversely any Award theretofore granted under the Plan without the prior written
consent of the Participant with respect to the Participant's outstanding Awards;
provided, however, the Board of Directors, upon recommendation of the Committee,
may terminate, amend, or modify this Article 10 at any time and from time to
time prior to the date of a Change in Control.
10.3. POOLING OF INTERESTS ACCOUNTING. Notwithstanding any other
provision of the Plan to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may take any action necessary, including but not limited
to the amendment or repeal of any Contingent
Award, to preserve the use of pooling of interests accounting.
ARTICLE 11. AMENDMENT, MODIFICATION AND TERMINATION.
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11.1. AMENDMENT, MODIFICATION AND TERMINATION. The Board or the
Committee, may, at any time, terminate, amend, modify, or suspend this Plan
provided that no such amendment, modification, suspension, or termination of the
Plan shall in any manner (except as allowable under Section 10.3) adversely
affect in any material way any Final Award made under the Plan without the
consent of the Participant holding the Final Award.
11.2. COMPLIANCE WITH CODE SECTION 162(M). Except as otherwise provided
by this Article 11.2, at all times when Code Section 162(m) is applicable, all
Awards granted under this Plan shall comply with the requirements of Code
Section 162(m). However, in the event the Committee determines that such
compliance is not desired with respect to the initial grant of any Award under
the Plan, then compliance with Code Section 162(m) shall not apply and be
required for such Award. In addition, in the event that changes are made to Code
Section 162(m) to permit greater flexibility with respect to any Award available
under the Plan, the Committee may, subject to this Article 11, make any
adjustments it deems appropriate.
ARTICLE 12. WITHHOLDING.
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PCFC shall have the power and the right to deduct, withhold, or
require a Participant to remit to PCFC an amount sufficient to satisfy federal,
state, and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of this Plan.
ARTICLE 13. INDEMNIFICATION.
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Each person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by PCFC against and from any loss,
cost, liability, or expense that may be imposed upon or reasonably incurred by
him or her in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with PCFC's approval, or paid by him or her in satisfaction of any judgment in
any such action, suit, or proceeding against him or her, provided he or she
shall give PCFC an opportunity, at its own expense, to handle and defend the
same before he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be entitled under
PCFC's articles of incorporation or bylaws, as a matter of law, or otherwise, or
any power that PCFC have to indemnify them or hold them harmless.
ARTICLE 14. SUCCESSORS.
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All obligations of PCFC under the Plan with respect to Awards granted
hereunder shall be binding on any successor to PCFC, whether the existence of
such successor is the result of a direct or indirect purchase, merger,
consolidation, or otherwise, of all or substantially all of the business and/or
assets of PCFC.
ARTICLE 15. LEGAL CONSTRUCTION.
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15.1. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; the
plural shall include the singular and the singular shall include the plural.
15.2. SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
15.3. REQUIREMENTS OF LAW. The granting of Contingent Awards and the
payment of Final Awards under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
15.4. GOVERNING LAW. To the extent not preempted by federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the state of Delaware.