OLD NATIONAL BANCORP 2008 INCENTIVE COMPENSATION PLAN PERFORMANCE SHARE AWARD AGREEMENT (INTERNAL PERFORMANCE FACTORS)
Exhibit 10(av)
OLD NATIONAL BANCORP
2008 INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE AWARD AGREEMENT
(INTERNAL PERFORMANCE FACTORS)
2008 INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARE AWARD AGREEMENT
(INTERNAL PERFORMANCE FACTORS)
This Award Agreement (“Agreement”) is entered into as of January 27, 2011 (“Grant Date”), by
and between Old National Bancorp, an Indiana corporation (“Company”), and
, an officer or employee of the Company or one of its Affiliates
(“Participant”).
Background
A. The Company adopted the Old National Bancorp 2008 Incentive Compensation Plan (“Plan”) to
further the growth and financial success of the Company and its Affiliates by aligning the
interests of participating officers and key employees (“participants”) more closely with those of
the Company’s shareholders, providing participants with an additional incentive for excellent
individual performance, and promoting teamwork among participants.
B. The Company believes that the goals of the Plan can be achieved by granting Performance
Shares to eligible officers and other key employees.
C. The Compensation and Management Development Committee of the Board has determined that a
grant of Performance Shares to the Participant, as provided in this Award Agreement, is in the best
interests of the Company and its Affiliates and furthers the purposes of the Plan.
D. The Participant wishes to accept the Company’s grant of Performance Shares, subject to the
terms and conditions of this Award Agreement, the Plan and the Company’s Stock Ownership
Guidelines.
Agreement
In consideration of the premises and the mutual covenants herein contained, the Company and
the Participant agree as follows:
1. Defined Terms. For purposes of this Agreement, if the first letter of a word (or each word
in a term) is capitalized, the term shall have the meaning provided in this Agreement, or if such
term not defined by this Agreement, the meaning specified in the Plan.
(a) “Adjusted Share Distribution” means, with respect to a Performance Share, a number of
whole and fractional Shares equal to the sum of the Unadjusted Share Distribution and the Dividend
Adjustment.
(b) “Appendix A” means Appendix A to this Agreement, which is hereby incorporated herein and
made a part hereof.
(c) “Dividend Adjustment” means, with respect to a Performance Share, a number of whole and
fractional Shares, determined as provided in Section 6, which is added to the Unadjusted Share
Distribution to reflect dividend payments during the Performance Period on the Shares included in
the Unadjusted Share Distribution.
(d) “Maximum Performance” means the Performance Goal achievement required for the maximum
permissible distribution with respect to a Performance Share, as set out in Appendix A.
(e) “Minimum Performance” means the minimum Performance Goal achievement required for any
distribution to be made with respect to a Performance Share, as set out in Appendix A.
(f) “Performance Goal” means a financial target on which the distribution with respect to a
Performance Share is based, as set out in Appendix A.
(g) “Performance Period” means the Performance Period specified in Appendix A.
(h) “Performance Share” means a contingent right awarded pursuant to this Agreement for
distribution of a Share upon attainment of the Performance Goals as set forth in Appendix A.
(i) “Section” refers to a Section of this Agreement.
(j) “Target Performance” means the Performance Goal achievement required for the targeted
distribution with respect to a Performance Share, as set out in Appendix A. If Target Performance
is achieved but not exceeded for all Performance Goals, the Unadjusted Share Distribution with
respect to a Performance Share is one share of the Company’s voting common stock (“Share”).
(k) “Unadjusted Share Distribution” means, with respect to a Performance Share, the total
number of Shares to be distributed to the Participant, before adding the Dividend Adjustment or
subtracting required tax withholding.
2. Incorporation of Plan Terms. All provisions of the Plan, including definitions (to the
extent that a different definition is not provided in this Agreement), are incorporated herein and
expressly made a part of this Agreement by reference. The Participant hereby acknowledges that he
or she has received a copy of the Plan.
3. Award of Performance Shares. The Committee has awarded the Participant
_____ (_____) Performance Shares, effective as of the Grant Date, subject to the terms and conditions of the Plan
and this Agreement.
4. Contingent Distribution on Account of Performance Shares.
(a) Except as provided in Section 5, no distribution shall be made with respect to any
Performance Share, unless (i) Minimum Performance is achieved or exceeded, and (ii) the Participant
(A) is continually employed by the Company and/or an Affiliate at all times from the
award of the Performance Shares until the date on which Shares are distributed pursuant to
Subsection (c) below; provided, however, the Committee may, in its discretion, waive the continuous
employment requirement in this clause (ii), or (B)Terminates Service during the Performance Period
on account of his death, Disability, or Retirement.
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(b) All distributions on account of a Performance Share shall be made in the form of Shares.
The Unadjusted Share Distribution with respect to a Performance Share, if any, is dependent on the
Company’s achievement of the Performance Goals, as specified in Appendix A. By way of example, if
Target Performance for the Performance Period is achieved but not exceeded with respect to each
Performance Goal, the Unadjusted Share Distribution shall consist of one share of the Company’s
voting common stock (“Share”). The number of Shares distributed on account of a Performance Share
shall be increased by the Dividend Adjustment to determine the Adjusted Share Distribution and
reduced by applicable tax withholding as provided in Section 10. If, after reduction for tax
withholding, the Participant is entitled to a fractional Share, the net number of Shares
distributed to the Participant shall be rounded down to the next whole number of Shares.
(c) Except as expressly provided in Section 5, the Company shall distribute the Adjusted Share
Distribution, reduced to reflect tax withholding, after December 31, 2013, but not later than March
31, 2014.
(d) Notwithstanding any other provision of this Agreement, the Committee may, in its sole
discretion, reduce the number of Shares that may be distributed as determined pursuant to the
Adjusted Share Distribution calculation set forth above. The preceding sentence shall not apply to
a distribution made pursuant to Section 5.
5. Change in Control. If a Change in Control occurs during the Performance Period, and the
Participant has been continually employed by the Company and/or an Affiliate from the Grant Date
until the day preceding the Change in Control date, the Company shall distribute to the Participant
on the Change in Control date or within thirty days thereafter the number of Shares through the
date of the Change in Control (pro-rated for the Performance period), increased by the Dividend
Adjustment, that would have been paid to the Participant pursuant to Section 4, if (i) the
Participant had satisfied the employment requirement of Subsection 4(a), and (ii) the Performance
Period ended on the Change in Control date with earned Performance Shares to be calculated based on
actual Company performance relative to the Performance Goals as of the Change in Control date. In
determining the number of Shares to be distributed to the Participant pursuant to this Section, no
Dividend Adjustment shall be made on account of anticipated dividends after the Change in Control
date. The Committee, in its sole discretion, may elect for the Company to pay the Participant, in
lieu of distributing Shares, the cash equivalent of the Shares to be distributed to the Participant
pursuant to this Section. Upon such cash payment or distribution of Shares, the Company’s
obligations with respect to the Performance Shares shall end.
6. Dividend Adjustment. Except as otherwise provided for in this Agreement, a Dividend
Adjustment shall be added to the Unadjusted Share Distribution. The Dividend Adjustment shall be a
number of Shares equal to the number of Shares that would have resulted,
if each dividend paid during the Performance Period on the Shares included in the Unadjusted
Share Distribution had been immediately reinvested in Shares.
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7. Performance Goals. The applicable Performance Goals, the weight given to each Performance
Goal, and the Minimum Performance, Target Performance, and Maximum Performance are set out in
Appendix A.
8. Participant’s Representations. The Participant agrees, upon request by the Company and
before the distribution of Shares with respect to the Performance Shares, to provide written
investment representations as reasonably requested by the Company. The Participant also agrees
that, if he or she is a member of the Company’s Executive Leadership Group at the time the Shares
are distributed, and if at that time he or she has not satisfied the Company’s Stock Ownership
guidelines, the Participant will continue to hold the Shares received in the Distribution until
such time as the Participant has satisfied the Company’s Stock Ownership requirement.
9. Income and Employment Tax Withholding. All required federal, state, city, and local income
and employment taxes that arise on account of the Performance Shares shall be satisfied through the
withholding of Shares otherwise distributable pursuant to this Agreement.
10. Nontransferability. The Participant’s interest in the Performance Shares or any
distribution with respect to such Shares may not be (i) sold, transferred, assigned, margined,
encumbered, bequeathed, gifted, alienated, hypothecated, pledged, or otherwise disposed of, whether
by operation of law, whether voluntarily or involuntarily or otherwise, other than by will or by
the laws of descent and distribution, or (ii) subject to execution, attachment, or similar process.
Any attempted or purported transfer in contravention of this Section shall be null and void ab
initio and of no force or effect whatsoever.
11. Indemnity. The Participant hereby agrees to indemnify and hold harmless the Company and
its Affiliates (and their respective directors, officers and employees), and the Committee, from
and against any and all losses, claims, damages, liabilities and expenses based upon or arising out
of the incorrectness or alleged incorrectness of any representation made by Participant to the
Company or any failure on the part of the Participant to perform any agreements contained herein.
The Participant hereby further agrees to release and hold harmless the Company and its Affiliates
(and their respective directors, officers and employees) from and against any tax liability,
including without limitation, interest and penalties, incurred by the Participant in connection
with his or her participation in the Plan.
12. Changes in Shares. In the event of any change in the Shares, as described in Section 4.04
of the Plan, the Committee, consistent with the principles set out in such Section, will make
appropriate adjustment or substitution in the number of Performance Shares, so that the contingent
economic value of a Performance Share remains substantially the same. The Committee’s
determination in this respect will be final and binding upon all parties.
13. Effect of Headings. The descriptive headings used in this Agreement are inserted for
convenience and identification only and do not constitute a part of this Agreement for purposes of
interpretation.
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14. Controlling Laws. Except to the extent superseded by the laws of the United States, the
laws of the State of Indiana, without reference to the choice of law principles thereof, shall be
controlling in all matters relating to this Agreement.
15. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of
which will be deemed an original, but all of which collectively will constitute one and the same
instrument.
16. Recoupment/Clawback. Any grant of Performance Shares under this Agreement or any other
award granted or paid to the Participant under the Company’s 2008 Incentive Compensation Plan,
whether in the form of stock options, stock appreciation rights, restricted stock, performance
units, performance shares, stock or cash, is subject to recoupment or “clawback” by the Company in
accordance with the Company’s Bonus Recoupment/Clawback Policy, as may be amended from time to
time. This Section, “Recoupment/Clawback,” shall survive termination of this Agreement.
IN WITNESS WHEREOF, the Company, by its officer thereunder duly authorized, and the
Participant, have caused this Performance Share Award Agreement to be executed as of the day and
year first above written.
PARTICIPANT
Accepted by:
|
Date: | |||||
Printed Name: |
||||||
| OLD NATIONAL BANCORP | ||||
By: |
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| Executive Vice President — Chief Human Resources Officer | ||||
| Old National Bancorp | ||||
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APPENDIX A TO 2011 PERFORMANCE AWARD AGREEMENT
(Internal Performance Factors)
(Internal Performance Factors)
Grant Date: , 2011
Performance Shares Awarded: See Section 3 of the Agreement
Performance Period: January 1, 2011, through December 31, 2011
Performance Shares Awarded: See Section 3 of the Agreement
Performance Period: January 1, 2011, through December 31, 2011
Internal Factors for Determining Amount Payable Pursuant to Performance Award
The number of Shares payable on account of a Performance Share (before any Dividend Adjustment
or tax withholding) will be based on the collective results of the following three performance
factors (“Performance Factors”) during the Performance Period:
1. Earnings Per Share (EPS);
2. Net Charge Off Ratio.
2. Net Charge Off Ratio.
Definitions Related to Internal Performance Factors
Earnings Per Share (EPS). Earnings Per Share is defined as GAAP EPS, as reported in
the Company’s Form 10-K for the fiscal year ending December 31, 2011 excluding, however,
extraordinary items and non-recurring charges, both as determined under GAAP, recognized during the
fiscal year ending December 31, 2011.
Net Charge Off Ratio. Net Charge Off Ratio is defined as the average ratio of Net
Charge Offs to Average Loans, both as reported in the Company’s Form 10-K, for the fiscal year
ending December 31, 2011.
Performance Weighting Fraction
“Performance Weighting Fraction” means the relative importance of each performance measure in
evaluating performance and determining the number of Shares to be distributed (before any Dividend
Adjustment or tax withholding) with respect to each Performance Share. The following weight has
been assigned to each performance factor:
| EPS | Net Charge Off | |||
| Growth | Ratio | |||
50% |
50 | % | ||
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Calculation of Performance
For each Performance Factor, the performance level will be determined at the end of the
Performance Period. The performance level will then be multiplied by the Performance Weighting
Fraction for each Performance Factor, resulting in the Company’s Weighted Average Performance
Level. The table below shows the percentage of Shares to be issued with respect to each
Performance Share (before any Dividend Adjustment or tax withholding) at various performance
levels:
| 2011 | Percent of | |||||||||||
| Performance Range | 2011 GAAP EPS | Net Charge Off Ratio | Incentive Earned | |||||||||
| MAXIMUM | $ | 0.66 | 0.390 | % | 200 | % | ||||||
| 0.65 | 0.411 | % | 193 | % | ||||||||
| 0.64 | 0.433 | % | 186 | % | ||||||||
| 0.63 | 0.454 | % | 179 | % | ||||||||
| 0.62 | 0.476 | % | 171 | % | ||||||||
| 0.61 | 0.497 | % | 164 | % | ||||||||
| 0.60 | 0.519 | % | 157 | % | ||||||||
| 0.59 | 0.540 | % | 150 | % | ||||||||
| 0.58 | 0.561 | % | 143 | % | ||||||||
| 0.57 | 0.583 | % | 136 | % | ||||||||
| 0.56 | 0.604 | % | 129 | % | ||||||||
| 0.55 | 0.626 | % | 121 | % | ||||||||
| 0.54 | 0.647 | % | 114 | % | ||||||||
| 0.53 | 0.669 | % | 107 | % | ||||||||
TARGET |
$ | 0.52 | 0.690 | % | 100 | % | ||||||
| 0.51 | 0.709 | % | 95 | % | ||||||||
| 0.50 | 0.728 | % | 91 | % | ||||||||
| 0.49 | 0.746 | % | 86 | % | ||||||||
| 0.48 | 0.765 | % | 81 | % | ||||||||
| 0.47 | 0.784 | % | 77 | % | ||||||||
| 0.46 | 0.803 | % | 72 | % | ||||||||
| 0.45 | 0.821 | % | 67 | % | ||||||||
| 0.44 | 0.840 | % | 63 | % | ||||||||
| 0.43 | 0.859 | % | 58 | % | ||||||||
| 0.42 | 0.878 | % | 53 | % | ||||||||
| 0.41 | 0.896 | % | 49 | % | ||||||||
| 0.40 | 0.915 | % | 44 | % | ||||||||
| 0.39 | 0.934 | % | 39 | % | ||||||||
| 0.38 | 0.953 | % | 34 | % | ||||||||
| 0.37 | 0.971 | % | 30 | % | ||||||||
MINIMUM |
$ | 0.36 | 0.990 | % | 25 | % | ||||||
The results for a given Performance Factor will be reduced to the next lowest level, if the final
financial result does not equal one of the levels listed in the above schedule.
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Example: The following example shows the Unadjusted Share Distribution on account of 1,000
Performance Shares, based on one possible achievement of Performance Goals.
| 2011 | ||||||||||||
| GAAP | Net Charge | |||||||||||
| EPS | Off Ratio | Total | ||||||||||
Actual Results |
$ | 0.58 | .71 | % | ||||||||
Performance Level (a) |
143 | % | 91 | % | ||||||||
Factor Weight (b) |
50 | % | 50 | % | ||||||||
Weighted Performance (a
times b) |
71.5 | % | 45.5 | % | 117 | % | ||||||
Shares Issued With
Respect to the
Performance Shares
(before Dividend
Adjustment or
Withholding) |
1170 | |||||||||||
Timing of Award Determination and Distribution
Once performance results for the Company are known and approved by the auditors, the
Compensation Committee will review and approve the final performance results for each Performance
Factor. The Shares will be distributed in accordance with the timing set forth in Section 4(c) of
this Agreement.
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