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EXHIBIT 10.10
Share Price, RSR and ROCE Performance Goals
PNC BANK CORP.
1997 LONG-TERM INCENTIVE AWARD PLAN
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INCENTIVE SHARE AGREEMENT
GRANTEE:
DATE OF GRANT:
INCENTIVE SHARES:
ADDITIONAL INCENTIVE SHARES (EQUALS 50% OF INCENTIVE SHARES):
1. DEFINITIONS. Terms defined in the 1997 Long-Term Incentive Award
Plan ("Plan") of PNC Bank Corp. ("Corporation") are used in this Agreement as
defined in the Plan unless otherwise defined in this Agreement. In addition,
except where the context otherwise indicates, the following definitions apply:
1.1 "Award Date" means the first Business Day following the achievement
of the Share Price Performance Goal, except as provided in Section 3.2. An Award
Date shall in no event be a date later than the Termination Date.
1.2 "Awarded Shares" mean any and all Incentive Shares and Additional
Incentive Shares issued to the Grantee pursuant to Section 3.1(a), Section
3.1(b) or Section 3.2 of this Agreement.
1.3 "Business Day" means any day when the New York Stock Exchange is
open for business.
1.4 "Cause" means:
(a) the willful and continued failure of the Grantee to substantially
perform the Grantee's duties with the Corporation (other than any such
failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to the
Grantee by the Board or the Chief Executive Officer of the Corporation
which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Grantee has not substantially
performed the Grantee's duties; or
(b) the willful engaging by the Grantee in illegal conduct or gross
misconduct that is materially and demonstrably injurious to the
Corporation.
For purposes of the preceding clauses (a) and (b), no act or failure to
act, on the part of the Grantee, shall be considered "willful" unless
it is done, or omitted to be done, by the Grantee in bad faith and
without reasonable belief that the Grantee's action or omission was in
the best interests of the Corporation. Any act, or failure to act,
based upon the instructions or prior approval of the Board, the Chief
Executive Officer or the Grantee's superior or based upon the advice of
counsel for the Corporation, shall be conclusively presumed to be done,
or omitted to be done, by the Grantee in good faith and in the best
interests of the Corporation. The cessation of employment of the
Grantee shall not be deemed to be for
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Cause unless and until there shall have been delivered to the Grantee,
as part of the notice of the Grantee's termination, a copy of a
resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board, at a Board meeting
called and held for the purpose of considering such termination,
finding that, in the good faith opinion of the Board, the Grantee is
guilty of the conduct described in clause (a) or (b) above and
specifying the particulars thereof in detail. Such resolution shall be
adopted only after reasonable notice of such Board meeting is provided
to the Grantee and the Grantee is given an opportunity, together with
counsel, to be heard before the Board.
1.5 "Change in Control" means a change of control of the Corporation of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Exchange Act, whether or not the
Corporation is then subject to such reporting requirement; provided, however,
that without limitation, a Change in Control shall be deemed to have occurred
if:
(a) any Person, excluding employee benefit plans of the Corporation, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act or any successor provisions thereto), directly
or indirectly, of securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of the Corporation's
then outstanding securities, provided, however, that such an
acquisition of beneficial ownership representing between twenty percent
(20%) and forty percent (40%), inclusive, of such voting power shall
not be considered a Change in Control if the Board approves such
acquisition either prior to or immediately after its occurrence;
(b) the Corporation consummates a merger, consolidation, share
exchange, division or other reorganization or transaction of the
Corporation (a "Fundamental Transaction") with any other corporation,
other than a Fundamental Transaction that results in the voting
securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
sixty percent (60%) of the combined voting power immediately after such
Fundamental Transaction of (i) the Corporation's outstanding
securities, (ii) the surviving entity's outstanding securities, or
(iii) in the case of a division, the outstanding securities of each
entity resulting from the division;
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(c) the shareholders of the Corporation approve a plan of complete
liquidation or winding-up of the Corporation or an agreement for the
sale or disposition (in one transaction or a series of transactions) of
all or substantially all of the Corporation's assets;
(d) as a result of a proxy contest, individuals who prior to the
conclusion thereof constituted the Board (including for this purpose
any new director whose election or nomination for election by the
Corporation's shareholders in connection with such proxy contest was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who were directors prior to such proxy contest) cease
to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied);
(e) during any period of twenty-four consecutive months, individuals
who at the beginning of such period constituted the Board (including
for this purpose any new director whose election or nomination for
election by the Corporation's shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied); or
(f) the Board determines that a Change in Control has occurred.
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of the Corporation shall not by itself constitute a
"Change in Control."
1.6 "CIC Failure" means the following:
(a) with respect to a CIC Triggering Event described in Section 1.7(a),
the Corporation's shareholders vote against the transaction approved by
the Board or the agreement to consummate the transaction is terminated;
or
(b) with respect to a CIC Triggering Event described in Section 1.7(b),
the proxy contest fails to replace or remove a majority of the members
of the Board.
1.7 "CIC Triggering Event" means the occurrence of either of the
following:
(a) the Board or the Corporation's shareholders approve a transaction
described in Subsection (b) of the definition of Change in Control
contained in Section 1.5 hereof; or
(b) the commencement of a proxy contest in which any Person seeks to
replace or remove a majority of the members of the Board.
1.8 "Coverage Period" means a period commencing on the earlier to occur
of (a) the date of a CIC Triggering Event and (b) the date of a Change in
Control, and ending on the date that is two years after the date of the Change
in Control, provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event such Coverage Period shall
terminate upon the earlier to occur of (i) the date of a CIC Failure and (ii)
the date that is two years after the date of the Change in Control triggered by
the CIC Triggering Event. After the termination of any Coverage Period, another
Coverage Period shall commence upon the earlier to occur of clauses (a) and (b)
in the preceding sentence.
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1.9 "Good Reason" means
(a) the assignment to the Grantee of any duties inconsistent in any
respect with the Grantee's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities
immediately prior to either the CIC Triggering Event or the Change in
Control, or any other action by the Corporation which results in a
diminution in any respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith that is remedied by the
Corporation promptly after receipt of notice thereof given by the
Grantee;
(b) a reduction by the Corporation in the Grantee's annual base salary
as in effect on the Date of Grant as set forth above, as the same may
be increased from time to time;
(c) the Corporation's requiring the Grantee to be based at any office
or location that is more than fifty (50) miles from the Grantee's
office or location immediately prior to either the CIC Triggering Event
or the Change in Control;
(d) the failure by the Corporation (i) to continue in effect any bonus,
stock option or other cash or equity-based incentive plan in which the
Grantee participates immediately prior to either the CIC Triggering
Event or the Change in Control that is material to the Grantee's total
compensation, unless a substantially equivalent arrangement (embodied
in an ongoing substitute or alternative plan) has been made with
respect to such plan, or (ii) to continue the Grantee's participation
in such plan (or in such substitute or alternative plan) on a basis at
least as favorable, both in terms of the amount of benefits provided
and the level of the Grantee's participation relative to other
participants, as existed immediately prior to the CIC Triggering Event
or the Change in Control; or
(e) the failure by the Corporation to continue to provide the Grantee
with benefits substantially similar to those received by the Grantee
under any of the Corporation's pension (including, but not limited to,
tax-qualified plans), life insurance, health, accident, disability or
other welfare plans in which the Grantee was participating, at costs
substantially similar to those paid by the Grantee, immediately prior
to the CIC Triggering Event or the Change in Control.
1.10 "Grant" means the total number of Incentive Shares and Additional
Incentive Shares granted pursuant to Section 2 of this Agreement.
1.11 "Median" means the position in the Peer Group below and above
which there is an equal number of positions or if there is no one middle
position, the two middle positions.
1.12 "Median Range" means within three (3) positions (either direction)
of the Peer Group Median.
1.13 "Peer Group" means Banc One Corporation, BankAmerica Corporation,
Bank of Boston Corporation, Bank of New York Company, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc.,
Chase Manhattan Corporation, Corestates Financial Corp., First Chicago NBD
Corporation, First Union Corporation, Fleet Financial Group, Inc., KeyCorp.,
Mellon Bank Corporation, National City Corporation, NationsBank Corporation,
Norwest Corporation, SunTrust Banks, Inc., Wachovia Corporation, and ▇▇▇▇▇ Fargo
& Company. The Peer Group may be adjusted from time to time by the Committee to
reflect mergers or consolidations or at any time at the discretion of the
Committee.
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1.14 "Person" has the meaning given in Section 3(a)(9) of the Exchange
Act and also includes any syndicate or group deemed to be a "person" under
Section 13(d)(3) of the Exchange Act.
1.15 "Restricted Period" means the period that begins on an Award Date
and ends on the earlier to occur of (a) the second anniversary of the Award Date
and (b) the day immediately preceding the date of termination of the Grantee's
employment during a Coverage Period by the Corporation or a Subsidiary without
Cause or by the Grantee for Good Reason.
1.16 "ROCE" or "Return on Common Equity" means, with respect to each of
the Corporation and members of the Peer Group, the annualized cumulative return
on common equity for the period commencing January 1, 1997 through the last day
of the calendar quarter immediately preceding the last day on which the Share
Price Performance Goal is met or, for the purpose of Section 3.2, through the
Termination Date. The Return on Common Equity of any Peer Group member and the
Corporation may be adjusted to reflect significant nonrecurring items, including
without limitation, merger-related charges or gains/losses on a sale of a
business unit, as approved by the Committee. ROCE shall be expressed as a
percent rounded to the nearest one-hundredths (e.g., 0.00%, with 0.005% being
rounded upward to 0.01%).
1.17 "ROCE Performance Goal" means the Corporation's ROCE is within the
Median Range of the Peer Group or higher.
1.18 "RSR" or "Relative Shareholder Return" means the cumulative total
shareholder return with respect to the Corporation on the Common Stock and with
respect to the other members of the Peer Group on a class of common stock
registered under Section 12 of the Exchange Act. For each of the Corporation and
members of the Peer Group, cumulative total shareholder return shall be
calculated by dividing: (a) the sum of: (i) the cumulative amount of dividends
for the measurement period, assuming dividend reinvestment, and (ii) the
difference between the share price at the end and the beginning of the
measurement period; by (b) the closing share price on December 31, 1996. The
term "measurement period" shall be the period beginning at the "measurement
point" established by the market close on December 31, 1996, and continuing
through (and including) the market close on the last day on which the Share
Price Performance Goal is met or, for the purpose of Section 3.2, the
Termination Date. With respect to dividends, it should be assumed that dividends
are reinvested into additional shares of the same class of equity securities at
the frequency with which dividends are paid on such securities during the
applicable period. RSR shall be expressed as a percent rounded to the nearest
one-hundredths (e.g., 0.00%, with 0.005% being rounded upward to 0.01%).
1.19 "RSR Performance Goal" means the Corporation's RSR is within the
Median Range of the Peer Group or higher.
1.20 "Share Price Performance Goal" means the first consecutive 20
Business Day period that begins when the closing price of a share of Common
Stock in the New York Stock Exchange composite transactions, as reported in The
Wall Street Journal or other authoritative source, is $57.00 and during which
period the cumulative average of the closing prices of a share of Common Stock
in New York Stock Exchange composite transactions, as reported in The Wall
Street Journal or other authoritative source, equals or exceeds $57.00.
1.21 "Termination Date" means (and includes) December 31, 1999.
2. GRANT OF INCENTIVE SHARES. Pursuant to Article 12 of the Plan and
subject to the terms and conditions of this Agreement, the Corporation hereby
grants to the Grantee named above that number of shares of Common Stock
specified above as Incentive Shares and, subject to the proviso of Section
3.1(a) as well, that number of shares of Common Stock specified above as
Additional Incentive Shares.
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3. TERMS OF GRANT. The Grant shall be subject to the following terms
and conditions:
3.1 On the Award Date,
(a) the Corporation shall issue to the Grantee one hundred percent
(100%) of the Incentive Shares if (1) the Share Price Performance Goal
is achieved, and (2) (i) the ROCE Performance Goal is achieved and (ii)
the RSR Performance Goal is achieved; provided, however, that, if the
goals referred to in the foregoing clauses (1) and (2) are all
achieved, (x) the Corporation shall also issue to the Grantee fifty
percent (50%) of the Additional Incentive Shares if the Corporation's
RSR is within the top five of the Peer Group, and/or (y) the
Corporation shall also issue to the Grantee fifty percent (50%) of the
Additional Incentive Shares if the Corporation's ROCE is within the top
five of the Peer Group; or
(b) the Corporation shall issue to the Grantee fifty percent (50%) of
the Incentive Shares if the Share Price Performance Goal is achieved,
but either or both of the ROCE Performance Goal and the RSR Performance
Goal are not achieved.
3.2 In the event that the Share Price Performance Goal has not been
achieved on or before the Termination Date, on the Termination Date, the
Corporation shall issue to the Grantee fifty percent (50%) of the Incentive
Shares if both the Corporation's RSR and the Corporation's ROCE are within the
top third of the Peer Group. If Incentive Shares are issued on the Termination
Date pursuant to this Section 3.2, such date shall be referred to as the "Award
Date".
3.3 Except as provided in Section 10 as the result of the Committee's
discretion in the event of the Grantee's retirement, death or total disability,
Incentive Shares and Additional Incentive Shares shall not be issued unless the
Grantee has been continuously employed by the Corporation or a Subsidiary for
the period beginning on the Date of Grant through the Award Date.
3.4 Awarded Shares shall be deposited with the Corporation or its
designee during the term of the Restricted Period, unless released and reissued
sooner as provided in Section 6 below, and any certificates representing such
Awarded Shares shall contain the following legend:
"This certificate and the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture and
restrictions against transfer) contained in the PNC Bank Corp. 1997
Long-Term Incentive Award Plan and an Agreement entered into between
the registered owner and PNC Bank Corp. Release from such terms and
conditions shall be made only in accordance with the provisions of the
Plan and the Agreement, a copy of each of which is on file in the
office of the Corporate Secretary of PNC Bank Corp."
If a book-entry system is used with respect to Awarded Shares, appropriate
notation of such forfeiture possibility and transfer restriction shall be made
on the system with respect to the account or accounts to which the Awarded
Shares are credited.
3.5. If the Grantee has been continuously employed by the Corporation
or a Subsidiary throughout the Restricted Period, the Awarded Shares deposited
with the Corporation or its designee shall be released and reissued to the
Grantee as soon as practicable following the end of the Restricted Period
pursuant to Section 7 below.
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3.6 If the conditions specified in Section 3.1(a), Section 3.1(b) or
Section 3.2 are not met on or before the Termination Date, none of the Incentive
Shares or Additional Incentive Shares shall be issued to the Grantee.
3.7 In the event the Corporation is unable to make the ROCE and RSR
calculations for the Peer Group and the Corporation on the Award Date, such
calculations and any issuances of Awarded Shares shall be made as soon
thereafter as practicable.
4. RIGHTS AS SHAREHOLDER. Except as provided in Section 5 below, the
Grantee shall have all the rights and privileges of a shareholder with respect
to the Awarded Shares including, but not limited to, the right to vote the
Awarded Shares and the right to receive dividends thereon. All such rights and
privileges shall cease upon forfeiture of the Awarded Shares.
5. PROHIBITIONS AGAINST SALE, ASSIGNMENT, ETC. The Grant, the Awarded
Shares, the right to vote Awarded Shares and the right to receive dividends
thereon may not be sold, assigned, transferred, exchanged, pledged, hypothecated
or otherwise encumbered until (except with respect to the Grant) released by the
Corporation to the Grantee pursuant to Section 7 below.
6. FORFEITURE. In the event the Grantee's employment with the
Corporation or a Subsidiary terminates prior to the lapse of a Restricted
Period, all Awarded Shares shall be forfeited by the Grantee to the Corporation
without payment of any consideration by the Corporation, and neither the Grantee
nor any successors, heirs, assigns or personal representatives of the Grantee
shall thereafter have any further rights or interest in the Awarded Shares or
the certificates representing the Awarded Shares. Notwithstanding the foregoing,
in the event of the Grantee's death or total disability during a Restricted
Period, all Awarded Shares will be released and reissued by the Corporation to
the Grantee or his or her legal representative pursuant to Section 7 below. In
the event of the Grantee's retirement during a Restricted Period, all Awarded
Shares will be forfeited, unless the Committee determines that such Awarded
Shares shall be released and reissued by the Corporation to the Grantee in light
of the facts and circumstances applicable to the Grantee and the Corporation.
When making such determination, the Committee may consider advice from its
outside auditors that such termination of the Restricted Period would not
prevent accounting for a business combination as a pooling of interests if such
accounting treatment is desired by the Corporation.
7. TERMINATION OF PROHIBITIONS. At the end of the Restricted Period and
in the event of the Grantee's death, total disability or retirement during the
periods described in Section 6 above (and subject to the Committee's discretion,
if any, as described in such Section), the Corporation shall release and reissue
the certificate representing such Awarded Shares without the legend referred to
in Section 3.4 above and shall deliver such certificate to the Grantee or his or
her legal representative.
8. PAYMENT OF WITHHOLDING. The Grantee may satisfy any applicable
federal, state or local income tax withholding requirements arising from the
vesting (and, hence, reissuance) of Awarded Shares pursuant to this Agreement by
payment of cash or through retention by the Corporation of Awarded Shares then
to be reissued to the Grantee hereunder or by delivery to the Corporation of
previously acquired shares of Common Stock. However, payment of any applicable
federal, state or local income tax withholding requirements arising from a Code
Section 83(b) election shall be satisfied by payment of cash or by delivery to
the Corporation of previously acquired shares of Common Stock.
9. EMPLOYMENT. Neither the granting of the Incentive Shares or
Additional Incentive Shares evidenced by this Agreement nor any term or
provision of this Agreement shall constitute or be evidence of any
understanding, expressed or implied, on the part of the Corporation or any
Subsidiary to employ the Grantee for
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any period or in any way alter the Grantee's status as an employee at will.
10. TERMINATION. The Grant shall terminate upon the earlier to occur of
the following: (a) the Termination Date; or (b) the termination of the Grantee's
employment with the Corporation or a Subsidiary, unless such termination is due
to Grantee's retirement, death or total disability and the Committee determines
that such Grant shall continue to a date no later than the Termination Date in
light of the facts and circumstances applicable to the Grantee.
11. SUBJECT TO THE PLAN AND THE COMMITTEE. The Grant and this Agreement
are subject to the terms and conditions of the Plan, which are incorporated
herein by reference and made a part hereof, but the terms of the Plan shall not
be considered an enlargement of any benefits under this Agreement. If the Plan
is not approved by the Corporation's shareholders at the Corporation's 1997
Annual Meeting, all references to the Plan shall mean the 1992 Long-Term
Incentive Award Plan. In addition, the Grant and this Agreement are subject to
any interpretations of or any rules and regulations issued by the Committee.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
signed on its behalf as of the Date of ▇▇▇▇▇.
ATTEST: PNC BANK CORP.
_____________________________ By ___________________________
Accepted and agreed to as of the Date of ▇▇▇▇▇ set forth above.
______________________________
Grantee
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