EXHIBIT 10.3
AMCORE FINANCIAL, INC.
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Performance Share Program
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Page
1. Purpose................................................ 1
2. Definitions............................................ 1
3. Determination of Performance Shares.................... 3
4. Payment of Awards...................................... 4
5. Termination of Employment.............................. 5
6. Administration......................................... 5
7. General Provisions..................................... 6
1. PURPOSE
AMCORE Financial, Inc. (the "Company") has adopted this Performance Share
Program (the "Program") in order to strengthen the ability of the Company to
attract and retain talented executives and to promote the long-term growth and
profitability of the Company by linking a significant element of participating
employee's compensation opportunity to the performance of the Company over an
extended period of time.
This Program shall be administered pursuant to the terms and conditions of the
AMCORE Financial, Inc. 2005 Stock Award and Incentive Plan (the "SAIP"), and is
a "subplan" of the SAIP, as contemplated by Section 8(e) of the SAIP. All common
stock of the Company issued in connection with the Program shall be deemed to be
issued from shares authorized and reserved pursuant to the SAIP. Any term used
herein shall, in the absence of a specific definition, have the meaning assigned
to such term in the SAIP.
2. DEFINITIONS
(a) "Account" means the bookkeeping account established for the Participant
under Section 4(b).
(b) "Award" means any grant of Common Stock in accordance with Section
4(a).
(c) "Change in Control" shall have the meaning assigned to such term in the
SAIP.
(d) "Committee" has the meaning given to it in the SAIP. To the extent the
Committee delegates authority pursuant to Section 6(a), references to the
Committee in the Program shall, as appropriate, be deemed to refer to the
Committee's delegate.
(e) "Disability" means permanent and total disability as determined under
the Company's disability program or policy.
(f) "Effective Date" means January 1, 2005, the effective date of this
Program.
(g) "Participant" means an executive officer or other key employee of the
Company who is selected by the Committee to participate in this Program.
(h) "Performance Cycle" means the period over which Performance Shares
designated in respect of the Performance Cycle potentially may be earned.
Performance Cycles will generally be three-year periods extending from January 1
of the initial year through December 31 of the third year in the Performance
Cycle. Performance Cycles generally will begin each year, and therefore will
overlap with one another. The three-year performance cycle beginning on January
1, 2005 shall be referred to herein as the 2005 - 2007 Performance Cycle.
Exhibit A illustrates the timing of the Performance Cycles under this Program. A
Performance Cycle shall be a period of no less than one year.
(i) "Performance Goals" means the levels of achievement specified in the
table, grid or formula described in Section 3(a)(i)(d) herein.
(j) "Performance Shares" means the shares of Stock, which a Participant may
earn hereunder.
(k) "Pro Rata Portion" means, for any individual, a portion of a specified
number of Performance Shares relating to a given Performance Cycle determined by
multiplying such number of Performance Shares by a fraction, the numerator of
which is the number of calendar days in the Performance Cycle during which the
individual was a Participant in the Program and the denominator of which is the
number of calendar days in the Performance Cycle.
(l) "Qualified Performance-based Compensation" has the meaning given such
term under Section 162(m) of the Code and the regulations promulgated
thereunder.
(m) "Retirement" means a Participant's retirement at or after age 65 with
five years of service to the Company or retirement at or after age 55 with ten
years of service to the Company.
(n) "Stock" means the common stock of the Company; par value of $.22 per
share, or such other securities as may be substituted or resubstituted for Stock
pursuant to Section 3(b) hereof.
(o) "Stock Unit" is a bookkeeping unit, which represents a right to receive
one share of Stock upon settlement, subject to the terms and conditions of this
Program. Stock Units are arbitrary accounting measures created and used solely
for purposes of this Program, and do not represent ownership rights in the
Company, shares of Stock, or any asset of the Company.
(p) "Target Performance Shares" means a number of Performance Shares
designated as a target number that may be earned by a Participant in respect to
a given Performance Cycle.
(q) "Termination of Employment" means the Participant's termination of
employment with the Company.
3. DETERMINATION OF PERFORMANCE SHARES
(a) Designation of Performance Shares and Related Terms.
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(i) Not later than 90 days after the beginning of a Performance Cycle, the
Committee shall: (a) select employees to participate in the Program for the
relevant Performance Cycle; (b) designate, for each such Participant, the Target
Performance Shares such Participant shall have the opportunity to earn in such
Performance Cycle; (c) specify the duration of the Performance Cycle; and (d)
specify a table, grid or formula that sets forth the number or percentage of
Target Performance Shares that will be earned corresponding to the Performance
Goals achieved for the three years ending on the last day of the Performance
Cycle. Exhibit B contains such a table for the 2005-2007 Performance Cycle. The
Committee may, in its discretion, adjust the number of Performance Shares earned
by a Participant after the completion of a Performance Cycle, notwithstanding
the achievement of a specified performance condition, by up to 25% of the total
number of Performance Shares deemed earned at the end of a Performance Cycle;
provided, however, that the maximum Performance Shares earned shall never exceed
200% of Target Performance Shares. The Committee may exercise this discretion in
light of other performance measures it deems relevant, including but not limited
to financial results of the Company during the relevant Performance Cycle
relative to the peer group of companies designated by the Committee for any
given Performance Cycle; provided, however, that the Committee may only exercise
such discretion to reduce, and not to increase, the number of Performance Shares
earned by a Participant unless such award was not intended to be Qualified
Performance-based Compensation. Threshold awards will be equal to 50% of Target
Performance Shares and maximum awards will be equal to 200% of Target
Performance Shares.
(ii) The provisions of Section 3(a)(i) notwithstanding, at any time during
a Performance Cycle, the Committee may select a new employee or a newly promoted
employee who was not currently participating in the Performance Cycle to
participate in the Performance Cycle and designate the Target Performance Shares
for such Participant; provided, however, that such designation must be effective
before the date on which two-thirds (2/3) of the relevant Performance Cycle has
elapsed; and further provided that such individuals must be designated within
the first 90 days of such Performance Cycle if awards to such individuals are
intended to be Qualified Performance-based Compensation. In no event may such
Participant earn more than the Pro Rata Portion of the Performance Shares
otherwise capable of being earned with respect to such Performance Cycle.
(iii) Not later than 120 days after the end of each Performance Cycle, the
Committee shall determine the extent to which the Performance Goals for the
earning of Performance Shares were achieved during such Performance Cycle and
the number of Performance Shares (or, the "Award") earned by each Participant
with respect to such Performance Cycle. The Committee shall certify in writing
as to whether the Performance Goals and any other material terms relating to the
earning of Performance Shares were in fact satisfied.
(b) Adjustment of and Changes in Stock. In the event of any change in the
outstanding shares of Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spinoff, combination or exchange of
shares or other similar corporate transaction, or any distributions to common
shareholders other than regular cash dividends, the Committee may make such
substitution or adjustment, if any, as it deems to be equitable, as to the
number or kind of shares of Stock, Performance Shares, and/or other securities
issued, reserved or granted for any purpose under this Program.
4. PAYMENT OF AWARDS
(a) Performance Awards. Subject to the applicable provisions of Section 3, each
Participant shall be entitled to receive an Award of Stock in an amount equal to
the Performance Shares earned in respect of a Performance Cycle. Participants
shall be immediately vested in such Award as of the date it is awarded by the
Committee in accordance with Section 3(a)(iii).
(b) Accounts. The Committee shall maintain a bookkeeping Account for each
Participant reflecting the number of Performance Shares credited to the
Participant hereunder. The Account may include sub accounts or other
designations, as the Committee may deem appropriate.
(c) Payment of Account. Payment of an Account will be made in shares of Stock
promptly following the date on which Awards are made; provided, however, the
Committee may, whether at the time of grant or at any time thereafter prior to
payment or settlement, permit (subject to such conditions as the Committee may
from time to time establish) a Participant to elect to defer receipt of all or
any portion of any shares of Stock that would otherwise be due to such
Participant in payment or settlement of any Award under the Program; provided
further, that any such deferral shall be made in compliance with a plan designed
to comply with the requirements of Section 409A of the Code. No fractional
shares of Stock shall be issued under the Program. Awards of fractional shares
of Stock, if any, shall be settled in cash.
5. TERMINATION OF EMPLOYMENT
(a) Termination Prior to Completion of Performance Cycle.
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(i) Upon a Participant's Termination of Employment with the Company other
than due to death, Disability or Retirement prior to completion of a Performance
Cycle, in the absence of Committee discretion or a relevant employment or
severance agreement between the Company and a Participant that provides
otherwise, all unearned Performance Shares relating to such Performance Cycle
shall cease to continue to be earned and shall be cancelled, and the Participant
shall have no further rights or opportunities hereunder.
(ii) If Termination of Employment is due to death, Disability or
Retirement, the Participant or his beneficiary shall be entitled to receive the
Pro Rata Portion of the Performance Shares earned at the conclusion of the
Performance Cycles in effect at the date of termination, at the time and to the
extent such Performance Shares would otherwise have been earned in accordance
with Section 4 if the individual's employment had not terminated until after the
close of the Performance Cycles. If the Participant has timely filed an
irrevocable election to defer settlement of Performance Shares following a
Termination of Employment in accordance with terms and conditions established by
the Committee, such earned Performance Shares shall be settled in accordance
with such deferral election; provided, however, that any such deferral shall be
made in compliance with a plan designed to comply with the requirements of
Section 409A of the Code.
(b) Change in Control. In the event of a Change in Control prior to the
conclusion of any Performance Cycle, in the absence of a relevant employment or
severance agreement between the Company and a Participant that provides
otherwise, the Participant shall be deemed to have earned and shall be entitled
to receive, in accordance with the applicable provisions of the Program, the Pro
Rata Portion of the Performance Shares relating to Performance Cycles in effect
as of the Change in Control, based on the greater of performance calculated
through the quarter ending immediately prior to the date of the Change in
Control (extrapolating the Performance Goals to such quarter then ending, as
determined by the Committee in its sole discretion) or the Target Performance
Shares.
6. ADMINISTRATION
(a) Committee. The Committee shall have full discretion to interpret and
administer the Program, and its decision in any matter involving the
interpretation and application of this Program shall be final and binding on all
parties. Except to the extent prohibited by applicable law or the applicable
rules of a stock exchange, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members, may delegate all
or any part of its responsibilities and powers for administering the Program to
one or more persons as the Committee deems appropriate, and, at any time revoke
the allocation or delegation; provided, however, the Committee may not delegate
its responsibilities under the Program relating to any Covered Employee to the
extent that such Covered Employee's Award is intended to be Qualified
Performance-based Compensation if such delegation would be prohibited under
Section 162(m) of the Code.
(b) Amendment and Termination. The Board reserves the right to amend, modify,
suspend or terminate this Program in whole or in part at any time, so long as
such action is consistent with the provisions of the SAIP.
7. GENERAL PROVISIONS
(a) Payments to Minors and Incompetents; Death. If any Participant, spouse or
beneficiary entitled to receive any benefits hereunder is a minor or is deemed
by the Committee or is adjudged to be legally incapable of giving valid receipt
and discharge for such benefits, they will be paid to such person or institution
as the Committee may designate or to the duly appointed guardian. Such payment
shall, to the extent made, be deemed a complete discharge of any such payment
under the Program. In the event of a Participant's death prior to payment of any
Award to which Participant is otherwise entitled, payment shall be made to the
Participant's then-effective beneficiary or beneficiaries in accordance with the
beneficiary designation on file with the Company. If no such designation is in
effect, payments will be made to the Participant's estate.
(b) No Contract. This Program shall not be deemed a contract of employment with
any Participant, nor shall any provision hereof affect the right of the Company
to terminate a Participant's employment.
(c) Non-Alienation of Benefits. No amount payable to, or held under the Program
for the account of, any Participant, spouse or beneficiary shall be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void; nor shall
any amount payable to, or held under the Program for the account of, any
Participant be in any manner liable for such Participant's debts, contracts,
liabilities, engagements, or torts, or be subject to any legal process to levy
upon or attach.
(d) Income Tax Withholding. As a condition to the delivery of any shares of
Stock or other amounts hereunder, the Committee may require that the
Participant, at the time of such payment of shares, pay to the Company an amount
to satisfy any applicable tax withholding obligation as the Committee shall
determine from time to time, or the Committee may take such other action as it
may deem necessary to satisfy any such withholding obligations. The Committee,
in its sole discretion, may permit or require a Participant to satisfy all or a
part of the tax withholding obligations incident to the payment of shares by
having the Company withhold a portion of the shares that would otherwise be
issuable to the Participant equal to the minimum amount of tax required to be
withheld. Such shares shall be valued based on their Fair Market Value (as
defined in the SAIP) on the date the tax withholding is required to be made. Any
such share withholding with respect to a Participant subject to Section 16(a) of
the Exchange Act shall be subject to such limitations as the Committee may
impose to comply with the requirements of Section 16 of the Exchange Act.
(e) Governing Law. The provisions of the Program shall be interpreted,
construed, and administered in accordance with the referenced provisions of the
Code and with the laws of the State of Nevada.
(f) Captions. The captions contained in the Program are inserted only as a
matter of convenience and for reference and in no way define, limit, enlarge, or
describe the scope or intent of the Program, nor in any way affect the
construction of any provision of the Program.
(g) Severability; Entire Agreement. If any of the provisions of this Program or
any award document is finally held to be invalid, illegal or unenforceable
(whether in whole or in part), such provision shall be deemed modified to the
extent, but only to the extent, of such invalidity, illegality or
unenforceability, and the remaining provisions shall not be affected thereby;
provided, that, if any of such provisions is finally held to be invalid,
illegal, or unenforceable because it exceeds the maximum scope determined to be
acceptable to permit such provision to be enforceable, such provision shall be
deemed to be modified to the minimum extent necessary to modify such scope in
order to make such provision enforceable hereunder. The Program, the SAIP and
any award documents contain the entire agreement of the parties with respect to
the subject matter thereof and, unless specified otherwise, supersede all prior
agreements, promises, covenants, arrangements, communications, representations
and warranties between them, whether written or oral, with respect to the
subject matter thereof.
(h) Nonexclusivity of the Program. This Program shall not be construed as
creating any limitations on the power of the Board or a committee thereof to
adopt such other incentive arrangements, apart from the Program, as it may deem
desirable.