EX-10.1 2 d128626dex101.htm EX-10.1
Exhibit 10.1
FORM OF POPULAR, INC.
2021 LONG-TERM EQUITY INCENTIVE AWARD
AND AGREEMENT
Recipient:
The Talent
and Compensation Committee
of the
Board of Directors
of Popular,
Inc. (the
“
Committee
”)
awarded
you
on
February
25,
2021
(the
“Grant
Date”
)
a
Long-Term
Incentive
Award
consisting of Restricted
Stock (“
Restricted Stock
”) and Performance
Shares (“
Performance Shares
” and, in
conjunction with the Restricted Stock, the “
Award”
).
This award agreement (the “
Award Agreement
”), dated as of the Grant Date, sets forth the
terms and conditions of your
Award.
This Award is made under the Popular, Inc. 2020 Omnibus
Incentive
Plan, as amended
(the “
Plan
”), and, except
as otherwise provided
herein, is subject
to the terms of
the Plan.
Capitalized terms used but not otherwise defined in this
Award Agreement have the meanings given in the
Plan.
1.
Award
.
The number of
shares of Restricted
Stock and Performance
Shares subject
to this Award is set forth in Annex 1 hereto.
The Award will vest as set forth below.
2.
Vesting;
Payout.
Subject to Section 6 of this Agreement, you will be entitled to the following
:
(a)
Restricted
Stock
Vesting
.
Except
as
otherwise
stated
in
this
Section
2,
your
Restricted Stock shall vest in four substantially equal annual installments on each of the dates specified in
Annex 1 (each of the dates described therein, a
“Restricted Stock
Vesting
Date
”).
(b)
Performance Shares Vesting.
Except as otherwise
stated in this
Section 2, you
shall
become vested in the Performance
Shares on the day
of the first scheduled
meeting of the Committee
taking
place in the month of February 2024, subject to the achievement by Popular, Inc. of the Performance Goals
specified
in
Annex
1
during
the
Performance
Cycle,
as
certified
by
the
Committee
in
such
meeting
(hereinafter the
“Performance Shares Vesting
Date”
and, together with the Restricted Stock Vesting
Date,
the
“Vesting
Date”)
.
The Performance Goals will be based on two performance metrics weighted equally:
the Relative Total Shareholder Return (the “
TSR
”) and the Absolute Return on Average Tangible
Common
Equity (the “
ROATCE
”) goals. The Performance Cycle is a three (3) year period beginning on January 1 of
the calendar year of the Grant
Date and ending on December 31 of
the third year.
Each Performance Goal
will have a
defined minimum
threshold (i.e.,
minimum result
for which an
incentive would
be earned),
target
(i.e., result at which
100% of the incentive
would be earned)
and maximum level
of performance (i.e., result
at which 1.5 times the incentive target would be earned).
(c)
Approved
Retirement.
Upon
an
Approved
Retirement after
attaining (x)
age
55
with 10 years of service with Popular, Inc. or its subsidiaries (the “
Corporation
”) or (y) age 60 with 5 years
of
service
with
the
Corporation:
(1)
your
outstanding
Restricted
Stock
shall
fully
vest;
and
(2)
your
outstanding
Performance
Shares
shall
continue
outstanding
and
vest
in
full
on
the
Performance
Shares
Vesting
Date in accordance with the actual results
of the Performance Goals during the Performance
Cycle.
(d)
Vesting
upon Retirement on
or after age
50 before attaining
age 55 and
10 years
of service.
The Committee,
at its discretion,
may accord
the same
treatment accorded
in Section
2(c) above
if you retire from your employment on or
after age 50, and before attaining age 55
and 10 years of service,
provided the sum of your age and years of service is at least 75.
(e)
Death.
Provided
that
on
the
date
of
your
death
you
are
still
employed
by
the
Corporation
and
your
rights
in
respect
of
your
Award
have
not
been
previously
terminated,
any
then
unvested
outstanding
Award
shall
immediately
vest
and
be
paid
to
the
representative
of
your
estate
promptly after your death.
In the case of the Performance Shares, the number of shares will
be calculated
as if the target number of Performance Shares had in fact been earned.
(f)
Disability.
If you become
subject to Disability
while you are
still employed by
the
Corporation, any then
unvested outstanding Award shares shall
vest and shall
be paid to
you promptly after
you become
subject to
Disability.
In the
case of
the Performance
Shares, the
number of
shares will
be
calculated as if the target number of Performance Shares had in fact been earned.
(g)
Change of Control.
If your employment is
terminated by the
Corporation or any
successor entity thereto
without Cause,
or if you
terminate your employment
for Good Reason,
in each case
upon or
within two
years after
a Change of
Control, prior to
a Vesting
Date, and provided
your rights
in
respect of the shares of your
unvested Award
have not previously terminated, the shares of
your unvested
Award
shall immediately
vest
and be
delivered to
you promptly
after
such termination
of
employment;
provided
that
,
as
of
the
Change
of
Control
date,
any
outstanding
Performance
Shares
shall
be
deemed
earned at the greater of the target level or actual performance level through the Change of Control date (or
if no target
level is specified,
the maximum level)
with respect to
all open performance
periods and such
Performance
Shares
shall be
subject
to
time-based
vesting
through
the
end
of
the
original
Performance
Cycle
for
each
such
Award,
subject
to
accelerated
vesting
in
accordance
with
the
first
sentence
of
this
clause.
(h)
Termination
without
Cause.
If
the
Corporation
terminates
your
employment
without Cause
you will
receive payment
of the
Award on a prorated
basis based
on the
number of
full months
in the vesting
schedule in which
you were an
active employee (with
a partial month
worked counted as
a full
month if you were an active employee for 15 days or more in the month) and such
reduced Award will vest
immediately upon your
termination of employment,
calculated in the
case of Performance
Shares as if
the
target number of Performance Shares had in fact been earned, as provided in the Plan.
(i)
Payout.
The
transfer
restrictions
on
the
applicable
number
of
whole
shares
of
Restricted Stock shall lapse on each
Vesting
Date or such other vesting date as
determined in this Section
2 and in the terms of the Plan. The payout with respect to vested Performance Shares shall be made on the
Performance Shares Vesting Date, on which date the
Committee shall determine the
total number of shares
earned based upon the
actual performance results
during the Performance
Cycle.
The vested shares will
be
delivered to you as
soon as administratively practicable, generally within
45 days following each Vesting
Date.
3.
Termination of Award
.
(a)
Except as
provided herein,
your rights
in respect
of your
outstanding unvested
Award
shares shall immediately terminate,
and no shares shall
be paid in respect thereof,
if at any time prior
to the
respective Vesting
Date you terminate your employment.
(b)
If the Corporation terminates your employment for Cause, your Award shares shall
be cancelled and the provisions under the Plan will apply.
4.
Non-transferability.
This Award (or any
rights and
obligations hereunder)
may not
be sold,
exchanged, transferred,
assigned, pledged,
hypothecated or
otherwise disposed
of or
hedged, in
any manner (including
through the use
of any cash-settled
instrument), whether
voluntarily or involuntarily
and whether by operation of
law or otherwise, other than
by will or by the laws
of descent and distribution.
5.
Withholding, Consents and Legends.
(a)
You
shall
be
solely
responsible
for
any
applicable
taxes
(including,
without
limitation,
income
and
excise
taxes)
and
penalties,
and
any
interest
that
accrues
thereon,
incurred
in
connection with your Award.
The Corporation will withhold shares of Common Stock
for the payment of
taxes
in
connection
with
the
vesting
of
your
Award
or
upon
the
occurrence
of
any
other
event
that,
in
accordance with applicable law,
will generate a tax liability with regards to
your Award.
The Corporation
will
withhold shares
of
Common
Stock
with
a
value
equal
to
the
amount
of
taxes
that
the
Corporation
determines it is
required to withhold under
applicable laws (with such
withholding obligation determined
based on any
applicable minimum statutory withholding rates).
The Corporation will use
the Fair Market
Value
of the
Common Stock on
the Vesting
Date or such
other date, as
applicable, in order
to determine
the number
of shares
to be
withheld. If
you wish
to remit
cash to
the Corporation
(through payroll
deduction
or
otherwise),
in
each
case
in
an
amount
sufficient
in
the
opinion
of
the
Corporation
to
satisfy
such
withholding
obligation,
you
must
notify
the
Corporation
in
advance
and
do
so
in
compliance
with
all
applicable laws and pursuant
to such rules as
the Corporation may establish from
time to time, including,
but not limited to, the Corporation’s Insider Trading Policy.
(b)
Your
right to receive shares pursuant
to the Award is conditioned on the receipt to
the reasonable satisfaction of
the Committee of
any required consent
that the Committee
may reasonably
determine to be necessary or
advisable.
By accepting delivery of the
shares, you acknowledge that you
are
subject to the Corporation’s Insider Trading Policy.
6.
Restrictive Covenants.
(a)
In consideration of the terms of
the Award,
you agree to the restrictive covenants
and associated remedies as set forth below,
which exist independently of and in addition to any obligation
to which you are
subject under the terms
of any other agreement
you may have with
the Corporation or any
of its subsidiaries (“
Popular
”).
(b)
For a period
of one year immediately
following termination of your
employment
with Popular for
any reason, you
will not do
any of the
following, either directly or
indirectly or through
associates, agents, or employees:
(i)
solicit,
recruit
or
assist
in
the
solicitation
or
recruitment
of
any
employee
or
consultant
of
Popular
(or
who
was
an
employee
or
consultant
of
Popular
within
the
prior
six
months) for the purpose of encouraging that
employee or consultant to leave Popular’s employ or
sever an agreement for services; or
(ii)
solicit,
participate
in
or
assist
in
the
solicitation
of
any
of
Popular’s
customers
serviced
by
you
or
with
whom
you
had
Material
Contact
and/or
regarding
whom
you
received
Confidential Information
(as defined
in Popular’s
Code of
Ethics) during
the three-year
period prior
to
your
employment
termination
who
were
still
customers
of
Popular
during
the
immediately
preceding 12-month period, for the purpose of
providing products or services in competition with
Popular’s products
or services.
"Material
Contact" means
interaction between
you and
the customer
within the three-year prior
to your last day as
a team member which
takes place to manage,
service
or further the business relationship.
The term “Solicit”, when used in this section, will mean any
direct or indirect communication of any kind
regardless of
who initiates
it, that
in any
way invites,
advises, encourages
or requests
any person
to take
any
action;
provided
that
such
term
will
not
be
deemed
to
include
solicitation
by
public
advertisement
media of general distribution (i.e., not targeted to present employees, consultants or customers of Popular)
without specific instruction or direction by you.
If you breach
any of
the terms
of this
restrictive covenant,
all outstanding
Restricted Stock
and Performance
Shares awarded hereunder, whether vested
or unvested, held by you shall be
immediately and irrevocably
forfeited for
no consideration.
For any
Restricted Stock
and Performance
Shares awarded
hereunder that
vested within one
(1) year prior
to the termination
of your employment
with Popular or
at any time
between
your termination
of employment
and the
date of
said breach,
you shall
be required to
repay or
otherwise
reimburse Popular an amount having
a value equal to the aggregate
fair market value (determined as of
the
date of vesting)
of such vested
shares. This paragraph does
not constitute Popular’s
exclusive remedy for
violation of your
restrictive covenant obligations, and
Popular may seek
any additional legal
or equitable
remedy, including injunctive relief, for any such violation.
7.
Section 409A.
Shares awarded
under this
Award
Agreement are
intended to
be
exempt from
Section 409A
of the
U.S. Code,
to the
extent applicable,
and this
Award Agreement is
intended
to, and
shall be
interpreted, administered and
construed consistent
therewith.
The Committee
shall have
full authority to give effect to the intent of this Section 7.
8.
No Rights to Continued Employment.
Nothing in this Award Agreement shall be
construed as
giving you
any right
to continued
employment by
the Corporation
or any
of its
affiliates or
affect any
right that
the Corporation
or any
of its
affiliates may
have to
terminate or
alter the
terms and
conditions of your employment.
9.
Successors
and
Assigns
of
the
Corporation.
The
terms
and
conditions
of
this
Award Agreement shall be binding
upon, and shall
inure to the
benefit of, the
Corporation and its
successor
entities.
10.
Committee Discretion.
Subject to the terms of the Plan,
the Committee shall have
full discretion with respect to any actions to be taken or determinations to be made in connection with this
Award Agreement, and its determinations shall be final, binding and conclusive.
11.
Amendment.
The Committee
reserves the
right at
any time
to amend
the terms
and conditions
set forth
in this
Award
Agreement;
provided
that, notwithstanding the
foregoing, no such
amendment
shall
materially
adversely
affect
your
rights
and
obligations
under
this
Award
Agreement
without
your
consent
(or
the
consent
of
your
estate,
if
such
consent
is
obtained
after
your
death),
and
provided
,
further
, that the Committee may not postpone the payout of shares to occur at any time after the
applicable time provided for in this Award Agreement. Any amendment of this
Award Agreement shall be
in
writing signed
by
an
authorized member
of
the
Committee or
a
person
or
persons
designated
by the
Committee.
12.
Adjustment; Other
Plan Provisions.
Subject to
Section 11,
the Committee
shall
adjust equitably the terms of this
Award
in accordance with Section 5.3 of the
Plan, if applicable. Subject
to
the
terms
of
this
Award
Agreement,
the
Restricted
Stock
shall
be
subject
to
the
terms
of
the
Plan,
including,
but
not
limited
to,
the
provisions
of
Section 8.4
related
to
dividends and
voting
rights.
Cash
dividends paid on the Restricted Stock
and on all of the Common
Stock that may be subsequently
acquired
with such
cash dividends,
will be
invested in
the purchase
of additional
shares of
Common Stock
of the
Corporation
in
accordance with
the
Popular,
Inc.
Dividend Reinvestment
and
Stock
Purchase
Plan
(the
“
DRIP
”); such shares
are not subject to
the restrictions and are
immediately vested. The Restricted
Stock
shall be held in custody by the Fiduciary Services Division of Banco Popular
de Puerto Rico.
Performance
Shares
will
accrue
Dividend
Equivalents
prior
to
the
Performance
Shares
Vesting
Date.
Accrued Dividend Equivalents with
respect to the Performance
Shares will be invested
in additional shares
of Common Stock
of the Corporation in
accordance with the formula
set forth in
the DRIP.
All shares of
Common
Stock
acquired
pursuant
to
the
reinvestment
of
dividends
will
be
subject
to
the
terms
and
conditions of Section
2 and will
be paid out
on the Performance
Shares Vesting
Date based on
the actual
number of Performance Shares earned on that date.
13.
Governing Law.
This award
shall be
governed by
and construed
in
accordance
with the laws of Puerto Rico, without regard to principles of conflicts of laws.
14.
Incentive Recoupment.
This award
shall be
subject to
the terms
of the
Popular, Inc.
Incentive Recoupment Guideline
in effect as of the
Grant Date and as
such guideline may be
required to be
modified in accordance with applicable law or regulation.
15.
Headings.
The
headings
in
this
Award
Agreement
are
for
the
purpose
of
convenience only and are not intended to define or limit the construction of the
provisions hereof.
IN
WITNESS
WHEREOF,
POPULAR,
INC.
and
the
Recipient
caused
this
Award
Agreement to be duly executed and delivered as of the Grant Date.
POPULAR, INC.
ACCEPTED:
By:
[Insert Name of Representative]
By: [Insert Name of Recipient]
Title:
[Insert Title of Representative]
Title: [Insert Title of Recipient]
_________________________
___________________________
Signature
Signature
ANNEX 1
POPULAR, INC.
2021 LONG-TERM EQUITY INCENTIVE AWARD
Recipient:
Employee Number:
Grant Date: February 25, 2021
Total Dollar Value
of Award:
Common Stock Market Price as of closing on Grant Date:
Restricted Stock
Dollar Value
of Restricted Stock Award:
Common Stock Market Price as of closing on Grant Date:
Total Shares of Restricted Stock Awarded:
Restricted Stock Vesting Dates:
Shares
Shares
Shares
Shares
February 23, 2022
February 23, 2023
February 23, 2024
February 23, 2025
Performance Shares
Dollar Value
of Performance Shares Award:
Common Stock Market Price as of closing on Grant Date:
Total Target
Number of Shares:
(50% Total Shareholder
Return / 50% ROATCE)
Relative Total Shareholder Return (TSR)
1
–
Opening Price =
Percentile Rank among
Comparator Group
Shares Earned
(% of Target)
75
th
Percentile or above
(maximum)
(1.5x target shares)
50th Percentile
(target)
(1x target shares)
25
th
Percentile
(threshold)
(0.5x target shares)
Below 25
th
Percentile
0
Absolute
Return
on
Average
Tangible
Common
Equity
(ROATCE)
2
–
ROATCE
Shares Earned
(% of Target)
3-year simple average ROATCE 2021-2023
12% or above
(maximum)
(1.5x target shares)
10%
(target)
(1x target shares)
7%
(threshold)
(0.5x target shares)
Lower than 7%
0
Results between threshold, target and maximum performance
will be interpolated to determine vesting award
1
TSR will be calculated as [(Closing Price at
end of period * (1 + number of shares
purchased assuming reinvestment of
dividends))/Opening Price at
beginning of period] – 1
●
Closing Price and Opening Price are based
on the preceding 60 trading days average
daily close price to mitigate against share
price volatility of
point-in-time metrics.
o
Opening price = average price 10/7/20-12/31/20
o
Closing price = average price 10/5/23-12/31/23
●
TSR calculations shall assume that dividends
are reinvested on the ex-dividend date
(i.e., the date a dividend asset is guaranteed).
Comparator Group -- SNL US Banks
greater than $10 billion in assets – Performance
will be based on the composition of the group
at the end of the 3-year
Performance Cycle.
If Popular’s absolute TSR is negative, payout
will be limited to a maximum of 100%
of target.
2
3-year simple average ROATCE for 3 years (2021-2023).
The Committee may adjust the goal or results
to reflect a core profitability that would
not be
unduly inflated or deflated by certain transactions
that do not reflect the underlying performance
of Popular’s ongoing operations, including,
but not limited
to, the impact of significant tax reform,
sales of non-earning assets, sales of branches
or other businesses, certain business acquisition
costs and revenues,
extraordinary events or charitable contributions,
severance costs and certain litigation
and settlement costs, among others.