EX-10.1 2 d799277dex101.htm EX-10.1
1
Exhibit 10.1
FORM OF POPULAR, INC.
2023 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
27,
2023
(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 2026, 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
2
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
.
3
(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
4
(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.
5
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 Name of Representative]
Title: [Insert Name of Recipient]
_________________________
___________________________
Signature
Signature
6
ANNEX 1
POPULAR, INC.
2023 LONG-TERM EQUITY INCENTIVE AWARD
Recipient:
Employee Number:
Grant Date: February 27, 2023
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, 2024
February 23, 2025
February 23, 2026
February 23, 2027
7
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 2023-2025
15.0% or above
(maximum)
(1.5x target shares)
13.0%
(target)
(1x target shares)
9.8%
(threshold)
(0.5x target shares)
Lower than 9.8%
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 10/06/2022
– 12/31/2022
o
Closing price = average price based on the
60-day trading period ending December 31,
2025
●
TSR calculations shall assume that dividends
are reinvested on the ex-dividend date
(i.e., the date a dividend asset is guaranteed).
Comparator Group -- U.S. Banks (GICS Code
401010) with Assets between $25B - $500B
– Performance will be based on the composition
of the group at
the beginning
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 (2023-2025).
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, unanticipated changes
in capital actions, certain
business acquisition costs and revenues,
extraordinary events or charitable contributions,
severance costs and certain litigation
and settlement costs, among
others.