EX-10.1 2 exhibit101.htm EX-10.1
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EXHIBIT
10.1
FIRST BANCORP
EXECUTIVE SHORT-TERM INCENTIVE PROGRAM
This document outlines the First BanCorp Executive Short-term Incentive Program (the “Program”) by and between First BanCorp
and its subsidiaries,
including FirstBank
Puerto Rico (the
“Bank,” and collectively
with First BanCorp
and any other
subsidiaries, the
“Corporation”)
and
the
Corporation’s
executives
(the
“Participant”)
approved
by
the
Board
of
Directors
(the
“Board”)
of
the
Corporation. The Program has been modified from time to time, with last modification
dated March 16, 2023.
1.
Purpose
The purpose of the Program is to reward the performance of the Participant in a manner
that is consistent with the Bank’s strategic
plan and
the attainment
of a
growing return
to the
shareholders of
the Corporation.
The Program
is further
intended to
assist the
Corporation in its ability to motivate, attract and retain qualified executives.
2.
Effective Date
The Program, in effect since January 1,
2018 through December 31, 2018, continues to
renew for successive one-year periods (each
calendar year being
a “Program Year”),
unless otherwise terminated
or modified in
accordance with the
Program and specifically
approved
by
the
Compensation
and
Benefits
Committee
(the
“Committee”)
of
the
Corporation’s
Board.
In
March
2023,
the
Committee approved certain modifications to the Program, effective for the Program
Year from January 1, 2023 through December
31, 2023, and onward.
3.
Eligibility for Participation
Participation is limited to
those approved by the
Committee during the first
90 days of each Program
Year.
Executives that would
otherwise be eligible who are hired or
promoted after the commencement of a
Program Year
may be included in the Program on
a
case-by-case basis with the approval of the Committee. In general,
new hires must be employed prior to October
1st of the Program
Year
to be eligible to participate in the Program for the performance period.
4.
Basis of Incentive Compensation Award
The Program is paid in cash. The Participant’s
potential incentive compensation award under the Program is based on
an incentive
target for his or
her position that
is approved at the
beginning of the
Program Year by the Committee (or
its delegee) in
its discretion.
The potential incentive compensation award is expressed
as a percentage of the Participant’s
base salary at the end of the Program
Year.
In no event shall a Participant receive payment under the Program that exceeds 150% of the Participant’s
incentive target for
the Program Year.
The amount of any incentive compensation award to be paid to a Participant is approved by
the Committee.
5.
Program Details
The Program uses a balanced scorecard structure with Corporate and Individual Goals. The Program allows flexibility to select key
Corporate metrics and adjust weightings year-over-year based on the Corporate
strategy.
The
amount
of
incentive
compensation
that
a
Participant
is
entitled
to
receive
under
the
Program
is
determined
based
on
the
Participant’s award target multiplied by his or
her base salary as
of December 31 of
the Program Year and the weighting (as
detailed
in Exhibit
A) and
achievement of
the approved
performance goals
(as detailed
in Exhibit
B). The
period for
achievement of
any
performance goal(s) is the Program Year.
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A.
Corporate Goals
The Corporate Goals for the Program Year
will be recommended by the Chief Executive Officer and approved in
writing by
the Committee.
B.
Individual Goals
Individual Goals are comprised of two components:
●
Individual performance
– Quantitative
and milestone
goals based
on the
Participant’s
line of
business or
functional
area as established
in the approved
annual budget and
specify high level
targets included in
each of the
Participant's
scorecard for the year.
●
Leadership
and
Core
Competencies
–
Qualitative
assessment
of
leadership
as
well
as
a
qualitative
assessment
of
established core competencies as set forth by the Corporation.
Individual Goals
for the
Program Year
will be
recommended by
the Chief
Executive Officer
and approved
in writing
by the
Committee.
C.
Determination of Incentive Compensation Award
Within the first 90 days following the end of
the Program Year,
the Corporation will review performance against the
Corporate Goals, certify in writing that the applicable performance goals
were satisfied, and determine the amount of the
incentive compensation award, if any,
to be paid to each Participant under the Program. For performance between threshold
and target or target and maximum levels, the incentive
calculation uses straight-line interpolation.
6.
Adjustments
In determining the level of performance achieved, the Committee may permit certain adjustments to
the performance metrics based
on nonrecurring
events such
as: (a) asset
write-downs not
in the
ordinary course
of business, (b)
litigation or
claim judgments
or
settlements, (c) the effect of changes in tax
laws, accounting principles or regulations, or other laws
or provisions affecting reported
results, (d) mergers,
acquisitions or divestitures,
(e) foreign exchange
gains and losses,
or (f) other
extraordinary,
unusual, and/or
nonrecurring items of gain or loss.
The Committee
and Board
have the
discretion to
modify payouts
for other
factors in
which they
deem relevant
including 1)
any
regulatory agency
issues a
formal, written
enforcement
action, memorandum
of understanding
or other
negative directive
action
where the
Committee considers
it imprudent
to provide
awards under
the Program,
2) after
a review
of the
Corporation’s
credit
quality measures the Committee considers it imprudent to provide awards
under the Program (please see Section 8).
7.
Termination
Events
In the event
the Participant’s
employment ceases
prior to the
Payment Date (as
defined below) for
any reason, including,
without
limitation, a voluntary termination of employment by the Participant, as defined by the personnel policies of the Corporation, or an
involuntary termination with
cause, the Participant
shall not be
entitled to, and
shall not have earned,
any incentive compensation
award under the Program. However, on a case-by-case basis, the Committee may allow
an incentive compensation award in its sole
discretion as deemed appropriate.
Additionally, Participants on a performance improvement program, have an unsatisfactory performance rating or have given notice
of resignation shall not be entitled to, and shall not have earned, any incentive
compensation award under the Program.
If
the
Participant
has
an
employment
or
change-in-control
agreement
that
indicates
different
terms
than
this
Section
7,
the
employment agreement will govern the terms for payment.
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8.
Administration of the Program
The Committee is
responsible for the
oversight, supervision and
existence of
the Program.
The Chief
Executive Officer shall
monitor
performance
and make
recommendations
to the
Committee concerning
award
opportunities and
the
amount
of the
Participants’
awards under
the Program.
The Chief
Executive
Officer
has been
delegated
discretion
to interpret
the terms
of the
Program,
to
determine
eligibility
for
benefits, and
to calculate
the incentive
compensation
awards under
the Program,
with the
exception
of
matters
concerning
his
or her
own
eligibility
or
awards under
the
Program.
The Committee
will make
decisions
concerning
all
matters relating
to the
Chief Executive
Officer’s
award, approve
all opportunities,
goals and
award payments
made to
executive
officers and
approve the aggregate
value of opportunities
and award payout
under the Program.
The Committee,
in its discretion,
makes
all
final
determinations
including
those
not
herein
specifically
authorized
which
may
be
necessary
or
desirable
for
the
effective administration of the Program.
Unless the Committee deems otherwise, awards will not be earned or paid, regardless of Corporate or individual performance, if 1)
any regulatory
agCency Cissues
a formal,
written enforcement
action, memorandum
of understanding
or other negative
directive
action where
the Committee
considers it
imprudent to
provide awards
under the
Program, 2)
after a
review of
the Corporation’s
credit quality measures the Committee considers it imprudent to provide
awards under the Program.
Any decision or interpretation of any provision of the Program adopted by the
Committee shall be final and conclusive.
9.
Modification and Termination
of Program
The Program may be modified or terminated at any time by the Committee
in its discretion, followed by written notification to
the
Participant as soon as reasonably practicable. In the event of a Program termination, the Participant shall continue to be eligible for
incentive
compensation
awards
for
the
Program
Year
prorated
through
the
Program’s
termination
date,
unless
the
Committee
determines in its discretion that no incentive compensation should be paid. Any incentive compensation awards shall be calculated
through the date of the Program termination on such basis as the Committee deems appropriate in its discretion and will be
payable
as soon as practicable after the
termination of the Program but in
no event later than 90
days following the end of the
Program Year.
10.
Ethical Statement
The Corporation
is committed
to doing
business in
an honest
and ethical
manner and
to complying
with all
applicable laws
and
regulations. Participant actions are expected to
comply with the policies
established by the Corporation, including ethics
and insider
policies. The Committee may
determine on a case-by-case
basis any adjustments or eliminations
of incentive payments under
this
Program due to violations of policies or noncompliance.
11.
Clawback
Awards
are subject to any clawback policy established by the Corporation.
12.
Participant Rights Not Assignable; Program Not a Contract
Any awards made pursuant to the Program shall not be subject to assignment, pledge or other disposition. Nothing contained in the
Program shall confer upon any employee any right to continued employment or to receive or continue
to receive any rate of pay or
other compensation, nor does the Program affect the right
of the Corporation to terminate a Participant’s employment. Participation
in the
Program does
not confer
rights to
participation in
other Corporation
programs or
Programs, including
annual or long-term
incentive Programs, non-qualified retirement or deferred compensation
Programs or other executive perquisite programs.
13.
Governing Law and Venue
The parties agree that the interpretation and enforcement of the Program shall be governed by the laws of Puerto Rico, and that any
action to enforce or determine any rights under the Program shall be brought exclusively in
a court of competent jurisdiction in San
Juan, Puerto Rico. The Participant consents and waives any objection
to personal jurisdiction and venue in such court.
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14.
Attorney’s Fees and Costs
The parties agree that in the event of any legal action arising out
of or relating to the interpretation or enforcement of
the Program,
the
Corporation
shall
be
entitled
to
recover
their
attorney’s
fees
and
costs
in
the
event
that
they
are
(or
either
of
them
is)
the
prevailing party.
15.
No Oral or Written Representations
The parties agree that they have relied on no oral or written representation or
promises not set forth herein, and that the terms of the
Program are
set forth
solely in
the written
Program document
and it
constitutes the
complete and
entire agreement
of the
parties
relating to the subject matter hereof.
16.
Banking Regulatory Provision
All incentive
compensation awards
under the
Program are
subject to
any condition,
limitation or
prohibition under
any financial
institution regulatory policy or rule to which the Corporation is subject.
Ratified by the Committee of the Board of First BanCorp on March 16, 2023.
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Exhibit A: Participants, Target
Opportunity and Weightings
The following is
a summary of current
Program Participants together
with each Participants’
opportunities at target
level performance
(expressed as a percentage of base salary) and weightings for each performance
component. Corporate Metric weighing is effective for
awards made for the 2023 performance year and onward.
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Exhibit B: Metrics and Calculation