ASSOCIATED BANC-CORP
10-Ks and 10-Qs
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant þ | |
| Filed by a Party other than the Registrant o | |
| Check the appropriate box: |
| o Preliminary Proxy Statement | |
| o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| þ Definitive Proxy Statement | |
| o Definitive Additional Materials | |
| o Soliciting Material Pursuant to §240.14a-12 |
Associated Banc-Corp
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ No fee required. | |
| o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| 1) Title of each class of securities to which transaction applies: |
| 2) Aggregate number of securities to which transaction applies: |
| 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| 4) Proposed maximum aggregate value of transaction: |
| 5) Total fee paid: |
| o Fee paid previously with preliminary materials. |
| o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| 1) Amount Previously Paid: |
| 2) Form, Schedule or Registration Statement No.: |
| 3) Filing Party: |
| 4) Date Filed: |
| SEC 1913 (11-01) | Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
Table of Contents
NOTICE OF 2010 ANNUAL MEETING
OF SHAREHOLDERS
PROXY STATEMENT
Table of Contents
March 15, 2010
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of
Shareholders of Associated Banc-Corp scheduled for
11:00 a.m. (CDT) on Wednesday, April 28, 2010, at the
Walter Theatre, St. Norbert College, 315 Third Street, De Pere,
Wisconsin. We will again present an economic/investment update
beginning at 10:00 a.m. Associated’s Wealth
Management professionals will provide an update on the equity
market and interest rate environment as they affect us as
investors.
The matters expected to be acted upon at the meeting are
described in detail in the attached Notice of Annual Meeting and
Proxy Statement.
Your Board of Directors and management look forward to
personally greeting those shareholders who are able to attend.
Please be sure to sign and return the enclosed proxy card so
that your shares will be voted. In the alternative, you may vote
your shares via the Internet or by using the telephone.
Instructions are included with the proxy card. If you attend the
Annual Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card or voted on the
Internet or by telephone. The Board of Directors joins us in
hoping that you will attend. Please indicate on your proxy card
whether or not you plan to attend the Annual Meeting.
For your convenience, we are providing space on the proxy card
for any questions or comments you may have that you wish to have
addressed either personally or at the Annual Meeting. We always
appreciate your input and interest in Associated Banc-Corp. If
you prefer, you may
e-mail
comments or questions to shareholders@associatedbank.com.
Sincerely,
William R. Hutchinson
Chairman of the Board
Philip B. Flynn
President and CEO
Table of Contents
1200 Hansen
Road
Green Bay, Wisconsin 54304
Green Bay, Wisconsin 54304
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
April 28, 2010
April 28, 2010
Holders of Common Stock of
Associated Banc-Corp:
The Annual Meeting of Shareholders of Associated Banc-Corp will
be held at the Walter Theatre, St. Norbert College, 315
Third Street, De Pere, Wisconsin, on Wednesday, April 28,
2010, at 11:00 a.m. (CDT) for the purpose of considering
and voting on:
| 1. | The election of ten directors. The Board of Directors’ nominees are named in the accompanying Proxy Statement. |
| 2. | The approval of the Associated Banc-Corp 2010 Incentive Compensation Plan. |
| 3. | The approval of an advisory (non-binding) proposal on executive compensation. |
| 4. | The ratification of the selection of KPMG LLP as the independent registered public accounting firm for Associated Banc-Corp for the year ending December 31, 2010. |
| 5. | Such other business as may properly come before the meeting and all adjournments thereof. |
The Board of Directors has fixed March 4, 2010, as the
record date for determining the shareholders of Associated
Banc-Corp entitled to notice of and to vote at the meeting, and
only holders of Common Stock of Associated Banc-Corp of record
at the close of business on such date will be entitled to notice
of and to vote at such meeting and all adjournments.
Brian R. Bodager
Executive Vice President
Chief Administrative Officer
General Counsel &
Corporate Secretary
Green Bay, Wisconsin
March 15, 2010
YOUR VOTE
IS IMPORTANT.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON APRIL 28,
2010:
THE PROXY STATEMENT AND ANNUAL REPORT ARE AVAILABLE ONLINE AT
WWW.PROXYDOCS.COM/ASBC.
YOU CAN ALSO VOTE BY TELEPHONE AT
1-800-690-6903.
IF YOU DO NOT VOTE BY USING THE INTERNET OR THE TELEPHONE,
YOU ARE URGED TO DATE, SIGN, AND PROMPTLY RETURN YOUR PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR
WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE
ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY OR YOUR PROMPT
VOTE BY USING THE INTERNET OR THE TELEPHONE, REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD, WILL AID ASSOCIATED BANC-CORP IN
REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE
GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IN THE EVENT YOU ATTEND THE MEETING.
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Table of Contents
1200 Hansen Road
Green Bay, Wisconsin 54304
PROXY
STATEMENT
ANNUAL MEETING — APRIL
28, 2010
Information
Regarding Proxies
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the
“Board”) of Associated Banc-Corp, hereinafter called
“Associated,” to be voted at the Annual Meeting of
Shareholders on Wednesday, April 28, 2010, and at any and
all adjournments thereof.
Solicitation of proxies by mail is expected to commence on
March 18, 2010, and the cost thereof will be borne by
Associated. In addition to such solicitation by mail, some of
the directors, officers, and regular employees of Associated
may, without extra compensation, solicit proxies by telephone or
personal interview. Associated has retained D.F.
King & Co., Inc. to solicit proxies for the Annual
Meeting from brokers, bank nominees and other institutional
holders. Associated has agreed to pay D.F. King & Co.,
Inc. up to $12,000 plus its
out-of-pocket
expenses for these services. Arrangements will be made with
brokerage houses, custodians, nominees, and other fiduciaries to
send proxy materials to their principals, and they will be
reimbursed by Associated for postage and clerical expenses.
VOTE BY INTERNET — www.proxyvote.com. Use
the Internet to transmit your voting instructions and for
electronic delivery of information up until 11:59 p.m.
Eastern Time the day before the meeting date. Have your proxy
card in hand when you access the website and follow the
instructions to obtain your records and to create an electronic
voting instruction form. If you vote by Internet, please do
not mail your proxy card.
VOTE BY TELEPHONE —
1-800-690-6903. Use
any touch-tone telephone to transmit your voting instructions up
until 11:59 P.M. Eastern Time the day before the meeting
date. Have your proxy card in hand when you call and then follow
the instructions. If you vote by telephone, please do not
mail your proxy card.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by two judges of election who are senior officers of
Associated and who will determine whether or not a quorum is
present. The presence, in person or by proxy, of the majority of
the outstanding shares entitled to vote at the Annual Meeting is
required to constitute a quorum for the transaction of business
at the Annual Meeting. The judges of election will treat
abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted
for purposes of determining the approval of any matter submitted
to shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain
shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that
matter but will be considered as present and entitled to vote
for purposes of determining the presence of a quorum for the
meeting.
Shareholders are urged to sign, date, and return the enclosed
proxy card as promptly as possible in the envelope enclosed for
that purpose. Shareholders of record can also give proxies using
the Internet. The Internet voting procedures are designed to
authenticate Associated’s shareholders’ identities, to
allow Associated’s shareholders to give their voting
instructions, and to confirm that Associated’s
shareholders’ instructions have been recorded properly.
Shareholders who wish to vote over the Internet should be
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aware that there might be costs associated with electronic
access, such as usage charges from Internet access providers and
telephone companies.
Any Associated shareholder of record desiring to vote over the
Internet will be required to enter the unique control number
imprinted on such shareholder’s Associated proxy card and,
therefore, should have their Associated proxy card in hand when
initiating the session. To vote over the Internet, log on to the
website www.proxyvote.com, and follow the simple instructions
provided. Instructions are also included on the proxy card.
Proxies may be revoked at any time prior to the exercise thereof
by filing with the Corporate Secretary of Associated a written
revocation or a duly executed proxy bearing a later date. Such
proxies may not be revoked via the Internet. Shares as to which
proxies have been executed will be voted as specified in the
proxies. If no specification is made, the shares will be voted
“FOR” the election of the Board’s nominees as
directors, “FOR” the Associated Banc-Corp 2010
Incentive Compensation Plan, “FOR” the approval of an
advisory (non-binding) proposal on executive compensation, and
“FOR” the ratification of selection of KPMG LLP as
Associated’s independent registered public accounting firm.
The Corporate Secretary of Associated is Brian R. Bodager, 1200
Hansen Road, Green Bay, Wisconsin 54304.
Record
Date and Voting Securities
The Board has fixed the close of business on March 4, 2010,
as the record date (the “Record Date”) for the
determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting. The securities of Associated entitled to
be voted at the meeting consist of shares of its common stock,
$0.01 par value (“Common Stock”), of which
173,614,761 shares were issued and outstanding at the close
of business on the Record Date. Only shareholders of record at
the close of business on the Record Date will be entitled to
receive notice of and to vote at the meeting.
Each share of Common Stock is entitled to one vote on each
matter. No other class of securities will be entitled to vote at
the meeting. There are no cumulative voting rights.
Corporate
Report and
Form 10-K
Annual Report
The 2009 Corporate Report of Associated and the 2009
Form 10-K
Annual Report have been mailed concurrently with this Proxy
Statement to shareholders of record. The 2009 Corporate Report
and the 2009
Form 10-K
Annual Report do not constitute a part of the proxy material.
PROPOSAL 1
ELECTION
OF DIRECTORS
The Board has the responsibility for establishing broad
corporate policies and for the overall performance of
Associated, although it is not involved in
day-to-day
operating details. Members of the Board are kept informed of
Associated’s business by various reports and documents sent
to them on a regular basis, including operating and financial
reports made at Board and committee meetings by officers of
Associated.
Unless otherwise directed, all proxies will be voted FOR the
election of each of the individuals nominated to serve as
directors. The biographical information below for each nominee
includes the specific experience, qualifications, attributes or
skills that led to the Corporate Governance Committee’s
conclusion that each nominee should serve as a director. The ten
nominees receiving the largest number of affirmative votes cast
at the Annual Meeting will be elected as directors.
Associated’s Corporate Governance Guidelines set forth
procedures if a nominee is elected but receives a majority of
“withheld” votes. In an uncontested election, any
nominee who receives a greater number of votes
“withheld” from his or her election than votes
“for” such election is required to tender his or her
resignation following certification of the shareholder vote. The
Corporate Governance Committee is required to make a
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recommendation to the Board with respect to any such letter of
resignation. The Board is required to take action with respect
to this recommendation and to disclose its decision and
decision-making process.
The nominees have consented to serve, if elected, and as of the
date of this Proxy Statement, Associated has no reason to
believe that any of the nominees will be unable to serve. Carlos
E. Santiago will not be standing for re-election to the Board at
the 2010 Annual Meeting. Correspondence may be directed to
nominees at Associated’s executive offices. Unless
otherwise directed, the persons named as proxies intend to vote
in favor of the election of the nominees.
The information presented below is as of March 15, 2010.
Nominees
for Election to our Board
Philip B. Flynn has been President and Chief Executive
Officer (“CEO”) of Associated since December 1,
2009. He was appointed to the Associated Board of Directors on
the same date. Prior to joining Associated, he served as Vice
Chairman and Chief Operating Officer of Union Bank of
California. During his nearly
30-year
career with Union Bank, he held a broad range of executive
positions, including chief credit officer and head of commercial
banking, specialized lending and wholesale banking. He served as
a member of Union Bank’s board of directors from 2004 to
2009. Age: 52.
Karen T. Beckwith has been a director of Associated since
April 2004. Currently, she is a principal of Beckwith Crowe,
LLC, a management consulting practice. She was President and CEO
of Gelco Information Network, a privately held provider of
transaction and information processing systems to corporations
and government agencies, based in Eden Prairie, Minnesota, until
its sale to Concur Technologies in October 2007. She joined
Gelco in 1999 as the CFO of Gelco Information Network; she then
served as Chief Operating Officer of the company’s Trade
Management Group, a division of Gelco Information Network, and
was named its President and CEO in 2001. Before joining Gelco,
she was with Ceridian Corp. for four years, most recently as
Senior Vice President for business development and integration
with Ceridian Employer Services. Ms. Beckwith served as a
director of CNS from 2003 to 2006. Her qualifications to serve
as a director of Associated and a member of the Audit Committee
include her education in finance and accounting. She was a CPA,
has practiced with an international public accounting firm and
has served in various executive capacities. She meets the
requirements of an audit committee financial expert. Age: 50.
Ruth M. Crowley has been a director of Associated since
February 2004. She is currently engaged in multiple retail and
merchandising consulting projects in her own consulting
practice. She was the President of Motorsports Authentics, a
merchandise licensee and retailer for NASCAR drivers and teams
from March 2006 to September 2007, and was Vice President,
General Merchandise, of Harley-Davidson, Inc. from 2000 to
February 2006. From 1998 to 2000, she was Senior Vice President
— Retail and Recreation Group, of Universal Studios in
California, and has held management positions in many sectors of
the retail industry since 1985. She currently serves as Vice
Chairman of the Board of Governors of the University of North
Texas School of Retail, Merchandising and Hospitality
Management. Ms. Crowley’s qualifications to serve as a
director of Associated and member of the Compensation and
Benefits Committee and the Nominating and Search Committee
include executive-level responsibility for retail product
marketing and sales to consumers for both large public and small
private firms. Age: 50.
Ronald R. Harder has been a director of Associated since
July 1991. He is presently retired. He served as the CEO of
Jewelers Mutual Insurance Company, Neenah, Wisconsin, from 2005
to 2007, the President and CEO from 1982 until 2005, and was an
officer since 1973. Jewelers Mutual Insurance Company is a
mutual insurance company providing insurance coverage nationwide
for jewelers in retail, wholesale, and manufacturing, as well as
personal jewelry insurance coverage for individuals.
Mr. Harder has served on several for-profit and non-profit
boards of directors. He utilizes skills developed through his
managerial experience over the course of his career in his
service as a senior executive. His qualifications to serve as a
director of Associated and a member of the Audit Committee
include serving
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as the CEO of Jewelers Mutual Insurance Company. Focused on
insurance, his firm is one of the largest specialty-line
underwriters of this type in the U.S. He also has
experience as a bank director. Age: 66.
William R. Hutchinson has been a director of Associated
since April 1994, Lead Director from April 2009 to December 2009
and Chairman of the Board since December 2009. He has served as
President of W. R. Hutchinson & Associates, Inc., an
energy industry consulting company, since April 2001.
Previously, he was Group Vice President, Mergers &
Acquisitions, of BP Amoco p.l.c. from January 1999 to April 2001
and held the positions of Vice President, Financial Operations,
Treasurer, Controller, and Vice President — Mergers,
Acquisitions & Negotiations of Amoco Corporation,
Chicago, Illinois, from 1981 through January 1999. He was a
director of Associated Bank Chicago, a former wholly owned
subsidiary of Associated, from 1981 to June 2005.
Mr. Hutchinson also serves as an independent director and
Chairman of the Audit Committees of 22 closed-end funds in the
Legg Mason Inc. Fund Complex. Mr. Hutchinson’s
qualifications to serve as Chairman of the Board of Directors of
Associated, Chairman of the Corporate Development Committee and
a member of the Audit Committee and Nominating and Search
Committee include executive level responsibility for the
financial operations of a large publicly-traded company. He
meets the requirements of an audit committee financial expert.
Mr. Hutchinson has significant mergers and acquisitions
experience and has served as a bank director for 15 years.
Age: 67.
Eileen A. Kamerick has been a director of Associated
since March 2007. Since August 2008, she has served as Senior
Vice President, Chief Financial Officer and Chief Legal Officer
of Tecta America Corporation, the largest commercial roofing
company in the United States, with particular expertise in solar
installations and greenroofs. Prior to joining Tecta America
Corporation, she served as Executive Vice President and Chief
Financial Officer of BearingPoint, Inc., a management and
technology consulting firm from May 2008 to June 2008. On
February 18, 2009, BearingPoint, Inc. filed for bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy
Code in the U.S. Bankruptcy Court for the Southern District
of New York. Prior to joining BearingPoint, Inc., she served as
Executive Vice President, Chief Financial Officer and Chief
Administrative Officer of Heidrick & Struggles
International, Inc., an international executive search and
leadership consulting firm, from June 2004 to May 2008.
Ms. Kamerick served on the board of directors of The
ServiceMaster Company from 2005 to 2007. She currently serves on
the board of directors of Westell Technologies, Inc. Her
qualifications to serve as a director of Associated and a member
of the Audit Committee, the Nominating and Search Committee and
the Risk and Credit Committee include her executive experience
with several public and private companies. She has formal
training in finance and accounting and meets the requirements of
an audit committee financial expert. Age: 51.
Richard T. Lommen has been a director of Associated since
October 2004. He has served as Chairman of the Board of Courtesy
Corporation, a McDonald’s franchisee, located in
La Crosse, Wisconsin, since 2006, and prior to that, as
President of Courtesy Corporation from 1968 to 2006.
Mr. Lommen served as Vice Chairman of the Board of First
Federal Capital Corp, which was acquired by Associated in
October 2004, since April 2002. His qualifications to serve as a
director of Associated and member of the Corporate Governance
Committee and Risk and Credit Committee include successful small
business/franchise ownership, his experience in all aspects of
franchise ownership, particularly management and instruction of
retail employees, and marketing and sales to consumers and his
service as Vice Chairman of First Federal Capital Corp. Age: 65.
John C. Meng has been a director of Associated since
January 1991. He served as Chairman of the Board of Schreiber
Foods, Inc., Green Bay, Wisconsin, from October 1999 to November
2007. Schreiber Foods, Inc. markets dairy products to the food
service industry worldwide and national retailers. He has served
as a director of Schreiber Foods, Inc. since 1978 and as an
officer since 1974, including Chairman, President, and CEO from
May 1999 to October 1999, President and CEO from December 1989
to May 1999, President and Chief Operating Officer from 1985 to
1989 and CFO from 1974 to 1981. Mr. Meng served as a
director of Integrys Energy Group, Inc. from February 2007 to
February 2009 and its predecessor WPS Resources Corporation from
February 2000 to February 2007. His qualifications to serve as a
director of Associated and Chairman of the Compensation and
Benefits Committee include executive leadership responsibility
for Schreiber Foods, Inc., one of the largest privately held
companies
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in the U.S. He has experience in marketing and sales,
finance, commodities and manufacturing. He also has service as a
bank director. Age: 65.
J. Douglas Quick has been a director of Associated
since July 1991. He has served as Chairman of Lakeside Foods,
Inc., Manitowoc, Wisconsin, since July 2008, and prior to that
time served as Chairman and CEO of Lakeside Foods, Inc. from
July 2007 to June 2008 and President and CEO of Lakeside Foods,
Inc. from 1986 to June 2007. Lakeside Foods, Inc. is a food
processor of a diverse line of food products sold throughout the
United States and the world. Mr. Quick’s
qualifications to serve as a director of Associated, Chairman of
the Corporate Governance Committee and a member of the
Nominating and Search Committee include 22 years of
executive leadership experience as CEO and as a director of both
public and private companies, including Lakeside Foods, Inc.,
and non-profit organizations, as well as management experience
in the areas of manufacturing, strategic planning, mergers and
acquisitions, and international business. He has an engineering
background and has served as a bank director. Age: 63.
John C. Seramur has been a director of Associated since
October 1997. Mr. Seramur also serves as a director of
Associated Trust Company, National Association, a wholly
owned subsidiary of Associated Bank, National Association. He
was President, CEO and Chief Operating Officer of First
Financial Corporation, a thrift holding company that merged with
Associated in 1997, and its subsidiary, First Financial Bank,
from 1966 to 1998. He has been a director of Health Payment
Systems, Inc. since 2008 and currently serves as Chairman of the
Board, a director of Stars Design since 2007 and a director of
Vita Foods from 1999 to 2008. His qualifications to serve as a
director of Associated, Chairman of the Risk and Credit
Committee and a member of the Compensation and Benefits
Committee, the Corporate Development Committee and the
Nominating and Search Committee include serving as the CEO of
First Financial Corporation. He also served as vice chairman of
Associated. He has experience managing mergers and acquisitions.
Age: 67.
Recommendation
of the Board of Directors
The Board recommends that shareholders vote FOR the election of
Mses. Beckwith, Crowley and Kamerick and Messrs. Flynn,
Harder, Hutchinson, Lommen, Meng, Quick and Seramur to the Board
of Directors.
Affirmative
Determinations Regarding Director Independence
Associated’s Board has considered the independence of the
nominees for election at the Annual Meeting under the corporate
governance rules of the Nasdaq Stock Market
(“NASDAQ”). The Board has determined that all of the
nominees are independent under the NASDAQ corporate governance
rules, except for Mr. Flynn, President and CEO of
Associated. Mr. Flynn is not independent because of his
service as an executive officer of Associated and not due to any
other transactions or relationships.
INFORMATION
ABOUT THE BOARD OF DIRECTORS
Board
Committees and Meeting Attendance
During 2009, the Board continued to take an active role, met
often and established the Credit and Risk Committee and
Nominating and Search Committee. Mr. Hutchinson assumed the
role of Lead Director in April 2009 and presided over numerous
executive sessions of the independent directors that resulted in
significant actions. These included more direct and frequent
communications with executive officers and banking regulators,
consideration of key issues and governance changes, and the
engagement of Winston & Strawn LLP as counsel to the
independent directors. The Lead Director, in consultation with
the Corporate Governance Committee and the Compensation and
Benefits Committee and supported by counsel to the independent
directors, led the negotiations leading to the resignation of
Ms. Binder, the retirement of Mr. Beideman and the
hiring of Mr. Flynn, and the documentation of the related
agreements.
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The Board held 18 meetings during 2009. All of the current
directors who served on the Board during 2009 attended at least
75% of the total number of meetings of the Board and its
committees of which they were members. The Board convened an
executive session of its independent directors at all of its
regular board meetings held in 2009. The Board has adopted
Corporate Governance Guidelines, including a Code of Ethics for
Directors and Executive Officers, which can be found on
Associated’s website at www.associatedbank.com, “About
Us,” “Investor Relations,” “Corporate
Governance.” We will describe on our website amendments to
or waivers from our Code of Ethics in accordance with all
applicable laws and regulations. Associated’s executive
officers, as employees of Associated, are also subject to the
Associate Code of Conduct.
The Audit Committee of the Board of Directors (the “Audit
Committee”), composed of Mses. Beckwith and Kamerick and
Messrs. Harder (Chairman) and Hutchinson, all of whom are
outside directors who meet the independence requirements set
forth in the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and NASDAQ corporate governance
rules, held 24 meetings during 2009. The Audit Committee reviews
the adequacy of internal accounting controls, reviews with the
independent registered public accounting firm its plan and
results of the audit engagement, reviews the scope and results
of procedures for internal auditing, reviews and approves the
general nature of audit services by the independent registered
public accounting firm, and reviews quarterly and annual
financial statements issued by Associated. The Audit Committee
has the sole authority to appoint or replace the independent
registered public accounting firm, subject to ratification by
the shareholders at the Annual Meeting. Both the internal
auditors and the independent registered accounting firm meet
periodically with the Audit Committee and have free access to
the Audit Committee at any time. In addition, the Audit
Committee oversees management’s bank regulatory compliance.
In light of the new requirements imposed on Associated and the
Board under TARP and increased oversight by bank regulators, the
Lead Director requested counsel to the independent directors to
provide guidance to the Audit Committee in its oversight
responsibilities and processes. The Audit Committee reviews and
enforces the Code of Ethics for Directors & Executive
Officers. The Charter of the Audit Committee can be found on
Associated’s website at www.associatedbank.com, “About
Us,” “Investor Relations,” “Corporate
Governance.”
The Compensation and Benefits Committee of the Board of
Directors (the “Compensation and Benefits Committee”),
composed of Ms. Crowley and Messrs. Meng (Chairman)
and Seramur, all of whom are outside directors who meet the
independence requirements set forth in the Exchange Act and
NASDAQ corporate governance rules, held seven meetings in 2009.
The Compensation and Benefits Committee’s functions
include, among other duties directed by the Board,
administration of Associated’s executive compensation and
employee benefit programs and oversight. The Compensation and
Benefits Committee assumed responsibility for review and
determination of director compensation in October 2009 from the
Corporate Governance Committee. The Charter of the Compensation
and Benefits Committee can be found on Associated’s website
at www.associatedbank.com, “About Us,” “Investor
Relations,” “Corporate Governance.”
The Corporate Governance Committee of the Board of Directors
(the “Corporate Governance Committee”), composed of
Messrs. Lommen, Quick (Chairman), and Santiago, all of whom
are outside directors who meet the independence requirements set
forth in the Exchange Act and NASDAQ corporate governance rules,
held five meetings in 2009. Mr. Santiago will not be
standing for re-election to the Board of Directors at the 2010
Annual Meeting. The Corporate Governance Committee’s
functions include corporate governance oversight, review and
recommendation for Board approval of Board and committee
charters. The Corporate Governance Committee also reviews the
structure and composition of the Board, considers qualification
requirements for continued Board service, and recruits new
director candidates. Prior to October 2009, the Corporate
Governance Committee was responsible for review and
determination of director compensation. The Charter of the
Corporate Governance Committee can be found on Associated’s
website at www.associatedbank.com, “About Us,”
“Investor Relations,” “Corporate Governance.”
The Nominating and Search Committee established in 2009 as a
subcommittee of the Corporate Governance Committee (the
“Nominating and Search Committee”), composed of Mses.
Crowley and
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Kamerick and Messrs. Quick (Chairman), Hutchinson and
Seramur, all of whom are outside directors who meet the
independence requirements set forth in the Exchange Act and
NASDAQ corporate governance rules, held 17 meetings in 2009. The
Nominating and Search Committee’s functions focused on the
selection of our recently hired President and CEO.
The Corporate Development Committee of the Board of Directors
(the “Corporate Development Committee”), composed of
Messrs. Hutchinson (Chairman) and Seramur, both of whom are
outside directors who meet the independence requirements set
forth in the Exchange Act and NASDAQ corporate governance rules,
held no meetings in 2009. The Corporate Development
Committee’s functions include, among other duties directed
by the Board, reviewing and recommending to the Board proposals
for acquisition or expansion activities. The Charter of the
Corporate Development Committee can be found on
Associated’s website at www.associatedbank.com, “About
Us,” “Investor Relations,” “Corporate
Governance.”
The Risk and Credit Committee of the Board of Directors (the
“Risk and Credit Committee”), composed of
Ms. Kamerick and Messrs. Lommen and Seramur
(Chairman), all of whom are outside directors who meet the
independence requirements set forth in the Exchange Act and
NASDAQ corporate governance rules, was formed in June 2009 and
held six meetings in 2009. The Risk and Credit Committee’s
primary responsibility is oversight of credit, interest rate and
liquidity risks. The Risk and Credit Committee relies on
management to establish appropriate policies, practices and
procedures. The Charter of the Risk and Credit Committee can be
found on Associated’s website at www.associatedbank.com,
“About Us,” “Investor Relations,”
“Corporate Governance.”
It is Associated’s policy that all of Associated’s
directors and nominees for election as directors at the Annual
Meeting attend the Annual Meeting except in cases of
extraordinary circumstances. All of the nominees for election at
the 2009 Annual Meeting of Shareholders were in attendance, with
the exception of Mr. Santiago.
Separation
of Board Chairman and CEO
As reflected in our Corporate Governance Guidelines, while the
Board has no formal policy requiring the separation of the
positions of Chairman of the Board and Chief Executive Officer,
the Board acknowledges that such separation may be appropriate
under certain circumstances. Currently, the positions of
Chairman of the Board and Chief Executive Officer are separated.
The Board elected to separate these roles in light of
Mr. Flynn recently joining Associated in December 2009 and
because it determined that Mr. Hutchinson, our former Lead
Director, serving as Chairman would enhance the effectiveness of
the Board. Additionally, the Board recognized that managing the
Board in the current economic environment is a particularly
time-intensive responsibility. Separating the roles allows
Mr. Flynn to focus solely on his duties as the Chief
Executive Officer which better serves Associated. Separation of
these roles also promotes risk management, enhances the
independence of the Board from management and mitigates any
potential conflicts of interest between the Board and management.
Board
Diversity
The Corporate Governance Committee considers attributes of
diversity as outlined in the Corporate Governance Committee
Charter when considering director nominees. While these
attributes are considered on an ongoing basis for the Board as
constituted, they are particularly considered in the recruitment
and deliberation regarding new nominees. The Corporate
Governance Committee Charter sets forth desired diversity
characteristics for Board member experience and competencies.
The Corporate Governance Committee believes that
Associated’s best interests are served by maintaining a
diverse and active Board membership with members who are
willing, able and well-situated to provide insight into current
business conditions, opportunities and risks. The
“outside” perspectives of the Board members are key
factors in contributing to our success. The following diversity
principles were initially implemented and have been in place
since April 2003 and are set forth in the Corporate Governance
Committee Charter:
| • | The number of directors should be maintained at 10-12 persons with the flexibility to expand, if required, to support acquisitions or mergers. |
7
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| • | Geographic diversity, as it relates to the markets Associated serves. |
| • | Industry representation, including a mix and balance of manufacturing, service, public and private company service. |
| • | Multi-disciplinary expertise, including financial/accounting expertise, sales/marketing expertise, mergers and acquisition expertise, regulatory, manufacturing, and production expertise, educational institutions, and public service expertise. |
| • | Racial, ethnic, and gender diversity. |
| • | A majority of the members of the Board shall be “independent” directors as defined by applicable law, including the rules and regulations of the Securities and Exchange Commission and the rules of NASDAQ. |
The Corporate Governance Committee has periodically assessed the
effectiveness of the principles set forth above, most recently
in connection with its activities in preparation for the 2010
Annual Meeting of Shareholders. In light of the current
Board’s representation of diverse industry, background,
communities within Associated’s markets, professional
expertise and gender diversity, the Corporate Governance
Committee believes that Associated has effectively implemented
these principles.
Director
Nominee Recommendations
The Corporate Governance Committee will consider any nominee
recommended by a shareholder in accordance with this section
under the same criteria as any other potential nominee. The
Corporate Governance Committee believes that a nominee
recommended for a position on the Board must have an appropriate
mix of director characteristics, experience, diverse
perspectives, and skills. Qualifications for nomination as a
director can be found in the Corporate Governance Committee
Charter. At a minimum, the core competencies should include
accounting or finance experience, market familiarity, business
or management experience, industry knowledge, customer-base
experience or perspective, crisis response, leadership,
and/or
strategic planning.
A shareholder who wishes to recommend a person or persons for
consideration as a nominee for election to the Board must send a
written notice by mail,
c/o Corporate
Secretary, Associated Banc-Corp, 1200 Hansen Road, Green Bay,
Wisconsin 54304, that sets forth (1) the name, age, address
(business and residence) and principal occupation or employment
(present and for the past five years) of each person whom the
shareholder proposes to be considered as a nominee; (2) the
number of shares of Associated beneficially owned (as defined by
Section 13(d) of the Exchange Act) and any other ownership
interest in the shares of Associated, whether economic or
otherwise, including derivatives and hedges, by each such
proposed nominee; (3) any other information regarding such
proposed nominee that would be required to be disclosed in a
definitive proxy statement to shareholders prepared in
connection with an election of directors pursuant to
Section 14(a) of the Exchange Act; and (4) the name
and address (business and residential) of the shareholder making
the recommendation and the number of shares of Associated
beneficially owned (as defined by Section 13(d) of the
Exchange Act) and any other ownership interest in the shares of
Associated, whether economic or otherwise, including derivatives
and hedges, by the shareholder making the recommendation.
Associated may require any proposed nominee to furnish
additional information as may be reasonably required to
determine the qualifications of such proposed nominee to serve
as a director of Associated.
Communications
Between Shareholders and the Board of Directors
Associated’s Board provides a process for shareholders to
send communications to the Board or any of the directors.
Shareholders may send written communications to the Board or any
one or more of the individual directors by mail,
c/o Corporate
Secretary, Associated Banc-Corp, 1200 Hansen Road, Green Bay,
Wisconsin 54304, or by
e-mail to
shareholders@associatedbank.com. All communications will be
compiled by Associated’s Corporate Secretary and submitted
to the Board or the individual directors on a regular basis
unless such communications are considered, in the reasonable
judgment of the Corporate
8
Table of Contents
Secretary, to be improper for submission to the intended
recipient(s). Examples of shareholder communications that would
be considered improper for submission include, without
limitation, customer complaints, solicitations, communications
that do not relate directly or indirectly to Associated or
Associated’s business, or communications that relate to
improper or irrelevant topics.
Compensation
and Benefits Committee Interlocks and Insider
Participation
There are no Compensation and Benefits Committee interlocking
relationships, as defined by the rules adopted by the Securities
and Exchange Commission, and no Associated officer or employee
is a member of the Compensation and Benefits Committee.
INFORMATION
ABOUT THE EXECUTIVE OFFICERS
The following is a list of names and ages of executive officers
of Associated indicating all positions and offices held by each
such person and each such person’s principal occupation(s)
or employment during the past five years. Officers are appointed
annually by the Board of Directors at the meeting of directors
immediately following the annual meeting of shareholders. There
are no family relationships among these officers, nor any
arrangement or understanding between any officer and any other
person pursuant to which the officer was selected. No person
other than those listed below has been chosen to become an
executive officer of Associated. The information presented below
is as of March 15, 2010.
Brian R. Bodager serves as Executive Vice President,
Chief Administrative Officer, General Counsel, and Corporate
Secretary of Associated and Associated Bank, National
Association. He serves as a director of Associated Bank,
National Association, and Executive Vice President, Secretary,
and director of Associated Trust Company, National
Association, a wholly owned subsidiary of Associated Bank,
National Association. He is also a director of the following
subsidiaries and affiliates of Associated: Associated Financial
Group, LLC; Associated Investment Services, Inc.; Associated
Wisconsin Investment Corp.; Associated Minnesota Investment
Corp.; Associated Illinois Investment Corp.; Associated
Wisconsin Real Estate Corp.; Associated Minnesota Real Estate
Corp.; Associated Illinois Real Estate Corp.; Financial Resource
Management Group, Inc.; First Enterprises, Inc.; First
Reinsurance, Inc.; Banc Life Insurance Corporation; Associated
Mortgage Reinsurance, Inc.; Associated Risk Group, LLC;
Associated Banc-Corp Founders Scholarship Fund; and Associated
Banc-Corp Foundation. He was first elected an executive officer
of Associated on July 22, 1992. Age: 54.
Oliver Buechse serves as Executive Vice President, Chief
Strategy Officer of Associated and Associated Bank, National
Association. From February 2004 to January 2010, he was Senior
Vice President, Strategy and Special Projects at
San Francisco-based Union Bank, and from July 2009 to
January 2010, he also served as Senior Vice President, North
American Vision and Portfolio Strategy for Bank of
Tokyo — Mitsubishi UFG. He began his career at
McKinsey & Company, working in the U.S., Germany, and
Austria. He was first elected as an executive officer of
Associated on February 15, 2010. Age: 41.
Judith M. Docter serves as Executive Vice President,
Director, Human Resources, of Associated and Associated Bank,
National Association. She is a director of Associated Bank,
National Association and Associated Financial Group, LLC. She
was Senior Vice President, Director of Organizational
Development, for Associated from May 2002 to November 2005. From
March 1992 to May 2002, she served as Director of Human
Resources for Associated Bank, National Association, Fox Valley
Region and Wealth Management. She was first elected an executive
officer of Associated on November 10, 2005. Age: 49.
Scott S. Hickey serves as Executive Vice President, Chief
Credit Officer of Associated and Associated Bank, National
Association. He is a director of Associated Bank, National
Association. From August 1985 to October 2008, he was Executive
Vice President and Chief Approval Officer of U.S. Bank,
N.A. He was first elected an executive officer of Associated on
October 23, 2008. Age: 54.
Mark J. McMullen serves as Executive Vice President,
Director, Wealth Management, of Associated and Associated Bank,
National Association. He is a director of Associated Bank,
National Association, Chairman and CEO of Associated
Trust Company, National Association, Chairman of the Board
of
9
Table of Contents
Associated Investment Services, Inc., and Chairman of the Board
of Associated Financial Group, LLC. He is also a director of
ASBC Investment Corp. (a subsidiary of Associated Bank, National
Association). He was first elected an officer of Associated on
June 2, 1981, and an executive officer of Associated
initially on April 25, 2001 and most recently on
July 1, 2009, following a previously announced retirement
transition. Age: 61.
Arthur E. Olsen, III serves as Executive Vice
President, General Auditor, of Associated. He was first elected
an executive officer of Associated on July 28, 1993. Age:
58.
Mark D. Quinlan serves as Executive Vice President and
Chief Information Officer, Director of Operations and
Technology, of Associated and Associated Bank, National
Association. He is a director of Associated Bank, National
Association. From November 2004 to November 2005,
Mr. Quinlan served as a consultant to Sky Financial Group,
an Ohio bank holding company, as the interim Chief Technology
Officer. He was Chief Information Officer for Charter One Bank,
N.A., from September 2003 to September 2004. He was first
elected an executive officer of Associated on November 10,
2005. Age: 49.
Mark G. Sander serves as Executive Vice President,
Commercial Banking of Associated and Associated Bank, National
Association. He is a director of Associated Bank, National
Association. Prior to joining Associated, Mr. Sander held
the position of Commercial Banking Executive at Bank of America
from October 2007 to February 2009. From 1980 to 2007,
Mr. Sander held a number of leadership positions in
commercial banking at LaSalle Bank, N.A. and its parent, ABN
AMRO Bank, N.V., including corporate executive vice president.
He was first elected an executive officer on August 31,
2009. Age 51.
Joseph B. Selner serves as Executive Vice President,
Chief Financial Officer (“CFO”), of Associated and
Associated Bank, National Association. He is a director of
Associated Bank, National Association; Associated
Trust Company, National Association; Associated Investment
Services, Inc.; ASBC Investment Corp.; Associated Wisconsin Real
Estate Corp.; Associated Minnesota Real Estate Corp.; Associated
Illinois Real Estate Corp.; First Enterprises, Inc.; First
Reinsurance, Inc.; Banc Life Insurance Corporation; Associated
Banc-Corp Founders Scholarship Fund; and Associated Banc-Corp
Foundation. He was first elected an executive officer of
Associated on January 25, 1978. Age: 63.
David L. Stein serves as Executive Vice President,
Director of Retail Banking. He is a director of Associated Bank,
National Association and Riverside Finance, Inc. He was the
President of the South Central Region of Associated Bank,
National Association, since January 2005. He held various
positions with J.P. Morgan Chase & Co., and one
of its predecessors, Bank One Corp, from August 1989 until
joining Associated in January 2005. He was first elected an
executive officer of Associated on June 19, 2007. Age: 46.
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Table of Contents
STOCK
OWNERSHIP
Security
Ownership of Beneficial Owners
The following table presents information regarding the
beneficial ownership of our common stock as of December 31,
2009, with respect to each person who, to our knowledge, is the
beneficial owner of 5% or more of our outstanding common stock.
|
Amount and Nature |
||||||||
|
of Beneficial |
Percent |
|||||||
|
Name and Address
|
Ownership(1)(2) | of Class | ||||||
|
FMR LLC
82 Devonshire Street Boston, MA 02109 |
19,109,616 | (3) | 14.95 | % | ||||
|
Blackrock, Inc.(4)
40 East 52nd Street New York, NY 10022 |
7,554,853 | 5.91 | % | |||||
| (1) | Shares are deemed to be “beneficially owned” by a person if such person, directly or indirectly, has or shares (a) the voting power thereof, including the power to vote or to direct the voting of such shares, or (b) the investment power with respect thereto, including the power to dispose or direct the disposition of such shares. In addition, a person is deemed to beneficially own any shares of which such person has the right to acquire beneficial ownership within 60 days. | |
| (2) | In its capacity as fiduciary, the beneficial holder exercises voting power where authority has been granted. In other instances, the beneficial holder solicits voting preferences from the beneficiaries. In the event responses are not received as to voting preferences, the shares will not be voted in favor of or against the proposals. | |
| (3) | In the capacity of fiduciary, included are 2,691,360 shares with sole power to vote or direct the vote and 19,109,616 shares with sole power to dispose or direct the disposition. | |
| (4) | On December 1, 2009, BlackRock, Inc. completed its acquisition of Barclays Global Investors from Barclays Bank PLC. As a result, Barclays Global Investors and substantially all of its affiliates are now included as subsidiaries of BlackRock, Inc. for purposes of Schedule 13G filings. |
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Table of Contents
Security
Ownership of Directors and Management
Listed below is information as of the Record Date concerning
beneficial ownership of Common Stock for each director and Named
Executive Officer (defined below) and by directors and executive
officers as a group, and is based in part on information
received from the respective persons and in part from the
records of Associated.
|
Amount and Nature |
||||||||||||
|
of Beneficial |
Shares Issuable |
Percent |
||||||||||
|
Name of Beneficial Owner
|
Ownership(1) | Within 60 Days(2) | of Class | |||||||||
|
Directors
|
||||||||||||
|
Philip B. Flynn
|
138,683 | 0 | * | |||||||||
|
Paul S. Beideman
|
472,727 | 372,100 | * | |||||||||
|
Lisa B. Binder
|
50 | 0 | * | |||||||||
|
Karen T. Beckwith
|
10,000 | 0 | * | |||||||||
|
Ruth M. Crowley
|
3,253 | 0 | * | |||||||||
|
Ronald R. Harder
|
19,998 | 0 | * | |||||||||
|
William R. Hutchinson
|
89,213 | 0 | * | |||||||||
|
Eileen A. Kamerick
|
4,500 | 0 | * | |||||||||
|
Richard T. Lommen
|
172,137 | 16,764 | * | |||||||||
|
John C. Meng
|
110,035 | 6,022 | * | |||||||||
|
J. Douglas Quick
|
62,317 | 6,022 | * | |||||||||
|
Carlos E. Santiago
|
0 | 0 | — | |||||||||
|
John C. Seramur
|
277,387 | 6,022 | * | |||||||||
|
Named Executive Officers
|
||||||||||||
|
Joseph B. Selner
|
488,521 | 290,178 | * | |||||||||
|
Scott S. Hickey
|
61,274 | 17,000 | * | |||||||||
|
Mark D. Quinlan
|
139,479 | 78,424 | * | |||||||||
|
Mark J. McMullen
|
446,686 | 265,158 | * | |||||||||
|
David A. Baumgarten
|
244,013 | 206,816 | * | |||||||||
|
All Directors and Executive Officers as a group (23 persons)
|
3,521,920 | 1,765,756 | 2.01 | % | ||||||||
| * | Denotes percentage is less than 1%. | |
| (1) | Beneficial ownership includes shares with voting and investment power in those persons whose names are listed above or by their spouses or trusts. Some shares may be owned in joint tenancy, by a spouse, or in the name of a trust or by minor children. Shares include shares issuable within 60 days of the Record Date and vested and unvested service-based restricted stock. | |
| (2) | Shares subject to options exercisable within 60 days of the Record Date. |
Stock
Ownership Guidelines
Associated has established guidelines for the ownership of
Associated common stock by its senior executives. See
“Executive Compensation — Compensation
Discussion and Analysis — Security Ownership
Guidelines.”
Associated has established stock ownership guidelines for the
Board (the “Director Stock Ownership Guidelines”). The
Director Stock Ownership Guidelines provide that each member of
the Board shall own the value of stock equal to five times the
annual amount contributed by Associated on the director’s
behalf into the Associated Banc-Corp Director’s Deferred
Compensation Plan (currently $200,000). Directors are required
to attain such stock ownership goal by the later of
July 26, 2011, or five years from the date on which they
first were appointed to the Board. Balances in the Directors
Deferred Compensation Plan count toward satisfying this
requirement. Ms. Beckwith, Mr. Harder,
Mr. Hutchinson, Ms. Kamerick, Mr. Lommen,
Mr. Meng, Mr. Quick and Mr. Seramur are in
compliance with the stock ownership guidelines. Ms. Crowley
must be in compliance with the stock ownership guidelines by
July
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2011; as of the Record Date, Ms. Crowley’s stock
ownership aggregates to approximately $179,000.
Mr. Santiago will not be standing for re-election to the
Board of Directors at the 2010 Annual Meeting.
Directors’
Deferred Compensation Plan
In addition to the beneficial ownership set forth in the
Security Ownership of Directors and Management table above, the
following non-employee directors have an account with the
balances in phantom stock set forth below in the Directors’
Deferred Compensation Plan. The dollar balances in these
accounts are also expressed daily in units of common stock of
Associated based on its daily closing price. The balances are
counted by Associated toward the non-employee director holding
requirements under the Director Stock Ownership Guidelines. The
units are nonvoting. See “Director
Compensation — Directors’ Deferred Compensation
Plan.”
|
Equivalent Number |
||||||||
|
Account Balance at |
of Associated |
|||||||
|
Director
|
the Record Date | Common Shares(1) | ||||||
|
Karen T. Beckwith
|
$ | 121,686 | 9,426 | |||||
|
Ruth M. Crowley
|
$ | 137,179 | 10,626 | |||||
|
Ronald R. Harder
|
$ | 121,686 | 9,426 | |||||
|
William R. Hutchinson
|
$ | 139,528 | 10,808 | |||||
|
Eileen A. Kamerick
|
$ | 144,675 | 11,206 | |||||
|
Richard T. Lommen
|
$ | 247,236 | 19,151 | |||||
|
John C. Meng
|
$ | 334,346 | 25,898 | |||||
|
J. Douglas Quick
|
$ | 139,528 | 10,808 | |||||
|
Carlos E. Santiago
|
$ | 82,166 | 6,365 | |||||
|
John C. Seramur
|
$ | 72,440 | 5,611 | |||||
| (1) | Based on the closing price of $12.91 of Associated common stock on the Record Date. |
13
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EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Nature
and Structure of Compensation Administration
Associated’s Compensation and Benefits Committee (the
“Committee”) of the Board of Directors is responsible
for all compensation of Associated’s Named Executive
Officers (“NEOs”). The Committee consists of
Ms. Crowley, Mr. Meng (Chairman), and
Mr. Seramur. The Committee sets the strategic direction for
Associated’s executive compensation policies and programs
and helps ensure management’s execution and compliance with
that strategic direction. It also oversees the design and
structure of certain compensation and benefit arrangements
described in this Proxy Statement. It sets the compensation of
the Chief Executive Officer (the “CEO”) and, with
input from the CEO, establishes compensation for the other NEOs.
The Committee has the sole authority to hire outside
compensation consultants to advise it on the structure and
amount of compensation of the executive officers of Associated.
The Committee retained Mercer (US) Inc. (“Mercer”) to
provide information, analyses and advice regarding executive and
director compensation in early 2009 through October 2009. The
Committee had retained Mercer since October 2005. In the
interest of maintaining a strong governance process and
obtaining a new perspective, the Committee engaged Towers,
Perrin, Forster & Crosby, Inc., now known as Towers
Watson (“Towers”) in October 2009 to advise it on the
compensation structure of Associated’s new CEO and
executive compensation for 2010. The compensation consultant
performs these services reporting directly to the Committee. The
Committee has established procedures that it considers adequate
to ensure that the compensation consultant’s advice to the
Committee remains objective and is not influenced by
Associated’s management. These procedures include: a direct
reporting relationship of the compensation consultant to the
Committee; a provision in the Committee’s engagement letter
with the compensation consultant specifying the information,
data, and recommendations that can and cannot be shared with
management; an annual update to the Committee on the
compensation consultant’s financial relationship with
Associated, including a summary of the work performed for
Associated during the preceding 12 months; and written
assurances from the compensation consultant that, within the
compensation consultant’s organization, the compensation
consultant’s lead professional who performs services for
Associated has a reporting relationship and compensation
determined separately from the compensation consultant’s
other lines of business and for its other work for Associated.
Towers prepared and presented reports to the Committee at its
December 2009 and January 2010 meetings for purposes of
assisting the Committee in making compensation decisions with
respect to 2009 annual incentive bonuses, incentive compensation
plans, and 2010 base salaries and equity awards.
During the four years ended December 31, 2009, Mercer
advised the Committee with respect to Associated’s
executive compensation and outside director compensation during
each year. The services provided by Mercer included testing of
the alignment of executive pay and business performance relative
to the peer companies described below, review of annual and
long-term incentive plans, evaluation of the competitiveness of
compensation provided to Associated’s non-employee
directors, and guidance to the Committee and management
concerning trends in executive and director compensation and
benefits and related issues.
Since its engagement by the Committee in October 2009, Towers
has advised the Committee with respect to Associated’s
executive compensation and outside director compensation. The
services provided by Towers include preparation of a competitive
analysis of Associated’s senior executive compensation
levels, assessment of incentive risk by reviewing
Associated’s material employee incentive compensation
plans, evaluation of executive pay and business performance
relative to Associated’s peer group, and review of
non-employee director compensation practices as disclosed in
peer company public filings.
As part of the annual compensation review process, management,
in particular the CEO and the Director of Human Resources,
interacts with the compensation consultant and the Committee
providing information, including the current compensation
structure and details regarding executive compensation,
14
Table of Contents
assessments of executive performance, and descriptions of the
job responsibilities of executive officers. The CEO typically
provides input to the compensation consultant to apply and
interpret the compensation surveys and peer group analysis and
provides information to present recommendations to the Committee
for compensation decisions for the NEOs other than himself. The
Director of Human Resources in conjunction with the compensation
consultant presents all of the pertinent compensation
information for the CEO to the Committee, and the Committee
makes its decisions for CEO compensation in an executive session
without the CEO present. As discussed below, the structuring and
negotiations of the compensation arrangements for Mr. Flynn
were handled by the Committee solely with the advice of the
Committee’s compensation consultants and outside legal
counsel.
Compensation
Compliance Under the Troubled Asset Relief Program
In November 2008, as part of the United States Department of the
Treasury’s (the “UST”) Capital Purchase Program
(the “CPP”) under the Troubled Asset Relief Program
(“TARP”), Associated voluntarily sold shares of its
Fixed Rate Cumulative Perpetual Preferred Stock, Series A
(the “Senior Preferred Stock”) and related warrants to
purchase its common stock to the UST for total proceeds of
$525 million.
During the period in which any obligation under TARP is
outstanding, excluding the period when the UST only holds
warrants (the “Restricted Period”), Associated
employee benefit plans and other executive compensation
arrangements for its senior executive officers, who are
currently the NEOs, and certain other highly compensated
employees of Associated, must comply with Section 111 of
the Emergency Economic Stabilization Act of 2008, as amended by
the American Recovery and Reinvestment Act of 2009 (collectively
“EESA”), which became effective February 17,
2009, and the UST’s rules. The UST has issued interim final
rules to implement Section 111 of EESA.
The Interim Final Rule on TARP Standards for Compensation and
Corporate Governance was issued by the UST in June 2009. The
Interim Final Rule imposed restrictions on Associated’s
compensation of senior executive officers and certain other
employees as a participant in the CPP.
The Interim Final Rule prohibited certain components of
Associated’s compensation program as it existed in February
2009 applicable to senior executive officers of Associated,
including:
| • | payment or accrual of annual and long-term incentive compensation; | |
| • | granting of stock options; and | |
| • | separation compensation, including separation benefits under Associated’s general severance policy applicable to all employees and its change of control plan. |
Under the Interim Final Rule, the types of compensation
available to Associated for compensating the senior executive
officers are cash salary, salary paid in shares of Associated
common stock and grants of restricted stock, subject to annual
limitations on amount and vesting.
EESA requires Associated to place limits on compensation to
prevent the NEOs from taking unnecessary and excessive risks
that threaten the value of Associated during the Restricted
Period. EESA further requires the Committee to meet at least
semi-annually with Associated’s senior risk officers to
review the relationship between Associated’s risk
management policies and the NEOs’ incentive arrangements.
The Committee must also certify that it has completed the
foregoing reviews in the proxy statement. The Committee
conducted its semi-annual reviews of incentive compensation in
July 2009 and December 2009 with Associated’s senior risk
officers. The Committee also engaged Towers to provide a third
party review of all of Associated’s incentive plans. Towers
affirmed that there was no unnecessary or excessive risk in
Associated’s incentive plans, and that those same plans did
not incent the manipulation of earnings.
Each of the NEOs (other than Mr. Flynn who joined
Associated in December 2009) executed a waiver and entered
into a TARP Capital Purchase Program Compliance, Amendment and
Consent Agreement with Associated for the purpose of amending
each NEO’s compensation, bonus, incentive and other benefit
15
Table of Contents
plans, arrangements and agreements in order to comply with
executive compensation and limitations of Section 111 of
EESA. Mr. Flynn’s employment agreement is in
compliance with Section 111 of EESA.
Compensation
Policies for Employees Affecting Risk and Risk
Management
As described above in connection with Associated’s
compliance under EESA, following reviews with Associated’s
senior risk officers and the review of Towers, the Committee
determined that its compensation plans do not encourage its
senior executive officers or employees to take unnecessary and
excessive risks that threaten the value of Associated, nor do
such plans encourage behavior focused on short-term results
rather than long-term value creation. The Committee has ensured
that these plans do not encourage the manipulation of reported
earnings of Associated to enhance the compensation of any of
Associated’s employees. The Committee also determined that
none of Associated’s compensation policies or practices for
its employees is reasonably likely to have a material adverse
effect on Associated.
Flynn
Employment Agreement
In August 2009, Mr. Beideman announced his retirement and
the Board’s Nominating and Search Committee announced a
national search for a new CEO. The Committee engaged Mercer to
provide advice as to the structuring of the compensation
arrangement as well as counsel to negotiate and document the
terms of the arrangement in compliance with the limitations of
TARP. In light of the TARP limitations on bonuses, cash
incentive compensation, stock options, severance, and the
resultant trends in the CEO compensation arrangements of TARP
participants during 2009, base salary was structured with a
portion payable in cash and a portion paid in vested shares of
common stock subject to restrictions on transfer. Based on this
structure, approximately 75% of total annual compensation is
paid in Associated common stock to align Mr. Flynn’s
interests with those of shareholders. Towers was engaged by the
Committee prior to the finalization of the arrangement and
provided its advice to the Committee on the proposed structure
of Mr. Flynn’s compensation.
The Board, based on the approval and recommendation of the
Committee, entered into an Employment Agreement with
Mr. Flynn dated as of November 16, 2009 (the
“Flynn Agreement”). The Flynn Agreement provides that
Mr. Flynn is an “at will” employee and specifies
the terms of compensation through December 31, 2011 (the
“Term”). The Flynn Agreement specifies the following
annual compensation during the Term (which shall be prorated for
any partial period of employment during the Term):
Base Salary: $1,200,000 payable in cash in
accordance with our payroll policies.
Share Salary: $2,256,000 payable at the time
that Base Salary is payable to Mr. Flynn, net of applicable
tax withholdings and deductions, in grants of shares of our
common stock, having a fair market value on the date of grant
equal to the pro rata portion of the salary payable on each such
pay date pursuant to the terms of our 2003 Long-Term Incentive
Plan or its successor equity incentive plan. As required under
TARP, each share payable to Mr. Flynn as Share Salary shall
be fully vested as of the date of grant. Although restrictions
on transfer are not required under TARP, the Committee imposed
restrictions on transfer that lapse as set forth in the table
below.
|
Lapse of Transfer |
||
|
Month and Year of Grant
|
Restrictions
|
|
|
December 2009
|
January 3, 2011 | |
|
January through April 2010
|
January 3, 2011 | |
|
May through August 2010
|
January 3, 2012 | |
|
September through December 2010
|
January 2, 2013 | |
|
January through April 2011
|
January 3, 2012 | |
|
May through August 2011
|
January 2, 2013 | |
|
September through December 2011
|
January 2, 2014 |
16
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Restricted Shares: $1,200,000 payable in
restricted shares of our common stock or restricted stock units
(“Restricted Stock”), based on the fair market value
at the date of grant. Mr. Flynn received grants of
Restricted Stock on December 1, 2009 and January 4,
2010. Mr. Flynn will receive a grant of Restricted Stock on
January 3, 2011. The Restricted Stock will vest in 25%
increments on the dates that Associated makes repayments in 25%
increments of the aggregate funds received by us under TARP. If
Mr. Flynn’s employment is terminated for any reason,
other than as a result of Mr. Flynn’s death or
disability or a change of control, within two years of the date
on which an award of Restricted Stock is granted, Mr. Flynn
shall forfeit such award in accordance with the TARP
requirements.
Supplemental Retirement Benefit: 9.5% of Base
Salary and Share Salary (each at their annual rate) less the
applicable dollar limitation in effect for such calendar year
set forth in Section 401(a)(17) of the Internal Revenue
Code (the “Code”) (currently $245,000) payable on the
last day of each payroll period (the “Supplemental
Retirement Benefit”). Each Supplemental Retirement Benefit
accrual will be vested on the date of such accrual and will be
distributed in a lump sum upon Mr. Flynn’s
“separation from service” within the meaning of
Section 409A of the Code. Our obligation to accrue for the
Supplement Retirement Benefit continues during
Mr. Flynn’s employment following the Term.
During Mr. Flynn’s employment, Associated will make
available to Mr. Flynn such fringe and other benefits and
perquisites as are regularly and generally provided to the other
senior executives of Associated, subject to the terms and
conditions of any employee benefit plans and arrangements
maintained by us and all applicable TARP requirements,
including, without limitation, the restriction on tax
gross-up
payments. Mr. Flynn has declined the monthly allowance for
business use of an automobile and club membership fees.
Associated paid the expenses of Mr. Flynn in connection
with him entering into the Flynn Agreement which were
approximately $21,000, as required pursuant to its terms. The
Flynn Agreement provides for our indemnification of
Mr. Flynn subject to applicable law and our bylaws and
maintenance of directors’ and officers’ insurance
coverage for the later of six years or the date that claims
would be time barred with coverage to Mr. Flynn no less
favorable than coverage provided to any current or former
executive.
The Flynn Agreement provides for compliance with any golden
parachute payment limitations and any other compensation
limitations under TARP. Further, the Flynn Agreement does not
provide for severance and tax
gross-ups.
Objectives
of the Compensation Program
The objectives of the compensation program are to provide a
balanced, competitive total compensation program aligned with
several goals. These goals include the ability to attract,
retain and motivate high-quality executives, reward individual
actions and behaviors that support Associated’s mission,
business strategies and performance-based culture, without
unnecessary and excessive risk; and maintain a total
compensation program that reflects the performance of Associated
while ensuring compensation positioned within competitive market
ranges.
The compensation program as modified for compliance with the
limitations under TARP, for the NEOs includes:
| • | annual base salary paid in cash; | |
| • | salary paid in salary shares; | |
| • | restricted stock awards; | |
| • | pension benefits; and | |
| • | perquisites. |
17
Table of Contents
Adopting this compensation structure has shifted the pay mix of
target compensation for the NEOs to a higher concentration on
equity, which continues to align executive compensation with the
interests of shareholders, compared to cash salary and annual
cash bonus as illustrated in the tables below:
|
Pre-TARP Percentage of |
Under TARP Percentage of |
|||||||
|
Compensation Element
|
Target Compensation(1)
|
Target Compensation(1)
|
||||||
|
CEO (2)
|
||||||||
|
Cash
|
67 | % | 25 | % | ||||
|
Equity
|
33 | % | 75 | % | ||||
|
Other NEOs
|
||||||||
|
Cash
|
64 | % | 30 | % | ||||
|
Equity
|
36 | % | 70 | % | ||||
| (1) | Percentages calculated based on target compensation rather than total compensation reported in the Summary Compensation Table. | |
| (2) | Percentages apply to Mr. Beideman. |
Associated’s objective is to set target total compensation
for executive officers generally near the median level for
executives having comparable responsibility for financial
institutions of comparable asset size. This objective is
important because Associated competes with such organizations
for the services of its executives and compares its financial
performance to those organizations.
Competitive compensation levels considered by Mercer in making
its recommendations to the Committee are based upon the results
of several compensation surveys and a peer group analysis.
Comparisons were made by Mercer at the
25th,
50th and
75th
percentiles. The analysis of the survey data accounts for
differences in corporate size, business lines, date of data
collection, and executive position responsibilities. The peer
group, established in prior years and updated in December 2008,
was used to set 2009 base salaries in January 2009. This peer
group consists of 19 publicly traded bank holding
companies1,
seven of which are in the NASDAQ bank index, that ranged in
asset size as of third quarter 2008 from $13 billion to
$65 billion and are engaged in similar lines of business as
Associated. The median size of the companies in this group was
$17 billion in assets compared to Associated’s
$22 billion in assets based upon third quarter 2008 data.
Associated management and the Committee, in conjunction with
Mercer, provided input as to the constituents of this peer
group. This peer group is used for comparison of compensation
levels for the NEOs and for comparing Associated’s business
performance to demonstrate
pay-for-performance
and other pay practices.
Towers tracked the performance of this peer group and its
reported executive compensation during 2009 and compared
Associated’s 2009 compensation in December 2009 with the
Towers 2009 Executive Financial Services Survey of publicly
traded companies (over 90 companies) and separately the 29
retail banks included in that survey. Towers advised that the
additional comparisons provided broader perspective.
Long-term incentive compensation is limited by Associated under
the TARP interim final rules to restricted stock. Long-term
incentive compensation is intended to directly relate a portion
of the executive officer’s compensation to stock price
appreciation realized by Associated’s shareholders, enhance
retention of key executives, build ownership of Associated
stock, and align compensation with stock performance over a
multi-year period.
| 1 | Peer Group Companies |
|
BancorpSouth Inc.
|
Cullen/Frost Bankers Inc. | The South Financial Group Inc. | ||
|
BOK Financial Corporation
|
First Horizon National Corporation | Synovus Financial Corp | ||
|
Citizens Republic Bancorp
|
Fulton Financial Corporation | TCF Financial Corporation | ||
|
City National Corporation
|
Huntington Bancshares Incorporated | Valley National Bancorp | ||
|
The Colonial BancGroup, Inc.
|
M & T Bank Corporation | Webster Financial Corp. | ||
|
Comerica Incorporated
|
Marshall & Ilsley Corporation | Zions Bancorporation | ||
|
Commerce Bancshares, Inc.
|
18
Table of Contents
Associated has established stock ownership guidelines for the
NEOs and other key executives. The purpose of the guidelines is
to ensure Associated’s senior executives own a portion of
Associated stock to help ensure that business decisions are made
in the best interest of long term shareholder value.
Associated’s retirement program, which includes the
Retirement Account Plan (“RAP”), the Associated
Banc-Corp 401(k) and Employee Stock Ownership Plan (the
“401(k) Plan”) and the Supplemental Executive
Retirement Plan (the “SERP”), provides post-retirement
income to the NEOs.
The perquisites offered during employment, described under
“Perquisites” below, complete the competitive total
compensation program.
Elements
of 2009 Executive Compensation
The Committee established 2009 compensation in January 2009
prior to the limitations imposed under TARP, which were
effective in February 2009 and implemented by the Interim Final
Rule in June 2009, with respect to Associated’s NEOs and
its next twenty most highly compensated employees. The
discussion below relating to 2009 compensation reflects the
Committee’s decisions prior to the effective dates of the
TARP limitations.
Short
Term
Base Salary. Associated’s
objective is to pay a base salary that is competitive with that
of peer companies, to reward performance and to enable it to
attract and retain the top talent that Associated needs to
manage and expand its business. Base salary is set each year
taking into account market compensation data, the compensation
consultant’s recommendations, as well as the performance
level of the executive and the competency level demonstrated in
the past. Changes in base salary are market-based and typically
effective in the first quarter of each year. For 2009, the
Committee did not approve any increase in base salaries from
2008 levels for the NEOs. When 2009 base salaries were
established, each of the NEO’s base cash salary comparative
position against the 50th percentile of market based upon
peer group and survey data was as follows:
Mr. Beideman — equal to market,
Mr. Selner — 11% below,
Mr. Hickey — 18% above,
Mr. Quinlan — 3% below,
Mr. McMullen — 12% above,
Ms. Binder — 20% above and
Mr. Baumgarten — 12% above.
Annual Incentive Bonus. No bonuses were
awarded or paid with respect to 2009 performance, consistent
with TARP-imposed limitations. Prior to these limitations,
Associated’s Performance Incentive Plan (“PIP
Plan”) provided the potential for annual incentive bonuses
and was designed to: (1) enable Associated to achieve or
exceed business goals; (2) reward team and individual
performance at a level consistent with shareholder rewards;
(3) maintain a total compensation program that reflects the
performance of Associated that is competitive within the
marketplace; and (4) provide internal equity for incentive
payments based upon Associated, unit, and individual performance
against established goals. Examples of discretionary factors may
include company performance relative to annual goals and peer
group performance, total shareholder return, market share
growth, net income growth, return on average equity and assets,
net charge-off ratio, loan quality and growth, deposit growth,
non-interest
19
Table of Contents
expense, cross-selling effectiveness, customer experience,
community outreach, and performance on other unit objectives.
The annual incentive bonus goals and targets established for
2009 included:
| Goals | ||||||||||||||||||||||||||||
|
Revenue |
Loan |
Expense |
||||||||||||||||||||||||||
|
EPS |
Growth |
Loss |
Control |
|||||||||||||||||||||||||
| Goal | Goal | Provision | Goal | |||||||||||||||||||||||||
| $1.50 | 3.62% | $176MM | At Budget | |||||||||||||||||||||||||
|
Target as |
||||||||||||||||||||||||||||
|
% of Base |
% Weighted | |||||||||||||||||||||||||||
|
Executive
|
Salary | Corporate | Unit | Corporate Relative Measurement Weighting | ||||||||||||||||||||||||
|
Philip B. Flynn
|
— | — | — | — | — | — | — | |||||||||||||||||||||
|
Paul S. Beideman
|
100 | % | 100 | % | 0 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
Joseph B. Selner
|
50 | % | 100 | % | 0 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
Scott S. Hickey
|
50 | % | 100 | % | 0 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
Mark D. Quinlan
|
50 | % | 100 | % | 0 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
Mark J. McMullen
|
50 | % | 50 | % | 50 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
Lisa B. Binder
|
100 | % | 100 | % | 0 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
|
David A. Baumgarten
|
50 | % | 50 | % | 50 | % | 50 | % | 20 | % | 20 | % | 10 | % | ||||||||||||||
In addition, the Committee historically may have used
discretionary factors to enhance or reduce the business
unit’s incentive payment to achieve a balance among
Associated financial performance measures, individual
performance, and discretionary qualitative factors. For 2009,
the Committee approved no awards under the PIP Plan to any of
Associated’s NEOs or its next twenty most highly
compensated employees.
Long
Term
Overview
Prior to the limitations imposed under TARP, long-term incentive
compensation opportunities were delivered in several forms
through the Associated Banc-Corp Cash Incentive Compensation
Plan (cash awards) and the 2003 Long Term Incentive Stock Plan
(equity awards). These programs were provided to ensure that the
NEOs were focused on the long term performance of Associated and
building shareholder value by increasing the profitability of
Associated. They are also a retention tool that keeps a portion
of the NEOs’ compensation tied to a longer period rather
than just an annual basis.
Equity
Awards
Stock Options. Prior to the limitations
imposed under TARP, stock option grants fulfilled several
purposes under Associated’s compensation program as listed
below:
| • | Rewarded the prior year’s performance as the number of shares granted varied based on the Committee’s assessment of individual and business performance in the prior calendar year. | |
| • | Encouraged creation of long term shareholder value as the value of stock options increased as Associated’s stock price increased. | |
| • | Retention of executive over the vesting period. |
Specifics of the stock option program are as follows:
| • | The Committee had discretion to allocate shares among the recipients to reflect business and individual performance, as well as the executive’s compensation in relation to peer companies. | |
| • | Generally options vested pro rata over a three-year period. | |
| • | All stock options granted to date required that options be exercised during employment except in the event of retirement, death or disability. | |
| • | All options granted must be exercised within one year of retirement. | |
| • | All stock options granted to date immediately vest upon a change of control of Associated. |
20
Table of Contents
A common methodology utilized by companies to determine grant
award value is the Black Scholes methodology. For 2009,
Associated chose to take a more conservative approach in
granting stock options by utilizing a historical Black Scholes
value which resulted in reducing the overall value of stock
options granted in 2009 compared to the 2008 grant. The 2009
grant awards compared to target are detailed in the chart below.
|
2009 Target Grant as % |
2009 Actual Grant as |
|||||||
|
Participant
|
of Salary | % of Salary | ||||||
|
P. Beideman
|
67 | % | 20 | % | ||||
|
Other NEOs
|
60 | % | 17 | % | ||||
Service-Based Restricted Shares
(“SBRS”). Prior to the limitations
imposed under TARP, SBRS grants are a form of restricted stock
grant for which the restrictions lapse solely by the passage of
time during employment. The purpose of SBRS grants is to provide
risk-based compensation which is aligned with the creation of
value to shareholders and enhances retention of key executives
over a multi-year period. Associated’s stock retention
requirements for executives apply to SBRS grants which further
aligns the interests of executives with shareholders. SBRS have
been granted to all of the NEOs. Other important elements of the
SBRS include:
| • | Grants of SBRS are generally made in the first three months of each year. | |
| • | Prior to TARP limitations on vesting, 34% of the shares vested upon the first anniversary following the date of grant and 33% on each of the second and third anniversaries. | |
| • | An SBRS recipient must be employed on the vesting date or the shares are forfeited. | |
| • | All restrictions on SBRS granted to date immediately vest upon a change of control of Associated. |
Associated
Banc-Corp Cash Incentive Compensation Plan
Prior to the limitations imposed under TARP, the Associated
Banc-Corp Cash Incentive Compensation Plan provided a potential
cash award based upon Associated’s earnings per share
(“EPS”) results against the targeted EPS for a
multi-year performance period, and performance modifier relative
to performance of the peer group. The multi-year cash incentive
opportunity has been provided to further align executive
incentive compensation with the maximization of shareholder
value as the principal metric for payout was Associated’s
EPS growth. The peer ranking will be measured on the basis of
reported diluted EPS growth during the performance period. In
the event that actual cumulative EPS results are below the
stated threshold for the period but relative performance is at
or above the median of the peers, the participants will earn a
portion of their target incentives as follows:
|
Relative Peer Ranking
|
Percent of Target Award | |||
|
<50th Percentile
|
0 | % | ||
|
50th Percentile
|
25 | % | ||
|
60th Percentile
|
40 | % | ||
|
³75th Percentile
|
50 | % | ||
Earned incentives for results between these levels will be
determined by straight line interpolation. No incentives will be
earned if EPS results are below the stated threshold and below
the median of the peers. No multi-year performance period
beginning in 2009 was adopted by the Committee for 2009.
21
Table of Contents
The following table sets forth the performance measures and
award potential for the multi-year performance periods in effect
at December 31, 2009:
| Cash Incentive Compensation Plan | ||||||||||||||||||||||||
| 2008-2010 | 2007-2009 | |||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||
|
Performance Measure
|
||||||||||||||||||||||||
|
EPS % Growth
|
1 | % | 3 | % | 4.5 | % | 2 | % | 3 | % | 4.5 | % | ||||||||||||
|
Payment % of Target
|
||||||||||||||||||||||||
|
EPS% Growth
|
25 | % | 100 | % | 263 | % | 25 | % | 100 | % | 263 | % | ||||||||||||
|
CEO Target % of Salary
|
67 | % | 67 | % | ||||||||||||||||||||
|
Other NEOs Target % of Salary
|
60 | % | 60 | % | ||||||||||||||||||||
For the
2007-2009
performance period, the Committee did not approve any awards to
participants because the performance metrics of EPS were not
achieved.
The plan provides that under certain circumstances the Committee
may approve adjustment of the EPS results for part or all of
extraordinary gains or losses for the year. Examples of such
adjustments would be gain or loss from the disposal of a
business segment, restructuring charges relative to mergers and
acquisitions, unusual or infrequently occurring events and
transactions and cumulative effects of changing accounting
principles.
Upon a change of control of Associated, if the Committee
determines that the performance goals are satisfied or likely to
be satisfied, an award, prorated for the portion of the
performance period that has elapsed, is payable.
Deferred
Compensation Plan
Associated maintains a non-qualified deferred compensation plan
to permit certain employees who are highly compensated under IRS
Section 414(q)(1)(B) to defer current compensation to
accumulate additional funds for retirement. All NEOs (other than
Mr. Flynn) were eligible to participate in 2009. However,
during 2009, none of the NEOs participated in the plan. The plan
allows eligible employees to defer up to 50% of base salary and
up to 100% of cash incentive compensation with a minimum
deferral of $10,000 per year. The participant receives payment
of deferred amounts either in a lump sum, or five or ten equal
annual installments beginning six months following the
participant’s separation from service, in either case
pursuant to a distribution election made prior to the
commencement of deferrals. In the case of an unforeseeable
emergency, the plan will allow for distributions during
employment. Each participant may, on a daily basis, specify
investment preferences from among various investment options for
the account, subject to final approval by the Administrator and
Trustee. The participant retains all rights to amounts in his or
her account if employment terminates for any reason. Earnings
are not supplemented by Associated.
Retirement
Plans
The Retirement Account Plan (“RAP”) is a qualified
defined benefit plan with cash balance features designed to
provide participants with a monthly income stream in the form of
an annuity at retirement. An employee becomes eligible to
participate effective the first day of the plan year in which he
or she first completes 1,000 hours of service. Each
participant receives an accrual of 5% of eligible compensation.
Compensation is subject to the IRS annual limitation which was
$245,000 in 2009. The RAP provides for an Annual Earnings Credit
based on the
30-Year
Treasury Rate. All participants become fully vested in their
accrued benefit upon completion of three years of credited
services, attainment of normal retirement (age 65) or
upon death or disability while employed by Associated. All NEOs,
except Ms. Binder and Mr. Hickey, have completed three
years of credited service and are 100% vested. Ms. Binder
did not complete three years of credited service prior to her
separation and therefore was not vested. Mr. Hickey was
hired in 2008 and has not completed three years of credited
service. Participants may be eligible to
22
Table of Contents
receive an early retirement benefit at age 55. For benefits
accruing prior to January 1, 2010, the early retirement
benefit reflects a reduction from the normal benefit at 2/12 of
1% for each month the benefit commencement date precedes the
normal retirement date, subject to the vesting schedule. A
retirement subsequent to the normal retirement date would
increase the normal benefit by 3/12 of 1% for each month the
benefit commencement date follows the normal retirement date.
Benefits accruing after December 31, 2009, provide for an
actuarial adjustment for early retirement benefits.
Beginning in 2007, Associated ceased making any profit-sharing
contribution to the 401(k) Plan. Vesting for prior years’
profit sharing contributions is one half after three years, an
additional one quarter after four years, and the remaining one
quarter after five years. NEOs, other than Messrs. Flynn,
Hickey and Quinlan and Ms. Binder, received contributions
in this plan and are 100% vested in the profit-sharing component
of the 401(k) Plan. All participants’ benefits fully vest
upon a change of control of Associated.
Any eligible participant may make contributions to the 401(k)
Plan, subject to the limitations established by the IRS.
Associated provides a match equal to 100% of the first 3% a
participant contributes, and 50% of the next 3%. Participants
must work 1,000 hours during the calendar year and be
employed with Associated on December 31 to qualify for this
matching contribution. An exception applies for retirement,
disability and death. Participants are fully vested in both
their own contributions and Associated’s matching
contribution.
The Supplemental Executive Retirement Plan (“SERP”) is
a non-qualified plan into which Associated makes a restorative
contribution for all income that exceeds the IRS annual
limitation. The contribution is equal to the excess of the
amount which would have been accrued under the RAP and the
401(k) Plan but for the IRS annual limitation over the amount
actually accrued by the participant for such plan year under the
RAP and 401(k) Plan. Accruals under the SERP occur at the same
rate and time as accruals under the RAP and 401(k) Plan and
incur gains and losses based on notational investment
preferences specified by participants among various investment
options. A participant is 100% vested in his or her SERP account
balance after 5 years of service. Distributions from the
SERP are made upon the earlier of the participant’s death
or the time specified by the participant at the time amounts are
credited to the SERP (which time may vary depending on the year
of crediting). All NEOs except Ms. Binder, who joined
Associated in 2007, Mr. Hickey, who joined Associated in
2008 and Mr. Quinlan, who joined Associated in 2005, are
vested in their respective SERP accounts. All participants’
benefits fully vest upon a change of control of Associated.
Mr. Flynn participates in a separate SERP under the terms
of the Flynn Agreement.
Perquisites
Perquisites for the NEOs include participation in certain
company-subsidized benefits that are also available to all
eligible
and/or
participating employees. Perquisites available to only the NEOs
and/or to a
limited group of executives or management are described below.
Perquisites are provided to the NEOs to attract and retain
talent and to ensure that Associated’s total compensation
for the NEOs remains competitive in the marketplace.
Associated believes in promoting the health of its employees
and, as an element of Associated’s wellness program,
provides certain of Associated’s senior executives the
option to receive an annual executive physical examination at
Associated’s expense. Certain costs of the program are
taxable income to the executive. All of the NEOs were eligible
for an executive physical in 2009 and two NEOs participated.
The automobile program provides a choice to executives (once per
year) of either $800 per month, or the standard corporate
mileage rate reimbursement which is less than the IRS mileage
rate. The $800 option is taxable income to the executive.
Associated reimburses participating executives for initiation
fees and other annual fixed costs of club membership to
encourage business development and customer-retention
activities. The executive is
23
Table of Contents
responsible for paying any equity membership costs and will
therefore retain the rights to that club equity. Compensation
for all membership costs is taxable income to the executive.
The NEOs and other senior officers are participants in an
additional $10,000 maximum monthly long term disability benefit.
Associated pays 50% of the premium for long term disability
benefits.
Associated offers relocation benefits to NEOs who join
Associated. These benefits vary upon the individual
circumstances of the executive. Associated believes that
offering these relocation benefits are necessary to attract
talented executives because many of Associated’s
competitors offer similar benefits. In addition, these benefits
are necessary for Associated to recruit executive talent
nationally.
In 2009, Associated reimbursed or paid $169,710 in relocation
expenses related to Mr. Hickey joining Associated in
October 2008. The relocation expenses for Mr. Hickey’s
move from Minneapolis to Milwaukee were approved by the
Committee. This amount included $100,000 as reimbursement to
Mr. Hickey for a portion of the loss he incurred in the
sale of his primary residence in Minnesota. Associated also
reimbursed Mr. Hickey approximately $33,000 for country
club expenses including approximately $16,000 of initiation fees
consistent with Associated’s policy.
Excessive
or Luxury Expenditure Policy
In August 2009, the Board adopted an Excessive or Luxury
Expenditure Policy (the “Expenditure Policy”) pursuant
to the Interim Final Rule under TARP. According to the
Expenditure Policy, Associated prohibits excessive or luxury
expenditures on (1) entertainment and events;
(2) office and facility renovations; (3) aviation and
other transportation services; and (4) other similar
activities and events (collectively, “Covered
Expenditures”) to the extent that such Covered Expenditures
are not reasonable expenditures for staff development,
reasonable performance incentives or other similar reasonable
measures conducted in the normal course of Associated’s
business operations. The Expenditure Policy sets forth specific
policies, including approval procedures, pertaining to Covered
Expenditures. The Expenditure Policy provides that exceptions to
this policy will only be granted in extreme circumstances and
with the pre-approval of Associated’s Ethics Committee,
comprising certain senior executive officers of Associated,
which exceptions will be reported to the Audit Committee of the
Board of Directors. The Audit Committee and its designated
Ethics Committee, shall have oversight responsibilities relating
to the Expenditure Policy. The General Auditor and the General
Counsel shall review annually adherence to the Expenditure
Policy.
Post-Termination
and In-Service Arrangements
Each of the NEOs is currently employed on an “at-will”
basis and none, other than Mr. Flynn, is party to an
employment agreement. Associated does not generally provide any
type of post-termination or in-service agreement to executives
to allow for maximum flexibility in determining the best
possible arrangement for both Associated and the executive at
the time of termination because each situation may require a
different type of agreement based upon the executive’s
performance and term of employment.
Subject to TARP-imposed limitations, effective in February 2009
with respect to Associated’s NEOs and its next twenty most
highly compensated employees, in the event the employment of a
participant in the Associated Banc-Corp Cash Incentive
Compensation Plan is terminated due to death, disability or
retirement, the plan award, if any, will be prorated. Otherwise,
a participant must be an employee on the last day of the
performance period to be eligible to receive an award.
Executives who are employed by Associated must be actively on
the payroll at the time of the payment of the PIP Plan. Those
executives who leave Associated prior to the payment for reasons
of death, disability or retirement will have their payment
prorated for the months they were actively in their position
during the performance period. Prorated payments will be made
during the normal bonus payment distribution cycle and will not
be advanced.
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Change of
Control Plan
Until Associated has repaid TARP funds, the following change of
control benefits are not available to Associated’s NEOs and
its next five most highly compensated employees.
Associated’s Change of Control Plan (the “Plan”)
is intended to provide severance benefits to the CEO and certain
senior officers in the event of their termination of employment
following a change of control of Associated (as defined below).
The Change of Control Plan is intended to maximize the value of
Associated in the event it were to be acquired by allowing
executives to impartially evaluate a proposal relating to an
acquisition and providing an incentive to participants in the
Plan to remain with Associated through the consummation of such
an acquisition. As of December 31, 2009, the NEOs (with the
exception of Mr. Flynn) and 21 other senior officers are
currently designated to participate under the Plan. The CEO is
authorized to designate additional senior officers to
participate in the Plan.
Under the Plan, if, during a three-year period following a
change of control of Associated, the executive’s employment
is involuntarily terminated or if the executive voluntarily
terminates employment for “good reason” as specified
in the Plan (see below), then, so long as such termination is
also a separation from service (as described in
Section 409A of the Code), the executive would receive
salary continuation for up to three (3) years (subject to
earlier lump sum payment to comply with Section 409A of the
Code, if applicable). In addition, the executive may be eligible
to receive annual incentive bonus compensation, medical, dental
and life insurance benefits (to the extent continued
participation is permitted by such plans), accrued vacation,
outplacement benefits, as well as payments in lieu of continued
participation in retirement programs for a period ranging from
two to three years. Per Mr. Flynn’s employment
agreement he is not eligible to participate in the Change of
Control Plan. Currently, subject to TARP-imposed limitations,
effective in February 2009 with respect to Associated’s
NEOs, the NEOs presently employed by Associated would otherwise
be entitled to a two-year continuation period. Associated
believes these timeframes are in line with practices at other
peer competitors. Benefits also include reimbursement of legal
fees and expenses related to the termination of employment or
dispute of benefits payable under the Plan. Benefits are not
paid in the event of retirement, death, or disability, or
termination for cause, which generally includes willful failure
to substantially perform duties or certain willful misconduct.
A “Change of Control” under the Plan means generally:
(1) a change of ownership of 25% or more of the outstanding
voting securities of Associated; (2) a merger or
consolidation of Associated with or into a previously
unaffiliated entity; (3) a sale by Associated of at least
85% of its assets to an unaffiliated entity; or (4) an
acquisition by a previously unaffiliated entity of 25% or more
of the outstanding voting securities of Associated (whether
directly, indirectly, beneficially, or of record).
Benefits would be payable if the executive voluntarily
terminates for “good reason” which includes a
termination of employment due to a change in the employee’s
duties and responsibilities which are inconsistent with those
prior to the Change of Control, a reduction in salary, change in
title, or a discontinuation of any bonus plan or certain other
compensation plans, a transfer to an employment location greater
than 50 miles from the employee’s present office
location, or certain other breaches, but only if the executive
provides Associated at least 30 days to cure the “good
reason” after giving notice thereof, and actually separates
from service within two years of the initial existence of such
good reason.
The Plan, including the Plan schedule, may be amended by the
Board of Directors, subject to certain limitations, at any time
by Associated prior to a Change of Control. Associated believes
the terms of its Plan are consistent with current market
practices. See also “Executive
Compensation — Potential Payments Upon Termination or
Change of Control.”
Lisa B.
Binder Separation
Effective May 15, 2009, Lisa B. Binder resigned from her
position as a member of the Board of Directors and as President
and Chief Operating Officer of Associated and from her positions
as an officer and director of Associated Bank, National
Association, and from each subsidiary on which she served. In
connection with Ms. Binder’s resignation, Associated
and Ms. Binder entered into a Separation and General
Release Agreement (the “Binder Agreement”), dated as
of May 15, 2009. Under the terms of the
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Binder Agreement, we agreed to pay Ms. Binder an aggregate
of $1,650,000, payable in monthly installments beginning on
May 29, 2009, and ending on March 15, 2010, in
connection with securing various restrictive covenants,
including an agreement not to compete.
Paul S.
Beideman Separation
Effective December 1, 2009, in connection with
Mr. Flynn’s appointment, Paul S. Beideman retired as
Chairman, director and Chief Executive Officer of Associated and
Associated Bank, National Association. In connection with
Mr. Beideman’s retirement, Associated and
Mr. Beideman entered into a Letter of Agreement, dated
November 25, 2009 (the “Beideman Agreement”). The
Beideman Agreement provided that Mr. Beideman would serve
as senior advisor to Mr. Flynn with such appropriate
transition duties as may be reasonably assigned by the Board
through February 1, 2010.
Mr. Beideman received his regular base salary at the 2009
rate and benefits and perquisites through February 1, 2010.
Mr. Beideman was not eligible to receive any additional
equity awards; outstanding awards continued to vest through
February 1, 2010, and remain exercisable until
February 1, 2011, in accordance with their terms.
Associated included Mr. Beideman under its directors and
officers liability insurance policy through February 1,
2010, and following his retirement will provide him the same
coverage under this policy (or successor policies) and the same
entitlement to corporate indemnification (and related
advancement rights) as other retired officers and directors.
Following retirement, Mr. Beideman and his spouse may
participate in our retiree medical plan and any successor plan
and Mr. Beideman shall pay such costs associated with the
plan that are applicable to other former senior executive
participants. Associated agreed to pay Mr. Beideman’s
reasonable legal fees and expenses incurred in connection with
the Beideman Agreement up to $20,000. Mr. Beideman did not
receive any severance or any special separation pay.
2010
Compensation Decisions
At the Committee’s January 2010 meeting, in connection with
its annual January review of executive compensation arrangements
of peer financial institutions and market conditions, with input
from Towers, the Committee determined that modifications for
2010 were necessary to achieve Associated’s objective of
retaining and motivating the key executives who are leading
Associated through the challenging economic cycle and to
continue to align the executives’ compensation with the
interests of shareholders. While being mindful and aware of
current market conditions, the Committee approved modifications
to Associated’s executive compensation effective
February 15, 2010 for Associated’s senior executives
(other than the CEO) which are consistent with the requirements
of the Interim Final Rule. These modifications included a 3.5%
increase in annual base cash compensation, salary to be paid in
shares of common stock which are fully vested with transfer
restrictions imposed by the Committee consistent with the
transfer restrictions applicable to the salary shares issued to
the CEO, and grants of restricted stock limited to one third of
compensation which are subject to vesting based upon
Associated’s repayment of TARP funds. Salary paid in the
form of common stock with restrictions on transferability ties
the executive’s compensation to long term shareholder
value. The restricted stock will vest in 25% increments on the
dates that Associated makes repayments in 25% increments of the
aggregate funds received by Associated under TARP. If the
NEO’s employment is terminated for any reason other than as
a result of his or her death or disability or a change of
control, within two years of the date on which an award of
restricted stock is granted, the NEO shall forfeit such award in
accordance with the TARP requirements. No plan-based awards were
established in 2010 for the
2010-2012
awards cycle under the Associated Banc-Corp Cash Incentive
Compensation Plan.
Accounting
and Tax Considerations
Associated desires to maximize return to its shareholders, as
well as meet its goal of the compensation policy (outlined under
“Objectives of the Compensation Program”). As part of
balancing these objectives, management (particularly the
Committee, the CEO, and the Director of Human Resources) gives
consideration to the accounting and tax treatment to Associated,
and to a lesser extent the tax treatment
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to the executive, when making compensation decisions. FASB
Accounting Standards Codification (“ASC”) Topic 718,
“Compensation — Stock Compensation”
(formerly known as Statement of Financial Accounting Standards
No. 123R, “Share-Based Payment”), became
effective for Associated on January 1, 2006, and required
all share-based payments to employees, including grants of
employee stock options, to be valued at fair value on the date
of grant and to be expensed over the applicable vesting period.
Section 162(m) of the Code generally disallows a federal
income tax deduction to public companies for compensation (other
than qualifying performance-based compensation) over $1,000,000
paid to the corporation’s CEO and the three other most
highly compensated executive officers. EESA, during the period
the UST holds a debt or equity position in Associated acquired
under the CPP, reduced the threshold under Section 162(m)
of the Code from $1,000,000 to $500,000 and eliminated the
exception for qualifying performance-based compensation for the
NEOs. Prior to being subject to EESA, the Committee’s
policy with respect to Section 162(m) of the Code has been
to qualify such compensation for deductibility where
practicable. The Committee acknowledges the reduced limitations
on deductibility during the Restricted Period in its
determinations of appropriate compensation levels.
Recovery
of Compensation
In connection with Associated’s voluntary sale of Senior
Preferred Stock and related warrants to purchase common stock to
the UST under TARP, EESA also requires Associated to provide for
the recovery of any bonus, retention award or incentive
compensation paid to a NEO and, following February 17,
2009, and subject to the standards adopted by the UST to any of
the next 20 most highly compensated employees of Associated, or
a “clawback”, during the Restricted Period, if the
payments were based on statements of earnings, revenues, gains
or other criteria that are later found to be materially
inaccurate. During the Restricted Period, EESA further allows
the UST to review bonuses, retention awards and other
compensation paid to the NEOs and subject to the standards
adopted by the UST, the next 20 most highly compensated
employees prior to February 17, 2009. If the UST determines
that such payments were inconsistent with the purposes of
Section 111 of EESA, TARP or otherwise contrary to the
public interest, the UST will negotiate with Associated and the
subject Associated employee regarding reimbursement to the US
government of such payment of compensation or bonus.
Security
Ownership Guidelines
In January 2010, the Committee revised the
previously-established stock ownership guidelines for the NEOs
and 13 other senior officers, and other key executives
identified by the Chief Executive Officer. The purpose of the
guidelines is to ensure that Associated’s senior executives
retain a portion of their restricted stock grants to help ensure
that their business decisions are made in the best interests of
long-term shareholder value. The revised guidelines require the
above-mentioned executives to hold 50% of vested SBRS granted
since January 2007, net of applicable taxes, for a period of
three years. An additional 18 executives will be required to
hold 50% of their vested SBRS grants, net of applicable taxes,
beginning with their 2010 SBRS grants.
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Table of Contents
COMPENSATION
AND BENEFITS COMMITTEE REPORT
The Committee has reviewed and discussed the Compensation
Discussion and Analysis required by Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this Proxy
Statement for filing.
Risk
Assessment
In compliance with TARP Interim Final Rule requirements, the
Committee met with Associated’s senior risk officers in
July 2009 and December 2009 to review Associated’s NEO
compensation plans and its other employee compensation plans and
to conduct risk assessments. The Committee engaged its
compensation consultants, Mercer and Towers, to assist with
these risk assessments. In December 2009, Towers prepared an
in-depth assessment report of Associated’s incentive
compensation plans (the “Towers Report”) and met with
Associated’s senior risk officers and the Committee to
review the Towers Report. Following an inventory of all
compensation plans that Associated expects to maintain in 2010,
the Towers Report provided a detailed review of 21 incentive
plans selected on the basis of their materiality to Associated.
The Towers assessment included a review of current compensation
plan documents, historical pay data and interviews with
Associated’s senior risk officers. For each of the
incentive plans reviewed, Towers analyzed the plan governance,
plan design and the financial impact on Associated. Based on its
review and analysis and the input from Associated’s senior
risk officers, Towers concluded that none of the reviewed
incentive plans have a high probability of encouraging
inappropriate risk taking by Associated’s NEOs or employees.
NEO
Compensation Plans
The Committee and the senior risk officers reviewed the
operation of the NEO compensation plans and Associated’s
key business risk factors. Following its review, the Committee
and the senior risk officers concluded that Associated’s
NEO compensation plans do not encourage unnecessary and
excessive risk-taking that threatens the value of Associated or
the manipulation of reported earnings. In making the foregoing
determination, the Committee and the senior risk officers
considered the following, in addition to the findings of the
Towers Report:
Performance Incentive Plan and Cash Incentive Compensation
Plan. There were no performance payouts for
2009 under either the Performance Incentive Plan nor Cash
Incentive Compensation Plan for the NEOs.
2003 Long Term Incentive Stock
Plan. Stock options and SBRS awards to NEOs
vest over a period of three years. Following the effective date
of the TARP Interim Final Rule, SBRS awards to NEOs vest over a
period which corresponds to Associated’s repayment of TARP.
Share salary awards, although fully vested at the date of
issuance, are subject to restrictions on transfer. These awards
derive value based on long-term performance of Associated Common
Stock over the respective period of vesting or transfer
restrictions.
Various Retirement Programs. Benefits
under the defined benefit plans to NEOs are not based on the
performance of Associated, while benefits under the defined
contribution plans to NEOs are based on the performance of
Associated only to the extent the participant elects to invest
in Associated Common Stock.
Employee
Compensation Plans
In addition to the compensation plans for the NEOs discussed
above, Associated maintains various other employee compensation
plans, some of which are discretionary in nature as to the
amounts to be paid thereunder, some for which the amounts to be
paid thereunder is based on a formula, some of which meet the
requirements for commission compensation under the TARP Interim
Final Rule and others for which the amounts to be paid
thereunder may be determined based on a combination of these
approaches. All of
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these plans were reviewed by the Committee as described above.
As a result of the review, no plan was identified as having a
high degree of risk. It was further determined that risk
management oversight, internal control processes, governance
procedures currently in place and the discretionary nature of
many of the compensation plans collectively served to ensure
that the compensation plans do not encourage excessive
risk-taking activities or the manipulation of earnings.
Pursuant to the TARP Interim Final Rule, the Committee certifies
that:
| (1) | It has reviewed with senior risk officers the senior executive officer (SEO) compensation plans and has made all reasonable efforts to ensure that these plans do not encourage SEOs to take unnecessary and excessive risks that threaten the value of Associated; | |
| (2) | It has reviewed with senior risk officers the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to Associated; and | |
| (3) | It has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of Associated to enhance the compensation of any employee. |
THE COMPENSATION AND BENEFITS COMMITTEE
John C. Meng, Chairman
Ruth M. Crowley
John C. Seramur
Ruth M. Crowley
John C. Seramur
29
Table of Contents
SUMMARY
COMPENSATION TABLE
|
Change in |
||||||||||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||||||||||
|
Non-Qualified |
||||||||||||||||||||||||||||||||||||
|
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||||||
|
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||||||
|
Name and Principal |
Salary |
Bonus |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
||||||||||||||||||||||||||||
|
Position
|
Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | $(6) | ($)(7) | ($)(8) | |||||||||||||||||||||||||||
|
Philip B. Flynn(9)
|
2009 | $ | 186,092 | $ | 0 | $ | 100,003 | $ | 0 | $ | 0 | $ | — | $ | 12,451 | $ | 298,546 | |||||||||||||||||||
|
President and CEO
|
||||||||||||||||||||||||||||||||||||
|
Paul S. Beideman(10)
|
2009 | 900,000 | 0 | 1,226,699 | 179,720 | 0 | 83,561 | 26,099 | 2,416,079 | |||||||||||||||||||||||||||
|
Former Chairman
|
2008 | 892,307 | 0 | 1,493,400 | 137,570 | 180,000 | 27,676 | 45,888 | 2,776,841 | |||||||||||||||||||||||||||
|
and CEO
|
2007 | 842,308 | 600,000 | 549,018 | 303,250 | 0 | 108,072 | 58,093 | 2,460,741 | |||||||||||||||||||||||||||
|
Joseph B. Selner
|
2009 | 360,000 | 0 | 86,300 | 48,524 | 0 | 95,023 | 28,312 | 618,159 | |||||||||||||||||||||||||||
|
Executive Vice
|
2008 | 358,261 | 150,000 | 323,570 | 74,288 | 66,520 | (6 | ) | 27,450 | 1,000,089 | ||||||||||||||||||||||||||
|
President, Chief
Financial Officer |
2007 | 346,223 | 200,000 | 237,230 | 163,755 | 0 | 59,487 | 27,026 | 1,033,721 | |||||||||||||||||||||||||||
|
Scott S. Hickey
|
2009 | 350,000 | 0 | 210,572 | 107,832 | 0 | 24,406 | 225,734 | 918,544 | |||||||||||||||||||||||||||
|
Executive Vice
|
2008 | 57,884 | 100,000 | 195,000 | 57,834 | 0 | — | 2,000 | 412,718 | |||||||||||||||||||||||||||
|
President, Chief
Credit Officer |
||||||||||||||||||||||||||||||||||||
|
Mark D. Quinlan
|
2009 | 310,000 | 0 | 217,476 | 45,289 | 0 | 39,551 | 28,934 | 641,250 | |||||||||||||||||||||||||||
|
Executive Vice
|
2008 | 307,108 | 155,000 | 224,010 | 74,431 | 56,000 | 25,537 | 30,155 | 872,241 | |||||||||||||||||||||||||||
|
President, Chief
Information Officer |
2007 | 289,477 | 100,000 | 169,450 | 109,170 | 0 | 23,969 | 31,384 | 723,450 | |||||||||||||||||||||||||||
|
Mark J. McMullen
|
2009 | 365,000 | 0 | 146,710 | 44,930 | 0 | 50,335 | 34,112 | 641,087 | |||||||||||||||||||||||||||
|
Executive Vice
|
2008 | 362,946 | 90,000 | 248,900 | 63,282 | 68,340 | (6 | ) | 38,692 | 872,160 | ||||||||||||||||||||||||||
|
President, Director,
Wealth Management |
2007 | 350,119 | 175,000 | 203,340 | 145,560 | 0 | 63,370 | 39,146 | 976,535 | |||||||||||||||||||||||||||
|
Lisa B. Binder(11)
|
2009 | 242,308 | 0 | 466,020 | 107,832 | 0 | (6 | ) | 1,109,782 | 1,925,942 | ||||||||||||||||||||||||||
|
Former President
|
2008 | 592,307 | 400,000 | 622,250 | 82,542 | 110,000 | 62,633 | 160,919 | 2,030,651 | |||||||||||||||||||||||||||
|
and COO
|
2007 | 497,115 | 650,000 | 507,750 | 303,945 | 0 | 29,856 | 282,464 | 2,271,130 | |||||||||||||||||||||||||||
|
David A. Baumgarten(12)
|
2009 | 326,400 | 0 | 239,914 | 43,852 | 0 | 55,423 | 37,767 | 703,356 | |||||||||||||||||||||||||||
|
Executive Vice
|
2008 | 326,400 | 120,000 | 273,790 | 71,536 | 64,000 | 1,616 | 40,604 | 897,946 | |||||||||||||||||||||||||||
|
President, Regional
Banking |
2007 | 325,415 | 120,000 | 179,617 | 121,300 | 0 | 37,727 | 38,664 | 822,723 | |||||||||||||||||||||||||||
| (1) | Salary represents amounts paid in cash or shares of Associated common stock during the calendar year whether or not receipt of any such amounts was deferred by the executive. There was no increase in base salary in 2009. | |
| (2) | No bonuses were awarded under the annual performance incentive plans with respect to 2009 performance. Bonus represents amounts earned in 2007 and 2008 and awarded under the annual performance incentive plans in 2008 and 2009, respectively. Amounts earned in 2008 were approved for payment by the Committee prior to the enactment of EESA. Mr. Quinlan’s bonus for 2008 included $40,000 for successful systems conversion paid in July 2008. The Committee approved the earned 2008 bonuses and awarded bonuses to each of the NEOs, other than Mr. Beideman. Based on Mr. Beideman’s 2008 performance goals, Mr. Beideman would have been awarded the payment of $450,000. Mr. Beideman recommended to the Committee that the Committee specifically consider whether to exercise its discretion to not award him a cash incentive bonus under the PIP for 2008, even though Associated satisfied the relevant performance criteria. The Committee exercised its discretion not to pay the CEO the cash incentive bonus for 2008. | |
| (3) | Stock Awards for 2009 reflect the aggregate grant date fair value of awards. Grants in prior years have been restated to be reported on a consistent basis. Mr. Beideman retired on February 1, 2010, resulting in 65,133 shares of his 2009 grant not vesting and 19,800 shares of his 2008 grant not vesting. Ms. Binder’s resignation, effective May 15, 2009, resulted in her forfeiting all of her unvested stock awards which were 27,000 shares for 2009, 16,500 shares for 2008 and 4,950 shares for 2007. For further discussion and details regarding the accounting treatment and underlying assumptions relative to stock-based compensation, see Note 11, “Stock-Based Compensation,” of the notes to Consolidated Financial Statements included in Part II, |
30
Table of Contents
| Item 8, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. | ||
| (4) | Option Awards for 2009 reflect the aggregate grant date fair value of awards. Grants in prior years have been restated to be reported on a consistent basis. Mr. Beideman retired on February 1, 2010, resulting in options to purchase 33,000 shares of his 2009 grant not vesting and options to purchase 16,500 shares of his 2008 grant not vesting. Ms. Binder’s resignation, effective May 15, 2009, resulted in her forfeiting all of her Option Awards which included options to purchase 30,000 shares for 2009, 30,000 shares for 2008 and 50,000 shares for 2007. For further discussion and details regarding the accounting treatment and underlying assumptions relative to stock-based compensation, see Note 11, “Stock-Based Compensation,” of the notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. | |
| (5) | For the 2006-2008 performance period, the performance metric for earnings per share was not achieved and therefore, the Committee did not approve any award. For the 2007-2008 performance period, the performance metrics of earnings per share were not achieved; however, Associated’s performance was at the 75th percentile relative to the peer group, therefore, resulting in an award of 50% of target. See also “Associated Banc-Corp Cash Incentive Compensation Plan.” The Committee approved the earned 2007-2008 50% payout and awarded the payments to all of the NEOs. No awards were earned or paid for the 2007-2009 performance period. | |
| (6) | Reflects the total of the change in present value of the Retirement Account Plan (“RAP”) and the Supplemental Executive Retirement Plan (“SERP”), respectively as follows: |
| 2009 | 2008 | 2007 | ||||||||||||||||||||||||||||||||||
|
NAME
|
RAP | SERP | TOTAL* | RAP | SERP | TOTAL* | RAP | SERP | TOTAL | |||||||||||||||||||||||||||
|
Philip B. Flynn
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
|
Paul S. Beideman
|
15,277 | 68,284 | 83,561 | 13,850 | 13,826 | 27,676 | 13,512 | 94,560 | 108,072 | |||||||||||||||||||||||||||
|
Joseph B. Selner
|
30,772 | 64,251 | 95,023 | 28,142 | (48,842 | ) | (20,700 | ) | 30,526 | 28,961 | 59,487 | |||||||||||||||||||||||||
|
Scott S. Hickey
|
12,250 | 14,156 | 26,406 | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
Mark D. Quinlan
|
13,718 | 25,833 | 39,551 | 12,412 | 13,125 | 25,537 | 11,800 | 12,169 | 23,969 | |||||||||||||||||||||||||||
|
Mark J. McMullen
|
30,739 | 19,596 | 50,335 | 28,111 | (62,563 | ) | (34,452 | ) | 30,489 | 32,881 | 63,370 | |||||||||||||||||||||||||
|
Lisa B. Binder
|
967 | (69,289 | ) | (68,322 | ) | 11,950 | 50,683 | 62,633 | 11,250 | 18,606 | 29,856 | |||||||||||||||||||||||||
|
David A. Baumgarten
|
16,187 | 39,236 | 55,423 | 14,689 | (13,073 | ) | 1,616 | 14,511 | 23,216 | 37,727 | ||||||||||||||||||||||||||
| (*) Negative combined values are not presented in the summary compensation table. | ||
| No above-market or preferential earnings are credited on deferred compensation. All NEOs other than Mr. Hickey and Mr. Quinlan are 100% vested in both their RAP and SERP accounts. Mr. Hickey is 0% vested in both his RAP and SERP accounts. Mr. Quinlan is 100% vested in his RAP account and 0% vested in his SERP account and will begin vesting in his SERP account in 2010. See “Retirement Plans.” | ||
| (7) | Other Compensation for 2009 includes for each of the NEOs (other than Mr. Flynn): employer-paid premiums for life insurance and long term disability insurance coverages, the employer match on the NEO’s 2009 contributions to the 401(k) Plan ($11,025 each for Mr. Beideman, Mr. Selner, Mr. Hickey, Mr. Quinlan, Mr. McMullen and Mr. Baumgarten; $0 for Ms. Binder), and the allowance received for business use of an automobile. For Mr. Flynn, it includes certain relocation expenses related to Mr. Flynn joining Associated in December 2009. For Mr. Beideman, it includes the 10% employer match on his purchases through the employee stock purchase program and club membership fees. For Mr. Selner, it includes the 10% employer match on his purchases through the employee stock purchase program and club membership fees. For Mr. Hickey, it includes the cost of a physical examination, club membership fees in the amount of approximately $33,000 and certain relocation expenses in the amount of $169,710 related to Mr. Hickey joining Associated in October 2008, with the bulk of such relocation expense related to reimbursement to Mr. Hickey for a portion of the loss he incurred in the sale of his primary residence in Minnesota. For Mr. Quinlan, it includes the 10% employer match on his purchases through the employee stock purchase program and club membership fees. For Mr. McMullen, it includes club membership fees. For Ms. Binder, it includes the cost of a physical examination, club membership fees and payments pursuant to her separation |
31
Table of Contents
| agreement. For Mr. Baumgarten, it includes the 10% employer match on his purchases through the employee stock purchase program and club membership fees. | ||
| (8) | In 2009, “Salary” accounted for approximately 37% of the total compensation of Mr. Beideman and the other NEOs, respectively. | |
| (9) | Mr. Flynn commenced employment as President and CEO on December 1, 2009. | |
| (10) | Mr. Beideman resigned as Chairman and CEO as of December 1, 2009, and remained employed as a senior advisor to Mr. Flynn until February 1, 2010. | |
| (11) | Ms. Binder resigned on May 15, 2009. | |
| (12) | Mark G. Sander assumed Mr. Baumgarten’s responsibilities for regional banking in November 2009 as part of the management changes in the Commercial Banking business line. Mr. Baumgarten remains at Associated in a non-executive role. |
32
Table of Contents
GRANTS OF
PLAN-BASED AWARDS DURING 2009
|
All Other |
All Other |
|||||||||||||||||||||||||||||||
|
Stock |
Option |
|||||||||||||||||||||||||||||||
|
Awards: |
Awards: |
Exercise |
Grant Date |
|||||||||||||||||||||||||||||
|
Estimated Future Payouts |
Number |
Number of |
or Base |
Fair Value |
||||||||||||||||||||||||||||
|
Under Non-Equity |
of Shares |
Securities |
Price of |
of Stock |
||||||||||||||||||||||||||||
| Incentive Plan Awards(1) |
of Stock |
Underlying |
Option |
and Option |
||||||||||||||||||||||||||||
|
Grant |
Threshold |
Target |
Maximum |
or Units |
Options |
Awards |
Awards |
|||||||||||||||||||||||||
|
Name
|
Date | ($)(2) | ($) | ($)(3) | (#) | (#) | ($/Sh) | ($)(4) | ||||||||||||||||||||||||
|
Philip B. Flynn
|
12/1/09 | 8,985 | — | $ | 11.13 | $ | 100,003 | |||||||||||||||||||||||||
|
2008-2010
|
— | — | — | |||||||||||||||||||||||||||||
|
Paul S. Beideman(5)
|
1/28/09 | 45,000 | 50,000 | 17.26 | 956,420 | |||||||||||||||||||||||||||
| 3/4/09 | 35,433 | — | 12.70 | 449,999 | ||||||||||||||||||||||||||||
|
2008-2010
|
142,375 | 569,500 | 1,494,938 | |||||||||||||||||||||||||||||
|
Joseph B. Selner
|
1/28/09 | 5,000 | 13,500 | 17.26 | 134,824 | |||||||||||||||||||||||||||
|
2008-2010
|
52,305 | 209,220 | 549,203 | |||||||||||||||||||||||||||||
|
Scott S. Hickey
|
1/28/09 | 12,200 | 30,000 | 17.26 | 318,404 | |||||||||||||||||||||||||||
|
2008-2010
|
35,000 | 140,000 | 367,500 | |||||||||||||||||||||||||||||
|
Mark D. Quinlan
|
1/28/09 | 12,600 | 12,600 | 17.26 | 262,765 | |||||||||||||||||||||||||||
|
2008-2010
|
43,680 | 174,720 | 458,640 | |||||||||||||||||||||||||||||
|
Mark J. McMullen
|
1/28/09 | 8,500 | 12,500 | 17.26 | 191,640 | |||||||||||||||||||||||||||
|
2008-2010
|
52,748 | 210,990 | 553,849 | |||||||||||||||||||||||||||||
|
Lisa B. Binder(5)
|
1/28/09 | 27,000 | 30,000 | 17.26 | 573,852 | |||||||||||||||||||||||||||
|
2008-2010
|
82,500 | 330,000 | 866,250 | |||||||||||||||||||||||||||||
|
David A. Baumgarten
|
1/28/09 | 13,900 | 12,200 | 17.26 | 283,766 | |||||||||||||||||||||||||||
|
2008-2010
|
48,960 | 195,840 | 514,080 | |||||||||||||||||||||||||||||
| (1) | No plan-based awards were established in 2009 for the 2009-2011 award cycle under the Associated Banc-Corp Cash Incentive Compensation Plan. Plan-based awards were established in 2008 for the 2008-2010 award cycle under the Associated Banc-Corp Cash Incentive Compensation Plan. See “Associated Banc-Corp Cash Incentive Compensation Plan” for further discussion and details of each award cycle. | |
| (2) | For the 2008-2010 award cycle, threshold represents payment of 25% of target if EPS performance level achieved by Associated is at the 50th percentile of the peer group, and actual EPS results are below the threshold achievement level. | |
| (3) | Represents the amount payable if Associated meets the maximum EPS goal level and achieves its maximum level of peer modifier. | |
| (4) | See “Accounting and Tax Considerations.” For further discussion and details regarding the accounting treatment and underlying assumptions relative to stock-based compensation, see Note 11, “Stock-Based Compensation,” of the notes to Consolidated Financial Statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of Associated’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009. | |
| (5) | Awards forfeited upon date of separation. |
33
Table of Contents
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2009
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
|||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
Plan Awards: |
||||||||||||||||||||||||||||||||||
|
Incentive |
Plan Awards: |
Market or |
||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Plan Awards: |
Market |
Number of |
Payout Value |
|||||||||||||||||||||||||||||||
|
Securities |
Securities |
Number of |
Number of |
Value of |
Unearned |
Of Unearned |
||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Securities |
Shares or |
Shares or |
Shares, |
Shares, |
||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Underlying |
Units of |
Units of |
Units or |
Units or |
||||||||||||||||||||||||||||||
|
Options |
Options |
Unexercised |
Option |
Option |
Stock Held |
Stock Held |
Other Rights |
Other Rights |
||||||||||||||||||||||||||||
|
(#) |
(#) |
Unearned |
Exercise |
Expiration |
That Have |
That Have |
That Have |
That Have |
||||||||||||||||||||||||||||
|
Exercisable |
Unexercisable |
Options |
Price |
Date |
Not Vested |
Not Vested |
Not Vested |
Not Vested |
||||||||||||||||||||||||||||
|
Name
|
(1) | (1) | (#) | ($) | (1) | (#) | ($)(2) | (#) | ($) | |||||||||||||||||||||||||||
|
Philip B. Flynn
|
0 | 0 | 0 | $ | — | — | ||||||||||||||||||||||||||||||
| 8,985 | (3) | $ | 98,925 | 0 | $ | 0 | ||||||||||||||||||||||||||||||
|
Paul S. Beideman(4)
|
25,000 | 0 | 0 | 23.25 | 04/28/2013 | |||||||||||||||||||||||||||||||
| 112,500 | 0 | 0 | 29.08 | 01/28/2014 | ||||||||||||||||||||||||||||||||
| 73,500 | 0 | 0 | 33.18 | 02/10/2015 | ||||||||||||||||||||||||||||||||
| 60,600 | 0 | 0 | 32.82 | 12/13/2015 | ||||||||||||||||||||||||||||||||
| 33,500 | 16,500 | 0 | 33.89 | 01/24/2017 | ||||||||||||||||||||||||||||||||
| 17,000 | 33,000 | 0 | 24.89 | 01/23/2018 | ||||||||||||||||||||||||||||||||
| 0 | 50,000 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 125,379 | (5) | 1,380,423 | 0 | 0 | ||||||||||||||||||||||||||||||||
|
Joseph B. Selner
|
33,939 | 0 | 0 | 16.84 | 01/26/2010 | |||||||||||||||||||||||||||||||
| 41,249 | 0 | 0 | 19.47 | 01/24/2011 | ||||||||||||||||||||||||||||||||
| 41,249 | 0 | 0 | 21.24 | 01/23/2012 | ||||||||||||||||||||||||||||||||
| 37,500 | 0 | 0 | 22.98 | 01/22/2013 | ||||||||||||||||||||||||||||||||
| 37,500 | 0 | 0 | 29.08 | 01/28/2014 | ||||||||||||||||||||||||||||||||
| 50,000 | 0 | 0 | 33.07 | 01/26/2015 | ||||||||||||||||||||||||||||||||
| 33,000 | 0 | 0 | 32.82 | 12/13/2015 | ||||||||||||||||||||||||||||||||
| 18,090 | 8,910 | 0 | 33.89 | 01/24/2017 | ||||||||||||||||||||||||||||||||
| 9,180 | 17,820 | 0 | 24.89 | 01/23/2018 | ||||||||||||||||||||||||||||||||
| 0 | 13,500 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 15,890 | (5) | 174,949 | 0 | 0 | ||||||||||||||||||||||||||||||||
|
Scott S. Hickey
|
6,800 | 13,220 | 0 | 19.50 | 10/22/2018 | |||||||||||||||||||||||||||||||
| 0 | 30,000 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 18,800 | (5) | 206,988 | 0 | 0 | ||||||||||||||||||||||||||||||||
|
Mark D. Quinlan
|
40,000 | 0 | 0 | 31.17 | 11/01/2015 | |||||||||||||||||||||||||||||||
| 12,060 | 5,940 | 0 | 33.89 | 01/24/2017 | ||||||||||||||||||||||||||||||||
| 6,120 | 11,880 | 0 | 24.89 | 01/23/2018 | ||||||||||||||||||||||||||||||||
| 4,080 | 7,920 | 0 | 18.82 | 07/23/2018 | ||||||||||||||||||||||||||||||||
| 0 | 12,600 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 20,190 | (5) | 222,292 | 0 | 0 | ||||||||||||||||||||||||||||||||
|
Mark J. McMullen
|
29,946 | 0 | 0 | 16.84 | 01/26/2010 | |||||||||||||||||||||||||||||||
| 41,249 | 0 | 0 | 19.47 | 01/24/2011 | ||||||||||||||||||||||||||||||||
| 41,249 | 0 | 0 | 21.24 | 01/23/2012 | ||||||||||||||||||||||||||||||||
| 37,500 | 0 | 0 | 22.98 | 01/22/2013 | ||||||||||||||||||||||||||||||||
| 37,500 | 0 | 0 | 29.08 | 01/28/2014 | ||||||||||||||||||||||||||||||||
| 40,000 | 0 | 0 | 33.07 | 01/26/2015 | ||||||||||||||||||||||||||||||||
| 24,000 | 0 | 0 | 32.82 | 12/13/2015 | ||||||||||||||||||||||||||||||||
| 16,080 | 7,920 | 0 | 33.89 | 01/24/2017 | ||||||||||||||||||||||||||||||||
| 7,820 | 15,180 | 0 | 24.89 | 01/23/2018 | ||||||||||||||||||||||||||||||||
| 0 | 12,500 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 17,080 | (5) | 188,051 | 0 | 0 | ||||||||||||||||||||||||||||||||
34
Table of Contents
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
|
Equity |
||||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
|||||||||||||||||||||||||||||||||||
|
Equity |
Incentive |
Plan Awards: |
||||||||||||||||||||||||||||||||||
|
Incentive |
Plan Awards: |
Market or |
||||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Plan Awards: |
Market |
Number of |
Payout Value |
|||||||||||||||||||||||||||||||
|
Securities |
Securities |
Number of |
Number of |
Value of |
Unearned |
Of Unearned |
||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Securities |
Shares or |
Shares or |
Shares, |
Shares, |
||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Underlying |
Units of |
Units of |
Units or |
Units or |
||||||||||||||||||||||||||||||
|
Options |
Options |
Unexercised |
Option |
Option |
Stock Held |
Stock Held |
Other Rights |
Other Rights |
||||||||||||||||||||||||||||
|
(#) |
(#) |
Unearned |
Exercise |
Expiration |
That Have |
That Have |
That Have |
That Have |
||||||||||||||||||||||||||||
|
Exercisable |
Unexercisable |
Options |
Price |
Date |
Not Vested |
Not Vested |
Not Vested |
Not Vested |
||||||||||||||||||||||||||||
|
Name
|
(1) | (1) | (#) | ($) | (1) | (#) | ($)(2) | (#) | ($) | |||||||||||||||||||||||||||
|
Lisa B. Binder(6)
|
— | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
David A. Baumgarten
|
33,000 | 0 | 0 | 20.99 | 05/30/2011 | |||||||||||||||||||||||||||||||
| 24,749 | 0 | 0 | 21.24 | 01/23/2012 | ||||||||||||||||||||||||||||||||
| 22,499 | 0 | 0 | 22.98 | 01/22/2013 | ||||||||||||||||||||||||||||||||
| 30,000 | 0 | 0 | 29.08 | 01/28/2014 | ||||||||||||||||||||||||||||||||
| 25,000 | 0 | 0 | 33.07 | 01/26/2015 | ||||||||||||||||||||||||||||||||
| 30,000 | 0 | 0 | 32.82 | 12/13/2015 | ||||||||||||||||||||||||||||||||
| 13,400 | 6,600 | 0 | 33.89 | 01/24/2017 | ||||||||||||||||||||||||||||||||
| 8,840 | 17,160 | 0 | 24.89 | 01/23/2018 | ||||||||||||||||||||||||||||||||
| 0 | 12,200 | 0 | 17.26 | 01/28/2019 | ||||||||||||||||||||||||||||||||
| 22,909 | (5) | 252,228 | 0 | 0 | ||||||||||||||||||||||||||||||||
| (1) | Options expiring between 2010 and 2014 and between 2017 and 2019 have a three-year stepped vesting schedule (34% vested on the first anniversary following the date of the grant, the remaining options vested 33% each on the second and third anniversaries following the date of the grant); options expiring on 1/26/15 vested on 6/30/05; options expiring on 12/13/15 vested immediately upon the grant date of 12/13/05. | |
| (2) | Market value based on closing price of Associated Banc-Corp common stock of $11.01 on December 31, 2009. | |
| (3) | SBRS granted on December 1, 2009 on which restrictions had not lapsed as of December 31, 2009. For this grant, shares of restricted stock will vest: 25% at the time Associated repays 25% of the aggregate financial assistance received by Associated under TARP; an additional 25% at the time Associated repays 50% of the aggregate financial assistance received by Associated under TARP; an additional 25% at the time Associated repays 75% of the aggregate financial assistance received by Associated under TARP; and the remaining 25% at the time Associated repays 100% of the aggregate financial assistance received by Associated under TARP. Notwithstanding the foregoing schedule and subject to the requirements of TARP, no award of restricted stock will vest in accordance with the foregoing schedule if Mr. Flynn does not continue to perform substantial services to Associated for at least two years after the date on which such award of restricted stock was granted other than because of his death or disability, or a change of control of Associated. | |
| (4) | Mr. Beideman retired on February 1, 2010, and 49,500 of his unvested stock options and 84,933 shares of his unvested restricted stock were forfeited. | |
| (5) | SBRS granted on January 25, 2006, January 24, 2007, and January 23, 2008, on which restrictions had not lapsed as of December 31, 2009. For these grants, restrictions lapse on a three-year stepped vesting schedule, 34% on the first anniversary following the date of the grant, 33% on each of the second and third anniversary dates following the grant, respectively. Recipients must be employed on the date restrictions lapse in order to receive the shares. | |
| (6) | Ms. Binder resigned on May 15, 2009, and all of her outstanding unvested equity awards were forfeited. |
35
Table of Contents
OPTION
EXERCISES AND STOCK VESTED IN 2009
| Option Awards | Stock Awards | |||||||||||||||||||||||
|
Number of |
Value |
Shares |
Value |
|||||||||||||||||||||
|
Shares Acquired |
Realized |
Acquired |
Realized |
|||||||||||||||||||||
|
on Exercise |
on |
on |
on |
|||||||||||||||||||||
|
or Vesting |
Exercise |
Vesting |
Vesting |
|||||||||||||||||||||
|
Name of Executive Officer
|
(#) | ($) | (#)(1) | ($)(2) | ||||||||||||||||||||
|
Philip B. Flynn
|
0 | $ | 0 | 0 | $ | 0 | ||||||||||||||||||
|
Paul S. Beideman
|
0 | 0 | 29,739 | 458,042 | ||||||||||||||||||||
|
Joseph B. Selner
|
0 | 0 | 8,908 | 136,728 | ||||||||||||||||||||
|
Scott S. Hickey
|
0 | 0 | 3,400 | 39,236 | ||||||||||||||||||||
|
Mark D. Quinlan
|
0 | 0 | 6,360 | 97,592 | ||||||||||||||||||||
|
Mark J. McMullen
|
0 | 0 | 7,195 | 110,388 | ||||||||||||||||||||
|
Lisa B. Binder
|
0 | 0 | 13,450 | 211,756 | ||||||||||||||||||||
|
David A. Baumgarten
|
0 | 0 | 7,370 | 113,145 | ||||||||||||||||||||
| (1) | Represents SBRS for which restrictions have lapsed. | |
| (2) | Value based on the closing price of Associated common stock on the date restrictions lapsed. |
PENSION
BENEFITS IN 2009
|
Number of |
||||||||||||||||
|
Years |
Present Value of |
Payments |
||||||||||||||
|
Credited |
Accumulated |
During Last |
||||||||||||||
|
Service |
Benefit |
Fiscal Year |
||||||||||||||
|
Name
|
Plan Name(1) | (#) | ($) | ($) | ||||||||||||
|
Philip B. Flynn
|
RAP | — | — | 0 | ||||||||||||
| SERP | — | — | 0 | |||||||||||||
|
Paul S. Beideman
|
RAP | 7 | 87,869 | 0 | ||||||||||||
| SERP | 7 | 521,635 | 0 | |||||||||||||
|
Joseph B. Selner
|
RAP | 37 | 474,951 | 0 | ||||||||||||
| SERP | 37 | 210,944 | 0 | |||||||||||||
|
Scott S. Hickey(2)
|
RAP | 1 | 12,250 | 0 | ||||||||||||
| SERP | 1 | 14,156 | 0 | |||||||||||||
|
Mark D. Quinlan(3)
|
RAP | 4 | 48,930 | 0 | ||||||||||||
| SERP | 4 | 51,128 | 0 | |||||||||||||
|
Mark J. McMullen
|
RAP | 29 | 474,112 | 0 | ||||||||||||
| SERP | 29 | 220,181 | 42,234 | |||||||||||||
|
Lisa B. Binder
|
RAP | 2 | 24,167 | 0 | ||||||||||||
| SERP | 2 | 0 | 0 | |||||||||||||
|
David A. Baumgarten
|
RAP | 9 | 110,609 | 0 | ||||||||||||
| SERP | 9 | 119,887 | 0 | |||||||||||||
| (1) | Information regarding the RAP and the SERP can be found under “Retirement Plans.” | |
| (2) | Mr. Hickey is 0% vested in these benefits. | |
| (3) | Mr. Quinlan is 0% vested in the SERP benefit. |
36
Table of Contents
NON-QUALIFIED
DEFERRED COMPENSATION IN 2009
|
Executive |
Registrant |
Aggregate |
Aggregate |
Aggregate |
||||||||||||||||
|
Contributions |
Contributions |
Earnings |
Withdrawals/ |
Balance |
||||||||||||||||
|
in last FY |
in last FY |
in last FY |
Distributions |
at last FYE |
||||||||||||||||
|
Name
|
($)(1) | ($) | ($)(2) | ($)(3) | ($)(4) | |||||||||||||||
|
Philip B. Flynn
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||
|
Paul S. Beideman
|
0 | 0 | (6,876 | ) | 0 | 2,190,800 | ||||||||||||||
|
Joseph B. Selner
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Scott S. Hickey
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Mark D. Quinlan
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Mark J. McMullen
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
Lisa B. Binder
|
0 | 0 | 0 | 0 | 0 | |||||||||||||||
|
David A. Baumgarten
|
0 | 0 | 138,727 | 0 | 624,940 | |||||||||||||||
| (1) | Participants may defer up to 50% of their base salary and up to 100% of their cash incentive compensation. All amounts in this column were reported in the Summary Compensation Table as 2009 compensation. | |
| (2) | Aggregate earnings are based on the performance of investments within the Associated Banc-Corp Deferred Compensation Plan. Each participant may specify investment preferences for his or her account, subject to final approval by the Administrator and Trustee, electing from among various investment options. | |
| (3) | Distributions from this plan are made according to irrevocable elections participants make prior to the commencement of any deferral. With the effectiveness of Section 409A of the Code, participants were given an opportunity to change prior distribution elections; however, no change could be effective until after January 1, 2009. Beginning in 2009, participants also have the opportunity to elect in-service distributions. Participants may choose a lump sum distribution, annual installments over any period of time, or any combination, to occur during or after employment. A six-month waiting period from date of termination applies to any distributions made after termination of employment. The first distribution begins 6 months following termination of employment. All participants are fully vested in this plan. | |
| (4) | All participant contributions were reported in the Summary Compensation Table as compensation in previous proxy statements to the extent that a participant was an NEO in the fiscal year in which the contribution was earned. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
Subject to TARP-imposed limitations, effective in February 2009
with respect to Associated’s NEOs and its next twenty most
highly compensated employees, Associated maintains a Change of
Control Plan (the “Plan”) to provide severance
benefits to the CEO and certain designated senior officers if
their employment terminates as a result of a change of control
of Associated. As of December 31, 2009, the NEOs, with the
exception of Mr. Flynn, and 21 other senior officers are
currently designated to participate under the Plan, and prior to
a Change of Control, the CEO is authorized to designate
additional participating senior officers. All of the NEOs
participated in the Plan in 2009. See “Executive
Compensation — Compensation Discussion and Analysis,
Change of Control Plan”.
The Interim Final Rule on TARP Standards for Compensation and
Corporate Governance, issued by the UST in June 2009, prohibits
Associated from making any golden parachute payments (as defined
in the Interim Final Rule) to any of the SEOs and the next five
most highly compensated employees of Associated during the
period beginning on November 21, 2008, and ending on the
last date upon which any obligation arising from the receipt of
TARP funds remains outstanding (disregarding any warrants to
purchase common stock of Associated that UST may hold (the
“TARP Period”). The Interim Final Rule generally
prohibits Associated from providing tax
gross-ups
(as defined in the Interim Final Rule), or a right to a payment
of such a
gross-up at
a future date, to any of the SEOs and the next twenty most
highly compensated employees of Associated during the TARP
Period.
37
Table of Contents
The following is a summary of estimated maximum payments the
NEOs would receive in the event of separation from employment
triggering benefits under the Plan at December 31, 2009.
The exercise prices of options held by NEOs exceeded the closing
price of Associated common stock at December 31, 2009.
|
Medical/ |
||||||||||||||||||||||||||||||||||||
|
Dental/ |
||||||||||||||||||||||||||||||||||||
|
Life |
||||||||||||||||||||||||||||||||||||
|
Insurance |
Retirement Plan |
|||||||||||||||||||||||||||||||||||
|
Benefits |
Contributions, |
|||||||||||||||||||||||||||||||||||
|
Total Salary |
For the |
Including the |
Unvested |
|||||||||||||||||||||||||||||||||
|
Duration of |
Continuation |
Duration of |
Accrued |
RAP, 401(k) |
Incentive |
Restricted |
Outplacement |
|||||||||||||||||||||||||||||
| Payments | Benefit(1) | Payments(2) | Vacation(3) | and SERP | Bonus | Stock | Benefit | Total(4) | ||||||||||||||||||||||||||||
|
Philip B. Flynn(5)
|
— | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
|
Paul S. Beideman(6)
|
3 Years | 2,700,000 | 72,625 | 100,385 | 391,500 | 3,600,000 | 1,380,423 | 20,000 | 8,264,933 | |||||||||||||||||||||||||||
|
Joseph B. Selner
|
2 Years | 720,000 | 56,486 | 40,154 | 86,400 | 540,000 | 174,949 | 20,000 | 1,637,989 | |||||||||||||||||||||||||||
|
Scott S. Hickey
|
2 Years | 700,000 | 71,508 | 39,038 | 84,000 | 525,000 | 206,988 | 20,000 | 1,646,534 | |||||||||||||||||||||||||||
|
Mark D. Quinlan
|
2 Years | 620,000 | 1,764 | 34,577 | 74,400 | 465,000 | 222,292 | 20,000 | 1,438,033 | |||||||||||||||||||||||||||
|
Mark J. McMullen
|
2 Years | 730,000 | 54,864 | 40,712 | 87,600 | 547,500 | 188,051 | 20,000 | 1,668,727 | |||||||||||||||||||||||||||
|
Lisa B Binder(7)
|
2.5 Years | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
|
David A. Baumgarten
|
2 Years | 652,800 | 72,977 | 36,406 | 78,336 | 489,600 | 252,228 | 20,000 | 1,602,347 | |||||||||||||||||||||||||||
| (1) | Based on base salary at December 31, 2009. | |
| (2) | Based on program costs at December 31, 2009. | |
| (3) | Maximum unused vacation accrual allowed by Company policy. | |
| (4) | The Change of Control Plan also provides for (a) payment of legal fees and expenses, if any, incurred as a result of a termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment or in seeking to obtain or enforce any right or benefit provided by the Plan), and (b) in the event the participant is subject to the excise tax imposed by Section 4999 of the Code, a payment in an amount that will place the participant in the same after-tax economic position that the Participant would have enjoyed if the Excise Tax had not applied to the payment(s) provided under the Change of Control Plan. | |
| (5) | Mr. Flynn’s employment agreement does not include participation in the Change of Control Plan. | |
| (6) | Mr. Beideman retired on February 1, 2010 and is not entitled to any payment upon a change of control. | |
| (7) | Ms. Binder resigned on May 15, 2009 and is not entitled to any payment upon a change of control. See “Executive Compensation — Compensation Discussion and Analysis — Lisa B. Binder Separation” for information regarding Ms. Binder’s separation payments. |
DIRECTOR
COMPENSATION
The 2010 compensation for non-employee directors of Associated
approved by the Board on January 27, 2010 and which
remained unchanged from 2008 (except for the Lead Director
retainer), is comprised of:
| • | $30,000 annual retainer | |
| • | $75,000 additional retainer for the Lead Director and the non-executive Chairman (as of December 2009) | |
| • | $8,500 additional retainer for the Audit Committee Chair | |
| • | $5,750 additional retainer for the Chairs of the Compensation and Benefits Committee, Corporate Governance Committee, Nominating and Search Committee, and Risk and Credit Committee | |
| • | $1,750 Board meeting fee | |
| • | $1,750 Audit Committee meeting fee | |
| • | $1,250 Compensation and Benefits Committee, Corporate Governance Committee, Nominating and Search Committee, Corporate Development Committee, and Risk and Credit Committee meeting fee | |
| • | Directors’ Deferred Compensation Plan contribution of $40,000 (invested in an account valued based on the trading price of Associated common stock) |
38
Table of Contents
Directors’
Deferred Compensation Plan
Through its acquisition of other banks and bank holding
companies, Associated Banc-Corp became the sponsor of several
plans to which the directors of the acquired organizations had
deferred their director compensation. To simplify ongoing
administration, Associated Banc-Corp established its own
directors’ deferred compensation plan and merged the
predecessor plans into it effective July 1, 1999.
Each year, Associated Banc-Corp makes a monetary contribution
into the Directors’ Deferred Compensation Plan for each
non-employee director. That contribution must be invested in an
account in which the account balance is based on the trading
price of Associated common stock.
Directors may also defer any or all of their board fees,
including retainers, as well as committee and board meeting
fees. Earnings are based on the performance of plan investment
alternatives and are not supplemented by Associated. With the
exception of the investment of the Associated contribution
referenced above, directors may realign investments as
frequently as they wish.
Distributions begin six months after a director ceases to serve
on the Board, and payments are made according to elections made
prior to the commencement of deferrals. Distributions are paid
either in a lump sum, or in annual installments over a five-year
or ten-year period.
DIRECTOR
COMPENSATION IN 2009
|
Change in |
||||||||||||||||||||||||||||
|
Pension |
||||||||||||||||||||||||||||
|
Fees |
Value and |
|||||||||||||||||||||||||||
|
Earned |
Non-Qualified |
|||||||||||||||||||||||||||
|
or |
Non-Equity |
Deferred |
||||||||||||||||||||||||||
|
Paid in |
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
|||||||||||||||||||||||
|
Cash |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
||||||||||||||||||||||
|
Name
|
($)(1) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
|
Karen T. Beckwith
|
$ | 126,840 | 0 | 0 | 0 | 0 | 0 | $ | 126,840 | |||||||||||||||||||
|
Ruth M. Crowley
|
116,091 | 0 | 0 | 0 | 0 | 0 | 116,091 | |||||||||||||||||||||
|
Robert Gallagher
|
37,500 | 0 | 0 | 0 | 0 | 0 | 37,500 | |||||||||||||||||||||
|
Ronald R. Harder
|
135,672 | 0 | 0 | 0 | 0 | 0 | 135,672 | |||||||||||||||||||||
|
William R. Hutchinson(2)
|
223,182 | 0 | 0 | 0 | 0 | 0 | 223,182 | |||||||||||||||||||||
|
Eileen A. Kamerick
|
148,520 | 0 | 0 | 0 | 0 | 0 | 148,520 | |||||||||||||||||||||
|
Richard T. Lommen
|
109,340 | 0 | 0 | 0 | 0 | 0 | 109,340 | |||||||||||||||||||||
|
John C. Meng
|
111,338 | 0 | 0 | 0 | 0 | 0 | 111,338 | |||||||||||||||||||||
|
J. Douglas Quick
|
127,135 | 0 | 0 | 0 | 0 | 0 | 127,135 | |||||||||||||||||||||
|
Carlos E. Santiago
|
100,336 | 0 | 0 | 0 | 0 | 0 | 100,336 | |||||||||||||||||||||
|
John C. Seramur(3)
|
134,475 | 0 | 0 | 0 | 0 | 0 | 134,475 | |||||||||||||||||||||
| (1) | Includes $40,000 contribution to the Director’s Deferred Compensation Plan. | |
| (2) | Includes $16,250 that was earned in 2008, but paid to Mr. Hutchinson in 2009 due to an administrative change in the manner in which he requested his fees be paid to him. | |
| (3) | Mr. Seramur serves as a director of Associated Trust Company, National Association, a wholly owned subsidiary of Associated Bank, National Association. Mr. Seramur receives annual director fees of $2,000 for such service which is not included in the table above. |
39
Table of Contents
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, Associated’s
directors and executive officers, as well as certain persons
holding more than 10% of Associated’s stock, are required
to report their initial ownership of stock and any subsequent
change in such ownership to the Securities and Exchange
Commission, NASDAQ, and Associated (such requirements
hereinafter referred to as “Section 16(a) filing
requirements”). Specific time deadlines for the
Section 16(a) filing requirements have been established.
To Associated’s knowledge, based solely upon a review of
the copies of such reports furnished to Associated, and upon
written representations of directors and executive officers that
no other reports were required, with respect to the fiscal year
ended December 31, 2009, Associated’s officers,
directors, and greater than 10% beneficial owners complied with
all applicable Section 16(a) filing requirements, except
that Mark G. Sander reported one purchase of approximately
$2,500 of shares of common stock under the Associated Employee
Stock Purchase Plan late.
RELATED
PERSON TRANSACTIONS
Officers and directors of Associated and its subsidiaries,
members of their families, and the companies or firms with which
they are affiliated were customers of, and had banking
transactions with, Associated’s subsidiary bank
and/or
investment subsidiaries in the ordinary course of business
during 2009. Additional transactions of this type may be
expected to take place in the ordinary course of business in the
future. All loans and loan commitments were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other unrelated persons and, in
management’s opinion did not involve more than a normal
risk of collectibility or present other unfavorable features. At
December 31, 2009, the aggregate principal amount of loans
outstanding to directors, officers, or their related interests
was approximately $48 million, which represented
approximately 2% of consolidated stockholders’ equity.
Prior to the consummation of the merger of First Federal Capital
Corp (“First Federal”) with Associated in October
2004, Mr. Lommen served as a non-employee director of First
Federal. Mr. Lommen receives annual payments of $8,800 for
10 years under the First Federal Director Emeritus Program
that began in the fourth quarter of 2004.
Associated has agreed to indemnify Mr. Lommen to the
fullest extent permitted by First Federal’s Articles of
Incorporation, Bylaws, or Wisconsin law and to acquire
directors’ and officers’ liability insurance for a
period of six years following the effective time of the merger
with respect to matters arising out of his position as a
director of First Federal.
Related
Party Transaction Policies and Procedures
We have adopted written Related Party Transaction Policies and
Procedures that set forth Associated’s policies and
procedures regarding the identification, review and approval or
ratification of “interested transactions.” For
purposes of Associated’s policy only, an “interested
transaction” is a transaction, arrangement or relationship
or series of similar transactions, arrangements or relationships
(including indebtedness or guarantee of indebtedness) in which
Associated and any “related party” are participants
involving an amount that exceeds $120,000. Certain transactions,
including transactions involving compensation for services
provided to Associated as a director or executive officer by a
related party, are not covered by this policy. A related party
is any executive officer, director, nominee for election as
director or a greater than 5% shareholder of Associated,
including an “immediate family member” of such persons.
Under the policies and procedures, the Corporate Governance
Committee reviews and either approves or disapproves the entry
into the interested transaction. In considering interested
transactions, the Corporate Governance Committee takes into
account, among other factors it deems appropriate, whether the
interested transaction is on terms no less favorable than terms
generally available to an unaffiliated third party under the
same or similar circumstances and the extent of the related
party’s interest in the transaction.
40
Table of Contents
The Related Party Transaction Policies and Procedures can be
found on Associated’s website at www.associatedbank.com,
“About Us,” “Investor Relations,”
“Corporate Governance.”
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee of the Board is responsible for providing
independent, objective oversight of Associated’s accounting
functions and internal controls. The Audit Committee is
currently composed of four directors, each of whom meets the
independence requirements set forth under the Exchange Act
requirements and in NASDAQ corporate governance rules. The Audit
Committee operates under a written charter approved by the
Board. The Charter can be found at Associated’s website at
www.associatedbank.com, “About Us,” “Investor
Relations,” “Corporate Governance.”
Associated’s Board has also determined that three of the
members of the Audit Committee, Ms. Beckwith,
Mr. Hutchinson and Ms. Kamerick, are “audit
committee financial experts,” based upon education and work
experience. Associated believes Ms. Beckwith qualifies as
an “audit committee financial expert” based upon the
fact that she was a Certified Public Accountant and upon her
experience as an auditor for Deloitte, Haskins & Sells
from 1982 to 1984; as the person responsible for external
financial reporting for Deluxe from 1984 to 1995; and as Chief
Financial Officer for Gelco from 1999 to 2000. Associated
believes Mr. Hutchinson qualifies as an “audit
committee financial expert” based upon his experience as
Group Vice President, Mergers & Acquisitions, of BP
Amoco p.l.c. from January 1999 to April 2001; and Vice
President, Financial Operations, Treasurer, Controller, and Vice
President — Mergers, Acquisitions &
Negotiations of Amoco Corporation, Chicago, Illinois, from 1981
to 1999. Associated believes Ms. Kamerick qualifies as an
“audit committee financial expert” based upon her
experience as Senior Vice President, Chief Financial Officer and
Chief Legal Officer of Tecta America Corporation since August
2008; Executive Vice President and Chief Financial Officer of
BearingPoint, Inc. from May 2008 to June 2008; Executive Vice
President, Chief Financial Officer and Chief Administrative
Officer of Heidrick & Struggles International, Inc.,
from June 2004 to May 2008; Executive Vice President and CFO of
Bcom3 Group, Inc., parent company of Leo Burnett and Starcom
Media from August 2001 to January 2003; and Executive Vice
President and CFO of United Stationers from 2000 to 2001.
Management is responsible for Associated’s internal
controls and financial reporting process. The independent
registered public accounting firm is responsible for performing
an independent audit of Associated’s consolidated financial
statements in accordance with auditing standards generally
accepted in the United States of America and to issue a report
thereon, as well as an audit of the effectiveness of our
internal control over financial reporting in accordance with the
Standards of the Public Company Accounting Oversight Board
(United States) (the “PCAOB”). The Audit
Committee’s responsibility is to monitor and oversee these
processes. In connection with these responsibilities, the Audit
Committee met with management and the independent registered
public accounting firm to review and discuss the
December 31, 2009 consolidated financial statements. The
Audit Committee also discussed with the independent registered
public accounting firm the matters required by Statement on
Auditing Standards No. 61 (The Auditor’s Communication
With Those Charged With Governance), (AICPA, Professional
Standards, Vol. 1 AU Section 380). The Audit Committee also
received written disclosures from the independent registered
public accounting firm required by the applicable requirements
of the PCAOB regarding the independent registered public
accounting firm’s communications with the Audit Committee
concerning independence, and the Audit Committee discussed with
the independent registered public accounting firm that
firm’s independence.
Based upon the Audit Committee’s discussions with
management and the independent registered public accounting
firm, and the Audit Committee’s review of the
representations of management and the independent registered
public accounting firm, the Audit Committee recommended that the
Board include the audited consolidated financial statements in
Associated’s Annual Report on
Form 10-K
for the year ended December 31, 2009, to be filed with the
Securities and Exchange Commission.
41
Table of Contents
AUDIT
COMMITTEE
|
Ronald R. Harder, Chairman |
Karen T. Beckwith, Member |
William R. Hutchinson, Member |
Eileen A. Kamerick, Member |
The foregoing Report of the Audit Committee shall not be deemed
to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act or under the Exchange Act, except to
the extent Associated specifically incorporates this information
by reference and shall not otherwise be deemed filed under such
Acts.
42
Table of Contents
PROPOSAL 2
APPROVAL
OF THE ASSOCIATED BANC-CORP
2010
INCENTIVE COMPENSATION PLAN
We are requesting our shareholders to vote in favor of adopting
the Associated Banc-Corp 2010 Incentive Compensation Plan
(referred to in this proposal as the “2010 Plan”). On
March 1, 2010, our Board of Directors adopted the 2010
Plan, subject to approval by our shareholders. If our
shareholders approve the 2010 Plan, it will become effective on
the date of the Annual Meeting, and it will replace the
Associated Banc-Corp 2003 Long-Term Incentive Stock Plan (the
“2003 Plan”) and no future awards will be made under
the 2003 Plan. In addition, if our shareholders approve the 2010
Plan, no future awards will be made under the Associated
Banc-Corp 1987 Long-Term Incentive Stock Plan (the “1987
Plan”) after the date of the Annual Meeting. The
description of certain key features of the 2010 Plan is subject
to the specific provisions in the full text of the 2010 Plan,
which is attached as Appendix A to this Proxy Statement.
The approval of the 2010 Plan is important for many reasons. A
significant reason for requesting approval of the 2010 Plan is
to ensure that we have sufficient shares of common stock
available to make equity awards to our employees, in furtherance
of the philosophy of the Compensation and Benefits Committee
(the “Committee”) that emphasizes payment of long-term
incentive compensation without encouraging employees to take
unnecessary and excessive risks. Shareholder approval of the
2010 Plan is necessary in order for us, after we no longer
participate in TARP, to be able to grant performance-based
awards that qualify for the exception to the deductibility limit
set forth in Section 162(m) of the Code
(“Section 162(m)”), which is discussed in the
Compensation Discussion and Analysis section above. In addition,
shareholder approval of the 2010 Plan will provide us with an
incentive compensation plan that (1) expands the types of
incentive compensation awards that may be granted to eligible
persons; (2) requires “double trigger” change in
control vesting for incentive compensation awards (i.e., a
termination of employment must occur within a limited time
period following a change in control for outstanding incentive
awards to vest); and (3) contains minimum vesting
requirements for most awards, the duration of which depends on
whether the award is tied to the achievement of specified
performance goals. If shareholders do not approve the 2010 Plan,
the 1987 Plan and the 2003 Plan will remain in place without any
additional shares.
Purposes
and Eligibility
The purposes of the 2010 Plan are to attract and retain
qualified persons upon whom, in large measure, our sustained
progress, growth and profitability depend, to motivate the
participants to achieve long-term company goals, and to more
closely align the participants’ interests with those of our
other shareholders by providing them with a proprietary interest
in our growth and performance. Our executive officers,
employees, consultants and non-employee directors are eligible
to participate in the 2010 Plan. As of March 4, 2010 we had
4,997 employees and 10 non-employee directors. We do not
currently anticipate that our consultants will participate in
the 2010 Plan.
Shares Authorized
for Issuance
Under the 2010 Plan, 11,500,000 shares of our common stock
are authorized for initial issuance, which will be increased by
the number of shares (1) remaining, as of the effective
date of the 2010 Plan, for issuance under the 2003 Plan,
(2) that become available under the 2010 Plan and the 2003
Plan pursuant to forfeiture, termination, lapse of restrictions
or satisfaction of a share-based award in cash or other property
other than with shares and (3) needed to substitute shares
subject to outstanding awards granted by a company with which we
consummate a business combination (as described in the
“Substitute Awards” section below). The number of
shares available under the 2010 Plan will be reduced by one for
each share delivered as a result of the exercise of a stock
option. Except with respect to a stock appreciation right
payable only in cash (in which case the number of available
shares will not be reduced), the number of shares available
under the 2010 Plan will be reduced by the greater of
(a) the
43
Table of Contents
number of shares delivered upon exercise of a stock appreciation
right, and (b) the number of shares underlying such right
(i.e., shares associated with a stock appreciation right reduce
the number of shares available under the 2010 Plan on a gross
basis rather than a net basis). Each share delivered pursuant to
the 2010 Plan in respect of an award other than a stock option,
stock appreciation right or substitute award will reduce the
number of shares available under the 2010 Plan by 2.16. The 2010
Plan provides that shares not issued or delivered as a result of
the net settlement of an outstanding option or SAR, shares used
to pay the exercise price or required tax withholding for an
award under the 2010 Plan and shares repurchased in the open
market with the proceeds of an exercise price will be
unavailable for future awards under the 2010 Plan.
The following table provides information as of March 4,
2010, regarding our total outstanding shares of common stock,
shares remaining available for issuance under the 2003 Plan that
would be added to the 2010 Plan upon shareholder approval of the
2010 Plan, total number of shares potentially subject to
forfeiture under the 1987 Plan and 2003 Plan, shares underlying
outstanding options under the 1987 Plan and 2003 Plan, and
shares underlying full value awards under the 2003 Plan, as well
as overhang, weighted average exercise price and option terms,
and share price information.
|
Shares Outstanding
|
173,614,761 | |||
|
Shares Underlying Outstanding Options
|
7,598,543 | |||
|
Shares Outstanding + Shares Underlying Outstanding
Options
|
181,213,304 | |||
|
Overhang (Shares Underlying Options
Outstanding/Shares Outstanding)
|
4.38 | % | ||
|
Weighted Average Exercise Price of Outstanding Options
|
$24.40 | |||
|
Weighted Average Remaining Contractual Term of Outstanding
Options
|
6.03 years | |||
|
Non-vested Full Value Awards Outstanding Under 2003 Plan
|
752,862 | |||
|
Shares Available for Grant from 2003 Plan
|
1,271,070 | |||
|
Total Overhang (Shares Underlying Outstanding Options +
Shares Available)/Shares Outstanding
|
5.11 | % | ||
|
Additional Shares Board Seeks Approval For
|
11,500,000 | |||
|
As a % of Shares Outstanding
|
6.62 | % | ||
|
As a % of Shares Outstanding &
Shares Underlying Outstanding Options
|
6.35 | % | ||
|
Closing Price of Common Stock
|
$12.91 |
Administration
and Types of Awards
The 2010 Plan is administered by the Committee, which interprets
the 2010 Plan and, subject to the terms of the 2010 Plan, has
broad discretion to select the eligible persons to whom awards
will be granted, as well as the type, size and terms and
conditions of each award, including the exercise price of stock
options, the number of shares subject to awards and the
expiration date of, and the vesting schedule or other
restrictions applicable to, awards. To the extent permitted
under the 2010 Plan, with respect to awards that are not subject
to minimum vesting requirements (described below in the Minimum
Vesting and Termination of Employment or Services section), the
Committee has the authority to accelerate vesting, waive
restrictions or allow awards to continue to vest following
termination.
The 2010 Plan allows us to grant the following types of awards:
| • | options (non-qualified and incentive stock options); |
| • | stock appreciation rights, or SARs; |
| • | restricted stock; |
| • | restricted stock units; |
| • | deferred stock; |
| • | performance units; |
| • | annual incentive awards; and |
| • | shares. |
44
Table of Contents
Stock Options. Options may be granted
by the Committee and may be either non-qualified options or
incentive stock options. Options are subject to the terms and
conditions, including vesting conditions, set by the Committee
(and incentive stock options are subject to further statutory
restrictions that are set forth in the 2010 Plan). Stock options
will vest in accordance with the applicable award agreement. The
exercise price for all stock options granted under the 2010 Plan
will be determined by the Committee, except that no stock
options can be granted with an exercise price that is less than
100% of the fair market value of the common stock on the date of
grant. Further, shareholders who own greater than 10% of our
voting stock will not be granted incentive stock options that
have an exercise price less than 110% of the fair market value
of the common stock on the date of grant.
The term of all stock options granted under the 2010 Plan will
be determined by the Committee and will not exceed 10 years
(or five years for incentive stock options granted to
shareholders who own greater than 10% of our voting stock). No
incentive stock option may be granted to an optionee, which,
when combined with all other incentive stock options becoming
exercisable in any calendar year that are held by that optionee,
would have an aggregate fair market value in excess of $100,000.
In the event an optionee is awarded $100,000 in incentive stock
options in any calendar year, any incentive stock options in
excess of $100,000 granted during the same year will be treated
as non-qualified stock options. Each option gives the
participant the right to receive a number of shares of common
stock upon exercise of the option and payment of the exercise
price. The exercise price may be paid in cash (including cash
obtained through a broker selling the shares acquired on
exercise), personal check, wire transfer or, if approved by the
Committee, shares of common stock or restricted common stock.
The 2010 Plan also gives the Committee discretion to permit
Associated to pay, in cash or shares, the net amount or
“spread” between the total exercise price and the fair
market value of the aggregate number of shares being exercised.
The 2010 Plan prohibits the repricing of stock options. For this
purpose, “repricing” means (except in the case of
certain adjustments permitted by the 2010 Plan and described in
the Adjustments section below): (1) lowering of the
exercise price of a stock option after it is granted;
(2) cancelling a stock option at a time when the exercise
price exceeds the fair market value of the underlying common
stock in exchange for another award; and (3) any other
action which is treated as repricing under generally accepted
accounting principles. The 2010 Plan provides that dividend
equivalents will not be payable with respect to stock options.
Stock Appreciation Rights or SARs. All
SARs must be granted on a stand-alone basis (i.e., not in
conjunction with stock options granted under the 2010 Plan).
SARs are subject to the terms and conditions, including vesting
conditions, set by the Committee. SARs will vest in accordance
with the applicable award agreement. A SAR granted under the
2010 Plan entitles its holder to receive, at the time of
exercise, an amount per share equal to the excess of the fair
market value (at the date of exercise) of a share of the common
stock over a specified price, known as the strike price, fixed
by the Committee, which will not be less than 100% of the fair
market value of the common stock on the grant date of the SAR.
Payment may be made in cash, shares of the common stock, or
other property, in any combination as determined by the
Committee. The 2010 Plan prohibits the repricing of SARs (as
described in the Stock Options section above). The 2010 Plan
provides that dividend equivalents will not be payable with
respect to SARs.
Restricted Stock and Restricted Stock
Units. Restricted stock is common stock that
is forfeitable until the restrictions lapse. Restricted stock
units are rights granted as an award to receive shares of common
stock, conditioned upon the satisfaction of restrictions imposed
by the Committee. The Committee will determine the restrictions
for each award and the purchase price in the case of restricted
stock, if any. Restrictions on the restricted stock and
restricted stock units may include time-based restrictions, the
achievement of specific performance goals or, in the case of
restricted stock units, the occurrence of a specific event.
Except as described below in the Minimum Vesting and Termination
of Employment or Service section, restricted stock which vests
solely based upon continued employment will be subject to
restrictions of at least three years, and restricted stock which
vests based on attainment of specified performance goals will be
subject to restrictions of at least one year. Participants may
have voting rights in restricted stock and do not have voting
rights in restricted stock units. Participants generally will
not
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receive dividends on shares of restricted stock or restricted
stock units, but may be able to receive dividend equivalents if
and when such award vests or, if later, becomes payable. If the
performance goals are not achieved or the restrictions do not
lapse within the time period provided in the award agreement,
the participant will forfeit his or her restricted stock
and/or
restricted stock units.
Deferred Stock. Deferred stock is the
right to receive shares of common stock at the end of a
specified deferral period. The Committee will determine the
number of shares and terms and conditions for each deferred
stock award and whether such deferred stock will be acquired
upon the lapse of restrictions on restricted stock or restricted
stock units. A deferred stock award may also be made in
connection with a participant’s deferral election to
receive all or a portion of his or her salary
and/or bonus
or, in the case of a director, his or her cash retainer. If a
deferred stock award is made pursuant to a voluntary deferral
election by the participant, such award will not be subject to
minimum vesting requirements. Otherwise, a deferred stock award
will generally be subject to a minimum vesting period of three
years. Participants do not have voting rights in deferred stock,
but participants’ deferred stock may be credited with
dividend equivalents to the extent dividends are paid or
distributions made during the deferral period.
Performance Units. Performance units
are any grant of (1) a bonus consisting of cash or other
property the amount and value of which,
and/or the
receipt of which, is conditioned upon the achievement of certain
performance goals specified by the Committee, or (2) a unit
valued by reference to a designated amount of property.
Performance units may be paid in cash, shares of common stock,
restricted stock or restricted stock units. The Committee will
determine the number and terms of all performance units,
including the performance goals and performance period during
which such goals must be met. Performance units will not vest
sooner than one year from their date of grant, except in certain
limited circumstances described below in the Minimum Vesting and
Termination of Employment or Service section. If the performance
goals are not attained during the performance period specified
in the award agreement, the participant will forfeit all of his
or her performance units. The 2010 Plan provides that dividend
equivalents will not be paid with respect to performance units
prior to the date on which they vest.
Annual Incentive Awards. The 2010 Plan
includes annual incentive awards. The Committee will determine
the amounts and terms of all annual incentive awards, including
performance goals, which may be weighted for different factors
and measures. In the case of annual incentive awards intended to
satisfy Section 162(m), the Committee will designate
individuals eligible for annual incentive awards within the
first 90 days of the year for which the annual incentive
award will apply and will certify attainment of performance
goals within 60 days following the end of each year. In
addition, the Committee may establish threshold, target and
maximum annual incentive award opportunities for each
participant. Annual incentive awards may be paid in cash, shares
of common stock, restricted stock, options or any other award
under the 2010 Plan. Such payment will be made by
March 15th of the year following the year for which
such incentive award was earned.
Shares. Shares that are provided as a
part of a participant’s base salary may be granted under
the 2010 Plan without being subject to any vesting, transfer or
other restrictions. Associated awards shares to certain of its
key employees who are subject to compensation limitations under
TARP, and such shares constitute a portion of such
employee’s base salary. Pursuant to the Interim Final Rule
under TARP, salary that is paid in shares of common stock must
not be subject to any vesting requirements, although it may be
subject to restrictions on transferability. Associated generally
imposes transfer restrictions on these shares.
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Performance-Based
Compensation
The objective performance criteria for awards (other than stock
options and SARs) granted under the 2010 Plan that are designed
to qualify for the performance-based exception from the tax
deductibility limitations of Section 162(m) and are to be
based on one or more of the following measures:
| • | earnings before any or all of interest, tax, depreciation or amortization (actual and adjusted and either in the aggregate or on a per-share basis); |
| • | earnings (either in the aggregate or on a per-share basis); |
| • | net income or loss (either in the aggregate or on a per-share basis); |
| • | operating profit; |
| • | cash flow (either in the aggregate or on a per-share basis); |
| • | free cash flow (either in the aggregate or on a per-share basis); |
| • | capital ratio (either tier 1 or total); |
| • | non-interest expense; |
| • | costs; |
| • | gross revenues; |
| • | deposit growth; |
| • | loan loss provisions; |
| • | reductions in expense levels; |
| • | operating and maintenance cost management and employee productivity; |
| • | share price or total shareholder return (including growth measures and total shareholder return or attainment by the shares of a specified value for a specified period of time); |
| • | net economic value; |
| • | non-performing asset ratio; |
| • | net charge-off ratio; |
| • | net interest margin; |
| • | economic value added or economic value added momentum; |
| • | aggregate product unit and pricing targets; |
| • | strategic business criteria, consisting of one or more objectives based on meeting specified revenue, sales, credit quality, loan quality, market share, market penetration, geographic business expansion goals, objectively identified project milestones, production volume levels, cost targets, and goals relating to acquisitions or divestitures; |
| • | return on average assets or average equity; |
| • | achievement of objectives relating to diversity, employee turnover, or other human capital metrics; |
| • | results of customer satisfaction surveys or other objective measures of customer experience; and/or |
| • | debt ratings, debt leverage and debt service. |
In any calendar year, no participant may be granted awards for
options or SARs that exceed, in the aggregate, 400,000
underlying shares of our common stock. In any calendar year, no
participant may be granted awards for restricted stock, deferred
stock, restricted stock units or performance units (or any other
award other than options or SARs which is determined by
reference to the value of shares or appreciation in the value of
shares) that exceed, in the aggregate, 400,000 underlying shares
of our common stock. No participant may be granted a cash award
that would have a maximum payout, during any calendar year,
exceeding $3 million. No participant may be granted a cash
award for a performance period of more than one year that would
have a maximum payout, during the performance period, that would
exceed $6 million. These limits are higher than we expect
to be needed for awards under the 2010 Plan and are included in
the 2010 Plan to comply with the requirements for deductibility
of awards subject to Section 162(m).
Change in
Control
Unless provided otherwise in an award agreement, a
participant’s awards will become vested, the relevant
restrictions will lapse and the relevant performance goals will
be deemed to be met upon the involuntary termination of such
participant’s employment or service without cause during
the two-year period following the occurrence of a change in
control. In addition, the Committee may, in order to maintain a
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participant’s rights in the event of any change in control
of Associated (1) make any adjustments to an outstanding
award to reflect such change in control, or (2) cause the
acquiring or surviving entity to assume or substitute rights
with respect to an outstanding award. Furthermore, the Committee
may cancel any outstanding unexercised options or SARs (whether
or not vested) that have an exercise price or strike price, as
applicable, that is greater than the fair market value of our
common stock as of the date of the change in control. Under the
2010 Plan, the Committee will also have the ability to cash out
any options or SARs (whether or not vested) that have an
exercise price or strike price, as applicable, that is less than
the fair market value of our common stock as of the date of the
change in control. If the Committee determines that such an
award should be cashed-out, the participant will receive the
lesser of the fair market value of a share of our common stock
on the date of the change in control or the price paid per share
in the transaction that constitutes the change in control.
For purposes of the 2010 Plan, a “change in control”
occurs when (1) any corporation, person or other entity,
including a group, becomes the beneficial owner of more than 35%
of our then-outstanding common stock; (2) consummation of
our merger or consolidation with or into another corporation
other than a majority-owned subsidiary of Associated, or a sale
or other disposition of at least 85% of our assets, and
following such a transaction the members of Associated’s
Board of Directors prior to such transaction no longer
constitute a majority of the board of directors of Associated
surviving after such transaction; (3) consummation of a
plan of liquidation of Associated; or (4) within any
24-month
period a majority of our Board of Director positions are no
longer held by (a) individuals who were members of the
Board of Directors at the beginning of such
24-month
period (the “Initial Board Members”), and
(b) those individuals who were first elected as directors
upon the recommendation of the Initial Board Members (other than
as a result of any settlement of a proxy or consent solicitation
contest or any action taken to avoid such a contest). With
respect to any award that would be considered deferred
compensation subject to Section 409A of the Code, a
similar, but Section 409A compliant, definition of
“change in control” applies.
Minimum
Vesting and Termination of Employment or Service
Minimum Vesting. Any award that is
conditioned upon satisfying specified performance goals and is
payable in shares of common stock will not vest sooner than one
year following the date of grant of such award. Any award that
vests solely based upon the participant’s continued
employment with Associated will not vest sooner than three years
following the date of grant of such award. However, options,
SARs, deferred stock that is received pursuant to a
participant’s deferral election, and shares that are paid
as a component of a participant’s base salary are not
subject to these one-year and three-year minimum vesting
requirements. Also, the one-year and three-year minimum vesting
requirements may not apply if the participant terminates
employment due to his or her early retirement, normal
retirement, death, disability or a change in control of
Associated. In addition, up to 5% of the available shares under
the 2010 Plan will not be subject to the one-year and three-year
minimum vesting requirements, as determined by the Committee
either at the time an award is made or at a later date.
Treatment of Awards Following
Termination. Unless the applicable award
agreement provides otherwise, in the event of a
participant’s termination of employment or service (either
voluntarily by the participant or by us) without cause and not
due to death, disability, early retirement or normal retirement,
such participant’s vested stock options or SARs (to the
extent exercisable at the time of such termination) will remain
exercisable until 30 days after such termination (but not
beyond the original term of the option or SAR) and thereafter
will be cancelled and forfeited to us. Unless the applicable
award agreement provides otherwise, in the event of a
participant’s termination of employment due to his or her
early retirement, a pro rata portion of such participant’s
stock options or SARs (based upon the period of service worked
during the applicable vesting period) will be vested following
such termination, and, to the extent vested, will remain
exercisable during the one year period following such
termination (but not beyond the original term of the option or
SAR), and thereafter will be cancelled and forfeited to us. With
respect to stock options and SARs granted pursuant to an award
agreement, unless the applicable award agreement provides
otherwise, in the event of a participant’s termination of
employment or service due to his or her death, disability or
normal retirement, such participant’s stock options or SARs
will vest
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and remain exercisable until one year after such termination
(but not beyond the original term of the option or SAR), and
thereafter will be cancelled and forfeited to us. In the event
of a participant’s termination of employment or service for
cause, such participant’s outstanding stock options or SARs
will immediately be cancelled and forfeited to us.
Unless the applicable award agreement provides otherwise, with
respect to restricted stock, in the event of the
participant’s termination of employment or service for any
reason other than death, disability, early retirement or normal
retirement, all unvested shares will be forfeited to us. Unless
the applicable award agreement provides otherwise, upon a
termination due to the participant’s early retirement, a
pro rata portion of such participant’s restricted stock
(based upon the period of service worked during the applicable
vesting period) will be vested. Unless the applicable award
agreement provides otherwise, upon a termination due to the
participant’s death, disability or normal retirement, all
unvested shares of restricted stock will immediately vest.
Restricted stock units, performance units and deferred stock
awards that are subject to the minimum one-year or three-year
vesting requirements (described above under Minimum Vesting) may
become vested in connection with a change in control of
Associated or upon the participant’s termination of
employment due to early retirement, normal retirement, death or
disability, as determined by the Committee or in an applicable
award agreement.
Key Definitions. For purposes of the
2010 Plan, “cause” means (1) commission of an act
of fraud, embezzlement or other act of dishonesty that would
reflect adversely on the integrity, character or reputation of
Associated; (2) breach of a fiduciary duty to Associated;
(3) violation or threatening to violate a restrictive
covenant agreement (such as a non-compete, non-solicit or
non-disclosure agreement); (4) unauthorized disclosure or
use of confidential information or trade secrets;
(5) violation of any lawful policies or rules of ours,
including any applicable code of conduct; (6) commission of
criminal activity; (7) failure to reasonably cooperate in
any investigation or proceeding concerning Associated;
(8) determination by a governmental authority or agency
that bars or prohibits the participant from being employed in
his or her current position; or (9) neglect or misconduct
in the performance of a participant’s duties that remains
unresolved ten days after we have given notice of the neglect or
misconduct, in each case as determined by the Committee.
However, if a participant is subject to an employment agreement
with us that contains a different definition of
“cause,” the definition contained in the employment
agreement will control.
For purposes of the 2010 Plan, “early retirement”
means the participant terminates employment or service with
Associated after reaching age 55 and working with
Associated for at least 15 years. For purposes of the 2010
Plan, “normal retirement” means the participant
terminates employment or service with Associated after reaching
age 62 and working with Associated for at least five years.
Amendment
and Termination
Unless the 2010 Plan is earlier terminated by our Board of
Directors, the 2010 Plan will automatically terminate on the
earlier of (1) the date all shares subject to the 2010 Plan
have been purchased or acquired and the restrictions on all
restricted stock granted under the 2010 Plan have lapsed, and
(2) ten years from the 2010 Plan’s effective date.
Awards granted before the termination of the 2010 Plan may
extend beyond that date in accordance with their terms. The
Board of Directors is permitted to amend the 2010 Plan and the
Committee is permitted to amend the terms and conditions of
outstanding awards. However, no amendment of the 2010 Plan or an
award may adversely affect the rights of any participant with
respect to outstanding awards without the applicable
participant’s written consent, decrease the minimum vesting
requirements (described above in the Minimum Vesting and
Termination of Employment or Service section), or violate rules
under Section 409A of the Code regarding the form and
timing of payment of deferred compensation. Shareholder approval
of any such amendment will be obtained if required to comply
with applicable law or the rules of the NASDAQ Global Select
Market, which would include actions such as increasing the
number of shares available under the 2010 Plan or expanding who
is eligible to participate under the 2010 Plan.
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Transferability
Unless otherwise determined by the Committee, awards granted
under the 2010 Plan are not transferable except by will or the
laws of descent and distribution. The Committee will have sole
discretion to permit the transfer of an award to certain family
members specified in the 2010 Plan.
Adjustments
In the event a stock dividend, stock split, reorganization,
recapitalization, spin-off, or other similar event affects
shares such that the Committee determines an adjustment to be
appropriate to prevent dilution or enlargement of the benefits
or potential benefits intended to be made available under the
2010 Plan, the Committee will (among other actions and subject
to certain exceptions) adjust the number and type of shares
available under the 2010 Plan, the number and type of shares
subject to outstanding awards and the exercise price of
outstanding stock options and other awards.
Substitute
Awards
The 2010 Plan permits the Committee to grant substitute awards
in connection with a corporate transaction with Associated.
Substitute Awards are awards that may be granted in replacement
of stock or stock-based awards from another business held by
current and former employees or non-employee directors of, or
consultants to, such business that is, or whose stock is,
acquired by us, in order to preserve the economic value of all
or a portion of a substituted award on such terms and conditions
(including price) as the Committee determines.
Federal
Tax Consequences
The following summary is based on U.S. federal income tax
laws in effect as of January 1, 2010. Such laws and
regulations are subject to change. This summary assumes that all
awards will be exempt from, or comply with, the rules under
Section 409A of the Code regarding non-qualified deferred
compensation. If an award fails to comply with Section 409A
of the Code, the award may be subject to immediate taxation,
interest and tax penalties in the year the award vests or is
granted. This summary does not constitute tax advice and does
not address possible state, local or foreign tax consequences.
Stock Options. The grant of stock
options under the 2010 Plan will not result in taxable income to
the recipient of the option or an income tax deduction for
Associated. However, the transfer of common stock to an option
holder upon exercise of his or her options may or may not give
rise to taxable income to the option holder and tax deductions
for Associated, depending upon whether the options are
“incentive stock options” or non-qualified options.
The exercise of a non-qualified option by an option holder
generally results in immediate recognition of taxable ordinary
income by the option holder and a corresponding tax deduction
for Associated in the amount by which the fair market value of
the shares of common stock purchased, on the date of such
exercise, exceeds the aggregate exercise price paid. Any
appreciation or depreciation in the fair market value of those
shares after the date of such exercise will generally result in
a capital gain or loss to the holder at the time he or she
disposes of those shares.
In general, the exercise of an incentive stock option is exempt
from income tax (although not from the alternative minimum tax)
and does not result in a tax deduction for Associated if the
holder has been an employee of ours at all times beginning with
the option grant date and ending three months before the date
the holder exercises the option (or 12 months in the case
of termination of employment due to disability). If the holder
has not been so employed during that time, the holder will be
taxed as described above for non-qualified stock options. If the
option holder disposes of the shares purchased more than two
years after the incentive stock option was granted and more than
one year after the option was exercised, then the option holder
will recognize any gain or loss upon disposition of those shares
as capital gain or loss. However, if the option holder disposes
of the shares prior to satisfying these holding periods (known
as “disqualifying dispositions”), the option holder
will be obligated to report as taxable ordinary income for the
year in which
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that disposition occurs the excess, with certain adjustments, of
the fair market value of the shares disposed of, on the date the
incentive stock option was exercised, over the exercise price
paid for those shares. Associated would be entitled to a tax
deduction equal to that amount of ordinary income reported by
the option holder. Any additional gain realized by the option
holder on the disqualifying disposition of the shares would be
capital gain. If the total amount realized in a disqualifying
disposition is less than the exercise price of the incentive
stock option, the difference would be a capital loss for the
option holder.
Stock Appreciation Rights or SARs. The
granting of SARs does not result in taxable income to the
recipient of a SAR or a tax deduction for Associated. Upon
exercise of a SAR, the amount of any cash the participant
receives and the fair market value as of the exercise date of
any common stock received are taxable to the participant as
ordinary income and such amount will be deductible by Associated.
Restricted Stock. Unless an election is
made by the recipient under Section 83(b) of the Code, a
participant will not recognize any taxable income upon the award
of shares of restricted stock that are not transferable and are
subject to a substantial risk of forfeiture. Dividends paid with
respect to restricted stock prior to the lapse of restrictions
applicable to that stock will be taxable as compensation income
to the participant. Generally the participant will recognize
taxable ordinary income at the first time those shares become
transferable or are no longer subject to a substantial risk of
forfeiture, in an amount equal to the fair market value of those
shares when the restrictions lapse, less any amount paid with
respect to the award of restricted stock. The recipient’s
tax basis will be equal to the sum of the amount of ordinary
income recognized upon the lapse of restrictions and any amount
paid for such restricted stock. The recipient’s holding
period will commence on the date on which the restrictions lapse.
As indicated above, a participant may elect, under
Section 83(b) of the Code, to recognize taxable ordinary
income upon the award date of restricted stock (rather than
being taxed as described above) based on the fair market value
of the shares of common stock subject to the award on the date
of the award. If a participant makes that election, any
dividends paid with respect to that restricted stock will not be
treated as compensation income, but rather as dividend income,
and the participant will not recognize additional taxable income
when the restrictions applicable to his or her restricted stock
award lapse. Assuming compliance with the applicable tax
withholding and reporting requirements, Associated will be
entitled to a tax deduction equal to the amount of ordinary
income recognized by a participant in connection with his or her
restricted stock award in the taxable year in which that
participant recognizes that ordinary income.
Deferred Stock. The granting of
deferred stock generally should not result in taxable ordinary
income to the recipient of deferred stock or a tax deduction for
Associated. The payment or settlement of deferred stock should
generally result in immediate recognition of taxable ordinary
income by the recipient equal to the amount of any cash paid or
the then-current fair market value of the shares of common stock
received and a corresponding tax deduction by Associated. Rules
relating to the timing of payment of deferred compensation under
Section 409A of the Code are applicable to deferred stock
and any violation of Section 409A may result in potential
acceleration of income taxation, as well as interest and tax
penalties to the participant.
Other Awards. The granting of
restricted stock units, performance units or an annual incentive
award generally should not result in the recognition of taxable
income by the recipient or a tax deduction by Associated. The
payment or settlement of these awards, or the grant of shares,
should generally result in immediate recognition of taxable
ordinary income by the recipient equal to the amount of any cash
paid or the then-current fair market value of the shares of
common stock received and a corresponding tax deduction by
Associated. If the award consists of shares of common stock that
are not transferable and are subject to a substantial risk of
forfeiture, the tax consequences to the participant and
Associated will be similar to the tax consequences of restricted
stock awards described above, assuming that such award is
payable upon the lapse of the restrictions. If the award
consists of unrestricted shares of common stock, the recipient
of those shares will immediately recognize as taxable ordinary
income the fair market value of those shares on the date of the
award, and Associated will be entitled to a corresponding tax
deduction.
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Section 162(m). Currently, due to
our participation in TARP, the limits under Section 162(m)
are inapplicable to us because we are prohibited from awarding
performance-based compensation to the employees who would be
subject to the limits imposed Section 16(m). Once we are no
longer a participant in TARP, under Section 162(m), we may
be limited as to federal income tax deductions to the extent
that total annual compensation in excess of $1 million is
paid to our Chief Executive Officer or any one of our other
three highest-paid executive officers (other than the Chief
Financial Officer) who are employed by Associated on the last
day of our taxable year. However, certain
“performance-based compensation,” the material terms
of which are disclosed to and approved by our shareholders, is
not subject to this deduction limitation.
Section 280G of the Code. Under
certain circumstances, accelerated vesting, exercise or payment
of awards under the 2010 Plan in connection with a “change
in control” of Associated might be deemed an “excess
parachute payment” for purposes of the golden parachute
payment provisions of Section 280G of the Code. To the
extent that it is so considered, the participant holding the
award would be subject to an excise tax equal to 20% of the
amount of the excess parachute payment, and Associated would be
denied a tax deduction for the amount of the excess parachute
payment. However, the 2010 Plan provides for an automatic
reduction of a participant’s awards to the extent that an
award would result in any excess parachute payment that would
trigger such an excise tax, unless the participant is party to a
written agreement with Associated that provides for other
treatment with respect to such excess parachute payments.
New Plan
Benefits
Associated cannot determine (except as indicated in the table
below) the number of shares or dollar amounts of long-term
incentive awards that will be granted under the 2010 Plan to the
NEOs, the executive officers as a group, directors who are not
executive officers as a group and employees who are not
executive officers as a group. Under the terms of the 2010 Plan,
the amount of awards to be granted is within the discretion of
the Committee. Accordingly, we have provided below a table of
the aggregate number of award grants under the 1987 Plan and the
2003 Plan to each of the NEOs and certain groups of participants
during 2009. However, the Committee already determined to pay
certain individuals a portion of their base salary in shares of
our common stock, also called salary shares, and to pay our
Chief Executive Officer a restricted stock award.
Following the date of our 2010 Annual Meeting, these salary
shares will be awarded from the 2010 Plan if our shareholders
approve the 2010 Plan at that meeting. In addition, our Chief
Executive Officer’s restricted stock award in 2011 will be
made under the 2010 Plan if it is approved by our shareholders
at our 2010 Annual Meeting. The chart below lists the dollar
value of (1) the salary shares that will be received each
pay date, (2) the salary shares that will be received for
all 2010 pay dates after the 2010 Plan’s effective date,
for each of the following: any NEO who is receiving salary
shares, all executive officers receiving salary shares as a
group, and all non-executive officers receiving salary shares as
a group, and (3) all restricted stock awards to be made
during 2010 and 2011 that are presently determinable.
|
2009 |
||||||||||||
|
2009 |
Restricted |
2009 |
||||||||||
|
Stock |
Stock |
Salary |
||||||||||
|
Name and Position or Group
|
Options | Grants | Shares | |||||||||
|
Philip B. Flynn, President and CEO
|
— | 8,985 | 5,841 | |||||||||
|
Paul S. Beideman, Former Chairman and CEO
|
50,000 | 80,433 | — | |||||||||
|
Joseph B. Selner, Executive Vice President, Chief Financial
Officer
|
13,500 | 5,000 | — | |||||||||
|
Scott Hickey, Executive Vice President, Chief Credit Officer
|
30,000 | 12,200 | — | |||||||||
|
Mark D. Quinlan, Executive Vice President, Chief Information
Officer
|
12,600 | 12,600 | — | |||||||||
|
Mark J. McMullen, Executive Vice President, Director, Wealth
Management
|
12,500 | 8,500 | — | |||||||||
|
Lisa B. Binder, Former President and COO
|
30,000 | 27,000 | — | |||||||||
|
David A. Baumgarten, Executive Vice President, Regional Banking
|
12,200 | 13,900 | — | |||||||||
|
Executive Officers as a group
|
223,250 | 226,043 | 5,841 | |||||||||
|
Non-Employee Directors as a group
|
0 | 0 | — | |||||||||
|
Non-Executive Officer Employees as a group
|
743,576 | 145,600 | — | |||||||||
52
Table of Contents
|
Dollar |
Aggregate |
Number |
Dollar |
Aggregate |
Number |
|||||||||||||||||||
|
Value Per |
Dollar |
of Shares |
Value Per |
Dollar |
of Shares |
|||||||||||||||||||
|
Pay Date |
Value for |
for 2010 |
Pay Date |
Value for |
for 2011 |
|||||||||||||||||||
|
Name and Position or Group
|
for 2010 | 2010(1) | (2) | for 2011 | 2011(1) | (2) | ||||||||||||||||||
|
Philip B. Flynn,
|
$ | 86,769 | $ | 1,561,846 | — | $ | 86,769 | $ | 3,456,000 | (3) | — | |||||||||||||
|
President and CEO
|
||||||||||||||||||||||||
|
Paul S. Beideman,
|
— | — | — | — | — | — | ||||||||||||||||||
|
Former Chairman
and CEO |
||||||||||||||||||||||||
|
Joseph B. Selner,
|
$ | 16,283 | $ | 293,095 | — | — | — | — | ||||||||||||||||
|
Executive Vice President,
Chief Financial Officer |
||||||||||||||||||||||||
|
Scott S. Hickey,
|
$ | 10,419 | $ | 187,546 | — | — | — | — | ||||||||||||||||
|
Executive Vice President,
Chief Credit Officer |
||||||||||||||||||||||||
|
Mark D. Quinlan,
|
$ | 9,228 | $ | 166,112 | — | — | — | — | ||||||||||||||||
|
Executive Vice President,
Chief Information Officer |
||||||||||||||||||||||||
|
Mark J. McMullen,
|
$ | 10,866 | $ | 195,584 | — | — | — | — | ||||||||||||||||
|
Executive Vice President,
Director, Wealth Management |
||||||||||||||||||||||||
|
Lisa B. Binder, Former
|
— | — | — | — | — | — | ||||||||||||||||||
|
President and COO
|
||||||||||||||||||||||||
|
David A. Baumgarten,
|
— | — | — | — | — | — | ||||||||||||||||||
|
Executive Vice President,
Regional Banking |
||||||||||||||||||||||||
|
Executive Officers as a group(4)
|
$ | 187,515 | $ | 3,375,270 | — | $ | 96,000 | $ | 3,696,000 | — | ||||||||||||||
|
Non-Employee Directors as a group
|
— | — | — | — | — | — | ||||||||||||||||||
|
Non-Executive Officer Employees as a group
|
$ | 26,283 | $ | 673,094 | (5) | — | — | — | — | |||||||||||||||
| (1) | The amounts in this column assume the share salary recipients remain employed through December 31 of the applicable plan year. | |
| (2) | The number of shares cannot be determined because the actual number of shares paid on any pay date will depend on the closing price of a share of our common stock on each pay date. On each pay date, the number of shares a recipient will receive is the dollar value per pay date, minus any tax withholdings, then divided by the stock price of our common stock on that pay date, rounded down to the nearest whole number of shares. | |
| (3) | In addition to share salary, this amount includes a restricted stock grant valued at $1,200,000. The number of restricted shares that will be granted pursuant to this award will depend on our closing stock price on the date this award is granted. | |
| (4) | Includes the named executive officers listed above in the chart. | |
| (5) | In addition to share salary, this amount includes a restricted stock grant for a newly-hired non-executive officer. |
Recommendation
of the Board of Directors
The Board recommends that shareholders vote FOR the approval of
the Associated Banc-Corp 2010 Incentive Compensation Plan. If a
majority of the votes cast is voted FOR this Proposal 2, it
will pass.
53
Table of Contents
PROPOSAL 3
APPROVAL
OF AN ADVISORY (NON-BINDING) PROPOSAL ON EXECUTIVE
COMPENSATION
As a participant in the TARP Capital Purchase Program, we are
required under the American Recovery and Reinvestment Act of
2009 to include in this Proxy Statement and present at the
shareholders meeting a non-binding shareholder vote to approve
the compensation of our executives, as disclosed in this Proxy
Statement pursuant to the compensation rules of the SEC. The
proposal, commonly known as a “Say on Pay” proposal,
gives you as a shareholder the opportunity to approve or not
approve the compensation of our executives as disclosed in this
proxy statement through the following resolution:
“Resolved, that the shareholders approve the
compensation of the executives of Associated Banc-Corp, as
disclosed pursuant to the compensation disclosure rules of the
SEC (which disclosure shall include the compensation discussion
and analysis, the compensation tables and any related
material).”
Your vote will not be binding on Associated’s Board of
Directors. However, Associated’s Benefits and Compensation
Committee plans to consider the outcome of the vote in its
compensation determinations for our executives.
Recommendation
of the Board of Directors
The Board recommends that shareholders vote FOR the approval of
an advisory (non-binding) proposal on the compensation of the
executives of Associated Banc-Corp, as disclosed pursuant to the
compensation disclosure rules of the SEC (which disclosure shall
include the compensation discussion and analysis, the
compensation tables and any related material). If a majority of
the votes cast is voted FOR this Proposal 3, it will pass.
Unless otherwise directed, all proxies will be voted FOR
Proposal 3.
54
Table of Contents
PROPOSAL 4
RATIFICATION
OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has selected, and the Board has approved,
KPMG LLP to serve as Associated’s independent registered
public accounting firm for the year ending December 31,
2010. KPMG LLP audited Associated’s consolidated financial
statements for the year ended December 31, 2009. It is
expected that a representative of KPMG LLP will be present at
the Annual Meeting, will have the opportunity to make a
statement if he or she so desires, and will be available to
respond to appropriate questions.
If KPMG LLP declines to act or otherwise becomes incapable of
acting, or if its appointment is otherwise discontinued, the
Audit Committee will appoint another independent registered
public accounting firm. If a majority of the votes cast is voted
FOR this Proposal 4, it will pass. Unless otherwise
directed, all proxies will be voted FOR Proposal 4. If the
shareholders do not ratify the selection, the Audit Committee
will take the shareholders’ vote under advisement.
Fees Paid
to Independent Registered Public Accounting Firm
The following table presents fees for professional audit
services rendered by KPMG LLP for the audit of Associated’s
annual financial statements for 2008 and 2009, and fees billed
for other services rendered by KPMG LLP.
| 2008 | 2009 | |||||||
|
Audit Fees(1)
|
$ | 813,700 | $ | 894,200 | ||||
|
Audit-Related Fees(2)
|
271,600 | 265,700 | ||||||
|
Tax Fees
|
— | — | ||||||
|
All Other Fees
|
— | — | ||||||
|
Total Fees
|
$ | 1,085,300 | $ | 1,159,900 | ||||
| (1) | Audit fees include those necessary to perform the audit and quarterly reviews of Associated’s consolidated financial statements. In addition, audit fees include audit or other attest services required by statute or regulation, such as comfort letters, consents, reviews of SEC filings, and reports on internal controls. | |
| (2) | Audit-related fees consist principally of fees for recurring and required financial statement audits of certain subsidiaries, employee benefit plans, and common trust funds. |
The Audit Committee is responsible for reviewing and
pre-approving any non-audit services to be performed by
Associated’s independent registered public accounting firm.
The Audit Committee has delegated its pre-approval authority to
the Chairman of the Audit Committee to act between meetings of
the Audit Committee. Any pre-approval given by the Chairman of
the Audit Committee pursuant to this delegation is presented to
the full Audit Committee at its next regularly scheduled
meeting. The Audit Committee or Chairman of the Audit Committee
reviews and, if appropriate, approves non-audit service
engagements, taking into account the proposed scope of the
non-audit services, the proposed fees for the non-audit
services, whether the non-audit services are permissible under
applicable law or regulation, and the likely impact of the
non-audit services on the independent registered public
accounting firm’s independence.
During 2009, each new engagement of Associated’s
independent registered public accounting firm to perform audit
and non-audit services was approved in advance by the Audit
Committee or the Chairman of the Audit Committee pursuant to the
foregoing procedures.
The Audit Committee of the Board of Associated considers that
the provision of the services referenced above to Associated is
compatible with maintaining independence by KPMG LLP.
55
Table of Contents
Recommendation
of the Board of Directors
The Board recommends that shareholders vote FOR the selection of
KPMG LLP as Associated’s independent registered public
accounting firm for the year ending December 31, 2010.
OTHER
MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, Associated is not aware
of any matters to be presented for action at the meeting other
than those described in this Proxy Statement. If any matters
properly come before the Annual Meeting, the proxy form sent
herewith, if executed and returned, gives the designated proxies
discretionary authority with respect to such matters.
56
Table of Contents
SHAREHOLDER
PROPOSALS
Proposals of a shareholder submitted pursuant to
Rule 14a-8
of the Securities and Exchange Commission
(“Rule 14a-8”)
for inclusion in the proxy statement for the annual meeting of
shareholders to be held April 27, 2011, must be received by
Associated at its executive offices no later than
November 17, 2010. This notice of the annual meeting date
also serves as the notice by Associated under the advance-notice
Bylaw described below.
A shareholder that intends to present business other than
pursuant to
Rule 14a-8
at the next annual meeting, scheduled to be held on
April 27, 2011, must comply with the requirements set forth
in Associated’s Amended and Restated Bylaws. To bring
business before an annual meeting, Associated’s Amended and
Restated Bylaws require, among other things, that the
shareholder submit written notice thereof to Associated’s
executive offices not less than 75 days nor more than
90 days prior to April 27, 2011. Therefore, Associated
must receive notice of a shareholder proposal submitted other
than pursuant to
Rule 14a-8
no sooner than January 27, 2011, and no later than
February 11, 2011. If notice is received before
January 27, 2011, or after February 11, 2011, it will
be considered untimely, and Associated will not be required to
present such proposal at the April 27, 2011 Annual Meeting.
By Order of
the Board of Directors,
Brian R. Bodager
Executive Vice President
Chief Administrative Officer
General Counsel & Corporate Secretary
Green Bay, Wisconsin
March 15, 2010
57
Table of Contents
Table of Contents
Table of
Contents
| Page | ||||||
|
Section 1.
|
Establishment, Purpose and Duration | A-1 | ||||
|
1.1.
|
Effective Date and Purpose | A-1 | ||||
|
1.2.
|
Duration of the Plan | A-1 | ||||
|
Section 2.
|
Definitions | A-1 | ||||
|
2.1.
|
“Annual Incentive Award” | A-1 | ||||
|
2.2.
|
“Award” | A-1 | ||||
|
2.3.
|
“Award Agreement” | A-1 | ||||
|
2.4.
|
“Beneficiary” | A-1 | ||||
|
2.5.
|
“Board” | A-1 | ||||
|
2.6.
|
“Bonus Opportunity” | A-1 | ||||
|
2.7.
|
“Cause” | A-1 | ||||
|
2.8.
|
“Change in Control” | A-2 | ||||
|
2.9.
|
“Code” | A-3 | ||||
|
2.10.
|
“Committee” | A-3 | ||||
|
2.11.
|
“Common Stock” | A-3 | ||||
|
2.12.
|
“Company” | A-3 | ||||
|
2.13.
|
“Compensation Limitations” | A-3 | ||||
|
2.14.
|
“Covered Employee” | A-4 | ||||
|
2.15.
|
“Deferred Compensation Award” | A-4 | ||||
|
2.16.
|
“Deferred Stock” | A-4 | ||||
|
2.17.
|
“Disability” | A-4 | ||||
|
2.18.
|
“Dividend Equivalent” | A-4 | ||||
|
2.19.
|
“Early Retirement” | A-4 | ||||
|
2.20.
|
“Effective Date” | A-4 | ||||
|
2.21.
|
“Eligible Person” | A-4 | ||||
|
2.22.
|
“Employer” | A-4 | ||||
|
2.23.
|
“Employment Agreement” | A-4 | ||||
|
2.24.
|
“Exchange Act” | A-4 | ||||
|
2.25.
|
“Exercise Date” | A-4 | ||||
|
2.26.
|
“Fair Market Value” | A-4 | ||||
|
2.27.
|
“Grant Date” | A-5 | ||||
|
2.28.
|
“Grantee” | A-5 | ||||
|
2.29.
|
“Incentive Stock Option” | A-5 | ||||
|
2.30.
|
“including” | A-5 | ||||
|
2.31.
|
“Non-Qualified Stock Option” | A-5 | ||||
|
2.32.
|
“Normal Retirement” | A-5 | ||||
|
2.33.
|
“Option” | A-5 | ||||
|
2.34.
|
“Option Price” | A-5 | ||||
|
2.35.
|
“Performance-Based Exception” | A-5 | ||||
|
2.36.
|
“Performance Goal” | A-5 | ||||
A-i
Table of Contents
| Page | ||||||
|
2.37.
|
“Performance Measures” | A-5 | ||||
|
2.38.
|
“Performance Period” | A-5 | ||||
|
2.39.
|
“Performance Unit” | A-5 | ||||
|
2.40.
|
“Person” | A-6 | ||||
|
2.41.
|
“Plan” | A-6 | ||||
|
2.42.
|
“Restricted Stock” | A-6 | ||||
|
2.43.
|
“Restricted Stock Unit or “RSU” | A-6 | ||||
|
2.44.
|
“Restrictions” | A-6 | ||||
|
2.45.
|
“Rule 16b-3” | A-6 | ||||
|
2.46.
|
“SEC” | A-6 | ||||
|
2.47.
|
“Section 16 Non-Employee Director” | A-6 | ||||
|
2.48.
|
“Section 16 Person” | A-6 | ||||
|
2.49.
|
“Settlement Date” | A-6 | ||||
|
2.50.
|
“Share” | A-6 | ||||
|
2.51.
|
“Stock Appreciation Right” or “SAR” | A-6 | ||||
|
2.52.
|
“Strike Price” | A-6 | ||||
|
2.53.
|
“Subsidiary” | A-6 | ||||
|
2.54.
|
“Substitute Award” | A-6 | ||||
|
2.55.
|
“Term” | A-6 | ||||
|
2.56.
|
“Termination of Service” | A-6 | ||||
|
2.57.
|
“Year” | A-7 | ||||
|
Section 3.
|
Administration | A-7 | ||||
|
3.1.
|
Committee | A-7 | ||||
|
3.2.
|
Powers of the Committee | A-7 | ||||
|
Section 4.
|
Shares Subject to the Plan and Adjustments | A-9 | ||||
|
4.1.
|
Number of Shares Available for Grants | A-9 | ||||
|
4.2.
|
Adjustments in Authorized Shares and Awards | A-10 | ||||
|
4.3.
|
Compliance With Code Section 162(m) | A-10 | ||||
|
4.4.
|
Performance Based Exception Under Code Section 162(m) | A-11 | ||||
|
Section 5.
|
Eligibility and General Conditions of Awards | A-12 | ||||
|
5.1.
|
Eligibility | A-12 | ||||
|
5.2.
|
Award Agreement | A-12 | ||||
|
5.3.
|
General Terms and Termination of Service | A-12 | ||||
|
5.4.
|
Non-Transferability of Awards | A-14 | ||||
|
5.5.
|
Cancellation and Rescission of Awards | A-15 | ||||
|
5.6.
|
Substitute Awards | A-15 | ||||
|
5.7.
|
Exercise by Non-Grantee | A-15 | ||||
|
5.8.
|
No Cash Consideration for Awards | A-15 | ||||
|
Section 6.
|
Stock Options | A-15 | ||||
|
6.1.
|
Grant of Options | A-15 | ||||
|
6.2.
|
Award Agreement | A-16 | ||||
A-ii
Table of Contents
| Page | ||||||
|
6.3.
|
Option Price | A-16 | ||||
|
6.4.
|
Vesting | A-16 | ||||
|
6.5.
|
Grant of Incentive Stock Options | A-16 | ||||
|
6.6.
|
Exercise and Payment | A-17 | ||||
|
Section 7.
|
Stock Appreciation Rights | A-18 | ||||
|
7.1.
|
Grant of SARs | A-18 | ||||
|
7.2.
|
Award Agreements | A-18 | ||||
|
7.3.
|
Strike Price | A-18 | ||||
|
7.4.
|
Vesting | A-18 | ||||
|
7.5.
|
Exercise and Payment | A-18 | ||||
|
7.6.
|
Grant Limitations | A-18 | ||||
|
Section 8.
|
Restricted Stock | A-18 | ||||
|
8.1.
|
Grant of Restricted Stock | A-18 | ||||
|
8.2.
|
Award Agreement | A-18 | ||||
|
8.3.
|
Consideration for Restricted Stock | A-19 | ||||
|
8.4.
|
Vesting | A-19 | ||||
|
8.5.
|
Effect of Forfeiture | A-19 | ||||
|
8.6.
|
Escrow; Legends | A-19 | ||||
|
8.7.
|
Shareholder Rights in Restricted Stock | A-19 | ||||
|
Section 9.
|
Restricted Stock Units | A-19 | ||||
|
9.1.
|
Grant of Restricted Stock Units | A-19 | ||||
|
9.2.
|
Award Agreement | A-19 | ||||
|
9.3.
|
Crediting Restricted Stock Units | A-19 | ||||
|
Section 10.
|
Deferred Stock | A-20 | ||||
|
10.1.
|
Grant of Deferred Stock | A-20 | ||||
|
10.2.
|
Award Agreement | A-20 | ||||
|
10.3.
|
Deferred Stock Elections | A-20 | ||||
|
10.4.
|
Deferral Account | A-21 | ||||
|
Section 11.
|
Performance Units | A-21 | ||||
|
11.1.
|
Grant of Performance Units | A-21 | ||||
|
11.2.
|
Value/Performance Goals | A-22 | ||||
|
11.3.
|
Earning of Performance Units | A-22 | ||||
|
11.4.
|
Adjustment on Change of Position | A-22 | ||||
|
Section 12.
|
Annual Incentive Awards | A-22 | ||||
|
12.1.
|
Annual Incentive Awards | A-22 | ||||
|
12.2.
|
Determination of Amount of Annual Incentive Awards | A-22 | ||||
|
12.3.
|
Time of Payment of Annual Incentive Awards | A-23 | ||||
|
12.4.
|
Form of Payment of Annual Incentive Awards | A-23 | ||||
|
Section 13.
|
Dividend Equivalents | A-23 | ||||
A-iii
Table of Contents
| Page | ||||||
|
Section 14.
|
Change in Control | A-23 | ||||
|
14.1.
|
Acceleration of Vesting | A-23 | ||||
|
14.2.
|
Special Treatment in the Event of a Change in Control | A-24 | ||||
|
Section 15.
|
Amendments and Termination | A-24 | ||||
|
15.1.
|
Amendment and Termination | A-24 | ||||
|
15.2.
|
Previously Granted Awards | A-24 | ||||
|
Section 16.
|
Beneficiary Designation | A-24 | ||||
|
Section 17.
|
Withholding | A-25 | ||||
|
17.1.
|
Required Withholding | A-25 | ||||
|
17.2.
|
Notification under Code Section 83(b) | A-25 | ||||
|
Section 18.
|
General Provisions | A-25 | ||||
|
18.1.
|
Governing Law | A-25 | ||||
|
18.2.
|
Severability | A-25 | ||||
|
18.3.
|
Successors | A-26 | ||||
|
18.4.
|
Requirements of Law | A-26 | ||||
|
18.5.
|
Securities Law Compliance | A-26 | ||||
|
18.6.
|
Code Section 409A | A-26 | ||||
|
18.7.
|
Mitigation of Excise Tax | A-27 | ||||
|
18.8.
|
No Rights as a Shareholder | A-27 | ||||
|
18.9.
|
Awards Not Taken into Account for Other Benefits | A-27 | ||||
|
18.10.
|
Employment Agreement Supersedes Award Agreement | A-27 | ||||
|
18.11.
|
Non-Exclusivity of Plan | A-27 | ||||
|
18.12.
|
No Trust or Fund Created | A-27 | ||||
|
18.13.
|
No Right to Continued Employment or Awards | A-28 | ||||
|
18.14.
|
Military Service | A-28 | ||||
|
18.15.
|
Construction | A-28 | ||||
|
18.16.
|
No Fractional Shares | A-28 | ||||
|
18.17.
|
Plan Document Controls | A-28 | ||||
|
18.18.
|
Compensation Limitations | A-28 | ||||
A-iv
Table of Contents
Associated
Banc-Corp
2010
Incentive Compensation Plan
Section 1. Establishment,
Purpose and Duration
1.1. Effective Date and
Purpose. Associated Banc-Corp, a Wisconsin
corporation (the “Company”), hereby establishes
the Associated Banc-Corp 2010 Incentive Compensation Plan (the
“Plan”). The Plan is intended to (a) align
the interests of key employees and consultants of the Company
and its subsidiaries, and directors of the Company, with the
interests of the Company’s shareholders by encouraging
stock ownership; (b) provide long-term stock and cash
incentives and rewards to those individuals who are in a
position to contribute to the long-term success and growth of
the Company without encouraging participants to take unnecessary
and excessive risks; and (c) assist the Company in
attracting and retaining exceptionally qualified employees,
consultants and directors upon whom, in large measure, the
sustained progress, growth and profitability of the Company
depend. The Plan was approved by the Company’s Board of
Directors (the “Board”) on March 1, 2010,
subject to approval by the Company’s shareholders, and, if
approved by shareholders, the Plan shall become effective on
April 28, 2010 (the “Effective Date”).
1.2. Duration of the
Plan. The Plan shall commence on the
Effective Date and shall remain in effect, subject to the right
of the Committee to amend or terminate the Plan at any time
pursuant to Section 15 hereof, until the earlier to occur
of (a) the date all Shares subject to the Plan shall have
been purchased or acquired and the Restrictions on all
Restricted Stock granted under the Plan shall have lapsed,
according to the Plan’s provisions, and (b) ten
(10) years from the Effective Date of the Plan. The
termination of the Plan shall not adversely affect any Awards
outstanding on the date of such termination.
Section 2. Definitions
As used in the Plan, in addition to terms elsewhere defined in
the Plan, the following terms shall have the meanings set forth
below:
2.1. “Annual Incentive Award”
means a performance bonus determined under Section 12.
2.2. “Award” means any Option
(including a Non-Qualified Stock Option and an Incentive Stock
Option), Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Deferred Stock, Performance Unit, Substitute Award,
Share, Dividend Equivalent or Annual Incentive Award.
2.3. “Award Agreement” means
any written agreement, contract or other instrument or document
evidencing any Award granted hereunder between the Company and
the Grantee.
2.4. “Beneficiary” means the
Person designated to receive Plan benefits, if any, following a
Grantee’s death in accordance with Section 16.
2.5. “Board” means the Board
of Directors of the Company.
2.6. “Bonus Opportunity”
means a Grantee’s threshold, target and maximum bonus
opportunity for a Year, provided that such bonus opportunity
shall be either (a) to the extent that the Grantee has
entered into an Employment Agreement with the Company, the
threshold, target and maximum bonus levels, if any, specified in
such Employment Agreement for such Year based on the
Grantee’s base salary in effect on the first day of such
Year, or (b) if there is no Employment Agreement in effect
between the Company and the Grantee as of the first day of such
Year or if the Employment Agreement does not specify such bonus
levels, the percentage of such Grantee’s base salary in
effect on the first day of such Year (or such later date as such
person is designated as a Grantee) as determined by the
Committee in its sole discretion within the first ninety
(90) days of such Year (or before such later date as such
person is designated as a Grantee).
2.7. “Cause” means, as
determined by the Committee, the occurrence of any one of the
following: (a) commission of an act of fraud, embezzlement
or other act of dishonesty that would reflect adversely on the
integrity, character or reputation of the Company, or that would
cause harm to its customer
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relations, operations or business prospects; (b) breach of
a fiduciary duty owed to the Company; (c) violation or
threatening to violate a restrictive covenant agreement, such as
a non-compete, non-solicit, or non-disclosure agreement, between
an Eligible Person and any Employer; (d) unauthorized
disclosure or use of confidential information or trade secrets;
(e) violation of any lawful policies or rules of the
Company, including any applicable code of conduct;
(f) commission of criminal activity; (g) failure to
reasonably cooperate in any investigation or proceeding
concerning the Company; (h) determination by a governmental
authority or agency that bars or prohibits the Grantee from
being employed in his or her current position with the Company;
or (i) neglect or misconduct in the performance of the
Grantee’s duties and responsibilities, provided that he or
she did not cure such neglect or misconduct within ten
(10) days after the Company gave written notice of such
neglect or misconduct to such Grantee; provided,
however, that in the event a Grantee is party to a
Employment Agreement with the Company or a Subsidiary that
contains a different definition of Cause, the definition of
Cause contained in such Employment Agreement shall be
controlling.
2.8. “Change in Control”
means:
(a) with respect to Awards other than Deferred Compensation
Awards, the occurrence of any one or more of the following:
(i) any corporation, person or other entity (other than the
Company, a majority-owned subsidiary of the Company or any of
its subsidiaries, or an employee benefit plan (or related trust)
sponsored or maintained by the Company), including a
“group” as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner of stock representing
more than thirty-five percent (35%) of the combined voting power
of the Company’s then outstanding securities;
(ii) (A) consummation of the Company’s merger or
consolidation with or into another corporation other than a
majority-owned subsidiary of the Company, or the sale or other
disposition of at least eighty-five percent (85%) of the
Company’s assets, and (B) the persons who were the
members of the Board prior to such approval do not represent a
majority of the directors of the surviving, resulting or
acquiring entity or parent thereof; (iii) the consummation
of a plan of liquidation; or (iv) within any period of 24
consecutive months, persons who were members of the Board
immediately prior to such
24-month
period, together with persons who were first elected as
directors (other than as a result of any settlement of a proxy
or consent solicitation contest or any action taken to avoid
such a contest) during such
24-month
period by or upon the recommendation of persons who were members
of the Board immediately prior to such
24-month
period and who constituted a majority of the Board at the time
of such election, cease to constitute a majority of the Board.
(b) with respect to Deferred Compensation Awards, the
occurrence of one or more of any of the following:
(i) A Change in the Ownership of the
Company. A change in ownership of the Company
shall occur on the date that any one Person, or more than one
Person acting as a “Group” (as defined below),
acquires ownership of stock of the Company that, together with
stock held by such Person or Group, constitutes more than fifty
percent (50%) of the total fair market value or total voting
power of the stock of the Company; provided,
however, that, if any one Person, or more than one Person
acting as a Group, is considered to own more than fifty percent
(50%) of the total fair market value or total voting power of
the stock of the Company, the acquisition of additional stock by
the same Person or Persons is not considered to cause a change
in the ownership of the Company.
(ii) A Change in the Effective Control of the
Company. A change in the effective control of the
Company occurs on the date that any one Person, or more than one
Person acting as a Group, acquires (or has acquired during the
12-month
period ending on the date of the most recent acquisition by such
Person or Persons) ownership of stock of the Company possessing
thirty-five percent (35%) or more of the total voting power of
the stock of the Company; provided, however, that,
if any one Person, or more than one Person acting as a Group, is
considered to effectively control the Company, the acquisition
of additional control of the
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Company by the same Person or Persons is not considered a change
in the effective control of the Company.
(iii) A Change in the Ownership of a Substantial Portion
of the Company’s Assets. A change in the
ownership of a substantial portion of the Company’s assets
occurs on the date that any one Person, or more than one Person
acting as a Group, acquires (or has acquired during the
12-month
period ending on the date of the most recent acquisition by such
Person or Persons) assets from the Company that have a total
Gross Fair Market Value (as defined below) equal to eighty-five
percent (85%) or more than the total Gross Fair Market Value of
all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however,
that, a transfer of assets by the Company is not treated as a
change in the ownership of such assets if the assets are
transferred to:
(A) a shareholder of the Company (immediately before the
asset transfer) in exchange for or with respect to its stock;
(B) an entity, fifty percent (50%) or more of the total
Fair Market Value or voting power of which is owned, directly or
indirectly, by the Company;
(C) a Person, or more than one Person acting as a Group,
that owns, directly or indirectly, fifty percent (50%) or more
of the total Fair Market Value or voting power of all the
outstanding stock of the Company; or
(D) an entity, at least fifty percent (50%) of the total
Fair Market Value or voting power of which is owned, directly or
indirectly, by a Person described in Section 2.8(b)(iii)(C).
For purposes of this Section 2.8(b):
“Gross Fair Market Value” means the
value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities
associated with such assets;
“Group” shall have the meaning ascribed
to such term in Treasury Regulations
Section 1.409A-3(i)(5)(v)(B), (vi)(D) or (vii)(C), as
applicable;
stock ownership shall be determined under Code
Section 409A; and
any interpretation or determination of the Committee regarding
the payment of Deferred Compensation Awards in connection with a
Change in Control shall take into account any applicable
guidance and regulations under Code Section 409A, and shall
be made with the intent to comply with Code Section 409A.
2.9. “Code” means the
Internal Revenue Code of 1986 (and any successor thereto), as
amended from time to time. References to a particular section of
the Code include references to regulations and rulings
promulgated thereunder and to any successor provisions.
2.10. “Committee” has the
meaning set forth in Section 3.1(a).
2.11. “Common Stock” means
common stock, par value $.01 per share, of the Company.
2.12. “Company” has the
meaning set forth in Section 1.1.
2.13. “Compensation Limitations”
means (a) the terms and conditions of the Troubled
Asset Relief Program (“TARP”) under the
Emergency Economic Stabilization Act of 2008, as amended,
including the Interim Final Rule published by the Department of
the Treasury on June 15, 2009, and any other rules and
regulations that are applicable to the Company pursuant to its
participation in the TARP, as they may be promulgated
and/or
amended from time to time; and (b) any other compensation
limitations that may become applicable to the Company or Grantee
pursuant to laws or other rules, regulations or written guidance
issued pursuant to the authority of the Federal Reserve Board,
the Office of the Comptroller of
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the Currency, the Federal Deposit Insurance Corporation or other
applicable federal or state regulatory agency.
2.14. “Covered Employee”
means a Grantee who, as of the last day of the fiscal year in
which the value of an Award is includable in income for federal
income tax purposes, is one of the group of “covered
employees,” within the meaning of Code Section 162(m),
with respect to the Company.
2.15. “Deferred Compensation
Award” means an Award that is not exempt from Code
Section 409A and, thus, could be subject to adverse tax
consequences under Code Section 409A.
2.16. “Deferred Stock” means
a right, granted as an Award under Section 10, to receive
payment in the form of Shares (or measured by the value of
Shares) at the end of a specified deferral period.
2.17. “Disability” means:
(a) with respect to Awards other than Deferred Compensation
Awards, a mental or physical illness that entitles the Grantee
to receive benefits under the long-term disability plan of an
Employer, or if the Grantee is not covered by such a plan or the
Grantee is not an employee of an Employer, a mental or physical
illness that renders a Grantee totally and permanently incapable
of performing the Grantee’s duties for the Company or a
Subsidiary.
(b) with respect to any Deferred Compensation Award, a
Grantee’s inability to engage in any substantial gainful
activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than
twelve (12) months.
Notwithstanding anything to the contrary in this
Section 2.17 to the contrary, a Disability shall not
qualify under the Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced
sickness; or (ii) an injury or disease contracted, suffered
or incurred while participating in a felony criminal offense.
2.18. “Dividend Equivalent”
means any right to receive payments equal to dividends or
property, if and when paid or distributed, on Shares or
Restricted Stock Units.
2.19. “Early Retirement”
means a Termination of Service, other than for Cause, death or
Disability, on or after reaching age fifty-five (55) and
completion of fifteen (15) years of service with an
Employer.
2.20. “Effective Date” has
the meaning set forth in Section 1.1.
2.21. “Eligible Person” means
any (a) employee of an Employer, (b) non-employee
director of the Company or (c) consultant engaged by an
Employer.
2.22. “Employer” means the
Company or any Subsidiary.
2.23. “Employment Agreement”
means an employment agreement, offer letter, consulting
agreement or other written agreement between an Employer and an
Eligible Person, which relates to the terms and conditions of
such person’s employment or other services for an Employer.
2.24. “Exchange Act” means
the Securities Exchange Act of 1934 (and any successor thereto),
as amended from time to time. References to a particular section
of the Exchange Act include references to rules, regulations and
rulings promulgated and in effect thereunder, and to any
successors thereto.
2.25. “Exercise Date” means
the date the Grantee or other holder of an Award that is subject
to exercise delivers notice of such exercise to the Company,
accompanied by such payment, attestations, representations and
warranties or other documentation as required hereunder, under
the applicable Award Agreement or as the Committee may otherwise
specify.
2.26. “Fair Market Value”
means, as of any applicable date, (a) the closing sales
price for one Share on such date as reported on the NASDAQ
Global Select Market or, if the foregoing does not apply, on
such other market system or stock exchange on which the
Company’s Common Stock is then listed or admitted to
trading, or on the last previous day on which a sale was
reported if no sale of a Share was reported on such date, or
(b) if the foregoing subsection (a) does not apply,
the fair market value of a Share as
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reasonably determined in good faith by the Board in accordance
with Code Section 409A. For purposes of
subsection (b), the determination of such Fair Market Value
by the Board will be made no less frequently than every twelve
(12) months and will either (x) use one of the safe
harbor methodologies permitted under Treasury
Regulation Section 1.409A-1(b)(5)(iv)(B)(2)
(or such other similar regulation provision as may be provided)
or (y) include, as applicable, the value of tangible and
intangible assets of the Company, the present value of future
cash flows of the Company, the market value of stock or other
equity interests in similar corporations and other entities
engaged in trades or businesses substantially similar to those
engaged in by the Company, the value of which can be readily
determined through objective means (such as through trading
prices or an established securities market or an amount paid in
an arm’s length private transaction), and other relevant
factors such as control premiums or discounts for lack of
marketability and whether the valuation method is used for other
purposes that have a material economic effect on the Company,
its shareholders or its creditors.
2.27. “Grant Date” means the
date on which an Award is granted, which date may be specified
in advance by the Committee.
2.28. “Grantee” means an
Eligible Person who has been granted an Award.
2.29. “Incentive Stock
Option” means an Option granted under
Section 6 that is intended to meet the requirements of Code
Section 422.
2.30. “including” or
“includes” means “including, but
not limited to,” or “includes, but is not limited
to,” respectively.
2.31. “Non-Qualified Stock
Option” means an Option granted under
Section 6 that is not intended to be an Incentive Stock
Option.
2.32. “Normal Retirement”
means a Termination of Service, other than for Cause, death or
Disability, on or after reaching age sixty-two (62) and
completion of five (5) years of service with an Employer.
2.33. “Option” means an
Incentive Stock Option or Non-Qualified Stock Option.
2.34. “Option Price” means
the price at which a Share may be purchased by a Grantee
pursuant to an Option.
2.35. “Performance-Based
Exception” means the performance-based exception
from the tax deductibility limitations of Code
Section 162(m) contained in Code Section 162(m)(4)(C)
(including, to the extent applicable, the special provision for
options thereunder).
2.36. “Performance Goal”
means the objective
and/or
subjective criteria determined by the Committee, the degree of
attainment of which will affect (a) in the case of an Award
other than an Annual Incentive Award, the amount of the Award
the Grantee is entitled to receive or retain, and (b) in
the case of an Annual Incentive Award, the portion of the
individual’s Bonus Opportunity potentially payable as an
Annual Incentive Award. Performance Goals may contain threshold,
target and maximum levels of achievement and, to the extent the
Committee intends an Award (other than an Option, but including
an Annual Incentive Award) to comply with the Performance-Based
Exception, the Performance Goals shall be chosen from among the
Performance Measures set forth in Section 4.4(a).
2.37. “Performance Measures”
has the meaning set forth in Section 4.4(a).
2.38. “Performance Period”
means that period established by the Committee at the time any
Performance Unit is granted or at any time thereafter during
which any Performance Goals specified by the Committee with
respect to such Award are to be measured.
2.39. “Performance Unit”
means any grant pursuant to Section 11 of (a) a bonus
consisting of cash or other property the amount or value of
which,
and/or the
entitlement to which, is conditioned upon the attainment of any
Performance Goals specified by the Committee, or (b) a unit
valued by reference to a designated amount of property other
than Shares.
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2.40. “Person” means any
individual, sole proprietorship, corporation, partnership, joint
venture, limited liability company, association, joint-stock
company, trust, unincorporated organization, institution, public
benefit corporation, entity or government instrumentality,
division, agency, body or department.
2.41. “Plan” has the meaning
set forth in Section 1.1 and also includes any appendices
hereto.
2.42. “Restricted Stock”
means any Share issued as an Award under the Plan that is
subject to Restrictions.
2.43. “Restricted Stock Unit”
or “RSU” means the right granted as an
Award under the Plan to receive a Share, conditioned on the
satisfaction of Restrictions imposed by the Committee, which may
be time-based, performance-based or based upon the occurrence of
one or more events or conditions.
2.44. “Restrictions” means
any restriction on a Grantee’s free enjoyment of the Shares
or other rights underlying Awards, including (a) a
restriction that the Grantee or other holder may not sell,
transfer, pledge, or assign a Share or right, and (b) such
other restrictions as the Committee may impose in the Award
Agreement (including any restriction on the right to vote such
Share and the right to receive any dividends). Restrictions may
be based upon the passage of time, the satisfaction of
performance criteria or the occurrence of one or more events or
conditions, and shall lapse separately or in combination upon
such conditions and at such time or times, in installments or
otherwise, as the Committee shall specify. Awards subject to a
Restriction shall be forfeited if the Restriction does not lapse
prior to such date, the occurrence of such event or the
satisfaction of such other criteria as the Committee shall
determine.
2.45. “Rule 16b-3”
means
Rule 16b-3
promulgated by the SEC under the Exchange Act, as amended from
time to time, together with any successor rule.
2.46. “SEC” means the United
States Securities and Exchange Commission, or any successor
thereto.
2.47. “Section 16 Non-Employee
Director” means a member of the Board who satisfies
the requirements to qualify as a “non-employee
director” under
Rule 16b-3.
2.48. “Section 16 Person”
means a person who is subject to potential liability under
Section 16(b) of the Exchange Act with respect to
transactions involving equity securities of the Company.
2.49. “Settlement Date” means
the payment date for Restricted Stock Units or Deferred Stock,
as set forth in Section 9.3(b) or 10.4(c), as applicable.
2.50. “Share” means a share
of Common Stock.
2.51. “Stock Appreciation
Right” or “SAR” means a
right granted as an Award under the Plan to receive, as of the
date specified in the Award Agreement, an amount equal to the
number of Shares with respect to which the SAR is exercised,
multiplied by the excess of (a) the Fair Market Value of
one Share on the Exercise Date over (b) the Strike Price.
2.52. “Strike Price” means
the per-Share price used as the baseline measure for the value
of a SAR, as specified in the applicable Award Agreement.
2.53. “Subsidiary” means any
Person that directly, or through one (1) or more
intermediaries, is controlled by the Company and that would be
treated as part of a single controlled group of corporations
with the Company under Code Sections 414(b) and 414(c) if
the language “at least 50 percent” is used
instead of “at least 80 percent” each place it
appears in Code Sections 1563(a)(1), (2) and
(3) and Treasury
Regulation Section 1.414(c)-2.
2.54. “Substitute Award” has
the meaning set forth in Section 5.6.
2.55. “Term” means the period
beginning on the Grant Date of an Option or SAR and ending on
the date such Option or SAR expires, terminates or is cancelled.
2.56. “Termination of Service” means,
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(a) with respect to awards other than Deferred Compensation
Awards, the first day on which (i) an individual is for any
reason no longer providing services to an Employer as an
employee, director or consultant or (ii) with respect to an
individual who is an employee or consultant to a Subsidiary,
such entity ceases to be a Subsidiary of the Company and such
individual is no longer providing services to the Company or
another Subsidiary; provided, however, that the
Committee shall have the discretion to determine when a Grantee,
who terminates services as an employee, but continues to provide
services in the capacity of a consultant immediately following
such termination, has incurred a Termination of Service; or
(b) with respect to Deferred Compensation Awards, a
“separation from service” within the meaning of
Treasury
Regulation Section 1.409A-1(h)
or as permitted under Code Section 409A.
2.57. “Year” means a calendar
year.
Section 3. Administration
3.1. Committee.
(a) Subject to Section 3.2, the Plan shall be
administered by the Compensation and Benefits Committee of the
Board, unless otherwise determined by the Board (the
“Committee”). The members of the Committee
shall be appointed by the Board from time to time and may be
removed by the Board from time to time. To the extent the Board
considers it desirable to comply with
Rule 16b-3
and/or meet
the Performance-Based Exception, the Committee shall consist of
two or more directors of the Company, all of whom (i) are
Section 16 Non-Employee Directors
and/or
(ii) qualify as “outside directors” within the
meaning of Code Section 162(m), as applicable. The number
of members of the Committee shall from time to time be increased
or decreased, and shall be subject to such conditions, in each
case if and to the extent the Board deems it appropriate to
permit transactions in Shares pursuant to the Plan to satisfy
such conditions of
Rule 16b-3
and the Performance-Based Exception as then in effect.
(b) Subject to Section 4.4(c), the Committee may
delegate, to the fullest extent permitted under applicable law,
to the Chief Executive Officer of the Company any or all of the
authority of the Committee with respect to the grant of Awards
to Grantees, other than Grantees who are executive officers, or
are (or are expected to be) Covered Employees
and/or are
Section 16 Persons at the time any such delegated
authority is exercised.
3.2. Powers of the
Committee. Subject to and consistent with the
provisions of the Plan, the Committee shall have full power and
authority and sole discretion as follows:
(a) to determine when, to whom (i.e., what Eligible
Persons) and in what types and amounts Awards should be granted;
(b) to grant Awards to Eligible Persons in any number, and
to determine the terms and conditions applicable to each Award,
including (in each case, based on such considerations as the
Committee shall determine) conditions intended to comply with
Code Section 409A, the number of Shares or the amount of
cash or other property to which an Award will relate, any Option
Price or Strike Price, grant price or purchase price, any
limitation or Restriction, any schedule for or performance
conditions relating to the earning of the Award or the lapse of
limitations, forfeiture restrictions, restrictive covenants,
restrictions on exercisability or transferability, any
Performance Goals, including those relating to the Company
and/or a
Subsidiary
and/or any
division thereof
and/or an
individual,
and/or
vesting based on the passage of time, satisfaction of
performance criteria or the occurrence of one or more events or
conditions;
(c) to determine whether an Award will be subject to
minimum vesting requirements under Section 5.3(d);
(d) to determine the benefit (including any Bonus
Opportunity) payable under any Award and to determine whether
any performance, vesting or transfer conditions, including
Performance Measures or Performance Goals, have been satisfied;
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(e) to determine whether or not specific Awards shall be
granted in connection with other specific Awards;
(f) to determine the Term, as applicable;
(g) to determine the amount, if any, that a Grantee shall
pay for Restricted Stock, whether to permit or require the
payment of cash dividends thereon to be paid
and/or
deferred, and the terms related thereto, when Restricted Stock
(including Restricted Stock acquired upon the exercise of an
Option) shall be forfeited and whether such Shares shall be held
in escrow or other custodial arrangement;
(h) to determine whether, to what extent and under what
circumstances an Award may be settled in, or the exercise price
of an Award may be paid in, cash, Shares, other Awards or other
property, or an Award may be accelerated, vested, canceled,
forfeited or surrendered or any terms of the Award may be
waived, and to accelerate the exercisability of, and to
accelerate or waive any or all of the terms and conditions
applicable to, any Award or any group of Awards for any reason
and at any time or to extend the period subsequent to the
Termination of Service within which an Award may continue to
vest and/or
be exercised;
(i) to determine with respect to Awards granted to Eligible
Persons, whether, to what extent and under what circumstances
cash, Shares, other Awards, other property and other amounts
payable with respect to an Award will be deferred, either at the
election of the Grantee or if and to the extent specified in the
Award Agreement automatically or at the election of the
Committee (for purposes of limiting loss of deductions pursuant
to Code Section 162(m) or otherwise) and to provide for the
payment of interest or other rate of return determined with
reference to a predetermined actual investment or independently
set interest rate, or with respect to other bases permitted
under Code Section 162(m), Code Section 409A or
otherwise, for the period between the date of exercise and the
date of payment or settlement of the Award;
(j) to determine whether a Grantee has a Disability or a
Retirement (including years of service);
(k) to determine whether and under what circumstances a
Grantee has incurred a Termination of Service (e.g.,
whether Termination of Service was for Cause);
(l) to determine whether an Eligible Person is subject to
Compensation Limitations;
(m) to make, amend, suspend, waive and rescind rules and
regulations relating to the Plan;
(n) without the consent of the Grantee, to make adjustments
in the terms and conditions of, and the criteria in, Awards in
recognition of unusual or non-recurring events (including events
described in Section 4.2) affecting an Employer or the
financial statements of an Employer, or in response to changes
in Compensation Limitations or other applicable laws,
regulations or accounting principles; provided,
however, that in no event shall such adjustment increase
the value of an Award for a person expected to be a Covered
Employee for whom the Committee desires to have the
Performance-Based Exception apply;
(o) to appoint such agents as the Committee may deem
necessary or advisable to administer the Plan;
(p) to determine the terms and conditions of all Award
Agreements applicable to Eligible Persons (which need not be
identical) and, with the consent of the Grantee (except as
provided in this Section 3.2(p), and Sections 5.5 and
15.2), to amend any such Award Agreement at any time;
provided, however, that the consent of the Grantee
shall not be required for any amendment (i) that does not
adversely affect the rights of the Grantee, or (ii) that is
necessary or advisable (as determined by the Committee) to carry
out the purpose of the Award as a result of any new Compensation
Limitation or other applicable law or regulation, or a change in
an existing
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Compensation Limitation or other applicable law or regulation or
interpretation thereof, or (iii) to the extent the Award
Agreement specifically permits amendment without consent;
(q) to impose such additional terms and conditions upon the
grant, exercise or retention of Awards as the Committee may,
before or concurrently with the grant thereof, deem appropriate,
including limiting the percentage of Awards that may from time
to time be exercised by a Grantee and requiring the Grantee to
enter into restrictive covenants;
(r) to correct any defect, supply any omission or reconcile
any inconsistency, and to construe and interpret the Plan, any
rules and regulations adopted hereunder, Award Agreements or any
other instrument entered into or relating to an Award under the
Plan; and
(s) to take any other action with respect to any matters
relating to the Plan for which it is responsible and to make all
other decisions and determinations, including factual
determinations, as may be required under the terms of the Plan
or as the Committee may deem necessary or advisable for the
administration of the Plan.
Any action of the Committee with respect to the Plan shall be
final, conclusive and binding on all Persons, including the
Company, Subsidiaries, any Grantee, any Eligible Person, any
Person claiming any rights under the Plan from or through any
Grantee, and shareholders, except to the extent the Committee
may subsequently modify, or take further action not consistent
with, its prior action. If not specified in the Plan, the time
at which the Committee must or may make any determination shall
be determined by the Committee, and any such determination may
thereafter be modified by the Committee. The express grant of
any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any
power or authority of the Committee.
All determinations of the Committee shall be made by a majority
of its members; provided, however, that any
determination affecting any Awards made or to be made to a
member of the Committee may, at the Board’s election, be
made by the Board.
Section 4. Shares Subject
to the Plan and Adjustments
4.1. Number of Shares Available for
Grants.
(a) Subject to adjustment as provided in Section 4.2,
the aggregate number of Shares which may be delivered under the
Plan shall not exceed the sum of (i) 11,500,000, plus
(ii) the number of remaining Shares under the Associated
Banc-Corp 2003 Long-Term Incentive Stock Plan (the “2003
Plan”) (not subject to outstanding awards under the
2003 Plan and not delivered out of the Shares reserved
thereunder) as of the Effective Date of the Plan, plus
(iii) the number of Shares that become available under the
2003 Plan after the Effective Date of the Plan pursuant to
forfeiture, termination, lapse or satisfaction of an Award in
cash or property other than Shares (the combined total of (i),
(ii) and (iii) being referred to as the
“Available Shares”). For purposes of this
Section 4.1(a)), (x) each Share delivered pursuant to
the exercise of an Option shall reduce the Available Shares by
one (1) Share; (y) a number equal to the greater of
each Share delivered upon exercise of a SAR and the number of
Shares underlying such SAR (whether the distribution is made in
cash, Shares or a combination of cash and Shares) shall reduce
the Available Shares by one (1) Share, other than a SAR
that, by its terms, from and after the Grant Date thereof is
payable only in cash, in which case the Available Shares shall
not be reduced; and (z) each Share delivered pursuant to an
Award, other than an Option, SAR or Substitute Award, shall
reduce the Available Shares by 2.16 Shares. If any Shares
subject to an Award granted hereunder are forfeited or such
Award otherwise terminates without the delivery of such Shares,
the Shares subject to such Award, to the extent of any such
forfeiture or termination, shall again be available for grant
under the Plan in the same ratio as such Shares were previously
counted as issued under the Plan with respect to such forfeited
or terminated Award. If any Award is settled in cash, the Shares
subject to such Award that are not delivered shall again be
available for grants under the Plan. The following Shares may
not again be made available for issuance as Awards under the
Plan: (i) Shares not issued or delivered as a result of the
net settlement of an outstanding Option or SAR, (ii) Shares
used to pay the Option Price or withholding taxes
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related to an outstanding Award, and (iii) Shares
repurchased on the open market with the proceeds of the Option
Price.
(b) The Committee shall from time to time determine the
appropriate methodology for calculating the number of Shares
that have been delivered pursuant to the Plan. Shares delivered
pursuant to the Plan may be, in whole or in part, authorized and
unissued Shares, or treasury Shares, including Shares
repurchased by the Company for purposes of the Plan.
(c) The maximum number of shares of Common Stock that may
be issued under the Plan in this Section 4.1 shall not be
affected by (i) the cash payment of dividends or Dividend
Equivalents in connection with outstanding Awards; or
(ii) any Shares required to satisfy Substitute Awards.
4.2. Adjustments in Authorized Shares and
Awards.
(a) In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash,
Shares, or other securities or property), stock split or
combination, forward or reverse merger, reorganization,
subdivision, consolidation or reduction of capital,
recapitalization, consolidation, scheme of arrangement,
split-up,
spin-off or combination involving the Company or repurchase or
exchange of Shares, issuance of warrants or other rights to
purchase Shares or other securities of the Company, or other
similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of: (i) the number
and type of Shares (or other securities or property) with
respect to which Awards may be granted, (ii) the number and
type of Shares (or other securities or property) subject to
outstanding Awards, (iii) the grant or exercise price with
respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award,
(iv) the number and kind of Shares of outstanding
Restricted Stock or relating to any other outstanding Award in
connection with which Shares are subject, and (v) the
number of Shares with respect to which Awards may be granted to
a Grantee; provided, however, in each case, that
with respect to Awards of Incentive Stock Options intended to
continue to qualify as Incentive Stock Options after such
adjustment, no such adjustment shall be authorized to the extent
that such adjustment would cause the Incentive Stock Option to
fail to continue to qualify under Code Section 424(a); and
provided further that the number of Shares subject to any
Award denominated in Shares shall always be a whole number.
(b) Notwithstanding Section 4.2(a), any adjustments
made pursuant to Section 4.2(a) shall be made in such a
manner as to ensure that, after such adjustment, Awards continue
not to be non-qualified deferred compensation subject to Code
Section 409A (or if such Awards are already subject to Code
Section 409A, so as not to give rise to adverse tax
consequences under Code Section 409A).
4.3. Compliance With Code
Section 162(m).
(a) Section 162(m)
Compliance. To the extent the Committee
determines that compliance with the Performance-Based Exception
is desirable with respect to an Award, Sections 4.3 and 4.4
shall apply. In the event that changes are made to Code
Section 162(m) to permit flexibility with respect to any
Awards available under the Plan, the Committee may, subject to
this Section 4.3, make any adjustments to such Awards as it
deems appropriate.
(b) Annual Individual
Limitations. No Grantee may be granted Awards
for Options or SARs with respect to a number of Shares in any
one (1) Year exceeding 400,000 Shares. No Grantee may
be granted Awards for Restricted Stock, Deferred Stock,
Restricted Stock Units or Performance Units (or any other Award
other than Options or SARs which is determined by reference to
the value of Shares or appreciation in the value of Shares) with
respect to a number of Shares in any one (1) Year exceeding
400,000 Shares. If an Award denominated in Shares is
cancelled, the Shares subject to the cancelled Award continue to
count against the maximum number of Shares that may be granted
to a Grantee in any Year. All Shares specified in this
Section 4.3(b) shall be adjusted to the extent necessary to
reflect adjustments to Shares required by Section 4.2. No
Grantee may be granted a cash Award that would have a maximum
payout, during any Year, exceeding $3,000,000. No Grantee may be
granted a cash Award for
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a Performance Period of more than one (1) Year that would
have a maximum payout, during the Performance Period, that would
exceed $6,000,000.
4.4. Performance Based Exception Under Code
Section 162(m).
(a) Performance Measures. Subject
to Section 4.4(d), unless and until the Committee proposes
for shareholder vote and shareholders approve a change in the
general Performance Measures set forth in this
Section 4.4(a), for Awards (other than Options and SARs)
designed to qualify for the Performance-Based Exception, the
objective performance criteria shall be based upon one or more
of the following (each a “Performance Measure”):
(i) Earnings before any or all of interest, tax,
depreciation or amortization (actual and adjusted and either in
the aggregate or on a per-Share basis);
(ii) Earnings (either in the aggregate or on a per-Share
basis);
(iii) Net income or loss (either in the aggregate or on a
per-Share basis);
(iv) Operating profit;
(v) Cash flow (either in the aggregate or on a per-Share
basis);
(vi) Free cash flow (either in the aggregate on a per-Share
basis);
(vii) Capital ratio (either Tier 1 or total);
(viii) Non-interest expense;
(ix) Costs;
(x) Gross revenues;
(xi) Deposit growth;
(xii) Loan loss provisions;
(xiii) Reductions in expense levels;
(xiv) Operating and maintenance cost management and
employee productivity;
(xv) Share price or total shareholder return (including
growth measures and total shareholder return or attainment by
the Shares of a specified value for a specified period of time);
(xvi) Net economic value;
(xvii) Non-performing asset ratio;
(xviii) Net charge-off ratio;
(xix) Net interest margin;
(xx) Economic value added or economic value added momentum;
(xxi) Aggregate product unit and pricing targets;
(xxii) Strategic business criteria, consisting of one or
more objectives based on meeting specified revenue, sales,
credit quality, loan quality, market share, market penetration,
geographic business expansion goals, objectively identified
project milestones, production volume levels, cost targets and
goals relating to acquisitions or divestitures;
(xxiii) Return on average assets or average equity;
(xxiv) Achievement of objectives relating to diversity,
employee turnover or other human capital metrics;
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(xxv) Results of customer satisfaction surveys or other
objective measures of customer experience; and/or
(xxvi) Debt ratings, debt leverage and debt service;
provided, however, that applicable Performance
Measures may be applied on a pre- or post-tax basis; and
provided further that the Committee may, on the
Grant Date of an Award intended to comply with the
Performance-Based Exception, and in the case of other Awards, at
any time, provide that the formula for such Award may include or
exclude items to measure specific objectives, such as losses
from discontinued operations, extraordinary gains or losses, the
cumulative effect of accounting changes, acquisitions or
divestitures, foreign exchange impacts and any unusual,
non-recurring gain or loss.
(b) Flexibility in Setting Performance
Measures. For Awards intended to comply with
the Performance-Based Exception, the Committee shall set the
Performance Measures within the time period prescribed by Code
Section 162(m). The levels of performance required with
respect to Performance Measures may be expressed in absolute or
relative levels and may be based upon a set increase, set
positive result, maintenance of the status quo, set decrease or
set negative result. Performance Measures may differ for Awards
to different Grantees. The Committee shall specify the weighting
(which may be the same or different for multiple objectives) to
be given to each performance objective for purposes of
determining the final amount payable with respect to any such
Award. Any one or more of the Performance Measures may apply to
the Grantee, a department, unit, division or function within the
Company or any one or more Subsidiaries, and may apply either
alone or relative to the performance of other businesses or
individuals (including industry or general market indices).
(c) Adjustments. The Committee
shall have the discretion to adjust the determinations of the
degree of attainment of the preestablished Performance Goals;
provided, however, that Awards that are designed
to qualify for the Performance-Based Exception may not (unless
the Committee determines to amend the Award so that it no longer
qualified for the Performance-Based Exception) be adjusted
upward (the Committee shall retain the discretion to adjust such
Awards downward). The Committee may not, unless the Committee
determines to amend the Award so that it no longer qualifies for
the Performance-Based Exception, delegate any responsibility
with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee
as to the achievement of the Performance Measure(s) shall be in
writing prior to payment of the Award.
(d) Changes to Performance
Measures. In the event that applicable laws,
rules or regulations change to permit Committee discretion to
alter the governing Performance Measures without obtaining
shareholder approval of such changes, and still qualify for the
Performance-Based Exception, the Committee shall have sole
discretion to make such changes without obtaining shareholder
approval.
Section 5. Eligibility
and General Conditions of Awards
5.1. Eligibility. The
Committee may in its discretion grant Awards to any Eligible
Person, whether or not he or she has previously received an
Award.
5.2. Award Agreement. To the
extent not set forth in the Plan, the terms and conditions of
each Award shall be set forth in an Award Agreement.
5.3. General Terms and Termination of
Service. Except as provided in an Award
Agreement or as otherwise provided below in this
Section 5.3, all Options or SARs that have not been
exercised, or any other Awards that remain subject to
Restrictions or which are not otherwise vested or exercisable,
at the time of a Termination of Service shall be cancelled and
forfeited to the Company. Any Restricted Stock that is forfeited
by the Grantee upon Termination of Service shall be reacquired
by the Company, and the
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Grantee shall sign any document and take any other action
required to assign such Shares back to the Company.
(a) Options and SARs. Except as
otherwise provided in an Award Agreement:
(i) If the Grantee incurs a Termination of Service due to
his or her death or Disability, the Options or SARs shall become
fully vested and exercisable at the time of such Termination of
Service, and such Options or SARs shall remain exercisable for a
period of one (1) year from the date of such Termination of
Service (but not beyond the original Term). To the extent the
Options or SARs are not exercised at the end of such one
(1) year period, the Options or SARs shall be immediately
cancelled and forfeited to the Company.
(ii) If the Grantee incurs a Termination of Service due to
his or her Early Retirement, (A) a pro rata portion of each
unvested Option or SAR shall become immediately vested and
exercisable upon the date of such Termination of Service and
(B) to the extent vested, such Options or SARs shall remain
exercisable for a period of one (1) year from the date of
such Termination of Service (but not beyond the original Term).
The number of Shares to become vested is equal to the product of
the number of Shares granted in the applicable Option or SAR
multiplied by a fraction, the numerator of which is the number
of days employed by the Employer during the vesting period of
such Option or SAR and the denominator of which is the number of
days in the vesting period, and such product is reduced by the
number of Shares already vested immediately prior to the date of
such Termination of Service. To the extent the Options or SARs
are not exercised at the end of such one (1) year period,
the Options or SARs shall be immediately cancelled and forfeited
to the Company.
(iii) If the Grantee incurs a Termination of Service due to
his or her Normal Retirement, the Options or SARs shall become
fully vested and exercisable at the time of such Termination of
Service, and such Options or SARs shall remain exercisable for a
period of one (1) year from the date of such Termination of
Service (but not beyond the original Term). To the extent the
Options or SARs are not exercised at the end of such one
(1) year period following a Termination of Service due to
the Grantee’s Retirement, the Options or SARs shall be
immediately cancelled and forfeited to the Company.
(iv) If the Grantee either incurs a Termination of Service
by an Employer without Cause or a Termination of Service, which
is voluntary on the part of the Grantee (and not due to such
Grantee’s death, Disability, Early Retirement or Normal
Retirement), the Options and SARs may thereafter be exercised,
to the extent they were vested and exercisable at the time of
such Termination of Service, for a period of thirty
(30) days from the date of such Termination of Service (but
not beyond the original Term). To the extent the Options or SARs
are not exercised at the end of such thirty (30) day
period, the Options or SARs shall be immediately cancelled and
forfeited to the Company. To the extent the Options and SARs are
not vested and exercisable on the date of such Termination of
Service, they shall be immediately cancelled and forfeited to
the Company.
(v) If the Grantee incurs a Termination of Service for
Cause all Options and SARs shall be immediately canceled and
forfeited to the Company.
(b) Restricted Stock. Except as
otherwise provided in an Award Agreement:
(i) If the Grantee incurs a Termination of Service due to
his or her Early Retirement, a pro rata portion of each unvested
Restricted Stock Award shall become immediately vested and no
longer subject to the applicable Restrictions upon the date of
such Termination of Service. The number of Shares to become
vested is equal to the product of the number of Shares granted
in the applicable Restricted Stock Award multiplied by a
fraction, the numerator of which is the number of days employed
by the Employer during the vesting period of such Restricted
Stock Award and the denominator of which is the number of days
in the vesting period, and such product is reduced by the number
of Shares already vested immediately prior to the date of such
Termination of Service. Any Shares subject to a Restricted Stock
Award that are still subject to Restrictions and not vested
either
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before or upon such Termination of Service shall be immediately
forfeited (on the date of such Termination of Service) by the
Grantee to the Company.
(ii) If Termination of Service occurs by reason of the
Grantee’s death, Disability or Normal Retirement, such
Grantee’s Restricted Stock shall become immediately vested
and no longer subject to the applicable Restrictions.
(iii) If Termination of Service occurs for any reason other
than the Grantee’s death, Disability, Early Retirement or
Normal Retirement while the Grantee’s Restricted Stock is
subject to a Restriction(s), all of such Grantee’s
Restricted Stock that is unvested or still subject to
Restrictions shall be forfeited by the Grantee.
(c) Dividend Equivalents. If
Dividend Equivalents have been credited with respect to any
Award and such Award (in whole or in part) is forfeited, all
Dividend Equivalents issued in connection with such forfeited
Award (or portion of an Award) shall also be forfeited to the
Company.
(d) Minimum Vesting. Except as
otherwise provided pursuant to this Section 5.3 and
Section 14, (i) in the case of any Award (other than
an Option or SAR) that is conditioned upon the attainment of
specified performance goals by the Grantee with the Company or a
Subsidiary (including a division or business unit of the Company
or a Subsidiary) and is payable in Shares, the Restrictions
shall last for no less than one (1) year, or (ii) in
the case of an Award, other than (x) Shares that are
payable as a component of base salary or (y) Deferred Stock
that is granted in connection with a Grantee’s Deferral
Election, that is conditioned solely upon the continuous
employment by the Grantee with the Company or a Subsidiary and
is payable in Shares, the Restrictions shall last for no less
than three (3) years. Except as otherwise provided pursuant
to this Section 5.3 and Section 14, during the
mandated one-year and three-year period of Restrictions, as
applicable, the Committee may not waive the Restrictions for all
or any part of such Award. Notwithstanding the foregoing, the
Committee shall have the authority under this
Section 5.3(d) to accelerate, vest or waive Restrictions
with respect to any Awards (that are subject to the minimum
vesting restrictions set forth above) that (A) (exclusive
of the accelerations, vesting and waivers permitted pursuant to
clauses (B) and (C) below) do not, in the aggregate,
exceed five percent (5%) of the Available Shares under the Plan
(as such number may be adjusted or increased from time to time
pursuant to the Plan), (B) occur in connection with a
Change in Control, or (C) occur, with a respect to any
Grantee, in connection with the death, Disability, Early
Retirement or Normal Retirement of such Grantee.
(e) Waiver. Notwithstanding
anything to the contrary in the Plan, the Committee may in its
sole discretion as to all or part of any Award that is not
subject to the one-year or three-year minimum vesting
requirements specified in Section 5.3(d), at the time the
Award is granted or thereafter, (i) determine that Awards
shall become exercisable or vested, or Restrictions shall
lapse, (ii) determine that Awards shall continue to become
exercisable or vested in full or in installments, or
Restrictions shall continue to lapse, after a Termination of
Service, (iii) extend the period for exercise of Options or
SARs following a Termination of Service (but not beyond the
original Term), or (iv) provide that any Award shall, in
whole or in part, not be forfeited upon such Termination of
Service.
5.4. Non-Transferability of Awards.
(a) Each Award and each right under any Award shall be
exercisable only by the Grantee during the Grantee’s
lifetime, or, if permissible under applicable law, by the
Grantee’s guardian or legal representative.
(b) No Award (prior to the time, if applicable, Shares are
delivered in respect of such Award), and no right under any
Award, may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Grantee other than by
will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company or any Subsidiary; provided, however,
that the designation of a Beneficiary to receive benefits in the
event of the Grantee’s death, or a transfer by the Grantee
to the Company with respect to Restricted Stock, shall not
constitute an assignment, alienation, pledge, attachment, sale,
transfer or encumbrance for purposes of this
Section 5.4(b). If so determined by the
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Committee, a Grantee may, in the manner established by the
Committee, designate a Beneficiary or Beneficiaries to exercise
the rights of the Grantee, and to receive any distribution with
respect to any Award upon the death of the Grantee. A
transferee, Beneficiary, guardian, legal representative or other
person claiming any rights under the Plan from or through any
Grantee shall be subject to the provisions of the Plan and any
applicable Award Agreement, except to the extent the Plan and
Award Agreement otherwise provide with respect to such persons,
and to any additional restrictions or limitations deemed
necessary or appropriate by the Committee.
(c) Notwithstanding Sections 5.4(a) and 5.4(b) above,
to the extent provided in the applicable Award Agreement,
Non-Qualified Stock Options may be transferred, without
consideration, to a Permitted Transferee. For this purpose,
(i) a “Permitted Transferee” in respect of
any Grantee means any member of the Immediate Family of such
Grantee, any trust of which all of the primary beneficiaries are
such Grantee or members of his or her Immediate Family, or any
partnership, limited liability company, corporation or similar
entity of which all of the partners, members or shareholders are
such Grantee or members of his or her Immediate Family, and
(ii) the “Immediate Family” of a Grantee
means the Grantee’s spouse, former spouse, children,
stepchildren, grandchildren, parents, stepparents, siblings,
grandparents, nieces and nephews,
mother-in-law,
father-in-law,
sons-in-law,
daughters-in-law,
brothers-in-law,
or
sisters-in-law,
including adoptive relationships. Such Award may be exercised by
such Permitted Transferee in accordance with the terms of such
Award.
(d) Nothing herein shall be construed as requiring the
Committee to honor the order of a domestic relations court
regarding an Award, except to the extent required under
applicable law.
5.5. Cancellation and Rescission of
Awards. Unless the Award Agreement specifies
otherwise, the Committee may cancel, rescind, suspend, withhold
or otherwise limit or restrict any unexercised or unsettled
Award at any time if the Grantee is not in compliance with all
applicable provisions of the Award Agreement and the Plan, or is
in violation of any restrictive covenant or other agreement with
an Employer.
5.6. Substitute Awards. The
Committee may, in its discretion and on such terms and
conditions as the Committee considers appropriate under the
circumstances, grant Substitute Awards under the Plan. For
purposes of this Section 5.6, “Substitute
Award” means an Award granted under the Plan in
substitution for stock and stock-based awards (“Acquired
Entity Awards”) held by current and former employees or
non-employee directors of, or consultants to, another
corporation or entity who become Eligible Persons as the result
of a merger, consolidation or combination of the employing
corporation or other entity (the “Acquired
Entity”) with the Company or a Subsidiary or the
acquisition by the Company or a Subsidiary of property or stock
of the Acquired Entity immediately prior to such merger,
consolidation, acquisition or combination (“Acquisition
Date”) in order to preserve for the Grantee the
economic value of all or a portion of such Acquired Entity Award
at such price as the Committee determines necessary to achieve
such preservation of economic value.
5.7. Exercise by
Non-Grantee. If any Award is exercised as
permitted by the Plan by any Person other than the Grantee, the
exercise notice shall be accompanied by such documentation as
may reasonably be required by the Committee, including, without
limitation, evidence of authority of such Person or Persons to
exercise the Award and, if the Committee so specifies, evidence
satisfactory to the Company that any death taxes payable with
respect to such Shares have been paid or provided for.
5.8. No Cash Consideration for
Awards. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be
required by applicable law.
Section 6. Stock
Options
6.1. Grant of
Options. Subject to and consistent with the
provisions of the Plan, Options may be granted to any Eligible
Person in such number, and upon such terms, and at any time and
from time to time as shall be determined by the Committee.
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6.2. Award Agreement. Each
Option grant shall be evidenced by an Award Agreement in such
form as the Committee may approve that shall specify the Grant
Date, the Option Price, the Term (which shall be ten
(10) years from its Grant Date unless the Committee
otherwise specifies a shorter period in the Award Agreement),
the number of Shares to which the Option pertains, the time or
times at which such Option shall be exercisable and such other
provisions (including Restrictions) not inconsistent with the
provisions of the Plan as the Committee shall determine.
6.3. Option Price. The
purchase price per Share purchasable under an Option shall be
determined by the Committee; provided, however,
that such purchase price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant
Date. Subject to the adjustment allowed in Section 4.2, or
as otherwise permissible under this Section 6.3, neither
the Committee nor the Board shall have the authority or
discretion to change the Option Price of any outstanding Option.
Without the approval of shareholders, neither the Committee nor
the Board will amend or replace previously granted Options or
SARs in a transaction that constitutes “repricing,”
which for this purpose means any of the following or any action
that has the same effect: (a) lowering the exercise price
of an Option or SAR after it is granted; (b) any other
action that is treated as a repricing under generally accepted
accounting principles; (c) cancelling an Option or SAR at a
time when its exercise price exceeds the Fair Market Value of
the underlying Stock, in exchange for another Award, other
equity, cash or other property; provided, however,
that the foregoing transactions shall not be deemed a repricing
if done pursuant to an adjustment authorized under
Section 4.2.
6.4. Vesting. Shares subject
to an Option shall become vested and exercisable as specified in
the applicable Award Agreement.
6.5. Grant of Incentive Stock
Options. At the time of the grant of any
Option, the Committee may, in its discretion, designate that
such Option shall be made subject to additional restrictions to
permit it to qualify as an Incentive Stock Option. Any Option
designated as an Incentive Stock Option:
(a) shall be granted only to an employee of the Company or
a Subsidiary Corporation (as defined below in this
Section 6.5);
(b) shall have an Option Price of not less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant
Date, and, if granted to a person who owns capital stock
(including stock treated as owned under Code
Section 424(d)) possessing more than ten percent (10%) of
the total combined voting power of all classes of capital stock
of the Company or any Subsidiary Corporation (a “10%
Owner”), have an Option Price not less than one hundred
ten percent (110%) of the Fair Market Value of a Share on its
Grant Date;
(c) shall have a Term of not more than ten (10) years
(five (5) years if the Grantee is a 10% Owner) from its
Grant Date, and shall be subject to earlier termination as
provided herein or in the applicable Award Agreement;
(d) shall not have an aggregate Fair Market Value (as of
the Grant Date) of the Shares with respect to which Incentive
Stock Options (whether granted under the Plan or any other
equity incentive plan of the Grantee’s employer or any
parent or Subsidiary Corporation (“Other
Plans”)) are exercisable for the first time by such
Grantee during any calendar year (“Current
Grant”), determined in accordance with the provisions
of Code Section 422, which exceeds $100,000 (the
“$100,000 Limit”);
(e) shall, if the aggregate Fair Market Value of the Shares
(determined on the Grant Date) with respect to the Current Grant
and all Incentive Stock Options previously granted under the
Plan and any Other Plans which are exercisable for the first
time during a calendar year (“Prior Grants”)
would exceed the $100,000 Limit, be, as to the portion in excess
of the $100,000 Limit, exercisable as a separate Non-Qualified
Stock Option at such date or dates as are provided in the
Current Grant;
(f) shall require the Grantee to notify the Committee of
any disposition of any Shares delivered pursuant to the exercise
of the Incentive Stock Option under the circumstances described
in Code
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Section 421(b) (relating to holding periods and certain
disqualifying dispositions) (“Disqualifying
Disposition”), within ten (10) days of such a
Disqualifying Disposition;
(g) shall by its terms not be assignable or transferable
other than by will or the laws of descent and distribution and
may be exercised, during the Grantee’s lifetime, only by
the Grantee; provided, however, that the Grantee
may, to the extent provided in the Plan in any manner specified
by the Committee, designate in writing a Beneficiary to exercise
his or her Incentive Stock Option after the Grantee’s
death; and
(h) shall, if such Option nevertheless fails to meet the
foregoing requirements, or otherwise fails to meet the
requirements of Code Section 422 for an Incentive Stock
Option, be treated for all purposes of the Plan, except as
otherwise provided in subsections (d) and (e) above,
as a Non-Qualified Stock Option.
For purposes of this Section 6.5, “Subsidiary
Corporation” means a corporation other than the Company
in an unbroken chain of corporations beginning with the Company
if, at the time of granting the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain. Notwithstanding the foregoing and
Sections 3.2(p) and 15.2, the Committee may, without the
consent of the Grantee, at any time before the exercise of an
Option (whether or not an Incentive Stock Option), take any
action necessary to prevent such Option from being treated as an
Incentive Stock Option.
6.6. Exercise and Payment.
(a) Except as may otherwise be provided by the Committee in
an Award Agreement, Options shall be exercised by the delivery
of a written notice (“Notice”) to the Company
setting forth the number of Shares to be exercised, accompanied
by full payment (including any applicable tax withholding) for
the Shares made by any one or more of the following means on the
Exercise Date (or such other date as may be permitted in writing
by the Secretary of the Company):
(i) cash, personal check or wire transfer;
(ii) with the approval of the Committee, Shares or Shares
of Restricted Stock valued at the Fair Market Value of a Share
on the Exercise Date; or
(iii) subject to applicable law and the Company’s
policies, through the sale of the Shares acquired on exercise of
the Option through a broker-dealer to whom the Grantee has
submitted an irrevocable notice of exercise and irrevocable
instructions to deliver promptly to the Company the amount of
sale or loan proceeds sufficient to pay for such Shares,
together with, if requested by the Company, the amount of
applicable withholding taxes payable by Grantee by reason of
such exercise.
(b) The Committee may, in its discretion, specify that, if
any Shares of Restricted Stock (“Tendered Restricted
Shares”) are used to pay the Option Price, (i) all
the Shares acquired on exercise of the Option shall be subject
to the same Restrictions as the Tendered Restricted Shares,
determined as of the Exercise Date, or (ii) a number of
Shares acquired on exercise of the Option equal to the number of
Tendered Restricted Shares shall be subject to the same
Restrictions as the Tendered Restricted Shares, determined as of
the Exercise Date.
(c) At the discretion of the Committee and subject to
applicable law, the Company may loan a Grantee all or any
portion of the amount payable by the Grantee to the Company upon
exercise of the Option on such terms and conditions as the
Committee may determine.
(d) If the Option is exercised as permitted by the Plan by
any Person other than the Grantee, the Notice shall be
accompanied by documentation as may reasonably be required by
the Company, including evidence of authority of such Person or
Persons to exercise the Option.
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(e) At the time a Grantee exercises an Option or to the
extent provided by the Committee in the applicable Award
Agreement, in lieu of accepting payment of the Option Price of
the Option and delivering the number of Shares of Common Stock
for which the Option is being exercised, the Committee may
direct that the Company either (i) pay the Grantee a cash
amount, or (ii) issue a lesser number of Shares of Common
Stock, in any such case, having a Fair Market Value on the
Exercise Date equal to the amount, if any, by which the
aggregate Fair Market Value (or such other amount as may be
specified in the applicable Award Agreement, in the case of an
exercise occurring concurrent with a Change in Control) of the
Shares of Common Stock as to which the Option is being exercised
exceeds the aggregate Option Price for such Shares, based on
such terms and conditions as the Committee shall establish.
Section 7. Stock
Appreciation Rights
7.1. Grant of SARs. Subject
to and consistent with the provisions of the Plan, the
Committee, at any time and from time to time, may grant SARs to
any Eligible Person on a standalone basis or in tandem with an
Option. The Committee may impose such conditions or restrictions
on the exercise of any SAR as it shall deem appropriate.
7.2. Award Agreements. Each
SAR grant shall be evidenced by an Award Agreement in such form
as the Committee may approve, which shall specify the Grant
Date, the Strike Price, the Term (which shall be ten
(10) years from its Grant Date unless the Committee
otherwise specifies a shorter period in the Award Agreement),
the number of Shares to which the SAR pertains, the time or
times at which such SAR shall be exercisable and such other
provisions (including Restrictions) not inconsistent with the
provisions of the Plan as shall be determined by the Committee.
7.3. Strike Price. The
Strike Price of a SAR shall be determined by the Committee in
its sole discretion; provided, however,
that the Strike Price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the Grant
Date of the SAR.
7.4. Vesting. Shares subject
to a SAR shall become vested and exercisable as specified in the
applicable Award Agreement.
7.5. Exercise and
Payment. Except as may otherwise be provided
by the Committee in an Award Agreement, SARs shall be exercised
by the delivery of a written notice to the Company, setting
forth the number of Shares with respect to which the SAR is to
be exercised. No payment of a SAR shall be made unless
applicable tax withholding requirements have been satisfied in
accordance with Section 17.1 or otherwise. Any payment by
the Company in respect of a SAR may be made in cash, Shares,
other property, or any combination thereof, as the Committee, in
its sole discretion, shall determine.
7.6. Grant Limitations. The
Committee may at any time impose any other limitations or
Restrictions upon the exercise of SARs that it deems necessary
or desirable in order to achieve desirable tax results for the
Grantee or the Company.
Section 8. Restricted
Stock
8.1. Grant of Restricted
Stock. Subject to and consistent with the
provisions of the Plan, the Committee, at any time and from time
to time, may grant Restricted Stock to any Eligible Person in
such amounts as the Committee shall determine.
8.2. Award Agreement. Each
grant of Restricted Stock shall be evidenced by an Award
Agreement that shall specify the Restrictions, the number of
Shares subject to the Restricted Stock Award, and such other
provisions not inconsistent with the provisions of the Plan as
the Committee shall determine. The Committee may impose such
Restrictions on any Award of Restricted Stock as it deems
appropriate, including time-based Restrictions, Restrictions
based upon the achievement of specific Performance Goals,
Restrictions based on the occurrence of a specified event,
Restrictions under applicable laws or pursuant to a regulatory
entity with authority over the Company or a Subsidiary,
and/or a
combination of any of the above.
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8.3. Consideration for Restricted
Stock. The Committee shall determine the
amount, if any, that a Grantee shall pay for Restricted Stock.
8.4. Vesting. Shares subject
to a Restricted Stock Award shall become vested and transferable
as specified in the applicable Award Agreement and in accordance
with Section 5.3(d) (thereafter being referred to as
“Unrestricted Stock”). For purposes of
calculating the number of Shares of Restricted Stock that become
Unrestricted Stock as set forth above, Share amounts shall be
rounded to the nearest whole Share amount, unless otherwise
specified in the applicable Award Agreement.
8.5. Effect of
Forfeiture. If Restricted Stock is forfeited,
and if the Grantee was required to pay for such Shares of
Restricted Stock or acquired such Shares upon the exercise of an
Option, the Grantee shall be deemed to have resold such
Restricted Stock to the Company at a price equal to the lesser
of (a) the amount paid by the Grantee for such Restricted
Stock or the Option Price, as applicable, and (b) the Fair
Market Value of a Share on the date of such forfeiture. The
Company shall pay to the Grantee the deemed sale price as soon
as administratively practical. Such Restricted Stock shall cease
to be outstanding and shall no longer confer on the Grantee
thereof any rights as a shareholder of the Company, from and
after the date of the event causing the forfeiture, whether or
not the Grantee accepts the Company’s tender of payment for
such Restricted Stock.
8.6. Escrow; Legends. The
Committee may provide that the certificates for any Restricted
Stock (a) shall be held (together with a stock power
executed in blank by the Grantee) in escrow by the Secretary of
the Company until such Restricted Stock becomes non-forfeitable
or vested and transferable, or is forfeited
and/or
(b) shall bear an appropriate legend restricting the
transfer of such Restricted Stock under the Plan. If any
Restricted Stock becomes non-forfeitable or vested and
transferable, the Company shall cause certificates for such
Shares to be delivered without such legend or shall cause a
release of restrictions on a book entry account maintained by
the Company’s transfer agent.
8.7. Shareholder Rights in Restricted
Stock. Restricted Stock, whether held by a
Grantee or in escrow or other custodial arrangement by the
Secretary of the Company, shall confer on the Grantee all rights
of a shareholder of the Company, except as otherwise provided in
the Plan or Award Agreement. At the time of a grant of
Restricted Stock, the Committee may require the payment of cash
dividends thereon to be deferred and, if the Committee so
determines, reinvested in additional Shares of Restricted Stock.
Stock dividends and deferred cash dividends issued with respect
to Restricted Stock shall be subject to the same Restrictions
and other terms (including forfeiture) as apply to the Shares of
Restricted Stock with respect to which such dividends are
issued. The Committee may, in its discretion, provide for
payment of interest on deferred cash dividends.
Section 9. Restricted
Stock Units
9.1. Grant of Restricted Stock
Units. Subject to and consistent with the
provisions of the Plan and applicable requirements of Code
Sections 409A(a)(2), (3) and (4), the Committee, at
any time and from time to time, may grant Restricted Stock Units
to any Eligible Person, in such amount and upon such terms as
the Committee shall determine. A Grantee shall have no voting
rights with respect to Restricted Stock Units.
9.2. Award Agreement. Each
grant of Restricted Stock Units shall be evidenced by an Award
Agreement that shall specify the Restrictions, the number of
Shares subject to the Restricted Stock Units granted, and such
other provisions not inconsistent with the Plan or Code
Section 409A as the Committee shall determine. The
Committee may impose such Restrictions on Restricted Stock Units
as it deems appropriate, including time-based Restrictions,
Restrictions based on the achievement of specific Performance
Goals, Restrictions based on the occurrence of a specified
event, restrictions under securities laws or pursuant to a
regulatory entity with authority over the Company or a
Subsidiary,
and/or a
combination of any of the above, provided that such Restrictions
are in accordance with Section 5.3(d) if applicable.
9.3. Crediting Restricted Stock
Units. The Company shall establish an account
(“RSU Account”) on its books for each Eligible
Person who receives a grant of Restricted Stock Units.
Restricted Stock Units
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shall be credited to the Grantee’s RSU Account as of the
Grant Date of such Restricted Stock Units. RSU Accounts shall be
maintained for recordkeeping purposes only and the Company shall
not be obligated to segregate or set aside assets representing
securities or other amounts credited to RSU Accounts. The
obligation to make distributions of securities or other amounts
credited to RSU Accounts shall be an unfunded, unsecured
obligation of the Company.
(a) Crediting of Dividend
Equivalents. Except as otherwise provided in
an Award Agreement, whenever dividends are paid or distributions
made with respect to Shares, Dividend Equivalents shall be
credited to RSU Accounts on all Restricted Stock Units credited
thereto as of the record date for such dividend or distribution.
Such Dividend Equivalents shall be credited to the RSU Account
in the form of additional Restricted Stock Units in a number
determined by dividing the aggregate value of such Dividend
Equivalents by the Fair Market Value of a Share at the payment
date of such dividend or distribution.
(b) Settlement of RSU
Accounts. The Company shall settle an RSU
Account by delivering to the holder thereof (which may be the
Grantee or his or her Beneficiary, as applicable) a number of
Shares equal to the whole number of Shares underlying the
Restricted Stock Units then credited to the Grantee’s RSU
Account (or a specified portion in the event of any partial
settlement); provided, however, that any
fractional Shares underlying Restricted Stock Units remaining in
the RSU Account on the Settlement Date shall either be forfeited
or distributed in cash in an amount equal to the Fair Market
Value of a Share as of the Settlement Date multiplied by the
remaining fractional Restricted Stock Unit, as determined by the
Committee. Unless otherwise provided in an Award Agreement, the
Settlement Date for all Restricted Stock Units credited to a
Grantee’s RSU Account shall be as soon as administratively
practical following when Restrictions applicable to an Award of
Restricted Stock Units have lapsed, but in no event shall such
Settlement Date be later than March 15 of the Year following the
Year in which the Restrictions applicable to an Award of
Restricted Stock Units have lapsed. Unless otherwise provided in
an Award Agreement, in the event of a Grantee’s Termination
of Service prior to the lapse of such Restrictions, such
Grantee’s Restricted Stock Units shall be immediately
cancelled and forfeited to the Company.
Section 10. Deferred
Stock
10.1. Grant of Deferred
Stock. Subject to and consistent with the
provisions of the Plan and applicable requirements of Code
Sections 409A(a)(2), (3), and (4), the Committee, at any
time and from time to time, may grant Deferred Stock to any
Eligible Person in such number, and upon such terms, as the
Committee, at any time and from time to time, shall determine
(including, to the extent allowed by the Committee, grants at
the election of a Grantee to convert Shares to be acquired upon
lapse of Restrictions on Restricted Stock or Restricted Stock
Units into such Deferred Stock). A Grantee shall have no voting
rights in Deferred Stock.
10.2. Award Agreement. Each
grant of Deferred Stock shall be evidenced by an Award Agreement
that shall specify the number of Shares underlying the Deferred
Stock subject to an Award, the Settlement Date such Shares of
Deferred Stock shall be settled and such other provisions as the
Committee shall determine that are in accordance with the Plan
(including Section 5.3(d) if applicable) and Code
Section 409A.
10.3. Deferred Stock Elections.
(a) Making of Deferral
Elections. If and to the extent permitted by
the Committee, an Eligible Person may elect (a “Deferral
Election”) at such times and in accordance with rules
and procedures adopted by the Committee (which shall comport
with Code Section 409A), to receive all or any portion of
his salary, bonus
and/or cash
retainer (in the case of a director) (including any cash or
Share Award, other than Options or SARs) either in the form of a
number of shares of Deferred Stock equal to the quotient of the
amount of salary, bonus
and/or cash
retainer or other permissible Award to be paid in the form of
Deferred Stock divided by the Fair Market Value of a Share on
the date such salary, bonus, cash retainer or other such Award
would otherwise be paid in cash or distributed in Shares or
pursuant to such other terms and conditions as the Committee may
determine. The Grant Date for an Award of Deferred Stock made
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pursuant to a Deferral Election shall be the date the deferrable
amount subject to a Deferral Election would otherwise have been
paid to the Grantee in cash or Shares.
(b) Timing of Deferral
Elections. An initial Deferral Election must
be filed with the Company (pursuant to procedures established by
the Committee) no later than December 31 of the Year
preceding the Year in which the amounts subject to the Deferral
Election would otherwise be earned, subject to such restrictions
and advance filing requirements as the Company may impose. A
Deferral Election shall be irrevocable as of the filing
deadline, unless the Company has specified an earlier time at
which it shall be irrevocable. Each Deferral Election shall
remain in effect with respect to subsequently earned amounts
unless the Eligible Person revokes or changes such Deferral
Election. Any such revocation or change shall have prospective
application only and must be made at a time at which a
subsequent Deferral Election is permitted.
(c) Subsequent Deferral
Elections. A Deferral Election (other
than an initial Deferral Election) made with respect to a
Deferred Compensation Award must meet the timing requirements
for a subsequent deferral election as specified in Treasury
Regulation Section 1.409A-2(b).
10.4. Deferral Account.
(a) Establishment of Deferral
Accounts. The Company shall establish an
account (“Deferral Account”) on its books for
each Eligible Person who receives a grant of Deferred Stock or
makes a Deferral Election. Deferred Stock shall be credited to
the Grantee’s Deferral Account as of the Grant Date of such
Deferred Stock. Deferral Accounts shall be maintained for
recordkeeping purposes only and the Company shall not be
obligated to segregate or set aside assets representing
securities or other amounts credited to Deferral Accounts. The
obligation to make distributions of securities or other amounts
credited to Deferral Accounts shall be an unfunded, unsecured
obligation of the Company.
(b) Crediting of Dividend
Equivalents. Except as otherwise provided in
an Award Agreement, whenever dividends are paid or distributions
made with respect to Shares, Dividend Equivalents shall be
credited to Deferral Accounts on all Deferred Stock credited
thereto as of the record date for such dividend or distribution.
Such Dividend Equivalents shall be credited to the Deferral
Account in the form of additional Deferred Stock in a number
determined by dividing the aggregate value of such Dividend
Equivalents by the Fair Market Value of a Share at the payment
date of such dividend or distribution.
(c) Settlement of Deferral
Accounts. The Company shall settle a Deferral
Account by delivering to the holder thereof (which may be the
Grantee or his or her Beneficiary, as applicable) a number of
Shares equal to the whole number of Shares of Deferred Stock
then credited to the Grantee’s Deferral Account (or a
specified portion in the event of any partial settlement);
provided, however, that any fractional
Shares of Deferred Stock remaining in the Deferral Account on
the Settlement Date shall either be forfeited or distributed in
cash in an amount equal to the Fair Market Value of a Share as
of the Settlement Date multiplied by the remaining fractional
Share, as determined by the Committee. The Settlement Date for
all Deferred Stock credited in a Grantee’s Deferral Account
shall be determined in accordance with Code Section 409A
and shall be specified in the applicable Award Agreement or
Deferral Election. The Settlement Date for Deferred Stock, as
may be permitted by the Committee in its discretion and as
specified in the Award Agreement or Deferral Election, is
limited to one or more of the following events: (i) a
specified date as in Treasury
Regulation Section 1.409A-3(i)(1),
(ii) a Change in Control (within the meaning of
Section 2.8(b), (iii) the Grantee’s
“separation from service” as provided in Treasury
Regulation Section 1.409A-1(b),
(iv) the Grantee’s death, (v) the Grantee’s
Disability, or (vi) an “unforeseeable emergency”
of the Grantee as provided in Treasury
Regulation Section 1.409A-3(i)(3).
Section 11. Performance
Units
11.1. Grant of Performance
Units. Subject to and consistent with the
provisions of the Plan, Performance Units may be granted to any
Eligible Person in such number and upon such terms, and at any
time and from time to time, as shall be determined by the
Committee. Performance Units shall be evidenced by an Award
Agreement in such form as the Committee may approve, which shall
contain such
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terms and conditions not inconsistent with the provisions of the
Plan (including Section 5.3(d)) as shall be determined by
the Committee.
11.2. Value/Performance
Goals. The Committee shall set Performance
Goals in its discretion which, depending on the extent to which
they are met during a Performance Period, will determine the
number or value of Performance Units that will be paid to the
Grantee at the end of the Performance Period. Each Performance
Unit shall have an initial value that is established by the
Committee at the time of grant. The Performance Goals for Awards
of Performance Units may be set by the Committee at threshold,
target and maximum performance levels with the number or value
of the Performance Units payable directly correlated to the
degree of attainment of the various performance levels during
the Performance Period. Unless otherwise provided in an Award
Agreement, no payment shall be made with respect to a
Performance Unit Award if the threshold performance level is not
satisfied. If Performance Goals are attained between the
threshold and target performance levels or between the target
and maximum performance levels, the number or value of
Performance Units under such Award shall be determined by linear
interpolation, unless otherwise provided in an Award Agreement.
With respect to Covered Employees and to the extent the
Committee deems it appropriate to comply with Code
Section 162(m), all Performance Goals shall be based on
objective Performance Measures satisfying the requirements for
the Performance-Based Exception, and shall be set by the
Committee within the time period prescribed by Code
Section 162(m).
11.3. Earning of Performance
Units. Except as provided in Section 13,
after the applicable Performance Period has ended, the holder of
Performance Units shall be entitled to payment based on the
level of achievement of Performance Goals set by the Committee
and as described in Section 11.2. If the Performance Unit
is intended to comply with the Performance-Based Exception, the
Committee shall certify the level of achievement of the
Performance Goals in writing before the Award is settled. At the
discretion of the Committee, the Award Agreement may specify
that an Award of Performance Units is payable in cash, Shares,
Restricted Stock or Restricted Stock Units.
11.4. Adjustment on Change of
Position. If a Grantee is promoted, demoted
or transferred to a different business unit of the Company
during a Performance Period, then, to the extent the Committee
determines that the Award, the Performance Goals or the
Performance Period are no longer appropriate, the Committee may
adjust, change, eliminate or cancel the Award, the Performance
Goals or the applicable Performance Period, as it deems
appropriate in order to make them appropriate and comparable to
the initial Award, the Performance Goals or the Performance
Period.
Section 12. Annual
Incentive Awards
12.1. Annual Incentive
Awards. Subject to and consistent with the
provisions of the Plan, Annual Incentive Awards may be granted
to any Eligible Person in accordance with the provisions of this
Section 12. The Committee shall designate the individuals
eligible to be granted an Annual Incentive Award for a Year. In
the case of an Annual Incentive Award intended to qualify for
the Performance-Based Exception, such designation shall occur
within the first ninety (90) days of such Year. The
Committee may designate an Eligible Person as eligible for a
full Year or for a period of less than a full Year. The
opportunity to be granted an Annual Incentive Award shall be
evidenced by an Award Agreement or in such form as the Committee
may approve, which shall specify the individual’s Bonus
Opportunity, the Performance Goals, and such other terms not
inconsistent with the Plan as the Committee shall determine.
12.2. Determination of Amount of Annual
Incentive Awards.
(a) Aggregate Maximum. The
Committee may establish guidelines as to the maximum aggregate
amount of Annual Incentive Awards payable for any Year.
(b) Establishment of Performance Goals and Bonus
Opportunities. For any Annual Incentive Award
granted, the Committee shall establish Performance Goals for the
Year (which may be the same or different for some or all
Eligible Persons) and shall establish the threshold, target and
maximum Bonus Opportunity for each Grantee for the attainment of
specified threshold, target and maximum Performance
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Goals. In the case of an Annual Incentive Award intended to
qualify for the Performance-Based Exception, such designation
shall occur within the first ninety (90) days of the Year.
Performance Goals and Bonus Opportunities may be weighted for
different factors and measures as the Committee shall determine,
and as provided under Section 4.4.
(c) Committee Certification and Determination of
Amount of Annual Incentive Award. The
Committee shall determine and certify in writing the degree of
attainment of Performance Goals as soon as administratively
practicable after the end of each Year but not later than sixty
(60) days after the end of such Year. The Committee shall
determine an individual’s maximum Annual Incentive Award
based on the level of attainment of the Performance Goals (as
certified by the Committee) and the individual’s Bonus
Opportunity. The Committee may adjust an Annual Incentive Award,
or delegate with respect to such an Award, as provided in
Section 4.4. The determination of the Committee to reduce
(or not pay) an individual’s Annual Incentive Award for a
Year shall not affect the maximum Annual Incentive Award payable
to any other individual. No Annual Incentive Award intended to
qualify for the Performance-Based Exception shall be payable to
an individual unless at least the threshold Performance Goal is
attained.
(d) Termination of Service. If a
Grantee has a Termination of Service during the Year, the
Committee may, in its absolute discretion and under such rules
as the Committee may from time to time prescribe, authorize the
payment of an Annual Incentive Award to such Grantee in
accordance with the foregoing provisions of this
Section 12.2 and in the absence of such determination by
the Committee the Grantee shall receive no Annual Incentive
Award for such Year; provided, however, that, to
extent that an Annual Incentive Award is intended to comply with
the Performance-Based Exception, the payment of such Award shall
be determined based upon actual performance at the end of the
Year and any payment of such Award shall be paid in accordance
with Section 12.3, unless otherwise provided in the
applicable Award Agreement in a manner compliant with Code
Section 162(m).
12.3. Time of Payment of Annual Incentive
Awards. Annual Incentive Awards shall be paid
as soon as administratively practicable after the Committee
determines the amount of the Award payable under Section 12
but not later than the March 15 after the end of the Year for
which the Annual Incentive Award relates.
12.4. Form of Payment of Annual Incentive
Awards. An individual’s Annual Incentive
Award for a Year shall be paid in cash, Shares, Restricted
Stock, Options or any other form of an Award, or any combination
thereof, as provided in the Award Agreement or in such form as
the Committee may approve.
Section 13. Dividend
Equivalents
The Committee is authorized to grant Awards of Dividend
Equivalents alone or in conjunction with other Awards (other
than Options and SARs), on such terms and conditions as the
Committee shall determine in accordance with the Plan and Code
Section 409A. Unless otherwise provided in the Award
Agreement or in Section 9 and Section 10 of the Plan,
Dividend Equivalents shall be paid immediately when accrued and,
in no event, later than March 15 of the Year following the Year
in which such Dividend Equivalents accrue. Unless otherwise
provided in the Award Agreement or in Section 9 and
Section 10 of the Plan, if the Grantee incurs a Termination
of Service prior to the date such Dividend Equivalents accrue,
the Grantee’s right to such Dividend Equivalents shall be
immediately forfeited. Notwithstanding the foregoing, no
Dividend Equivalents may be paid with respect to unvested
Performance Units.
Section 14. Change
in Control
14.1. Acceleration of
Vesting. Unless otherwise provided in the
applicable Award Agreement, upon the occurrence of (a) an
event satisfying the Section 2.8 definition of “Change
in Control” with respect to a particular Award, and
(b) a Grantee’s involuntary Termination of Service
(other than due to Cause) that occurs during the two
(2) year period immediately following such Change in
Control event, such Award shall become vested, all Restrictions
shall lapse and all Performance Goals shall be deemed to be met,
as applicable; provided, however, that no
payment of an Award shall be accelerated to the extent such
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payment would cause such Award to be subject to the adverse tax
consequences under Code Section 409A. The Committee may, in
its discretion, include such further provisions and limitations
with respect to a Change in Control in any Award Agreement as it
may deem desirable.
14.2. Special Treatment in the Event of a
Change in Control. In order to maintain the
Grantee’s rights upon the occurrence of any event
satisfying the Section 2.8 definition of “Change in
Control” with respect to an Award, the Committee, as
constituted before such event, may, in its sole discretion, as
to any such Award, either at the time the Award is made
hereunder or any time thereafter: (a) make such adjustment
to any such Award then outstanding as the Committee deems
appropriate to reflect such Change in Control;
and/or
(b) cause any such Award then outstanding to be assumed, or
new rights substituted therefor, by the acquiring or surviving
entity after such Change in Control. Additionally, in the event
of any Change in Control with respect to Options and SARs, the
Committee, as constituted before such Change in Control, may, in
its sole discretion (except as may be otherwise provided in the
Award Agreement): (a) cancel any outstanding unexercised
Options or SARs (whether or not vested) that have a per-Share
Option Price or Strike Price (as applicable) that is greater
than the Change in Control Price (defined below); or
(b) cancel any outstanding unexercised Options or SARs
(whether or not vested) that have a per-Share Option Price or
Strike Price (as applicable) that is less than or equal to the
Change in Control Price in exchange for a cash payment of an
amount equal to (x) the difference between the Change in
Control Price and the Option Price or Strike Price (as
applicable), multiplied by (y) the total number of Shares
underlying such Option or SAR that are vested and exercisable at
the time of the Change in Control. The Committee may, in its
discretion, include such further provisions and limitations in
any Award Agreement as it may deem desirable. The “Change
in Control Price” means the lower of (a) the per-Share
Fair Market Value as of the date of the Change in Control, or
(b) the price paid per Share as part of the transaction
which constitutes the Change in Control.
Section 15. Amendments
and Termination
15.1. Amendment and Termination.
(a) Subject to Section 15.2, the Board may at any time
amend, alter, suspend, discontinue or terminate the Plan in
whole or in part without the approval of the Company’s
shareholders, provided that (i) any amendment shall be
subject to the approval of the Company’s shareholders if
(A) such approval is required by any federal or state law
or regulation or any stock exchange or automated quotation
system on which the Shares may then be listed or quoted or
(B) such amendment would decrease the minimum vesting
requirements under Section 5.3(d); and (ii) any Plan
amendment or termination will not impermissibly accelerate the
timing of any payments that constitute non-qualified deferred
compensation under Code Section 409A and result in adverse
tax consequences under Code Section 409A.
(b) Subject to Section 15.2, the Committee may amend
the terms of any Award Agreement, prospectively or
retroactively, in accordance with the terms of the Plan.
15.2. Previously Granted
Awards. Except as otherwise specifically
provided in the Plan (including Sections 3.2(m), 3.2(p),
5.5, 15.1 and this Section 15.2) or an Award Agreement, no
termination, amendment or modification of the Plan shall
adversely affect in any material way any Award previously
granted under the Plan or an Award Agreement without the written
consent of the Grantee of such Award. Notwithstanding the
foregoing, the Board or the Committee (as applicable) shall have
the authority to amend the Plan and outstanding Awards to the
extent necessary or advisable to account for changes in
applicable law, regulations, rules or other written guidance
(including Compensation Limitations) without a Grantee’s
consent.
Section 16. Beneficiary
Designation
Each Grantee under the Plan may, from time to time, name any
Beneficiary or Beneficiaries (who may be named contingently or
successfully) to whom any benefit under the Plan is to be paid
in case of his or her death before he or she receives any or all
of such benefit. Each such designation shall revoke all prior
designations by the same Grantee, shall be in a form prescribed
by the Company, and will be effective
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only when filed by the Grantee in writing with the Company
during the Grantee’s lifetime. In the absence of any such
designation, the Grantee’s estate shall be the
Grantee’s Beneficiary.
Section 17. Withholding
17.1. Required Withholding.
(a) The Committee in its sole discretion may provide that
when taxes are to be withheld in connection with the exercise of
an Option or a SAR, upon the lapse of Restrictions on an Award
or upon payment of any benefit or right under the Plan (the
Exercise Date, the date such Restrictions lapse or such payment
of any other benefit or right occurs hereinafter referred to as
the “Tax Date”), the Grantee may be required or
may be permitted to elect to make payment for the withholding of
federal, state and local taxes, including Social Security and
Medicare (“FICA”) taxes, by one or a
combination of the following methods:
(i) payment of an amount in cash equal to the amount to be
withheld;
(ii) requesting the Company to withhold from those Shares
that would otherwise be received upon exercise of an Option or a
SAR, upon the lapse of Restrictions on, or upon settlement of,
any other Award, a number of Shares having a Fair Market Value
on the Tax Date equal to the amount to be withheld; or
(iii) withholding from any compensation otherwise due to
the Grantee.
The Committee in its sole discretion may provide that the
maximum amount of tax withholding upon exercise of an Option or
a SAR or in connection with the settlement of any other Award to
be satisfied by withholding Shares pursuant to
clause 17.1(a)(iii) above shall not exceed the minimum
amount of taxes, including FICA taxes, required to be withheld
under federal, state and local law. An election by Grantee under
this Section 17.1(a) is irrevocable. Any fractional share
amount and any additional withholding not paid by the
withholding or surrender of Shares must be paid in cash. If no
timely election is made, the Grantee must deliver cash to
satisfy all tax withholding requirements, unless otherwise
provided in the Award Agreement.
(b) Any Grantee who makes a Disqualifying Disposition (as
defined in Section 6.5(f)) or an election under Code
Section 83(b) shall remit to the Company an amount
sufficient to satisfy all resulting tax withholding requirements
in the same manner as set forth in Section 17.1(a).
(c) No Award shall be settled, whether in cash or in
Shares, unless the applicable tax withholding requirements have
been met to the satisfaction of the Committee.
17.2. Notification under Code
Section 83(b). If the Grantee, in
connection with the exercise of any Option, or the grant of
Restricted Stock, makes the election permitted under Code
Section 83(b) to include in such Grantee’s gross
income in the year of transfer the amounts specified in Code
Section 83(b), then such Grantee shall notify the Company
of such election within ten (10) days of filing the notice
of the election with the Internal Revenue Service, in addition
to any filing and notification required pursuant to regulations
issued under Code Section 83(b). The Committee may, in
connection with the grant of an Award or at any time thereafter,
prohibit a Grantee from making the election described above.
Section 18. General
Provisions
18.1. Governing Law. The
validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in
accordance with the laws of the State of Wisconsin, other than
its law respecting choice of laws and applicable federal law.
18.2. Severability. If any
provision of this Plan or any Award Agreement is or becomes or
is deemed to be invalid, illegal or unenforceable in any
jurisdiction, or as to any Person or Award, or would disqualify
the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the
Committee, materially altering the intent of the
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Plan or the Award, it shall be stricken and the remainder of the
Plan and any such Award shall remain in full force and effect.
18.3. Successors. All
obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business
and/or
assets of the Company.
18.4. Requirements of
Law. The granting of Awards and the delivery
of Shares under the Plan shall be subject to all applicable
laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges or
markets as may be required. Notwithstanding any provision of the
Plan or any Award Agreement, Grantees shall not be entitled to
exercise, or receive benefits under, any Award, and the Company
(or any Subsidiary) shall not be obligated to deliver any Shares
or deliver benefits to a Grantee, if such exercise or delivery
would constitute a violation by the Grantee, the Company or a
Subsidiary of any applicable law or regulation.
18.5. Securities Law
Compliance. If the Committee deems it
necessary to comply with any applicable securities law, or the
requirements of any securities exchange or market upon which
Shares may be listed, the Committee may impose any restriction
on Awards or Shares acquired pursuant to Awards under the Plan
as it may deem advisable. All evidence of Share ownership
delivered pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations or
other requirements of the SEC, any securities exchange or market
upon which Shares are then listed, and any applicable securities
law. If so requested by the Company, the Grantee shall make a
written representation and warranty to the Company that he or
she will not sell or offer to sell any Shares unless a
registration statement shall be in effect with respect to such
Shares under the Securities Act of 1933, as amended, and any
applicable state securities law or unless he or she shall have
furnished to the Company an opinion of counsel, in form and
substance satisfactory to the Company, that such registration is
not required.
If the Committee determines that the exercise or
non-forfeitability of, or delivery of benefits pursuant to, any
Award would violate any applicable provision of securities laws
or the listing requirements of any national securities exchange
or national market system on which any of the Company’s
equity securities are listed, then the Committee may postpone
any such exercise, non-forfeitability or delivery to comply with
all such provisions at the earliest practicable date.
18.6. Code
Section 409A. To the extent applicable
and notwithstanding any other provision of the Plan, the Plan
and Award Agreements hereunder shall be administered, operated
and interpreted in accordance with Code Section 409A,
including, without limitation, any regulations or other guidance
that may be issued after the date on which the Board approves
the Plan; provided, however, in the event that the
Committee determines that any amounts payable hereunder may be
taxable to a Grantee under Code Section 409A prior to the
payment
and/or
delivery to such Grantee of such amount, the Company may
(a) adopt such amendments to the Plan and related Award,
and appropriate policies and procedures, including amendments
and policies with retroactive effect, that the Committee
determines necessary or appropriate to preserve the intended tax
treatment of the benefits provided by the Plan and Awards
hereunder,
and/or
(b) take such other actions as the Committee determines
necessary or appropriate to comply with or exempt the Plan
and/or
Awards from the requirements of Code Section 409A,
including Department of Treasury guidance and other interpretive
materials as may be issued after the date on which the Board
approves the Plan. The Company and its Subsidiaries make no
guarantees to any Person regarding the tax treatment of Awards
or payments made under the Plan, and, notwithstanding the above
provisions and any agreement or understanding to the contrary,
if any Award, payments or other amounts due to a Grantee (or his
or her beneficiaries, as applicable) results in, or causes in
any manner, the application of any adverse tax consequence under
Code Section 409A or otherwise to be imposed, then the
Grantee (or his or her Beneficiaries, as applicable) shall be
solely liable for the payment of, and the Company and its
Subsidiaries shall have no obligation or liability to pay or
reimburse (either directly or otherwise) the Grantee (or his or
her Beneficiaries, as applicable) for, any such adverse tax
consequences.
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In the case of any Deferred Compensation Award (in addition to
Deferred Stock), the provisions of Section 10.4 relating to
permitted times of settlement shall apply to such Award. If any
Deferred Compensation Award is payable to a “specified
employee” (within the meaning of Treasury
Regulation Section 1.409A-1(i)),
then such payment, to the extent payable due to the
Grantee’s Termination of Service and not otherwise exempt
from Code Section 409A, shall not be paid before the date
that is six (6) months after the date of such Termination
of Service (or, if earlier, such Grantee’s death).
18.7. Mitigation of Excise
Tax. If any payment or right accruing to a
Grantee under the Plan (without the application of this
Section 18.7), either alone or together with other payments
or rights accruing to the Grantee from an Employer
(“Total Payments”), would constitute a
“parachute payment” (as defined in Code
Section 280G), such payment or right shall be reduced to
the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan
being subject to an excise tax under Code Section 4999 or
being disallowed as a deduction under Code Section 280G.
The determination of whether any reduction in the rights or
payments under the Plan is to apply shall be made by the
Committee in good faith after consultation with the Grantee, and
such determination shall be conclusive and binding on the
Grantee. The Grantee shall cooperate in good faith with the
Committee in making such determination and providing the
necessary information for this purpose. The foregoing provisions
of this Section 18.7 shall apply with respect to any person
only if, after reduction for any applicable federal excise tax
imposed by Code Section 4999 and federal income tax imposed
by the Code, the Total Payments accruing to such person would be
less than the amount of the Total Payments as reduced, if
applicable, under the foregoing provisions of the Plan and after
reduction for only federal income taxes. Notwithstanding the
foregoing, in the event a Grantee is a party to a Employment
Agreement with the Company or a Subsidiary that provides for
more favorable treatment for the Grantee regarding Code
Section 280G, including, but not limited to, the right to
receive a
gross-up
payment for the excise tax under Code Section 4999, such
agreement shall be controlling.
18.8. No Rights as a
Shareholder. No Grantee shall have any rights
as a shareholder of the Company with respect to the Shares
(except as provided in Section 8.7 with respect to
Restricted Stock) that may be deliverable upon exercise or
payment of such Award until such Shares have been delivered to
him or her.
18.9. Awards Not Taken into Account for Other
Benefits. Awards shall be special incentive
payments to the Grantee and shall not be taken into account in
computing the amount of salary or compensation of the Grantee
for purposes of determining any pension, retirement, death or
other benefit under (a) any pension, retirement,
profit-sharing, bonus, insurance or other employee benefit plan
of an Employer, except as such plan shall otherwise expressly
provide, or (b) any Employment Agreement between an
Employer and the Grantee, except as such agreement shall
otherwise expressly provide.
18.10. Employment Agreement Supersedes Award
Agreement. In the event a Grantee is a party
to an Employment Agreement with the Company or a Subsidiary that
provides for vesting or extended exercisability of equity
compensation Awards on terms more favorable to the Grantee than
the Grantee’s Award Agreement or this Plan, the Employment
Agreement shall be controlling; provided that (a) if
the Grantee is a Section 16 Person, any terms in the
Employment Agreement requiring Compensation Committee of the
Board, Board or shareholder approval in order for an exemption
from Section 16(b) of the Exchange Act to be available
shall have been approved by the Compensation Committee of the
Board, the Board or the shareholders, as applicable, and
(b) the Employment Agreement shall not be controlling to
the extent the Grantee and Grantee’s Employer agree it
shall not be controlling, and (c) an Employment Agreement
or modification to an Employment Agreement shall be deemed to
modify the terms of any pre-existing Award only if the terms of
the Employment Agreement expressly so provide.
18.11. Non-Exclusivity of
Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for
approval shall be construed as creating any limitations on the
power of the Board to adopt such other compensatory arrangements
for employees as it may deem desirable.
18.12. No Trust or
Fund Created. Neither the Plan nor any
Award shall create or be construed to create a trust or separate
fund of any kind or a fiduciary relationship between the Company
or any Subsidiary and a Grantee or any other Person. To the
extent that any Person acquires a right to receive
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payments from the Company or any Subsidiary pursuant to an
Award, such right shall be no greater than the right of any
unsecured general creditor of the Company or any Subsidiary.
18.13. No Right to Continued Employment or
Awards. No employee shall have the right to
be selected to receive an Award under this Plan or, having been
so selected, to be selected to receive a future Award. The grant
of an Award shall not be construed as giving a Grantee the right
to be retained in the employ of the Company or any Subsidiary or
to be retained as a director of the Company or any Subsidiary.
Further, the Company or a Subsidiary may at any time terminate
the employment of a Grantee free from any liability, or any
claim under the Plan, unless otherwise expressly provided in the
Plan or in any Award Agreement.
18.14. Military
Service. Awards shall be administered in
accordance with Code Section 414(u) and the Uniformed
Services Employment and Reemployment Rights Act of 1994.
18.15. Construction. The
following rules of construction will apply to the Plan:
(a) the word “or” is disjunctive but not
necessarily exclusive and (b) words in the singular include
the plural, words in the plural include the singular, and words
in the neuter gender include the masculine and feminine genders
and words in the masculine or feminine genders include the
neuter gender. The headings of sections and subsections are
included solely for convenience of reference, and if there is
any conflict between such headings and the text of this Plan,
the text shall control.
18.16. No Fractional
Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash, other securities, or
other property shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any
rights thereto shall be canceled, terminated or otherwise
eliminated.
18.17. Plan Document
Controls. This Plan and each Award Agreement
constitute the entire agreement with respect to the subject
matter hereof and thereof; provided, however, that
in the event of any inconsistency between the Plan and such
Award Agreement, the terms and conditions of the Plan shall
control.
18.18. Compensation
Limitations. Notwithstanding anything in the
Plan to the contrary, (a) no payment or benefit hereunder
will be provided to a Grantee if any such payment or benefit
would violate any applicable Compensation Limitations and
(b) the Board or Committee (as applicable in accordance
with Section 15) may amend the Plan or an Award
Agreement at any time, without the consent of the Grantee, to
the extent it determines necessary to comply with any applicable
Compensation Limitations.
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| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date ASSOCIATED BANC-CORP M21504-P89840 ASSOCIATED BANC-CORP 200 NORTH ADAMS STREET ATTN: DWAYNE DAUBNER MS: 7829 GREEN BAY, WI 54301 To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. Please indicate if you plan to attend the Annual meeting. For Against Abstain For address changes and/or comments, please check this box and write them on the back where indicated. For All Withhold All For All Except 0 0 0 0 0 0 Yes No 0 0 0 0 0 0 0 0 0 Vote on Directors 1. Election of Directors Nominees: Vote on Proposals ?? VOTE BY INTERNET — www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. If you vote by Internet, please do not mail your Proxy Card. VOTE BY PHONE — 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time, the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER COMMUNICATIONS If you would like to reduce the costs incurred by Associated Banc-Corp in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years ?? VOTE BY MAIL Mark, sign, and date your proxy card and return it in the postage-paid envelope we have provided or return it to Associated Banc-Corp, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. Note: If you vote over the Internet, you may incur costs such as telecommunication and Internet access charges for which you will be responsible. 2. The approval of the Associated Banc-Corp 2010 Incentive Compensation Plan The Board of Directors recommends that you vote FOR the following: The Board of Directors recommends you vote FOR the following proposals: Your comments and questions are welcome For your convenience, we are providing space on the reverse side of this proxy card for any questions or comments you may have that you wish to have addressed either personally or at the Annual Meeting. We always appreciate your input and interest in Associated. You may e-mail comments or concerns to shareholders@associatedbank.com. 05) William R. Hutchinson 06) Eileen A. Kamerick 07) Richard T. Lommen 08) John C. Meng 01) Karen T. Beckwith 02) Ruth M. Crowley 03) Philip B. Flynn 04) Ronald R. Harder 3. The approval of an advisory (non-binding) proposal on executive compensation 4. To ratify the selection of KPMG LLP as the independent registered public accounting firm for Associated Banc-Corp for the year ending December 31, 2010. Such other matters as may properly come before the meeting and all adjournments thereof. Receipt of Notice of said meeting and of the Proxy Statement and Annual Report of Associated is hereby acknowledged. Please sign exactly as name appears hereon and date. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. THIS P ROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL. 09) J. Douglas Quick 10) John C. Seramur 0 0 Yes No Please indicate if you plan to attend the Economic/Investment update. C56862 1 The undersigned hereby appoints, Kristi A. Hayek, and Michael E. Silver as Proxies, each with the power to appoint his/her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Common Stock of Associated Banc-Corp (“Associated”) held of record by the undersigned on March 4, 2010, at the Annual Meeting of Shareholders to be held on April 28, 2010, or any adjournment thereof on the matters and in the manner indicated on the reverse side of this proxy card and described in the Proxy Statement of Associated. This proxy revokes all prior proxies given by the undersigned. If no direction is made, this proxy will be voted FOR Proposals 1, 2, 3 and 4. If other matters come before the meeting, this proxy will be voted in accordance with the best judgment of the proxies appointed. The Board of Directors recommends a vote FOR the election of Directors and FOR Proposals 2, 3 and 4. ASSOCIATED BANC-CORP 1200 Hansen Road, Green Bay, WI 54304 This Revocable Proxy Is Solicited On Behalf Of The Board Of Directors Of Associated Banc-Corp For The Annual Meeting Of Shareholders To Be Held On April 28, 2010 Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 28, 2010. The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com and www.proxydocs.com/ASBC. ALL VOTES ARE IMPORTANT! PLEASE MARK, SIGN, AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE OR VOTE VIA THE TELEPHONE OR INTERNET. Continued and to be signed on reverse side M21505-P89840 2010 Annual Meeting of Shareholders You are cordially invited to attend the Annual Meeting of Shareholders of Associated Banc-Corp to be held at the Walter Theatre, St. Norbert College, 315 Third Street, De Pere, Wisconsin, at 11:00 a.m. (CST) on Wednesday, April 28, 2010. Beginning at 10:00 a.m.(CST), we will again present an economic/investment update. Associated’s Wealth Management professionals will provide an update on the equity market and interest rate environment as they affect us as investors. If you plan to attend the Annual Meeting and/or the economic/investment update, please mark the appropriate box(es) on the proxy card. Whether or not you plan to attend the annual meeting of shareholders, it is important that all shares be represented. Please vote and sign the proxy card printed on the reverse side. Tear at the perforation and mail the proxy card in the enclosed postage-paid envelope at your earliest convenience or vote via the telephone or Internet. We look forward to seeing you on April 28. THANK YOU FOR VOTING. ALL VOTES ARE IMPORTANT! Do Not Return This Proxy Card if you are voting via the Internet. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) C56862 2 |
Table of Contents
| 2010 Annual Meeting of Shareholders You are cordially invited to attend the Annual Meeting of Shareholders of Associated Banc-Corp to be held at the Walter Theatre, St. Norbert College, 315 Third Street, De Pere, Wisconsin, at 11:00 a.m. (CST) on Wednesday, April 28, 2010. Beginning at 10:00 a.m.(CST), we will again present an economic/investment update. Associated’s Wealth Management professionals will provide an update on the equity market and interest rate environment as they affect us as investors. If you plan to attend the Annual Meeting and/or the economic/investment update, please mark the appropriate box(es) on the proxy card. Whether or not you plan to attend the annual meeting of shareholders, it is important that all shares be represented. Please vote and sign the proxy card printed on the reverse side. Tear at the perforation and mail the proxy card in the enclosed postage-paid envelope at your earliest convenience or vote via the telephone or Internet. We look forward to seeing you on April 28. THANK YOU FOR VOTING. ALL VOTES ARE IMPORTANT! Do Not Return This Proxy Card if you are voting via the Internet. Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on April 28, 2010. The Notice and Proxy Statement, Annual Report and Form 10-K are available at www.proxyvote.com and www.proxydocs.com/ASBC. M21505-P89840 ASSOCIATED BANC-CORP 1200 Hansen Road, Green Bay, WI 54304 This Revocable Proxy Is Solicited On Behalf Of The Board Of Directors Of Associated Banc-Corp For The Annual Meeting Of Shareholders To Be Held On April 28, 2010 The undersigned hereby appoints, Kristi A. Hayek, and Michael E. Silver as Proxies, each with the power to appoint his/her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Common Stock of Associated Banc-Corp (“Associated”) held of record by the undersigned on March 4, 2010, at the Annual Meeting of Shareholders to be held on April 28, 2010, or any adjournment thereof on the matters and in the manner indicated on the reverse side of this proxy card and described in the Proxy Statement of Associated. This proxy revokes all prior proxies given by the undersigned. If no direction is made, this proxy will be voted FOR Proposals 1, 2, 3 and 4. If other matters come before the meeting, this proxy will be voted in accordance with the best judgment of the proxies appointed. The Board of Directors recommends a vote FOR the election of Directors and FOR Proposals 2, 3 and 4. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) ALL VOTES ARE IMPORTANT! PLEASE MARK, SIGN, AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE OR VOTE VIA THE TELEPHONE OR INTERNET. Continued and to be signed on reverse side |
TABLE OF CONTENTS
PROXY STATEMENTInformation Regarding ProxiesRecord Date and Voting SecuritiesCorporate Report and Form 10-K Annual ReportPROPOSAL 1 ELECTION OF DIRECTORSNominees for Election to our BoardRecommendation of the Board of DirectorsAffirmative Determinations Regarding Director IndependenceINFORMATION ABOUT THE BOARD OF DIRECTORSBoard Committees and Meeting AttendanceSeparation of Board Chairman and CEOBoard DiversityDirector Nominee RecommendationsCommunications Between Shareholders and the Board of DirectorsCompensation and Benefits Committee Interlocks and Insider ParticipationINFORMATION ABOUT THE EXECUTIVE OFFICERSSTOCK OWNERSHIPSecurity Ownership of Beneficial OwnersSecurity Ownership of Directors and ManagementStock Ownership GuidelinesDirectors Deferred Compensation PlanEXECUTIVE COMPENSATIONCompensation Discussion and AnalysisNature and Structure of Compensation AdministrationCompensation Compliance Under the Troubled Asset Relief ProgramCompensation Policies for Employees Affecting Risk and Risk ManagementFlynn Employment AgreementObjectives of the Compensation ProgramElements of 2009 Executive CompensationShort TermLong TermOverviewEquity AwardsAssociated Banc-Corp Cash Incentive Compensation PlanDeferred Compensation PlanRetirement PlansPerquisitesExcessive or Luxury Expenditure Policy