This excerpt taken from the FPTB DEF 14A filed Mar 20, 2006.
future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that First PacTrust Bancorp, Inc. specifically incorporates it by reference in such filing.
General. The Board of Directors of the Company and the Bank have delegated the authority and responsibility to the Compensation Committee to oversee the general compensation policies of the Company and Bank, to establish compensation plans and salary levels for executive officers, and review the recommendations of management on compensation for other officers and employees of the Bank. The members of the Compensation Committee are independent directors. The Committees responsibilities are described in a written charter adopted by the Board of Directors.
When the Bank converted from a mutually owned to a publicly owned company, the Compensation Committee developed an executive compensation plan designed to (i) attract, motivate, reward and retain executive officers who are key to the long term success of the bank; and (ii) encourage decision making that maximized shareholder value. The Committee's ongoing compensation objective is to ensure that such compensation reflects the achievement of both long term and short-term goals as they relate to the Companys overall strategic planning process.
Executive Compensation Policy. The compensation package given to executive officers of the Bank is comprised of a base salary and an annual incentive bonus. Executive officers are also provided with other benefit plans available to all eligible employees, including the employee stock ownership plan. The Compensation Committee reviews the compensation plan elements available to executive officers periodically as they relate to the policies described above. The Committee met twice in fiscal 2005 to review general compensation and benefit levels for the Bank, including consideration and administration of the Stock Option and Incentive Plan and the Recognition and Retention Plan, and to review and recommend the base salary and bonus of the Chief Executive Officer.
Base Salary. It is the policy of the Compensation Committee to annually review executive compensation packages, including base salaries paid or proposed to be paid, using information derived primarily from third party sources that provide compensation data and analysis from publicly held companies in the Companys market area. Using this and asset size, the Committee compares the positions under consideration with similar jobs in other financial institutions. Specific factors considered include the level of responsibility delegated to a particular officer, the complexity of the job being evaluated, the positions impact on both short and long term corporate objectives, the expertise and skill level of the individual under consideration, the degree to which the officer has achieved his or her management objectives for the plan year, and the officers overall performance in managing his or her area of responsibility. The Compensation Committees decisions are discretionary, and no quantifiable formula is used in arriving at a decision. For fiscal 2006, a merit increase of 3.5% was awarded to the base salaries of each of the executive officers.
Annual Incentive Bonus. All officers of the Bank, including the named executive officers, are eligible to participate in bonuses awarded at the discretion of the Banks Board of Directors. The annual incentive bonuses are awarded based on quantitative criteria related to the actual operating results for the prior year relative to the established goals set for net income, loan growth and deposit growth. In addition, qualitative criteria related to customer satisfaction and compliance, audit and examination results, deposit growth, loan originations and portfolio growth, as well as delinquency ratios, are also factors considered. There is also a discretionary component factored in that is based upon the Committees evaluation of the individual contributions towards the success of the Company. The discretionary bonuses for 2005 and 2006 did not exceed 4% of the after-tax net income.
Benefit Plans. The Compensation Committee believes that a competitive benefit package is essential to attract and maintain highly qualified employees. The Compensation Committees policy regarding employee benefit plans is to provide competitive benefits including health, life and disability insurance to the employees of the Bank, including executive officers. The executive officers participate at the same level as all employees in
general. The employee stock ownership plan will provide executive officers and employees with an additional equity-based incentive to maximize long-term shareholder value.