This excerpt taken from the MFSF 10-K filed Mar 16, 2007.
Description of 2007 Bonus Plan
The Company has established a new cash incentive bonus plan for 2007 for all officers and employees of the Company and Mutual Federal (the 2007 Bonus Plan). The quarterly payments will be made if and to the extent the Companys performance in 2007 exceeds baseline levels on certain key performance indicators (which will be the same for all officers and employees), including loan and deposit growth, net interest margin improvement, growth in non-interest income, the ratios of non-performing assets to total assets and net charge-offs to total assets, and management of general and administrative expenses. The key performance indicators for the potential additional annual incentive payments to officers will be 2007 net interest income after provision for loan losses, non-interest income and non-interest expense.
The amounts of the quarterly and annual bonuses under the 2007 Bonus Plan, if earned, will be determined by multiplying the employees salary by the employees payout percentage. While the payout percentages will vary from employee to employee, they will increase proportionately for all officers and employees if and to the extent the Company attains a performance level above the baseline performance threshold. Annual incentive payouts to officers will only be made if actual performance exceeds baseline performance levels. Depending on the extent to which (if at all) actual performance exceeds baseline performance levels, the aggregate amount payable pursuant to the quarterly bonus component and the annual bonus component will range from 35% to 48% of the amount by which actual pre-tax net income from operations for the quarter or year, as applicable, exceeds the baseline level.
Additional information about the 2007 Bonus Plan is incorporated herein by reference from the Companys definitive proxy statement for its Annual Meeting of Stockholders to be held in April 2007, except for information contained under the headings Compensation Committee Report, and Report of the Audit/Compliance Committee, a copy of which will be filed not later than 120 days after the close of the fiscal year.