This excerpt taken from the PNC 8-K filed Feb 20, 2007.
2007 Annual Incentive Award Opportunities
On February 13, 2007, the committee established the performance goals and business criteria for annual incentive awards for the companys executive officers for the 2007 award period.
James E. Rohr, PNCs Chairman and Chief Executive Officer, and the companys next four most highly compensated executive officers will receive their 2007 annual incentive awards under PNCs 1996 Executive Incentive Award Plan, as amended and restated (1996 plan). The five executive officers who participate in the 1996 plan receive awards based on a compensation pool. For 2007, the committee approved certain amendments to the 1996 plan and recommended that the 1996 plan, as amended, be submitted to shareholders for approval at the 2007 annual meeting of shareholders, to be held on April 24, 2007. Under the 1996 plan, as amended, the committee determined that the size of the pool for each participating executive officer will be equal to a maximum of 0.2% of PNCs consolidated pre-tax net income, as adjusted for acquisition and merger integration costs, the impact of PNCs obligation to fund BlackRock long-term incentive programs, extraordinary items, discontinued operations, and the impact of items that result from changes in tax law (including any adjustments required for changes in the accounting for leveraged leases).
Once the year is over and the size of the compensation pool for the year is determined, the committee will start with the maximum amount of the compensation pool that a 1996 plan participant can receive and determine whether to adjust it downward to its final level. In making this downward adjustment, the committee will take into account the same types of performance factors that they take into account in determining the bonuses to be paid to the other executive officers who do not participate in the 1996 plan, including the following:
The committee also determined that any annual incentive awards for 2007 approved in the first quarter of 2008 for 1996 plan participants as well as for most of the other executive officers would be denominated
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in dollars and then paid in a combination of cash and restricted stock or stock units, subject to deferral under PNCs Deferred Compensation Plan if the executive made a prior deferral election. The first portion of the award would equal 75% of the dollar-denominated amount approved by the committee and would be paid in cash, or deferred if the executive officer made a prior deferral election. The remaining 25% would consist of an award of restricted PNC common stock or stock units, in either case subject to forfeiture if the executive officer does not remain with PNC during a three-year vesting period with certain limited exceptions, with the amount of this portion of the award increased by 25% to reflect the risk of forfeiture and lack of liquidity during the vesting period.