This excerpt taken from the PNC DEF 14A filed Mar 23, 2007.
Description of the 1996 Plan
The following summary of the material terms of the 1996 Plan, as amended and restated, is qualified in its entirety by reference to the full text of the 1996 Plan. A complete copy of the 1996 Plan, as amended and restated, is attached as Exhibit A to this proxy statement and is also available by writing to The PNC Financial Services Group, Inc., One PNC Plaza21st Floor, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222-2707, Attention: Corporate Secretary.
Administration. The 1996 Plan is administered by the Committee, or such other committee of directors as may be designated by the Board in the future. Each member of the Committee, which must have at least two members, must meet the standards of independence necessary to be classified as an outside director for purposes of Section 162(m) of the Code. As a result, no Participants or other employees of the Corporation or its Subsidiaries are permitted to serve on the Committee. Unless otherwise determined by the Board, the Committee will be the Personnel and Compensation Committee of the Board. The Committee may, in its discretion, authorize our Chief Executive Officer to act on its behalf, except with respect to matters relating to such Chief Executive Officer, or which are required to be acted upon by the Committee under the 1996 Plan or in order to satisfy the requirements of the performance-based compensation exception to the $1 million tax deductibility limit. The Committee has the authority to interpret the 1996 Plan as well as to prescribe, amend and rescind rules relating to the 1996 Plan. In addition, the Committee is authorized to make Awards under the 1996 Plan, determine the terms of the Awards and make all other determinations deemed necessary or advisable for the administration of the 1996 Plan.
Eligibility and Award Period. The 1996 Plan provides that Awards may be made to our employees (or employees of our Subsidiaries) who are identified by the Committee as Participants. The Committee will identify the Participants or class of Participants who are eligible to participate in the 1996 Plan and specify the Award Period in writing no later than (a) 90 days after the commencement of the Award Period or (b) the expiration of 25% of the Award Period. We expect that the Participants will generally include all executive officers who are covered employees under Section 162(m) of the Code. The Award Period is any period designated by the Committee; however, no Award Period may be shorter than a full fiscal quarter and must end on the last day of the Corporations fiscal year. Unless otherwise determined by the Committee, Participants must be employed on the last day of the Award Period in order to be eligible for an Award. Non-employee directors are not eligible to participate in the 1996 Plan.
Awards. An Award granted under the 1996 Plan provides for the payment to a Participant of up to 0.2% of Incentive Income for the Award Period and, in the discretion of the Committee, the issuance of Additional Stock. Moreover, an Award is subject to the terms of the 1996 Plan and such terms as may
be specified by the Committee in accordance with the 1996 Plan. Incentive Income means our consolidated pre-tax net income, adjusted for the impact of any item for which such impact was the result of a change in tax law, for the impact of any extraordinary items, discontinued operations, acquisition and merger integration costs, and for the impact of our obligation to fund BlackRocks long-term incentive programs (including both charges or credits for the mark-to-market of the obligation and gains or losses on the transfer of shares in satisfaction of such obligation). With the exception of merger integration costs, all of the preceding terms are defined in accordance with generally accepted accounting principles in the United States. Merger integration costs are amounts identified as such by us in publicly disclosed financial information. Incentive Income for an Award Period that is longer or shorter than our fiscal year will be calculated based on Incentive Income for full fiscal quarters within the Award Period.
Under the 1996 Plan an Award can be paid entirely in cash, entirely in Shares or in a combination of cash and Shares. If our shareholders approve the 1996 Plan, the shares issued under the 1996 Plan will reduce an equivalent number of shares available for issuance under the already shareholder-approved 2006 Incentive Award Plan. Shares issued pursuant to the terms of an Award may be subject to such terms and conditions as the Committee may specify in its discretion, including, but not limited to, terms and conditions that provide for the lapse of transfer restrictions or forfeiture provisions to be contingent on continued employment. If and to the extent that the terms of an Award provide for a portion of a Participants Award payout to be paid in the form of Shares, the terms of the Award may also provide for the issuance to the Participant of Additional Stock not to exceed 25% of the number of Shares issued to the Participant in full or partial payment of the Participants Award. Moreover, the Committee may, in its discretion, at the time of payment, authorize that an Award Payment be made in cash, Common Stock or a combination thereof. In such case, no Additional Shares may be issued.
No later than the earlier of 90 days after the beginning of an Award Period or the expiration of 25% of the Award Period, the Committee must establish in writing: (a) the Award for each Participant with respect to an Award Period; (b) the extent, if any, to which an Award that is certified to be payable to a Participant, will be paid in the form of Shares valued at Fair Market Value; (c) whether any Additional Stock will be issued to the Participant in respect of any Shares issued in full or partial payment of an Award; and (d) any other terms and conditions applicable to the Award and any Shares (including Additional Stock) that may be issued pursuant to the terms of the Award. Fair Market Value means, as of the date Fair Market Value is being determined, an amount equal to the most recent reported closing price of a share of our Common Stock on the NYSE, or as otherwise determined using any other reasonable method adopted by the Committee in good faith for such purpose that uses actual transactions in Common Stock as reported by the NYSE.
Following the end of an Award Period, the Committee will certify the achievement of Incentive Income and the amount of the maximum Award Payment for each Participant in respect of each Award. Once the Committee has determined the amount of any Awards to be made for an Award Period and the amount to be paid in Shares (including any Additional Stock), it must certify the amounts in writing and authorize the Corporation to pay the Awards to the Participants in accordance with the terms and conditions of the 1996 Plan. Unless the Committee determines otherwise, no Award Amount or Additional Stock will be paid or issued to a Participant unless the Participant is employed by the Corporation or a Subsidiary on the date of payment or issuance.
The Committee may, in its sole discretion, determine not to pay an Award Amount or not to issue Shares or Additional Stock or may reduce an Award Amount or the number of Shares below the
amount or number of Shares payable or issuable under the terms of the Incentive Award without the consent of a Participant.
Except to the extent that the pre-established terms of an Award require payment of all or a portion of the Award Amount in Shares, the Committee may, in its discretion, at the time an Award Amount is paid, pay such amount in the form of cash, Shares (in an amount based on Fair Market Value), or a combination thereof.
The Committee may require deferral of the payment of any Award on such terms as the Committee deems appropriate. In addition, the Committee may permit a Participant to defer the payment of any Award and issuance of Additional Stock pursuant to any applicable deferred compensation plan of the Corporation. In either case, any additional amounts accrued on account of such deferred payment will be based either on a reasonable rate of interest or the actual rate of return of one or more pre-determined investments specified by the Committee or pursuant to the terms of such deferred compensation plan and will be in accordance with the provisions of Section 409A of the Code.