This excerpt taken from the PBCT DEF 14A filed Mar 13, 2008.
ITEM III. AMENDMENT OF THE 2007 RECOGNITION AND RETENTION PLAN
At the Annual Meeting of Shareholders in October 2007, the shareholders approved adoption of the Peoples United Financial, Inc. 2007 Recognition and Retention Plan (the RRP). The RRP was adopted approximately six months following the second-step conversion of Peoples United Financial in April 2007. Therefore, in compliance with Office of Thrift Supervision regulations governing management stock benefit plans adopted within one year following a conversion, the RRP does not permit the accelerated vesting of grants made pursuant to the plan in the event of the retirement of an award recipient.
The Board of Directors has approved, and the shareholders are being requested to approve, amendments to the RRP that would (1) permit (but not require) the accelerated vesting of grants made under the plan in the event of a recipients retirement and (2) revise the definition of the word Retirement as it now appears in the RRP.
The proposed amendment to the definition of Retirement will (a) make the definition consistent with the definition of that same term in the 1998 Long-Term Incentive Plan and the proposed 2008 Long-Term Incentive Plan when used with reference to employees; (b) have no effect on the current definition when used with reference to members of the Board of Directors; and (c) create a new definition of Retirement with reference to members of an advisory board in recognition of the difference between such individuals and members of the Board of Directors.
Inclusion of retirement as an event permitting accelerated vesting of previously-made grants is consistent with the goals intended to be served by the RRP. Otherwise, an award having a five-year vesting schedule which is made to any person within five years of his or her normal retirement age could never become fully vested. The Compensation and Nominating Committee is not required to permit accelerated vesting of all awards made pursuant to the RRP as a result of retirement, and could in the award agreement provide that only a specified portion of the awards would vest in that event.
If shareholders approve the proposed amendments to the RRP, the Board of Directors expects to authorize amendments to the terms of previously-granted awards in order to permit accelerated vesting of all or a portion of such awards upon the holders retirement (as defined with respect to that holder under the RRP). For Company officers who retire pursuant to a policy requiring retirement at a specified age, members of the advisory board, and members of the Board of Directors, all unvested awards would become vested upon retirement. For all other award holders, all unvested awards that were designated as recognition awards and a portion of the unvested awards that were designated as retention awards would become vested upon retirement. Unvested retention awards would vest on a prorated basis, based on the number of months elapsed since the most recent scheduled vesting date (or award grant date if no vesting has yet occurred) and the number of awards expected to vest on the next scheduled vesting date. Awards not specifically designated as recognition awards will be treated as retention awards.
The full text of the proposed amendments to the RRP appear as Exhibit B to this Proxy Statement
Shareholder Approval Requirement
Assuming that a quorum is present at the Annual Meeting, approval of the proposal to adopt the proposed amendments to the RRP requires the affirmative vote of a majority of the shares of the common stock present, in person or by proxy, and entitled to vote at the Annual Meeting.
The Board of Directors believes that amendment of the RRP as proposed is in the best interests of Peoples United Financial and its shareholders, and recommends that shareholders vote FOR approval of the amendments to the 2007 Recognition and Retention Plan.