STI » Topics » Qualifying Performance-Based Compensation

This excerpt taken from the STI DEF 14A filed Mar 6, 2009.

Qualifying Performance-Based Compensation

The Committee may specify that the grant, retention, vesting, or issuance of any award, (whether in the form of a stock option, SAR, restricted stock, RSU or a performance award) or the amount to be paid out under any award, will be subject to or based on performance objectives or other standards of financial performance and/or personal performance evaluations, whether or not established and administered in accordance with the requirements of Section 162(m) of the Code for awards intended to qualify as performance-based compensation. The Committee may reduce the number of shares issued or the amount paid under an award to the extent specified in the award agreement, on the basis of such further considerations as the Committee in its sole discretion shall determine.

Establishment of Performance Goals. At the beginning of each performance period the Committee will establish performance goals applicable to performance awards. To the extent that performance conditions under the Plan are applied to awards intended to qualify as performance-based compensation under Section 162(m), such performance goals will be objectively measurable and will be based upon the achievement of a specified

 

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percentage or level in one or more of the following criteria, subject to any objectively verifiable adjustment(s) permitted and pre-established by the Committee in accordance with Section 162(m) of the Code, as determined by the Committee in its sole discretion:

 

•   Return over capital costs or increases in return over capital costs.

•   Net earnings or the growth in such earnings.

•   Earnings before interest and taxes or the growth in such earnings.

•   Earnings before interest expense, taxes, depreciation, amortization and other non-cash items or the growth in such earnings.

•   Consolidated net income or the growth in such income.

•   Market capitalization of our stock.

•   Return on equity.

•   Return on tangible equity.

•   Cash return on equity.

 

•   Stock price or the growth in such price.

•   Return on assets or the growth on such return.

•   Cash return on assets.

•   Total shareholder return or the growth in such return.

•   Expenses or the reduction of expenses.

•   Revenue growth.

•   Efficiency ratio or the changes in such ratio.

•   Economic value added or changes in such value added.

•   Operating leverage.

•   Net interest margin.

•   Tier 1 capital.

•   Risk-adjusted net interest margin.

•   Cash return on tangible equity.

•   Net income available to common shareholders.

•   Book value per share.

•   Pre-tax income or growth.

•   Operating EPS or growth
    (excluding one-time, non-core items).

•   Cash EPS or growth.

•   Cash operating EPS or growth
    (excluding one-time, non-core items).

 

•   Total risk-based capital ratio.

•   Tangible equity / tangible assets.

•   Tangible common equity / tangible assets.

•   Tangible book value / share.

•   Loan balances or growth.

•   Deposit balances or growth.

•   Low cost deposit balances or growth.

•   Such other financial performance measures deemed     appropriate by the Committee.

Performance goals may be based on one or more business criteria, one or more of our business units or divisions, our subsidiaries or affiliates, or the Company as a whole, and if so desired by the Committee, by comparison with a peer group of companies. Performance awards granted under the Plan may contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee may determine, provided that, if the performance awards are intended to qualify as performance-based compensation under Section 162(m), such additional terms and conditions are also not inconsistent with Section 162(m).

Limited Transferability of Awards. Unless the Committee determines otherwise, awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution, and during the participant’s lifetime, may be exercised only by the participant (or his personal representative or guardian if the participant is incapacitated).

Tax Withholding. The Committee may require payment, or withhold payments made pursuant to awards, to satisfy applicable withholding tax requirements.

Change in Control. The Plan does not provide for automatic vesting upon our change in control. The agreements currently used by the Committee in connection with grants under the Plan provide that if we have a change in control, any outstanding unvested awards shall vest if the participant terminates for “good reason” or is terminated “for cause,” as defined in the agreement, within 3 years of our change in control. The Committee, in its discretion, may change these provisions in future grant agreements.

Additionally, upon or anticipation of our change in control, if the Board determines that adequate provision has not been made for our successor’s assumption of options, SARs, restricted stock and RSUs outstanding under the Plan, or for the granting of substitute awards, then only in such a case, the Plan authorizes the Board to make equitable adjustments to outstanding awards. This includes, in its discretion, the power to unilaterally cancel outstanding options and SARs in exchange for the number of whole shares of stock and cash for any fractional

 

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share the participant would have received on exercise in full. The Board may also deem any service or performance restrictions for outstanding restricted stock grants or RSUs to be satisfied on the date set by the Board. However, in each case, this ability is limited to situations where the Board determines that adequate provision has not been made for our successor’s assumption of outstanding awards.

We intend, that, to the extent any provisions of the Plan or any awards granted under the Plan are subject to Section 409A (which relates to nonqualified deferred compensation), they will be interpreted and administered in good faith in accordance with Section 409A requirements and that the Committee will have the authority to amend any outstanding awards so that they are in compliance with Section 409A or qualify for an exemption from Section 409A.

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