Wintrust Financial Corporation Cash Incentive and Retention Award Agreement
Exhibti 10.4
Wintrust Financial Corporation
(Minimum Payout Amount: None)
(Periodic Vesting)
(Periodic Vesting)
Cycle I (2008-2012)
[Award Date]
[Award Date]
(Minimum Payout Amount: None)
(Periodic Vesting)
(Periodic Vesting)
THIS AGREEMENT, effective as of [award date] represents the grant of a long-term cash
incentive and retention award (“CIR Award”) by Wintrust Financial Corporation (the “Corporation”),
to the Participant named below, pursuant to the provisions of the 2008 Long-Term Cash Incentive and
Retention Plan (the “Plan”) or any amended or successor plan thereto. The cash payout ultimately
earned and paid, if any, for this CIR Award will be determined pursuant to Section 3 of this
Agreement.
This Agreement is an Award Agreement as contemplated by the Plan, the terms and provisions of
which are incorporated herein by reference. All capitalized terms will have the meanings ascribed
to them in the Plan, unless specifically set forth otherwise herein. The parties hereto agree as
follows:
1. Grant Information. The individual named below has been selected to receive a long-term CIR
Award as specified below:
| (a) Participant: | ||||
| (b) Target CIR Award: | $ | |||
| (c) Performance Measure: | Earnings per share (“EPS”) |
2. Performance Period. The performance period commences on January 1, 2008, and ends on
December 31, 2012 (“Performance Cycle”).
3. Performance Grid; Calculation of CIR Award. The CIR Award, if any, earned by the
Participant who remains continuously employed by the Corporation or any Subsidiary from the date of
this Agreement through the last day of the Performance Cycle will be equal to the Target CIR Award
amount set forth above, multiplied by the “Multiple” determined in accordance with the Performance
Grid set forth on Appendix A attached hereto, subject to a maximum amount equal to the Maximum CIR
Award Amount set forth on Appendix A. For example, if the sixty (60-) month cumulative earnings
per share at the end of 2012 is $18.00, the Participant will earn two-hundred twenty percent (220%)
of the Target CIR Award amount as set forth in Section 1(b) of this Agreement.
The amount of CIR Award earned will be determined after the conclusion of the Performance
Cycle by the Compensation Committee of the Board of Directors (the “Committee”), in its sole
discretion, based on the performance of the Corporation, calculated using the Performance Grid.
Earned CIR Awards will be paid in accordance with Section 5 below.
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For purposes of this Agreement, “Earnings Per Share” or “EPS” shall mean the Corporation’s
“primary earnings per share,” as determined on a fully-diluted basis in accordance with generally
accepted accounting principles, consistently applied, as publicly reported by the Corporation on
its fiscal year financial reports. Cumulative EPS will be equal to the sum of the EPS for each of
the five years in the Performance Cycle.
The Committee shall have the authority to modify the calculation of Cumulative EPS and the
Cumulative EPS objectives set forth in the Performance Grid in Section 3 of this Agreement, in the
Committee’s good faith discretion, as the Committee deems appropriate in connection with any
repurchases by the Corporation of its Common Stock from shareholders, acquisition, reorganization,
recapitalization, merger, consolidation, spin-off, extraordinary dividend or other distribution, or
similar transaction; provided, however, that the Committee shall make such adjustments in the event
of a stock dividend or stock split, reverse stock split or similar change in the capital structure
of the Corporation, in order to prevent the dilution or enlargement of rights.
4. Effect of Termination of Employment during the Performance Cycle. In the event the
Participant does not remains continuously employed by the Corporation or any Subsidiary from the
date of this Agreement through the last day of the Performance Cycle, then the amount, if any,
payable to the Participant (or, in the event of death, the Participant’s beneficiary) under this
Agreement will be determined in accordance with this Section 4 and paid in accordance with Section
5 below. For purposes of this Section 4, “vested percentage” means the percentage determined in
accordance with Vesting Table set forth on Appendix A.
Termination for Cause. Termination of the Participant’s employment during the
Performance Cycle by the Corporation for cause will result in immediate forfeiture of the CIR
Award, with no payment to the Participant. For purposes of this Agreement, “cause” shall have
the same meaning given to such term under an employment or similar agreement applicable to the
Participant and, in the absence of such an agreement or definition of “cause” therein, “cause”
shall have the meaning set forth on Appendix B attached hereto.
Disability or Death; Termination not for Cause; Resignation. If the
Participant’s employment terminates as a result of disability or death during the Performance
Cycle or if the Participant’s employment is terminated during the Performance Cycle for any
other reason other than termination by the Corporation for cause, the Participant (or, in the
event of death, the Participant’s beneficiary) will receive the vested percentage of the
Truncated CIR Award Amount described below. For purposes of this Agreement the term disability
shall have the same meaning given to such term in the Corporation’s Long-Term Disability Plan,
or any successor plan.
Retirement. If the Participant’s employment terminates during the Performance
Cycle in circumstances constituting Retirement (as defined on Appendix B) and the Participant
remains Retired from the Industry (as defined on Appendix B) through the end of the
Performance Cycle, then, in addition to the vested percentage of the Truncated CIR Award
Amount described above, the Participant will be eligible to receive an amount equal to the
Participant’s vested percentage multiplied by Top-Up Amount, if any, described below.
2
The “Truncated CIR Award Amount” is the amount, if any determined by multiplying the Target
CIR Award set forth in Section 1(b) above by the applicable Multiple determined by reference to the
Performance Grid and based on the Compound Annual Growth Rate of EPS achieved during the
Performance Cycle through the end of the fiscal year which coincides with or immediately precedes
the date on which termination of employment occurs. For example, if the termination of employment
occurs in 2010, and the Compound Annual Growth Rate of EPS achieved through the end of 2009 is 11%,
then the applicable multiple would be one hundred forty percent (140%).
The “Top Up Amount” is the positive amount, if any, by which the CIR Award that the
Participant would have earned at the end of the Performance Cycle based on actual performance
during the full Performance Cycle exceeds the Truncated CIR Award Amount described above.
5. Payment of Earned Incentive Award. Unless deferred in accordance with procedures set forth
by the Committee and otherwise subject to the requirements set forth in the Plan relating to Code
Section 409A, the earned CIR Award determined in accordance with Section 3 above will be paid to
the Participant as soon as practicable after the end of the Performance Cycle and the Compensation
Committee’s determination of amount of the earned CIR Award; provided that such payment shall be
made no later than March 15th of the calendar year following the end of the Performance Cycle. Any
Top Up Amount payable to a retired Participant shall be paid at the same time as the earned CIR
Award would have been paid in accordance with this paragraph.
Unless deferred in accordance with procedures set forth by the Committee and otherwise subject
to the requirements set forth in the Plan relating to Code Section 409A, the amounts determined and
payable in accordance with Section 4 prior to the end of the Performance Cycle in the event of
termination of employment during the Performance Cycle shall be payable as follows: if the date of
termination of employment occurs prior to July 1 of a calendar year, payment shall be made (without
interest) as soon as practicable after December 31 of such year, provided that such payment shall
be made no later than March 15th of the calendar year following such termination of employment; and
if such termination occurs after June 30 of a calendar year, such payment shall be made as soon as
practicable after July 1 of the following calendar year, provided such payment shall be made no
later than December 31 of such following calendar year.
6. Change in Control of the Corporation. In the event of a Change in Control during the
Performance Cycle, the Participant will be paid a CIR Award under this Agreement. The amount of
such CIR Award will be determined in the same manner as a Truncated CIR Award Amount described in
Section 4 above, based on the Compound Annual Growth Rate of EPS though the last day of the
calendar year coinciding with or next preceding the date of the Change of Control. For example, if
the Change of Control occurs during the third quarter of 2009, and the Compound Annual Growth Rate
in EPS at the end of 2008 was 8% then the applicable multiple would be one hundred ten percent
(110%). The amount of the CIR Award determined in accordance with this Section 6 shall not be
subject to proration and shall be paid in full to the Participant upon or within 15 days after the
date of the Change of Control.
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7. Nontransferability. The CIR Award may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated (“Transfer”) other than by will or by the laws of descent and
distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of
an CIR Award is made, the Participant’s right to such CIR Award will be immediately forfeited to
the Corporation, and this Agreement will lapse.
8. Tax Withholding. The Corporation will have the power and the right to deduct or withhold,
or require the Participant or the Participant’s beneficiary to remit to the Corporation, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result of this Agreement.
9. Administration. This Agreement and the Participant’s rights hereunder are subject to all
the terms and conditions of the Plan, as the same may be amended from time to time, as well as to
such rules and regulations as the Committee may adopt for administration of the Plan. It is
expressly understood that the Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of the Plan and this Agreement, all
of which will be binding upon the Participant.
10. Continuation of Employment. This Agreement will not confer upon the Participant any right
to continuation of employment by the Corporation or its subsidiaries, nor will this Agreement
interfere in any way with the Corporation’s or its subsidiaries’ right to terminate the
Participant’s employment at any time.
11. Amendments. The Plan is discretionary in nature and the Committee may terminate, amend, or
modify the Plan or this Agreement; provided, however, that no such termination, amendment, or
modification of the Plan or this Agreement may adversely affect in any material way the CIR Award
subject to this Agreement without the Participant’s written approval, except amendments or
modifications made in accordance with Section 3 or required to conform to laws.
12. Amendment to this Agreement. Any amendment and/or termination of this Agreement will not
accelerate a payment date if such amendment or termination would subject such amounts to taxation
under Code Section 409A.
13. Successor. All obligations of the Corporation under the Plan and this Agreement, with
respect to the CIR Award, will be binding on any successor to the Corporation, whether the
existence of such successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the Corporation.
14. Severability. The provisions of this Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions will nevertheless be binding and enforceable.
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15. Applicable Laws and Consent to Jurisdiction. The validity, construction, interpretation,
and enforceability of this Agreement will be determined and governed by the laws of the State of
Illinois without giving effect to the principles of conflicts of law. For the purpose of litigating
any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction
and agree that such litigation will be conducted in the federal or state courts of the State of
Illinois.
16. Restrictions and Clawback. This Award shall be subject to forfeiture and cancellation in
the discretion of the Committee upon the occurrence of the any of the events described in clauses
(a) through (e) of Section 8(e) of the Plan prior to the payment of any amounts under this
Agreement. If any such event occurs within one year after the payment of any amount under this
Agreement, then upon demand from the Committee, the Participant shall reimburse the Corporation the
amount of any such payment. Payments under this Agreement shall also be subject to repayment to
the Corporation in upon the occurrence of events described in the final sentence of Section 8(e) of
the Plan.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of
[award date].
| Wintrust Financial Corporation | ||||||
| By: | ||||||
| Participant | ||||||
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Appendix A to Cash Incentive and Retention Award Agreement
(Minimum Payout Amount: None)
(Periodic Vesting)
(Minimum Payout Amount: None)
(Periodic Vesting)
Cumulative EPS Performance Grid for Cycle I (2008-2012)
| Compound Annual | ||||
| Growth Rate | Multiple of Target | |||
| Range | Cumulative EPS1 | CIR Award | ||
| 20.0% or greater | $20.00 or greater | 300% | ||
| 17.5% – 19.99% | $18.65 – $19.99 | 260% | ||
| 15.0% – 17.49% | $17.37 – $18.64 | 220% | ||
| 12.5% – 14.99% | $16.17 – $17.36 | 180% | ||
| 10.0% – 12.49% | $15.04 – $16.16 | 140% | ||
| 7.5% – 9.99% | $13.99 – $15.03 | 110% | ||
| 5.0% – 7.49% | $13.00 – $13.98 | 70% | ||
| <5.0% | <$13.00 | 0% | ||
For purposes of this Appendix A, the “Maximum Payout Amount” is 300% times the Target CIR
Award.
| 1 | This column reflects the cumulative EPS for the five years, assuming a CAGR equal to the amount set forth in the left hand column and a starting point equal to 2007 EPS of $2.24. |
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Vested Percentage Table
| Termination | Termination | Termination | Termination | Termination | ||||||
| Occurs in | Occurs in | Occurs in | Occurs in | Occurs in | ||||||
| 2008 | 2009 | 2010 | 2011 | 2012 | ||||||
| Vested Percentage | 0% | 20% | 40% | 60% | 80% | |||||
For purposes of the Vested Percentage Table, if the date of termination of a Participant’s
employment (that is, his or her last day of employment) is December 31 of such year, the
termination of employment will be deemed to occur in the following year.
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Appendix B to Cash Incentive and Retention Award Agreement
Definitions
For purposes of this Agreement, “cause” shall mean the following:
| (i) | misappropriation of any funds or
property of the Corporation or its subsidiaries; or |
||
| (ii) | attempting to obtain any personal profit from any transaction in which the Key
Employee has a personal financial interest, unless the Key Employee shall have
first obtained the consent of the Board of Directors; or |
||
| (iii) | material neglect or refusal to perform the duties reasonably assigned to the Key
Employee given the Key Employee’s current job description;
or |
||
| (iv) | participating in a course of conduct which is injurious to the Corporation or its
subsidiaries, as interpreted by the Board of Directors; or |
||
| (v) | being convicted of a felony; or | ||
| (vi) | being adjudicated a bankrupt; or | ||
| (vii) | suspension due to the direction of any authorized bank regulatory agency. |
To the extent that there is a dispute arising over the application of the definition of Cause, the
Committee or the Board of Directors of the Corporation shall have the authority to interpret and
apply such definitions in a reasonable manner.
For purposes of this Agreement, the termination of a Participant’s employment shall be deemed a
“Retirement” if such termination of the Participant’s employment is for any reason other
than death, disability or termination by the Corporation for cause, and such termination occurs on
or after age 65, or on or after age 55 and, as of the date of termination, the sum of the
Participant’s attained age as of his or her most recent birthday and full and completed years of
service with the Corporation or any Subsidiary (including for this purpose continuous years of
service, if any, with a Subsidiary as of the date such Subsidiary was acquired by the Corporation)
equals or exceeds 75.
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The Participant shall be deemed to be “Retired from the Industry” so long as such
Participant (A) does not thereafter perform services as an employee, officer, director or
consultant for, or in any other capacity assist, any bank, thrift, bank or thrift holding
Corporation, asset management Corporation, trust Corporation, investment advisor, or any other
financial services Corporation (other than the Corporation or a Subsidiary), whether existing or in
formation, that provides or plans to provide banking or other financial services, including but not
limited to, those relating to loans, deposits, treasury management, custodial or trust services, or
investment or wealth management services within the Chicago or Milwaukee metropolitan area, and (B)
certifies to the Corporation, at such times and in such manner as the Committee may require, that
since Participant’s’ Retirement, Participant has not performed any such services.
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