COMPENSATORY AGREEMENT WITH EXECUTIVE DATED JULY 16, 2009
Exhibit
10.1
COMPENSATORY
AGREEMENT WITH EXECUTIVE DATED JULY 16, 2009
July
16, 2009
Xx.
Xxxxxx X. XxxxXxxxxx
000
Xxx Xxx
Xxxx
Xxxxxxxxx, XX 00000
Dear
Xxx,
I
am very pleased to offer you a key executive position on the Washington Trust
management team. This letter will confirm the terms of our employment
offer.
I. Title
and Position Summary
Upon
hire, you will be named President and Chief Operating Officer of The Washington
Trust Company and, shortly thereafter, of Washington Trust Bancorp,
Inc. You will be responsible for managing all line functions
(commercial lending, wealth management, retail lending, and retail banking), as
well as the supporting functions of Marketing, Operations, and
Technology. This position will allow you to familiarize yourself with
the Bank and its team.
In
addition, you will be elected to the Board of Directors of The Washington Trust
Company and Washington Trust Bancorp, Inc. at the earliest date
possible.
Following
my retirement at the end of April 2010, you will be appointed President and
Chief Executive Officer, assuming you have performed to the expectations of the
Board of Directors.
II. Salary
Your
annual salary will be $400,000. Once you are appointed President and
Chief Executive Officer, your annual salary will be increased to
$450,000.
III. One-Time
Signing Bonus and Equity Grant
In
recognition that you are forfeiting bonus and equity compensation with your
current employer to join Washington Trust, we have agreed to provide a one-time
signing bonus of $100,000 to be paid at the end of January 2010.
On
your first date of employment, you will be granted 7,000 Restricted Stock Units
of Washington Trust Bancorp, Inc. You will also be granted a
Nonqualified Stock Option to acquire 21,000 shares of Washington Trust Bancorp,
Inc. common stock at an exercise price equal to the fair market value on the
date of grant. Both grants will become vested on the five year
anniversary of your first date of employment.
IV. Annual
Performance Plan
You
will be eligible to participate in the Annual Performance Plan beginning in 2010
(payable in early 2011). Your target bonus payment will be 45% of
base salary earnings. Plan payments are based on corporate
performance (Return on Equity, Net Income, and Earnings per Share) and an
assessment of your individual performance. The allocation to
corporate performance and individual performance is 70% and 30%,
respectively.
V. Equity
Compensation
You
will be eligible for equity grants in such number, at such times, and on such
terms as may be approved by the Compensation Committee of the Board of
Directors, in its sole discretion. These grants typically occur
annually, and at the CEO level, have a target value of 45% of salary modified
for your individual performance. Grants may be subject to time-based
or performance-based vesting, or a combination thereof, at the discretion of the
Compensation Committee.
VI. Welfare
Benefits
You
will be eligible for benefits under The Washington Trust Company Welfare Benefit
Plan on the first day of the month following or coinciding with your first date
of employment. This comprehensive benefit plan features medical,
dental, life and long-term disability insurance, as well as medical
reimbursement and dependent care reimbursement accounts.
Our
group long-term disability insurance policy is limited to $250,000 of covered
salary. We will attempt to purchase a supplemental policy so that
your salary will be fully covered. This insurance policy may be
subject to medical underwriting and approval of the insurer, which we cannot
control. Alternatively, if you have an existing private long-term
disability insurance policy, we can reimburse you for the amount attributable to
your coverage shortfall.
Our
group life insurance policy provides a benefit of up to two-times salary,
subject to a maximum coverage amount of $520,000. To the extent the
Bank can purchase a bank-owned life insurance policy, we may be able to offer
additional coverage through a split-dollar arrangement.
VII. Retirement
Plans
You
will be eligible to participate in The Washington Trust Company 401(k) Plan
effective on the first day of the quarter following or coinciding with your
three-month anniversary. Under this Plan, you may contribute up to
25% of salary earnings, subject to an IRS dollar limit ($16,500 in
2009). If you defer at least 5% of salary earnings, the Bank will
make a matching contribution of 3%. In addition, you are eligible for
a non-elective employer contribution of 4% of salary earnings, regardless of
whether you choose to contribute to the Plan.
You
are also eligible to participate in The Washington Trust Company Nonqualified
Deferred Compensation Plan (“Nonqualified Plan”). This “401(k) mirror plan”
accomplishes the following goals:
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Compensation
Deferral: Allows you to defer up to 25% of salary and
100% of bonus to provide supplemental retirement and tax
benefits.
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Restoration of Benefits Lost
due to Qualified Plan Limits: Provides for payments of
certain amounts that would have been contributed by the Bank under the
401(k) Plan (“excess employer contributions”), but for the deferral under
the Nonqualified Plan and/or IRS limitations on annual compensation under
qualified plans. Excess employer contributions would include
matching contributions as well as the 4% non-elective
contribution.
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Supplemental Executive
Retirement Benefits: The Bank will make an additional
annual contribution of 5% of your salary earnings to supplement your
retirement benefit. Assuming that you qualify for the full
employer match, this will bring your total employer retirement plan
contribution to 12% of salary (3% match; 4% non-elective contribution; and
5% supplemental contribution).
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Employee
and employer contributions to the Nonqualified Plan are credited with
earnings/losses based on your selection of investment measurement options
(publicly-traded mutual funds). Plan balances are protected under a
rabbi trust agreement.
Employer
contributions under both the qualified 401(k) Plan and the Nonqualified Plan
will become vested after two years of service.
VIII. Change
in Control Agreement
You
will enter into a Change in Control Agreement that, upon a change in control
event, will provide three years of salary; bonus payment (based on the average
bonus paid within the previous three years); and medical and dental benefit
continuation. Benefits may be reduced to ensure that they do not
exceed Section 280G limits, and therefore result in excise tax under Section
4999.
IX. Miscellaneous
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You
will be granted a car allowance of $800 per month that includes
mileage. This payment is reported as income and subject to
applicable taxes. In determining your taxable income, we may
deduct actual business miles at the standard mileage
rate.
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You
will be reimbursed up to $10,000 annually for social club membership for
the purpose of meeting with clients. This reimbursement is
reported as income and subject to applicable
taxes.
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This
offer of employment is subject to the successful completion of a criminal
background check. While we hope that your employment relationship
with the Bank will be rewarding and long-term, we recognize that either party is
free to terminate this relationship at will in the future.
Please
confirm your acceptance in writing by signing the enclosed copy and returning it
to my attention. On behalf of the Nominating Committee and the entire
Board, we are pleased to welcome you aboard! We look forward to your
contribution to the future success of the organization.
Sincerely,
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/s/ Xxxx X. Xxxxxx
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Xxxx
X. Xxxxxx
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Chairman
& Chief Executive
Officer
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I accept
the terms of the above offer.
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/s/ Xxxxxx X. XxxxXxxxxx
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7/17/2009
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| Xxxxxx X. XxxxXxxxxx |
Date
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