ANNUAL
EXECUTIVE PERFORMANCE INCENTIVE PLAN
Guidelines
for Annual Awards
The
purpose of the Annual Executive Performance Incentive Plan is to promote the interests of MVB Bank, Inc. (MVB) and its shareholders
by:
| a. | attracting
and
retaining
executives
of
outstanding
ability;
|
| b. | incentivizing
such
individuals,
by
means
of
performance-related
goals
and; |
| c. | enabling
such
individuals
to
participate
in
the
growth
and
financial
success
of
MVB |
2. Plan
Scope
These
Guidelines cover MVB’s Annual Executive Performance Incentive Plan (Plan) only and do not address other compensation, benefits
or other incentive plans in place at MVB. The Plan is administered on an annual basis corresponding to MVB’s fiscal year
(January-December). At the start of each year, an updated Plan is submitted to MVB Financial Corp’s Board of Directors for
approval through its Human Resources Committee. The Plan is overseen and monitored by MVB’s Human Resources Department.
3.
Plan Participation Eligibility
On
an annual basis, the CEO recommends the Executives (Named Executive) who will be eligible for the Plan, subject to final approval
by the MVB Financial Corp. Board of Directors. Once the annual Plan is approved, each Named Executive will receive written notification
and a copy of the given year’s Plan reflecting his or her requirements and potential incentive payout levels. The CEO is
eligible to participate in the plan.
MVB
Team Members who participate in a commission-based incentive plan (Mortgage Loan Officers/Mortgage Loan Manager) or any other
MVB Financial Corp. incentive plan, will not be eligible for this Plan.
4.
Plan Design
The
Plan has been designed using industry best practices aligned with MVB’s strategic planning and performance benchmark targets.
There are several components to the design with different criteria and weightings applied to ensure the Plan is stringent, yet
team and individually achievable as an effective incentive to garner high performance in all areas of MVB operations.
| a. | Annual
Executive
Incentive
Plan
Performance
Requirements
and
Payout
Matrix |
As
part of the annual review and approval of the Plan, the CEO will provide the Human Resources Committee with detailed Performance
Requirements and a Payout Matrix (Plan Matrix) which establishes for each Named Executive the given year’s performance measurements
and associated weightings used to determine individual incentive compensation payouts. The HR Committee shall annually establish
similar detailed Performance Requirements and a Payout Matrix (Plan Matrix) for the CEO.
In
addition, the Matrix will reflect the payout ratios based on actual performance targets and percentage breakdowns (weights) regarding
the Named Executive’s portion of potential incentive which comes from overall company performance metrics and if applicable,
from the individual’s annual personal performance evaluation.
The
Plan Guidelines or the Plan Matrix, once approved, cannot be changed or modified by a verbal communication or course of dealing,
but only by a written communication signed by the Human Resources Committee Chairman.
| b. | Key
Criteria
for
Incentive
Payout
Activation |
The
following are set criteria that must be met fully or no incentive payout is made:
By
the Bank – No payout to any Named Executive will be made unless MVB’s annually established Net Income goal
target is met or exceeded
By
the Individual – No payout to a Named Executive will be made unless these two requirements are met:
| |
• | Receive
a “3- Meets Expectations”
rating (on a 1 to 5 scale) on her or
his personal performance plan (3P) for
the Plan year, AND |
| |
• | Complete
his or her established education plan
for the given year. |
| c. | Net
Income
Incentive
Percentages
and
Targeted
Requirements |
| | |
MVB’s
net income for the year will be the basis for determining the overall incentive payout levels based on the following scale:
Performance
Level Against
Net
Income Goal |
Payout
as Percent (%) of Target Incentive Opportunity |
100% |
0% |
125% |
25% |
150% |
50% |
200% |
100% |
The
applicable percentage will be indicated in the Plan Matrix to be reviewed and recommended by the Human Resources Committee with
final approval by the MVB Financial Corp. Board of Directors and be calculated on a prorated basis.
The
following govern how the net income goal is established and used:
| i. | The net income target value will be established as part of the annual strategic planning and performance benchmark activity.
The MVB Financial Corp. Board of Directors gives final approval to the pending year’s net income goal, which becomes the
net income target goal for the Plan. |
| ii. | The net income goal for the calendar year may be further adjusted to reflect extraordinary events or circumstances affecting
MVB Financial Corp. or its business, which render such a goal unattainable. |
|
iii. | As shown in the above table, reaching 100% or falling short of the net income goal will result in no incentive payout for
any Named Executive. |
| d. | Plan
Governance
&
Authorization |
The
following cover how the Plan and Plan Matrix will be governed and implemented:
|
i. | MVB Financial Corp. Board of Directors may,
at their sole discretion, waive, change or amend
the Plan and the annual Plan Matrix as it deems appropriate. |
| ii. | The
Human Resources Committee working on behalf of, and subject to review and approval by a majority of, the MVB Financial Corp. Board,
will clarify, interpret and resolve any ambiguity as to the meaning of any terms or provisions of this Plan or annual Plan Matrix
or any questions as to the correct interpretation of any information contained therein, all of which will be final and binding. |
| iii. | By
participating
in
the
Plan
under
these
Guidelines,
each
Named
Executive
agrees
that
such
decisions,
rulings
and
interpretations
will
be
final
and
that
each
Named
Executive
will
be
bound
by
them.
Each
Named
Executive
further
agrees
that
if
and
when
any
circumstances
arise
relating
to
these
Guidelines
which
are
not
covered
by
this
description
of
the
Plan,
the
Named
Executive
will
be
bound
by
the
recommended
decision,
ruling
or
interpretation
of
the
Human
Resources
Committee
as
approved
by
the
MVB
Financial
Corp.
Board
of
Directors. |
| iv. | Payment of any cash incentive under these Guidelines to any Named Executive covered is conditioned upon the written certification
of the Human Resources Committee that the performance goals and any other material conditions applicable to such award were satisfied. |
|
v. | The Human Resources Committee
will retain the discretion to decrease, but not increase, the amount of any cash incentive
otherwise payable to any Named Executive in accordance with the applicable performance
formula described above. |
| e. | Performance
Benchmarks
Development
&
Use |
A
set of performance measurements, beyond the net income goal, will be used in the Plan. The final performance metric and its targeted
value for the given year Plan will be found on the Plan Matrix. Each Named Executive will have a series of selected performance
metrics designated as part of his or her performance criteria to reach or exceed during the Plan year. For each such performance
metric, a weight will be assigned to equal 100% across the total metrics determined for the Named Executive. The following are
the prime performance metrics deployed in the Plan Matrix (subject to change from year to year):
Net
Income Transaction Accounts Core Deposits
Kasasa
Cash/Savings Deposits Non-Interesting Bearing Deposits
Commercial
Loans Deposit Cross Sell
Non-Performing
Loans Pull Through Rate
Mortgage
Loans Mortgage Income
Loan
Loss Reserve M&A Transactions
| f. | Allocation
of
Performance
Payout
Weights
between
Performance
Metrics
and
Personal
Performance |
Four
incentive percentage split tiers will be used based upon job position levels within MVB. The Plan Matrix will indicate the designated
tier for each Named Executive. The tier weighting ratios will be used in calculating the incentive payouts as follows:
Incentive
Tier |
Performance
Metric(PM)/Personal Performance (PP)Weighting |
1 |
60%
PM - 40% PP |
2 |
80%
PM - 20% PP |
3 |
90%
PM - 10% PP |
4 |
100%
PM Bank* |
*Subject
to additional Plan guidelines set forth below.
| g. | Payment
and
Tax
Considerations |
The
following are considerations regarding payment and associated taxes based on the Plan design:
|
i. | Awards earned under these Guidelines are expected
to be paid within sixty (60) days following the later
of the end of the month in which the calendar year
comes to an end or the delivery of financial statements
to MVB after the completion of the external financial
audit. |
| ii |
All
award
payments
under
these
Guidelines
are
considered
supplemental
pay
and
will
be
taxed
as
such.
Appropriate
withholding
and
deductions
will
be
taken
from
such
payments.
Percentages
will
be
rounded
to
the
nearest
1/10
of
a
percent
(for
example,
10.3%)
and
the
total
amount
of
award
will
be
rounded
up
to
the
nearest
whole
dollar. |
| iii. |
The
amount
of
a
Named
Executive’s
earnings
for
the
calendar
year
which
have
actually
been
paid
to
the
Named
Executive
will
be
used
in
determining
the
amount
of
incentive
payout
calculation.
This
calculation
excludes
the
salary
elements
for
any
award
payments
issued
during
the
calendar
year.
|
| h. | Qualified
Performance-Based
Awards
Requirement |
Section
162(m) of the Internal Revenue Code limits the amount of annual compensation that may be deducted by a public company for each
of its top four executives to $1 million. Certain types of compensation are not subject to the limit, including compensation that
is performance-based within the meaning of IRS regulations, if this plan is approved by the shareholders of MVB Financial Corp.
MVB
will also comply with executive compensation standards to include the CEO, CFO, plus the next three most highly compensated executive
officers. The standards that have to be met include:
| · | Ensuring
incentive
compensation
does
not
encourage
excessive
risk-taking. |
| · | Require
clawback
of
any
incentive
or
incentive
compensation
paid
to
a
senior
executive
based
on
statements
of
earnings,
gains
or
other
criteria
that
are
later
proven
to
be
materially
inaccurate. |
| 5. | Final
Payout
Eligibility
Requirements |
The
following are conditions which regulate the payout of any incentive compensation:
a. | | A
Named
Executive
must
be
classified
as
a
regular
and
full-time
for
the
entire
calendar
year
and
be
of
active
status
in
order
to
receive
payment. |
b. | | A
Named
Executive
must
be
hired
and
on
the
active
payroll
as
full-time
as
of
the
first
business
day
after
October
1
of
the
applicable
calendar
year
in
order
to
participate
during
that
calendar
year
and
will
be
paid
at
a
prorated
payout
amount. |
c. | | If
a
Named
Executive,
who
was
previously
eligible
for
another
MVB-based
incentive
plan,
is
promoted
to
a
position
eligible
for
the
Plan,
he
or
she
will
be
eligible
for
a
prorated
payout
based
on
both
plans’
criteria. |
d. | | A
Named
Executive
on
leave
of
absence,
regardless
of
type,
will
receive
the
incentive
payment
only
upon
return
to
regular,
full-time,
active
status;
provided,
however,
that
Named
Executive
on
military
leave
will
be
issued
payment
at
the
time
incentive
checks
are
issued
even
if
they
have
not
returned
to
regular,
full-time,
active
status
at
that
time. |
| 6. | Additional
Plan
Payout
Conditions |
a. | | In
the
event
of
major
economic
changes,
catastrophic
events,
or
any
other
circumstances
not
contemplated
by
MVB
Financial
Corp.
(but
subject
to
the
rules
described
above
relating
to
Qualified
Performance-Based
Awards),
the
MVB
Financial
Corp.
Board
of
Directors,
working
through
its
Human
Resources
Committee,
reserves
the
right
to
alter,
amend
or
terminate
these
Guidelines
and
any
awards
hereunder. |
b. | | In
the
event
MVB
Financial
Corp.
restates
its
financial
results
within
twelve
(12)
months
of
the
payment
of
an
award
under
these
Guidelines
due
to
material
non-compliance
with
any
financial
reporting
requirements
of
the
federal
securities
laws
as
a
result
of
a
Named
Executive’s
intentional
“misconduct”
(as
determined
by
the
members
of
the
MVB
Financial
Corp.
Board),
the
Named
Executive
will
reimburse
MVB
Financial
Corp.
the
difference
between
the
amount
of
the
award
actually
awarded
and
the
amount
of
the
award
such
an
executive
officer
would
have
received
had
the
amount
of
the
award
been
calculated
based
on
the
restated
financial
statements. |
c. | | The
altering,
inflating,
and/or
inappropriate
manipulation
of
performance/financial
results
or
any
other
infraction
of
recognized
ethical
business
standards,
will
subject
the
Named
Executive
to
disciplinary
action
up
to
and
including
termination
of
employment.
In
addition,
any
award
as
provided
by
the
Plan
to
which
the
Named
Executive
would
otherwise
be
entitled
will
be
revoked. |
d. | | A
Named
Executive
who
has
willfully
engaged
in
any
activity
injurious
to
MVB
will
forfeit
any
award
earned
during
the
award
period
in
which
the
activity
occurred. |
e. | | Regarding
acquisitions/mergers,
end
of
year
goals
or
expenses
will
not
be
adjusted.
MVB
Financial
Corp.
will
not
gain
net
income
credit
nor
will
deduct
the
cost
of
the
acquisition/merger
from
expenses
before
final
payout
is
made. |
| 7. | Employment
Status
Changes
and
Retirement |
a. | | Except
as
set
forth
below,
a
Named
Executive
whose
employment
with
MVB
Financial
Corp.
ends
for
any
reason,
other
than
death,
prior
to
the
issuance
of
incentive,
will
forfeit
any
incentive
he
or
she
otherwise
would
have
been
entitled
to
receive. |
b. | | A
Named
Executive
who
dies
or
whose
employment
ends
due
to
Disability
or
Retirement
after
the
end
of
the
calendar
year,
but
before
the
issuance
of
incentive,
will
not
forfeit
the
incentive
which
the
Named
Executive
would
have
otherwise
been
entitled
to
receive. |
c. | | A
Named
Executive
who
dies
or
whose
employment
ends
due
to
Disability
during
a
calendar
year
will
participate
on
a
prorated
basis
in
the
incentive
program
based
upon
the
number
of
weeks
of
employment
with
MVB
during
such
year. |
d. | | A
Named
Executive
whose
employment
ends
due
to
Retirement
during
a
calendar
year
will
participate
on
a
prorated
basis
in
the
incentive
program
based
upon
the
number
of
weeks
of
employment
with
MVB
during
such
calendar
year
provided
that
the
Named
Executive’s
term
of
employment
is
at
least
one-half
of
the
calendar
year. |
e. | | A
Named
Executive
who
terminates
employment
due
to
Retirement
in
the
first
half
of
the
calendar
year
will
not
receive
any
incentive
amounts
pursuant
to
these
Guidelines
for
such
calendar
year. |
f. | | These
Guidelines
do
not
in
any
manner
restrict
the
right
of
MVB
Financial
Corp.
or
the
Named
Executive
to
end
employment
at
any
time,
for
any
reason,
with
or
without
cause. |