EX-10.1 2 d128626dex101.htm EX-10.1 EX-10.1
 
 
 
 
 
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Exhibit 10.1
FORM OF POPULAR, INC.
2021 LONG-TERM EQUITY INCENTIVE AWARD
 
AND AGREEMENT
 
Recipient:
 
The Talent
 
and Compensation Committee
 
of the
 
Board of Directors
 
of Popular,
 
Inc. (the
“
Committee
”)
 
awarded
 
you
 
on
 
February
 
25,
 
2021
(the
“Grant
 
Date”
)
a
 
Long-Term
 
Incentive
 
Award
consisting of Restricted
 
Stock (“
Restricted Stock
”) and Performance
 
Shares (“
Performance Shares
” and, in
conjunction with the Restricted Stock, the “
Award”
).
 
This award agreement (the “
Award Agreement
”), dated as of the Grant Date, sets forth the
terms and conditions of your
 
Award.
 
This Award is made under the Popular, Inc. 2020 Omnibus
 
Incentive
Plan, as amended
 
(the “
Plan
”), and, except
 
as otherwise provided
 
herein, is subject
 
to the terms of
 
the Plan.
Capitalized terms used but not otherwise defined in this
 
Award Agreement have the meanings given in the
Plan.
 
1.
Award
 
.
 
The number of
 
shares of Restricted
 
Stock and Performance
 
Shares subject
to this Award is set forth in Annex 1 hereto.
 
The Award will vest as set forth below.
 
2.
Vesting;
 
Payout.
Subject to Section 6 of this Agreement, you will be entitled to the following
:
(a)
Restricted
 
Stock
 
Vesting
 
.
 
Except
 
as
 
otherwise
 
stated
 
in
 
this
 
Section
 
2,
 
your
Restricted Stock shall vest in four substantially equal annual installments on each of the dates specified in
Annex 1 (each of the dates described therein, a
“Restricted Stock
Vesting
 
Date
”).
(b)
Performance Shares Vesting.
 
Except as otherwise
 
stated in this
 
Section 2, you
 
shall
become vested in the Performance
 
Shares on the day
 
of the first scheduled
 
meeting of the Committee
 
taking
place in the month of February 2024, subject to the achievement by Popular, Inc. of the Performance Goals
specified
 
in
 
Annex
 
1
 
during
 
the
 
Performance
 
Cycle,
 
as
 
certified
 
by
 
the
 
Committee
 
in
 
such
 
meeting
(hereinafter the
 
“Performance Shares Vesting
 
Date”
and, together with the Restricted Stock Vesting
 
Date,
the
 
“Vesting
 
Date”)
.
 
The Performance Goals will be based on two performance metrics weighted equally:
the Relative Total Shareholder Return (the “
TSR
”) and the Absolute Return on Average Tangible
 
Common
Equity (the “
ROATCE
”) goals. The Performance Cycle is a three (3) year period beginning on January 1 of
the calendar year of the Grant
 
Date and ending on December 31 of
 
the third year.
 
Each Performance Goal
will have a
 
defined minimum
 
threshold (i.e.,
 
minimum result
 
for which an
 
incentive would
 
be earned),
 
target
(i.e., result at which
 
100% of the incentive
 
would be earned)
 
and maximum level
 
of performance (i.e., result
at which 1.5 times the incentive target would be earned).
(c)
Approved
 
Retirement.
 
Upon
 
an
 
Approved
 
Retirement after
 
attaining (x)
 
age
 
55
with 10 years of service with Popular, Inc. or its subsidiaries (the “
Corporation
”) or (y) age 60 with 5 years
of
 
service
 
with
 
the
 
Corporation:
 
(1)
 
your
 
outstanding
 
Restricted
 
Stock
 
shall
 
fully
 
vest;
 
and
 
(2)
 
your
 
 
 
 
 
 
 
 
outstanding
 
Performance
 
Shares
 
shall
 
continue
 
outstanding
 
and
 
vest
 
in
 
full
 
on
 
the
 
Performance
 
Shares
Vesting
 
Date in accordance with the actual results
 
of the Performance Goals during the Performance
 
Cycle.
(d)
Vesting
 
upon Retirement on
 
or after age
 
50 before attaining
 
age 55 and
 
10 years
of service.
 
The Committee,
 
at its discretion,
 
may accord
 
the same
 
treatment accorded
 
in Section
 
2(c) above
if you retire from your employment on or
 
after age 50, and before attaining age 55
 
and 10 years of service,
provided the sum of your age and years of service is at least 75.
 
(e)
Death.
 
Provided
 
that
 
on
 
the
 
date
 
of
 
your
 
death
 
you
 
are
 
still
 
employed
 
by
 
the
Corporation
 
and
 
your
 
rights
 
in
 
respect
 
of
 
your
 
Award
 
have
 
not
 
been
 
previously
 
terminated,
 
any
 
then
unvested
 
outstanding
 
Award
 
shall
 
immediately
 
vest
 
and
 
be
 
paid
 
to
 
the
 
representative
 
of
 
your
 
estate
promptly after your death.
 
In the case of the Performance Shares, the number of shares will
 
be calculated
as if the target number of Performance Shares had in fact been earned.
(f)
Disability.
 
If you become
 
subject to Disability
 
while you are
 
still employed by
 
the
Corporation, any then
 
unvested outstanding Award shares shall
 
vest and shall
 
be paid to
 
you promptly after
you become
 
subject to
 
Disability.
 
In the
 
case of
 
the Performance
 
Shares, the
 
number of
 
shares will
 
be
calculated as if the target number of Performance Shares had in fact been earned.
(g)
Change of Control.
 
If your employment is
 
terminated by the
 
Corporation or any
successor entity thereto
 
without Cause,
 
or if you
 
terminate your employment
 
for Good Reason,
 
in each case
upon or
 
within two
 
years after
 
a Change of
 
Control, prior to
 
a Vesting
 
Date, and provided
 
your rights
 
in
respect of the shares of your
 
unvested Award
 
have not previously terminated, the shares of
 
your unvested
Award
 
shall immediately
 
vest
 
and be
 
delivered to
 
you promptly
 
after
 
such termination
 
of
 
employment;
provided
 
that
,
 
as
 
of
 
the
 
Change
 
of
 
Control
 
date,
 
any
 
outstanding
 
Performance
 
Shares
 
shall
 
be
 
deemed
earned at the greater of the target level or actual performance level through the Change of Control date (or
if no target
 
level is specified,
 
the maximum level)
 
with respect to
 
all open performance
 
periods and such
Performance
 
Shares
 
shall be
 
subject
 
to
 
time-based
 
vesting
 
through
 
the
 
end
 
of
 
the
 
original
 
Performance
Cycle
 
for
 
each
 
such
 
Award,
 
subject
 
to
 
accelerated
 
vesting
 
in
 
accordance
 
with
 
the
 
first
 
sentence
 
of
 
this
clause.
 
(h)
Termination
 
without
 
Cause.
 
If
 
the
 
Corporation
 
terminates
 
your
 
employment
without Cause
 
you will
 
receive payment
 
of the
 
Award on a prorated
 
basis based
 
on the
 
number of
 
full months
in the vesting
 
schedule in which
 
you were an
 
active employee (with
 
a partial month
 
worked counted as
 
a full
month if you were an active employee for 15 days or more in the month) and such
 
reduced Award will vest
immediately upon your
 
termination of employment,
 
calculated in the
 
case of Performance
 
Shares as if
 
the
target number of Performance Shares had in fact been earned, as provided in the Plan.
 
(i)
Payout.
 
The
 
transfer
 
restrictions
 
on
 
the
 
applicable
 
number
 
of
 
whole
 
shares
 
of
Restricted Stock shall lapse on each
 
Vesting
 
Date or such other vesting date as
 
determined in this Section
2 and in the terms of the Plan. The payout with respect to vested Performance Shares shall be made on the
Performance Shares Vesting Date, on which date the
 
Committee shall determine the
 
total number of shares
earned based upon the
 
actual performance results
 
during the Performance
 
Cycle.
 
The vested shares will
 
be
delivered to you as
 
soon as administratively practicable, generally within
 
45 days following each Vesting
Date.
3.
Termination of Award
 
.
(a)
 
Except as
 
provided herein,
 
your rights
 
in respect
 
of your
 
outstanding unvested
 
Award
shares shall immediately terminate,
 
and no shares shall
 
be paid in respect thereof,
 
if at any time prior
 
to the
respective Vesting
 
Date you terminate your employment.
 
 
 
 
(b)
 
If the Corporation terminates your employment for Cause, your Award shares shall
be cancelled and the provisions under the Plan will apply.
4.
Non-transferability.
 
This Award (or any
 
rights and
 
obligations hereunder)
 
may not
be sold,
 
exchanged, transferred,
 
assigned, pledged,
 
hypothecated or
 
otherwise disposed
 
of or
 
hedged, in
any manner (including
 
through the use
 
of any cash-settled
 
instrument), whether
 
voluntarily or involuntarily
and whether by operation of
 
law or otherwise, other than
 
by will or by the laws
 
of descent and distribution.
 
5.
Withholding, Consents and Legends.
(a)
You
 
shall
 
be
 
solely
 
responsible
 
for
 
any
 
applicable
 
taxes
 
(including,
 
without
limitation,
 
income
 
and
 
excise
 
taxes)
 
and
 
penalties,
 
and
 
any
 
interest
 
that
 
accrues
 
thereon,
 
incurred
 
in
connection with your Award.
 
The Corporation will withhold shares of Common Stock
 
for the payment of
taxes
 
in
 
connection
 
with
 
the
 
vesting
 
of
 
your
 
Award
 
or
 
upon
 
the
 
occurrence
 
of
 
any
 
other
 
event
 
that,
 
in
accordance with applicable law,
 
will generate a tax liability with regards to
 
your Award.
 
The Corporation
will
 
withhold shares
 
of
 
Common
 
Stock
 
with
 
a
 
value
 
equal
 
to
 
the
 
amount
 
of
 
taxes
 
that
 
the
 
Corporation
determines it is
 
required to withhold under
 
applicable laws (with such
 
withholding obligation determined
based on any
 
applicable minimum statutory withholding rates).
 
The Corporation will use
 
the Fair Market
Value
 
of the
 
Common Stock on
 
the Vesting
 
Date or such
 
other date, as
 
applicable, in order
 
to determine
the number
 
of shares
 
to be
 
withheld. If
 
you wish
 
to remit
 
cash to
 
the Corporation
 
(through payroll
 
deduction
or
 
otherwise),
 
in
 
each
 
case
 
in
 
an
 
amount
 
sufficient
 
in
 
the
 
opinion
 
of
 
the
 
Corporation
 
to
 
satisfy
 
such
withholding
 
obligation,
 
you
 
must
 
notify
 
the
 
Corporation
 
in
 
advance
 
and
 
do
 
so
 
in
 
compliance
 
with
 
all
applicable laws and pursuant
 
to such rules as
 
the Corporation may establish from
 
time to time, including,
but not limited to, the Corporation’s Insider Trading Policy.
 
(b)
Your
 
right to receive shares pursuant
 
to the Award is conditioned on the receipt to
the reasonable satisfaction of
 
the Committee of
 
any required consent
 
that the Committee
 
may reasonably
determine to be necessary or
 
advisable.
 
By accepting delivery of the
 
shares, you acknowledge that you
 
are
subject to the Corporation’s Insider Trading Policy.
6.
Restrictive Covenants.
 
(a)
In consideration of the terms of
 
the Award,
 
you agree to the restrictive covenants
and associated remedies as set forth below,
 
which exist independently of and in addition to any obligation
to which you are
 
subject under the terms
 
of any other agreement
 
you may have with
 
the Corporation or any
of its subsidiaries (“
Popular
”).
(b)
For a period
 
of one year immediately
 
following termination of your
 
employment
with Popular for
 
any reason, you
 
will not do
 
any of the
 
following, either directly or
 
indirectly or through
associates, agents, or employees:
 
(i)
solicit,
 
recruit
 
or
 
assist
 
in
 
the
 
solicitation
 
or
 
recruitment
 
of
 
any
 
employee
 
or
consultant
 
of
 
Popular
 
(or
 
who
 
was
 
an
 
employee
 
or
 
consultant
 
of
 
Popular
 
within
 
the
 
prior
 
six
months) for the purpose of encouraging that
 
employee or consultant to leave Popular’s employ or
sever an agreement for services; or
 
(ii)
solicit,
 
participate
 
in
 
or
 
assist
 
in
 
the
 
solicitation
 
of
 
any
 
of
 
Popular’s
 
customers
serviced
 
by
 
you
 
or
 
with
 
whom
 
you
 
had
 
Material
 
Contact
 
and/or
 
regarding
 
whom
 
you
 
received
Confidential Information
 
(as defined
 
in Popular’s
 
Code of
 
Ethics) during
 
the three-year
 
period prior
to
 
your
 
employment
 
termination
 
who
 
were
 
still
 
customers
 
of
 
Popular
 
during
 
the
 
immediately
preceding 12-month period, for the purpose of
 
providing products or services in competition with
 
 
 
 
 
 
Popular’s products
 
or services.
 
"Material
 
Contact" means
 
interaction between
 
you and
 
the customer
within the three-year prior
 
to your last day as
 
a team member which
 
takes place to manage,
 
service
or further the business relationship.
 
The term “Solicit”, when used in this section, will mean any
 
direct or indirect communication of any kind
regardless of
 
who initiates
 
it, that
 
in any
 
way invites,
 
advises, encourages
 
or requests
 
any person
 
to take
any
 
action;
 
provided
 
that
 
such
 
term
 
will
 
not
 
be
 
deemed
 
to
 
include
 
solicitation
 
by
 
public
 
advertisement
media of general distribution (i.e., not targeted to present employees, consultants or customers of Popular)
without specific instruction or direction by you.
If you breach
 
any of
 
the terms
 
of this
 
restrictive covenant,
 
all outstanding
 
Restricted Stock
 
and Performance
Shares awarded hereunder, whether vested
 
or unvested, held by you shall be
 
immediately and irrevocably
forfeited for
 
no consideration.
 
For any
 
Restricted Stock
 
and Performance
 
Shares awarded
 
hereunder that
vested within one
 
(1) year prior
 
to the termination
 
of your employment
 
with Popular or
 
at any time
 
between
your termination
 
of employment
 
and the
 
date of
 
said breach,
 
you shall
 
be required to
 
repay or
 
otherwise
reimburse Popular an amount having
 
a value equal to the aggregate
 
fair market value (determined as of
 
the
date of vesting)
 
of such vested
 
shares. This paragraph does
 
not constitute Popular’s
 
exclusive remedy for
violation of your
 
restrictive covenant obligations, and
 
Popular may seek
 
any additional legal
 
or equitable
remedy, including injunctive relief, for any such violation.
7.
Section 409A.
 
Shares awarded
 
under this
 
Award
 
Agreement are
 
intended to
 
be
exempt from
 
Section 409A
 
of the
 
U.S. Code,
 
to the
 
extent applicable,
 
and this
 
Award Agreement is
 
intended
to, and
 
shall be
 
interpreted, administered and
 
construed consistent
 
therewith.
 
The Committee
 
shall have
full authority to give effect to the intent of this Section 7.
8.
No Rights to Continued Employment.
 
Nothing in this Award Agreement shall be
construed as
 
giving you
 
any right
 
to continued
 
employment by
 
the Corporation
 
or any
 
of its
 
affiliates or
affect any
 
right that
 
the Corporation
 
or any
 
of its
 
affiliates may
 
have to
 
terminate or
 
alter the
 
terms and
conditions of your employment.
 
9.
Successors
 
and
 
Assigns
 
of
 
the
 
Corporation.
 
The
 
terms
 
and
 
conditions
 
of
 
this
Award Agreement shall be binding
 
upon, and shall
 
inure to the
 
benefit of, the
 
Corporation and its
 
successor
entities.
10.
Committee Discretion.
 
Subject to the terms of the Plan,
 
the Committee shall have
full discretion with respect to any actions to be taken or determinations to be made in connection with this
Award Agreement, and its determinations shall be final, binding and conclusive.
11.
Amendment.
 
The Committee
 
reserves the
 
right at
 
any time
 
to amend
 
the terms
and conditions
 
set forth
 
in this
 
Award
 
Agreement;
provided
 
that, notwithstanding the
 
foregoing, no such
amendment
 
shall
 
materially
 
adversely
 
affect
 
your
 
rights
 
and
 
obligations
 
under
 
this
 
Award
 
Agreement
without
 
your
 
consent
 
(or
 
the
 
consent
 
of
 
your
 
estate,
 
if
 
such
 
consent
 
is
 
obtained
 
after
 
your
 
death),
 
and
provided
,
further
, that the Committee may not postpone the payout of shares to occur at any time after the
applicable time provided for in this Award Agreement. Any amendment of this
 
Award Agreement shall be
in
 
writing signed
 
by
 
an
 
authorized member
 
of
 
the
 
Committee or
 
a
 
person
 
or
 
persons
 
designated
 
by the
Committee.
12.
Adjustment; Other
 
Plan Provisions.
 
Subject to
 
Section 11,
 
the Committee
 
shall
adjust equitably the terms of this
 
Award
 
in accordance with Section 5.3 of the
 
Plan, if applicable. Subject
to
 
the
 
terms
 
of
 
this
 
Award
 
Agreement,
 
the
 
Restricted
 
Stock
 
shall
 
be
 
subject
 
to
 
the
 
terms
 
of
 
the
 
Plan,
including,
 
but
 
not
 
limited
 
to,
 
the
 
provisions
 
of
 
Section 8.4
 
related
 
to
 
dividends and
 
voting
 
rights.
 
Cash
 
 
 
dividends paid on the Restricted Stock
 
and on all of the Common
 
Stock that may be subsequently
 
acquired
with such
 
cash dividends,
 
will be
 
invested in
 
the purchase
 
of additional
 
shares of
 
Common Stock
 
of the
Corporation
 
in
 
accordance with
 
the
 
Popular,
 
Inc.
 
Dividend Reinvestment
 
and
 
Stock
 
Purchase
 
Plan
 
(the
“
DRIP
”); such shares
 
are not subject to
 
the restrictions and are
 
immediately vested. The Restricted
 
Stock
shall be held in custody by the Fiduciary Services Division of Banco Popular
 
de Puerto Rico.
Performance
 
Shares
 
will
 
accrue
 
Dividend
 
Equivalents
 
prior
 
to
 
the
 
Performance
 
Shares
 
Vesting
 
Date.
Accrued Dividend Equivalents with
 
respect to the Performance
 
Shares will be invested
 
in additional shares
of Common Stock
 
of the Corporation in
 
accordance with the formula
 
set forth in
 
the DRIP.
 
All shares of
Common
 
Stock
 
acquired
 
pursuant
 
to
 
the
 
reinvestment
 
of
 
dividends
 
will
 
be
 
subject
 
to
 
the
 
terms
 
and
conditions of Section
 
2 and will
 
be paid out
 
on the Performance
 
Shares Vesting
 
Date based on
 
the actual
number of Performance Shares earned on that date.
13.
Governing Law.
 
This award
 
shall be
 
governed by
 
and construed
 
in
 
accordance
with the laws of Puerto Rico, without regard to principles of conflicts of laws.
14.
Incentive Recoupment.
 
This award
 
shall be
 
subject to
 
the terms
 
of the
 
Popular, Inc.
Incentive Recoupment Guideline
 
in effect as of the
 
Grant Date and as
 
such guideline may be
 
required to be
modified in accordance with applicable law or regulation.
15.
Headings.
 
The
 
headings
 
in
 
this
 
Award
 
Agreement
 
are
 
for
 
the
 
purpose
 
of
convenience only and are not intended to define or limit the construction of the
 
provisions hereof.
 
IN
 
WITNESS
 
WHEREOF,
 
POPULAR,
 
INC.
 
and
 
the
 
Recipient
 
caused
 
this
 
Award
Agreement to be duly executed and delivered as of the Grant Date.
POPULAR, INC.
 
ACCEPTED:
 
By:
 
[Insert Name of Representative]
 
By: [Insert Name of Recipient]
Title:
 
[Insert Title of Representative]
 
Title: [Insert Title of Recipient]
_________________________
 
___________________________
Signature
 
Signature
 
 
 
 
 
 
 
ANNEX 1
POPULAR, INC.
2021 LONG-TERM EQUITY INCENTIVE AWARD
Recipient:
 
Employee Number:
 
Grant Date: February 25, 2021
Total Dollar Value
 
of Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Restricted Stock
Dollar Value
 
of Restricted Stock Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Total Shares of Restricted Stock Awarded:
 
Restricted Stock Vesting Dates:
 
Shares
 
Shares
 
Shares
 
Shares
February 23, 2022
 
February 23, 2023
February 23, 2024
February 23, 2025
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Shares
Dollar Value
 
of Performance Shares Award:
 
Common Stock Market Price as of closing on Grant Date:
 
Total Target
 
Number of Shares:
 
(50% Total Shareholder
 
Return / 50% ROATCE)
Relative Total Shareholder Return (TSR)
1
 
–
 
Opening Price =
 
Percentile Rank among
Comparator Group
Shares Earned
(% of Target)
75
th
 
Percentile or above
(maximum)
(1.5x target shares)
50th Percentile
(target)
(1x target shares)
25
th
 
Percentile
(threshold)
(0.5x target shares)
Below 25
th
 
Percentile
0
Absolute
 
Return
 
on
 
Average
 
Tangible
 
Common
 
Equity
(ROATCE)
2
 
–
 
ROATCE
Shares Earned
(% of Target)
3-year simple average ROATCE 2021-2023
12% or above
(maximum)
(1.5x target shares)
10%
(target)
(1x target shares)
7%
(threshold)
(0.5x target shares)
Lower than 7%
0
Results between threshold, target and maximum performance
 
will be interpolated to determine vesting award
1
 
TSR will be calculated as [(Closing Price at
 
end of period * (1 + number of shares
 
purchased assuming reinvestment of
 
dividends))/Opening Price at
beginning of period] – 1
●
Closing Price and Opening Price are based
 
on the preceding 60 trading days average
 
daily close price to mitigate against share
 
price volatility of
point-in-time metrics.
o
Opening price = average price 10/7/20-12/31/20
o
Closing price = average price 10/5/23-12/31/23
●
TSR calculations shall assume that dividends
 
are reinvested on the ex-dividend date
 
(i.e., the date a dividend asset is guaranteed).
Comparator Group -- SNL US Banks
 
greater than $10 billion in assets – Performance
 
will be based on the composition of the group
 
at the end of the 3-year
Performance Cycle.
If Popular’s absolute TSR is negative, payout
 
will be limited to a maximum of 100%
 
of target.
2
3-year simple average ROATCE for 3 years (2021-2023).
 
The Committee may adjust the goal or results
 
to reflect a core profitability that would
 
not be
unduly inflated or deflated by certain transactions
 
that do not reflect the underlying performance
 
of Popular’s ongoing operations, including,
 
but not limited
to, the impact of significant tax reform,
 
sales of non-earning assets, sales of branches
 
or other businesses, certain business acquisition
 
costs and revenues,
extraordinary events or charitable contributions,
 
severance costs and certain litigation
 
and settlement costs, among others.