CAPITAL BANCORP LTD. MANAGEMENT INCENTIVE PLAN

EXHIBIT 10.2

CAPITOL BANCORP LTD. MANAGEMENT INCENTIVE PLAN

SECTION 1. PURPOSE.

The purpose of the Capitol Bancorp Ltd. Management Incentive Plan is to promote and advance the interests of Capitol Bancorp Ltd., a Michigan corporation (the “Corporation”) and its shareholders by enabling the Corporation to attract, retain and reward key employees of the Corporation and its Affiliates, and to qualify incentive compensation paid to Participants who are covered Employees as performance-based compensation within the meaning of Section 162(m) of the Code.

SECTION 2. DEFINITIONS.

The terms below shall have the following meanings:

      (a)  “ Affiliate ” means (i) any entity that is controlled by the Corporation, whether directly or indirectly, and (ii) any entity in which the Corporation has a significant equity interest, as determined by the Committee.

      (b)  “ Annual Base Salary ” means the Participant’s rate of annual salary as of the last December 1st occurring during the Performance Period.

      (c)  “ Board ” means the Board of Directors of the Corporation.

      (d)  “ Code ” means the Internal Revenue Code of 1986, as amended.

      (e)  “ Committee ” means the committee appointed by the Board to administer the Plan as provided herein. Unless otherwise determined by the Board, the Compensation Committee of the Board shall be the Committee.

      (f)  “ Corporation ” means Capitol Bancorp Ltd., a Michigan corporation, and its successors and assigns.

      (g)  “ Covered Employee ” means a “covered employee” within the meaning of Section 162(m)(3) of the Code.

      (h)  “ Incentive Payment ” means, with respect to each Participant, the amount he or she may receive for the applicable Performance Period as established by the Committee pursuant to the provisions of the Plan.

      (i)  “ Participant ” means any employee of the Corporation or an Affiliate who is designated by the Committee as eligible to receive an Incentive Payment under the Plan.

      (j)  “ Performance Goals ” means (i) earnings per share, (ii) return measures (including, but not limited to, return on assets, equity or sales), (iii) net income (before or after taxes), (iv) cash flow (including, but not limited to, operating cash flow and free cash flow), (v)

cash flow return on investments, which equals net cash flows divided by owner’s equity, (vi) earnings before or after taxes, interest, depreciation and/or amortization, (vii) internal rate of return or increase in net present value, (viii) gross revenues, (ix) gross margins or (x) share price (including, but not limited to, growth measures and total shareholder return). Performance Goals with respect to awards for employees who are not Covered Employees may also be based on any other objective performance goals as may be established by the Committee for a Performance Period. Performance Goals may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated and may be based on or adjusted for any other objective goals, events, or occurrences established by the Committee for a Performance Period. Such Performance Goals may be particular to a line of business, subsidiary or other unit or may be based on the performance of the Corporation generally. Such Performance Goals may cover such period as may be specified by the Committee.

      (k)  “ Performance Period ” means, with respect to any Incentive Payment, the period, not to be less than 12 months, specified by the Committee, including but not limited to, for a one-year performance period, the calendar year.

      (l)  “ Performance Targets ” mean the specific measures which must be satisfied in connection with any Performance Goal prior to funding of any incentive pool.

      (m)  “ Plan ” means the Capitol Bancorp Ltd. Management Incentive Plan.

SECTION 3. ADMINISTRATION.

The Plan shall be administered by the Committee. Subject to the express provisions of the Plan, the Committee shall have exclusive authority to interpret the Plan, to promulgate, amend, and rescind rules and regulations relating to it and to make all other determinations deemed necessary or advisable in connection with the administration of the Plan, including, but not limited to, determinations relating to eligibility, whether to make Incentive Payments, the terms of any such payments, the time or times at which Performance Goals are established, the Performance Periods to which Incentive Payments relate, and the actual dollar amount of any Incentive Payment. The determinations of the Committee pursuant to this authority shall be conclusive and binding. The Committee may, in its discretion, authorize the Chief Executive Officer of the Corporation to act on its behalf, except with respect to matters relating to such Chief Executive Officer or which are required to be certified by a majority of the Committee under the Plan, or which are required to be handled exclusively by the Committee under Code Section 162(m) or the regulations promulgated thereunder.

SECTION 4. ESTABLISHMENT OF PERFORMANCE GOALS AND INCENTIVE PAYMENTS.

      (a)  Prior to the earliest time required by Section 162(m) of the Code or the regulations thereunder, the Committee shall, with the ratification of the “outside directors” of the Board (as such term is defined in Code Section 162(m)) for each such Performance Period, determine and establish in writing the following:

          (i) The Performance Goals applicable to the Performance Period; and

          (ii) The Performance Targets pursuant to which the total amount which may be available for payment to all Participants as Incentive Payments based upon the relative level of attainment of the Performance Goals may be calculated.

      (b)  After the end of each Performance Period, the Committee shall:

          (i) Certify in writing, prior to the unconditional payment of any Incentive Payment, the level of attainment of the Performance Goals for the Performance Period;