MB FINANCIAL, INC. AND MB FINANCIAL BANK, N.A. STOCK DEFERRED COMPENSATION PLAN

EXHIBIT 10.8

MB FINANCIAL, INC. AND MB FINANCIAL BANK, N.A.

STOCK DEFERRED COMPENSATION PLAN

Amended and Restated

effective January 1, 2009

MB FINANCIAL, INC. AND MB FINANCIAL BANK, N.A.

STOCK DEFERRED COMPENSATION PLAN

Amended and Restated Effective January 1, 2009

Purpose

The purpose of this Plan is to provide specified benefits to a select group of management and highly compensated Employees, and Directors, who contribute materially to the continued growth, development and future business success of MB Financial, Inc., MB Financial Bank, N.A., and any other subsidiaries, if any, that sponsor this Plan.  The benefits provided hereunder shall be distributed in the form of Company Stock. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

 

Effective Date

 

The Plan, as amended and restated in this document, is effective as of January 1, 2009 (the “ Effective Date ”). The distribution of benefits vested as of December 31, 2004 (together with earnings thereon) (“ Grandfathered Benefits ”) shall be governed solely by the terms of Appendix A.

 

ARTICLE 1                                

 

Definitions

 

For purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following meanings:

 

1.1   “ Account Balance ” shall mean, with respect to a Participant, a credit on the records of the Employer equal to the sum of (i) the Employee Deferral Account, (ii) the Director Deferral Account (collectively, the Employee Deferral and Director Deferral Accounts shall hereinafter be referred to as the “Deferral Account”), (iii) the Matching Contribution Account, and (iv) the Employer Contribution Account.  The Account Balance, and each other specified account balance, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her designated Beneficiary, pursuant to this Plan.

 

1.2   “ Annual Bonus ” shall mean any compensation, in addition to Base Annual Salary relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year, payable to a Participant as an Employee under any Employer’s annual bonus and cash incentive plans, excluding equity awards.

 

1.3   “ Annual Deferral Amount ” shall mean that portion of a Participant’s Base Annual Salary, Annual Bonus and/or Director’s Compensation that a Participant elects to have, and is deferred, in accordance with Article 3, for any one Plan Year.  In the event of a Participant’s Disability (if deferrals cease in accordance with Section 6.1) or Separation from Service prior to the end of a Plan Year, such year’s Annual Deferral Amount shall be the actual amount withheld prior to such event.

 

1.4   “ Annual Installment Method ” shall be annual installment payments over the number of years selected by the Participant in accordance with the Plan, calculated as follows:  Prior to the last Business Day (as defined in Section 3.7) of the year, the Account Balance of the Participant shall be multiplied by a fraction, the numerator of which is one, and the denominator of which is the remaining number of annual payments due the Participant (including the installment being calculated).  Notwithstanding the foregoing, any installment payments payable under the Plan shall constitute a single payment for purposes of compliance with Code Section 409A.

 

By way of example, if the Participant elects a 10 year Annual Installment Method, the first payment shall be 1/10 of the Account Balance, calculated as described in this definition.  The following year, the payment shall be 1/9 of the Account Balance, calculated as described in this definition. Each annual installment shall be paid on or as soon as administratively practicable following the last Business Day of the applicable year, but in no event more than 30 days after such date.

 

1.5   “ Base Annual Salary ” shall mean the annual cash compensation relating to services performed during any calendar year, whether or not paid in such calendar year or included on the Federal Income Tax Form W-2 for such calendar year,   excluding bonuses, commissions, overtime, fringe benefits, equity awards, relocation expenses, incentive payments, retention payments, change in control and severance payments, non-monetary awards, directors’ fees and other fees, automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee’s gross income). Base Annual Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Code sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Employee.

 

1.6   “ Beneficiary ” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 8, that are entitled to receive benefits under this Plan upon the death of a Participant.

 

1.7   “ Beneficiary Designation Form ” shall mean the form established from time to time by or at the direction of the Committee that a Participant completes, signs and returns to the Committee or its designated agent to designate one or more Beneficiaries.

 

1.8   “ Benefit Payment Date ” shall mean:

 

(a)   For purposes of a Short-Term Payout payable to a Participant under Article 4, any date occurring during the 60-day period beginning on January 1st of the calendar year designated by the Participant as the payment year for an Annual Deferral Amount (“ Short Term Payment Year ”), provided that such Short Term Payment Year shall be at least five Plan Years after the end of the Plan Year in which such amounts are actually deferred.

 

(b)   For purposes of a Separation from Service Benefit payable to a Participant under Article 5 who is not a Specified Employee (determined as of the date of his or her Separation from Service), any date occurring during the 90-day period beginning on the date on which the Participant experiences the Separation from Service; provided that if the Participant has elected payment pursuant to the Annual Installment Method, the Benefit Payment Date for each annual installment shall occur during the 30-day period beginning after each December 1st.

 

(c)   For purposes of a Separation from Service Benefit payable to a Participant under Article 5 who is also a Specified Employee (determined as of the date of his or her Separation from Service), (i) on or as soon as administratively practicable after the first date of the seventh month following the Participant’s Separation from Service date, but in no event more than 30 days after such date, or (ii) if earlier, on or as soon as administratively practicable after the date of the Participant’s death; provided that if the Participant has elected payment pursuant to the Annual Installment Method, the Benefit Payment Date for the first annual installment shall take place during the 30-day period beginning after the earlier of July 1 or December 1 to occur after the completion of the sixth (6th) month following the Participant’s Separation from Service and, for all subsequent annual installments, during the 30-day period beginning after each December 1st.

 

1.9   “ Board ” shall mean the Board of Directors of the Company.

 

1.10   “ Change in Control ” shall mean the first to occur of any of the following events:

 

(a)           Any “person” (as that term is used in Section 13 and 14(d)(2) of the Securities Exchange Act of 1934 (the “ Exchange Act ”)) is or becomes the beneficial owner (as that term is used in Section 13(d) of the Exchange Act) directly or indirectly of securities of the Company representing 35% or more of the combined voting power of the Company’s or the Employer’s outstanding securities entitled to vote generally in the election of directors;

 

(b)           individuals who were members of the Board on the Effective Date (the “ Incumbent Board ”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a member of the Board subsequent to the Effective Date (i) whose appointment as a director by the Board was approved by a vote of at least three quarters of the directors comprising the Incumbent Board, or (ii) whose nomination for election as a member of the Board by the Company’s stockholders was approved by the Incumbent Board or recommended by the nominating committee serving under the Incumbent Board, shall be considered a member of the Incumbent Board;

 

(c)           consummation of a plan of reorganization, merger or consolidation involving the Company or the Employer or the securities of either, other than (i) in the case of the Company, a transaction at the completion of which the stockholders of the Company immediately preceding completion of the transaction hold more than 60% of the outstanding securities of the resulting entity entitled to vote generally in the election of its directors or (ii) in the case of the Employer, a transaction at the completion of which the Company holds more than 50% of the outstanding securities of the resulting institution entitled to vote generally in the election of its directors;

 

(d)           consummation of a sale or other disposition to an unaffiliated third party or parties of all or substantially all of the assets of the Company or the Employer or approval by the stockholders of the Company or the Employer of a plan of complete liquidation or dissolution of the Company or the Employer.

 

For purposes of clause (a), the term “person” shall not include the Company, any Executive benefit plan of the Company or the Employer, or any corporation or other entity owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

Each event comprising a Change in Control is intended to constitute a “change in ownership or effective control,” or a “change in the ownership of a substantial portion of the assets,” of the Company or the Employer as such terms are defined for purposes of Section 409A of the Code and Change in Control as used herein shall be interpreted consistently therewith.

 

1.11   “ Claimant ” shall have the meaning set forth in Section 13.1.

 

1.12   “ Code ” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

 

1.13   “ Committee ” shall mean the committee or its designee as described in Article 11.

 

1.14   “ Company ” shall mean MB Financial, Inc., a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

 

1.15   “ Company Stock ” shall mean the common stock of the Company.

 

1.16   “ Deduction Limitation ” shall mean the following described limitation on a benefit that may otherwise be distributable pursuant to the provisions of this Plan.  Except as otherwise provided, this limitation shall be applied to all distributions that are “subject to the Deduction Limitation” under this Plan.  If an Employer determines in good faith prior to a Change in Control that there is a reasonable likelihood that any compensation paid to a Participant for a taxable year of the Employer would not be deductible by the Employer solely by reason of the limitation under Code section 162(m), then to the extent deemed necessary by the Employer to ensure that the entire amount of any distribution to the Participant pursuant to this Plan prior to the Change in Control is deductible, the Employer may defer all or any portion of a distribution under this Plan.  Any amounts deferred pursuant to this limitation shall continue to be credited/debited with additional amounts, even if such amount is being paid out in installments.  The amounts so deferred and amounts credited thereon shall be distributed to the Participant or his or her Beneficiary (in the event of the Participant’s death) at the earliest possible date, as determined by the Employer in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Employer during which the distribution is made will not be limited by Code section 162(m), or if earlier, the effective date of a Change in Control.  Notwithstanding anything to the contrary in this Plan, the Deduction Limitation shall not apply to any distributions made after a Change in Control.

 

1.17   “ Deferral Account ” shall mean (i) the sum of all of a Participant’s Annual Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant’s Deferral Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.

 

1.18   “ Deferral Election Date ” shall mean:

 

(a)   For purposes of deferrals of Base Annual Salary, Annual Bonus, and/or Director’s Compensation under Article 3, except as provided below, the last day of the Plan Year preceding the Plan Year during which the services related to such Base Annual Salary, Annual Bonus, and/or Director’s Compensation are to be performed; or

 

(b)   For a Participant who is first designated by the Committee on or after the first day of the Plan Year as being eligible to participate in the Plan, 30 days from the date such designation is communicated to the Participant.

 

1.19   “ Director ” shall mean a member of the Board.

 

1.20   “ Director’s Compensation ” shall mean fees and other compensation payable for services as a Director.

 

1.21   “ Disability ” shall be determined in accordance with Treasury Regulation 1.409A-3(i)(4). The determination of whether a Participant has a Disability shall be determined by the Committee in its sole discretion.

 

1.22   “ Election Form ” shall mean the appropriate form(s) prescribed from time to time by the Committee for a Participant to complete, sign and return to the Committee or its designated agent to make an election under the Plan.

 

1.23   “ Employee ” shall mean a person who is an employee of any Employer.

 

1.24   “ Employer(s) ” shall mean the Company, MB Financial Bank, N.A., and any other subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in the Plan and have adopted the Plan as a sponsor.

 

1.25   “ Employer Contribution ” shall mean a contribution made by an Employer on behalf of a Participant pursuant to Section 3.4.

 

1.26   “ Employer Contribution Account ” shall mean (i) the sum of the Participant’s Employer Contribution Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant’s Employer Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Employer Contribution Account.

 

1.27   “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

 

1.28   “ Matching Contribution ” shall mean a matching contribution made by an Employer on behalf of a Participant or Participants in accordance with Section 3.4.

 

1.29   “ Matching Contribution Account ” shall mean (i) the sum of all of a Participant’s Matching Contribution Amounts, plus (ii) amounts credited in accordance with all the applicable crediting provisions of this Plan that relate to the Participant’s Matching Contribution Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Matching Contribution Account.

 

1.30   “ Participant ” shall mean any Employee or Director who (i)  is selected to participate in the Plan, (ii) elects to participate in the Plan, (iii) signs a Plan Agreement, Election Form and Beneficiary Designation Form, (iv) signs a Plan Agreement, Election Form and Beneficiary Designation Form that is accepted by the Committee, (v)  commences participation in the Plan, and (vi) does not terminate his or her Plan Agreement.  A spouse or former spouse of a Participant shall not be treated as a Participant in the Plan or have an Account Balance under the Plan, even if he or she has an interest in the Participant’s Account Balance under the Plan as a result of applicable law or property settlements resulting from legal separation or divorce.

 

1.31   “ Plan ” shall mean the Company’s Stock Deferred Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement and Election Form(s), as they may from time to time be amended.

 

1.32   “ Plan Agreement ” shall mean a written agreement, as may be amended from time to time, that is entered into by and between an Employer and a Participant.  Each Plan Agreement executed by a Participant and the Participant’s Employer shall provide for the entire benefit to which such Participant is entitled under the Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement.  The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in the Plan or limit the benefits otherwise provided under the Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant.

 

1.33   “ Plan Year ” shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

 

1.34   “ Separation from Service ” shall mean:

 

(a)   For a Participant who is an Employee, a separation from service from all Employers due to death, retirement or other termination of employment, as determined in accordance with Treasury Regulation 1.409A-1(h).

 

(b)   For a Participant who is a Director, a separation from service from the board of directors of the Company and all of its subsidiaries, as determined in accordance with Treasury Regulation 1.409A-1(h).  For this purpose, service as a honorary or emeritus director will not constitute continuing service as a member of the board of directors of the Company or its subsidiaries.

 

1.35   “ Separation from Service Benefit ” shall mean the benefit set forth in Article 5.

 

1.36   “ Short-Term Payment Year ” shall have the meaning set forth in Section 1.7.

 

1.37   “ Short-Term Payout ” shall mean the payout set forth in Section 4.1.

 

1.38   “ Specified Employee ” shall mean any Participant who is determined to be a “key employee” (as defined under Code section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance with Treas. Reg. §1.409A-1(i).  In determining whether a Participant is a Specified Employee, the following provisions shall apply:

 

(a)   The Committee’s identification of the individuals who fall within the definition of “key employee” under Code section 416(i) (without regard to paragraph (5) thereof) shall be based upon the 12-month period ending on each December 31st (referred to below as the “Identification Date”).  In applying the applicable provisions of Code Section 416(i) to identify such individuals, “compensation” shall be determined in accordance with Treas. Reg. §1.415(c)-2(a) without regard to:

 

 

 

 

(b)   Each Participant who is among the individuals identified as a “key employee” in accordance with part (a) of this Section shall be treated as a Specified Employee for purposes of this Plan if such Participant experiences a Separation from Service during the 12-month period that begins on the April 1st following the applicable Identification Date.

 

1.39   “ Trust ” shall mean, if applicable, one or more trusts established pursuant to a trust agreement between the Company and the trustee named therein, as amended from time to time.

 

1.40   “ Unforeseeable Financial Emergency ” shall be determined in accordance with Treasury Regulation 1.409A-3(i)(3).

 

ARTICLE 2                                

 

Selection, Enrollment, Eligibility

 

2.1   Selection by Committee .  Participation in the Plan shall be limited to a select group of management and highly compensated Employees and Directors, as determined by the Committee in its sole discretion.  From that group, the Committee shall select, in its sole discretion, Employees and Directors to participate in the Plan.

 

2.2   Enrollment Requirements .  As a condition to participation, each selected Employee or Director shall complete, execute and return to the Committee or its designated agent a Plan Agreement, an Election Form and a Beneficiary Designation Form, all within 30 days after he or she is selected to participate in the Plan.  In addition, the Committee shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

 

2.3   Eligibility; Commencement of Participation .  Provided an Employee or Director selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee or its designated agent within the specified time period, that Employee or Director shall commence participation in the Plan as soon as administratively practicable following the month in which the Employee or Director completes all enrollment requirements or another date, such as the first day of the next Plan Year, as specified by the Committee.  If an Employee or Director fails to meet all such requirements within the period required, in accordance with Section 2.2, that Employee or Director shall not be eligible to participate in the Plan until the first day of the Plan Year following the delivery to and acceptance by the Committee or its designated agent of the required documents.

 

2.4   Termination of Participation and/or Deferrals .  If the Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or is no longer a Director, the Committee shall have the right, in its sole discretion, to prevent the Participant from making future deferral elections as of the first day of the subsequent Plan Year.

 

ARTICLE 3                                

 

Deferral Commitments/Employer Contributions/Crediting/Taxes

 

3.1   Compensation Deferrals .  For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, up to 100% of his or her Base Annual Salary, Annual Bonus and/or Director’s Compensation, as the case may be.  If no election is made, or a Participant does not make a timely election, the amount deferred shall be zero.  Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, the maximum Annual Deferral Amount shall be limited to the amount of compensation not yet earned by the Participant as of the date the Participant submits a Plan Agreement and Election Form to the Committee for acceptance.

 

3.2   Election to Defer; Effect of Election Form .

 

(a)   General Rules .  Except as provided below, a Participant must make his or her deferral election as to a Plan Year no later than the applicable Deferral Election Date and such election shall become irrevocable as of the last day of such preceding Plan Year.

 

(b)   Subsequent Plan Years .  For each succeeding Plan Year, a Participant may revoke or make a new deferral election for the subsequent Plan Year, provided that such election is made before the applicable Deferral Election Date.  In the absence of the timely delivery of such a new Election Form, the Election Form in effect at the end of the preceding Plan Year shall constitute the Participant’s irrevocable deferral election for the succeeding Plan Year.

 

(c)   Effect of Short-Term Payout Election. Notwithstanding the foregoing, if a Participant, pursuant to Section 4.1, elects a Short-Term Payout, such election shall be effective for the subsequent Plan Year and shall render all of a Participant’s prior deferral elections, if any, ineffective for subsequent Plan Years. To defer compensation for subsequent Plan Years, the Participant must submit a new Election Form. In the absence of the timely delivery of a new Election Form, the Participant’s deferral amount shall be deemed to be zero for the subsequent Plan Year and will remain zero for all subsequent Plan Years unless and until he or she timely delivers a new Election Form to the Committee.

 

(d)   Election Form.   For the above elections to be valid, the Election Form must be properly completed and signed by the Participant and timely delivered to and accepted by the Committee.

 

3.3   Withholding of Annual Deferral Amounts .  For each Plan Year, the Base Annual Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary.  The Annual Bonus portion of the Annual Deferral Amount shall be withheld at the time the Annual Bonus is or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year.  The Director’s Compensation portion of the Annual Deferral Amount shall be withheld at the time the Director’s Compensation is paid to the Participant, whether or not this occurs during the Plan Year.

 

3.4   Employer Contributions .  

 

(a)   Discretionary Matching Contributions .  Each Employer, in its sole discretion, may agree to contribute on behalf of a Participant (or Participants) who is an Employee of that Employer a Matching Contribution with respect to the Plan Year.  The amount of the Matching Contribution shall be determined in relation to the Participant’s Annual Deferral Amount, or to such other compensation that the Participant makes to any other plan of deferred compensation.  For any Plan Year, Matching Contributions may be made for some, but not all, Participants, and the amount of the Matching Contribution may vary from Participant to Participant, all as determined by the Employer in its sole discretion.  No earnings shall be credited on any Matching Contributions until after such contributions are allocated to a Participant’s Matching Contribution Account.

 

(b)   Discretionary Employer Contributions .  Each Employer may, but is not required to, contribute on behalf of a Participant who is an Employee of that Employer an additional Employer Contribution.  For any Plan Year, Employer Contributions may be made for some, but not all, Participants, and the amount of the Employer Contribution may vary from Participant to Participant, all as determined by the Employer in its sole discretion.  No earnings shall be credited on any Employer Contributions until after such contributions are allocated to a Participant’s Employer Contribution Account.

 

3.5   Investment of Trust Assets .  In the event that a Trust is established, the assets of the Trust shall be invested solely in Company Stock, except for such amounts of cash as the Trustee determines necessary to ensure the proper operation of the Trust.

 

3.6   Vesting .  A Participant shall at all times be 100% vested in his or her Deferral Account, Employer Contribution Account, and Matching Contribution Account.

 

3.7   Crediting/Debiting of Account Balances .  In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its sole discretion, for each day that the New York Stock Exchange is open (“Business Day”), amounts shall be credited or debited to a Participant’s Account Balance as though (i) a Participant’s Account Balance were invested in Company Stock; (ii) the portion of the Annual Deferral Amount that was actually deferred during any calendar quarter was invested in Company Stock no later than the close of business on the fifth (5th) Business Day after the day on which such amounts are actually deferred from the Participant’s Base Annual Salary through reductions in his or her payroll; and (iii) any distribution made to a Participant that decreases such Participant’s Account Balance ceased being invested in Company Stock no earlier than one Business Day prior to the distribution, at the closing price on such date.  Any Employer Contributions and/or Employer Matching Contributions shall be credited to a Participant’s Employer Contribution Account and/or Matching Contribution Account, as the case may be, no later than the end of the first calendar quarter following the Plan Year to which such contributions relate.

 

3.8   FICA and Other Taxes .

 

(a)   Deferral Account .  For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Participant’s Employer(