CHITTENDEN CORPORATION Performance Share Program

Exhibit 10.3

CHITTENDEN CORPORATION

Performance Share Program

CHITTENDEN CORPORATION

Performance Share Program

Chittenden Corporation (the “Company”) has adopted this Performance Share Program (the “Program”), subject to the approval of the Company’s stockholders of the Amended and Restated Chittenden Corporation Stock Incentive Plan, in order to strengthen the ability of the Company to attract and retain talented executives and to promote the long-term growth and profitability of the Company by linking a significant element of participating employee’s compensation opportunity to the performance of the Company over an extended period of time. This Program shall be administered pursuant to the terms and conditions of the Chittenden Corporation Stock Incentive Plan (the “SIP”). All common stock of the Company issued in connection with the Program shall be deemed to be issued from shares authorized and reserved pursuant to the SIP. Any term used herein shall, in the absence of a specific definition, have the meaning assigned to such term in the SIP.

(a) “ Account ” means the bookkeeping account established for the Participant under Section 4(b).

(b) “ Affiliated Corporations ” means members of the controlled group of corporations as defined in Section 1563 of the Code.

(c) “ Award ” means any grant of Common Stock in accordance with Section 4(a).

(d) “ Board ” means the Board of Directors of Chittenden Corporation.

(e) “ Change in Control ” shall have the meaning assigned to such term in the SIP.

(f) “ Code ” means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

(g) “ Committee ” means the committee designated by the Board to administer the Program. With respect to Covered Employees for whom the Program is intended to provide Qualified Performance-based Compensation within the meaning of Section 162(m) of the Code, any Committee must consist of two or more persons each of whom are “outside directors” within the meaning of Section 162(m) of the Code. To the extent the Committee delegates authority pursuant to Section 6(a), references to the Committee in the Program shall, as appropriate, be deemed to refer to the Committee’s delegate.

(h) “ Common Stock ” or “ Stock ” means the common stock of the Company.

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(i) “ Comparison Group ” means the peer group of companies designated by the Committee as the Comparison Group relative to a given Performance Cycle, as described in Section 3(a)(iii).

(j) “ Covered Employee ” has the meaning given such term under Section 162(m) of the Code.

(k) “ Dividend Equivalent ” means credits in respect of each Performance Share or other Stock Unit representing an amount equal to the dividends or distributions declared and paid on a share of Common Stock.

(l) “ EPS Growth Rate ” means the Company’s fully diluted compound earnings per share growth rate over the relevant Performance Cycle.

(m) “ Effective Date ” means the date that the Company’s shareholders approve the Amended and Restated Chittenden Corporation Stock Incentive Plan, the effective date of this Program.

(n) “ Exchange Act ” means the Securities Exchange Act of 1934, as amended and in effect from time to time, including all rules and regulations promulgated thereunder.

(o) “ Participant ” means an executive officer or other key employee of the Company or an Affiliated Corporation who is selected by the Committee to participate in this Program.

(p) “ Performance Cycle ” means the period over which Performance Shares designated in respect of the Performance Cycle potentially may be earned. Performance Cycles will generally be three-year periods extending from January 1 of the initial year through December 31 of the third year in the Performance Cycle. Performance Cycles generally will begin each year, and therefore will overlap with one another. The three-year performance cycle beginning on January 1, 2005 shall be referred to herein as the 2005 - 2007 Performance Cycle. Exhibit A illustrates the timing of the Performance Cycles under this Program. A Performance Cycle shall be a period of no less than one year.

(q) “ Performance Goals ” means the levels of achievement specified in the table, grid or formula described in Section 3(a)(i)(d) herein.

(r) “ Performance Shares ” means the shares of Common Stock which a Participant may earn hereunder.

(s) “ Pro Rata Portion ” means, for any individual, a portion of a specified number of Performance Shares relating to a given Performance Cycle determined by multiplying such number of Performance Shares by a fraction, the numerator of which is the number of calendar days in the Performance Cycle during which the individual was a Participant in the Program and the denominator of which is the number of calendar days in the Performance Cycle (subject to adjustment under Section 3(b)).

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(t) “ Qualified Performance-based Compensation ” has the meaning given such term under Section 162(m) of the Code and the regulations promulgated thereunder.

(u) “ Stock Unit ” is a bookkeeping unit which represents a right to receive one share of Common Stock upon settlement, together with a right to accrual of additional Stock Units as a result of Dividend Equivalents, subject to the terms and conditions of this Program. Stock Units are arbitrary accounting measures created and used solely for purposes of this Program, and do not represent ownership rights in the Company, shares of Common Stock, or any asset of the Company.

(v) “ Target Performance Shares ” means a number of Performance Shares designated as a target number that may be earned by a Participant in respect to a given Performance Cycle.

(w) “ Termination of Employment ” means the Participant’s termination of employment with the Company and any Affiliated Corporations.

(x) “ Total Shareholder Return ” means the amount, expressed as a percentage, of market price appreciation or depreciation of a share of Common Stock plus dividends on a share of Common Stock or on the common stock of a company in the Comparison Group assuming dividend reinvestment at the dividend payment date.

(a) Designation of Performance Shares and Related Terms .

(i) Not later than 90 days after the beginning of a Performance Cycle, the Committee shall: (a) select employees to participate in the Program for the relevant Performance Cycle; (b) designate, for each such Participant, the Target Performance Shares such Participant shall have the opportunity to earn in such Performance Cycle; (c) specify the duration of the Performance Cycle; and (d) specify a table, grid or formula that sets forth the number or percentage of Target Performance Shares that will be earned corresponding to the percentile rank of the Company’s EPS Growth Rate for the three years ending on the last day of the Performance Cycle as compared to the EPS Growth Rate of the Comparison Group for the three years ending on the last day of the Performance Cycle. Exhibit B contains such a table for the 2005-2007 Performance Cycle. The Committee may, in its discretion, adjust the number of Performance Shares earned by a Participant, notwithstanding the achievement of a specified performance condition. The Committee may exercise this discretion in light of other performance measures it deems relevant, including but not limited to Total Shareholder Return results of the Company during the relevant Performance Cycle relative to the Comparison Group; provided, however, that the Committee may only exercise such discretion to reduce, and not to increase, the number of Performance Shares earned by a Participant unless such award was not intended

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to be Qualified Performance-based Compensation. Threshold awards will be equal to 50% of Target Performance Shares and maximum awards will be equal to 150% of Target Performance Shares.

(ii) The provisions of Section 3(a)(i) notwithstanding, at any time during a Performance Cycle, the Committee may select a new employee or a newly promoted employee who was not currently participating in the Performance Cycle to participate in the Performance Cycle and designate the Target Performance Shares for such Participant; provided, however, that such designation must be effective before the date on which two-thirds (2/3) of the relevant Performance Cycle has elapsed; and further provided that such ind