EXHIBIT 10.3
AMCORE FINANCIAL, INC.
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Performance Share Program
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Page
1.
Purpose................................................
1
2.
Definitions............................................
1
3. Determination of Performance
Shares....................
3
4. Payment of
Awards......................................
4
5. Termination of
Employment..............................
5
6.
Administration.........................................
5
7. General
Provisions.....................................
6
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1. PURPOSE
AMCORE Financial, Inc. (the "Company") has
adopted this Performance Share
Program (the "Program") 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
AMCORE Financial, Inc. 2005 Stock Award and
Incentive Plan (the "SAIP"), and is
a "subplan" of the SAIP, as contemplated by
Section 8(e) of the SAIP. 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 SAIP. Any term used
herein shall, in the absence of a specific
definition, have the meaning assigned
to such term in the SAIP.
2. DEFINITIONS
(a) "Account"
means the bookkeeping account established for the Participant
under Section 4(b).
(b) "Award"
means any grant of Common Stock in accordance with Section
4(a).
(c) "Change in
Control" shall have the meaning assigned to such term in the
SAIP.
(d) "Committee"
has the meaning given to it in the SAIP. 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.
(e) "Disability"
means permanent and total disability as determined under
the Company's disability program or
policy.
(f) "Effective
Date" means January 1, 2005, the effective date of this
Program.
(g)
"Participant" means an executive officer or other key employee of
the
Company who is selected by the Committee to
participate in this Program.
(h) "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.
(i) "Performance
Goals" means the levels of achievement specified in the
table, grid or formula described in Section
3(a)(i)(d) herein.
(j) "Performance
Shares" means the shares of Stock, which a Participant may
earn hereunder.
(k) "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.
(l) "Qualified
Performance-based Compensation" has the meaning given such
term under Section 162(m) of the Code and
the regulations promulgated
thereunder.
(m) "Retirement"
means a Participant's retirement at or after age 65 with
five years of service to the Company or
retirement at or after age 55 with ten
years of service to the Company.
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(n) "Stock"
means the common stock of the Company; par value of $.22 per
share, or such other securities as may be
substituted or resubstituted for Stock
pursuant to Section 3(b) hereof.
(o) "Stock Unit"
is a bookkeeping unit, which represents a right to receive
one share of Stock upon settlement, 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 Stock, or any asset of
the Company.
(p) "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.
(q) "Termination
of Employment" means the Participant's termination of
employment with the Company.
3. DETERMINATION OF PERFORMANCE
SHARES
(a) Designation of Performance Shares
and Related Terms.
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(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 Performance
Goals achieved 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 after the completion of a
Performance Cycle, notwithstanding
the achievement of a specified performance
condition, by up to 25% of the total
number of Performance Shares deemed earned
at the end of a Performance Cycle;
provided, however, that the maximum
Performance Shares earned shall never exceed
200% of Target Performance Shares. The
Committee may exercise this discretion in
light of other performance measures it
deems relevant, including but not limited
to financial results of the Company during
the relevant Performance Cycle
relative to the peer group of companies
designated by the Committee for any
given Performance Cycle; 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 to be Qualified
Performance-based Compensation. Threshold
awards will be equal to 50% of Target
Performance Shares and maximum awards will
be equal to 200% 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
individuals
