FIRST COMMONWEALTH FINANCIAL CORPORATION
601 Philadelphia Street
Indiana, Pennsylvania 15701
Notice of 20182024 Annual Meeting
of Shareholders
To Our Shareholders:
The 2018 Annual Meeting of Shareholders of First Commonwealth Financial Corporation will be held at First Commonwealth Place, 654 Philadelphia Street, Indiana, Pennsylvania 15701 on Tuesday, April 24, 2018, beginning at 2:00 p.m., Eastern Time, to consider and vote on the following matters:
The 2024 Annual Meeting of Shareholders of First Commonwealth Financial Corporation will be held on Tuesday, April 23, 2024, beginning at 1:00 p.m., Eastern Time.
Table of Contents
Annex A – First Commonwealth Financial Corporation 2024 Stock Plan
Proxy Statement for the
We are sending this proxy statement and the accompanying proxy card to you as a shareholder of First Commonwealth Financial Corporation in connection with the solicitation of proxies for the Annual Meeting of Shareholders (the “Annual Meeting”). First Commonwealth’s Board of Directors is soliciting proxies for use at the Annual Meeting or at any postponement or adjournment of the Annual Meeting. Only shareholders of record as of the close of business on March 1, In this proxy statement, the “Company,” “First Commonwealth,” “we,” “our” or “us” all refer to First Commonwealth Financial Corporation and its subsidiaries. We also refer to the Board of Directors of First Commonwealth Financial Corporation as the “Board.” Here we present an overview of information that you will find throughout this proxy statement. As this is only a summary, we encourage you to read the entire proxy statement for more information about these topics prior to voting. Annual Meeting
Shareholder Voting Matters
Proxy Summary
Our Director Nominees You are being asked to vote on the election of the
Corporate Governance Facts
Participating in the Annual Meeting You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on March 1, 2024, the record date, or hold a valid proxy for the meeting. To be admitted to the Annual Meeting at www.meetnow.global/MZLCTU7, you must enter the 15-digit control number found next to the label “Control Number” on your Notice of Internet Availability or proxy card or in the email sending you the Proxy Statement. If you are a beneficial shareholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your control number. Whether or not you participate in the Annual Meeting, it is important that your shares be part of the voting process. You may log on to www.meetnow.global/MZLCTU7 and enter your Control Number. We are committed to answering all relevant questions we receive during the meeting. Shareholders may submit questions during the meeting through the virtual meeting platform at www.meetnow.global/MZLCTU7 We encourage you to access the Annual Meeting before it begins. Online check-in will start approximately fifteen minutes before the meeting on April 23, 2024. If you have difficulty accessing the meeting, please call 1-888-724-2416 (toll free) or 1-781-575-2748 (international). Technicians will be available to assist you. We will also make the Annual Meeting viewable to anyone interested in a webcast at www.meetnow.global/MZLCTU7. Interested persons who were not shareholders as of the close of business on March 1, 2024 may view, but will not be able to vote or ask questions.
The following table sets forth certain information concerning the persons known by us to be the beneficial owners of more than 5% of the outstanding shares of our common stock.
The following table sets forth certain information as of the March 1,
The Board of Directors is responsible for overseeing the management of the Company’s business and affairs. The Board measures the effectiveness of its oversight using a balanced scorecard which is comprised of three themes:
Sound corporate governance provides the foundation which enables the Board to effectively carry out these responsibilities. This section discusses First Commonwealth’s corporate governance policies and practices, as well as the composition of the Board and its standing committees. The Board of Directors has adopted Corporate Governance Guidelines which codify our corporate governance policies and reflect our commitment to following corporate governance best practices. Below is a summary of the significant guidelines that we follow. Separation of Majority Voting in Director Elections. Under our Corporate Governance Director Independence. Executive Sessions. Our Board and committees regularly meet in executive session without management present, and ournon-management directors meet regularly without the Chief Executive Officer. This enables directors to provide candid feedback, raise concerns and discuss sensitive or confidential matters. Our Stock Ownership. We believe that directors should hold a meaningful investment in the Company’s stock to ensure that their interests are aligned with our shareholders. Our guidelines require that all directors own shares having a value of at least
Corporate Governance Director Orientation and Education. All new directors and committee members receive orientation to learn about the Company and its strategic plans, significant financial, regulatory, accounting and risk management matters and policies and compliance programs. Our current directors regularly participate in continuing education to maintain the skills necessary to perform their duties and responsibilities and to keep abreast of industry trends, legal and regulatory developments and corporate governance practices. Performance Evaluations. Our Board and committees regularly evaluate and discuss their performance. In addition, our Board performs a peer evaluation from time to time to provide directors with a confidential forum to assess and provide candid feedback regarding their own performance and the performance of fellow directors. The Board and its committees use the results of these evaluations to identify opportunities to enhance performance and topics for director continuing education. Retirement Age. We have established a mandatory retirement age of 75 for our directors. No candidate may be nominated for election as a director if he or she would be age 75 or older at the time of the election. Meeting Frequency and Attendance. Directors are expected to attend Board meetings and meetings of committees on which they serve and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Last year, our Board met nine (9) times. All of our directors attended at least 75% of the total number of meetings of the Board and all committees of which they were members. Annual Meeting Attendance. Composition and Diversity of the Board We believe that our Board should generally consist of between 10 and 15 directors. This range permits diversity of experience and sharing of Board and committee responsibilities without hindering effective governance. However, the Board may increase its membership beyond 15 to accommodate an exceptional candidate or operate with fewer than 10 directors if a vacancy arises. We believe The Governance Committee is also guided by a set of criteria that has been approved by the Board of Directors. Under these criteria, a director candidate should:
Corporate Governance
When assessing each current director for possible nomination andre-election, the Governance Committee considers all of the criteria listed above, as well as the needs of the Board, the independence of the director, the director’s meeting attendance and participation, and the value of the director’s contributions to the effectiveness of our Board and its committees. The rules of the NYSE require that at least a majority of our Board of Directors be comprised of independent directors. Our Corporate Governance Guidelines require that The Board reviews all relationships between the Company and its directors at least once per year and assesses each director’s independence annually using the NYSE independence standards. The Board has determined that a director may be independent even if he or she has business relationships with First Commonwealth or one of its affiliates, as long as, in the Board’s business judgment:
Based upon these criteria, the Board has determined that directors Caponi, Charley, Claus, Dahlmann, Glass, Gorney, When evaluating the independence of Mr. Latimer, the Board considered the lease transaction between First Commonwealth Bank and SML Limited Partnership described below under the heading “Related Party When evaluating the independence of Ms. Husic, the Board considered compensation in the amount of $100,000 paid to Ms. Husic pursuant to a Consulting Agreement entered into between First Commonwealth Bank and Ms. Husic in connection with the merger of Centric Bank (of which Ms. Husic served as Chief Executive Officer) into First Commonwealth Bank. The Board determined that the amount paid to Ms. Husic fell below the quantitative limits established by the NYSE independence rules and was not otherwise material to Ms. Husic or First Commonwealth. Oversight of Risk The Board of Directors actively oversees the risk management practices employed by First Commonwealth and its management team. The Board receives regular reports from our Chief Risk Officer regarding material risk exposures and the actions taken to monitor and mitigate those risks. In addition, senior management updates the Board at its regular meetings regarding trends and developments for credit, market, liquidity, compliance, reputation, operational, cybersecurity and strategic risk. Our Risk Committee provides risk oversight for the Board as a dedicated forum to review and discuss risks and risk management policies and practices.
Corporate Governance Audit Committee The Audit Committee is comprised of Julie A. Caponi (Chair), Gary R. Claus, taken to monitor and control those exposures, including risk assessments and risk management policies. Each member of the Audit Committee is financially literate, and our Board has determined that Directors Caponi and Claus qualify as “audit committee financial experts” as defined by the rules of the SEC. The Audit Committee met eight (8) times in Compensation and Human Resources Committee The Compensation and Human Resources Committee is comprised of Robert J. Ventura (Chair), The Governance Committee is comprised of The Risk Committee is a joint committee of the Boards of Directors of First Commonwealth Financial Corporation and First Commonwealth Bank and is comprised of David S. Dahlmann (Chair), Julie A. Caponi, Johnston A. Glass, Jon L. Gorney,
Code of Conduct and Ethics The Code of Conduct and Ethics governs the actions and working relationships of First Commonwealth employees, officers and directors. This Code addresses, among other items, conflicts of interest, confidentiality, fair dealing, protection and proper use of corporate assets and compliance with laws, rules and regulations. The Code of Conduct and Ethics encourages and provides a process for the reporting of any illegal or unethical behavior. First Commonwealth has established an ethics hotline to allow employees, officers and directors to anonymously report any known or suspected violation of laws, rules or regulations or the Code of Conduct and Ethics. Where to Find Governance Documents You can find copies of the charters for our Audit Committee, Compensation and Human Resources Committee, Governance Committee and Risk Committee, as well as our Corporate Governance Guidelines, Code of Conduct and Ethics and other important information, by visiting our website at www.fcbanking.com and following the links to “Investor Relations” and “Corporate Governance.” You may communicate directly with any director or the full Board. To do so, please write to the person or persons desired and mail the communication to: First Commonwealth Financial Corporation Attn: Board Communications P.O. Box 400 Indiana, PA 15701 Our employees will not open or otherwise screen any communications sent to this address. The communications will be delivered directly to the In addition, First Commonwealth has retained an independent service provider to receive calls from shareholders and other interested parties who wish to communicate with thenon-management directors. The telephone number for this service is1-866-825-5283. The independent service provider will forward all communications to the
Compensation of Directors
Director Compensation Schedule In
In addition to the fees described above,
Director Compensation in The following table shows the compensation paid to ournon-employee directors during
Upon the recommendation of our Governance Committee, the Board of Directors has nominated the Julie A. Ray T. Gary R. University. Mr. Claus earned a Bachelor of Science degree in Accounting from Robert Morris David S.
Proposal 1 – Election of Directors Corporation and First Commonwealth Bank from 2006 until April 2021. Mr. Dahlmann formerly served on the Board of Directors of the Federal Reserve Bank of Cleveland and as an Adjunct Professor at Saint Vincent College in Latrobe, Pennsylvania, and he Johnston A. Jon L. Board service include his extensive experience as a financial services executive and his strong expertise in financial services information technology and operations. Jane Grebenc. Ms. Grebenc, age 65, has served as Executive Vice President and Chief Revenue Officer of First Commonwealth Financial Corporation and President of First Commonwealth Bank since May 31, 2013. Ms. Grebenc is a member of our Risk Committee and director of First Commonwealth Bank. Ms. Grebenc’s financial services career includes executive leadership roles at a variety of institutions, including Park View Federal Savings Bank, Key Bank, and National City Bank. She was formerly the Executive Vice President in charge of the retail, marketing, IT and operations and the mortgage segments at Park View Federal Savings Bank from 2009 until 2012, the Executive Vice President in charge of the Wealth Segment at Key Bank from 2007 until 2009 and the Executive Vice President / Branch Network at National City Bank prior to 2007. Ms. Grebenc received her Bachelor of Science degree in Economics from John Carroll University, and she earned her MBA in Finance and Marketing from Case Western Reserve University. Her qualifications for service on our Board include her thorough understanding of the banking and financial services industry. David W.
Proposal 1 – Election of Directors components and advanced materials consumed in production processes from 2001 until his retirement in 2010. Prior to joining Kennametal in 2001, Mr. Greenfield was a shareholder of Buchanan Ingersoll & Rooney P.C., a Pittsburgh-based law firm, focusing on corporate, financial and transactional issues involving public and private companies. He also served as Senior Vice President, General Counsel and Secretary of Meritor Automotive, Inc. and Associate General Counsel of Rockwell International Corporation. He is also active in a number of charitable, educational and civic Patricia A. Husic. Ms. Husic, age 59, served as President, Chief Executive Officer, and a Director of Centric Financial Corp. and Centric Bank in Harrisburg, Pennsylvania, from 2007 until the acquisition by First Commonwealth. She was a co-founder of Centric Financial in 2007. Ms. Husic joined our Board on February 1, 2023, upon the closing of the acquisition. She is also a director of First Commonwealth Bank and a member of the Risk Committee. Prior to founding Centric, Ms. Husic served as President, COO and Director of Vartan Bank from 2005 until the acquisition in 2007 by Centric Financial. She served as Executive Vice President, Chief Operating Officer and Chief Financial Officer of Vartan Bank from 2004 to 2005. Previously, Ms. Husic was a member of the executive management team at Pennsylvania State Bank from 1991 to 2004, overseeing accounting, finance, and management information systems, during her tenure. She currently serves on the board of the American Bankers Mutual Insurance, LTD and as a director and secretary of the Central Pennsylvania Food Bank. Ms. Husic served as Chair of the Pennsylvania Bankers Association in 2013 and founded the Women in Banking program at the association during that time. She also served on the board of the American Bankers Association from 2016 to 2019. Ms. Husic has been recognized by American Banker magazine as one of the Most Powerful Women in Banking for the years 2015-2021. She earned her Bachelor’s degree in Accounting and Management Information Systems from Temple University and is a Certified Public Accountant. Ms. Husic brings over 30 years of experience and leadership in the banking industry and provides an important connection between First Commonwealth and its Eastern Pennsylvania markets. Bart E. Luke A. Vincent College. His qualifications for service as a director include his extensive business experience and his years of service as a director in the financial services industry.
Proposal 1 – Election of Directors Aradhna M. Oliphant. Ms. Oliphant, age 58, serves as the Chief Operations and Strategy Officer of the Wallis Annenberg Legacy Foundation, a philanthropic foundation based in Los Angeles, California. She previously served as President and Chief Executive Officer of Leadership Pittsburgh, Inc., a leadership development and networking organization in Southwestern Pennsylvania, from 2005 until 2022. Ms. Oliphant has also held leadership positions at The Forbes Funds, an affiliate of the Pittsburgh Foundation, The Children’s Festival Chorus in Pittsburgh, and Princeton Pro Musica in New Jersey. She has also served as an Adjunct Professor of Business Management and Psychology at various universities in New Jersey including Rider University, College of New Jersey, and College of St. Elizabeth. Ms. Oliphant joined our Board in April 2019 and serves as a member of our Compensation and Human Resources Committee and Governance Committee. She is also a director of First Commonwealth Bank. Ms. Oliphant earned a Bachelor of Arts Degree in Humanities and a Master of Arts Degree in Psychology from University of Bhopal, India, and a Master of Business Administration from Rutgers University, New Jersey. She has received Honorary Doctorates from Waynesburg University and Robert Morris University, both in Pennsylvania. Ms. Oliphant’s qualifications for service on our Board include her extensive leadership, professional development and business experience, and strong network and reputation among leaders across the business, foundation, public and civic sectors. T. Michael
Robert J. Stephen A.
Proposal 1 – Election of Directors Indiana County Chamber of Commerce, a member of the Indiana County Development Corporation and Center for Economic Operations, theco-founder and Chairman of the Seeds of Faith Christian Academy and Campaign Chair for the United Way. Mr. Wolfe earned a Bachelor of Science degree in Pharmacy from Temple University and a Masters in Public Administration from Penn State University. Mr. Wolfe contributes extensive experience in business, strategic planning and execution and organizational development to our Board of Directors. Each director elected this year will continue in office until a successor has been elected. Each nominee has indicated that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy will be voted for another person nominated by the Board. The Board may also choose to reduce the number of directors to be elected, as permitted by ourBy-laws. The Board of Directors recommends that you vote “FOR” each of the nominees listed above.
The Audit Committee of the Board has appointed
At the annual meeting, shareholders will be asked to ratify the appointment of The affirmative vote of the holders of a majority of First Commonwealth’s common stock present in person or represented by proxy at the annual meeting is necessary for ratification of the appointment of The Board of Directors recommends that you vote “FOR” the ratification of the selection of
Audit Information The Audit Committee of First Commonwealth’s Board of Directors operates under a written charter that specifies the Audit Committee’s duties and responsibilities. This charter is available on First Commonwealth’s website at www.fcbanking.com by following the links to “Investor Relations” and “Corporate Governance.” Management is responsible for the financial reporting process, the system of internal controls, including internal control over financial reporting, and procedures designed to ensure compliance with accounting standards and applicable laws and regulations. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited consolidated financial statements of First Commonwealth as of and for the year ended December 31, Based on the review and discussions noted above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in First Commonwealth’s annual report on Form10-K for the fiscal year ended December 31, Submitted by the Audit Committee, Julie A. Caponi, Chair Gary R. Claus Bart E. Johnson Robert J. Ventura
Audit Information Fees Billed by The aggregate fees billed by
Audit CommitteePre-Approval Policies and Procedures The Audit Committee is required topre-approve the audit andnon-audit services performed by First Commonwealth’s independent auditors in order to assure that the provision of those services does not impair the Under generalpre-approval, the Audit Committee approves in advance the payment of up to a specified amount of fees for the performance of specified types of audit, audit-related, tax and other services by the independent auditors. The term of generalpre-approval is generally twelve (12) months from the date ofpre-approval. Any services that are not subject to generalpre-approval or fees in excess ofpre-approved limits must be specificallypre-approved by the Audit Committee on acase-by-case basis.Pre-approved fee levels or budgeted amounts for all services to be provided by the independent auditors are established annually by the Audit Committee. The Audit Committee does not delegate its responsibilities topre-approve services performed by the independent auditors to management. However, thepre-approval policy allows the Audit Committee to delegate to one or more designated members of the Audit Committee the authority to grant requiredpre-approvals. The decision of any member to whom authority is delegated topre-approve an activity is presented to the full Audit Committee at its next scheduled meeting.
First Commonwealth is providing shareholders with the opportunity at the The Compensation and Human Resources Committee, which is responsible for the compensation of our executive officers, has overseen the development of a compensation program designed to attract, retain and motivate executives who enable us to achieve our strategic and financial goals. The Compensation Discussion and Analysis section of this proxy statement and the tabular disclosures regarding named executive officer compensation, together with the accompanying narrative disclosure, allow shareholders to view the trends in compensation and application of our compensation philosophies and practices for the years presented. Shareholders are being asked to vote on the following advisory resolution: RESOLVED, that the shareholders approve the compensation of First Commonwealth Financial Corporation’s named executive officers as described in the Compensation Discussion and Analysis section and in the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement. Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation and Human Resources Committee and the Board will take the outcome of the vote into account when considering future executive compensation arrangements. The Board of Directors recommends that you vote “FOR” the advisory resolution on executive compensation.
Executive Compensation Compensation Discussion and Analysis This Compensation Discussion and Analysis (CD&A) outlines our 2023 executive compensation philosophy and objectives, describes the elements of our executive compensation program, and explains how the Compensation & T. Michael Price President and James R. Reske Executive Vice President and Chief Financial Officer Jane Grebenc Executive Vice President and Brian G. Karrip Executive Vice President and Chief Credit Officer Norman J. Montgomery Executive Vice President, Business Integration Group Mgr.
Executive Summary We seek to align the interests of our executives with the interests of our shareholders. We believe it is important to incent and reward executives for corporate and individual The Committee established short- and
These performance goals
Executive Compensation
Summary of Executive Compensation Actions The following is a summary of compensation actions taken by the Company in
Executive Compensation CEO Pay At-A-Glance The following graphs show the direct relationship between our financial performance and our CEO total compensation1 levels and our improving relative performance by comparing our Core ROA and Core ROTCE to the median of our performance peer group and the total annual compensation for Mr. Price since 2017.
Executive Compensation Advisory Vote on Executive Compensation Our shareholders approved the compensation of our NEOs in an advisory vote at our 2023 annual meeting of shareholders. The advisory vote received the support of 97% of the votes cast (excluding abstentions and broker non-votes). The Committee considered the results of this advisory vote to be overwhelmingly favorable.
Executive Compensation What Guides Our Program Compensation Philosophy and Objectives The Committee believes that the continued success of the Company in achieving its strategic objectives depends in large part on the talent and leadership of its executives and the alignment of those executives with the interests of our investors. Accordingly, the Committee’s philosophy toward executive compensation can be summarized as follows:
Elements of Compensation Base Salary We provide base salaries to compensate our NEOs for services performed during the year. Base salaries further our objectives of attracting and retaining executive talent and providing competitive compensation. Base salaries for executive officers are determined by:
The Committee typically reviews and approves base salaries annually as part of the performance review process as well as upon promotion or other change in job responsibility. Adjustments to base salaries, within a range of competitive practices, are determined primarily by:
Incentive Compensation In order to align pay with corporate performance, the Committee seeks to appropriately balance fixed compensation with variable, or “at risk,” incentive compensation that is contingent on performance and the financial success of the organization. For 2023, the NEOs and certain other key executives participated in two incentive compensation plans:
Each plan includes performance goals with “threshold,” “target” and “superior” performance levels. The threshold level represents the minimum acceptable level of performance to earn an award under the particular performance goal. The Committee considers our budget, peer performance, growth percentages and the consensus estimate of covering analysts when establishing the target level of performance under our AIP. The superior performance level generally reflects stretch targets for the corporate performance goals. For the LTIP, the Company’s performance must meet or exceed the median of the performance peer group to achieve the target level of performance, while the threshold performance level is set at the 25th percentile and the superior level requires performance within the top quartile of the performance peer group. The Committee has discretion to consider unusual factors and their resulting effect on our performance, such as merger and acquisition transactions, the impact of share repurchase activity on the achievement of performance goals, strategic decisions that have an adverse impact on near-term results such as conversion-related expenses, unusual investment gains or losses, corporate and balance sheet restructuring, significant asset sales, significant exogenous events, and other items it deems appropriate in determining the extent to which we achieve our performance goals. Our incentive compensation plans are intended to align our executives’ financial interests with those of our investors. The combination of annual and long-term incentives is intended to balance our desire to achieve strong financial results over the short term with the need to employ prudent and sustainable growth strategies. Compensation Positioning and Mix First Commonwealth strives to maintain an executive compensation program (both individual components and in the aggregate) that is competitive with the market. While the targeted pay level is set to provide competitive pay for meeting expected performance, the actual pay level (by component and in the aggregate) varies based on performance relative to goals and industry performance over both short- and long-term timeframes. In the aggregate, the objective of First Commonwealth’s executive compensation program is to provide a balanced mix of fixed and variable (i.e., incentive / performance) and cash and equity compensation. The target mix of compensation will vary based on the executive’s role, and the actual mix will vary based on performance. Our executive compensation program emphasizes variable (at-risk) pay that aligns compensation with performance and shareholder value. For the NEOs, the mix of compensation elements is weighted toward variable, performance-based compensation. The CEO’s compensation has a greater emphasis on variable compensation than that of the other NEOs because his actions have a greater influence on the performance of the Company as a whole.
Executive Compensation As shown below, the majority of CEO target compensation and a significant portion of other NEO target compensation was variable and subject to performance and/or vesting requirements (56% for the CEO and an average of 47% for our other active NEOs) for fiscal year 2023.
The Decision-Making Process Role of the Compensation Committee The Compensation and Human Resources Committee of the Board (“the Committee”) is comprised of The primary responsibilities of the Committee are to:
The Committee relies upon performance data, statistical information and other data regarding executive compensation programs and peer practices provided from time to time by First Commonwealth’s Human Resources department, officers and outside advisors. The Committee has access to individual members of
Executive Compensation management and employees and may invite them to attend any Committee meeting. The Committee has the power and discretion to retain, at First Commonwealth’s expense, independent counsel and other advisors and experts as it deems necessary or appropriate to carry out its duties.
Role of Executives in Establishing Compensation The CEO
The CEO generally attends Committee meetings, but he is not present during executive sessions of the Committee at which his performance and compensation are discussed. Other members of management also attend meetings from time to time at the request of the Committee to provide reports and information on agenda topics. Independent Compensation Consultant During 2023, Meridian provided the Committee with peer executive compensation data and advised the Committee regarding various matters brought before the Committee, including the Committee’s evaluation of the design of short- and long-term incentive programs, the Board’s evaluation of the CEO and the evaluation of our performance and compensation against the performance and compensation of our compensation peer group, which is described under “Peer Comparisons” and elsewhere in this CD&A. The Committee has the sole authority to retain and terminate Meridian as its compensation consultant and approve fees and other engagement terms. The Committee has determined that Meridian is independent from management based upon the consideration of relevant factors, including:
Executive Compensation Peer Comparisons The Committee reviews a peer compensation assessment annually as a market check for the Company’s executive pay and performance.
The compensation peer group selected by the Committee is comprised of
The Committee also references a national peer group, which we refer to as our performance peer group, comprised of all publicly traded United States banks and thrifts having total assets greater than or equal to 50% and less than or equal to 200% of the total assets of the Company, when measuring the Company’s performance in comparison to peers for incentive plans and other purposes. During 2023, Meridian presented a market assessment of the Company’s executive compensation in comparison to the compensation peer group. The assessment noted that the CEO’s base salary is at 73% of the market median and target total direct compensation is at 70% of the market median. The base salary and target total direct compensation for other NEOs is within the competitive range of +/- 15% from the market median. Based on this assessment, Meridian concluded that the compensation of the NEOs is aligned with the Committee’s compensation philosophy. In assessing thepay-for-performance relationship, the Committee considers the historic
Executive Compensation The
The
Executive Compensation
During 2023, the Committee approved a 16% increase to
Annual Incentive Plan The Committee The
Threshold level. The Committee
When evaluating the Company’s
Executive Compensation to adjust the AIP payout for each NEO to 100% of the target award. The table below sets forth the amount earned by each NEO under the original design of the 2023 AIP, the amount of the discretionary award to each NEO and the total amount paid to each NEO under the 2023 AIP.
Long-Term Incentive Plans 2023-2025 LTIP In January 2023, the Committee established a LTIP for the
The table below identifies the performance
The performance peer group for 2021-2023 LTIP 2023 represented the final year of the performance cycle for the PRSUs issued pursuant to the 2021-2023 LTIP. Vesting was based upon First Commonwealth’s achievement of the following performance goals: (1) core ROTCE in relation to the performance peer group; and (2) TSR in relation to the performance peer group. The table below lists the performance goals for the 2021-2023 LTIP and their respective weightings and threshold, target and superior performance levels, and results:
Executive Compensation Based upon these results, in February 2024 the Committee approved the vesting of the following PRSUs and time-vesting RSUs to the NEOs:
Other Compensation Practices, Policies and Guidelines Stock Ownership Guidelines The Committee has
Executives are not required to purchase shares to reach these ownership guidelines. However, executives are restricted from selling shares received as equity-based compensation (net of
As of the record date for the annual meeting, each of our executive officers (including the NEOs) owns shares having a value that substantially exceeds their applicable stock ownership guideline. Policy Regarding Derivatives, Short Sales and First Commonwealth’s policy prohibits directors and officers (including the NEOs) from pledging shares on margin, trading in derivative securities of First Commonwealth’s common stock, engaging in short sales of First Commonwealth securities, or purchasing any other financial instruments that are designed to Benefit Programs and Perquisites The NEOs participate in employee benefit programs available to all other eligible employees of First Commonwealth, including our 401(k) plan, and group medical, life and disability insurance. In addition, First Commonwealth maintains a Nonqualified Deferred Compensation Plan that is designed to restore benefits that are not available to them under our 401(k) plan as highly compensated employees, according to rules of the IRS. Under the terms of this Plan, each participant may contribute up to 25% of his or her base salary and up to 100% of his or her annual incentive payment to the Plan.
Executive Compensation received by each NEO is included in the Other Compensation column of the Summary Compensation Table on page 37. In 2021, the Committee amended the Plan to allow employer discretionary contributions. In January 2024, the Committee approved discretionary contributions of $12,500 each to 17 senior leaders, including the NEOs. These contributions were approved to supplement retirement savings and recognize strong individual and company performance in 2023. The Company pays for certain members of senior management (including certain NEOs) to belong to one or more private clubs as a venue to entertain customers and to participate in various community functions. Expenses of a personal nature or related to a spouse or partner are not paid by the The Company offers our executive officers (including NEOs) the opportunity to receive financial planning and tax preparation services from a third-party to assist with their personal finances. Providing this service gives our executive officers a better understanding of their pay and benefits, allowing them to concentrate on the Company’s future success. If the Company hires or initiates a transfer of an employee, including an NEO, and requires a relocation of more than 50 miles, the employee may be eligible for reimbursement of the costs of house hunting trips, closing on the sale of the old home and the purchase of the new home, temporary living quarters and moving household goods and furniture. In these circumstances the Company will also gross up taxable relocation reimbursements for
Agreements with Executives We provide employment and change of control agreements to certain executive officers (including the NEOs) to promote stability and continuity of executive officers and ensure their interests are aligned with shareholders. Terms of these agreements consider marketplace practices and First Commonwealth’s unique needs and are tailored to the individual executive with a focus on retention and recruitment. The change of control agreements contain a “double trigger,” providing benefits only upon an involuntary termination or constructive termination of the executive officer in connection with a change of control. The agreements do not provide for any taxgross-ups payments upon a change of control event. The Committee considers change of control agreements to be necessary in the current financial services industry legal, regulatory and economic environment. Details on employment agreements and change of control agreements are included under “Potential Payments Upon Termination or Change of Control” on page 45.
The Committee
Executive Compensation
Compensation Committee Report The Compensation and Human Resources Committee has reviewed and discussed with management the Compensation Discussion and Analysis set forth in the preceding pages of this proxy statement, and based on such review and discussions, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Company’s Annual Report on Form10-K for the fiscal year ended December 31, Respectfully submitted, Robert J. Ventura, Chairman Ray T. Charley Gary R. Claus David W. Greenfield Aradhna M. Oliphant Stephen A. Wolfe
Executive Compensation Summary Compensation Table The table below shows compensation of our named executive officers.
Executive Compensation
The following table shows information on plan-based awards to the named executive officers during
Executive Compensation Outstanding Equity Awards at FiscalYear-End The following table presents the number and market value of unvested stock awards held by the named executive officers as of December 31,
Executive Compensation Option Exercises and Stock Vested We had no outstanding stock options during
Nonqualified Deferred Compensation We maintain anon-qualified deferred compensation plan in which each named executive officer may contribute up to 25% of his or her base salary and
Executive Compensation Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below.
Executive Compensation The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Tabular List of Financial Performance Measures First Commonwealth considers the following to be the most important financial performance measures it uses to link compensation actually paid to its NEOs, for 2023, to company performance. Core ROTCE Core EPS Core Efficiency Ratio Pre-Tax Pre-Provision Return on Average AssetsTotal Shareholder Return Relationship Between Pay and Performance The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years.
Executive Compensation  The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years. The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Core ROTCE during the four most recently completed fiscal years.
Executive Compensation  Compensation Policies and Practices Relating to Risk Management As a financial services institution, our objective is to effectively understand and manage our risk exposures and to ensure we are compensated appropriately for the risks that we take. Incentive plans play an important role in our success by providing specific rewards for achievement of goals, while balancing the risks we undertake with asset quality and safety and soundness considerations. We follow the following compensation policies and practices to ensure that we achieve this balance: All of our incentive plans have explicit provisions that allow First Commonwealth to recover any amounts paid to an employee as a result of erroneous or intentionally misrepresented data. Our corporate banking incentive plans provide the Company with the right to recover any payments made to an employee in respect of loans that are downgraded to non-accrual status or charged off within 24 months after origination.Our corporate banking incentive plans have explicit credit quality disqualifiers, which can reduce or eliminate an incentive otherwise earned if the employee fails to follow established portfolio management requirements. All sales and service incentives, including all incentives relating to the sale of loan and line-of-credit All sales and service incentive plans are reviewed annually and must be approved by a panel of executive officers. All incentives are monitored by our Human Resources department for compliance with documentation, risk profile and credit quality requirements. In addition, management performs an annual assessment of First Commonwealth’s incentive plans in order to determine the extent to which the incentives could potentially encourage excessive risk taking by our employees or otherwise expose the organization to risks that could destroy shareholder value or jeopardize the safety and soundness of First Commonwealth Bank. This assessment is reviewed by the Risk Committee and Compensation and Human Resources Committee of the Board of Directors. In performance/payout relationships for positions where incentives for individual behavior could potentially create an incentive for excessive risk taking, as well as mitigating controls in the design and administration of incentive plans. The assessment concluded that our compensation policies do not encourage excessive and unnecessary risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company.
Executive Compensation Potential Payments Upon Termination or Change of Control First Commonwealth has entered into agreements with certain executive officers and key employees, including each named executive officer, which provide for the payment of severance and benefits in the event of a qualifying termination of employment following a change of control. In addition, Mr. Price, Mr. Reske, Change of Control Agreements We have entered into a Change of Control Agreement with each of the Named Executive Officers which entitle the executive to receive severance payments in equal monthly installments over a specified period following the termination of his or her employment if the executive is terminated without “cause” (as defined below) or terminates his or her employment for “good reason” (as defined below) within a specified period following the occurrence of a “change of control” (as defined below) of First Commonwealth, each of which is referred to in the Change of Control Agreements as a “qualifying termination.” As used in the Change of Control Agreements: (A) “cause” includes (i) the conviction of a felony which results or is intended to result in a loss to the Company or its clients, employees, directors or officers; (ii) the failure to perform the executive’s duties with the degree of skill and care reasonably expected of a professional of his or her experience and stature after notice and an opportunity to cure; (iii) acts of dishonesty which result in material damage to the business or reputation of the Company; or (iv) a violation of the terms of the Change of Control Agreement or any Company policy or procedure which is deliberate and results or is intended to result in material damage to the business or reputation of the Company; (B) “good reason” includes (i) the diminution of or assignment of duties which are inconsistent with the position, authority, duties or responsibilities of the executive prior to the change of control; (ii) changing the location of the executive’s employment by more than fifty miles or substantially increasing the executive’s travel obligations; or (iii) reduction of the executive’s base salary or discontinuance of any benefit, welfare or compensation plan or material fringe benefit for the executive; and (C) “change of control” means (i) the acquisition by any person of beneficial ownership of 50% or more of the outstanding shares of our stock; (ii) a change in the composition of the majority of our Board of Directors (except for nominees who are approved by a majority vote of the incumbent Board); or (iii) a merger, reorganization, consolidation, sale or similar transaction in which the persons who owned our outstanding shares prior to the transaction do not beneficially own at least 50% of the outstanding shares of the resulting entity. However, the placement of the Company into receivership by the FDIC, the sale of the Company in an FDIC-assisted transaction or a change in the composition of our Board of Directors at the direction of an agency having supervisory authority over us will not constitute a “change of control” for purposes of the Change of Control Agreements. The monthly severance payment is calculated as one-twelfth (1/12) of the sum of the following:the executive’s annual base salary immediately prior to the change of control; the average of the aggregate amount of all bonuses paid to the executive during the thirty-six months prior to the change of control;the aggregate amount of all contributions by First Commonwealth for the account of the executive under First Commonwealth’s 401(k) plan during the twelve months prior to the change of control; and the aggregate amount of any contributions by First Commonwealth to the executive’s Non-Qualified Deferred Compensation Plan account during the twelve-months prior to the change of control.In addition to severance payments, the former executive and his or her family will continue to receive, at the employer’s expense, the same level of medical benefits for up to eighteen (18) months following the occurrence of a qualifying termination.
Executive Compensation If the payments and benefits to which the executive is entitled under his or her Change of Control Agreement, either alone or together with any other payments or benefits that he or she is entitled to receive from First Commonwealth, would constitute a “parachute payment” for purposes of section 280G of the Internal Revenue Code, the payments and benefits will be reduced by the minimum amount necessary to result in no portion of the payments and benefits being non-deductible by First Commonwealth and subject to the excise taxes imposed under the Internal Revenue Code for parachute payments.The following table sets forth the payments and the value of benefits that each such person would have been entitled to receive if a qualifying termination had occurred following a change of control on December 31,
Employment Agreement with Mr. Price We entered into an employment agreement with Mr. Price in November 2007 when he joined First Commonwealth as President of First Commonwealth Bank, and we entered into an amended and restated employment agreement with Mr. Price when he assumed the position of Interim President and Chief Executive Officer of the Company effective January 1, 2012. Under the terms of his employment agreement, as amended and restated, Mr. Price is employed for successive one-year terms ending December 31 unless the agreement is terminated by either party upon notice given at least 60 days prior to the end of the current term. The current term of Mr. Price’s employment agreement ends December 31, 2024. If First Commonwealth terminates Mr. Price’s employment other than for “cause” (as defined below) during the term of the agreement or Mr. Price resigns for “good reason” (as defined below) during the term of the agreement, then First Commonwealth will pay Mr. Price severance in an amount equal to one year’s base salary, subject to the execution of an agreed form of separation agreement and general release by Mr. Price. As used in Mr. Price’s employment agreement: (A) “cause” includes (i) the failure by Mr. Price to comply with any material provision of his employment agreement; (ii) the refusal by Mr. Price to comply with any lawful, written directive from the Board of Directors; (iii) Mr. Price’s failure to perform his duties with the degree of skill and care reasonably to be expected of a professional of his experience and stature after notice and a reasonable opportunity to cure (unless the failure to perform is incapable of being cured); or (iv) any act of dishonesty, fraud or moral turpitude by Mr. Price or the conviction of Mr. Price of a crime which, in the judgment of the Board of Directors, renders his continued employment materially damaging or detrimental to the Company; and (B) “good reason” includes (i) a substantial reduction in Mr. Price’s title, position or responsibilities; (ii) any reduction in Mr. Price’s base salary or a material reduction of benefits (unless such reduction of benefits applies equally to all similarly situated employees of the Company); (iii) the assignment of Mr. Price to a position which requires him to relocate permanently to a site more than fifty (50) miles outside of Indiana, Pennsylvania; or (iv) the assignment to Mr. Price of any duties or responsibilities (other than due to a promotion) which are materially inconsistent with the position of the President and Chief Executive Officer.
Executive Compensation The severance amount is payable in equal periodic installments in accordance with the Company’s normal payroll schedule, provided that any installments that would otherwise be payable within six months following Mr. Price’s separation from service will be paid on the day following the six-month anniversary of the separation from service. First Commonwealth will also offer continuation coverage to Mr. Price, as required by COBRA, under First Commonwealth’s group health plan on the terms and conditions mandated by COBRA and will pay the cost of Mr. Price’s COBRA premiums for 12 months following his separation from service.The employment agreement contains certain covenants which protect the Company during and following the termination of Mr. Price’s employment, including: (i) a non-competition covenant which prohibits Mr. Price from serving in certain capacities with competitive businesses for a period of one year following the termination of his employment; (ii) a provision prohibiting Mr. Price from soliciting or hiring our employees for one year followingthe termination of his employment; and (iii) customary provisions protecting the confidentiality of Company information and requiring the return of documents and information upon the termination of Mr. Price’s employment. If we had terminated Mr. Price’s employment without cause on December 31, $24,418. Employment We entered into employment agreements with Mr. Reske,
The term of one-year periods unless the If First Commonwealth terminates (x) one-twelfth (1/12) of his
executive’s principal position. The severance amount is payable in equal periodic installments in accordance with the Company’s normal payroll schedule, provided that any installments that would otherwise be payable within six months following
Executive Compensation of the separation from service. First Commonwealth will also offer continuation coverage to The non-competition covenant which prohibits
The table below sets forth the amount of severance and the aggregate value of COBRA premiums to which each executive would be entitled under the terms of his or her Employment Agreement had we
Ratio of CEO Pay to Median Employee Pay In accordance with SEC rules, we are reporting the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. We identified the median employee from among all employees as of December
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan The Board of Directors is requesting that First Commonwealth’s shareholders vote in favor of the First Commonwealth Financial Corporation 2024 Stock Plan (the “2024 Stock Plan”). The 2024 Stock Plan was approved by the Company’s Board of Directors on January 30, 2024, subject to shareholder approval. The 2024 Stock Plan will replace and supersede the First Commonwealth Financial Corporation Amended and Restated Incentive Compensation Plan, which was last approved by shareholders in 2015 and is scheduled to expire in 2025 (the “Prior Plan”). All outstanding awards under the Prior Plan will continue to be governed by the terms of the Prior Plan. We will not grant any awards under the 2024 Stock Plan prior to shareholder approval, and we will not grant any further awards under the Prior Plan after the 2024 Stock Plan has been approved by shareholders. Description of the 2024 Stock Plan The principal features of the 2024 Stock Plan are summarized below, but this summary is qualified in its entirety by reference to the 2024 Stock Plan itself, a copy of which is included with this Proxy Statement as Annex A. References in this Proposal 4 to “shares” refer to shares of common stock of First Commonwealth. Reason for Adoption of the 2024 Stock Plan. If approved by our shareholders, the 2024 Stock Plan will be the sole means by which First Commonwealth may grant long-term equity-based compensation awards to key employees of First Commonwealth and its subsidiaries (“employees”). The 2024 Stock Plan will also become the sole means by which First Commonwealth may grant stock-based awards to its directors who are not employees (“non-employee directors”). If the 2024 Stock Plan is not approved by the shareholders, First Commonwealth can continue to issue shares to employees and non-employee directors under the Prior Plan until the earlier of April 28, 2025. If the 2024 Stock Plan is approved, it will not affect awards outstanding under the Prior Plan that were granted prior to approval of the 2024 Stock Plan by the shareholders. The Prior Plan provided for the issuance of up to 5,000,000 shares of First Commonwealth stock. As of March 1, 2024, 1,552,747 shares of stock remained available for issuance under the Prior Plan, representing approximately 1.52% of First Commonwealth’s issued and outstanding shares. The Board considers equity compensation to be a significant component of total compensation for First Commonwealth’s employees and believes that a combination of short and long-term incentives is essential to maintain a competitive compensation program and to attract, reward and retain top talent. The Board believes adoption of the 2024 Stock Plan is an important part of the pay-for-performance program of First Commonwealth and that the authorization of a total of 5,000,000 shares, representing, if issued, approximately 4.9% of First Commonwealth’s issued and outstanding shares, will permit First Commonwealth to continue its compensation program for the next ten years. Purpose of the 2024 Stock Plan. The purpose of the 2024 Stock Plan is to recognize the contributions made to First Commonwealth and its subsidiaries by employees and non-employee directors, to provide such persons with additional incentive to devote themselves to the future success of First Commonwealth and its subsidiaries, and to enhance the ability of First Commonwealth and its subsidiaries to attract, retain and motivate such individuals by providing them with the opportunity to acquire or increase their proprietary interest in First Commonwealth. The 2024 Stock Plan serves these purposes by making equity-based awards available for grant to eligible participants in the form of:
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan
Highlights of the 2024 Stock Plan. The 2024 Stock Plan contains certain features that the Board believes are consistent with the interests of shareholders and sound governance principles. Provided below is a summary of these key plan features.
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan Shares Authorized Under the 2024 Stock Plan. The Board and the Committee understand their responsibility to shareholders in granting equity-based awards. In setting the number of proposed additional shares issuable under the 2024 Stock Plan and recommending the adoption of the plan by the Board, the Committee considered a number of factors, including:
Shares Currently Available for Issuance. As of March 1, 2024, we had 102,198,902 shares issued and outstanding (not including treasury shares) and 1,552,747 shares were available for future awards under the Prior Plan. If shareholders approve the 2024 Stock Plan, the shares available under the Prior Plan will be superseded by the proposed 5,000,000 shares that will be available for issuance under the 2024 Stock Plan. As of March 1, 2024, these shares would represent, if issued, approximately 4.89% of the issued and outstanding shares. Equity Award Granting Practices and Share Usage. In setting and recommending to shareholders the increase in the number of shares authorized, the Committee considered historic share usage and resulting burn rate as reflected in the table below.
Total Potential Dilution. The Committee considered the potential shareholder dilution represented by outstanding employee equity awards and shares available for future grants. Basic dilution is calculated as shown below.
As of March 1, 2024, and prior to any additional shares authorized under the 2024 Stock Plan, total potential dilution is 1.99%. Based upon the 5,000,000 shares proposed to be authorized under the 2024 Stock Plan, total potential dilution increases to 5.55%, which is lower than the industry thresholds established by major proxy advisory firms and institutional investors. Estimated Plan Life. The Committee also considered the estimated plan life (in years) for various potential share requests at different annual grant rates. Based upon the 2023 annual burn rate of approximately 0.27% of outstanding shares annually, the Committee anticipates that the 2024 Stock Plan shares would last for the anticipated plan duration of ten years. The actual plan duration will vary depending upon First Commonwealth’s stock price and its financial performance, both of which may be heavily influenced by market conditions.
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan Summary of the First Commonwealth Financial Corporation 2024 Stock Plan The following is a summary of the material features of the 2024 Stock Plan. This summary is qualified in its entirety by reference to Annex A, which contains the complete text of the 2024 Stock Plan. Total Common Shares Authorized. The 2024 Stock Plan authorizes a total of 5,000,000 shares. As of the date on which this 2024 Stock Plan is adopted by the shareholders, no additional shares may be issued under the Prior Plan. The Board believes the number of shares authorized for issuance under the 2024 Stock Plan will be sufficient, on the basis of current expectations, for all anticipated awards during the 2024 Stock Plan’s proposed ten-year term. Shares issued pursuant to the 2024 Stock Plan may be authorized and unissued shares or treasury shares. The number of shares issuable under the 2024 Stock Plan is subject to adjustment as to the number and kind of shares in the event of stock splits, stock dividends or certain other changes in the capitalization of First Commonwealth as described below. Share Counting. Shares subject to an award that are withheld or repurchased by First Commonwealth to satisfy a tax withholding obligation or that are tendered to First Commonwealth to pay the exercise price of an Option or which are tendered in satisfaction of any condition to a grant of Restricted Stock will not again be available for issuance under the 2024 Stock Plan. In addition, the gross number of shares covered by a SAR, to the extent it is exercised, will not again become available for issuance pursuant to the 2024 Stock Plan, regardless of the number of shares used to settle the SAR upon its exercise. Any awards issued pursuant to the 2024 Stock Plan that are settled solely in cash or otherwise forfeited thereafter will again become available for grant under the 2024 Stock Plan. Limitations on Awards. Under the 2024 Stock Plan, in any one calendar year, no participant may receive awards of stock options or SARs for more than 500,000 shares, stock-settled performance awards for more than 500,000 shares, cash-denominated performance awards of more than $5,000,000, or annual incentive awards for more than $5,000,000. Additionally, no non-employee director may receive awards of more than 50,000 shares in any one calendar year. Administration of the 2024 Stock Plan. The 2024 Stock Plan will be administered by the Compensation & Human Resources Committee of the Board, which is comprised solely of independent directors of First Commonwealth. The 2024 Stock Plan provides that, to the extent the Board determines it is appropriate for awards under the 2024 Stock Plan to qualify for the exemption available under SEC Rule 16b-3(d)(1) or Rule 16b-3(e) promulgated under the Securities Exchange Act of 1934, the Committee shall be composed of two or more members who are “non-employee directors” within the meaning of Rule 16b-3. The Committee has the power in its discretion to grant awards under the 2024 Stock Plan, to determine the terms of such awards, to interpret the provisions of the 2024 Stock Plan and to take action as it deems necessary or advisable for the administration of the 2024 Stock Plan. Termination and Amendment of the 2024 Stock Plan. Unless earlier terminated by the Board or the Committee, the 2024 Stock Plan will terminate ten (10) years after the date it is approved by our shareholders, which is expected to occur at the Annual Meeting. In addition, the Board or the Committee may, at any time and for any reason, suspend or terminate the 2024 Stock Plan or from time to time amend the 2024 Stock Plan, provided that any amendment will be submitted to our shareholders for approval if such shareholder approval is required by federal or state law or regulation or the rules of NYSE (or any other stock exchange on which our shares may then be listed or quoted). Even if the 2024 Stock Plan is suspended or terminated, the Committee will still retain authority to exercise powers given to it under the 2024 Stock Plan with respect to awards granted before the suspension or termination.
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan Eligibility and Participation. Any employee of First Commonwealth or its subsidiaries or any non-employee director of First Commonwealth is eligible to receive an award under the 2024 Stock Plan. However, pursuant to applicable law, only employees of First Commonwealth or its subsidiaries are eligible to receive ISOs. As of March 1, 2024, there were approximately 1,496 employees and 13 non-employee Directors eligible to participate in the 2024 Stock Plan. Minimum Vesting Requirement. No awards granted under the 2024 Stock Plan may vest earlier than one year following the grant date, subject to an exception for awards covering up to five percent (5%) of shares available for grant under the 2024 Stock Plan, which may vest earlier than one year from grant. This minimum vesting requirement does not apply to substitute awards granted in connection with awards that are assumed, converted, or substituted in connection with a merger, acquisition, or similar corporate transaction entered into by First Commonwealth or any of its subsidiaries, awards issued to non-employee directors, shares delivered in lieu of fully vested cash obligations or shares issued to settle a performance award or other award determined by performance goals (“Vesting Limitation Exceptions”). Options and SARs Options entitle the Option holder to purchase shares at a price established by the Committee. Options may be either ISOs or NQSOs. ISOs may only be granted to qualifying employees. SARs entitle the SAR holder to receive cash or shares equal to the positive difference (if any) between the exercise price and the fair market value of the shares underlying the SAR on the exercise date. We do not currently have a practice of awarding Options or SARs to employees or directors. The 2024 Stock Plan provides for a definition of “fair market value.” Exercise Price. The exercise price of an Option or SAR granted under the 2024 Stock Plan may not be less than the fair market value of the underlying shares on the date of grant. The 2024 Stock Plan prohibits any repricing, replacement, re-grant or modification of Options or SARs that would reduce the exercise price of the Options or SARs without shareholder approval, other than in connection with a change in our capitalization or certain corporate transactions described below in “Adjustment of Plan Shares.” Vesting/Expiration of Options and SARs. The Committee determines the terms under which Options and SARs vest and become exercisable. Option awards may contain provisions that allow the Option holder to exercise the Option after his or her termination of service due to death or disability or for such other reason established by the Committee. Any part of the Option that has not been exercised by the end of the Option term expires and is forfeited. Option and SAR terms may not exceed 10 years from the date of grant. Exercise of Options. An option holder may exercise an Option by completing the required steps as specified by the record keeper. The Option holder must state the number of shares for which the Option is being exercised and must tender payment for the shares. The Committee may, in its discretion, accept cash, check, electronic funds transfer or previously acquired shares (valued at the fair market value on the date of exercise) and held for the period required by the Committee. In the alternative, the Committee may reduce the number of Common Shares deliverable upon exercise of the Option through an established net exercise process or the Committee may permit payment through a broker-facilitated cashless exercise program. Exercise of SARs. Upon exercise of a SAR, a participant will be entitled to receive cash or shares, or a combination of both, as specified in the award agreement, having an aggregate fair market value equal to the excess of (i) the fair market value of one share on the date of exercise, over (ii) the SAR exercise price, multiplied by the number of shares covered by the SAR or the number being exercised. Termination of Options and SARs. In the event that a participant’s service with First Commonwealth and all of its subsidiaries terminates prior to the expiration of an Option or SAR, the participant’s right to exercise vested Options or SARs generally terminates, provided that the Committee may specify in the applicable Option or SAR agreement those circumstances in which the participant may exercise his or her Option after termination of service.
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan Restricted Stock Awards First Commonwealth may grant Restricted Stock to employees and non-employee directors. Such awards may vest as a result of continued service to First Commonwealth and may vest upon achievement of applicable performance criteria established by the Committee; provided, that Restricted Stock awards will be subject to a minimum service requirement of not less than one year before they can vest, subject to the Vesting Limitation Exceptions describe above. Restricted Stock granted to a participant may not be sold, transferred, pledged or otherwise encumbered or disposed of during the restricted period established by the Committee. In the event a participant’s service with First Commonwealth and its subsidiaries terminates prior to the vesting of a Restricted Stock award, that award will be forfeited unless the Committee approves the accelerated vesting or continued vesting of the award. Stock Unit Awards First Commonwealth may grant Stock Unit grants under the 2024 Stock Plan. An award of Stock Units gives the recipient the right to receive, upon exercise of the Stock Units, (a) a cash payment based upon the fair market value of the number of shares provided for in the award agreement at the time of exercise of the Stock Units, or (b) the shares specified in the Stock Unit award. Stock Unit awards may vest as a result of continued service to First Commonwealth or upon the achievement of applicable performance criteria established by the Committee; provided, that Stock Units granted under the 2024 Stock Plan will be subject to a minimum service requirement or minimum performance requirement (or both) of not less than one year before they can vest, subject to the Vesting Limitation Exceptions. In the event a participant’s service with First Commonwealth and its subsidiaries terminates prior to the vesting of a Stock Unit award, that award will be forfeited unless the Committee approves the accelerated vesting or continued vesting of the award. Performance-Based Compensation The Committee may specify that the grant, retention, vesting, or issuance of any award under the 2024 Stock Plan (whether in the form of an Option, SAR, Restricted Stock or Stock Unit) or the amount to be paid out under any award, will be subject to or based on performance objectives or other standards of financial performance and/or personal performance evaluations. Performance criteria may include, in the Committee’s discretion, performance goals relating to one or more of the following objectives:
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan A performance goal may be set in any manner determined by the Committee, including looking to achievement on an absolute or relative basis in relation to peer groups or indexes, and may relate to First Commonwealth as a whole or one or more operating units of First Commonwealth. In the Committee’s discretion, the business criteria may include or exclude “extraordinary items”, including extraordinary charges, losses from discontinued operations, restatements and accounting changes and other unplanned special charges such as restructuring expenses, acquisitions, acquisition expenses, including expenses related to goodwill and other intangible assets, stock offerings, stock repurchases and loan loss provisions. The Committee may also adjust any performance goal for a period as it deems equitable in recognition of unusual or nonrecurring events affecting First Commonwealth, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine. Clawback Provision The 2024 Stock Plan provides that awards and amounts paid or payable pursuant to or with respect to awards are subject to clawback as determined by the Committee, which may include forfeitures, repurchase, reimbursement and/or recoupment of awards and amounts paid or payable. The Committee has discretion to determine whether the Company may effect any such recovery (i) by seeking repayment from the participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the participant under any compensatory plan, program or arrangement maintained by the Company or any subsidiary, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amounts) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing or otherwise. Other Plan Features Limited Transferability of Awards. Unless the Committee determines otherwise, awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution, and during the participant’s lifetime, may be exercised only by the participant (or his or her personal representative or guardian if the participant is incapacitated). Tax Withholding. The Committee may require payment, or withhold payments made pursuant to awards, to satisfy applicable income and employment withholding tax requirements. Adjustment of Plan Shares. In the event First Commonwealth has a stock dividend or stock split, or a corporate transaction, such as a reorganization, separation or liquidation, merger, consolidation or similar transaction that affects First Commonwealth’s capitalization, the Committee will adjust in an equitable manner the number, kind or class of shares reserved under the 2024 Stock Plan and the individual and aggregate limits imposed on grants to the extent required to preserve the economic value of the awards, subject to certain limitations set forth in the 2024 Stock Plan. The Committee will make similar adjustments to shares underlying any grant previously made of Restricted Stock and any related grant or forfeiture conditions and to shares related to previously granted Options and the Option exercise price and to SARs and the SAR exercise price. If we assume awards or grant substitute awards in a corporate transaction for awards previously granted by another company we acquire, such substitute awards will not reduce the shares authorized for issuance under the 2024 Stock Plan or any individual or aggregate annual limits. Change in Control The 2024 Stock Plan provides that the Committee may provide in any award agreement for provisions relating to a Change in Control, as that term is defined in the 2024 Stock Plan, including, without limitation, the acceleration of the vesting, delivery or exercisability of, or the lapse of restrictions with respect to, any outstanding Awards; provided, however, that, in addition to any conditions provided for in the award agreement, any acceleration of the vesting, delivery or exercisability of, or the lapse of restrictions with respect to, any outstanding awards in connection with a Change in Control may occur with respect to any
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan participant who is an employee only if (i) the Change in Control occurs and (ii) the participant’s employment with First Commonwealth or any of its subsidiaries is terminated without Cause or by the Participant for Good Reason within two years following such Change in Control. The terms “Cause” and “Good Reason” are defined in the 2024 Stock Plan. The 2024 Stock Plan also provides that unless otherwise determined by the Committee, in the event of a merger, consolidation, mandatory share exchange or other similar business combination of First Commonwealth with or into any other entity or any transaction in which another person or entity acquires all of the issued and outstanding Common Shares or all or substantially all of the assets of First Commonwealth and its subsidiaries, an outstanding award may be assumed or an award of equivalent value may be substituted by such successor entity or a parent or subsidiary of such successor entity. With respect to awards subject to performance goals, except as otherwise determined by the Committee, in the event of a Change in Control, all incomplete performance periods in respect of such award in effect on the date the Change in Control occurs will end on the date of the Change in Control and the Committee shall (i) determine the extent to which performance goals with respect to each such performance period have been met based upon such audited or unaudited financial information then available and (ii) cause to be paid to the participant a pro-rated award (based on each completed day of the performance period prior to the Change in Control) based upon the Committee’s determination of the degree of attainment of the applicable performance goals or, if not determinable, assuming that the applicable target levels of performance have been attained (or on such other basis as the Committee determines to be appropriate); provided that in no event shall a participant become entitled to a payout in excess of the target level payout with respect to a performance goal for which the Committee has not determined the actual level of achievement. Rights as Shareholders Until exercised, holders of Options will have no rights as a shareholder with respect to those Options. With respect to shares of Restricted Stock, except as limited by the 2024 Stock Plan or award agreement, the participant shall have all of the voting rights of a shareholder of First Commonwealth with respect to the same class of shares as are represented by such Restricted Stock. With respect to SARs and Stock Units exercisable for shares, a participant shall have no voting rights with respect to such awards until the shares underlying such awards are properly issued to the participant. In no event may cash dividends paid with respect to Stock Units become payable before the date such Stock Units have become fully vested and nonforfeitable. Unless otherwise set forth in the applicable award agreement, if a share dividend is declared on any shares described in a Stock Unit grant, such dividend shall increase the number of shares described in such Stock Unit grant, but shall only be issuable if and when the related Stock Unit becomes exercisable. U.S. Federal Income Tax Consequences Options There are no federal income tax consequences to a participant or to First Commonwealth upon the grant of an ISO or an NQSO under the 2024 Stock Plan. Upon exercise of an NQSO, the Option holder generally recognizes ordinary income in an amount equal to: (i) the fair market value of the acquired shares on the date of exercise, reduced by (ii) the exercise price the participant pays for the shares received in the exercise. Provided First Commonwealth satisfies applicable reporting requirements, it is entitled to a tax deduction in the same amount as the participant includes as ordinary income. An Option retains its status as an ISO during the period the Option holder is an employee and, if the ISO does not expire at termination of employment, for three months after such termination of employment (with
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan certain exceptions for death and disability). Upon the exercise of an ISO, an Option holder generally recognizes no immediate taxable income. When the Option holder sells shares acquired through the exercise of an ISO, the gain is treated as long-term capital gain (or the loss is a long-term capital loss) unless the sale is a “disqualifying disposition.” A “disqualifying disposition” occurs if the Option holder sells shares acquired on exercise within two years from the grant date of the ISO or within one year from the date of exercise. On a disqualifying disposition, the Option holder includes the gain realized on the sale of the shares as ordinary income (or ordinary loss). Gain (or loss) is determined by subtracting the exercise price paid from the greater of (i) the fair market value of the shares on the exercise date, or (ii) the amount realized by the Option holder on the date of sale. The gain may constitute a tax preference item for computing the participant’s alternative minimum tax. Generally, First Commonwealth will not be entitled to any tax deduction for the grant or exercise of an ISO. If, however, the sale of shares acquired through exercise of an ISO is a disqualifying disposition, then provided it satisfies applicable reporting requirements, First Commonwealth will be entitled to a deduction in the same amount the participant includes in income. SARs There are no federal income tax consequences to either a participant or First Commonwealth upon the grant of a SAR. However, the participant generally will recognize ordinary income upon the exercise of a SAR in an amount equal to the aggregate amount of cash and the fair market value of the shares received upon exercise. Provided it satisfies applicable reporting requirements, First Commonwealth will be entitled to a deduction equal to the amount included in the participant’s income. Restricted Stock Except as otherwise provided below, there are no federal income tax consequences to either a participant or to First Commonwealth as a result of the grant of Restricted Stock. The participant recognizes ordinary income in an amount equal to the fair market value on the date of vesting of the Restricted Stock. Provided First Commonwealth satisfies applicable reporting requirements, it will be entitled to a corresponding deduction. Notwithstanding the above, a recipient of a Restricted Stock grant that is subject to a substantial risk of forfeiture may make an election under Section 83(b) of the Code, within 30 days after the date of the grant, to recognize ordinary income as of the date of grant and First Commonwealth will be entitled to a corresponding deduction at that time. Stock Units When a Stock Unit is settled, the participant will recognize ordinary income in an amount equal to the fair market value of the shares received or, if the Stock Unit is paid in cash, the amount paid. Golden Parachute Payments. Awards that are granted, accelerated or enhanced upon the occurrence of, or in anticipation of, a Change in Control of First Commonwealth may give rise, in whole or in part, to “excess parachute payments” under Section 280G and Section 4999 of the Code. With respect to any excess parachute payment, the participant would be subject to a 20% excise tax on, and First Commonwealth would be denied a deduction for, the “excess” amount. 409A of the Code. We intend that, to the extent any provisions of the 2024 Stock Plan or any awards granted under the 2024 Stock Plan are subject to Section 409A of the Code (which relates to nonqualified deferred compensation), they will be interpreted and administered in good faith in accordance with Section 409A requirements and that the Committee will have the authority to amend any outstanding awards so that they are in compliance with Section 409A or qualify for an exemption from Section 409A. First Commonwealth will not indemnify any participant for taxes or penalties imposed by Section 409A. To the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the 2024 Stock Plan during the six (6) month period immediately following the participant’s termination of employment or service will instead be paid on the first payroll date after the six-month anniversary of the participant’s separation from service (or the participant’s death, if earlier).
Proposal 4 – Approval of the First Commonwealth Financial Corporation 2024 Stock Plan Equity Compensation Plan Information The following table provides information regarding our existing equity compensation plans and shares available for future issuance as of December 31, 2023:
Vote Required and Recommendation of the Board The affirmative vote of a majority of the shares present in person or represented by proxy at the meeting is required to approve the 2024 Stock Plan. Abstentions will have the same effect as a vote cast against the proposal. Shares not voted by brokers and other entities holding shares on behalf of beneficial owners, and shares for which authority to vote is withheld, will have no effect on the outcome. Proxies received by the company and not revoked prior to or at the meeting will be voted for this proposal and the adoption of the Amended Plan unless otherwise instructed by the shareholders. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE FIRST COMMONWEALTH FINANCIAL CORPORATION 2024 STOCK PLAN.
Section 16(a) Section 16(a) of the Securities Exchange Act of 1934 requires First Commonwealth’s directors and executive officers, and persons who own more than 10% of a registered class of First Commonwealth’s equity securities, to file with the Securities and Exchange Commission (“SEC”) an initial report of ownership and reports of changes in ownership of our common stock and other equity securities of First Commonwealth. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish First Commonwealth with copies of all Section 16(a) forms they file. Based solely on First Commonwealth’s review of the copies of forms received by it, and written and oral representations from its directors, executive officers and greater than 10% shareholders, First Commonwealth is not aware of any late filings or failures to file Section 16(a) forms during
We know of no other matters to be submitted to the shareholders at the Annual Meeting. If any other matters properly come before the shareholders at the Annual Meeting, it is the intention of the persons named on the proxy to vote the shares represented thereby on such matters in accordance with their best judgment.
Related Party Transactions Any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships between First Commonwealth or any of its subsidiaries and any of First Commonwealth’s executive officers, directors or nominees for election as a director, any person owning more than 5% of First Commonwealth’s common stock or any immediate family member of any of the foregoing persons is considered a “related party transaction” and must be approved or ratified by the Governance Committee in accordance with a written policy adopted by First Commonwealth’s Board of Directors. This policy requires the Governance Committee to review the material facts of any related party transaction and either approve or disapprove the transaction after considering, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. Any director who has an interest in the transaction may not participate in any discussion or approval of the transaction except for the purpose of providing material facts concerning the transaction. The policy does not apply to the following categories of transactions:
In addition, certain categories of transactions have beenpre-approved under the terms of the policy, including:
First Commonwealth Bank is a party to a lease agreement with SML Limited Partnership, a real estate holding company of which director Luke A. Latimer is a general partner and owns a 34% interest, for the construction and operation of a branch in New Alexandria, PA. The In
Annual Meeting Information What matters will be voted upon at the meeting? At the meeting, you will be asked to consider the following items of business:
Why did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy materials? The SEC notice and access rule allows us to furnish our proxy materials over the internet to our shareholders instead of mailing paper copies of those materials to each shareholder. As a result, on or around March 15, notice containing instructions on how to access our proxy materials over the internet and vote online. This notice is not a proxy card and cannot be used to vote your shares. If you received only a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to on the notice. We provided some of our shareholders, including shareholders who have previously asked to receive paper copies of the proxy materials, with paper copies of the proxy materials instead of a notice that the materials are electronically available over the internet. What does the Notice of Internet Availability of Proxy Materials look like? You will get a document titled “Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to Be Held on April Who can vote? Shareholders of record on the record date, which was March 1, How does the Board of Directors recommend I vote on the proposals? The Board of Directors recommends that you vote as follows:
What constitutes a quorum to hold the annual meeting? The presence at the meeting, in person or by proxy, of the holders of a majority of the aggregate voting power of the common stock outstanding on the record date will constitute a quorum, permitting us to hold the meeting and conduct business. Proxies received but marked as abstentions and brokernon-votes (described below under “How do I vote my shares if they are held in the name of my broker?”) will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining a quorum.
Annual Meeting Information How many votes are required to approve each proposal? Election of Directors: Directors are elected by a plurality of votes cast, which means that the Corporate Governance Guidelines provide that in the circumstance of an uncontested director election, which is the case for this year’s directors’ election, any director who does not receive a majority of votes cast must promptly tender his or her resignation to the Board. Upon recommendation of the Governance Committee, the Board will determine whether to accept the resignation. Any brokernon-votes or abstentions will not be included in the total votes cast and will not affect the director election results. Ratification of Independent Approval of Named Executive Officer Compensation: Thenon-binding advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of at least a majority of the votes cast by shareholders present, in person or by proxy, at the meeting. Abstentions and brokernon-votes will not be counted as votes cast either for or against the proposal. Approval of the 2024 Stock Plan: A majority of the votes cast will be required to approve the 2024 Stock Plan. This will be considered a non-routine item. As a non-routine item, there may be broker non-votes. Any broker non-votes or abstentions will not be included in the total votes cast and will not affect the results. How many votes may I cast? For the election of directors, you are entitled to cast one vote for each share that you held as of the record date for each candidate nominated. Cumulative voting is not permitted. For each other proposal and any other matter brought before the meeting, you are entitled to one vote for each share that you held as of the record date.
Annual Meeting Information How do I register to If If you hold your shares through an intermediary, such as a bank or broker, and you want to vote or ask a question at the
How do I vote my shares if they are held in the name of my broker? If your shares are held by your broker, you must vote your shares through your broker. You should receive a form from your broker asking how you want to vote your shares. Follow the instructions on that form to give voting instructions to your broker. If you do not give instructions to your broker with respect to the ratification of
How do I revoke a proxy or change my vote? If you are the record holder of the shares, you may revoke your proxy or change your vote at any time before it is counted at the annual meeting by: (1) notifying our Secretary in writing at 601 Philadelphia Street, Indiana, Pennsylvania 15701; (2) attending the annual meeting and voting in person; or (3) submitting a later dated proxy card. If your shares are held by your broker, you should follow the instructions that the broker provides to you to revoke your proxy or change your vote. What does it mean if I receive more than one proxy card? If your shares are registered differently and are in more than one account, you will receive more than one proxy card. Please follow the directions for voting on each of the proxy cards you receive to ensure that all of your shares are voted. Who pays for the solicitation of proxies? First Commonwealth pays all costs related to the Company’s solicitation of proxies. We may solicit proxies by mail, or our directors, officers or employees may solicit proxies personally, by telephone, facsimile or the Internet. These persons will not receive any additional compensation for their efforts to solicit proxies. We will request that the notice of annual meeting, this proxy statement, the proxy card and related materials, if any, be forwarded to beneficial owners, and we expect to reimburse banks, brokers and other persons for their reasonableout-of-pocket expenses in handling these materials.
Requirements for Director Nominations and Shareholder Proposals
Director Nominations, Proposals for Action, and Other Business Brought Before the Shareholders may make nominations for the election of directors and other proposals for action at an annual meeting. Under ourBy-Laws, nominations or other business may be brought before the meeting:
TheBy-Law procedures described above are the exclusive means for a shareholder to make nominations or submit other business before the meeting, other than matters properly brought under Rule14a-8 under the Securities Exchange Act of 1934, as amended, and included in our notice of meeting. If you would like to include a proposal in our notice of the annual meeting and proxy materials under Rule14a-8, please see the requirements under “Proxy Proposals Brought Under Rule14a-8” below. If you do not want to make a nomination of a director for consideration at our annual meeting, but would like to submit the name of a director candidate to our Board for its consideration, please see “Recommendations of Director Candidates from Shareholders” below. If you follow the process discussed in that section, our Governance Committee will consider your candidate. Please direct any questions about the requirements or notices in this section to our Corporate Secretary at 601 Philadelphia Street, Indiana, Pennsylvania 15701. By-Law Requirements for Nominations or Other Business. If you are a shareholder who would like to nominate candidates for election as directors, or bring other proposals for action at the To be timely, the notice must be delivered not earlier than the close of business on the 180th day and not later than the close of business on the 150th day prior to the first anniversary of the preceding year’s annual meeting. For the If the date of next year’s annual meeting is more than 30 days before, or 60 days after, April
Requirements for Director Nominations and Shareholder Proposals All notices of nominations for director or other proposals for action must contain, on behalf of the shareholder and beneficial owner, if any, on whose behalf the nomination or proposal is being made, the following information, which is summarized from, and should be read in conjunction with, ourBy-Laws:
In addition to the information listed above, the following additional information is required for notices of nominations for director:
A notice for a proposal for action other than a nomination for director must include the following information, in addition to the information applicable to all notices as described above:
The proxies we appoint for the The
Requirements for Director Nominations and Shareholder Proposals Shareholder Proposals for the 2025 Annual Meeting If you are a shareholder who would like us to include your proposal in our notice of annual meeting and related proxy materials, you must follow SEC Rule14a-8. In submitting your proposal, our Corporate Secretary must receive your proposal, in writing, at our principal executive offices, no later than November 15, In addition, in order to comply with the universal proxy rules, shareholders who intend to solicit proxies for the 2025 Annual Meeting in support of director nominees other than First Commonwealth’s nominees must provide notice to First Commonwealth that sets forth the information required by Exchange Act Rule 14a-19 no later than February 22, 2025. Recommendations of Director Candidates If a shareholder recommends a candidate for director in good faith, our Governance Committee will consider it. If you are a shareholder, the Governance Committee will consider your candidate if you follow these procedures. Your recommendation must be in writing and be submitted no later than November You must submit your recommendation to the Secretary at our principal executive offices. Your written recommendation must include the following information:
Under current practices, the Governance Committee does not evaluate candidates recommended by a shareholder any differently than candidates recommended by the Governance Committee.
“ The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. We and some brokers who household proxy materials, may deliver a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or us if you hold registered shares. You can notify us by sending a written request to Investor Relations, First Commonwealth Financial Corporation, 654 Philadelphia Street, Indiana, PA 15701, or by calling our transfer agent, Computershare Shareowner Services LLC, at1-866-203-5173.
A shareholder may obtain a paper copy of this proxy statement, the
The SEC allows us to deliver proxy materials to shareholders over the Internet. We believe that this offers a convenient way for shareholders to review our information. It also reduces printing expenses and lessens the environmental impact of paper copies. We provided access to our proxy materials beginning on March 15, Any shareholder may access our proxy materials electronically. Upon request, we will continue to provide paper copies of proxy materials to shareholders for the current meeting or for future meetings. If you hold our shares in street name, we generally cannot mail our materials to you directly. Your broker or bank must provide you with the Notice of Availability of Proxy Materials or the proxy statement and proxy card, and must also explain the voting process to you. IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL
Annex A FIRST COMMONWEALTH FINANCIAL CORPORATION 2024 STOCK PLAN (Effective April 23, 2024)
1.1. Purpose. The First Commonwealth Financial Corporation 2024 Stock Plan (the “Plan”) is intended to advance the interests of First Commonwealth Financial Corporation (the “Company”) and its shareholders by providing incentives to Participants to contribute significantly to the strategic and long-term performance objectives and growth of the Company and its Subsidiaries. 1.2. Effective Date and Duration of the Plan. This Plan will be effective on April 23, 2024 (the “Effective Date”), subject to its approval by the shareholders of the Company. The Plan shall remain in effect, subject to the right of the Board to terminate the Plan at any time pursuant to Section 15.1, until all Shares subject to the Plan shall have been purchased or acquired according to the provisions of this Plan; provided, however, that in no event may an Award be granted under the Plan on or after the tenth (10th) anniversary of the Effective Date.
2.1. Definitions. For purposes of the Plan, and unless otherwise specified in an Award Agreement, the following terms shall have the meanings set forth in this Section 2: (a) “10% Shareholder” means an Employee who, as of the date on which an Incentive Stock Option is granted to such Employee, owns more than ten percent (10%) of the total combined voting power of all classes of Stock then issued by the Company or a Subsidiary. (b) “Award” means a grant of an Option, Stock Appreciation Right, Performance Share or Performance Unit, Dividend or Dividend Equivalent Rights, Stock Award, Restricted Stock or Restricted Unit, Cash Awards, or Other Award that is valued in whole or in part by reference to, or are otherwise based on, the Company’s Stock, Performance Goals or other factors, all on a standalone, combination or tandem basis, as described in or granted under this Plan. (c) “Award Agreement” means the agreement or other writing (which may be framed as a plan, program or notification, and which may be in electronic format) that sets forth the terms and conditions of each Award under the Plan, including any amendment or modification thereof. (d) “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the Exchange Act. (e) “Board” means the Board of Directors of the Company. (f) “Cause” shall mean (i) with respect to a Participant who is party to a written agreement with the Employer that contains a definition of “cause” (or words of like import) for purposes of termination of employment or service thereunder by the Company, “cause” as defined in the most recent version of such agreement, or (ii) in all other cases, (A) an act of material dishonesty by the Participant in connection with the Participant’s responsibilities as an Employee, Director or Consultant; (B) the Participant’s conviction of, or plea of guilty or nolo contendere to, a felony under applicable law; (C) the Participant’s gross misconduct in connection with the Participant’s responsibilities as an Employee, Director or Consultant; (D) the Participant’s violation of the written policies or procedures of the Company or a Subsidiary; (E) the Participant’s deliberate and intentional failure or refusal to perform his or her duties as an Employee, Director, or Consultant (other than during such time as the Participant is incapacitated due to an accident or illness or during his or her regularly scheduled vacation periods) after the Participant has received a written demand for such performance; or (F) any
Annex A federal or state governmental or regulatory body having regulatory authority over the business of the Company (i) entered any order against the Participant, or (ii) ordered or directed the Company to terminate or suspend the Participant’s employment. (g) “Change in Control” shall mean: (i) The acquisition, other than from the Company, by any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) directly or indirectly, through one transaction or a series of transactions, of more than 50% of the combined voting power of the then-outstanding voting securities of the Company; (ii) A change, for any reason, in the composition of the majority of the members of the Board, except for nominees who are approved by a majority vote of the incumbent Board; or (iii) The consummation of a reorganization, merger, consolidation, sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial owners of shares outstanding shares of the Company’s common stock immediately prior to such Business Combination do not, following such Business Combination, beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock of the corporation resulting from such a Business Combination (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries). Notwithstanding the foregoing or any provision of this Plan to the contrary, if an Award is subject to Section 409A (and not excepted therefrom) and a Change in Control is a distribution event pursuant to Section 409A for purposes of the Award, the foregoing definition of Change in Control shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation, as applicable, within the meaning of Treas. Reg. § 1.409A-3(i)(5). Additionally, notwithstanding the foregoing, (i) the placement of the Company or any Subsidiary into receivership or conservatorship by the Federal Deposit Insurance Corporation (“FDIC”) or a state or federal banking regulatory agency with jurisdiction over the Company or any Subsidiary, (ii) the acquisition of 50% or more of any Subsidiary’s assets or the assumption of 50% or more of a Subsidiary’s deposit liabilities in an FDIC-assisted transaction, or (iii) a change in the composition of the Board or the board of directors of any Subsidiary at the direction of a state or federal banking regulatory authority having supervisory authority over the Company or a Subsidiary will not constitute a “Change in Control” for purposes of this Plan. (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder. (i) “Committee” means the First Commonwealth Compensation and Human Resources Committee, or such other committee designated by the Board to administer this Plan. The Committee shall be appointed by the Board and consist of two or more members of the Board, each of whom shall be a “Non-Employee Director” as defined in Rule 16b-3 under the Exchange Act. (j) “Company” means First Commonwealth Financial Corporation, a Pennsylvania corporation, or any successor thereto as provided in Section 17 herein. (k) “Consultant” means any person, including an advisor (other than a person who is an Employee or a Director), or any entity that renders services to the Company and/or a Subsidiary, provided that
Annex A the services are not in connection with the offer and sale of securities in a capital raising transaction, and the consultant or advisor does not directly or indirectly promote or maintain a market for the Company’s securities. (l) “Director” means a director on the Board of the Company or a Subsidiary. (m) “Disability” means permanently and totally disabled as from time to time defined under the long-term disability plan of the Company or a Subsidiary applicable to Employee, or in the case where there is no applicable plan, a Participant becoming permanently and totally disabled as defined in Section 22(e)(3) of the Code (or any successor section); provided, however, if an Award is subject to Section 409A (and not excepted therefrom) and a Disability is a distribution event under Section 409A for purposes of the Award, the foregoing definition of Disability shall be interpreted, administered and construed in a manner necessary to ensure that the occurrence of any such event qualifies as a Disability within the meaning of Treas. Reg. § 1.409A-3(i)(4)(i). (n) “Dividend or Dividend Equivalent Rights” means the right to receive a payment, in cash or property, equal to the cash dividends or other distributions paid with respect to a Share. (o) “Effective Date” means the date this Plan is approved by the Company’s shareholders. (p) “Employee” means an employee of the Company or any Subsidiary, including an employee who is an officer or a Director, but excluding any person who is classified by the Employer as a “contractor” or “consultant.” Directors who are not otherwise employed by the Company or any Subsidiary shall not be considered Employees under the Plan. (q) “Employer” means the Company and its Subsidiaries. (r) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as amended. (s) “Excluded Items” means (i) any extraordinary gains or losses; (ii) any gains or losses from discontinued operations; (iii) any gains or losses from the sale of assets outside the ordinary course of business; (iv) impairment of tangible or intangible assets; (v) litigation of claim judgments or settlements; (vi) the effects of changes in tax law; accounting changes, or other such laws or provisions affecting reported results; (vii) business combinations, acquisitions, reorganizations and/or restructuring programs approved by the Board acquisitions; (viii) currency fluctuations; (ix) the diluted impact of goodwill on acquisitions, (x) early retirement incentives approved by the Board; (xi) reductions in force; and (xii) any unusual, nonrecurring, extraordinary, transition, one-time or similar items or charges that are reported publicly by the Company and/or described in management’s discussion and analysis of financial condition and results of operations or the financial statements and notes thereto appearing in the Company’s annual report to shareholders for the applicable year. (t) “Executive Officers” shall mean the officers of the Company as such term is defined in Rule 16a-1 under the Exchange Act. (u) “Fair Market Value” of Stock on or as of any date shall mean (i) the closing price of the Stock as reported by the New York Stock Exchange (or, if the Stock is not listed for trading on the New York Stock Exchange, then on such other national exchange upon which the Stock is then listed) for such date, or if there are no sales on such date, on the next preceding day on which there were sales, (ii) if the Stock is no longer listed for trading on a national exchange, the mean between the last reported “bid” and “ask” prices of Stock on the relevant date, as reported on the OTC Bulletin Board, or (iii) if the Stock is not publicly traded, or, if publicly traded, not so reported, an amount determined in accordance with standards adopted by the Committee.
Annex A (v) “Good Reason” means, unless otherwise provided by the Committee, one or more of the following, without the Participant’s express written consent: (i) a material change in the Participant’s title, position, or responsibilities that represents a substantial reduction of the title, position or responsibilities in effect immediately prior to the Change in Control; (ii) a material reduction in the Participant’s rate of annual base compensation as in effect immediately prior to the Change in Control or the failure of the Company to continue in effect any employee benefit plan, compensation plan, welfare benefit plan or material fringe benefit plan in which the Participant is participating or entitled to participate immediately prior to the Change in Control, unless the Participant is permitted to participate in other plans providing the Participant with substantially equivalent benefits in the aggregate (at substantially equivalent cost with respect to welfare benefit plans); (iii) the assignment of the Participant to a position that requires the Participant to relocate permanently to a site based anywhere more than fifty (50) miles from the office where the Participant is located (as determined by the Company’s policies) immediately prior to the Change in Control; or (iv) the assignment of the Participant to any duties or responsibilities (other than a promotion) that are materially inconsistent with the position that the Participant held immediately prior to the Change in Control. (w) “Incentive Stock Option” or “ISO” means an option to purchase Stock, granted under Section 10, which is intended to meet the requirements of an incentive stock option under Section 422 of the Code (or any successor Section). (x) “Non-Employee Director” shall have the meaning ascribed to such term in Rule 16b-3 of the Exchange Act. (y) “Nonqualified Stock Option” or “NQSO” means an option to purchase Stock, granted under Section 10, which is not intended to meet the requirements of an incentive stock option under Section 422 of the Code (or any successor Section). (z) “Option” means an Incentive Stock Option or a Nonqualified Stock Option. (aa) “Other Award” has the meaning specified in Section 11.1. (bb) “Participant” means an Employee, a Director or a Consultant who has been granted an Award under the Plan. (cc) “Performance Award” means an Award of Performance Shares or Performance Units, the payment or vesting of which is contingent on the attainment of one or more of the Performance Goals specified in such Award. (dd) “Performance Goal” or “Performance Goals” means one or more goals based on the following performance criteria (in all cases after taking into account any Excluded Items, as applicable) determined by the Committee: (i) return measures (including, but not limited to, total shareholder return, return on assets and return on equity), (ii) earnings measures (including, but not limited to, earnings per share, net income, net interest income, net interest margin, and non-interest income or any components thereof), (iii) growth measures (including, but not limited to, earnings growth, revenue growth, loan growth, asset growth, and book value growth), (iv) expense measures (including, but not limited to, expenses, operating efficiencies, efficiency ratios, and non-interest expense or any
Annex A components thereof), (v) balance sheet measures (including, but not limited to, assets, loans, charge-offs, loan loss reserves, non-performing assets, deposits, investments or any components thereof), (vi) book value; (vii) enterprise risk management measures (including, but not limited to, interest rate sensitivity, capital adequacy, regulatory compliance, asset quality, satisfactory internal or external audits, and financial ratings), (viii) Fair Market Value of the Stock; (ix) strategic initiatives (including, but not limited to milestone or outcome measurements relating to reorganizations, technological changes, mergers and acquisitions, market expansions, new products and services and capital and balance sheet management initiatives), or (x) achievement of balance sheet or income statement objectives. The Committee may determine that certain adjustments shall apply, in whole or in part, in such manner as determined by the Committee, to exclude the effect of any Excluded Items either in the establishment of the Performance Goal or in determining whether the Performance Goal has been achieved. In addition, the Committee may designate other categories, including categories involving individual performance and subjective targets, not listed above with respect to Awards in such circumstances that the Committee determines are in the best interests of the Company. Performance Goals may be determined either individually, alternatively or in any combination, and subject to such modifications or variations as specified by the Committee, applied to either the Company as a whole or to a business unit or Subsidiary, either individually, alternatively or in any combination, and measured over a period of time, including any portion of a year, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. Additionally, Performance Goals may include a threshold level of performance below which no payment will be made, levels of performance at which specified payments will be paid, and a maximum level of performance above which no additional payment will be made. Such performance criteria and objectives constituting the Performance Goals may be particular to a line of business, Subsidiary or other unit or the Company generally, and may, but need not be, based upon a change or an increase or positive result. (ee) “Performance Share” means an Award of Stock, granted pursuant to Section 9, that is issued subject to the achievement of one or more pre-established Performance Goals and/or other Vesting Conditions, as established by the Committee. (ff) “Performance Unit” means an Award of Stock Units, granted pursuant to Section 9, the payout of which is contingent on the achievement of one or more pre-established Performance Goals and/or other Vesting Conditions, as established by the Committee. (gg) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof. (hh) “Plan” means this First Commonwealth Financial Corporation 2024 Stock Plan, as amended from time to time. (ii) “Restricted Stock” means an Award of Stock, granted pursuant to Section 8, which is issued subject to the achievement of one or more Vesting Conditions, as established by the Committee. (jj) “Restricted Stock Unit” means an Award of Stock Units, granted pursuant to Section 8, the payout of which is contingent on the achievement of one or more Vesting Conditions, as established by the Committee. (kk) “Restriction Period” means the length of time established relative to an Award during which time the Participant cannot sell, assign, transfer, pledge, or otherwise encumber the Stock or Stock Units subject to such Award, and at the end of which the Participant obtains an unrestricted right to such Stock or Stock Units.
Annex A (ll) “Section 409A” shall mean Section 409A of the Code, the regulations and other binding guidance promulgated thereunder. (mm) “Separation from Service” and “Separate from Service” shall mean the Participant’s death, retirement or other termination of employment or service with the Company (including all persons treated as a single employer under Sections 414(b) and 414(c) of the Code) that constitutes a “separation from service” (within the meaning of Section 409A). For purposes hereof, the determination of controlled group members shall be made pursuant to the provisions of Sections 414(b) and 414(c) of the Code; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears in Section 1563(a)(1),(2) and (3) of the Code and Treas. Reg. § 1.414(c)-2; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(h)(3)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. Whether a Participant has Separated from Service will be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A. A Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A. (nn) “Specified Employee” means a key employee (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) of the Company, as determined in accordance with the regulations issued under Code Section 409A and the procedures established by the Company. (oo) “Stock” or “Shares” means the common stock of the Company. (pp) “Stock Appreciation Right” or “SAR” means an Award, granted under Section 10, pursuant to which the Participant will receive a payment in cash or Stock, an any combination thereof, equal to the appreciation of the Fair Market Value of a Share from the date of grant to the date of exercise. (qq) “Stock Award” has the meaning specified in Section 10.2(b). (rr) “Stock Unit” means a right to receive a payment (in cash, Shares, or a combination of both, as contemplated in the Award Agreement) valued in relation to a designated dollar value or the Fair Market Value of one or more Shares. (ss) “Subsidiary” means any corporation, limited liability company or other limited liability entity, whether now or hereafter existing, in an unbroken chain of entities beginning with the Company if each of the entities (other than the last entity in the chain) owns the stock or equity interest possessing more than fifty percent (50%) of the total combined voting power of all classes of stock or other equity interests in one of the other entities in the chain; provided, however, with respect to an Incentive Stock Option, a Subsidiary shall mean any corporation which is a subsidiary corporation of the Company, as that term is defined in Section 424(f) of the Code, including any such corporation that becomes a Subsidiary after the adoption of the Plan. (tt) “Vesting Conditions” mean one or more service, performance and/or other restrictions or conditions, as established by the Committee in its sole discretion, which must be satisfied as a condition precedent to the payment or vesting of all or a portion of any Award. 2.2. Construction. Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. References to “Section” shall mean the Sections or subsections of this Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular, and any masculine term used herein also shall include the feminine. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.
Annex A 2.3. Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
3.1. Authority of the Committee. The Plan shall be administered by the Committee. The Committee shall have full authority and discretion to administer and interpret the Plan, including, but not limited to, the authority to: (a) Adopt or establish such rules, regulations, agreements, guidelines, procedures, forms and instruments, as may be necessary or advisable for the administration and operation of the Plan; (b) Select the persons to be granted Awards under the Plan; (c) Determine the terms, conditions, form and size of Awards to be made to each person selected, including clawback or other recoupment provisions applicable Awards granted hereunder; (d) Determine the time when Awards are to be made and any conditions which must be satisfied before an Award is made; (e) Establish objectives, conditions and Performance Goals for earning Awards; (f) Determine the terms of each Award Agreement and any amendments or modifications thereof; (g) Determine whether the conditions for earning an Award have been met and whether an Award will be paid at the end of the performance period; (h) Determine if and when an Award may be deferred; (i) Determine whether the amount or payment of an Award should be increased, reduced, eliminated, or otherwise adjusted; (j) Correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement; (k) Determine the guidelines and/or procedures for the payment or exercise of Awards; and (l) Determine whether to accelerate vesting provisions applicable to Awards in whole or in part. Notwithstanding the foregoing, no action of the Committee (other than pursuant to Sections 6.3 or 15.2 hereof) may, without the consent of the person or persons entitled to exercise any outstanding Option or Stock Appreciation Right or to receive payment of any other outstanding Award, adversely affect the rights of such person or persons with respect to such Awards. 3.2. Decisions Binding. The determinations of the Committee in the administration of the Plan shall be final, conclusive and binding on all the Company, the Participant and any and all interested parties. 3.3. Delegation of Certain Responsibilities. The Committee may, subject to the terms of the Plan and applicable law, appoint such agents as it deems necessary or advisable for the proper administration of the Plan under this Section 3; provided, however, that except as provided below, the Committee may not delegate its authority to grant Awards under the Plan or to correct errors, omissions or inconsistencies in the Plan. The Committee may delegate to the Company’s Chief Executive Officer or to other officers or employees of the Company its authority under this Section 3, provided that such delegation shall not
Annex A extend to the grant of Awards or the exercise of discretion with respect to Awards to Employees who, at the time of such action, are officers of the Company or its Subsidiaries who are subject to the reporting requirements of Section 16(a) of the Exchange Act. All authority delegated by the Committee under this Section 3.3 shall be exercised in accordance with the provisions of the Plan and any guidelines for the exercise of such authority that may from time to time be established by the Committee. 3.4. Indemnification. The Company will indemnify and hold harmless each member of the Board and the Committee, and each officer or member of any other committee to whom a delegation under Section 3.3 has been made, from and against any claims, damages, losses or expenses (including attorneys’ fees) arising out of or resulting from any acts or omissions with respect to this Plan or any Award granted hereunder to the maximum extent that the law and the Company’s Articles of Incorporation, as amended from time to time, and Pennsylvania law. For avoidance of doubt, nothing in this Section 3.5 is intended to limit the indemnification provisions applicable to directors of the Company as they are entitled under the Company’s Articles of Incorporation, as amended from time to time, and Pennsylvania law. 3.5. Award Agreements. Each Award under the Plan shall be evidenced by an Award Agreement, which shall be signed by an authorized officer of the Company and, if required, by the Participant, and shall contain such terms and conditions as may be authorized or approved by the Committee. Such terms and conditions need not be the same in all cases. An Award Agreement and any required signatures thereon or authorization or acceptance thereof may be in electronic format. 3.6. Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan, the Board or the Committee may impose such conditions on any Award (including, without limitation, the right of the Board or the Committee to limit the time of exercise to specified periods) as may be required to satisfy the requirements of Rule 16b-3 (or any successor rule), under the Exchange Act (“Rule 16b-3”). 3.7. Vesting of Awards. Awards granted under the Plan shall contain a Restriction Period based on the passage of time that is for no less than one year after the date of grant of an Award, and no Award may provide for partial or graduated vesting beginning before the first anniversary of the date of grant of an Award; provided, that the following Awards shall not be subject to the foregoing minimum vesting requirement: any (i) substitute Awards granted in connection with awards that are assumed, converted or substituted pursuant to a merger, acquisition or similar transaction entered into by the Company or any of its Subsidiaries, (ii) Shares delivered in lieu of fully vested cash obligations, (iii) Awards to Non-Employee Directors, and (iv) shares issued to settle a Performance Award or Shares issued to settle any Award determined by Performance Goals; and provided further that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Stock available pursuant to Article 6 of this Plan may be granted to any one or more Participants without respect to the minimum vesting period requirements of this Section and the minimum vesting period requirement shall not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award under Section 3.1(l).
4.1. Eligibility. Persons eligible to participate in this Plan include all Employees, Directors and Consultants. 4.2. Participation. Subject to the provisions of the Plan, the Committee may from time to time select those Employees, Directors and Consultants to whom Awards shall be granted and determine the terms and conditions of any such Award.
5.1. General. Subject to the terms of this Plan, the Committee may grant any type of Award to any Participant it selects, but only an Employee of the Company may receive grants of Incentive Stock Options.
Annex A Awards may be granted alone or in addition to, in tandem with, or (subject to the prohibition on repricing set forth in Section 5.2) in substitution for any other Award (or any other award granted under another plan of the Company or any Subsidiary). 5.2. Repricing and Backdating Prohibited. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 6.3, neither the Committee nor any other person may (i) amend the terms of outstanding Options or SARs to reduce the exercise price of such outstanding Options or SARs; (ii) cancel outstanding Options or SARs in exchange for Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs; or (iii) cancel outstanding Options or SARs with an exercise price above the current Share price in exchange for cash or other securities. In addition, the Committee may not make a grant of an Option or SAR with a grant date that is effective prior to the date the Committee takes action to approve such Award.
6.1. Maximum Number of Shares. Subject to adjustment as provided in Section 6.3 herein, the aggregate number of Shares available for issuance under the Plan, including Incentive Stock Options, shall be five million (5,000,000) Shares. No Participant may receive: (i) Options, Stock Appreciation Rights for more than 500,000 Shares in any one calendar year; (ii) Performance Awards (denominated in Shares) for more than 500,000 Shares in any one calendar year; (iii) Performance Awards (denominated in cash) for more than $5,000,000 in any one calendar year; and (iv) Other Awards for more than $5,000,000 in any one calendar year. No Non-Employee Director may receive more than 50,000 shares in any one calendar year. The foregoing limitations shall be subject to adjustment as provided in Section 6.3, but only to the extent that any such adjustment will not affect the status of: (i) any Award intended to qualify as an Incentive Stock Option or (ii) any Award intended to comply with, or qualify for an exception to, Section 409A of the Code. Stock delivered under the Plan may be either authorized and unissued Shares or Shares reacquired at any time and held as treasury Shares. The aggregate number of Shares reserved under this Section 6.1 shall be depleted by one Share for each Share subject to an Option or stock-settled SAR, or an Award other than an Option or SAR. For purposes of determining the aggregate number of Shares reserved for issuance under this Plan, any fractional Share shall be rounded to the next highest full Share. Awards settled solely in cash shall not reduce the number of shares of Stock available for Awards. 6.2. Replenishment of Shares under this Plan. If (i) an Award lapses, expires, terminates, or is cancelled without the Shares underlying the Award being issued, (ii) it is determined during or at the conclusion of the term of an Award that all or some portion of the Shares underlying the Award may not be issued on the basis that the conditions for such issuance were or will not be satisfied, (iii) Shares to be issued pursuant to an Award are forfeited, or (iv) Shares are issued pursuant to any Award and the Company subsequently reacquires them pursuant to rights reserved upon the issuance of the Shares, then such Shares shall be re-credited to the Plan’s reserve (in the same amount as such Shares depleted the reserve); provided, however, that Shares re-credited pursuant to the Plan pursuant to clause (iv) may not be issued pursuant to Incentive Stock Options. Notwithstanding the foregoing, in no event shall the following Shares be re-credited to the Plan’s reserve: (i) Shares tendered in payment of the exercise price of an Option, base price of a SAR or other exercise price of an Award; (ii) Shares tendered to satisfy Federal, state or local tax withholding obligations; (iii) Shares purchased by the Company using proceeds from Option exercises; and (iv) Shares not issued or delivered as a result of a net settlement of an outstanding Option or SAR. 6.3. Adjustments. If there is any change in the number, kind, or value of Shares of Stock outstanding by reason of (i) a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares, (ii) merger or other transaction in which Shares are changed or exchanged, (iii) reclassification or change in par value, or (iv) a dividend or other distribution occurs that the Board determines by resolution is extraordinary in nature, or any other event occurs that the Board or Committee deems to be substantially dilutive, then the Committee shall take steps to adjust, as applicable (A) the number and kind of Shares that may be issued under the Plan; (B) the number and kind of Shares subject to outstanding Awards; (C) the grant, purchase, or exercise price with respect to any Award; and/or (D) the Performance Goals of
Annex A an Award; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. Notwithstanding the foregoing, (i) in the event of a Change in Control, the provisions of Section 12 shall apply, and (ii) any adjustments to outstanding Awards shall be made in a manner so as not to constitute a modification under Sections 409A and 424 of the Code. Any such adjustments determined by the Committee shall be final, conclusive and binding. Subject to the provisions of Section 15, without affecting the number of Shares reserved or available under the Plan, the Committee may authorized the issuance or assumption of benefits under the Plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization upon such terms and conditions as it may deem appropriate, subject to compliance with the rules and regulations promulgated under Section 424 of the Code, as applicable.
7.1. Grant of Stock Appreciation Rights. Subject to the terms of the Plan, the Committee may grant SARs to Employees, Non-Employee Directors, or Consultants, either separately or in tandem with an Option. The Committee shall determine all terms and conditions of each SAR, including but not limited to: (a) Whether the SAR is granted independently of an Option or in tandem with an Option; (b) The number of Shares to which the SAR relates; (c) The date of grant, which may not be prior to the date of the Committee’s approval of the grant; (d) The grant price, provided that the grant price shall not be less than the Fair Market Value of a Share as of the grant date of the SAR; (e) The applicable vesting period of the SAR; (f) The term, provided that no SAR shall be exercisable later than the tenth (10th) anniversary of the date of its grant; and (g) Whether the SAR will be settled in cash, Shares, or a combination thereof. 7.2. Exercise of SARs. SARs may be exercised in accordance with such terms and conditions as the Committee, in its sole discretion, may specify. The Committee may (i) grant SARs that are subject to the achievement of one or more Vesting Conditions and (ii) accelerate the exercisability of outstanding SARs consistent with the provisions of the Plan. Tandem SARs shall be exercisable only while the Option to which the tandem SAR relates is exercisable. A SAR may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration date of the SAR, or such other date as specified by the Committee, if at such time such SAR has a positive value. Such deemed exercise shall be settled or paid in the same manner as a regular exercise thereof. 7.3. Tandem SARs. Unless otherwise determined by the Committee, if a SAR is granted in relation to an Option, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise of any number of SARs, the number of Shares subject to the related Option shall be reduced accordingly and such Option may not be exercised with respect to that number of Shares. The exercise of any number of Shares underlying an Option Award that relate to a SAR shall likewise result in an equivalent reduction in the number of Shares covered by the related SAR. 7.4. Payment of SAR Amount. Upon exercise of the SAR, the holder shall be entitled to receive payment of an amount determined by multiplying: (i) the difference between the Fair Market Value of a Share on the date of exercise over the base amount of the SAR as set by the Committee at the date of grant by (ii) the number of Shares with respect to which the SAR is exercised. Notwithstanding the authority
Annex A granted to the Committee pursuant to Section 3.1 of the Plan, once a SAR is granted, the Committee shall have no authority to reduce the price fixed by the Committee at the date of grant, nor may any SAR granted under the Plan be surrendered to the Company as consideration for the grant of a new SAR with a lower price at the date of grant without the approval of the Company’s shareholders, except pursuant to Section 6.5 of the Plan related to an adjustment in the number of Shares.
8.1. Grant of Restricted Stock and Restricted Stock Units. Subject to the terms and conditions of the Plan, the Committee, at any time and from time to time, may grant Restricted Stock and Restricted Stock Units under the Plan to such Employees, Directors, or Consultants and in such amounts and on such terms and conditions as it shall determine. 8.2. Terms and Conditions. Subject to the terms of this Plan and Section 8.1 above, the Committee will determine all terms and conditions of each Award of Restricted Stock and Restricted Stock Units, including but not limited to: (a) The number of Shares and/or Stock Units to which such Award relates; (b) Whether, as a condition for the Participant to realize all or a portion of the benefit provided under the Award, one or more Vesting Conditions must be achieved during such period as the Committee may specify; (c) The Restriction Period with respect to Restricted Stock or Restricted Stock Units; and (d) With respect to an Award of Restricted Stock Units, whether to settle such Award in cash, in Shares, or a combination thereof. 8.3. End of Period of Restriction. Except as otherwise provided in this Plan, at such time as all restrictions applicable to an Award of Restricted Stock or Restricted Stock Units are met and the Restriction Period expires, ownership of the Shares subject to such Award shall be transferred to the Participant free of all restrictions except those that may be imposed by applicable law; provided that if Restricted Stock Units are to be paid in cash, then the payment shall be made to the Participant after all applicable restrictions lapse and the Restriction Period expires. If delivery of Shares is to be made on a deferred basis, the Committee may provide for the crediting or payment of Dividend Equivalent Rights or interest during the deferral period. 8.4. Voting and Dividend Rights. (a) An Award of Restricted Stock shall entitle the Participant to receive dividends during the Restriction Period (to the extent issued by the Company), to vote the Common Stock subject to such Award and to enjoy all other shareholder rights, except that (i) the Participant shall not be entitled to possession of the stock certificate (in the event paper certificates are issued) until the Restriction Period shall have expired, (ii) the Company shall retain custody of the Shares during the Restriction Period, (iii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Shares during the Restriction Period, and (iv) a breach of the terms and conditions established by the Committee pursuant to the Award Agreement shall cause a forfeiture of the Restricted Stock Award. (b) An Award of Restricted Stock Units shall not entitle the Participant to receive dividends during the Restriction Period, nor vote the Common Stock subject to such Award, or to otherwise enjoy any other shareholder rights; provided, however that the Committee may, in its sole discretion, prescribe additional terms, conditions or restrictions relating to Restricted Stock Unit Awards, including but not limited to the issuance of any Dividend Equivalent Rights in tandem with a Restricted Stock Unit Award.
Annex A
9.1. Grant of Performance Awards. Subject to the terms and conditions of the Plan, Performance Units or Performance Shares may be granted to Employees, Directors, or Consultants at any time and from time to time as shall be determined by the Committee. Subject to the limitations provided in Section 6.1, the Committee shall have complete discretion in determining the number of Performance Units or Performance Shares granted to each Participant and the terms and conditions thereof. Unless otherwise determined by the Committee, any such Performance Award shall be evidenced by an Award Agreement containing the terms of the Award, including, but not limited to, the performance criteria and such terms and conditions as may be determined, from time to time, by the Committee, in each case, not inconsistent with this Plan. In relation to any Performance Award, the performance period may consist of one or more calendar years or other period for which performance is being measured, but in no event shall be less than one calendar year. 9.2. Establishment and Certification of Performance Goals. At such time deemed appropriate by the Committee, the Committee shall, in its sole discretion, shall establish in writing Performance Goals for Performance Units and Performance Shares. In addition to establishing minimum Performance Goals below which no compensation shall be payable pursuant to a Performance Award, the Committee, in its sole discretion, may create a performance schedule under which an amount less than or more than the target award may be paid so long as the Performance Goals have been achieved. After the end of the performance period for which the Performance Goals relate, the Committee shall certify in writing, prior to the payment of any Performance Award to a Participant, that the Performance Goal and all other material terms of the Plan were satisfied. 9.3. Additional Restrictions/Negative Discretion. The Committee, in its sole discretion, may also establish such additional restrictions or conditions that must be satisfied as a condition precedent to the payment of all or a portion of any Performance Awards. Such additional restrictions or conditions need not be performance-based and may include, among other things, the receipt by a Participant of a specified annual performance rating, the continued employment by the Participant and/or the achievement of specified performance goals by the Company, business unit or Participant. Furthermore, and notwithstanding any provision of this Plan to the contrary, the Committee, in its sole discretion, may retain the discretion to reduce the amount of any Performance Award to a Participant if it concludes that such reduction is necessary or appropriate based upon: (i) an evaluation of such Participant’s performance; (ii) comparisons with compensation received by other similarly-situated individuals working within the Company’s industry; (iii) the Company’s financial results and conditions; or (iv) such other factors or conditions that the Committee deems relevant. 9.4. Payment of Performance Awards. Payment of a Performance Award (i) may be made in cash, Stock (which may include Restricted Stock) or a combination thereof, as determined by the Committee in its sole discretion, (ii) may be made in a lump sum or in installments as prescribed by the Committee in its sole discretion, and (iii) to the extent applicable, shall be based on the Fair Market Value of the Stock. If any payment is to be made on a deferred basis, the Committee may provide for the crediting or payment of Dividend Equivalent Rights or interest during the deferral period.
10.1. Grant of Options. Subject to the terms and provisions of the Plan, the Committee will determine all terms and conditions of each Option, which shall be evidenced by the Award Agreement setting forth such terms and conditions, including but not limited to: (a) Whether the Option is (i) an Incentive Stock Option or (ii) a “nonqualified stock option” that does not meet the requirements of Section 422 of the Code; (b) The number of Shares subject to the Option;
Annex A (c) The date of grant, which may not be prior to the date of the Committee’s approval of the grant; (d) The exercise price, which may not be less than the Fair Market Value of the Shares subject to the Option as determined on the date of grant; provided that an Incentive Stock Option granted to a 10% Shareholder shall have an exercise price that is at least 100% of the Fair Market Value of the Shares subject to the Option as determined on the date of grant; (e) The applicable vesting period of the Option; (f) The terms and conditions of exercise, including the manner and form of payment of the exercise price; provided that if the aggregate Fair Market Value of the Shares subject to all Incentive Stock Options granted to a Participant (as determined on the date of grant of each such Option) that become exercisable during a calendar year exceeds the dollar limitation set forth in Section 422(d) of the Code, then such Incentive Stock Options shall be treated as nonqualified stock options to the extent such limitation is exceeded. An Option may provide that it shall be deemed to have been exercised at the close of business on the business day preceding the expiration date of the Option, or such other date as specified by the Committee, if at such time such Option has a positive value. Such deemed exercise shall be settled or paid in the same manner as a regular exercise thereof; and (g) The term; provided that each Option must terminate no later than tenth (10th) anniversary date of its grant. Notwithstanding the foregoing, no Incentive Stock Option granted to a 10% Shareholder shall be exercisable later than the fifth (5th) anniversary date of its grant. In all other respects, the terms of any Incentive Stock Option should comply with the provisions of Section 422 of the Code, except to the extent the Committee determines otherwise. The terms and conditions of Award Agreements relating to an Option need not be identical. If an Option that is intended to be an Incentive Stock Option fails to meet the requirements thereof, the Option shall automatically be treated as a nonqualified stock option to the extent of such failure. 10.2. Options in Substitution for Stock Options Granted by Other Corporations. Options may be granted under the Plan from time to time in substitution for stock options held by employees of corporations who become, or who became prior to the effective date of the Plan, employees of the Company or of any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company or such Subsidiary, or the acquisition by the Company or a Subsidiary of all or a portion of the assets of the employing corporation, or the acquisition by the Company or a Subsidiary of stock of the employing corporation with the result that such employing corporation becomes a Subsidiary.
11.1. Other Awards. Subject to the terms of this Plan, the Committee may grant other Awards under this Plan, including Stock or Awards under the Plan that are valued in whole or in part by reference to the Fair Market Value of Stock. Other Awards may be made in tandem, with, in replacement of, or as alternatives to Awards under Sections 7, 8, 9, or 10 of this Plan or of any other incentive, deferred compensation, or employee benefit plan of the Company or any of its Subsidiaries. Other Awards also include the right to receive Stock or a fixed or variable share denominated unit granted under this Plan or any deferred compensation, annual incentive plan, or similar plan established from time to time by the Company. An Other Award may provide for payment in cash or in Stock or a combination thereof. 11.2. Dividend Equivalent Rights. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each award of Dividend Equivalent Rights, including but not limited to whether: (a) such Award will be granted in tandem with another Award; (b) payment of the Award shall be made currently or credited to an account for the Participant that provides for the deferral of such amounts until a stated time; provided that Dividend Equivalent Rights that relate to Performance Awards that are contingent on the achievement of one or more Performance Goals at the time the cash dividend or other distribution is
Annex A paid with respect to a Share shall also be contingent on the achievement of such Performance Goals and shall not be paid until such Performance Goals are achieved; and (c) the Award will be settled in cash or Shares; provided that Dividend Equivalent Rights may be granted only in connection with a “full-value Award.” For this purpose, a “full-value Award” includes Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units (valued in relation to a Share) and any other similar Award under which the value of the Award is measured as the full value of a Share, rather than the increase in the value of a Share.
12.1. Effect of Change in Control of the Company. Unless provided otherwise in an Award Agreement or by the Committee prior to the date of the Change in Control, the provisions of this Section 12 shall apply in the event of a Change in Control. 12.2. Conditional Vesting. To the extent the Survivor in the Change in Control transaction does not agree to assume the Awards or issue replacement awards as provided in Section 12.3, upon a Change in Control: (a) Each SAR and Option then outstanding shall immediately become fully vested and exercisable; (b) Restricted Stock and Restricted Stock Units (that are not Performance Awards) that are not then vested shall vest; (c) All Performance Awards shall be deemed earned and shall be paid to the extent of the greater of (i) the extent, as determined by the Committee, to which the Performance Goals applicable to such Performance-Based Award have been met during the applicable performance period up through and including the effective date of the Change in Control; or (ii) the target number of Performance Units or Performance Shares determined at the date of grant; and (d) The treatment of any Other Award shall be as determined by the Committee and reflected in the applicable Award Agreement; provided, however, that the foregoing treatment shall not apply to an Award to the extent that another award meeting the requirements of Section 12.3 (a “Replacement Award”) is provided to the Participant pursuant to Section 6.5 to replace such outstanding Award (the “Replaced Award”). 12.3. Replacement Awards. If the purchaser, successor or surviving corporation (or parent thereof) (the “Survivor”) so agrees, some or all outstanding Awards shall be assumed, or replaced with the same type of Award with similar terms and conditions, by the Survivor in the Change of Control transaction. An Award shall meet the conditions of this Section 12.3 (and hence qualify as a Replacement Award) if: (a) it has a value at least equal to the value of the Replaced Award; (b) it relates to publicly traded equity securities of the Company or the Survivor following the Change in Control; and (c) its other terms and conditions are not less favorable to the Participant than the terms and conditions of the Replaced Award (including the provisions that would apply in the event of a subsequent Change in Control). Without limiting the generality of the foregoing, the Replacement Award may take the form of a continuation of the Replaced Award if the requirements of the preceding sentence are satisfied. The determination of whether the conditions of this Section 12.3 are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
Annex A 12.4. Separation from Service. Upon an involuntary separation from service of a Participant (other than for Cause) or, solely in the case of a Participant who is an Employee, a voluntary separation of service of the Participant for Good Reason, in any case occurring in connection with or during the period of two (2) years after a Change in Control, all Replacement Awards held by the Participant to the extent not vested as of such separation, shall become fully vested and (if applicable) exercisable and free of restrictions. To the extent provided in a Replacement Award, in order for a Participant to terminate for Good Reason: (a) the Participant must give written notice to the Survivor of the Participant’s intention to terminate employment for Good Reason within sixty (60) days after the event or omission which constitutes Good Reason, (b) the event must remain uncorrected by the Survivor for thirty (30) days following such notice (the “Notice Period”), and (C) such termination must occur within sixty (60) days after the expiration of the Notice Period.
13.1. General. Unless otherwise provided in the applicable Award Agreement or any severance or employment agreement, and subject to the authority of the Committee to accelerate vesting of Awards pursuant to Section 3.1(l), unvested Awards granted under this Plan shall expire, terminate, or otherwise be forfeited upon a Participant’s termination of employment or service with the Company and its Subsidiaries. 13.2. Change in Control. Nothing in this Article 13 shall supersede Article 12 of this Plan, which governs the effect of a Change in Control on Vesting Conditions.
14.1. Restrictions on Transfer. Except as otherwise provided herein, an Award granted hereunder may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated by a Participant, other than by will or the laws of descent and distribution or pursuant to a “qualified domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended. The Committee may prescribe and include in the Award Agreement other restrictions on transfer. Any attempted assignment or transfer in violation of this section shall be null and void. A transfer of an Award pursuant to this Section 14 shall be subject to such rules and procedures as the Committee may establish. In the event that an Award is transferred pursuant to this Section 14, such Award may not be subsequently transferred by the transferee except by will or the laws of descent and distribution, and such Award shall continue to be governed by and subject to the terms and limitations of this Plan and the relevant Award Agreement, and transferee shall be entitled to the same rights as the Participant under this Plan as if no transfer had taken place. No transfer shall be effective unless and until written notice of such transfer is provided to the Committee in the form and manner prescribed by the Committee. The consequences of termination of employment shall continue to be applied with respect to the original Participant, following which the Award shall be exercised by the transferee only to the extent and for the periods specified in the Plan and the related Award Agreement. 14.2. Transfers upon Death. Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively and who may include a trustee under a will or living trust) entitled to succeed to the rights of the Participant and who may exercise such rights as are provided under Plan and/or the applicable Award Agreement. Each designation will revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and will be effective only when filed by the Participant in writing with the Committee during the Participant’s lifetime. In the absence of any such designation or if all designated beneficiaries predecease the Participant, benefits or rights remaining at the Participant’s death shall be paid or transferred to the Participant’s estate, pursuant to the Participant’s will or under the applicable laws of descent and distribution. 14.3. Restrictions on Exercisability. Each Award, and each right under any Award, shall be exercisable during the lifetime of the Participant only by such Participant, or if permissible under applicable law, by
Annex A such Participant’s (i) guardian or legal representative, (ii) a transferee under a qualified domestic relations order, or (iii) a transferee as described in Section 14.1, above.
15.1. Amendment and Termination of Plan. The Board may terminate the Plan or any portion thereof at any time, subject to the following limitations: (a) The Board must approve any amendment of this Plan to the extent the Company determines such approval is required by prior action of the Board or by applicable law or regulation; (b) No such amendment or modification shall, without shareholder approval, (i) except as provided in Section 6.5, increase the number of shares of Stock that may be issued under the Plan, (ii) expand the types of Awards available to Participants under the Plan, (iii) materially expand the class of persons eligible to participate in the Plan; (iv) delete or limit the provisions in Section 5.2 prohibiting repricing and backdating of Options or SARs; or (v) extend the termination date for making Awards under the Plan. (c) Shareholders must approve any amendment of this Plan to the extent the Company determines such approval is required by: (i) Section 16 of the Exchange Act, (ii) the Code, (iii) the rules and regulations of the New York Stock Exchange or any other national exchange on which the Stock is then listed, or (iv) other applicable law, rules, or regulations; and (d) No such amendment or modification shall, without shareholder approval, amend the Plan to effect a “material revision” of the Plan, where a “material revision” includes, but is not limited to, a revision that: (a) materially increases the benefits accruing to a Participant under the Plan, (b) materially increases the aggregate number of securities that may be issued under the Plan, (c) materially modifies the requirements as to eligibility for participation in the Plan, or (d) changes the types of awards available under the Plan. 15.2. Amendment, Modification, or Cancellation of Awards. Subject to the requirements of the Plan, the Committee may amend, modify, or cancel any outstanding Awards, provided that any modification or amendment that materially diminishes the rights of the Participant, or the cancellation of the Award, shall be effective only if agreed to by the Participant or any other Person(s) as may then have an interest in the Award. Notwithstanding the foregoing, the Committee need not obtain such prior consent to effect any change: (A) to the extent the Committee deems such action necessary to comply with any applicable law or the listing requirements of the New York Stock Exchange or any other national exchange on which the Stock is then listed; (B) to the extent the Committee deems necessary to preserve favorable accounting or tax treatment of any Award for the Company; (C) to the extent the Committee deems such action necessary to conform the provisions of the Plan and/or Award with Section 409A or any other provision of the Code or other applicable law, the regulations issued thereunder or an exception thereto; or (D) to the extent the Committee determines that such action does not materially and adversely affect the value of an outstanding Award or that such action is in the best interest of the affected Participant or any other Person(s) as may then have an interest in such Award. 15.3. Clawback of Awards. To the extent required by applicable law or any applicable securities exchange listing standards, including but not limited to Section 304 of the Sarbanes-Oxley Act of 2002, Section 10D of the Exchange Act, Rule 10D-1 under the Exchange Act, and any other rules and regulations promulgated thereunder from time to time, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to clawback as determined by the Committee, which clawback may include forfeitures, repurchase, reimbursement and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards, in each instance in accordance with applicable law or listing standards. All Awards granted under this Plan, any property, including Shares, received in connection with any exercise or vesting of, or lapse of restriction on, any Awards, and any proceeds
Annex A received from the disposition of any such property, shall be subject to any clawback policy adopted, and amended from time to time, by the Committee. The Committee shall have discretion with respect to any clawback to determine whether the Company shall effect any such recovery (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program or arrangement maintained by the Company or any Subsidiary, Affiliate or Parent of the Company, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amounts) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the foregoing or otherwise.
16.1. Tax Withholding. The Company and any of its Subsidiaries shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company or any of its Subsidiaries, an amount sufficient to satisfy Federal, state, local or foreign income or other taxes required by law to be withheld with respect to any grant, exercise, payment or transfer made under or as a result of this Plan. 16.2. Stock Delivery or Withholding. The Company may, in its discretion, permit a Participant (or any beneficiary or other Person entitled to act) to elect to pay a portion or all of the amount such taxes in such manner as the Committee shall deem to be appropriate, including, but not limited to, authorizing the Company to withhold, or agreeing to surrender to the Company, Shares owned by such Participant or a portion of such forms of payment that would otherwise be distributed pursuant to an Award. Notwithstanding the foregoing or any provisions of the Plan to the contrary, any broker-assisted cashless exercise shall comply with the requirements of Financial Accounting Standards Board, Accounting Standards Codification, Topic 718 and any withholding satisfied through a net-settlement shall be limited to the minimum statutory withholding requirements. 17. SUCCESSORS. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise, of all or substantially all of the business and/or assets of the Company.
18.1. Employment or Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company or any of its Subsidiaries to terminate any Participant’s employment or service as a Director or Consultant at any time, nor confer upon any Participant any right to continue in the employ or to so serve as a Director or Consultant of the Company or any of its Subsidiaries. 18.2. Participation. No Employee, Director or Consultant shall have a right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. 18.3. No Implied Rights; Rights on Termination of Service. Neither the establishment of the Plan nor any amendment thereof shall be construed as giving any Participant, beneficiary, or any other person any legal or equitable right unless such right shall be specifically provided for in the Plan or conferred by specific action of the Committee in accordance with the terms and provisions of the Plan. Except as expressly provided in this Plan, neither the Company nor any of its Subsidiaries shall be required or be liable to make any payment under the Plan. 18.4. No Right to Company Assets. Neither the Participant nor any other person shall acquire, by reason of the Plan, any right in or title to any assets, funds or property of the Company or any of its Subsidiaries whatsoever including, without limiting the generality of the foregoing, any specific funds, assets, or other property which the Company or any of its Subsidiaries, in its sole discretion, may set aside
Annex A in anticipation of a liability hereunder. Any benefits which become payable hereunder shall be paid from the general assets of the Company or the applicable Subsidiary. The Participant shall have only a contractual right to the amounts, if any, payable hereunder unsecured by any asset of the Company or any of its Subsidiaries. Nothing contained in the Plan constitutes a guarantee by the Company or any of its Subsidiaries that the assets of the Company or the applicable Subsidiary shall be sufficient to pay any benefit to any person. 18.5. Rights as Shareholder; Fractional Shares. Except as otherwise provided under the Plan, a Participant or Beneficiary shall have no rights as a holder of Shares with respect to Awards hereunder, unless and until Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Fractional Shares shall not be issued or transferred under an Award, but the Committee may authorize payment of cash in lieu of a fraction, or round the fraction down. To the extent the Stock is uncertificated, references in this Plan to certificates shall be deemed to include references to any book-entry evidencing such Shares.
19.1. Repurchase Rights. Shares issued under the Plan may be subject to one or more repurchase options, or other conditions and restrictions as determined by the Committee in its discretion at the time the Award is granted. The Company shall have the right to assign at any time any repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Upon request by the Company, each Participant shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. 19.2. Provision of Information. Each Participant shall be given access to information concerning the Company equivalent to that information generally made available to the Company’s common shareholders. 19.3. Rights as Employee, Consultant or Director. No person shall have a right to be selected as a Participant, or, having been so selected for one Award, to be selected as a Participant for a future Award. Nothing in the Plan or any Award granted under the Plan shall confer on any Participant a right to remain an Employee, Consultant or Director or interfere with or limit in any way any right of the Company or a Subsidiary to terminate the Participant’s Service at any time. To the extent that an Employee of a Subsidiary receives an Award under the Plan, that Award shall in no event be understood or interpreted to mean that the Company is the Employee’s employer or that the Employee has an employment relationship with the Company. 19.4. Severability. If any one or more of the provisions (or any part thereof) of this Plan shall be held invalid, illegal or unenforceable in any respect, such provision shall be modified so as to make it valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions (or any part thereof) of the Plan shall not in any way be affected or impaired thereby. 19.5. Choice of Law. Except to the extent governed by applicable federal law, the validity, interpretation, construction and performance of the Plan and each Award Agreement shall be governed by the laws of the Commonwealth of Pennsylvania, without regard to its conflict of law rules. 19.6. Section 409A. Notwithstanding any provision of the Plan or an Award Agreement to the contrary, if any Award or benefit provided under this Plan is subject to the provisions of Section 409A, the provisions of the Plan and any applicable Award Agreement shall be administered, interpreted and construed in a manner necessary to comply with Section 409A or an exception thereto (or disregarded to the extent such provision cannot be so administered, interpreted or construed). The following provisions shall apply, as applicable: (a) If a Participant is a Specified Employee and a payment subject to Section 409A (and not excepted therefrom) to the Participant is due upon Separation from Service, such payment shall be
Annex A delayed for a period of six (6) months after the date the Participant Separates from Service (or, if earlier, the death of the Participant). Any payment that would otherwise have been due or owing during such six-month period will be paid immediately following the end of the six-month period in the month following the month containing the six-month anniversary of the date of termination, unless another compliant date is specified in the applicable Award Agreement. (b) For purposes of Section 409A, and to the extent applicable to any Award or benefit under the Plan, it is intended that distribution events qualify as permissible distribution events for purposes of Section 409A and shall be interpreted and construed accordingly. Whether a Participant has Separated from Service will be determined based on all of the facts and circumstances and, to the extent applicable to any Award or benefit, in accordance with the guidance issued under Section 409A. For this purpose, a Participant will be presumed to have experienced a Separation from Service when the level of bona fide services performed permanently decreases to a level less than twenty percent (20%) of the average level of bona fide services performed during the immediately preceding thirty-six (36) month period or such other applicable period as provided by Section 409A. (c) The Committee, in its discretion, may specify the conditions under which the payment of all or any portion of any cash compensation, Shares or other form of payment under an Award, may be deferred until a later date. Deferrals shall be for such periods or until the occurrence of such events, and upon such terms and conditions, as the Committee shall determine in its discretion, in accordance with the provisions of Section 409A; provided, however, that no deferral shall be permitted with respect to Stock Options or Stock Appreciation Rights. (d) The grant of Non-Qualified Stock Options, Stock Appreciation Rights and other stock rights subject to Section 409A shall be granted under terms and conditions consistent with Treas. Reg. § 1.409A-1(b)(5) such that any such Award does not constitute a deferral of compensation under Section 409A. Accordingly, any such Award may be granted to Employees, Directors and Consultants of the Company and the Subsidiaries in which the Company has a controlling interest. In determining whether the Company has a controlling interest, the rules of Treas. Reg. § 1.414(c)-2(b)(2)(i) shall apply; provided that the language “at least 50 percent” shall be used instead of “at least 80 percent” in each place it appears; provided, further, where legitimate business reasons exist (within the meaning of Treas. Reg. § 1.409A-1(b)(5)(iii)(E)(i)), the language “at least 20 percent” shall be used instead of “at least 80 percent” in each place it appears. The rules of Treas. Reg. §§ 1.414(c)-3 and 1.414(c)-4 shall apply for purposes of determining ownership interests. (e) In no event shall any member of the Board, the Committee or the Company (or its employees, officers or directors) have any liability to any Participant (or any other Person) due to the failure of an Award to satisfy the requirements of Section 409A.
q IF
NOTE: Please sign as your name appears hereon. All joint owners should sign. When signing as an attorney, executor, administrator, corporate officer, trustee, custodian or guardian, please give full title as such. If the shares are held by a corporation or other legal entity, please sign in full corporate or entity name by President or other authorized capacity.
The 2024 Annual Meeting of Shareholders of First Commonwealth Financial Corporation will be held on Tuesday, April 23, 2024 at 1:00pm Eastern Time, virtually via a live audio webcast at https://meetnow.global/MZLCTU7. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form.
ANNUAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY The undersigned hereby appoints THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREBY BY THE UNDERSIGNED SHAREHOLDER. IF THIS PROXY IS SIGNED, BUT NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF FIRST COMMONWEALTH FINANCIAL CORPORATION’S BOARD OF DIRECTORS. (Continued, and to be marked, dated and signed, on the
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C123456789
IF 
