Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(e)
Adoption of Incentive Compensation Plan for Executive Management
. On September 24, 2018, Hamilton Bank (the "Bank"), the wholly owned subsidiary of Hamilton Bancorp, Inc. (the "Company"), adopted the Hamilton Bank Annual Incentive Plan for Executive Management (the "Plan"). The Plan was adopted as a separate and new plan for the named executive officers of the Company. The Plan focuses on financial measures that are critical to the Bank's growth and profitability and will be utilized to align the interests of the senior management team with stockholders of the Company by paying cash bonus awards that are linked to the performance of the Bank. The Plan shall remain in effect until terminated, modified or amended by the Compensation Committee of the Board of Directors of the Bank (the "Compensation Committee").
For each plan year (April 1
st
to March 31
st
), the Compensation Committee will establish performance objectives for each named executive officer participating in the Plan (the "participant"). If the performance objectives are met, the participant is entitled to a bonus award under the Plan equal to a pre-established percentage of the participant's salary, as determined by the Compensation Committee, in its sole discretion. Notwithstanding the foregoing, a participant is only eligible to receive a bonus award under the Plan if (1) the participant's overall performance level is at "fully achieved standards," based on the Bank's annual performance review, and (2) the Bank satisfies a pre-established overall performance gate or trigger, as determined by the Compensation Committee for the applicable plan year. The Compensation Committee has discretion to amend, modify or adjust the bonus awards payable under the Plan as needed to reflect business environment, market condition and credit quality that may affect the Bank's performance, financial soundness and funding for this Plan.
Each participant's performance objective for the applicable plan year is determined annually at the discretion of the Compensation Committee, but generally will include: (1) objective performance targets focused on financial performance and asset quality, and (2) subjective, discretionary performance targets such as particular qualitative factors for each participant, based on his or her duties for the Bank. Each performance objective will be defined at three levels (threshold, target, and stretch) to correspond with the Bank's strategic objectives and budgetary plans and will be weighted based on priority as a percentage of the bonus award eligible to be paid to the participant for the applicable plan year.
Bonus awards will be paid to each participant in a lump sum within two and one-half (2 ½) months following the end of each plan year. Unless otherwise determined by the Compensation Committee, a participant who is not employed as of the payout date of his or her bonus award under the Plan shall forfeit such bonus award. However, in the event of the participant's death or disability at any time during the plan year or the participant's retirement (as defined in accordance with the Bank's policies and practices) on or after January 1
st
of the plan year, the participant, or the participant's estate, will be paid a pro-rated bonus award.
All awards made under the Plan are subject to potential clawback in accordance with the terms of the Bank's clawback policy or applicable law, as may be in effect from time to time.
The foregoing description of the material terms of the Plan does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1, which is incorporated herein by reference.