COUNTRYWIDE FINANCIAL CORPORATION
JANUARY 1, 2005
SECTION 1: PURPOSES
The purposes of the Countrywide Financial Corporation Senior Management
Incentive Plan (the "Plan") are to (i) promote the success and growth of the
Company and its business units; (ii) increase shareholder value; (iii) provide
certain Executive Officers with an opportunity to receive incentive compensation
dependant upon that success and growth; and (iv) attract, retain and motivate
such individuals. To accomplish these purposes, the Company will provide certain
Performance Goals and Target Awards to Participants if certain conditions
precedent are satisfied and the Participant continues in the employ of the
Company for the periods described in this Plan.
SECTION 2: DEFINITIONS
2.1 "ARBITRATION AGREEMENT" means the latest version of the
Company-wide Agreement to Arbitrate Claims in effect at the
time of eligibility for participation in the Plan.
2.2 "AWARD" means an incentive award made pursuant to the Plan. An
Award may be paid in the form of cash, Restricted Stock or a
combination of cash and Restricted Stock.
2.3 "BENEFICIARY" means the person(s) designated by the
Participant in PeopleSoft as his or her beneficiary in the
event of his or her death while a Participant or, in the
absence of such designation, the Participant's estate.
2.4 "BOARD OF DIRECTORS" means the Board of Directors of the
2.5 "CAUSE" means (1) any act of (A) fraud or intentional
misrepresentation, or (B) embezzlement, misappropriation or
conversion of assets or opportunities of the Company, (2)
willful violation of any law, rule or regulation in connection
with the performance of the Participant's duties (other than
traffic violations or similar offenses), (3) commission of any
act of moral turpitude or conviction of a felony or (4) entry
of an order duly issued by any federal or state regulatory
agency having jurisdiction in the matter removing Participant
from office of the Company or its subsidiaries or permanently
prohibiting the Participant
from participating in the conduct of the affairs of the
Company or any of its subsidiaries.
2.6 "COMMITTEE" means the Compensation Committee of the Board of
Directors with respect to Executive Officers and the Chief
Administrative Officer with respect to Participants who are
not Executive Officers.
2.7 "COMPANY" means Countrywide Financial Corporation and its
successors and shall include any subsidiaries of the Company,
except where the context indicates otherwise.
2.8 "DISABILITY" means the event of Participant's qualifying for
permanent disability benefits under the Company's Long Term
Disability Plan (the "LTD Plan"), or if Participant does not
participate in the LTD Plan, would have qualified for
permanent disability had the Participant been a participant in
the LTD Plan. The determination of Disability shall be made
after 30 days notice to Participant and only if Participant
has not returned to performance of his duties during such
2.9 "ELIGIBLE EMPLOYEE" means an employee of the Company who has
satisfied the participation requirements of Section 3
2.10 "EXECUTIVE OFFICER" means an Officer of the Company who is
designated as an Executive Officer by the Committee.
2.11 "INCENTIVE PLAN" means that document that sets forth Target
Awards, Performance Goals and weightings with respect to one
or more Performance Criteria.
2.12 "PARTICIPANT" means a Senior Manager designated from time to
time pursuant to Section 3 to participate in the Plan and who
has read and agreed in writing to the terms and conditions of
the applicable Performance Goals and the Plan.
2.13 "PERFORMANCE CRITERIA" means one or more of the criteria set
forth below selected by the Company to measure performance for
a Plan Year:
(i) Gross and/or Net Revenue (in the aggregate or
attributable to specific products)
(ii) Gross and/or Net Income
(iii) Operating Income
(iv) Costs and Expenses
(v) Operating Cash Flow
(vi) Share Price
(vii) Earnings per Share
(viii) Return on Investment
(ix) Return on Assets
(x) Return on Capital
(xi) Return on Equity
(xii) Market Share
(xiii) Total Shareholder Return
(xiv) EBIT or EBITDA
(xv) EmployeeRetention, Development, Succession Planning,
(xvi) Objective Goals set for a Participant
(xvii) Cost of Goods Sold and Gross Margin
(xx) Internal Audit/Risk Assessment
The Performance Criteria may be expressed or measured at the individual,
function, department, division, region, unit, subsidiary, affiliate or Company
level or any combination thereof. The Performance Criteria set forth above
involving corporate objectives may be specified in absolute terms (including,
for example, the completion of a pre-existing project), in ratios, in
percentages, or in terms of growth from period to period or over time, as well
as relative to an established or specially created performance index of the
Company's competitors or peers. Except in the case of individual Objective
Goals, Performance Criteria shall be measured and determined in accordance with
generally accepted accounting principles, as consistently applied by the
2.14 "PERFORMANCE GOAL" means the level of performance, either in
absolute terms or as compared to one or more other companies
or indices, established as the Performance Goal with respect
to a Performance Criteria or indices.
2.15 "PLAN" means the Countrywide Financial Corporation Senior
Management Incentive Plan.
2.16 "PLAN YEAR" means the fiscal year of the Company.
2.17 "RESTRICTED STOCK" means shares of common stock of the Company
that are subject to restrictions as set forth in the 2000
Equity Incentive Plan of the Company or any successor plan.
2.18 "SENIOR MANAGEMENT" OR "SENIOR MANAGER" means Senior Managing
Directors and Managing Directors of the Company.
2.19 "TARGET AWARD" means an amount approved by the Committee as a
Participant's Target Award upon attainment of a Performance
SECTION 3: PARTICIPATION
3.1 ELIGIBILITY. Subject to Sections 3.2 ,3.3 and 3.4 below,
Participants for any Plan Year shall be selected and approved
by the Committee from among the Senior Management of the
Company. If due to hiring, promotion, or demotion, the
Committee determines that an Employee should be eligible to
participate in the Plan for a Plan Year, or that a Participant
should cease to be so eligible, in either case, after the
commencement of the Plan Year, then, the Committee shall have
the discretion to provide that such individual shall be
eligible for a prorated Award, as and to the extent it may
determine. The selection of a Senior Manager as a Participant
for a Plan Year shall not entitle such individual to be
selected as a Participant with respect to any other Plan Year.
3.2 CONTINUING OBLIGATION. As a condition to participation in the
Plan, the Participant specifically agrees that during the
period of the Participant's employment and for a period of
twelve (12) months following termination of employment for any
reason whatsoever, the Participant shall not disrupt, damage,
impair or interfere with the business of the Company in any
manner, including without limitation, by directly or
indirectly soliciting or inducing, or attempting to solicit or
induce, any employee to leave the employ of the Company, or by
inducing an employee to sever or modify that person's
relationship with the Company.
3.3 ARBITRATION AGREEMENT. As a further condition to participation
in the Plan, the Participant must have executed an Arbitration
3.4 ACTIVE EMPLOYMENT. As a further condition to participation in
the Plan, the Participant specifically agrees that unless
otherwise provided herein, as a condition precedent to
eligibility for any portion of an Award, an Eligible Employee
must be employed in active status from the date he or she
first became a Participant for a Plan Year through the date of
SECTION 4: AWARDS
4.1 TARGET AWARDS AND PERFORMANCE GOALS. The Committee shall
approve for each Participant for such year Target Awards and
Performance Goals and weightings with respect to one or more
Performance Criteria. Target Awards, Performance Criteria,
Performance Goals and
weightings may vary from Plan Year to Plan Year and
Participant to Participant, and may cover a period greater
than a single Plan Year.
4.2 DETERMINATION OF AWARDS. The actual Award payable to a
Participant will be determined by the Company and approved by
the Committee based on (i) the Participant's Target Award (ii)
the extent to which the Performance Goals have been achieved,
and (iii) the weighting established with respect to the
applicable Performance Criteria. The Committee may reduce the
amount of an Award in the event there is a substantial
distortion in EPS for the Plan Year in respect of which an
Award is being paid resulting from an acquisition, a
divestiture, or a change in accounting standards.
4.3 PAYMENT OF AWARDS. Awards will be paid in a single installment
as soon as practicable after the close of the Plan Year for
which they are made. Except as otherwise provided in Section
5, it is a condition precedent to the payment of any Award
that the Participant be employed in active status through the
date the Award is made. Subject to such terms and conditions
and within such limits as may from time to time be
established, one or more Participants may defer the receipt of
cash amounts payable under the Plan pursuant to the Company's
Executive Deferred Compensation Plan or any successor plan.
SECTION 5: TERMINATION OF EMPLOYMENT
5.1 DEATH OR DISABILITY. If a Participant's employment with the
Company terminates due to death or Disability, the Participant
or his or her Beneficiary, as the case may be, will be paid a
prorated Award in cash for such year as soon as practicable
after such Plan Year.
5.2 CAUSE. If a Participant's employment with the Company is
terminated for Cause, the right to the payment of an Award in
respect of a Plan Year and all other rights under this Plan
will be forfeited, and no Award will be made hereunder to or
in respect of such Participant.
SECTION 6: ADMINISTRATION
6.1 IN GENERAL. Except as otherwise provided in the Plan, the
Committee, will have full and complete authority, in its sole
and absolute discretion, (i) to exercise all of the powers
granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any related document, (iii) to
prescribe, amend and rescind rules relating to the Plan, (iv)
to make all determinations necessary or advisable in
administering the Plan,
and (v) to correct any defect, supply any omission and
reconcile any inconsistency in the Plan.
6.2 DETERMINATIONS. The actions and determinations of the
Committee or its designee on all matters relating to the Plan
and any Awards, including the authority to decide whether to
pay or not pay an Award in case of a failure to satisfy a
conditions precedent will be final and conclusive. Such
determinations need not be uniform and may be made by it
selectively among persons who receive, or are eligible to
receive, Awards under the Plan, whether or not such persons
are similarly situated.
6.3 APPOINTMENT OF EXPERTS. The Committee may appoint such
accountants, counsel, and other experts as it deems necessary
or desirable in connection with the administration of the
6.4 BOOKS AND RECORDS. The Committee shall keep a record of all
their proceedings and actions and shall maintain all such
books of account, records and other data as shall be necessary
for the proper administration of the Plan.
6.5 PAYMENT OF EXPENSES. The Company shall pay all expenses of
administering the Plan, including, but not limited to, the
payment of professional and expert fees.
SECTION 7: MISCELLANEOUS
7.1 NONASSIGNABILITY. No Award will be assignable or transferable
(including pursuant to a pledge or security interest) other
than by will or by laws of descent and distribution.
7.2 TAX WITHHOLDING. Whenever payments under the Plan are to be
made or deferred, the Company will withhold therefrom, or from
any other amounts payable to or in respect of the Participant,
an amount sufficient to satisfy any applicable governmental
tax withholding requirements related thereto.
7.3 AMENDMENT OR TERMINATION OF THE PLAN. The Plan may be amended
or terminated by the Committee in any respect except that no
amendment or termination may be made after the date on which a
Senior Manager is selected as a Participant for a Plan Year
which would adversely affect the rights of such Participant
with respect to such Plan Year.
7.4 OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan will
be deemed in any way to limit, restrict or require the Company
from making or to make any Award or payment to any person
under any other plan, arrangement or understanding, whether
now existing or hereafter in effect.
7.5 PAYMENTS TO OTHER PERSONS. If payments are legally required to
be made to any person other than the person to whom any amount
is payable under the Plan, such payments will be made
accordingly. Any such payment will be a complete discharge of
the liability of the Company under the Plan.
7.6 UNFUNDED PLAN. Nothing in this Plan will require the Company
to purchase assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets
for the purpose of satisfying any obligations under the Plan.
Participants will have no rights under the Plan other than as
unsecured general creditors of the Company.
7.7 LIMITS OF LIABILITY. Neither the Company, the Committee nor
any other person participating in any determination of any
question under the Plan, or in the interpretation,
administration or application of the Plan, will have any
liability to any party for any action taken or not taken in
good faith under the Plan.
7.8 NO RIGHT OF EMPLOYMENT. Nothing in this Plan will be construed
as creating any contract of employment or conferring upon any
Employee or Participant any right to continue in the employ or
other service of the Company or limit in any way the right of
the Company to change such person's compensation or other
benefits or to terminate the employment or other service of
such person with or without Cause.
7.9 SECTION HEADINGS. The section headings contained herein are
for convenience only, and in the event of any conflict, the
text of the Plan, rather than the section headings, will
7.10 INVALIDITY. Although the Participant and the Company consider
the provisions hereof to be reasonable for the purpose of
rewarding the Participant in a fair and legal manner, if any
particular provision of this Plan, Performance Goals or Target
Awards is not consistent with Federal, state or local law,
then that provision will be reformed (such reformation to
apply only with respect to the operation of such provision in
the particular jurisdiction where such inconsistency exists)
so that it is valid and which, insofar as practicable,
implements the purposes and
intent of the Plan, and such invalidity or unenforceability
will not affect any other provision or part hereof.
7.11 APPLICABLE LAW. The Plan will be governed by and interpreted
in accordance with the laws of the jurisdiction where the
Participant is currently located, or was last employed by the
Company without regard to the conflict of law principles
7.12 EFFECTIVE DATE. The Plan shall be effective as of January 1,
2005 and shall continue to be effective for each succeeding
Plan Year until the Plan is amended or terminated. IN WITNESS
WHEREOF, the Company has caused this Amendment Two to be
executed this 23rd day of February, 2005.
Countrywide Financial Corporation
Senior Managing Director,
Chief Administrative Officer
I HEREBY ACKNOWLEDGE THAT I HAVE READ, FULLY UNDERSTAND AND AGREE TO BE BOUND BY
ALL OF THE TERMS AND CONDITIONS OF THE PLAN, TARGET AWARDS AND PERFORMANCE GOALS
AND APPLICABLE INCENTIVE PLAN.
Dated: Countrywide Financial Corporation