ISBC 2017 Form 10-K & 2018 Proxy Statement

39 The Compensation and Benefits Committee weighted each Named Executive Officer's 2017 annual cash incentive award opportunity under the plan (as a percentage of the total award opportunity) with respect to corporate financial targets and individual goals as follows: Executive Officer Corporate Financial Targets Individual Goals Kevin Cummings 60% 40% Domenick A. Cama 60% 40% Richard S. Spengler 50% 50% Paul Kalamaras 50% 50% Sean Burke 50% 50% The Compensation and Benefits Committee feels strongly that executive compensation should be formally tied to the attainment of certain corporate financial targets and individual performance goals to more closely align the executive’s performance with providing value for our stockholders. The corporate financial targets for 2017 were based on: (1) net income, weighted at 70%; and (2) enhanced risk management, weighted at 30%. The Compensation and Benefits Committee established the following corporate financial targets for net income: Metric Weighting Threshold Target Maximum Net Income ($ in millions) 70% $160 $170 $180 The net income goals at threshold, target and maximum were 8%, 4% and 1% lower, respectively, than the corresponding net income goals for 2016. In establishing the net income goal, the Compensation and Benefits Committee considered specific challenges facing the Company for 2017. When establishing the net income goal, the Company was aware of the current headwinds it faced with regard to BSA remediation efforts and their related costs. The amount of these costs and their timing were difficult to forecast in establishing the net income goal. In addition, our results of operations depend primarily on net interest income, which is directly impacted by the market interest rate environment. Rising short-term interest rates, combined with competitive pricing in both the loan and deposit markets continue to create a challenging net interest margin environment, which was factored into establishing the net income goal for 2017. These two factors were the main drivers for the decrease in net income goals when compared to 2016. The enhanced risk management goal was viewed by the Compensation and Benefits Committee as a company-wide performance target metric associated with the Company’s BSA remediation efforts, as many groups within the Bank worked towards its achievement. In establishing the enhanced risk management goal, management discussed with the Compensation and Benefits Committee; (1) development and implementation of compliance systems; (2) validation of the systems and (3) development and implementation of training programs. The Compensation and Benefits Committee agreed with this assessment. In comparing the target percentages to the 2016 incentive opportunity, both 2017 and 2016 Net Income goals were given specific amounts for threshold, target and maximum achievement with weightings being the same in both years. For both 2017 and 2016, the enhanced risk management goal was weighted at 0%, 50%, and 100% at the threshold, target and maximum, respectively. PROXY STATEMENT