UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On March 23, 2020, CNB Financial Corporation (the “Corporation”) and CNB Bank (the “Bank”) entered into an executive employment agreement (the “Employment Agreement”) with Tito L. Lima (“Mr. Lima”), who currently serves as Executive Vice President and Chief Financial Officer of the Corporation and the Bank.
The term of the Employment Agreement commences on March 23, 2020 and continues until December 31, 2022. Thereafter, the Employment Agreement automatically renews for successive twelve-month periods unless and until terminated in accordance with the terms of the Employment Agreement.
Pursuant to the Employment Agreement, Mr. Lima is entitled to a base salary of $262,000 and may receive incentive compensation equal to up to forty percent (40%) of his base salary and such annual increases, stock, stock rights and bonuses as may from time to time be awarded by the Board of Directors of the Corporation. Mr. Lima is eligible to participate in the CNB Financial Corporation 2019 Omnibus Incentive Plan and is entitled to certain benefits, including insurances, paid time off, retirement plans and similar benefits, made available to other similarly situated executive-level employees of the Corporation and/or the Bank. The Employment Agreement includes (i) a covenant not to compete against the Corporation, the Bank or any related entities during Mr. Lima’s employment and thereafter for thirty-six months after his employment ends for any reason and (ii) a covenant to protect the Corporation’s and the Bank’s confidential information.
In the event he is terminated without cause, regardless of whether such termination is in connection with a change of control, or voluntarily terminates employment under certain specific circumstances following a change of control, Mr. Lima is entitled to receive a lump sum cash payment equal to 2.5 times his base salary for the year in which his employment ends plus 2.5 times the average incentive bonus paid over the preceding three-year period.
Cash and benefits payable to Mr. Lima pursuant to the Employment Agreement following a change of control, together with payments under other benefit plans, could constitute “excess parachute payments” under Section 280G of the Internal Revenue Code of 1986, as amended, resulting in the imposition of a 20% excise tax on the recipient and the denial of the deduction for such excess amounts to the Corporation or the Bank. If amounts payable to Mr. Lima would be excess parachute payments, then his severance benefits will be reduced to that amount that would result in no portion being an excess parachute payment unless payment of the full severance amount would result in Mr. Lima receiving an amount greater than the reduced amount on an after-tax basis. The Employment Agreement does not provide for tax indemnity for any such potential excise taxes that may be due by Mr. Lima.
The Employment Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The description of the Employment Agreement herein is a summary of the material terms, does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.1.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| 10.1 |
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
| CNB Financial Corporation | ||||||
| Date: March 24, 2020 |
By: |
/s/ Joseph B. Bower, Jr. | ||||
| Joseph B. Bower, Jr. | ||||||
| President and Chief Executive Officer | ||||||