Summit Financial Group 8-K Compensation
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________________________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of earliest event reported):
December
14, 2006
Summit
Financial Group, Inc.
(Exact
name
of registrant as specified in its charter)
West Virginia
No.
0-16587
55-0672148
(State
or other
jurisdiction of
(Commission File
Number)
(I.R.S.
Employer
incorporation or organization)
Identification No.)
300
North Main Street
Moorefield,
West Virginia 26836
(Address
of
Principal Executive Offices)
(304)
530-1000
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name
or address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[
] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Section
5
-
Corporate Governance and Management
ITEM
5.02. Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
The
Company
and its Chief Executive Officer, H. Charles Maddy, III, extended the term of
Mr.
Maddy’s Employment Agreement dated March 4, 2005, for an additional year until
March 4, 2010. On December 20, 2006, Mr. Maddy and the Company executed a Second
Amendment to the Employment Agreement (the “Amendment”) providing for the
extension in writing.
The
Company’s named executive officers are: Mr. H. Charles Maddy, III, President and
Chief Executive Officer; Mr. C. David Robertson, President and Chief Executive
Officer of Summit Community Bank; Mr. Patrick N. Frye, Senior Vice President
and
Chief Credit Officer; Mr. Ronald F. Miller, President and Chief Executive
Officer of Shenandoah Valley National Bank; and Robert S. Tissue, Senior Vice
President and Chief Financial Officer. The Company reported all of these
individuals as named executive officers in its 2006 proxy statement. The Company
anticipates that each of these individuals will be disclosed as a named
executive officer in its 2007 proxy statement.
The
Company’s Executive Compensation program consists of three basic components: (1)
salaries; (2) annual incentive compensation;
and (3) long-term incentive compensation pursuant to the Officer Stock
Option Plan. The Committee is responsible for the administration of the
Company’s Executive Compensation programs, which includes establishing base
salary levels, awarding bonuses under the Company’s incentive compensation plans
and awarding stock options under the Company’s Officer Stock Option Plan.
The
Company’s compensation policies will be discussed in detail in the Compensation
Discussion & Analysis (CD&A) included in the Company’s 2007 proxy
statement.
Base
Salaries
The
Company
has entered into employment agreements with Messrs. Maddy, Miller, Robertson,
Frye and Tissue (the “Employment Agreements”). The Employment Agreements
establish a base salary for each individual and the Committee has the authority
to annually adjust such base salaries based upon an evaluation of each
individual’s performance.
On
December
14, 2006, the Committee reviewed recommendations by the President and Chief
Executive Officer for the other named executive officer’s base salaries for
2007. In reviewing the recommendations, the Committee considered (i) the
financial performance of the Company and (ii) a presentation by the President
and Chief Executive Officer regarding each named executive officer. The
President and Chief Executive Officer based his presentation and recommendations
on an analysis of Company performance and peer group comparisons. Based on
this
analysis, the Committee set the base salaries of the named executive officers,
other than the President and Chief Executive Officer, for 2007 as follows:
Mr.
Robertson - $183,900; Mr. Frye - $166,000; Mr. Miller - $183,900; and Mr. Tissue
- $166,000.
In
determining the base salary for Mr. Maddy, the Committee considered base salary
information at comparable companies, cash equivalent compensation data at
comparable companies, the perquisites provided to Mr. Maddy, the complexity
of
job duties of Mr. Maddy as compared to the perceived complexity of the duties of
similar executives at other comparable companies, the Company’s financial
performance and Mr. Maddy’s individual job performance. Based on this analysis,
the Committee set Mr. Maddy’s base salary for 2007 at $387,500.
Annual
Incentive Compensation
Bonuses
are
awarded primarily under the Company’s Incentive Compensation Plan based on a
formula which primarily considers the return on average equity of the Company
and its bank subsidiaries. With respect to Messrs. Miller and Robertson, the
Company established an annual incentive compensation plan which includes
specific performance goals and business criteria based on their achievement
of
the budgeted net income for their respective bank subsidiaries (the “Alternative
Bonus Plan”). Messrs. Miller and Robertson are eligible to receive a bonus under
the Incentive Compensation Plan if compensation calculated under the Incentive
Compensation Plan exceeds compensation due under the Alternative Bonus Plan.
In
this case, Messrs. Miller and Robertson will only receive incentive compensation
under the Incentive Compensation Plan. The Committee approved a similar bonus
structure for 2007.
Long-Term
Incentive Compensation
Under
the
Officer Stock Option Plan, the Company may award stock options for up to 960,000
shares of the Company’s common stock to qualified officers of the Company and
its subsidiaries. Each option granted under the Plan must have an exercise
price
of no less than the fair market value of the Company’s common stock as of the
date of the grant. In determining long-term incentive compensation of the CEO
and the other Named Executive Officers, the Committee considered the Company’s
financial performance, relative stockholder return, the additional expense
that
would be required to be recognized in accordance with Financial Accounting
Standards Board Statement 123, Share-Based Payment (Revised
2004),
the
option adjusted total compensation awarded to CEO’s at comparable companies and
the awards given to the CEO in the past years. After analyzing these factors,
the Committee awarded no options to the CEO or the other Named Executive
Officers for 2006 under the Stock Option Plan. The Committee approved 10,000
options to be awarded to any non-executive officers by the Chief Executive
Officer, in his discretion.
Section
9 - Financial Statements and Exhibits
ITEM
9.01. Financial
Statements and Exhibits
| |
10.1
|
Amendment to Employment Agreement between Summit Financial Group,
Inc. and
H. Charles Maddy, III.
|
10.2
Summit
Financial Group, Inc. Incentive Plan
10.3 Shenandoah
Valley National Bank Incentive Plan
10.4 Summit
Community Bank Incentive Compensation Plan
SIGNATURES
Pursuant
to
the requirements of the Securities and Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
SUMMIT
FINANCIAL GROUP,
INC.
Date:
December
20, 2006 By:
/s/
Julie R. Cook
Julie R. Cook
Vice President &
Chief Accounting Officer