NORWOOD FINANCIAL CORP
INFORMATION TO BE INCLUDED IN THE REPORT
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e) Effective March 1, 2021, Norwood Financial Corp’s (the “Company”) wholly-owned subsidiary, Wayne Bank (the “Bank”), entered into a Salary Continuation Agreement with John F. Carmody, Executive Vice President and Chief Credit Officer (the “Executive”). The Salary Continuation Agreement is intended to provide benefits to the Executive upon retirement, death, or disability, or in the event of a Change in Control (as defined in the Salary Continuation Agreement). Upon a separation of service from the Bank at the Normal Retirement Age of 65, the Bank will be obligated to pay to the Executive the Normal Retirement Benefits specified in the Salary Continuation Agreement in monthly installments for a period of fifteen (15) years. The Normal Retirement Benefit for Mr. Carmody is $48,000 per annum. An Executive who continues working past the Normal Retirement Age will earn an increased benefit for each month worked up to age 67. If an Executive has a separation from service (other than in connection with a Change in Control or a termination for cause) or becomes disabled prior to reaching Normal Retirement Age, he will be eligible for a reduced annual benefit equal to the annual retirement benefit accrued through the date of separation or disability payable in monthly installments for a period of fifteen (15) years beginning at Normal Retirement Age or the month after disability, as the case may be.
In the event of a Change in Control occurring prior to a separation from service, disability or Normal Retirement Age, the Executive will be entitled to receive an annual benefit equal to his Normal Retirement Benefit in equal monthly installments for 15 years commencing the month following Normal Retirement Age in lieu of any other benefit under the Salary Continuation Agreement. In the event of a Change in Control occurring after Normal Retirement Age but prior to a separation from service or disability, the Bank will pay the executive an annual benefit equal to the annual retirement benefit accrued through the date of the Change in Control for 15 years commencing the month following the Change in Control.
In the event of the Executive’s death before separation from service, disability or a Change in Control, the Normal Retirement Benefit will be paid to the Executive’s beneficiary over 15 years commencing the month following the Executive’s death. If death occurs after Normal Retirement Age but prior to separation from service, disability or a Change in Control, the death benefit will be increased for each month worked up to age 67. If death occurs after retirement but prior to receipt of all payments due and owing under the Salary Continuation Agreement, payments will continue to be made in the same amounts and at the same times to the Executive’s beneficiary. In the event of the Executive’s death after qualifying for benefits under the Salary Continuation Agreement but before Normal Retirement Age, the Bank will pay the Executive’s beneficiary the same amount and for the same period as the Bank would have been required to pay the Executive at Normal Retirement Age but payments will commence the month following the Executive’s death. The Executive will not be entitled to receive any benefits under the Salary Continuation Agreement in the event of termination for cause.
The Salary Continuation Agreement requires the Executive to comply with certain non-competition and non-solicitation restrictions following a termination of employment as a condition to the continued receipt of benefits.
Although the Company will accrue the expense of the retirement benefit liability over time, the Company’s liability under the Salary Continuation Agreement will remain unfunded and the accrued amounts will remain subject to the rights of creditors of the Company.
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