Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On October 24, 2019, CNB Financial Corporation (the “Corporation”) and CNB Bank (the “Bank”) entered into an executive employment agreement (the “Employment Agreement”) with Joseph B. Bower, Jr. (“Mr. Bower”), who currently serves as President and Chief Executive Officer of the Corporation and the Bank. The Employment Agreement terminates and replaces Mr. Bower’s prior executive employment contract, dated May 17, 2016, by and among the Corporation, the Bank and Mr. Bower (the “Prior Employment Agreement”), which was previously extended pursuant to its terms in April 2018, effective January 1, 2018.
The Employment Agreement (i) secures the continued employment of Mr. Bower, (ii) supersedes the terms and conditions of the Prior Employment Agreement, and (iii) updates certain terms of the Prior Employment Agreement. The term of the Employment Agreement commences on October 24, 2019 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. Bower is entitled to a base salary established by the Board of Directors of the Corporation (the “Board”) and may receive such annual increases, stock, stock rights and bonuses as may from time to time be awarded by the Board. Mr. Bower 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. Bower’s employment and thereafter forthirty-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. Bower is entitled to receive a lump sum cash payment equal to 2.99 times his base salary for the year in which his employment ends plus 2.99 times the average incentive bonus paid over the preceding three-year period.
Cash and benefits payable to Mr. Bower 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. Bower 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. Bower receiving an amount equal to or greater than 110% of the reduced amount on anafter-tax basis. The Employment Agreement does not provide for tax indemnity for any such potential excise taxes that may be due by Mr. Bower.
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
