On April 19, 2022, the Board of Directors of the Corporation (the “Board”) appointed Michael Peduzzi as a Vice President of the Corporation. Mr. Peduzzi, who currently serves as President and Chief Operating Officer of CNB Bank (the “Bank”), previously was appointed to succeed Joseph B. Bower, Jr. as Chief Executive Officer of the Bank on July 1, 2022 and President and Chief Executive Officer of the Corporation on January 1, 2023. Mr. Peduzzi is party to that certain executive employment agreement, dated October 21, 2021 (the “Employment Agreement”), among Mr. Peduzzi, the Corporation and the Bank.
The term of the Employment Agreement commenced on August 31, 2021 and continues until December 31, 2024. 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. Peduzzi is entitled to a base salary of at least $475,000 and may receive such annual increases, stock, stock rights and bonuses as may from time to time be awarded by the Board. Mr. Peduzzi is eligible to participate in the CNB Financial Corporation 2019 Omnibus Incentive Plan and participates in the Corporation’s Supplemental Executive Retirement 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. Mr. Peduzzi is also entitled to receive a relocation allowance of up to $20,000. Mr. Peduzzi received a one-time sign-on grant of restricted stock (“Stock Award”) on November 1, 2021 having a grant date fair market value of approximately $75,000, based on the closing price of the Corporation’s common stock on the grant date. The Stock Award will vest at a rate of 20% on each of the first, second, third, fourth and fifth anniversaries of the grant date, subject to the terms and conditions of the CNB Financial Corporation 2019 Omnibus Incentive Plan and the underlying award agreement.
The Employment Agreement includes (i) a covenant not to compete against the Corporation, the Bank or any related entities during Mr. Peduzzi’s employment and thereafter for twenty-four 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, or he voluntarily terminates employment for good reason as specified in the Employment Agreement or under certain specific circumstances following a change of control, Mr. Peduzzi 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. Peduzzi 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. Peduzzi 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. Peduzzi 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. Peduzzi.
The Employment Agreement is attached hereto as Exhibit 99.1 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 99.1.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
