Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On September 13, 2018, Farmers & Merchants State Bank (the “Bank”), the wholly-owned subsidiary of Farmers & Merchants Bancorp, Inc. (“F&M”), entered into an employment agreement (the “Employment Agreement”) with Lars B. Eller, under which Mr. Eller will become the President and Chief Executive Officer of the Bank. F&M has guaranteed the Bank’s performance under the terms of the Employment Agreement. Mr. Eller, who is 52 years old, will start his position with the Bank effective September 18, 2018. Mr. Eller has held positions with TD Bank Financial Group, National City Bank and Royal Bank America as specified in the press release attached hereto as Exhibit 99.1.
Pursuant to the terms of the Employment Agreement, Mr. Eller will assume the additional positions of President and CEO of F&M effective upon the retirement of Paul S. Siebenmorgen, the current President and CEO of F&M, which is anticipated to occur in early 2019. In addition, Mr. Eller will join the Boards of Directors for both F&M and the Bank effective on September 21, 2018. Mr. Eller has no familial relationship with any other director or executive officer of F&M or the Bank and has not engaged in any transactions with such persons, F&M or the Bank, other than execution of the Employment Agreement.
The Employment Agreement is for a three-year term ending on August 31, 2021. Pursuant to the Employment Agreement, Mr. Eller will receive a base pay of $350,000, subject to upward adjustment, and will be entitled to participate in the Bank’s employee benefit plans and programs generally available to similarly situated employees. Mr. Eller will participate in the Bank’s Annual Cash Incentive Plan, 401(k) Plan and, beginning in 2019, he will receive grants of restricted stock with a target range of 4,000 restricted shares in 2019. Mr. Eller will be granted 1,200 restricted common shares of F&M with aone-year vesting schedule, effective September 18, 2018. Mr. Eller will be reimbursed for appropriate business expenses and also will be reimbursed for his reasonable relocation costs in connection with his move to Archbold, Ohio. The Employment Agreement also provides for four weeks of vacation, a monthly car allowance and life insurance.
The Employment Agreement provides for termination upon the expiration of the term noted above, death, by the Bank for “cause” (as defined in the Employment Agreement), disability, by the Bank without cause, voluntary termination by Mr. Eller, or in connection with a “change in control” (as defined in the Employment Agreement). Upon termination by the Bank without cause, the Bank would be obligated to pay Mr. Eller one year of compensation, unless the termination were to occur prior to the first anniversary of his hiring (September 18, 2019), in which case he would be entitled to two years of compensation. Such compensation would include his then base pay, any incentives earned to the date of termination, and continued coverage under the Bank’s health and dental plans or payment of an amount equal to such benefits.
In the event of a change in control of the Bank, Mr. Eller would be entitled to receive an amount equal to two times the sum of his then annual base pay and any incentive compensation
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