First United Corp 8-K, filed Mar 15, 2022
First United Corp/Md/ (FUNC)
About this 8-K
First United Corp filed this 8-K on March 15, 2022, reporting on events of March 9, 2022.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
| (e) | Compensatory Arrangements. |
2022 Short-Term Incentive Plan Award Opportunities
As previously disclosed by First United Corporation (the “Corporation”) in its Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2020 (the “2020 Form 8-K”), the Compensation Committee (the “Committee”) of the Corporation’s Board of Directors has adopted a Short-Term Incentive Plan (the “STIP”), which is a cash incentive award program intended to reward executives for the Corporation’s annual performance, with incentive goals selected each year by the Committee. A summary of the material terms of the STIP can be found in Item 5.02 of the 2020 Form 8-K under the heading, “First United Corporation Short-Term Incentive Plan”, which summary is incorporated herein by reference. A copy of the STIP was filed as Exhibit 10.2 to the 2020 Form 8-K.
On March 9, 2022, the Committee established incentive goals for 2022 and granted award opportunities under the STIP to the Corporation’s principal executive officer (Carissa L. Rodeheaver), its principal financial officer (Tonya K. Sturm), and its other named executive officers (Robert L. Fisher, II and Jason B. Rush). For 2022, the performance metrics are based on return on average assets, efficiency ratio, average delinquencies as a percentage of total loans, and individual performance criteria that are specific to each officer. Each officer’s specific metrics for 2022 are set forth in a new Appendix A to the STIP, a copy of which is filed as Exhibit 10.1 hereto, are not material, are considered confidential by the Corporation until the financial results for 2022 have been determined, and will be disclosed as and when required by Item 402 of the SEC’s Regulation S-K. The following table provides information about the cash awards that could be earned by these officers for 2022 and paid in 2023 under the STIP:
GRANTS OF PLAN-BASED AWARDS
| Estimated Possible Annual Payouts Under the STIP ($) | ||||||||||||||
| Name | Year | Threshold | Target | Maximum (Stretch) | ||||||||||
| Carissa L. Rodeheaver | 2022 | $ | 60,974 | $ | 121,948 | $ | 182,922 | |||||||
| Tonya K. Sturm | 2022 | 26,780 | 53,560 | 80,340 | ||||||||||
| Robert L. Fisher, II | 2022 | 35,129 | 70,259 | 105,388 | ||||||||||
| Jason B. Rush | 2022 | 32,187 | 64,375 | 96,562 | ||||||||||
2022 Long-Term Incentive Plan Award Opportunities
Also on March 9, 2022, pursuant to the Corporation’s Long-Term Incentive Plan (the “LTIP”), the Committee granted restricted stock units (“RSUs”) to the foregoing officers. An RSU contemplates the issuance of shares of common stock of the Corporation if and when the RSUs vest.
The awards granted to each of the officers consist of (i) a performance-vesting award for a three-year performance period ending December 31, 2024, and (ii) a time-vesting award that will vest ratably over a three-year period that began on March 26, 2024. Under the performance-vesting RSUs, the officers will receive 25% of the target number of shares if at least one of the threshold performance levels is met and 50% of the target number of shares if both of the threshold performance levels are met; 50% of the target number of shares if at least one of the target performance levels is met and 100% of the target number of shares if both of the target performance levels are met; and 75% of the target number of shares if at least one of the maximum performance levels is met and 150% of the target number of shares if both of the maximum performance levels are met. Actual vesting amounts will be pro-rated between threshold and target levels and target and maximum levels to reward incremental improvement. For the performance period ending December 31, 2024, the values of the RSUs granted to the officers were based on specified percentages of the officers’ salaries as of the date of grant. These percentages are set forth in a new Appendix A to the LTIP, a copy of which is filed herewith as Exhibit 10.2. The RSUs’ performance goals are based on earnings per share for the year ending December 31, 2024 and growth in tangible book value per share during the performance period. The threshold, target and maximum performance levels for these grants are not material, are considered confidential by the Corporation until the financial results for the performance period have been determined, and will be disclosed as and when required by Item 402 of the SEC’s Regulation S-K.
These awards are evidenced by Restricted Stock Unit Award Agreements (Performance-Vesting) and Restricted Stock Unit Award Agreements (Time-Vesting) that contain customary terms and conditions for these types of equity awards, the forms of which were filed as Exhibit 10.1 and Exhibit 10.2, respectively, to the Corporation’s Current Report on Form 8-K that was filed with the SEC on March 27, 2020. A summary of the material terms of the LTIP can be found in Item 5.02 of the 2020 Form 8-K under the heading, “First United Corporation Long-Term Incentive Plan”, which summary is incorporated herein by reference. A copy of the LTIP was filed as Exhibit 10.1 to the 2020 Form 8-K.
The following table provides information about the shares of common stock that could be issued to each of the foregoing officers under these RSUs:
| Shares that Could be Issued (#) | ||||||||||||||||
| Name | RSU Type | Vesting Date (Time-Vesting) or Performance Period (Performance-Vesting) | Threshold (50% of Target) | Target | Maximum (Stretch) | |||||||||||
| Carissa L. Rodeheaver | Time | Ratably beginning 3/9/2023 | N/A | 1,857 | N/A | |||||||||||
| Performance | 1/1/2022 to 12/31/2024 | 1,857 | 3,715 | 5,517 | ||||||||||||
| Tonya K. Sturm | Time | Ratably beginning 3/9/2023 | N/A | 979 | N/A | |||||||||||
| Performance | 1/1/2022 to 12/31/2024 | 489 | 979 | 1,468 | ||||||||||||
| Robert L. Fisher, II | Time | Ratably beginning 3/9/2023 | N/A | 1,284 | N/A | |||||||||||
| Performance | 1/1/2022 to 12/31/2024 | 642 | 1,284 | 1,926 | ||||||||||||
| Jason B. Rush | Time | Ratably beginning 3/9/2023 | N/A | 1,176 | N/A | |||||||||||
| Performance | 1/1/2022 to 12/31/2024 | 588 | 1,176 | 1,765 | ||||||||||||
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. |
The exhibits filed or furnished with this report are listed in the following Exhibit Index:
| Exhibit No. | Description | |
| 10.1 | Appendix A to the First United Corporation Short-Term Incentive Plan (filed herewith)* | |
| 10.2 | Appendix A to the First United Corporation Long-Term Incentive Plan (filed herewith) | |
| 104 | Cover page interactive data file (embedded within the iXBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FIRST UNITED CORPORATION | |||
| Dated: March 15, 2022 | By: | /s/ Tonya K. Sturm | |
| Tonya K. Sturm | |||
| Senior Vice President & CFO | |||
Exhibit 10.1
Portions of this Exhibit 10.1, identified by brackets, have been excluded from this Exhibit because they are both not material and would likely cause competitive harm to the registrant if publicly disclosed. Such information will be disclosed as, if and when required pursuant to Item 402 of Regulation S-K.
Appendix A
Short-Term Incentive Plan
2022 Plan Year Targets and Goals
Incentive Targets
The incentive targets for the 2022 Plan year are set forth in the following table:
|
2022 Short-Term Incentive Opportunities (% of Base Salary) | ||||
| Tier | Below Threshold |
Threshold (50% of Target) |
Target (100%) |
Maximum (150% of Target) |
| CEO | 0% | 15% | 30% | 45% |
| Tier I | 0% | 12.5% | 25% | 37.5% |
Tier I includes the following executives: Chief Financial Officer (CFO); Chief Operating Officer (COO); Chief Revenue Officer (CRO); and Chief Wealth Officer (STO).
Performance Goals
For Plan year 2022, the performance goals are return on average assets (ROAA), efficiency ratio, delinquencies as a percentage of total loans, and individual performance based upon the metric indicated for each position in the following table. The following table shows the performance goals at threshold, budget and maximum for Plan year 2022:
| Performance Measures |
Wt. | 2022 Performance Metrics | ||
|
Threshold (90% of target |
Target (100%) |
Maximum (110% of target | ||
| ROAA | 40% | [ ]% | [_]% | [_]% |
| Efficiency Ratio (non-GAAP) | 20% | [_]% | [_]% | [_]% |
| Average Delinquencies as % of total loans | 20% | [_]% | [_]% | [_]% |
| Individual Performance | 20% | |||
| CEO – Corporate Net Income (millions) | $[_] | $[_] | $[_] | |
| CFO – Corporate Net Interest Margin | [_]% | [_]% | [_]% | |
| COO – Corporate Operating Leverage | [_]% | [_]% | [_]% | |
| CRO – Corporate Operating Leverage | [_]% | [_]% | [_]% | |
| STO – Wealth Efficiency Ratio | [_]% | [_]% | [_]% | |
Minimum Performance Trigger
For Plan year 2022, the Corporation’s net income must be at least 50% of goal for that year, which is $[_], or the Plan will not pay out any awards, regardless of the performance with respect to the award metrics.
1 Performance goals are net of incentive payouts; only way to get threshold award is if incentive awards are included. Threshold has a floor of the prior year’s actual result.
Exhibit 10.2
APPENDIX A
Long-Term Incentive Plan
Performance and Award Opportunities – Three-Year Performance Period Beginning January 1, 2022
The table below provides the Award opportunities as a percentage of base salary at December 31, 2021:
| Tier |
Annual Target Award Opportunity (% of Base Salary) |
| CEO | 30% |
| I | 20% |
Tier I includes the following executive officers: Chief Financial Officer; Chief Operating Officer; Chief Revenue Officer; and Senior Trust Officer.
Two-thirds of an Award will be a Performance Award, and one-third of the Award will be a Time Award. The Time Award will vest ratably over a three-year period, beginning on the first anniversary of the grant date. A participant must be an employee in good standing on each vesting date to receive shares under a Time Award.
2022 Performance Goals for Performance Awards
The Performance Period will be deemed to have commenced on January 1, 2022 and will end on December 31, 2024. The targeted performance goals will be earnings per share and tangible book value per share. The threshold level for vesting purposes will be 50% of the target amount. The maximum level will be 150% of those target levels. Threshold performance for at least one of these performance metrics must be met for an award to vest. The targeted performance goals for this Performance Period will be specified in each award agreement. If the threshold levels are met, then 50% of the Performance Award will vest; if the target levels are met, then 100% of the Performance Award will vest; and if the maximum levels are met, then 150% of the Performance Award will vest. Actual vesting amounts will be pro-rated between threshold and target levels and target and maximum levels. The vesting date for these Performance Awards will be the earlier of the date on which the Compensation Committee confirms the Corporation’s financial performance for the performance period or March 15, 2025, provided that (i) the participant is an employee of the Corporation in good standing on such date, (ii) the Corporation’s earnings per share for the one-year period ending December 31, 2024 meet or exceed the threshold level for that performance metric, and (iii) the Corporation’s tangible book value per share meets or exceeds the threshold level for that performance metric.