Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 1, 2022, American National Bankshares Inc. (the "Company") and its
wholly-owned subsidiary bank, American National Bank and Trust Company (the
"Bank"), entered into amended and restated employment agreements, effective as
of January 1, 2022, with (i) Jeffrey V. Haley, President and Chief Executive
Officer of the Company and the Bank, that supersedes and replaces his prior
employment agreement, dated March 2, 2015, with the Company, (ii) Jeffrey W.
Farrar, Executive Vice President, Chief Operating Officer and Chief Financial
Officer of the Company and the Bank, that supersedes and replaces his prior
employment agreement, dated August 5, 2019, with the Company, and (iii) Edward
C. Martin, Executive Vice President and Chief Administrative Officer of the
Company and the Bank, that supersedes and replaces his prior employment
agreement, dated September 21, 2016, with the Bank.
Amended and Restated Employment Agreement with Jeffrey V. Haley
Mr. Haley's amended and restated employment agreement has an initial term of
three years from its effective date, January 1, 2022, and expires on December
31, 2024, provided that on and after January 1, 2023, the term of the agreement
will be automatically extended on a daily basis by one day so that there will
always be at least two years remaining in the term of the agreement upon such
extension. The Company may give Mr. Haley notice of nonrenewal of his agreement
at any time on or after January 1, 2023 and the agreement will terminate two
years after the date of such notice. The agreement will automatically terminate
on the first day of the month immediately following the month in which Mr. Haley
turns 67.
Mr. Haley is entitled to receive an annual base salary of not less than $575,000
plus cash bonuses and equity-based awards in such amounts as may be determined
by the Company's compensation committee or board of directors in accordance with
the terms and conditions of the applicable short-term and long-term cash and
equity incentive plans in effect for senior executives of the Company. Any
incentive-based compensation or award that Mr. Haley receives will be subject to
clawback by the Company as may be required by applicable law or, if applicable,
any stock exchange listing requirement and on such basis as the Company
determines. During his employment, Mr. Haley is expected to maintain a level of
share ownership of the Company's common stock in accordance with guidelines
established by the Company.
If the Company terminates Mr. Haley's employment without "Cause" or if he
terminates his employment for "Good Reason" (each as defined in the agreement),
the Company will pay Mr. Haley any accrued but unpaid salary, bonus and benefits
to which he is entitled as of the date of termination. In addition, subject to
Mr. Haley's execution of a general release of claims, the Company will make a
lump sum payment to him in an amount equal to the product of (x) his "Total
Annual Compensation" (as defined in the agreement) divided by 12 times (y) the
number of months remaining between the date of termination and the last day of
the then-current term of the agreement, including pro-rated credit for any
partial month. Pursuant to the agreement, "Total Annual Compensation" means the
sum of (1) Mr. Haley's base salary in effect on the date of termination, (2) the
greater of Mr. Haley's maximum annual bonus opportunity for the year in which
his employment terminates and the annual bonus earned for the most recently
completed calendar year, (3) the grant date value of any equity awards granted
to Mr. Haley over the 12 months immediately prior to the date of termination
(the "prior 12 months"), (4) any tax-qualified or non-tax qualified plan
contributions or allocations made on Mr. Haley's behalf over the prior 12
months, and (5) the value of any perquisites and other benefits, including the
employer portion of benefit premiums, paid or made available to Mr. Haley or on
his behalf over the prior 12 months. Upon termination of employment, Mr. Haley
will be subject to certain noncompetition and nonsolicitation restrictions for
12 months.
If a "Change in Control" (as defined in the agreement) of the Company occurs and
Mr. Haley's employment is terminated by him for Good Reason or by the Company on
account of its failure to renew the agreement or without Cause, in each case
within 24 months following the Change in Control, Mr. Haley will be entitled to
receive, subject to his execution of a general release of claims, a lump sum
payment equal to the sum of: (i) any earned but unpaid incentive or bonus
compensation with respect to any completed calendar year; (ii) a pro-rated cash
bonus amount based on Mr. Haley's prior year's cash bonus amount; (iii) any
other benefits or awards which, pursuant to the terms of any plans, policies or
programs of the Company, have been earned or become payable but which have not
been paid to Mr. Haley; and (iv) an amount equal to either (A) 2.99 times Mr.
Haley's Total Annual Compensation, or (B) if his employment terminates between
his 65th birthday and the date Mr. Haley attains his U.S. Social Security
Administration normal retirement age, the product of (x) Mr. Haley's Total
Annual Compensation divided by 12 times (y) the number of months remaining
between the date of termination and the date Mr. Haley attains his U.S. Social
Security Administration normal retirement age, including pro-rated credit for
any partial month. For the purposes of calculating Mr. Haley's Total Annual
Compensation in connection with a Change in Control termination, the base salary
used will be that in effect on the date of termination of employment or, if
higher, immediately prior to the Change in Control, and the term "prior 12
months" will refer to such period immediately before the date of the Change in
Control. The agreement also provides that the severance payments and benefits to
which Mr. Haley may be entitled in connection with a Change in Control will be
reduced to the amount that does not trigger the excise tax under Section 4999 of
the Internal Revenue Code of 1986. No reduction, however, will be made and Mr.
Haley will be responsible for all excise and other taxes if his after-tax
position with no cutback exceeds his after-tax position with a cutback by more
than 5%.
A copy of Mr. Haley's amended and restated employment agreement is attached to
this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by
reference.
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Amended and Restated Employment Agreement with Jeffrey W. Farrar
Mr. Farrar's amended and restated employment agreement has an initial term of
two years from its effective date, January 1, 2022, and expires on December 31,
2023, provided that on and after January 1, 2023, the term of the agreement will
be automatically extended on a daily basis by one day so that there will always
be at least one year remaining in the term of the agreement upon such
extension. The Company may give Mr. Farrar notice of nonrenewal of his
agreement at any time on or after January 1, 2023 and the agreement will
terminate one year after the date of such notice. The agreement will
automatically terminate on the first day of the month immediately following the
month in which Mr. Farrar turns 67.
Mr. Farrar is entitled to receive an annual base salary of not less than
$364,000 plus cash bonuses and equity-based awards in such amounts as may be
determined by the Company's compensation committee or board of directors in
accordance with the terms and conditions of the applicable short-term and
long-term cash and equity incentive plans in effect for senior executives of the
Company. Any incentive-based compensation or award that Mr. Farrar receives
will be subject to clawback by the Company as may be required by applicable law
or, if applicable, any stock exchange listing requirement and on such basis as
the Company determines. During his employment, Mr. Farrar is expected to
maintain a level of share ownership of the Company's common stock in accordance
with guidelines established by the Company.
If the Company terminates Mr. Farrar's employment without "Cause" or if he
terminates his employment for "Good Reason" (each as defined in the agreement),
the Company will pay Mr. Farrar any accrued but unpaid salary, bonus and
benefits to which he is entitled as of the date of termination. In addition,
subject to Mr. Farrar's execution of a general release of claims, the Company
will make a lump sum payment to him in an amount equal to the product of (x) his
"Total Annual Compensation" (as defined in the agreement) divided by 12 times
(y) the number of months remaining between the date of termination and the last
day of the then-current term of the agreement, including pro-rated credit for
any partial month. Pursuant to the agreement, "Total Annual Compensation" means
the sum of (1) Mr. Farrar's base salary in effect on the date of termination,
(2) the greater of Mr. Farrar's maximum annual bonus opportunity for the year in
which his employment terminates and the annual bonus earned for the most
recently completed calendar year, (3) the grant date value of any equity awards
granted to Mr. Farrar over the 12 months immediately prior to the date of
termination (the "prior 12 months"), (4) any tax-qualified or non-tax qualified
plan contributions or allocations made on Mr. Farrar's behalf over the prior 12
months, and (5) the value of any perquisites and other benefits, including the
employer portion of benefit premiums, paid or made available to Mr. Farrar or on
his behalf over the prior 12 months. Upon termination of employment, Mr. Farrar
will be subject to certain noncompetition and nonsolicitation restrictions for
six months and 12 months, respectively.
If a "Change in Control" (as defined in the agreement) of the Company occurs and
Mr. Farrar's employment is terminated by him for Good Reason or by the Company
on account of its failure to renew the agreement or without Cause, in each case
within 24 months following the Change in Control, Mr. Farrar will be entitled to
receive, subject to his execution of a general release of claims, a lump sum
payment equal to the sum of: (i) any earned but unpaid incentive or bonus
compensation with respect to any completed calendar year; (ii) a pro-rated cash
bonus amount based on Mr. Farrar's prior year's cash bonus amount; (iii) any
other benefits or awards which, pursuant to the terms of any plans, policies or
programs of the Company, have been earned or become payable but which have not
been paid to Mr. Farrar; and (iv) an amount equal to the product of (x) Mr.
Farrar's Total Annual Compensation divided by 12 times (y) the lesser of 24 or
the number of months remaining between the date of termination and the date Mr.
Farrar attains his U.S. Social Security Administration normal retirement age,
including pro-rated credit for any partial month. For the purposes of
calculating Mr. Farrar's Total Annual Compensation in connection with a Change
in Control termination, the base salary used will be that in effect on the date
of termination of employment or, if higher, immediately prior to the Change in
Control, and the term "prior 12 months" will refer to such period immediately
before the date of the Change in Control. The agreement also provides that the
severance payments and benefits to which Mr. Farrar may be entitled in
connection with a Change in Control will be reduced to the amount that does not
trigger the excise tax under Section 4999 of the Internal Revenue Code of 1986.
No reduction, however, will be made and Mr. Farrar will be responsible for all
excise and other taxes if his after-tax position with no cutback exceeds his
after-tax position with a cutback by more than 5%.
A copy of Mr. Farrar's amended and restated employment agreement is attached to
this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by
reference.
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Amended and Restated Employment Agreement with Edward C. Martin
Mr. Martin's amended and restated employment agreement has an initial term of
two years from its effective date, January 1, 2022, and expires on December 31,
2023, provided that on and after January 1, 2023, the term of the agreement will
be automatically extended on a daily basis by one day so that there will always
be at least one year remaining in the term of the agreement upon such
extension. The Company may give Mr. Martin notice of nonrenewal of his
agreement at any time on or after January 1, 2023 and the agreement will
terminate one year after the date of such notice. The agreement will
automatically terminate on the first day of the month immediately following the
month in which Mr. Martin turns 67.
Mr. Martin is entitled to receive an annual base salary of not less than
$330,000 plus cash bonuses and equity-based awards in such amounts as may be
determined by the Company's compensation committee or board of directors in
accordance with the terms and conditions of the applicable short-term and
long-term cash and equity incentive plans in effect for senior executives of the
Company. Any incentive-based compensation or award that Mr. Martin receives
will be subject to clawback by the Company as may be required by applicable law
or, if applicable, any stock exchange listing requirement and on such basis as
the Company determines. During his employment, Mr. Martin is expected to
maintain a level of share ownership of the Company's common stock in accordance
with guidelines established by the Company.
If the Company terminates Mr. Martin's employment without "Cause" or if he
terminates his employment for "Good Reason" (each as defined in the agreement),
the Company will pay Mr. Martin any accrued but unpaid salary, bonus and
benefits to which he is entitled as of the date of termination. In addition,
subject to Mr. Martin's execution of a general release of claims, the Company
will make a lump sum payment to him in an amount equal to the product of (x) his
"Total Annual Compensation" (as defined in the agreement) divided by 12 times
(y) the number of months remaining between the date of termination and the last
day of the then-current term of the agreement, including pro-rated credit for
any partial month. Pursuant to the agreement, "Total Annual Compensation" means
the sum of (1) Mr. Martin's base salary in effect on the date of termination,
(2) the greater of Mr. Martin's maximum annual bonus opportunity for the year in
which his employment terminates and the annual bonus earned for the most
recently completed calendar year, (3) the grant date value of any equity awards
granted to Mr. Martin over the 12 months immediately prior to the date of
termination (the "prior 12 months"), (4) any tax-qualified or non-tax qualified
plan contributions or allocations made on Mr. Martin's behalf over the prior 12
months, and (5) the value of any perquisites and other benefits, including the
employer portion of benefit premiums, paid or made available to Mr. Martin or on
his behalf over the prior 12 months. Upon termination of employment, Mr. Martin
will be subject to certain noncompetition and nonsolicitation restrictions for
six months and 12 months, respectively.
If a "Change in Control" (as defined in the agreement) of the Company occurs and
Mr. Martin's employment is terminated by him for Good Reason or by the Company
on account of its failure to renew the agreement or without Cause, in each case
within 24 months following the Change in Control, Mr. Martin will be entitled to
receive, subject to his execution of a general release of claims, a lump sum
payment equal to the sum of: (i) any earned but unpaid incentive or bonus
compensation with respect to any completed calendar year; (ii) a pro-rated cash
bonus amount based on Mr. Martin's prior year's cash bonus amount; (iii) any
other benefits or awards which, pursuant to the terms of any plans, policies or
programs of the Company, have been earned or become payable but which have not
been paid to Mr. Martin; and (iv) an amount equal to the product of (x) Mr.
Martin's Total Annual Compensation divided by 12 times (y) the lesser of 24 or
the number of months remaining between the date of termination and the date Mr.
Martin attains his U.S. Social Security Administration normal retirement age,
including pro-rated credit for any partial month. For the purposes of
calculating Mr. Martin's Total Annual Compensation in connection with a Change
in Control termination, the base salary used will be that in effect on the date
of termination of employment or, if higher, immediately prior to the Change in
Control, and the term "prior 12 months" will refer to such period immediately
before the date of the Change in Control. The agreement also provides that the
severance payments and benefits to which Mr. Martin may be entitled in
connection with a Change in Control will be reduced to the amount that does not
trigger the excise tax under Section 4999 of the Internal Revenue Code of 1986.
No reduction, however, will be made and Mr. Martin will be responsible for all
excise and other taxes if his after-tax position with no cutback exceeds his
after-tax position with a cutback by more than 5%.
A copy of Mr. Martin's amended and restated employment agreement is attached to
this Current Report on Form 8-K as Exhibit 10.3 and is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 Amended and Restated Employment Agreement, dated March 1, 2022, by
and among American National Bankshares Inc., American National Bank
and Trust Company, and Jeffrey V. Haley.
10.2 Amended and Restated Employment Agreement, dated March 1, 2022, by
and among American National Bankshares Inc., American National Bank
and Trust Company, and Jeffrey W. Farrar.
10.3 Amended and Restated Employment Agreement, dated March 1, 2022, by
and among American National Bankshares Inc., American National Bank
and Trust Company, and Edward C. Martin.
Cover Page Interactive Data File (embedded within the Inline XBRL
104 document).
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