UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C., 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported)
July
31, 2007
CITY
HOLDING COMPANY
(Exact
Name of Registrant as Specified in its Charter)
Commission
File Number: 0-17733
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West
Virginia
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55-0169957
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(State
or Other Jurisdiction of
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(I.R.S.
Employer
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Incorporation
or Organization)
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Identification
No.)
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25
Gatewater Road, Cross Lanes, WV 25313
(Address
of Principal Executive Offices, Including Zip Code)
304-769-1100
(Registrant’s
Telephone Number, Including Area Code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR
240.14a-12(b))
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17CFR240.13e-4(c))
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-1-
Section
1 – Registrant’s Business and Operations
Item
1.01 Entry
into a Material Definitive Agreement
On
July
31, 2007, City Holding Company (the “Company”) and City
National Bank of West Virginia (“City National”) entered into the following
employment agreements:
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·
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An
Employment Agreement with Charles R. Hageboeck regarding his continued
employment as President and Chief Executive Officer of the Company
and
City National (the “Hageboeck Employment Agreement”);
and
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·
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An
Employment Agreement with Craig G. Stilwell regarding his continued
employment as Executive Vice President of the Company and City National
(the “Stilwell Employment
Agreement.
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The
Board
of Directors of the Company, at its regularly scheduled meeting on
July 25, 2007, approved the Hageboeck Employment Agreement and
Stilwell Employment Agreement (collectively, the “Employment Agreements”) upon
recommendation by the Company’s compensation committee. The material
terms and conditions of each of the Employment Agreements are set forth
below.
Hageboeck
Employment Agreement
The
material terms and conditions of the Hageboeck Employment Agreement are as
follows:
The
term
of the Hageboeck Employment Agreement begins on July 25, 2007 and terminates
on
July 31, 2009, unless extended. On each monthly anniversary date
following July 31, 2007, the term is automatically extended for an
additional month unless either the Company, City National or Mr. Hageboeck
serve notice to the other parties to fix the term to a definite two year period
from the date of such notice.
Cash
compensation under the Hageboeck
Employment Agreement consists of the following:
-2-
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·
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A
minimum annual salary at a rate not less than $360,000, which will
be
adjusted upward annually to reflect the Company’s performance,
compensation levels for peer institutions and changes in the scale
and
scope of business activities of the Company under Mr. Hageboeck’s
leadership;
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·
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An
“incentive compensation” at the end of each of the Company’s fiscal years
based on the Company’s Return on Tangible Equity (“ROTE”) for such fiscal
year, such that if the Company’s ROTE is at least 14%, the incentive
compensation will be equal to 20% of Mr. Hageboeck’s annual salary
plus an additional 5% of annual salary for each 1% increase in ROTE
over
14%, but no incentive compensation will be payable if ROTE is less
than
14%; and
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·
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A
bonus to be awarded by the Company and City National’s Boards of Directors
in their discretion based upon Mr. Hageboeck’s accomplishments and
achievements and/or his leadership of the Company and City
National.
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In
the
event that Mr. Hageboeck’s employment with the Company terminates during any
fiscal year because of death, Total and Permanent Disability (defined as being
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result
in
death or can be expected to last for a continuous period of not less than 12
months), termination by the Company without Just Cause (defined below) or
Mr. Hageboeck’s termination for Good Reason (defined below), the incentive
compensation will be prorated based on the number of days worked by Mr.
Hageboeck.
In
addition to the foregoing, Mr.
Hageboeck will have the right to participate in the incentive plans of the
Company and City National for which he may become eligible and designated a
participant. Also, Mr. Hageboeck will continue to participate in the
employee pension and welfare benefits and group employee benefits such as sick
leave, vacation, group disability and health, life, and accident insurance
and
similar indirect compensation which the Company and City National may from
time
to time extend to its officers; provided that Mr. Hageboeck will receive
term life insurance coverage in an amount not less than two times his base
salary.
If
Mr. Hageboeck suffers a Total and
Permanent Disability during the term of the agreement, he will continue to
earn
all compensation (including bonuses and incentive compensation) to which he
would have been entitled as if he had not been Totally and Permanently Disabled
for the first 12 months of the period, reduced by the amount of any compensation
received pursuant to any applicable disability insurance plan of the Company
or
City National. Thereafter, he will receive compensation to which he
is entitled under any applicable disability insurance plan. In
addition, after the first 12 months of any Total and Permanent Disability,
the
Board of Directors may terminate Mr. Hageboeck’s employment, in which case he
will be entitled to receive “Termination Compensation” multiplied by three paid
over 60 equal monthly installments and he will continue to receive health
insurance covered from the Company on the same terms as were in effect prior
to
his termination for all periods he receives Termination
Compensation. “Termination Compensation” means the highest amount of
cash compensation paid to the employee in respect of any of the three most
recent calendar years ending prior to the date of termination, determined by
reference to the annual cash compensation (salary, incentive compensation,
and
bonus). If Mr. Hageboeck dies during the term of the agreement, his
estate will receive an amount equal to his Termination Compensation multiplied
by three and paid over 36 equal monthly payments, in addition to any life
insurance benefits available to all employees of City National.
-3-
If
(i) Mr. Hageboeck voluntarily
terminates employment with the Company and City National for any reason (other
than Total and Permanent Disability or for Good Reason (defined below), (ii)
the
Company terminates Mr. Hageboeck for Just Cause (defined below); or (iii) the
Hageboeck Employment Agreement terminates after the Company elects not to extend
it and converts it to a fixed two-year period, Mr. Hageboeck will be entitled
to
receive $1,122,304, plus interest at the Treasury One-Year Constant
Maturity rate accruing from and after December 31, 2006, which will be paid
to him over 36 equal monthly payments beginning the first month following his
termination of employment. This termination benefit reflects benefits
originally provided under the Employment Agreement signed between the Company,
City National and Mr. Hageboeck on June 11, 2001, as amended on November 18,
2003 which benefits became fully vested on June 11, 2005. This
benefit is not subject to a risk of forfeiture under any circumstances except
where Mr. Hageboeck engages in a willful, fraudulent activity that materially
and adversely affects the Company or City National and Mr. Hageboeck personally
profits from such activity.
If
the Company and City National
terminate Mr. Hageboeck for reasons other than Just Cause or Mr. Hageboeck
terminates employment for Good Reason, he will receive his Termination
Compensation times three to be paid in 36 monthly installments.
The
Company and City National have the
right to terminate Mr. Hageboeck for “Just Cause” if he:
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·
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Commits
an act materially detrimental to the Company or City
National;
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·
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Is
convicted of a felony involving moral turpitude;
or
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·
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Materially
breaches any other provision of the
agreement.
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Mr.
Hageboeck may voluntarily terminate
employment for “Good Reason” if any of the following events occur without his
express written consent:
-4-
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·
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The
assignment to him of duties inconsistent with the position of President
and Chief Executive Officer;
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·
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A
reduction in his pay grade or base salary or his exclusion from
participation in benefit plans in which he previously
participated;
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·
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An
involuntary relocation more than 50 miles from where he is working
at such
time or breach of any other material provision of the agreement by
the
Company or City National;
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·
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Any
purported termination of his employment by the Company or City National
which is not in accordance with the agreement;
or
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·
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The
occurrence of a change of control.
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For
a period of 36 months following a
voluntary termination of employment or a termination of employment for Just
Cause or Total and Permanent Disability, Mr. Hageboeck cannot:
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·
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Engage
in the consumer, savings or commercial banking business, the savings
and
loan business or the mortgage banking business in any county of any
state
in which the Company or City National maintains offices as well as
certain
other counties in West Virginia, Kentucky or
Ohio.
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For
a
period of 36 months after a termination of employment for Good Reason or without
Just Cause, Mr. Hageboeck cannot:
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·
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Solicit
any depositors or customers of the Company, City National or their
affiliates; or
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Induce
any then or former employee of the Company, City National or their
affiliates to terminate his or her employment with such
employer.
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For
a
period of 36 months after a termination of employment for any reason,
Mr. Hageboeck cannot disclose any confidential information obtained by him
while in the employ of the Company and City National.
Stilwell
Employment Agreement
The
material terms and conditions of the Stilwell Employment Agreement are as
follows:
-5-
The
term
of the Stilwell Employment Agreement begins on July 25, 2007 and terminates
on
July 31, 2009, unless extended. On each monthly anniversary date
following July 31, 2007, the term is automatically extended for an additional
month unless either the Company, City National or Mr. Stilwell serve notice
to the other parties to fix the term to a definite two year period from the
date
of such notice.
Cash
compensation under the Stilwell
Employment Agreement consists of the following:
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·
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A
minimum annual salary at a rate not less than $212,000, which will
be
adjusted upward annually to reflect the Company’s performance,
compensation levels for peer institutions and changes in the scale
and
scope of business activities of the Company under Mr. Stilwell’s
leadership;
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|
·
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An
“incentive compensation” at the end of each of the Company’s fiscal years
based on the Company’s Return on Tangible Equity (“ROTE”) for such fiscal
year, such that if the Company’s ROTE is at least 14%, the incentive
compensation will be equal to 20% of Mr. Stilwell’s annual salary
plus an additional 5% of annual salary for each 1% increase in ROTE
over
14%, but no incentive compensation will be payable if ROTE is less
than
14%; and
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·
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A
bonus to be awarded by the Company and City National’s Boards of Directors
in their discretion based upon Mr. Stilwell’s accomplishments and
achievements and/or his leadership of the Company and City
National.
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In
the
event that Mr. Stilwell’s employment with the Company terminates during any
fiscal year because of death, Total and Permanent Disability (defined as being
unable to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result
in
death or can be expected to last for a continuous period of not less than 12
months), termination by the Company without Just Cause (defined below) or
Mr. Stilwell’s termination for Good Reason (defined below), the incentive
compensation will be prorated based on the number of days worked by Mr.
Stilwell.
In
addition to the foregoing, Mr.
Stilwell will have the right to participate in the incentive plans of the
Company and City National for which he may become eligible and designated a
participant. Also, Mr. Stilwell will continue to participate in the
employee pension and welfare benefits and group employee benefits such as sick
leave, vacation, group disability and health, life, and accident insurance
and
similar indirect compensation which the Company and City National may from
time
to time extend to its officers; provided that Mr. Stilwell will receive term
life insurance coverage in an amount not less than two times his base
salary.
-6-
If
Mr. Stilwell suffers a Total and
Permanent Disability during the term of the agreement, he will continue to
earn
all compensation (including bonuses and incentive compensation) to which he
would have been entitled as if he had not been Totally and Permanently Disabled
for the first 12 months of the period, reduced by the amount of any compensation
received pursuant to any applicable disability insurance plan of the Company
or
City National. Thereafter, he will receive compensation to which he
is entitled under any applicable disability insurance plan. In
addition, after the first 12 months of any Total and Permanent Disability,
the
Board of Directors may terminate Mr. Stilwell’s employment, in which case he
will be entitled to receive “Termination Compensation” multiplied by three paid
over 60 equal monthly installments and he will continue to receive health
insurance covered from the Company on the same terms as were in effect prior
to
his termination for all periods he receives Termination
Compensation. “Termination Compensation” means the highest amount of
cash compensation paid to the employee in respect of any of the three most
recent calendar years ending prior to the date of termination, determined by
reference to the annual cash compensation (salary, incentive compensation,
and
bonus). If Mr. Stilwell dies during the term of the agreement, his
estate will receive an amount equal to his Termination Compensation multiplied
by three and paid over 36 equal monthly payments, in addition to any life
insurance benefits available to all employees of City National.
If
(i) Mr. Stilwell voluntarily
terminates employment with the Company and City National for any reason (other
than Total and Permanent Disability or for Good Reason (defined below), (ii)
the
Company terminates Mr. Stilwell for Just Cause (defined below); or (iii) the
Stilwell Employment Agreement terminates after the Company elects not to extend
it and converts it to a fixed two-year period, Mr. Stilwell will be entitled
to
receive $693,082, plus interest at the Treasury One-Year Constant Maturity
rate accruing from and after December 31, 2006, which will be paid to him
over 36 equal monthly payments beginning the first month following his
termination of employment. This termination benefit reflects benefits
originally provided under the Employment Agreement signed between the Company,
City National and Mr. Stilwell on May 15, 2001, as amended on November 18,
2003
which benefits became fully vested on May 15, 2005. This benefit is
not subject to a risk of forfeiture under any circumstances except where Mr.
Stilwell engages in a willful, fraudulent activity that materially and adversely
affects the Company or City National and Mr. Stilwell personally profits from
such activity.
If
the Company and City National
terminate Mr. Stilwell for reasons other than Just Cause, or Mr. Stilwell
terminates employment for Good Reason, he will receive his Termination
Compensation times three to be paid in 36 monthly installments.
The
Company and City National have the
right to terminate Mr. Stilwell for “Just Cause” if he:
-7-
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·
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Commits
an act materially detrimental to the Company or City
National;
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·
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Is
convicted of a felony involving moral turpitude;
or
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·
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Materially
breaches any other provision of the
agreement.
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Mr.
Stilwell may voluntarily terminate
employment for “Good Reason” if any of the following events occur without his
express written consent:
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·
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The
assignment to him of duties inconsistent with the position of Executive
Vice President;
|
|
·
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A
reduction in his pay grade or base salary or his exclusion from
participation in benefit plans in which he previously
participated;
|
|
·
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An
involuntary relocation more than 50 miles from where he is working
at such
time or breach of any other material provision of the agreement by
the
Company or City National;
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·
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Any
purported termination of his employment by the Company or City National
which is not in accordance with the agreement;
or
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·
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The
occurrence of a change of control.
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For
a period of 36 months following a
voluntary termination of employment or a termination of employment for Just
Cause or Total and Permanent Disability, Mr. Stilwell cannot:
|
·
|
Engage
in the consumer, savings or commercial banking business, the savings
and
loan business or the mortgage banking business in any county of any
state
in which the Company or City National maintains offices as well as
certain
other counties in West Virginia, Kentucky or
Ohio.
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For
a
period of 36 months following a termination for Good Reason or without Just
Cause, Mr. Stilwell cannot:
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·
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Solicit
any depositors or customers of the Company, City National or their
affiliates; or
|
|
·
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Induce
any then or former employee of the Company, City National or their
affiliates to terminate his or her employment with such
employer.
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-8-
For
a
period of 36 months after termination for any reason, Mr. Stilwell cannot
disclose any confidential information obtained by him while in the employ of
the
Company and City National.
The
foregoing is a summary of the material terms of the Hageboeck Employment
Agreement and Stilwell Employment and is qualified in its entirety by each
such
agreement, copies of which are attached as Exhibits 10.1 and 10.2, respectively,
to this Current Report on Form 8-K and is hereby incorporated by reference
into
this Item 1.01.
Section
9 - Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits.
(c) Exhibits
Signatures
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the Undersigned
hereunto duly authorized.
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Dated:
July 31, 2007
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City
Holding Company
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By:
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/s/
David L. Bumgarner
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David
L. Bumgarner
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Chief
Financial Officer
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