8-K: Burke & Herbert Amends Executive Retirement Plan Post-Merger

Burke & Herbert Financial Services Corp. amended a supplemental executive retirement plan and terminated its associated trust for former Summit Community Bank executives following their merger.

Summary

• Burke & Herbert Bank & Trust Company, a wholly-owned subsidiary of Burke & Herbert Financial Corp., entered into the First Amendment to the Summit Community Bank Supplemental Executive Retirement Plan (SERP) and Consent to Termination of Summit Community Bank Supplemental Executive Retirement Trust (Trust) on December 19, 2025.
• The Amendment was made with H. Charles Maddy, III and other key executives (Participants) of the former Summit Community Bank, Inc.
• The SERP, effective July 1, 2021, provided nonqualified pension benefits.
• Upon the merger of Summit Community Bank, Inc. into Burke & Herbert Bank on May 3, 2024, benefits under the SERP fully vested due to a change in control event.
• Summit had established the Trust on April 29, 2024, with FirstBank as Trustee, to hold assets for paying SERP benefits.
• The purpose of the Amendment is to terminate the Trust and waive the requirement to maintain a rabbi trust specifically in connection with the May 3, 2024 merger.
• All other SERP provisions remain in full force, including the full vesting of Normal Retirement Benefits upon the merger and the requirement to establish a rabbi trust upon any future change in control of Burke & Herbert Bank.
• The termination of the Trust requires written approval from 100% of the Participants.

Sentiment

Score: 6

Explanation: The filing reflects a neutral to slightly positive sentiment as it represents a routine administrative cleanup post-merger, simplifying executive compensation arrangements and ensuring compliance without indicating any adverse financial or operational issues.

Positives

• Simplifies administrative overhead by terminating the Supplemental Executive Retirement Trust established post-merger.
• Clarifies the ongoing executive compensation structure post-merger, ensuring compliance with Section 409A of the Internal Revenue Code.
• Reaffirms the full vesting of Normal Retirement Benefits for participants as a result of the May 3, 2024 merger.
• Maintains the requirement for a rabbi trust to be established upon any future change in control of Burke & Herbert Bank, providing future security for executive benefits.

Future Outlook

The SERP will continue to be administered as a nonqualified, unfunded plan for a select group of management or highly compensated employees, in compliance with Section 409A of the Internal Revenue Code. A rabbi trust will be required to be established upon any future change in control of Burke & Herbert Bank.

Management Comments

• The Executive is fully vested in the Normal Retirement Benefit as a result of the Change in Control resulting from the merger of Summit Community Bank, Inc. with and into Burke & Herbert Bank & Trust Company on May 3, 2024.
• The Executive waives the requirement of the establishment and maintenance of the rabbi trust in connection with the Summit Merger.

Industry Context

This is a common administrative action following a bank merger, where executive compensation plans from the acquired entity are integrated or modified by the acquiring entity. It reflects standard post-merger cleanup and compliance efforts related to nonqualified deferred compensation plans.

Comparison to Industry Standards

• The amendment and termination of the trust are consistent with post-merger integration practices in the banking sector, where acquiring companies often streamline or consolidate executive benefit plans.
• The continued compliance with Section 409A of the Internal Revenue Code for nonqualified deferred compensation plans is a standard requirement across all industries for such arrangements.
• The use of a rabbi trust for executive benefits, particularly upon a change in control, is a common mechanism in corporate governance to provide security for executives while keeping assets subject to the claims of general creditors.

Corporate Governance

Related Party Transactions

• The amendment and termination of the trust involve compensation arrangements with key executives (Participants), including H. Charles Maddy, III, who are considered related parties in this context.

Stakeholder Impact

• Shareholders: Minimal direct impact. This is an administrative adjustment to existing executive compensation, not a new expense or liability. It may slightly reduce administrative costs.
• Executives (Participants): Benefits remain fully vested as per the merger terms. The change is administrative regarding the trust, but the underlying benefit obligation remains. The security of a rabbi trust is waived for the past merger but retained for future change in control events.

Next Steps

• Obtain written approval from 100% of the Participants for the termination of the Summit Community Bank Supplemental Executive Retirement Trust.
• The Bank will provide a Participant Consent to FirstBank, the trustee of the Trust, upon receiving all approvals.

Key Dates

Keywords

Burke & Herbert Financial Services, BHRB, SEC Filing, 8-K, Executive Compensation, SERP, Supplemental Executive Retirement Plan, Rabbi Trust, Merger, Summit Community Bank, Corporate Governance, Financial Services, Banking