8-K: First United Corporation Amends Executive Retirement Plan Participation Agreements

First United Corporation amends participation agreements under its executive retirement plan to address lump sum distribution calculations and potential payment delays.

Summary

• First United Corporation's subsidiary, First United Bank & Trust, amended participation agreements under its Defined Benefit Supplemental Executive Retirement Plan (SERP) with key executives Carissa L. Rodeheaver and Jason B. Rush on March 27, 2025.
• The amendments address the calculation of lump sum distributions and the accrual of interest in case of payment delays.
• Specifically, if an executive elects to change from an annuity to a lump sum payment, the lump sum amount will be determined as of the original annuity commencement date and credited with interest until the actual payment date.
• Interest will accrue annually at the third segment rate described in Section 417(e) of the Internal Revenue Code.
• The changes ensure compliance with Code Section 409A, which governs deferred compensation.

Sentiment

Score: 7

Explanation: The document reflects a neutral to slightly positive sentiment as it outlines routine updates to executive compensation plans, ensuring compliance and potentially improving executive satisfaction.

Positives

• The amendments provide clarity on how lump sum distributions are calculated, ensuring fair treatment for executives.
• The interest accrual on delayed payments protects the value of the benefit for executives if payment is postponed.
• The changes ensure compliance with Section 409A of the Internal Revenue Code, reducing potential legal and financial risks.

Future Outlook

The amendments to the participation agreements are intended to ensure the continued smooth operation of the executive retirement plan and compliance with relevant regulations.

Industry Context

Executive compensation and retirement plans are common in the banking industry to attract and retain talent. Amendments to these plans often reflect changes in regulations or company-specific circumstances.

Comparison to Industry Standards

• Supplemental Executive Retirement Plans (SERPs) are a common feature in the financial services industry, often designed to provide benefits beyond qualified retirement plans.
• The use of the third segment rate under Section 417(e) of the Internal Revenue Code for interest accrual is a standard practice in calculating actuarial equivalence for lump sum distributions.
• Many financial institutions use similar mechanisms to ensure compliance with Section 409A, which governs deferred compensation arrangements.

Stakeholder Impact

• Shareholders may be interested in the details of executive compensation plans.
• Executives Carissa L. Rodeheaver and Jason B. Rush are directly impacted by the changes to their retirement benefits.
• Employees may view the executive compensation plan as a reflection of the company's commitment to its leadership.

Key Dates

Keywords

executive retirement plan, SERP, lump sum distribution, participation agreement, First United Corporation, deferred compensation, Section 409A, interest accrual