Business Context and Reporting Period
This Form 8-K Current Report was filed by Franklin Financial Services Corporation on August 18, 2026. The filing discloses an amendment to the employment agreement of Charles B. Carroll, President of the Company and President and Chief Operating Officer of its subsidiary, Farmers and Merchants Trust Company of Chambersburg. The amendment became effective on August 17, 2026.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity metrics. The document is strictly focused on executive compensation arrangements.
Material Changes
The primary material change is the amendment to the employment agreement for Executive Charles B. Carroll, effective August 17, 2026. Key modifications include:
- Term Extension: The agreement term is set for three years beginning August 17, 2026, with automatic one-year renewals unless terminated with 180 days' prior notice.
- Compensation Definition: "Agreed Compensation" is now defined as the Executive's highest annual base salary plus the average of his annual cash bonuses for the three calendar years immediately preceding termination.
- Change in Control Provisions: New terms define severance entitlements if the Executive terminates for "Good Reason" or is involuntarily terminated without "Cause" following a Change in Control.
Guidance, Outlook, and Risks
The filing does not provide financial guidance, outlook, or general risk factors. However, it details specific financial contingencies related to executive severance:
- Severance Cap: In the event of a qualifying termination after a Change in Control, the Executive is entitled to a lump sum payment of no greater than 2.99 times his Agreed Compensation.
- Benefits Continuation: The Executive is entitled to two years of continued health and welfare benefits or reimbursement for comparable coverage.
- Tax Gross-Up: The Executive is entitled to a limited gross-up to mitigate tax liabilities associated with the parachute payment.
Investor Verification Checklist
- Verify the full text of the First Amendment to Employment Agreement filed as Exhibit 99.1 to understand specific definitions of "Good Reason," "Cause," and "Change in Control."
- Confirm the Executive's current base salary and historical bonus averages to estimate potential "Agreed Compensation" liabilities.
- Review the Company's existing Change in Control agreements to assess the cumulative impact of this amendment on total potential severance obligations.
- Check for any subsequent filings regarding the valuation of non-solicitation and non-competition restrictions required for Section 280G calculations.