Business Context and Reporting Period
This Form 8-K Current Report was filed by Northrim BanCorp, Inc. on January 18, 2012. The filing discloses the execution of a new employment agreement with R. Marc Langland, the Company's Chairman, President, and Chief Executive Officer, effective January 1, 2012.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The report focuses exclusively on executive compensation arrangements.
- Base Salary: $324,012 annually.
- Contract Term: Initial term ending December 31, 2012, with automatic one-year extensions unless notice is given 90 days prior to January 1.
Material Changes
The primary material change is the formalization of Mr. Langland's compensation and role in the context of the Company's succession plan.
- Salary Adjustment Clause: The agreement stipulates that if Mr. Langland's duties are reduced as the succession plan is implemented, his base salary will be adjusted accordingly.
- Retirement Plan Changes: Mr. Langland will continue to participate in the Supplemental Executive Retirement Plan (SERP) and Supplemental Executive Retirement Deferred Compensation Plan (SERDCP). However, no additional principal contributions will be made on his behalf except for earnings contributions under the SERP. The Employer will make a customary principal contribution to the SERDCP in 2012, but no additional contributions will be made in future years.
- Profit Sharing: Mr. Langland will not participate in the Northrim BanCorp, Inc. Profit Sharing Plan.
Outlook, Risks, and Unusual Items
Termination Provisions: In the event of a "Change of Control," termination without "Cause," or termination by Mr. Langland for "Good Reason," the following apply:
- Payment of all base salary earned through the termination date.
- Continuation of health and dental insurance benefits for 18 months following termination.
- Parachute Payment Reduction: If payments constitute a parachute payment under Internal Revenue Code Section 280G, they will be reduced so the present value equals 2.99 times Mr. Langland's base amount. SERP credits are exempt from this reduction.
Covenants: Mr. Langland is subject to confidentiality, non-competition, non-solicitation, and non-disparagement provisions.
Investor Verification Checklist
- Verify the status of the Company's succession plan and the anticipated timeline for reducing Mr. Langland's duties.
- Review the full text of the employment agreement (Exhibit 10.46) for specific definitions of "Cause" and "Good Reason."
- Confirm the impact of the cessation of future SERDCP principal contributions on the executive's total compensation package.
- Assess the potential financial liability of the 18-month health benefit continuation in a termination scenario.