Business Context and Reporting Period
Company: First Community Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: September 30, 2006
Event: Entry into a Material Definitive Agreement (Item 1.01)
On September 30, 2006, the Board of Directors approved the "First Community Corporation 2006 Non-Employee Director Deferred Compensation Plan." The plan is designed to align the financial interests of non-employee directors with the Company's long-term growth and complies with Section 409A of the Internal Revenue Code.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on the terms of a new compensation plan.
Material Changes
The primary material change is the establishment of a new deferred compensation mechanism for non-employee directors. Key features include:
- Deferral Mechanism: Directors may elect to defer annual retainer fees into a stock unit account. Units are credited based on the fair market value of common stock on the last trading day preceding the credit date.
- Dividend Equivalents: Accounts are credited with additional deferred stock units equivalent to cash dividends paid on common stock.
- Vesting: Participants are fully vested in deferred cash compensation at all times.
- Unfunded Status: The Company has no obligation to establish a fund or reserve; the plan is unfunded, and assets are not segregated.
Guidance, Outlook, and Risks
Distribution Terms:
- Termination: Vested balances are distributed in a lump sum of common stock 30 days after termination of service (including death or disability).
- Change in Control: Vested balances are distributed in a lump sum of common stock within 60 days after a change in control.
- Emergencies: Withdrawals are permitted only for "unforeseeable emergencies" (e.g., severe illness, casualty loss) as defined by the Board and Section 409A.
Risks and Contingencies:
- The deferred stock units do not constitute options or rights to purchase shares.
- The Board retains the right to amend or terminate the plan at any time, provided such changes do not adversely affect accrued rights without participant consent.
Investor Verification Checklist
- Review Exhibits 10.1 and 10.2 for the full legal text of the Deferred Compensation Plan and Form of Agreement.
- Verify the number of directors eligible to participate and the potential impact on future share dilution.
- Confirm the Company's current stock price to understand the valuation basis for future unit credits.
- Assess the impact of the unfunded nature of the plan on the Company's balance sheet liabilities.