MPB Mid Penn Bancorp Inc

On September 6, 2022, Mid Penn Bancorp, Inc. (the “Corporation”) and/or Mid Penn Bank, the Corporation’s primary operating subsidiary (the “Bank”), entered into new or amended and restated employment, change in control and supplemental executive retirement plan agreements with certain members of its executive management team, including the following named executive officers of the Corporation (the “Executives”): Rory G. Ritrievi, President and Chief Executive Officer (“Mr. Ritrievi”), Allison Johnson, Senior Executive Vice President and Chief Financial Officer (“Ms. Johnson”), Scott Micklewright, Senior Executive Vice President and Chief Revenue Officer (“Mr. Micklewright”), Justin T. Webb, Senior Executive Vice President and Chief Operating Officer (“Mr. Webb”), and Joan Dickinson, Executive Vice President and Chief Retail Officer (“Ms. Dickinson”).

Employment Agreements

The term of the employment agreement among the Corporation, the Bank and each Executive is three years (two years for Ms. Dickinson), and, unless notice of nonrenewal is timely delivered, will automatically renew for a total of three years (two years for Ms. Dickinson) on each anniversary of September 6, 2022. The employment agreements provide that Messrs. Ritrievi, Micklewright and Webb will receive an annual base salary of $625,000.22, $350,000.04 and $350,000.04, respectively, and Ms. Johnson and Ms. Dickinson will receive an annual base salary of $325,000 and $295,000.16, respectively, which may be increased from time to time. In addition to base salary, the employment agreements provide for, among other things, participation in bonus programs and other benefit plans and arrangements applicable to executive officers of the Bank.

In the event of the Executive’s involuntary termination of employment without “cause” or in the event of a voluntary termination for “good reason” (each as defined in the employment agreement), the Executive would become entitled to continue to receive the Executive’s base salary in effect on the date of termination for a period equal to the greater of the remaining employment term or six months and participate in the Bank’s life, disability, medical/health insurance and other benefits substantially similar to those which the Executive was receiving during the year prior to the date of termination for the same period described above immediately following the date of termination, or a cash payment equal to the estimated after-tax cost to obtain such benefits, or substantially similar benefits.

The employment agreement and the Executive’s employment may be terminated for “cause” (as defined in the employment agreement) by written notice from the Corporation or the Bank.  If the employment agreement is terminated for cause, the Executive’s rights under the employment agreement terminate as of the effective date of termination.  The employment agreement also terminates without further payments to the Executive as of the termination date in the event of the Executive’s voluntary termination of employment (other than for good reason) or death.  In the case of the Executive’s “disability” (as defined in the employment agreement), the Executive will become eligible for employer-provided short-term and/or long-term disability benefits, or worker’s compensation benefits, in which case the Bank’s obligation to pay the Executive their annual base salary shall be reduced by such benefits.  Under certain other types of disabilities set forth in the employment agreement, the employment agreement will terminate six months following a determination related to such disability by the Corporation’s board of directors.

In the event that the Executive is involuntarily terminated for cause or voluntarily terminates employment without good reason, the Executive will be subject to a twelve month non-solicitation covenant (applicable to both customers and employees). In the event that the Executive is involuntarily terminated without cause or voluntarily terminates employment for good reason, the Executive will be subject to a twelve month non-solicitation covenant with respect to employees and a six month non-solicitation covenant with respect to customers.

The employment agreement with each Executive provides that, in the event that the payments to be received by the Executive, when taken together with payments and benefits payable to or on behalf of the Executive under any other plans, contracts or arrangements, would constitute an excess parachute payment under Internal Revenue Code Section 280G, the Executive may elect to reduce the payment actually received in order to reduce or eliminate the impact of the excise tax under Section 4999 of the Code. The Executive is not entitled to a “gross-up” payment to reduce the effect of the tax under Section 4999 of the Code.

Mr. Ritrievi’s employment agreement further provides that he shall serve on the Bank’s board of directors and shall be re-nominated for election to the Corporation’s board of directors, with the Corporation’s board of directors recommending such election to its shareholders, for any annual meeting of shareholders at which the class of directors in which Mr. Ritrievi is serving will be elected.  Mr. Ritrievi’s service as director of the Corporation, the Bank and any affiliate or subsidiary shall immediately terminate upon the termination of his employment for any reason.

Change in Control Agreements

Each of the change in control agreements executed between the Bank and each Executive has a fixed three-year term commencing on September 6, 2022, with automatic annual one-year renewals thereafter, absent notice of non-renewal from either party. Each agreement has a “double-trigger” payment feature requiring both a change in control of the Corporation and the involuntary termination of the Executive’s employment without “cause” or voluntary termination of employment by the Executive for “good reason” (each as defined in the change in control agreement) in order for any benefit to become payable under the agreement.

More specifically, in the event an Executive’s employment is terminated on or within twelve months after a “change in control” (as defined in the agreement) during the term of the agreement either by the Corporation, other than for death or disability or for a reason other than “cause”, or by the Executive after the occurrence of certain specified events constituting “good reason”, the Corporation will pay the Executive a lump-sum cash payment. That payment is equal to 2.99 times the Executive’s highest annual base salary in effect during the twelve months preceding the Executive’s termination of employment with respect to Mr. Ritrievi, 2.75 times with respect to Messrs. Micklewright and Webb and Ms. Johnson, and 2.25 times with respect to Ms. Dickinson. In addition, the Executive and the Executive’s beneficiaries will remain eligible to participate, on the same terms and conditions as apply from time to time to the Corporation’s executive management team, in the medical, vision and dental programs of the Bank for three years (33 months for Messrs. Micklewright and Webb and Ms. Johnson, and 27 months for Ms. Dickinson), or a cash payment equal to the estimated after-tax cost to obtain such benefits, or substantially similar benefits, within thirty days following the Executive’s termination.

In the event that the Executive is involuntarily terminated for cause or voluntarily terminates employment without good reason, the Executive will be subject to a twelve month non-solicitation covenant (applicable to both customers and employees). In the event that the Executive is involuntarily terminated without cause or voluntarily terminates employment for good reason, the Executive will be subject to a twelve month non-solicitation covenant with respect to employees and a six month non-solicitation covenant with respect to customers.

The change in control agreement with each Executive provides that, in the event that the payments to be received by the Executive, when taken together with payments and benefits payable to or on behalf of the Executive under any other plans, contracts or arrangements, would constitute an excess parachute payment under Internal Revenue Code Section 280G, the Executive may elect to reduce the payment actually received in order to reduce or eliminate the impact of the excise tax under Section 4999 of the Code. The Executive is not entitled to a “gross-up” payment to reduce the effect of the tax under Section 4999 of the Code.

Supplemental Executive Retirement Plan Agreements

Each supplemental retirement plan agreement (“SERP”) provides for the monthly payment of a fixed cash benefit over a period of fifteen years, commencing on the first day of the month following the Executive’s separation from service: (i) occurring on or after reaching normal retirement age (age 70); (ii) due to disability; (iii) due to death; or (iv) within two years following a change in control of the Bank.  The terms of the SERPs are identical for each Executive, except for the amount of the annual benefit and the timing of vesting of the benefit, which is as follows: Mr. Ritrievi - $190,000 (approximately 40% currently vested with the remainder to vest ratably over the next four years); Ms. Johnson - $100,000 (0% currently vested with the remainder to vest ratably over the next ten years); Messrs. Micklewright and Webb - $100,000 (approximately 45% currently vested with the remainder to vest ratably over the next four years); and Ms. Dickinson - $80,000 (approximately 25% currently vested with the remainder to vest ratably over the next six years). The Board of Directors of the Bank reserves the right to increase the amount of the benefit from time to time, in its discretion. 

The SERP provides that, in the event that the payments to be received by the Executive, when taken together with payments and benefits payable to or on behalf of the Executive under any other plans, contracts or arrangements, would constitute an excess parachute payment under Internal Revenue Code Section 280G, the Executive may elect to reduce the payment actually received in order to reduce or eliminate the impact of the excise tax under Section 4999 of the Code. The Executive is not entitled to a “gross-up” payment to reduce the effect of the tax under Section 4999 of the Code. 

The SERP also contains non-competition and non-solicitation covenants. A violation of such covenants, except in limited circumstances, would result in the forfeiture of any unpaid benefits to the Executive. 

The foregoing descriptions of the employment agreements, change in control agreements and supplemental executive retirement plan agreements do not purport to be complete and are qualified in their entirety by reference to the employment agreements, change in control agreements and supplemental executive retirement plan agreements attached hereto as Exhibits 10.1 through 10.15, respectively, of this Current Report on Form 8-K, and are incorporated by reference into this Item 5.02.