Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)Compensatory Arrangements of Certain Officers
On March 22, 2022, Southern Bank (the “Bank”), the wholly owned banking subsidiary of Southern Missouri Bancorp, Inc. (the “Company”) entered into an amended and restated severance agreement (the “Severance Agreement”) with its Chief Lending Officer, Rick Windes, a named executive officer of the Company. The Severance Agreement supersedes and replaces Mr. Windes previous severance agreement with the Bank, dated November 7, 2019.
The amendments, among other changes described below, revise the severance payout formula by eliminating the use of “base amount” of compensation, as defined under Section 280G of the Internal Revenue Code (“Section 280G), and substituting “Cash Compensation, “which is defined at Section 1.(a) of the Severance Agreement to include base salary and cash bonus. A summary of the entire Severance Agreement follows.
The Severance Agreement has a term that initially expires on December 31, 2022. On each December 31st thereafter, the term of the Severance Agreement is extended for a period of one additional year unless either the Bank or Mr. Windes has given notice to the other party in writing at least 60 days prior to such annual renewal date that the term of the Severance Agreement will not be extended. If a change in control occurs during the term of the Severance Agreement, however, the remaining term of the agreement shall be automatically extended until the one-year anniversary of the completion of the change in control.
Under the Severance Agreement, if Mr. Windes’s employment is terminated in connection with or within one year following a change in control (1) by the Bank other than for cause, disability, retirement or as a result of Mr. Windes’s death or (2) by Mr. Windes for Good Reason as defined in the Severance Agreement, Mr. Windes will be entitled to receive in a lump sum within five business days following the date of termination, a cash severance amount equal to one and one half times (formerly one times) his cash compensation. In addition, Mr.Windes will be entitled for the earlier of an eighteen month period (formerly 12 month period), or until the date of Mr. Windes’s full time employment with another employer, at no cost to Mr. Windes, the continued participation by him (including his dependents who are covered by the Bank at the time of his termination) in all group insurance, life insurance, health, dental, vision and accident insurance and disability insurance plans offered by the Bank in which Mr. Windes and his covered dependents were participating immediately prior to the date of termination of employment.
In the event that the continued participation of Mr. Windes and his covered dependents in any group insurance plan is barred or would trigger the payment of an excise tax under Section 4980D of the Internal Revenue Code then the Bank will either (1) arrange to provide Mr. Windes and his or her covered dependents with alternative benefits substantially similar to those which he currently receives provided the alternative benefits do not trigger the payment of an excise tax or (2) pay to Mr. Windes within 10 business days following the termination, a lump sum cash amount equal to the projected cost of the benefits to the Bank until the eighteen month anniversary date of the date of termination of employment.
If the payment and benefits Mr. Windes has the right to receive from the Bank would constitute a “parachute payment” under Section 280G, then the payment and benefits will be reduced by the minimum amount necessary to result in no portion of the payment and benefits payable by the Bank under the Severance Agreement being non-deductible to the Bank pursuant to Section 280G.