UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): January 28, 2016

 
Summit Financial Group, Inc.
(Exact name of registrant as specified in its charter)

      West Virginia       
 
     No. 0-16587      
 
          55-0672148         
(State or other jurisdiction of  
 
(Commission File Number)  
 
(I.R.S. Employer
incorporation or organization) 
 
 
 
Identification No.)

300 North Main Street
Moorefield, West Virginia 26836
(Address of Principal Executive Offices)

(304) 530-1000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Section 5 - Corporate Governance and Management

  
ITEM 5.02
Departure of Directors or Certain Officers, Election of Directors; Appointment of Certain Officers, Compensatory Arrangements of Certain Officers

On January 28, 2016, the Compensation and Nominating Committee of the Board of Directors of the Company approved the terms of the Company’s Executive Officer Management Incentive Plan for 2016. The Executive Officer Management Incentive Plan for 2016 provides eligible participants, including executive officers of the Company, with the opportunity to earn a bonus equal to 25% of the executive officer’s base salary as of January 1, 2016 multiplied by a multiplier based on the Company’s annual return on average tangible equity (“ROATE”) for 2016. The targeted range for the Company’s ROATE for 2016 is 10.00 to 10.99 percent. If the Company’s actual ROATE for 2016 is within this targeted range, each executive officer will receive an incentive payment equal to 25% of their respective annual base salary as of January 1, 2016 (the “Targeted Incentive”).

If the Company’s actual ROATE for 2016 is greater than the targeted range, executive officers will be eligible to receive an incentive that is greater than the Targeted Incentive; conversely, if the Company’s actual ROATE for 2016 is less than the targeted range, executive officers will be eligible to receive an incentive that is less than the Targeted Incentive.

A copy of the Executive Officer Management Incentive Plan for 2016 is included as Exhibit 10.1 and is incorporated herein by reference. The above summary is qualified in its entirety by reference to the Executive Officer Management Incentive Plan for 2016 attached as Exhibit 10.1.
 

Section 9 - Financial Statements and Exhibits

  ITEM 9.01.      Financial Statements and Exhibits

(d) Exhibits
 
10.1
 
Executive Officer Management Incentive Plan for 2016






SIGNATURES
 
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


.
 
 
 
 
 
SUMMIT FINANCIAL GROUP, INC.
 
 
 
 
 
 
Date:   February 3, 2016
 
 
 
 
By:   /s/  Julie R. Markwood
 
 
 
 
 
Julie R. Markwood
 
 
 
 
 
Vice President &
 
 
 
 
 
Chief Accounting Officer
 






EXHIBIT 10.1
SUMMIT FINANCIAL GROUP, INC.
Executive Officer Management Incentive Plan
for 2016
OBJECTIVE
The objective of the Executive Officer Management Incentive Plan for 2016 (“2016 MIP”) is to incent and reward select members of Summit Financial Group, Inc.’s and its subsidiaries’ (collectively hereafter, “Summit’s”) management team for their exceptional performance, while still balancing risk with reward.
PARTICIPANT ELIGIBILITY
Eligibility for participation in the 2016 MIP is extended to the following executive officers (“Eligible Participants”):
Summit Financial Group, Inc.
 
Summit Community Bank, Inc.
Chief Executive Officer
 
President
Chief Financial Officer
 
Chief Operating Officer
Chief Accounting Officer
 
Chief of Credit Administration
To be eligible to receive a 2016 MIP payment, Eligible Participants must be employed for the entirety of 2016. If an otherwise Eligible Participant separates from employment at Summit for any reason, voluntarily or involuntarily, prior to January 1, 2017, no incentive will be paid to such Eligible Participant.
MIP COMPUTATION
The 2016 MIP computation is based upon Summit achieving a targeted annual return on average tangible equity (“ROATE”). For purposes of the 2016 MIP, Summit’s ROATE is to be calculated on a consolidated basis for the year ended 2016, as follows:
Net Income + (Amortization of Intangibles x 0.63)
Average Shareholders’ Equity - Average Intangibles
For purposes of the 2016 MIP, Summit’s targeted ROATE for 2016 is 10.00 to 10.99 percent. If Summit’s actual ROATE for 2016 is within this targeted range, each Eligible Participant will receive an incentive payment equal to 25% of their respective annual base salary as of January 1, 2016 (the “Targeted Incentive”).
If Summit’s actual ROATE for 2016 is greater than the targeted range, Eligible Participants will be eligible to receive an incentive that is greater than the Targeted Incentive; conversely, if Summit’s actual ROATE for 2016 is less than the targeted range, Eligible Participants will be eligible to receive an incentive that is less than the Targeted Incentive.






The formula to compute each Eligible Participant’s incentive payment under the 2016 MIP is as follows:

Eligible
Participant’s    
Annual Base    
Salary on    
January 1, 2016
 
 
 
 
MIP Multiplier
 
Eligible Participants 2016 MIP Incentive
 
 
 
 
 
X
25%
X
 
=
 
 
 
 
 
 
 
 
 
 

The MIP Multiplier to be used for purposes of the above formula varies based upon Summit’s actual ROATE for 2016, as follows:
Summit’s Actual    
ROATE for 2016
 
MIP
Multiplier
 
Less than 8%
 
0%
8.00% to 8.99%
 
80%
9.00% to 9.99%
 
90%
10.00% to 10.99%
Target
100%
11.00% to 11.99%
 
127%
12.00% to 12.99%
 
162%
13.00% to 13.99%
 
195%
14.00% and greater
 
210%

In addition to the 2016 MIP incentives which may be awarded to Eligible Participants in accordance with the above formula, an additional incentive totaling no more than $40,000 may be awarded at the discretion of Summit’s Chief Executive Officer, in whole or in part, to one or more deserving Summit employees who are not Eligible Participants.
OTHER MIP TERMS
No incentive under the 2016 MIP will be made, if at December 31, 2016 through the time of payment of the 2016 MIP incentive, Summit or any affiliate is subject to any active or pending, formal or informal, agreement or enforcement action to which any bank regulatory authority is a party, including but not limited to a memorandum of understanding, written agreement, or order of cease and desist.
PAYMENT OF INCENTIVES
The 2016 MIP incentive will be calculated after January 1, 2017 and paid as soon as practicable following Summit’s public release of its 2016 earnings, but no later than March 31, 2017.







INTERPRETATIONS, AMENDMENTS OR DISCONTINUATION
All interpretations of or amendments to the 2016 MIP will be made at the sole discretion of Compensation and Nominating Committee of the Summit Financial Group, Inc. Board of Directors. The 2016 MIP may be discontinued or revised by the Compensation and Nomination Committee at any time.