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Get filing alertsFranklin Financial extends President Carroll's employment term, caps change-in-control severance at 2.99x compensation
Filed August 18, 2026 · Period ending August 18, 2026 · ~1 min read
Key Changes
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President and COO Charles B. Carroll's employment agreement extended to new 3-year term starting August 17, 2026, with automatic 1-year renewals unless either party gives 180 days' notice, providing employment security through at least 2029.
Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Compensation verify on EDGAR → -
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Change-in-control severance capped at 2.99 times Agreed Compensation (highest base salary plus 3-year average bonus), payable within 30 days if terminated without cause or for good reason after a change in control. The 2.99x cap stays below the 3x threshold that triggers excise taxes under Section 280G.
Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Compensation verify on EDGAR → -
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Bank will obtain appraisal of non-compete and non-solicitation covenants to reduce parachute payment calculations under Section 280G, aiming to minimize excise tax exposure in change-in-control scenarios.
Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Compensation verify on EDGAR → -
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Executive receives 2 years of continued health and welfare benefits (or reimbursement for comparable coverage) following change-in-control termination.
Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Compensation verify on EDGAR →
Summary
Franklin Financial Services amended the employment agreement for President and Chief Operating Officer Charles B. Carroll, extending his term to three years beginning August 17, 2026. The agreement includes automatic one-year renewals unless either party provides 180 days' notice, ensuring employment continuity through at least 2029.
The amendment restructures change-in-control severance provisions, capping payments at 2.99 times Agreed Compensation—defined as his highest annual base salary plus the three-year average of annual cash bonuses. The 2.99x multiple is designed to stay below the 3.0x threshold that would trigger golden parachute excise taxes under Section 280G of the Internal Revenue Code.
The agreement includes tax mitigation mechanisms: the bank will obtain an independent appraisal of Carroll's non-compete and non-solicitation restrictions to allocate a portion of change-in-control payments to the fair value of these covenants, potentially reducing the amount subject to excise taxes. If terminated without cause or for good reason following a change in control, Carroll receives the lump-sum severance payment within 30 days plus two years of health and welfare benefits continuation. The amendment represents standard executive retention planning, balancing competitive change-in-control protections with tax efficiency for both the company and executive.
Section-by-Section Diff
Event · Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Compensation
Franklin Financial amended President Charles B. Carroll's employment agreement, extending the term and modifying change-in-control severance provisions.
Added in current filing · verify on EDGAR →
The Amendment amends Section 5 of the employment agreement to define “Agreed Compensation” as Executive’s highest annual base salary, as defined in the employment agreement, and the average of his annual cash bonuses for the three (3) calendar years immediately preceding his termination.
The amendment redefines how severance compensation is calculated, using the executive's highest annual base salary plus the three-year average of annual cash bonuses. This definition serves as the basis for calculating change-in-control severance payments.
Added in current filing · verify on EDGAR →
If Executive terminates his employment for Good Reason (as defined in the employment agreement) or he is involuntarily terminated without Cause (as defined in the employment agreement) after a Change in Control, then he will be entitled to the following compensation and benefits: ... the Bank shall pay Executive a lump sum amount equal to no greater than 2.99 times the Executive's Agreed Compensation, minus applicable taxes and withholdings, payable within thirty (30) days of Executive's separation of service.
Following a change in control, if the executive is terminated without cause or resigns for good reason, he receives a lump sum capped at 2.99 times his Agreed Compensation within 30 days. The 2.99x multiple appears designed to stay below the 3x threshold that triggers excise taxes under Section 280G of the tax code.
Added in current filing · verify on EDGAR →
the Bank shall obtain an appraised value of non-solicitation and non-competition restrictions under the employment agreement for the purposes of reducing any parachute payment calculations in accordance with Section 280G of the Internal Revenue Code of 1986, as amended.
The bank will obtain an appraisal of the executive's non-compete and non-solicitation covenants to potentially reduce parachute payment calculations under Section 280G. This mechanism, combined with the 2.99x severance cap and limited gross-up provision, aims to minimize excise tax exposure for both the company and executive in a change-in-control scenario.
Show 1 minor / wording change
Added in current filing · verify on EDGAR →
for a period of two (2) years Executive shall receive a continuation of all life, disability, medical insurance and other normal health and welfare benefits or if the Bank cannot legally provide such benefits because Executive is no longer an employee, or future law or plans do not permit so, the Bank shall reimburse Executive in an amount equal to the monthly premium paid by him to obtain comparable coverage.
After a change-in-control termination, the executive receives two years of continued health and welfare benefits, or reimbursement for comparable coverage if the bank cannot legally provide benefits to a former employee. This provides additional post-employment security beyond the cash severance.
Event · Exhibit 99.1
Added in current filing · view on EDGAR →
Executive shall serve as the President and Chief Operating Officer of the Bank reporting to the CEO of the Corporation and the Bank and the Board of Directors of the Corporation and Bank.
Chad Carroll was promoted from Executive Vice President and Chief Operating Officer to President and Chief Operating Officer of Farmers and Merchants Trust Company of Chambersburg (the bank subsidiary). He continues to report to the CEO and boards of both the holding company and the bank. This represents an elevation in executive responsibility within the organization.
Added in current filing · view on EDGAR →
This Agreement shall be for a three (3) year period (the “Employment Period”) beginning August 17, 2026, and if not previously terminated pursuant to the terms of this Agreement, the Employment Period shall end three (3) years later (the “Initial Term”). The Employment Period shall be extended automatically for one (1) additional year on the first annual anniversary date of the commencement of the Initial Term (the date first above written), and then on each anniversary date of this Agreement thereafter, unless the Corporation, the Bank or Executive gives contrary written notice to the other not less than one hundred eighty (180) days before any such anniversary date
The employment agreement was reset to a new three-year term beginning August 17, 2026, with automatic one-year extensions on each anniversary unless either party provides 180 days' notice. This evergreen structure provides Carroll with ongoing employment security tied to his new role as President and COO.
Added in current filing · view on EDGAR →
The Bank, or successor thereto, shall pay Executive a lump sum amount equal to and no greater than 2.99 times Executive’s Agreed Compensation as defined in subsection (g) of Section 5, minus applicable taxes and withholdings within thirty (30) days of Executive’s Separation of Service
In the event of termination following a change in control, Carroll would receive a lump sum payment capped at 2.99 times his Agreed Compensation (defined as highest base salary plus average of prior three years' bonuses). The 2.99x multiple is designed to stay below the 3x threshold that would trigger golden parachute excise taxes under Section 280G of the tax code. The agreement also includes provisions for a limited gross-up payment to cover excise taxes on amounts from salary continuation agreements.
Show 2 minor / wording changes
Added in current filing · view on EDGAR →
If such termination occurs for Good Reason and such termination constitutes a Separation of Service as defined by Internal Revenue Code of 1986, as amended (“Code”) Section 409A (“Separation of Service”), then the Bank shall pay Executive an amount equal to the Executive’s remaining Annual Base Salary that would otherwise be due and payable under the Agreement to the Executive for the remaining Employment Period, minus applicable taxes and withholdings, payable in equal monthly installments over the remaining Employment Period. Such amount in the aggregate shall not exceed 2.99 times Executive’s Annual Base Salary or be less than 2.00 times Executive’s Annual Base Salary.
If Carroll resigns for Good Reason (such as material reduction in duties, forced relocation beyond 50 miles, salary cut, or benefits reduction), he would receive his remaining base salary for the employment period, paid monthly, with the total amount capped between 2.00x and 2.99x his annual base salary. He would also receive two years of continued health and welfare benefits. This provides protection against constructive termination scenarios.
Added in current filing · view on EDGAR →
The Corporation, Bank and Executive hereby recognize that: (i) the non-solicitation restrictions and non-competition restrictions under Section 9 of this Agreement have value, (ii) the value shall be recognized in any calculations the Corporation, Bank and Executive perform with respect to determining the affect, if any, of the parachute payment provisions of Section 280G of the Code (“Section 280G”), by allocating a portion of the payments under Section 7 of this Agreement to the fair value of the non-solicitation and non-competition restrictions under Section 9 of this Agreement (the “Appraised Value”), (iii) the Bank shall obtain an independent appraisal to determine the Appraised Value, (iv) the Appraised Value will be considered reasonable compensation for post change in control services within the meaning of Q&A-40 of the regulations under Section 280G
The agreement establishes that Carroll's non-compete and non-solicitation restrictions have independent economic value that will be appraised and allocated as reasonable compensation for post-change-in-control services. This appraisal mechanism is designed to reduce the amount of change-in-control payments subject to golden parachute excise taxes by treating a portion as compensation for the restrictive covenants rather than severance.
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Figures/quotes linked to EDGAR · Narrative written by AI · Aug 19, 2026 · How we verify