UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
(Amendment
No. 2)
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): July 26, 2006
SHORE
BANCSHARES, INC.
(Exact
name of registrant as specified in its charter)
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Maryland
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0-22345
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52-1974638
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(State
or other jurisdiction of
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(Commission
file number)
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(IRS
Employer
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incorporation
or organization)
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Identification
No.)
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18
East Dover Street, Easton, Maryland 21601
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code: (410)
822-1400
N/A
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Explanatory
Note
This
amendment on Form 8-K/A is being filed to include information required by Item
5.02(d) of Form 8-K that was inadvertently omitted from the Form 8-K filed
on
August 1, 2006, as previously amended on August 11, 2006. The disclosures below
provide information as of August 1, 2006.
Item
1.01. Entry
into a Material Definitive Agreement.
The
information called for by this Item 1.01 is incorporated herein by reference
to
Item 5.02 of this report.
Item
5.02. Departure
of Directors or Principal Officers; Election of Directors; Appointment
of Principal Officers.
(b)
and
(c) Termination
of Officer; Appointment of Officer.
Effective
July 26, 2006, the Company’s Board of Directors appointed Lloyd L. Beatty, Jr.,
53, to serve as the Company’s Chief Operating Officer. Mr. Beatty replaces
Daniel T. Cannon, who will continue to serve as the Company’s Executive Vice
President. This appointment in intended to provide Mr. Cannon with an
opportunity to focus his efforts on serving as President and Chief Executive
Officer of the Company’s subsidiary, The Centreville National Bank of Maryland,
and as Chairman of the Maryland Bankers Association, and to provide Mr. Beatty
with the opportunity to work more closely with W. Moorhead Vermilye, the
Company’s President and Chief Executive Officer, to expand the Shore Bancshares
franchise as discussed below.
Mr.
Beatty has served as a Vice President of the Company since October 2004. Until
January 1, 2006, Mr. Beatty primarily assisted management of the Company with
certain strategic initiatives, and he worked on a part-time basis until October
2005. Starting January 1, 2006, Mr. Beatty’s duties were expanded to include
management authority with respect to certain aspects of the Company’s strategic
initiatives and to provide corporate oversight of the Company’s non-traditional
products and services and the Company’s information technology (IT) system.
Prior to October 2005, Mr. Beatty was the Chief Operating Officer of Darby
Overseas Investments, LP and President of Darby Advisors, Inc. Mr. Beatty has
served as a director of the Company since December 2000 and of the Bank since
1992.
The
Company and Mr. Beatty are not party to a written employment agreement. Total
compensation paid to Mr. Beatty during 2005 was $194,028, which includes amounts
attributable to salary, bonus, profit sharing payments, matching 401(k)
contributions and imputed income related to the Company’s group term life
insurance program. Mr. Beatty’s annual salary for 2006 is $215,000 and was
established upon the recommendation of the Compensation Committee of the Board
of Directors, and he may earn additional compensation in 2006 through the
Company’s bonus and profit sharing plans, matching 401(k) contributions and
imputed income related to the Company’s group term life insurance
program.
Mr.
Beatty’s annual salary is subject to annual adjustment.
In
2006,
The Talbot Bank of Easton, Maryland, a wholly-owned subsidiary of the Company
(the “Bank”), converted a $300,000 line of credit to Mr. Beatty into a $93,651
fixed-rate term loan. Also in 2006, the Bank extended a $40,000 loan to Mr.
Beatty’s son, which is collateralized by a CD pledged by Mr. Beatty and held at
the Bank. These extensions of credit were made on substantially the same terms,
including interest rates, collateral, and repayment terms on loans, as those
prevailing at the same time for comparable transactions with others. These
extensions of credit have not and do not currently involve more than the normal
risk of collectability or present other unfavorable features.
(d) Election
of Director.
Effective
July 31, 2006, the Board of Directors of the Company elected William W. Duncan,
Jr., 59, to serve as a director until the 2007 Annual Meeting of Stockholders
and until his successor is duly elected and qualifies. Mr. Duncan was elected
in
connection with his concurrent appointment by the Bank’s Board of Directors to
serve as the President and Chief Executive Officer of the Bank. Mr. Duncan
has
also been elected to serve as a director of the Bank. Mr. Duncan’s predecessor,
W. Moorhead Vermilye, will remain the President and Chief Executive Officer
of
the Company and a director of both the Company and the Bank. The Boards of
the
Company and the Bank, as well as Mr. Vermilye, believe that the Company’s
business and operations have diversified and become more complex in recent
years, and the separation of the dual President/CEO role is intended to provide
Mr. Vermilye the opportunity to work more closely with Mr. Beatty to expand
and
enhance the Shore Bancshares franchise. Mr. Duncan is expected to serve on
the
Executive Committee and Strategic Planning Committee of the Company’s Board of
Directors.
From
2004
until his appointment with the Bank, Mr. Duncan served as the Chairman of
Mercantile Eastern Shore Bank, located in Chestertown, Maryland. From 1982
to
2004, Mr. Duncan was President and Chief Executive Officer of St. Michaels
Bank,
located in St. Michaels, Maryland. Mr. Duncan served as a director of the
Federal Reserve Bank of Richmond from 2001 through 2004, and currently serves
as
Vice Chairman and a director of Shore Health System, Inc. (since 1996) and
a
director of Talbot Hospice Foundation, Inc. (since 1999).
The
Bank
and Mr. Duncan are not party to a written employment agreement. Mr. Duncan’s
employment arrangement provides for an annual salary of $245,000, subject to
annual adjustment, and participation in the Company’s bonus program, profit
sharing and 401(k) plan, and group term life insurance program, to the extent
the provisions and regulations of such plans permit such participation. In
addition, provided that Mr. Duncan remains employed by the Bank, the Company
agreed to make five annual awards of restricted stock to Mr. Duncan under the
Company’s 2006 Stock and Incentive Compensation Plan. The number of shares that
will be subject to each award has not yet been determined but will be based
on a
fixed dollar amount intended to correspond, in part, to the value of certain
retirement and other benefits that were forfeited when Mr. Duncan terminated
his
service with his previous employer. Each award of restricted stock will vest
ratably over the lesser of five years or the number of years remaining until
Mr.
Duncan reaches age 65.
In
2005,
the Bank extended a $100,000 home equity line of credit to Mr. Duncan’s son and
a $75,000 business line of credit to his son’s accounting firm. These extensions
of credit were made on substantially the same terms, including interest rates,
collateral, and repayment terms on loans, as those prevailing at the same time
for comparable transactions with others. These extensions of credit have not
and
do not currently involve more than the normal risk of collectability or present
other unfavorable features.
Item
9.01. Financial
Statements and Exhibits.
(c)
Exhibits:
Exhibit
10.1—Summary of Compensation Arrangement for Lloyd L. Beatty, Jr.**
Exhibit
10.2—Summary of Compensation Arrangement for William W. Duncan, Jr. (filed
herewith)
**
Previously filed
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by
the undersigned, thereunto duly authorized.
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SHORE
BANCSHARES, INC.
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| Dated:
February 11, 2007 |
By: |
/s/
W.
Moorhead Vermilye |
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W.
Moorhead Vermilye |
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President
and CEO
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