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): September 29, 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:
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))
Item
1.01. Entry
into a Material Definitive Agreement.
On
September 29, 2006, the Compensation Committee of the Board of Directors of
Shore Bancshares, Inc. (the “Company”) adopted the Shore Bancshares, Inc. Executive Deferred Compensation Plan for
members of management and highly compensated employees of the Company and its
subsidiaries (the “Plan”). Participants will be selected by the Compensation
Committee. The Plan is attached hereto as Exhibit 10.1. The material features
of
the Plan are discussed below.
The
Plan
permits a participant to elect, each year, to defer receipt of up to 100% of
his
or her salary and bonus to be earned in the following year. The Plan also
permits the participant to defer the receipt of performance-based compensation
not later than six months before the end of the period for which it is to be
earned. The deferred amounts will be credited to an account maintained on behalf
of the participant (a “Deferral Account”) and will be deemed to be invested in
certain investment options established from time to time by the Compensation
Committee. A participant’s election to defer compensation will be evidenced by
an election form that will specify, among other things, the allocation of the
deferred compensation among the various deemed investment options. Once made,
an
election is irrevocable.
The
Company has agreed to make mandatory contributions for certain participants
on
the last day of each Plan year for which the participant was an employee. A
mandatory contribution for a Plan year will be reduced on a pro-rata basis
in
the event a participant has a Separation of Service (as defined in the Plan).
The Company may, but is not required to, also make matching and discretionary
contributions for the benefit of a participant. Matching contributions for
a
Plan year, if any, will be announced prior to the beginning of that Plan year.
Discretionary contributions for a Plan year, if any, may vary among participants
and will be credited to the participant’s account at the end of a Plan year.
Mandatory, matching and discretionary contributions will be credited to an
Employer Funded Account (as defined in the Plan) established by the Company
and
will be deemed to be invested in the manner specified in the participant’s
election form for that Plan year in respect of his or her voluntary deferrals.
Information about the participants who are entitled to mandatory contributions
and the amounts thereof, and participants who are entitled to discretionary
contributions and the amounts thereof, is set forth in Schedule
A
to the
Plan. Matching contributions will not be made with respect to income deferred
between October 1, 2006 and December 31, 2006, the first Plan Year.
A
participant’s Deferral Account and his or her Employer Funded Account will be
credited with the gain or loss generated on the investments in which the funds
in those accounts are deemed to be invested.
A
participant is fully vested at all times in the amount credited to his or her
Deferral Account. With respect to the amount credited to a participant’s
Employer Funded Account, a participant is 0% vested in the first year of
participation in the Plan; thereafter, the participant’s interest vests 25% each
year. If, however, the participant’s service with the Company terminates because
of death or the Company experiences a Change in Control (as defined in the
Plan), then the participant’s interest in his or her Employer Funded Account
will be automatically 100% vested regardless of years in the Plan. If the
participant separates from service for any reason other than death, Disability
(as defined in the Plan), Change of Control or Retirement (as defined in the
Plan) at or after age 65, then any non-vested portion of his or her Employer
Funded Account will be forfeited.
The
Plan
contemplates automatic distributions upon the occurrence of certain events
and
elective distributions.
If
a
participant dies or experiences a Disability while employed by the Company
or if
the Company experiences a Change in Control, then the vested portions of a
participant’s accounts will be distributed in a lump sum payment to the
participant or, in the case of death, to his or her designated beneficiaries.
If
a participant experiences a Separation of Service, then the vested portions
of a
participant’s accounts will be distributed in a lump sum or in installments, as
specified in the most recent election form. Certain restrictions on the
commencement of automatic distributions apply to Key Employees (as defined
in
the Plan).
A
participant may elect in his or her annual election form to receive elective
distributions, or “In-Service Distributions”, from his or her Deferral Account
of amounts deferred (and earnings thereon) for a given Plan year as soon as
three years after the end of that Plan year. At the time of the election, the
participant must also elect whether to receive the elective distribution in
a
lump sum or in installments over a period of up to 10 years. If a participant
fails to make a payment method election, then the distribution will be made
in
one lump sum. A participant may change his or her election to postpone a
distribution or change the form of payment, but such change must be made at
least 12 months prior to the original distribution date, cannot be effective
until at least 12 months following the subsequent election, and must postpone
the commencement of the payment for a period of at least five years from the
original distribution date.
The
Plan
also permits certain limited distributions upon the occurrence of an Unforeseen
Emergency (as defined to the Plan) and a lump sum distribution, at the Plan
administrator’s sole discretion, in the event the participant’s accounts have a
value of less than $10,000.
Benefits
are not assignable by a participant.
The
Plan
may be amended and/or terminated by the Company’s Board of Directors at any
time, provided that no amendment may decrease a participant’s accrued benefit
prior to the date of amendment and no termination may deprive a participant
of a
right accrued prior to the date of termination. Notwithstanding the foregoing,
the Board may amend the Plan so that it complies with law.
Item
9.01. Financial
Statements and Exhibits.
(c)
Exhibits:
Exhibit
10.1—Shore Bancshares, Inc. Executive Deferred Compensation Plan and related
Deferral Election, Investment Designation, and Beneficiary Designation Forms
(filed herewith).
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:
October 2, 2006
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By:
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/s/
W. Moorhead Vermilye
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W.
Moorhead Vermilye
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President
and CEO
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EXHIBIT
INDEX
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Exhibit
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Number
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Description
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10.1
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Shore
Bancshares, Inc. Executive Deferred Compensation Plan and related
Deferral
Election, Investment Designation, and Beneficiary Designation Forms
(filed
herewith).
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