Franklin Financial Services Amends President's Employment Deal

What Happened

• Franklin Financial Services Corporation (FRAF) filed an 8‑K reporting a First Amendment to the employment agreement of Charles B. Carroll (President of the Company; President & COO of Farmers and Merchants Trust Company of Chambersburg), effective August 17, 2026.
• The Amendment resets the employment term to three years beginning August 17, 2026, with automatic one‑year renewals unless either party gives at least 180 days’ notice before the anniversary; if proper termination notice is given, the agreement expires two years after the next anniversary date.

Key Details

• Agreement term: three (3) years starting August 17, 2026; automatic one‑year renewals unless 180 days’ prior notice is given.
• Defines “Agreed Compensation” to include Executive’s highest annual base salary plus the average of his annual cash bonuses for the three calendar years immediately preceding termination.
• Change‑in‑control severance: if Executive resigns for Good Reason or is involuntarily terminated without Cause after a Change in Control, he is entitled to up to 2.99× Agreed Compensation paid as a lump sum within 30 days of separation.
• Benefits: two (2) years continuation of life, disability, medical and other welfare benefits (or reimbursement of premiums if benefits cannot be provided). The Bank will obtain an appraisal of non‑compete/non‑solicit restrictions to reduce any parachute payments under Section 280G, and the Executive is entitled to a limited tax gross‑up as set by the Amendment.
• All other terms of the original employment agreement remain unchanged; the Amendment is filed as Exhibit 99.1.

Why It Matters

• For investors, the Amendment clarifies the company’s potential financial exposure on a change in control—most notably a capped severance payment up to 2.99× Agreed Compensation and a two‑year benefit continuation—along with a limited gross‑up and 280G mitigation steps.
• These provisions affect executive retention and the potential cost to shareholders in the event of a sale or other change in control, while the 280G appraisal and limited gross‑up indicate the company sought to manage tax consequences and reduce excessive parachute tax liabilities.