Form 8-K

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): July 19, 2007

 

CAPE FEAR BANK CORPORATION

(Exact name of registrant as specified in its charter)

 

 

North Carolina   000-51513   20-3035898

(State or other jurisdiction

of incorporation)

   (Commission File Number)  

(IRS Employer

Identification No.)

 

1117 Military Cutoff Road

Wilmington, North Carolina

   28405
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (910) 509-2000

 

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))

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements with Certain Officers

On July 19, our Board of Directors, based on the recommendation of its Corporate Governance Committee (which functions as the Board’s independent compensation committee), approved the criteria under which incentive awards may be paid for 2007 to each participant in our Annual Cash Incentive Plan, including our named executive officers.

Under the criteria approved by the Board, the incentive award payable to each participant for 2007 will be:

 

  •  

his or her “Base Amount” (stated as a percentage of the mid-point of his or her salary grade), multiplied by

 

  •  

a percentage of from 0% to 100% (the “Applicable Percentage”) to be determined based on the amount of our 2007 “Pre-Tax, Pre-Incentive Income” (i.e. our consolidated earnings, before taxes and before any deduction for the payment of incentive awards under the Plan), multiplied by

 

  •  

a percentage from 0% to 100% (the “Performance Percentage”) to be determined based on the extent to which individual and/or team performance goals (“Performance Goals”) assigned to participants, or to groups of participants with similar responsibilities (and expressed as quantitative and/or qualitative measures of individual, branch and/or company-wide performance related to the participants’ duties and responsibilities), are met for the year.

The threshold amount of Pre-Tax, Pre-Incentive Income required before any awards may be paid under the Plan is $2,210,802, and the Applicable Percentage will be 100% if Pre-Tax, Pre-Incentive Income amounts to $3,106,317 or more.

A weight, expressed as a percentage, or a range of percentages, is assigned to each Performance Goal. Those percentages are positive numbers in the case of certain Performance Goals, and they are negative numbers (or deductions) in the case of certain other Performance Goals. At the end of 2007, the Committee will determine the extent to which each participant’s Performance Goals have been met, and each participant’s Performance Percentage will equal the aggregate of the positive percentages related to goals that have been met, minus the aggregate of the negative percentages related to goals that have not been met.

The Compensation Committee has the discretion to adjust (increase or decrease) the amount of the award paid to any participant as it deems necessary to meet the purpose of this Plan and to recommend payment of discretionary bonuses outside the Plan.

The following table lists the Base Amount for each of our named executive officers for 2007.

 

               Base Amount

Named

Executive Officer

   

Title

   

Salary Grade

Midpoint

   

Percent of

Salary Grade

Midpoint

    

Dollar

Amount

Cameron Coburn

    President and Chief Executive Officer    $ 253,360    49.28 %   $ 124,845

Betty V. Norris

    Chief Financial Officer      172,430    44.63 %     76,957

Lynn M. Burney

    Chief Operations Officer      136,880    42.06 %     57,567

James R. MacLaren

    Chief Credit Officer      136,880    42.06 %     57,567

Mark A. Tyler

    Chief Banking Officer      136,880    42.06 %     57,567

The following table lists the Applicable Percentages at each level of Pre-Tax, Pre-Incentive Income.

 

Pre-Tax,

Pre-Incentive

Income

  

Applicable

Percentage

    

Pre-Tax,

Pre-Incentive

Income

  

Applicable

Percentage

  
$2,210,802   0.0 %   $ 2,658,559   50.0 %
2,238,787   3.1 %     2,686,544   53.1 %
2,266,772   6.3 %     2,714,529   56.3 %
2,294,756   9.4 %     2,742,514   59.4 %
2,322,741   12.5 %     2,770,499   62.5 %
2,350,726   15.6 %     2,798,483   65.6 %
2,378,711   18.8 %     2,826,468   68.8 %
2,406,696   21.9 %     2,854,453   71.9 %
2,434,681   25.0 %     2,882,438   75.0 %
2,462,665   28.1 %     2,910,423   78.1 %
2,490,650   31.3 %     2,938,408   81.3 %
2,518,635   34.4 %     2,966,392   84.4 %
2,546,620   37.5 %     2,994,377   87.5 %
2,574,605   40.6 %     3,022,362   90.6 %
2,602,590   43.8 %     3,050,347   93.8 %
2,630,574   46.9 %     3,078,332   96.9 %
      3,106,317   100.0 %

The following table lists the Performance Goals and weights that apply to our named executive officers for 2007.

 

Performance Goal

   

Performance

Percentage

Pre-Tax, Pre-Incentive Income of at least $2,182,817

    35%

Increase in non-interest income of 10% to 20%

    0% to 25% (1)

Increase in core deposits of 5% to 10%

    0% to 30% (1)

Efficiency ratio of from 80% to 75%

    0% to 10% (1)

Limit non-performing loans to 0.75% or less of loans

    ( 25)% (2)

Limit charge-offs to not more than 0.5% or less of loans

    ( 25)% (2)

Maintain specified minimum regulatory examination rating

    (100)% (2)
(1) 0% applies to the threshhold level of the range. The higher percentage applies to the ceiling level of the range. Percentages will be extrapolated for results within the range.
(2) Negative percentages represent deductions if goal is not met.

Item 9.01. Financial Statements and Exhibits.

Exhibits. The following Exhibit is being furnished with this Report.

 

Exhibit No.

   

Exhibit Description

10.1

    Copy of the Annual Cash Incentive Plan

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    CAPE FEAR BANK CORPORATION
  (Registrant)
Date: July 25, 2007   By:  

/s/ Betty V. Norris

    Betty V. Norris
    Senior Vice President and Chief Financial Officer