One man stands to receive a big payday as a result of Farmers Bank’s pending acquisition by West Virginia’s WesBanco.
Lloyd Hillard, president and CEO of Farmers Capital Bank Corp., the Frankfort-based holding company of United Bank, will receive a single cash payment of $1.67 million from WesBanco as a result of the bank’s recently announced acquisition of Farmers.
On Wednesday, Hillard, who has been with Farmers since 2010, told The State Journal that employment agreements are designed by the bank’s board of directors to keep the CEO “focused” and working hard on behalf of shareholders.
Indeed, so-called “golden parachute” deals are typically designed to retain top executives and ensure the neutrality of executives during potential takeovers.
Until last year, Farmers had been actively seeking buyers, recent regulatory filings reveal. In March 2015, Farmers hired financial adviser Keefe, Bruyette & Woods to contact “several potential acquirers” but was unable to reach a deal.
Farmers continued meeting with the adviser throughout 2015 and 2016 and even received an indication of interest in January of last year, but disagreements over purchase price nixed a potential deal. By last May, Farmers began exploring other “strategic initiatives,” including the potential of Farmers itself to acquire other financial institutions, regulatory filings say.
A late August dinner between Hillard and Jim Rickard, president for Kentucky and Southern Indiana for WesBanco, set Farmers on its current trajectory. Filings say Rickard told Hillard he was “pleased” with WesBanco’s September 2016 acquisition of Your Community Bankshares, where he had been president and CEO. He proceeded to ask Hillard “whether Farmers Capital would be interested in discussing strategic opportunities with WesBanco.”
“Mr. Hillard replied that, at that time, Farmers Capital was considering growth via acquisition rather than sale, but that he would always act in the best interests of Farmers Capital’s stockholders,” say recent regulatory filings.
WesBanco courted Hillard and Farmers with another dinner in mid-October, this time with WesBanco President and CEO Todd Clossin joining. A month later, WesBanco submitted a non-binding indication of interest to acquire Farmers.
Farmers’ own pursuit of an acquisition target referred to only as “Company A” in regulatory filings fell through in December. By January, WesBanco had submitted a second non-binding offer. “Robust” negotiations proceeded from there, including a visit to Frankfort by WesBanco officials on March 3.
Under the deal that the boards of both companies ultimately approved unanimously last month, WesBanco will exchange a combination of its common stock and cash for Farmers common stock. Farmers shareholders will be entitled to receive 1.053 shares of WesBanco common stock and $5 for each share of Farmers common stock for a total value of approximately $378.2 million, The State Journal previously reported.
Hillard told The State Journal that Farmers would schedule a shareholders meeting “very soon” and that he expects the WesBanco deal to close by the third quarter of this year. Asked why representatives of WesBanco were on site Wednesday in Frankfort, Hillard said the bank is in the process of analyzing the transaction, preparing for integration and “getting to know all the people in our markets.”
Hillard will stay on as chair of WesBanco’s Central and Southern Kentucky advisory board. As part of his new employment deal, he will be entitled to an annual salary of $275,000 and will receive a $250,000 retention bonus if he remains through September 2020, according to regulatory filings. Hillard told The State Journal that he expected to retire in two years’ time.