Exhibit 10.8



 






Exhibit 10.8




Summary of Compensation Paid to Executive Officers of Summit Financial Group Inc.

and Amendments to Executive Employment Agreements




     On December 7, 2004, the Compensation Committee (the “Committee”) of Summit Financial Group,
Inc. met to review the performance of the Company for 2004, to establish the Chief Executive
Officer’s and the other executive officer’s base salary for 2005, to determine the bonuses for the
Company’s executives under the Company’s Incentive Compensation Plan for 2004, and to determine the
number of options to grant to the Company’s officers and employees under the Company’s Officer
Stock Option Plan.



     The Company’s named executive officers are: Mr. H. Charles Maddy, III, President and Chief
Executive Officer; Mr. C. David Robertson, President and Chief Executive Officer of Summit
Community Bank; Mr. Patrick N. Frye, Senior Vice President and Chief Credit Officer; Mr. Ronald F.
Miller, President and Chief Executive Officer of Shenandoah Valley National Bank; Mr. Scott C.
Jennings, Senior Vice President and Chief Operating Officer; and Robert S. Tissue, Senior Vice
President and Chief Financial Officer. Company reported all of these individuals as named
executive officers in its 2004 proxy statement. The Company anticipates that each of these
individuals will be disclosed as a named executive officer in its 2005 proxy statement.



     The Company’s Executive Compensation program consists of three basic components: (1) salaries;
(2) annual incentive compensation pursuant to the Incentive Compensation Plan; and (3) long-term
incentive compensation pursuant to the Officer Stock Option Plan. The Committee is responsible for
the administration of the Company’s Executive Compensation programs, which includes recommending to
the Board of Directors for ratification base salary levels, bonuses under the Company’s Incentive
Compensation Plan and stock option awards under the Company’s Officer Stock Option Plan. The
Company’s compensation policies will be discussed in detail in the Report of the Compensation and
Nominating Committee on Executive Compensation included in the Company’s proxy statement.



Base Salaries




     The Company has entered into employment agreements with Messrs. Maddy, Miller, Robertson and
Frye (the “Employment Agreements”). The Employment Agreements establish a base salary for each
individual and the Committee has the authority to annually adjust such base salaries based upon an
evaluation of each individual’s performance. The Committee recommends such adjustments to the
Board of Directors for ratification.



     On December 7, 2004, the Committee reviewed recommendations by the President and Chief
Executive Officer for the other named executive officer’s base salary for 2005. In reviewing the
recommendations, the Committee considered (i) the financial performance of the Company and (ii) a
presentation by the President Chief Executive Officer regarding each named executive officer. The
President and Chief Executive Officer based his presentation and recommendations on an analysis of
Company performance, and peer group comparisons. Based on this analysis, the Committee recommended
to the Board of Directors for ratification that the base salaries of the named executive officers,
other than the President and Chief Executive Officer, for 2005 be set
as follows: Mr. Robertson – $170,000; Mr. Frye –
$150,000; Mr. Miller – $170,000; Mr. Jennings –
$140,100; and Mr. Tissue – $140,000. These recommendations were presented to the Board of Directors for ratification at its meeting
on March 4, 2005. The Board of Directors ratified the recommendations of the Committee.



     Although the Committee contemplated entering into a written employment agreement with Mr. H.
Charles Maddy, III, the President and Chief Executive Officer of the Company, in 2005, on December
7, 2004 the Committee approved a new base salary for 2005 of $325,000 for Mr. Maddy with the
understanding that this base salary could increase upon further review in connection with the
negotiation of an employment agreement with Mr. Maddy.



     Upon further review of peer group information and based on certain performance related
criteria set forth in the Report



 









 




of the Compensation and Nominating Committee on Executive Compensation in the Proxy Statement, Mr.
Maddy’s base salary was increased to $350,000 for 2005 under the terms of Mr. Maddy’s Employment
Agreement dated March 4, 2005. A summary of the terms of Mr. Maddy’s Employment Agreement is set
forth in the Company’s filing on Form 8-K filed March 4, 2005.




Annual Incentive Compensation




     All bonuses awarded under the Incentive Compensation Plan were based on a formula which
primarily considers the return on average equity of the Company and its bank subsidiaries. The
Committee approved a similar bonus structure for 2005. The named
executive officers were awarded the following bonuses under the Incentive Compensation Plan for 2004:



	 	 	 	 	 
	H. Charles Maddy
	 	$	151,765	 
	C. David Robertson
	 	$	45,000	 
	Patrick N. Frye
	 	$	69,933	 
	Ronald F. Miller
	 	$	99,227	 
	Scott C. Jennings
	 	$	93,227	 
	Robert S. Tissue
	 	$	93,227	 






Long-Term Incentive Compensation




     Under the Officer Stock Option Plan, the Company may award stock options for up to 960,000
shares of the Company’s common stock to qualified officers of the Company and its subsidiaries.
Each option granted under the Plan must have an exercise price of no less than the fair market
value of the Company’s common stock as of the date of the grant. The Committee awarded options in
2004 under the Stock Option Plan to the named executive officers as follows:



	 	 	 	 	 
	H. Charles Maddy
	 	 	12,000	 
	C. David Robertson
	 	 	6,000	 
	Patrick N. Frye
	 	 	8,000	 
	Ronald F. Miller
	 	 	6,000	 
	Scott C. Jennings
	 	 	8,000	 
	Robert S. Tissue
	 	 	8,000	 






     The stock options were granted at the average of the closing prices reported on the last five
business days prior to the grant date on which our common stock traded, which was $25.93.