Business Context and Reporting Period
This Form 8-K Current Report was filed by MVB Financial Corp. on June 19, 2017. The filing discloses the execution of employment agreement amendments and the approval of a Supplemental Executive Retirement Plan (SERP) for H. Edward Dean, III, the Chief Executive Officer of the Company's subsidiary, MVB Mortgage.
Key Financial Metrics
The filing does not provide financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation arrangements.
Material Changes and Compensation Details
On June 19, 2017, the Company and MVB Bank, Inc. entered into the Third and Fourth Addendums to Mr. Dean's employment agreement, effective June 1, 2017, and June 15, 2017, respectively. Key changes include:
- Commission Elimination: Mr. Dean is no longer eligible for loan origination or loan-related commissions.
- Term Extension: Employment term extended through December 31, 2020.
- Base Salary: Annual base compensation set at $575,000, effective January 1, 2018.
- Performance Bonus: Beginning January 1, 2018, Mr. Dean will receive a monthly cash payment equal to 9% of MVB Mortgage's pre-tax income.
- Earn-out Modification: Previous earn-out provisions are deleted effective January 1, 2018, though prior commissions received between January 1 and May 31, 2017, will offset earn-out amounts for the 2017 period.
- Equity Grant: Mr. Dean will receive 100,000 stock options in the Company, vesting in four equal installments annually from December 31, 2017, through December 31, 2020.
Outlook, Risks, and Contingencies
The Company approved a Supplemental Executive Retirement Plan (SERP) effective December 31, 2017. Key provisions include:
- Retirement Benefit: Upon completing three years of continuous employment and retiring at age 55 or older, Mr. Dean is entitled to a $1.8 million benefit, payable in 180 monthly installments of $10,000.
- Vesting Triggers: The benefit fully vests immediately if Mr. Dean is terminated without Cause, due to Disability, or terminates for Good Reason. It also vests fully upon death.
- Forfeiture: No benefit is payable if terminated for Cause.
- Restrictive Covenants: Mr. Dean is subject to non-solicitation and non-competition covenants for 24 months following termination of employment.
Investor Verification Checklist
- Verify the impact of the 9% pre-tax income bonus on future compensation expenses relative to MVB Mortgage's profitability.
- Confirm the valuation and dilution impact of the 100,000 stock options granted to Mr. Dean.
- Review the specific definitions of "Cause," "Good Reason," and "Disability" in the SERP and employment addendums to understand termination risks.
- Monitor the upcoming Form 10-Q filing for the full text of the Third Addendum, Fourth Addendum, and SERP exhibits.