Business Context and Reporting Period
Company: EVERTEC, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 21, 2018
Subject: Adoption of an Executive Severance Policy for named executive officers (excluding the CEO and COO).
Key Financial Metrics
This filing does not contain financial performance data. There are no reported values for revenue, profit, cash flow, margins, debt, or liquidity.
Material Changes
The primary material change is the implementation of the "Executive Severance Policy" effective December 21, 2018. This policy supersedes previous severance benefits for covered named executive officers. The policy outlines specific compensation triggers based on termination without Cause or for Good Reason, distinguishing between terminations occurring within 24 months of a Change in Control versus other periods.
Guidance, Outlook, and Management Commentary
Severance Terms:
- Within 24 months of Change in Control: Eligible officers receive a lump sum equal to 2x (Annual Base Salary + Annual Target Bonus), a pro rata target bonus, unpaid prior year bonuses, and 18 months of health insurance coverage.
- Outside 24 months of Change in Control: Eligible officers receive a lump sum equal to 1x Annual Base Salary, a pro rata bonus based on actual performance, unpaid prior year bonuses, and 18 months of health insurance coverage.
- Benefits are contingent upon the execution of a release of claims agreement.
- Benefits may be forfeited or reduced for breach of restrictive covenants or if the officer obtains health benefits from a new employer during the 18-month coverage period.
- A "gross-up" provision applies to avoid excise taxes under Section 280G of the Internal Revenue Code, ensuring the officer receives the maximum after-tax amount.
Investor Verification Checklist
- Verify the full text of the Executive Severance Policy in the upcoming Form 10-K exhibit.
- Confirm the specific definitions of "Cause," "Good Reason," and "Change in Control" within the policy document.
- Review the total number of executives covered under this new policy versus those excluded.
- Assess the potential financial impact of the 2x severance multiplier in the event of a Change in Control.