Business Context and Reporting Period
This Form 8-K was filed by EVERTEC, Inc. on November 8, 2018. The report discloses the execution of a new Employment Agreement between EVERTEC Group, LLC and Morgan M. Schuessler, Jr., the Company's President and Chief Executive Officer.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The only financial data disclosed relates to executive compensation:
- Base Salary: Increased to $700,000 annually (previously $675,000).
- Annual Cash Incentive: Eligible for up to 100% of base salary.
- Christmas Bonus: 3% of base salary.
- Severance (Termination without Cause/Good Reason): Two times the sum of annual base salary plus target bonus.
- Non-Renewal Payment: One times base salary (subject to release of claims).
- Other Benefits: Up to $10,000 annual reimbursement for country club fees; four weeks paid vacation; life and disability insurance; car and car insurance.
Material Changes
The primary material change is the extension of Mr. Schuessler's employment term and the increase in his base salary. The new agreement extends the employment term through December 31, 2021, with automatic one-year renewals unless notice of non-renewal is given 180 days in advance. The agreement also clarifies acceleration provisions for long-term incentive awards upon termination without cause, for good reason, or in connection with a Change in Control.
Guidance, Outlook, and Risks
The filing contains no financial guidance, outlook, or management commentary regarding business performance. Risks and contingencies are limited to the terms of the employment agreement, including:
- Change in Control Provisions: Full vesting of unvested time-based and performance-based awards if termination occurs within two years of a Change in Control.
- Prorated Vesting: If termination occurs outside the two-year Change in Control window, unvested awards are prorated as of the termination date.
- Covenants: The agreement includes non-competition, non-solicitation, and confidentiality covenants effective during employment and for one year post-termination.
Investor Verification Checklist
- Verify the total potential cash payout for Mr. Schuessler under various termination scenarios (e.g., 2x base + bonus vs. 1x base).
- Review the specific definitions of "Cause" and "Good Reason" in the full Employment Agreement to understand termination triggers.
- Confirm the impact of the salary increase on the company's overall executive compensation expense relative to prior periods.
- Assess the potential dilution or expense impact of the accelerated vesting of long-term incentive awards in the event of a Change in Control.