Business Context and Reporting Period
This Form 8-K Current Report was filed by Finwise Bancorp on May 17, 2022. The registrant is an emerging growth company incorporated in Utah, with its common stock (FINW) trading on The NASDAQ Stock Market LLC. The report primarily addresses executive compensation arrangements and retention agreements approved by the Board of Directors.
Key Financial Metrics
The filing does not provide standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on compensation terms and executive agreements.
Material Changes and Compensation Arrangements
Retention Bonus for James Noone
- Recipient: James Noone, Chief Credit Officer and Executive Vice President of FinWise Bank.
- Amount: $520,000 (less applicable deductions).
- Payment Terms: Advanced in two equal payments. The first was paid on April 1, 2022; the second is payable on the payroll cycle following January 15, 2023.
- Condition: The Recipient must remain actively employed through January 15, 2023, to earn the bonus.
2022 Executive Compensation Program
The Board adopted a new program for the CEO and other executive officers (excluding David Tilis) comprising a Cash Bonus Plan and a Long-Term Incentive Plan (LTIP).
Cash Bonus Plan
- Basis: Primarily based on pre-tax net income (100% for CEO; 75% for other officers, with 25% based on department goals).
- Range: Bonuses range from 0% to 175% of target amounts based on performance thresholds (80% to 120%+ of target).
- 2022 Targets and Maximums:
- Kent Landvatter (CEO): Target $450,000; Maximum $787,500.
- Javvis Jacobson (CFO): Target $170,000; Maximum $297,500.
- James Noone (CCO): Target $170,000; Maximum $297,500.
- Risk Adjustment: The Compensation Committee may reduce bonuses by up to 25% if inappropriate risk is taken.
Long-Term Incentive Plan (LTIP)
- Structure: 80% restricted stock and 20% stock options.
- Vesting: Ratably over three years based on Return on Average Assets (ROAA).
- 2022 Award Values:
- Kent Landvatter: $700,000.
- Javvis Jacobson: $270,000.
- James Noone: $210,000.
Guidance, Outlook, and Risks
The filing does not contain forward-looking financial guidance, general outlook commentary, or specific risk factors beyond the compensation plan's risk adjustment clause. The LTIP explicitly ties executive equity value to the achievement of specified ROAA levels.
Investor Verification Checklist
- Verify the actual pre-tax net income performance for 2022 to determine the realized cash bonus amounts for executives.
- Confirm the Return on Average Assets (ROAA) metrics to assess the vesting status of the LTIP grants.
- Review the full text of the Letter Agreement (Exhibit 10.1) for specific clawback provisions or additional conditions regarding James Noone's retention bonus.
- Monitor future filings to confirm if the second installment of the retention bonus was paid upon the January 15, 2023, deadline.