Business Context and Reporting Period
This Form 8-K filing by Essential Properties Realty Trust, Inc. (EPRT) was submitted on October 3, 2024. The report discloses the execution of an amended and restated employment agreement with Mark E. Patten, the Company's Executive Vice President, Chief Financial Officer, Treasurer, and Corporate Secretary, effective October 3, 2024.
Key Financial Metrics
The filing does not provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The document focuses exclusively on executive compensation terms.
Material Changes
The primary material change is the renewal and modification of the employment terms for the Chief Financial Officer. The new agreement extends the employment term through December 31, 2028, with automatic one-year extensions unless notice is given. Key compensation updates include:
- Base Salary: Set at a minimum annual rate of $520,000.
- Annual Performance Bonus: Minimum target set at 125% of the Base Salary.
- Long-Term Incentives: Continued eligibility for the Company's annual long-term incentive program, subject to Compensation Committee approval.
Guidance, Outlook, and Risks
The filing outlines specific severance and termination provisions rather than business outlook or guidance. If Mr. Patten's employment is terminated without "Cause" or for "Good Reason," he is entitled to:
- Accrued benefits.
- Severance equal to one times the sum of Base Salary plus the average Annual Performance Bonus paid over the prior three years.
- Change in Control (CIC) Provision: If termination occurs within 24 months following a Change in Control, severance increases to two times the sum of Base Salary plus the target Annual Performance Bonus, payable over 24 months.
- Pro rata Annual Performance Bonus based on actual performance (or target during the CIC Period).
- Up to 12 months of continued health care coverage.
- Immediate vesting of outstanding equity awards, payable within 60 days.
The agreement includes 12-month restrictive covenants regarding non-competition and non-solicitation post-termination.
Investor Verification Checklist
- Verify the total potential cash outflow for severance under the "Change in Control" scenario based on the current target bonus structure.
- Confirm the specific performance targets established by the Compensation Committee for the 125% bonus target.
- Review the definitions of "Cause" and "Good Reason" in the full text of Exhibit 10.1 to understand termination triggers.
- Assess the impact of the 12-month non-compete clause on the Company's ability to hire replacement talent in the immediate future.