Silvercrest Asset Management Group Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Silvercrest Asset Management Group Inc. (the "Company") on September 18, 2018. The report details the entry into a material definitive agreement regarding the employment of the Company's Chief Executive Officer.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on executive compensation arrangements.
Material Changes and Executive Compensation
On September 18, 2018, Silvercrest Asset Management Group LLC entered into a new Employment Agreement with Richard R. Hough III, who continues to serve as Chief Executive Officer. Key terms include:
- Term: Initial three-year term with automatic one-year renewals unless terminated with 180 days' written notice.
- Base Salary: Annualized base salary of $700,000, payable semi-monthly. Salary may be increased but not decreased without mutual consent or a company-wide reduction.
- Bonus: Eligible for an annual cash bonus determined by the compensation committee.
- Equity Grant: An option grant with a grant date fair market value of $500,000, vesting in annual increments over three years. Future annual grants will be determined by the committee commencing in 2019.
Termination Provisions and Risks
The agreement outlines specific severance benefits triggered by termination without Cause, termination for Good Reason, Disability, or death:
- Severance Payment: A cash amount equal to two times the sum of the annual base salary plus the average of the annual bonuses for the three prior fiscal years, paid over 24 months. Acceleration may occur in connection with a Change in Control.
- Prorated Bonus: Payment of the higher of the prorated annual bonus for the year of termination or the Average Bonus.
- Equity Vesting: Full vesting of time-based equity awards and vesting of performance-based awards based on actual performance.
- Restrictive Covenants: Mr. Hough is precluded from soliciting clients, vendors, suppliers, lenders, employees, consultants, or agents for a two-year period following employment.
Investor Verification Checklist
- Review the full text of the Employment Agreement (Exhibit 10.1) and Form of Option Agreement (Exhibit 10.2) for complete definitions of "Cause," "Good Reason," and "Change in Control."
- Verify the impact of the $500,000 option grant on the Company's existing equity incentive plan and potential dilution.
- Assess the potential cash outflow liability associated with the severance package (2x salary + bonus) in the event of an involuntary termination.
- Confirm the Company's current cash position to ensure liquidity is sufficient to cover potential severance obligations if triggered.