Business Context and Reporting Period
This Form 8-K Current Report was filed by Ladder Capital Corp on January 19, 2018, covering events occurring on January 18, 2018. The filing primarily addresses Item 5.02 regarding the appointment of certain officers and compensatory arrangements.
Key Financial Metrics
The filing text does not provide a clear value for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on executive compensation terms rather than operational financial results.
Material Changes
The material change reported is the execution of a Second Amended and Restated Employment Agreement between Ladder Capital Finance LLC (a subsidiary) and Pamela McCormack, the Company's President. Key terms include:
- Base Salary: Not less than $750,000 per year.
- Year-End Bonus: Discretionary under current CEO Brian Harris; if Harris departs, the bonus is the greater of 1.2% of Core Earnings or the average percentage of Core Earnings from the prior two years.
- Equity Incentives: Discretionary under Harris; if Harris departs, the grant value is the greater of $1,700,000 or the average value of the prior two years' grants.
- Vesting Acceleration: Unvested equity granted prior to December 8, 2019, vests on that date if employed; equity granted after that date is fully vested at issuance.
Outlook, Risks, and Contingencies
Severance Provisions: Upon termination without cause or for good reason, Ms. McCormack is entitled to:
- Cash severance equal to 1.5 times the sum of her annual base salary and the average of her annual cash bonuses for the two preceding years (1.0 times in limited 2018 circumstances).
- Payment structure: 50% lump sum, 50% in 12 monthly installments (unless triggered by a change in control, in which case it is fully lump sum).
- Prorated target annual cash bonus and minimum annual equity incentive grant.
- Health care reimbursement for up to 18 months.
Covenants: The agreement includes a one-year post-termination non-competition covenant and an 18-month post-termination non-solicitation covenant for employees and customers.
Investor Verification Checklist
- Verify the definition of "Core Earnings" in the attached Exhibit 10.1 to assess the potential liability of the bonus structure.
- Confirm the current status of Brian Harris as CEO to determine which compensation tier applies.
- Review the full text of Exhibit 10.1 for specific definitions of "without cause" and "good reason" regarding severance eligibility.
- Assess the impact of the December 8, 2019 vesting acceleration clause on future equity dilution.