Business Context and Reporting Period
This Form 8-K Current Report was filed by Ladder Capital Corp on May 22, 2017. The filing discloses the execution of a Third Amended and Restated Employment Agreement between Ladder Capital Finance LLC (a subsidiary of the Company) and Brian Harris, the Company's Chief Executive Officer.
Key Financial Metrics
The filing text does not provide a clear value for revenue, profit, cash flow, margins, debt, or liquidity metrics. The document focuses exclusively on executive compensation terms.
Material Changes
The primary material change is the amendment of the CEO's employment contract, effective May 22, 2017. Key terms include:
- Base Salary: Not less than $1,000,000 per year.
- Annual Cash Bonus: No less than 4.05% of the Company's core earnings for the year.
- Equity Incentive: An annual award equal to 41% of the senior management team's annual incentive amount, vesting on the grant date.
- Severance Provisions: Upon termination without cause or for good reason, the CEO is entitled to cash severance equal to the greater of $10,000,000 or two times the sum of his annual base salary and the average of the prior two years' cash bonuses. Half is payable in a lump sum, and half in twelve monthly installments.
- Change in Control: If termination occurs within one year of a change in control, the full cash severance is payable in a lump sum.
- Restrictive Covenants: Includes a one-year post-termination non-competition covenant and a two-year non-solicitation covenant.
Guidance, Outlook, and Risks
The filing does not contain financial guidance, outlook, or management commentary regarding business performance. The primary risk disclosed relates to the potential financial liability associated with the CEO's severance package, which could reach a minimum of $10,000,000 in cash under specific termination scenarios.
Investor Verification Checklist
- Verify the definition of "core earnings" in the employment agreement to assess the potential variable cash bonus liability.
- Review the full text of Exhibit 10.1 to confirm the specific definitions of "without cause" and "good reason" for termination.
- Assess the impact of the $10,000,000 minimum severance floor on the Company's liquidity in a worst-case scenario.
- Confirm the vesting schedule and valuation of the equity incentive awards relative to the senior management team's total compensation.