UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 20, 2014
EVERTEC, Inc.
(Exact name of registrant as specified in its charter)
Puerto Rico | 001-35872 | 66-0783622 | ||
(State or other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
Cupey Center Building, Road 176 Kilometer 1.3, San Juan, Puerto Rico |
00926 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (787) 759-9999
Not applicable
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b), (c)
On November 13, 2014, Morgan M. Schuessler, Jr., age 44, was appointed President and Chief Executive Officer of EVERTEC, Inc. (the Company) and its wholly owned subsidiary, EVERTEC Group, LLC (EVERTEC), effective January 1, 2015. On November 20, 2014, Peter Harrington resigned from the position of President and Chief Executive Officer of the Company and EVERTEC and from the Board of Directors of the Company (the Board), effective December 31, 2014. On November 21, 2014, the Company issued a press release announcing the leadership change. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.
Mr. Schuessler has over 20 years of payment industry leadership experience. Mr. Schuessler has served as President of International for Global Payments Inc., one of the worlds leading payment processing providers, overseeing the companys businesses outside of the Americas since 2012. The businesses under his leadership span 23 countries throughout Europe and Asia, and encompass more than 40% of the companys employees.
From 2008-2012, Mr. Schuessler served as Global Payments Executive Vice President and Chief Administrative Officer with responsibility for the companys global operations, human resources, corporate marketing and communications, real estate services and the money transfer business. In this position, he led the implementation of the worldwide credit and risk function, and the creation of the companys first global operations center in Manila, Philippines.
Prior to joining Global Payments, Mr. Schuessler served in several leadership positions with American Express, Inc. including Vice President, Global Purchasing Solutions with responsibility for managing the companys purchasing card business globally. Additionally, he served in various sales, marketing, strategy and product management positions.
Mr. Schuessler is a member of Visas Senior Client Council and the UnionPay International Member Council, the international division of China UnionPay (CUP). He holds a bachelors degree from New York University and an MBA from Emory Universitys Goizueta Business School where he currently serves on the Executive Committee of the Deans Advisory Board.
EVERTEC entered into an employment agreement with Mr. Schuessler (the Employment Agreement) on November 13, 2014 and it will become effective as of January 1, 2015.
The Employment Agreement provides that Mr. Schuessler will receive an annual base salary of $650,000, which amount is subject to annual review by the Board or a committee thereof. Mr. Schuessler is eligible for annual cash incentive awards of up to 100% of his base salary under the EVERTEC Annual Performance Incentive Guidelines. Mr. Schuessler will also receive a Christmas bonus each year in an amount equal to 3% of his base salary. Mr. Schuessler will receive a hiring bonus of $100,000 payable on or before January 15, 2015.
On January 1, 2015, Mr. Schuessler will receive a grant of restricted stock units valued at $3,000,000 as of December 31, 2014 (the Initial RSU Grant), which will be subject to a three-year vesting schedule, with one-third of the restricted stock units vesting after each year of service provided that Mr. Schuessler is performing services for EVERTEC on each vesting date. The award will vest in full upon an earlier termination of Mr. Schuesslers employment by the Company without cause, by Mr. Schuessler for good reason, or due to Mr. Schuesslers death or disability (each as defined in the Employment Agreement) provided that Mr. Schuessler is performing services for EVERTEC at such time.
On or about January 15, 2015, Mr. Schuessler will receive an additional grant of restricted stock units valued at $1,950,000 as of the day before the grant date. Twenty-five percent (25%) of the restricted stock units subject to this grant will be subject to a time-based vesting schedule over three years, with one-third of such 25% vesting after each year of service provided that Mr. Schuessler is performing services for EVERTEC on each vesting date. Seventy-five percent (75%) of the restricted stock units subject to this grant will be subject to a performance-based vesting schedule over three years provided that Mr. Schuessler is performing services for EVERTEC throughout the performance period, and the number of restricted stock units that vest will be between 0% and 150% of the target amount. The performance metrics will be established by the Compensation Committee of the Board and the Board after appropriate consultation with Mr. Schuessler and the definitive award terms will be set forth in an award agreement.
Under the Employment Agreement, Mr. Schuessler is entitled to participate in the employee benefit plans, policies, practices and arrangements generally made available to other executives of EVERTEC as well as certain specified levels of life insurance, short-term disability insurance and long-term disability insurance benefits, car and car insurance benefits in accordance with EVERTECs policies, reimbursement of up to $7,000 in country club membership fees annually, and four weeks of paid vacation annually. Mr. Schuessler is entitled to reimbursement for expenses incurred as a result of the relocation of his principal residence to Puerto Rico from Hong Kong and Atlanta and for up to $25,000 in legal fees he incurs in connection with negotiating the Employment Agreement and ancillary agreements.
The Employment Agreement has an initial term commencing January 1, 2015 and ending December 31, 2018. The term automatically renews for successive one-year periods on each January 1 thereafter unless either party gives notice of non-renewal at least 180 calendar days in advance of the renewal date. If EVERTEC does not renew the term, Mr. Schuessler shall, subject to his execution of a general release of claims in favor of the Company, be entitled to a lump sum payment equal to the greater of one times his base salary and the amounts otherwise due to him under applicable law. If the term is terminated by EVERTEC without cause or by Mr. Schuessler for good reason (each as defined in the Employment Agreement), he shall, subject to his execution of a general release of claims, be entitled to (A) a lump sum payment equal to twice the sum of his base salary and target annual bonus, (B) the value of any vested and unvested time-based restricted stock units and stock options in accordance with the applicable award
agreements, and (C) if such termination occurs with two years of a change in control (as defined in the EVERTEC, Inc. 2013 Equity Incentive Plan), the value of any earned and unearned performance-based restricted stock units and stock options taking into account the date of the termination of Mr. Schuesslers employment and assuming performance at the target level. The Employment Agreement contains a provision which reduces the payments and benefits otherwise payable to Mr. Schuessler in connection with a change in control (under the Employment Agreement or otherwise) if doing so results in a greater after-tax payment to Mr. Schuessler after factoring in the excise taxes imposed on golden parachute payments under Section 280G of the Internal Revenue Code.
In connection with his appointment, Mr. Schuessler will enter into an indemnification agreement with the Company, the terms of which are identical in all material respects to the form of indemnification agreement that the Company has previously entered into with each of its officers. The Companys standard form of officer indemnification agreement was described in, and previously filed as Exhibit 10.62 to, the Companys Registration Statement on Form S-1 (File No. 333-186487), as amended, on April 11, 2013. In addition to the indemnification rights provided under such agreement, EVERTEC has agreed to indemnify Ms. Schuessler for losses arising as a result of Mr. Schuessler entering into the Employment Agreement, including losses arising should his current employer breach certain obligations to him under his employment agreement and certain other agreements with his current employer. In addition, in the event that Mr. Schuessler is enjoined from commencing employment or continuing employment with EVERTEC as a result of any such agreements with his current employer, EVERTEC will continue to pay Mr. Schuesslers base salary under the Employment Agreement until the earlier of his resumption of employment with the Company and December 31, 2015 and, if his employment with EVERTEC is terminated as a result of any agreements with his current employer, the Initial RSU Grant shall, subject to Mr. Schuesslers execution of a general release of claims, fully vest and be paid in accordance with the original schedule. Mr. Schuesslers agreement with his current employer contains certain restrictions on Mr. Schuessler for a two-year period after termination of his employment, including a restriction from competing with the employer within the United States. The Company does not believe that this restriction prohibits Mr. Schuessler from joining the Company, which is based in Puerto Rico, or performing services under the Employment Agreement. The Company intends to file today an action in the San Juan Superior Court seeking a declaratory judgment to that effect.
The Employment Agreement contains certain non-competition and non-solicitation covenants for the benefit of EVERTEC during Mr. Schuesslers employment and for one year following the termination of his employment, certain covenants relating to the protection of EVERTECs confidential information and intellectual property, and a mutual non-disparagement covenant.
(d) |
Mr. Schuessler will initially become a member of the Board on January 1, 2015.
(e)
Mr. Harrington is entitled to receive the termination payments for a termination without cause as provided in his employment agreement. In addition, the Board has approved the following supplemental termination benefits pursuant to a separation agreement dated November 20, 2014 (the Separation Agreement): (i) a Christmas bonus of $26,650 to be paid in a lump sum when Christmas bonuses are paid to other employees in Puerto Rico; (ii) payout of accrued but unused vacation in a lump sum upon his termination of employment; (iii) accelerated vesting to November 20, 2014 of his option to purchase 93,334 shares of the Companys common stock; (iv) a dividend adjustment payment in respect of such stock option in an amount equal to $63,933.79, to be paid in a lump sum following his termination of employment; (v) the annual bonus that he otherwise would have earned for the fiscal year ending December 31, 2014 subject to the attainment of the applicable corporate and personal goals previously established for him, payable in a lump sum on or before December 29, 2014; (vi) Company-paid COBRA premiums through December 31, 2015; (vii) reimbursement of up to $6,000 in attorneys fees incurred by him in connection with negotiating his separation agreement; and (viii) assumption by the Company of his apartment lease, which costs $3,300 per month, effective January 1, 2015 and through the remainder of the term ending on March 31, 2015.
In addition, the Company has agreed to allow Mr. Harrington to put to the Company any or all his 324,322 shares of common stock pursuant to the Companys previously disclosed stock repurchase program and to put to the Company all or any portion of his option to purchase 93,332 shares of common stock. In the event Mr. Harrington elects to exercise the put right, the purchase price per share will equal the average closing price of the Companys common stock during the 30-day period commencing on October 21, 2014 and ending on November 19, 2014 (less, in the case of the stock option, the $4.83 per share exercise price). The purchase price will be paid in a lump sum following Mr. Harringtons termination of employment. Mr. Harrington is required to exercise the put right no later than December 20, 2014.
Pursuant to the Separation Agreement, Mr. Harrington released all claims against the Company, its subsidiaries (including EVERTEC) and each of their respective stockholders, attorneys, insurers, divisions, affiliates and employee benefit plans and agreed not to sue the released parties. Mr. Harrington also reaffirmed that he is bound by the restrictive covenants set forth in his employment agreement. The receipt by Mr. Harrington of the supplemental termination benefits described above is contingent upon Mr. Harrington not revoking the release within the seven-day revocation period following its execution.
The foregoing description is qualified in its entirety by reference to the complete text of the employment agreement with Mr. Harrington, which has been filed as Exhibit 10.65 to the Companys Quarterly Report on Form 10-Q filed on August 14, 2014 and is incorporated herein by reference.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
Number |
Exhibit | |
10.62** | Form of Indemnification Agreement among EVERTEC, Inc. and its officers and directors | |
10.65** | Amended and Restated Employment Agreement, dated July 1, 2014, by and between EVERTEC Group, LLC and Peter Harrington | |
99.1* | Press Release re: leadership change issued by EVERTEC, Inc. dated November 21, 2014 |
* | Filed herewith. |
** | Previously filed. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EVERTEC, Inc. (Registrant) | ||||||
Date: November 21, 2014 | /s/ Arturo Díaz-Abramo | |||||
Arturo Díaz-Abramo | ||||||
Senior Vice President-Legal & Compliance |
EXHIBIT INDEX
Exhibit No. |
Description | |
10.62** | Form of Indemnification Agreement among EVERTEC, Inc. and its officers and directors | |
10.65** | Amended and Restated Employment Agreement, dated July 1, 2014, by and between EVERTEC Group, LLC and Peter Harrington | |
99.1* | Press Release re: leadership change issued by EVERTEC, Inc. dated November 21, 2014 |
* | Filed herewith. |
** | Previously filed. |
Exhibit 99.1
EVERTEC ANNOUNCES NEW CEO
MORGAN SCHUESSLER TO SUCCEED PETER HARRINGTON,
EFFECTIVE JANUARY 1, 2015
SAN JUAN, PUERTO RICO November 21, 2014 EVERTEC, Inc. (NYSE: EVTC) (EVERTEC or the Company) today announced the appointment of Morgan Mac Schuessler as President and Chief Executive Officer, and Member of the Board of Directors, effective January 1, 2015. Mr. Schuessler will join EVERTEC after having served as President of International at Global Payments, Inc., overseeing businesses in 23 countries throughout Europe and Asia. Mr. Schuessler will succeed Peter Harrington, who will depart the Company at the end of the year for personal reasons.
Frank DAngelo, Chairman of the Board, said, On behalf of the entire Board of EVERTEC, I am delighted to welcome Mac Schuessler as our new CEO. Macs leadership of a multinational payments business, and his track record of successfully identifying and capitalizing on growth opportunities in current and new markets, will serve EVERTEC, our clients and our shareholders well. Macs experience and management skills make him an excellent choice to build on EVERTECs leadership in the growing and attractive Caribbean and Latin American financial services and payments markets, and set the course for the Companys next stage of growth.
Mr. DAngelo added, On behalf of the Board, I want to thank Peter for his dedication and partnership these past years as he led EVERTEC to become a successful public company. As he leaves us with a business that spans over 19 markets in the region, we wish Peter the very best in his future endeavors.
Peter Harrington commented, I am grateful to have worked with the talented and dedicated people of EVERTEC, and proud of what we have accomplished since taking the Company public. Given the solid base we have built, I believe EVERTEC can achieve even greater success in the future.
Commenting on his appointment, Mr. Schuessler said, I am honored to have been selected to lead EVERTEC. The Company has built a truly unique business as the foremost full-service transaction processor in Latin America, where considerable opportunities exist. Our focus will be to build upon this position, and continue to grow the Company, while delivering increased value to both our customers and shareholders. I look forward to working with the employees, executive team and Board of EVERTEC to achieve these goals.
Additional Information Regarding Morgan Mac Schuessler
Mac has over 20 years of payment industry experience. Mac will join EVERTEC after having served as President of International for Global Payments, one of the worlds leading payment processing providers, overseeing the companys international businesses, which encompass more than a third of its employees. In his new role at EVERTEC, Mac and his family will be relocating to San Juan, Puerto Rico.
From 2008-2012, Mac served as Global Payments Executive Vice President and Chief Administrative Officer with responsibility for the companys global operations, human resources, corporate marketing and communications, real estate services and the money transfer business. In this position, he led the implementation of the worldwide credit and risk function, and the creation of the companys first global operations center in Manila, Philippines.
Prior to joining Global Payments, Mr. Schuessler served in several leadership positions with American Express, Inc. including Vice President, Global Purchasing Solutions with responsibility for managing the companys purchasing card business globally. Additionally, he served in various sales, marketing, strategy and product management positions.
Mr. Schuessler is a member of Visas Senior Client Council and the UnionPay International Member Council, the international division of China UnionPay (CUP). He holds a bachelors degree from New York University and an MBA from Emory Universitys Goizueta Business School where he currently serves on the Executive Committee of the Deans Advisory Board.
Mr. Schuesslers agreement with Global Payments contains certain restrictions on Mr. Schuessler for a two-year period after termination of his employment, including a restriction from competing with Global Payments within the United States. EVERTEC does not believe that this restriction prohibits Mr. Schuessler from joining the Company, which is based in Puerto Rico, or performing services under the employment agreement he has entered into with EVERTEC. EVERTEC intends to file today an action in the San Juan Superior Court seeking a declaratory judgment to that effect. EVERTEC has agreed to indemnify Mr. Schuessler for certain associated expenses and damages, including certain lost compensation.
About EVERTEC
EVERTEC, Inc. (NYSE: EVTC) is the leading full-service transaction processing business in Latin America, providing a broad range of merchant acquiring, payment processing and business solutions services. The largest merchant acquirer in the Caribbean and Central Americaand one of the largest in Latin AmericaEVERTEC serves 19 countries in the region from its base in Puerto Rico. The Company manages a system of electronic payment networks that process more than 2.1 billion transactions annually, and offers a comprehensive suite of services for core bank processing, cash processing and technology outsourcing. In addition, EVERTEC owns and operates the ATH network, one of the leading personal identification number (PIN) debit networks in Latin America. The Company serves a diversified customer base of leading financial institutions, merchants, corporations and government agencies with mission-critical technology solutions. For more information, visit www.evertecinc.com.
Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of EVERTEC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by, or that otherwise include the words believes, expects, anticipates, intends, projects, estimates, and plans and similar expressions of future or conditional verbs such as will, should, may, and could are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to, uncertainties in the way Mr. Schuesslers restrictive covenants with his current employer, or other provisions in his employment agreement with his current employer, may be interpreted by a court. Consideration should also be given to the risks set forth under the headings Forward-Looking Statements and Risk Factors in the reports the Company files with the SEC from time to time, in connection with considering any forward-looking statements that may be made by the Company and its businesses generally. We undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events unless we are required to do so by law.
Contact
Investor and Media Contact
Alan Cohen
Executive Vice President
Investor Relations
787-773-5302
IR@evertecinc.com