8-K

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): February 14, 2022

Velocity Financial, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-39183	46-0659719
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
30699 Russell Ranch Road, Suite 295 Westlake Village, California		91362
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (818) 532-3700

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	VEL	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02: Compensatory Arrangements of Certain Officers.

On February 14, 2022, the Compensation Committee of the Board of Directors approved the Velocity Financial FY 2022 Annual Cash Incentive Program and FY 2022 Performance Stock Units Program for certain of our executive officers.

2022 Annual Cash Incentive Program

The Compensation Committee of the Board of Directors approved the Velocity Financial FY 2022 Annual Cash Incentive Program for the following named executive officers:

Executive:Title:

Christopher D. Farrar Chief Executive Officer

Mark R. Szczepaniak Chief Financial Officer

Jeffrey T. Taylor Executive Vice President, Capital Markets

The Compensation Committee approved Core Net Income Annual Growth for the year ending December 31, 2022 as the performance metric and individual performance objectives for determining cash bonus opportunities for the 2022 fiscal year.  Core Net Income Annual Growth is the percentage growth calculated by subtracting Core Net Income for fiscal year 2021 from Core Net Income for fiscal year 2022 and dividing that difference by Core Net Income for fiscal year 2021.  Core Net Income represents our net income after taxes adjusted to eliminate the effect of certain costs incurred or benefits received from activities that are not normal or recurring operating expenses or revenues.  

Based on 2022 Core Net Income Annual Growth and the threshold, target and maximum growth rates approved by the Compensation Committee, the participating executive officers are eligible to receive the following performance-based bonus opportunities:

Below ThresholdThresholdTargetMaximum

Christopher D. Farrar $0$190,000$380,000$760,000

Mark R. Szczepaniak $0$101,250$202,500$405,000

Jeffrey T. Taylor $0$82,500$165,000$330,000

If our 2022 Core Net Income Annual Growth is less than the Compensation Committee approved threshold, Messrs. Farrar, Szczepaniak and Taylor will not receive any performance-based bonus.  If our 2022 Core Net Income Annual Growth equals the approved threshold, Messrs. Farrar, Szczepaniak and Taylor will be eligible to receive a performance-based bonus equal to $190,000, $101,250 and $82,500, respectively.  If our 2022 Core Net Income Annual Growth equals or exceeds the approved maximum, Messrs. Farrar, Szczepaniak and Taylor will be eligible to receive a performance-based bonus equal to $760,000, $405,000 and $330,000, respectively.  If actual 2022 Core Net Income Annual Growth falls between the approved threshold and maximum, the executives will be eligible to receive a performance-based bonus based on straight line interpolation between such points in accordance with the above table.

Each executive will also be eligible to receive an individual performance-based bonus based on an assessment of such executive's performance relating to the following criteria:

•Asset quality and overall corporate risk management

•Leadership and decision making

•Velocity’s strategic initiatives

•Inter department cooperation and team building

•Completion of special projects

Based on such individual assessments, the participating executive officers are eligible to receive the following individual performance-based bonus opportunities:

Christopher D. Farrar $0 - $760,000

Mark R. Szczepaniak $0 - $405,000

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Jeffrey T. Taylor $0 - $330,000

Bonuses under the program will be subject to Compensation Committee certification following fiscal year-end 2022.

2022 Performance Stock Units Program

Under our FY 2022 Performance Stock Units Program, the Compensation Committee approved grants of Performance Stock Units with vesting conditioned on the numerical average of our Core Net Income Annual Growth for fiscal years 2022, 2023 and 2024.    

Based on our average Core Net Income Annual Growth over the three-year period and the threshold, target and maximum growth rates approved by the Compensation Committee, the participating executive officers are eligible to receive the following shares of common stock in settlement of their grants:

Below ThresholdThresholdTargetMaximum

Christopher D. Farrar 022,50045,00090,000

Mark R. Szczepaniak 07,50015,00030,000

Jeffrey T. Taylor 07,50015,00030,000

If our average Core Net Income Annual Growth is less than the Compensation Committee approved threshold, Messrs. Farrar, Szczepaniak and Taylor will not receive any shares.  If our average Core Net Income Annual Growth is equal to or greater than the Compensation Committee approved maximum, Messrs. Farrar, Szczepaniak and Taylor will receive 90,000, 30,000 and 30,000 shares respectively. If our actual average Core Net Income Annual Growth falls between the approved threshold and maximum, the executives will be eligible to receive shares based on straight line interpolation between such points in accordance with the above table.

Vesting of the Performance Stock Units will be subject to Compensation Committee certification following fiscal year-end 2024.

Item 9.01  Exhibits.

Exhibit Number	Description
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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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 thereunto duly authorized.

	Velocity Financial, Inc.
Date:  February 15, 2022		/s/ Roland T. Kelly
		Roland T. Kelly
		Chief Legal Officer and General Counsel

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XML

Document and Entity Information	Aug. 26, 2021
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 14, 2022
Entity Registrant Name	Velocity Financial, Inc.
Entity Central Index Key	0001692376
Entity Emerging Growth Company	false
Entity File Number	001-39183
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-0659719
Entity Address, Address Line One	30699 Russell Ranch Road
Entity Address, Address Line Two	Suite 295
Entity Address, City or Town	Westlake Village
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91362
City Area Code	818
Local Phone Number	532-3700
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	VEL
Security Exchange Name	NYSE