Virtu Financial, Inc 8-K, filed May 2, 2022
Virtu Financial, Inc. (VIRT)
About this 8-K
Virtu Financial, Inc filed this 8-K on May 2, 2022, reporting on events of April 29, 2022.
Items reported
- Item 5.02: Director or officer change, or executive pay
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On April 29, 2022, Virtu Financial, Inc. (the “Company”) entered into a new employment agreement with Doulas A. Cifu (the “Employment Agreement”), which amends and supersedes the terms of Mr. Cifu’s prior employment agreement dated November 15, 2017, pursuant to which Mr. Cifu will continue to serve as our Chief Executive Officer and report to the Company’s board of directors (the “Board”). Mr. Cifu’s duties, responsibilities and permitted activities are substantially identical to his original employment agreement.
The Employment Agreement has an initial term ending on February 28, 2028, with automatic renewals for successive one-year terms thereafter unless either the Company or Mr. Cifu provides notice of non-renewal at least ninety days in advance of the expiration of the then-current term. However, if a change in control of the Company occurs at a time when there are less than two years remaining in the term, the term will automatically be extended so that the expiration date is two years from the effective date of the change in control.
Under the Employment Agreement Mr. Cifu’s base salary was increased by $200,000 to $1,200,000 and Mr. Cifu is eligible to earn an annual bonus with a target bonus opportunity equal to $3,000,000 (increased from $2,500,000) and a maximum bonus opportunity equal to 200% of the target bonus opportunity. Fifty percent (50%) of the annual bonus will be based on the achievement of quantitative targets comprised of specific components of the Company’s annual budget and 50% of the annual bonus will be based on the achievement of qualitative goals. To the extent earned, 50% of the annual bonus will be paid in cash, 30% of the annual bonus will be paid in the form of restricted shares or restricted share units (“RSUs”) of Class A common stock of the Company (“Stock”) that vest in three equal annual installments and the remaining 20% will be paid in the form of fully-vested Stock or fully-vested deferred share units (“DSUs”) in respect of Stock (in each case, in accordance with any applicable timely deferral election). Mr. Cifu’s annual bonus for the 2022 fiscal year, if any, shall be determined on a weighted average basis, based on the elapsed time that the Employment Agreement and Mr. Cifu’s previous employment agreement were each in effect during the 2022 fiscal year.
The Employment Agreement provides that Mr. Cifu will remain eligible to receive an equity award at the beginning of each calendar year during the term (an “Annual Equity Grant”). It is the Board’s current intention that the Annual Equity Award will be in the form of 150,000 restricted shares or RSUs in respect of Stock that are subject to performance and service conditions. The number of shares earned under each Annual Equity Grant will be based on the percentage of budgeted EBITDA achieved in the applicable calendar year, with 100% of shares earned upon at least 65% achievement. In the event of achievement below 65%, the Compensation Committee of the Board will determine the number of earned shares, if any, in its sole discretion. To the extent any shares of Stock are earned with respect to an applicable Annual Equity Grant, 50% of such shares will vest on the last day of the calendar year to which such award relates and the remaining 50% will vest on the last day of the subsequent calendar year, subject to Mr. Cifu’s continued employment through each applicable vesting date.
The Employment Agreement further provides that Mr. Cifu is entitled to participate in all of the Company’s benefit plans and programs, and to receive perquisites, commensurate with his position, that are provided by the Company from time to time to senior executives generally, and to receive director and officer indemnification and insurance protection. In addition, during the term, Mr. Cifu will be provided a car and driver, consistent with past practice.
Under the Employment Agreement, if Mr. Cifu’s employment is terminated by the Company without cause, due to death or disability, by Mr. Cifu for good reason, or due to the expiration of the term on the expiration date as a result of the Company’s delivery of a notice of non-renewal of the term (each, a “Qualifying Termination”), then in addition to receiving his accrued amounts, Mr. Cifu will be entitled to, subject to the execution of a release of claims: (1) severance pay in an aggregate amount equal to the greater of (x) one times his base salary and (y) an amount equal to the total amount of base salary that would otherwise have been payable through the remainder of the term (the “Severance Amount”); (2) continued health, dental, vision and life insurance benefits under the terms of our benefit plans for (x) twelve months or (y) the period from termination of employment through the remainder of the term, whichever is longer (the “Benefits Continuation Period”); and following the
Benefits Continuation Period, continued participation in the Company’s health, dental, vision and life insurance until the earlier of (i) Mr. Cifu’s dependents reaching the age of 26, (ii) Mr. Cifu or his spouse becoming eligible for Medicare, or (iii) Mr. Cifu becoming eligible for comparable coverage under another employer’s benefit plans, subject to Mr. Cifu’s payment of the full cost of such benefits; (3) remain eligible to earn restricted shares of Stock or RSUs under his then-current Annual Equity Award, and to the extent earned, a pro rata portion of such shares shall be deemed vested on the last day of the calendar year to which such award relates (the “Equity Acceleration”); (4) accelerated vesting of any earned but unvested restricted shares of Stock or RSUs under the Annual Equity Award granted in the year prior to the year of termination; and (5) 150,000 shares of fully-vested Stock or, if Mr. Cifu has made an applicable and timely deferral election, DSUs.
If a Qualifying Termination occurs at any time within sixty days before, or twenty-four months following, a change in control, then Mr. Cifu is entitled to the payments and benefits described above; however (1) in lieu of the Severance Amount Mr. Cifu will be entitled to receive two and a half times the sum of (x) his base salary and (y) the annual bonus (including any amounts deferred or satisfied through the grant of equity awards) most recently awarded to Mr. Cifu for a completed fiscal year of the Company; (2) the Benefits Continuation Period will be extended to (x) 24 months or (y) the period from termination of employment through the remainder of the term, whichever is longer; and (3) in lieu of the Equity Acceleration, Mr. Cifu will be entitled to a pro rata portion of all of the shares underlying his then-current Annual Equity Award, which shall be deemed vested on the last day of the calendar year to which such award relates.
The Employment Agreement includes an acknowledgment that Mr. Cifu continues to be bound by the confidentiality and restrictive covenant provisions set forth in the Third Amended and Restated Limited Liability Company Agreement of Virtu Financial LLC, which provides for confidentiality and non-disparagement restrictions, as well as non-compete and non-solicitation restrictions until the third anniversary of the date on which Mr. Cifu ceases to be an officer, director or employee of the Company. The Employment Agreement also provides that the Company will pay as incurred, to the fullest extent permitted by law, all legal fees and expenses that Mr. Cifu incurs as a result of any contest (regardless of the outcome) by the Company, Mr. Cifu or others of the validity or enforceability of, or liability under, any provision of the Employment Agreement or any guarantee of performance of the Employment Agreement that arises in connection with or following a change in control, plus interest on any delayed payment at the applicable federal rate under Section 7872 of the Internal Revenue Code of 1986, as amended.
The description of the Employment Agreement is qualified in its entirety by reference to the full text of the Employment Agreement which will be filed with the Company’s Quarterly Report on Form 10-Q for the period ending June 30, 2022.
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.
| VIRTU FINANCIAL, INC. | |||
| By | /s/ Justin Waldie | ||
| Name: | Justin Waldie | ||
| Title: | Senior Vice President, Secretary and General Counsel | ||
Dated: April 29, 2022