Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On July 28, 2021, OFG Bancorp (the "Company") entered into a new Employment
Agreement and an Amended and Restated Change in Control Compensation Agreement
with José Rafael Fernández, the Company's President, CEO and Vice Chairperson of
its Board of Directors. The Employment Agreement is effective on July 1, 2021,
for a three-year term ending June 30, 2024, and replaced the employment
agreement that expired on June 30, 2021. The Amended and Restated Change in
Control Compensation Agreement amended and restated the change in control
compensation agreement entered into on December 15, 2004.
As provided in the Employment Agreement, Mr. Fernández will serve as President
and CEO of the Company reporting directly to the Board and will have overall
responsibility for the business and affairs of the Company. During the term of
the Agreement and in any election of directors in which his term as director is
set to expire, the Board will nominate and recommend to the shareholders of the
Company his election as a Board member and, if elected, will appoint him as its
Vice Chairperson.
The Employment Agreement provides that Mr. Fernández will be compensated as
follows: (i) annual base salary of $935,000, which may be increased by the
Board's Compensation Committee; (ii) an annual cash bonus pursuant to the
Company's non-equity incentive bonus plan based on a percentage of his annual
base salary determined by the Compensation Committee; (iii) annual incentive
compensation under the Company's equity-based compensation plan based on his
performance scorecard and based on a percentage of his annual base salary
determined by the Compensation Committee; (iv) annual expense allowance of
$100,000 for certain designated expenses, including those that are reasonably
appropriate for the performance of his duties under the Employment Agreement;
(v) a 10-year term life insurance policy in the amount of $3,000,000 covering
his life and having as beneficiaries his spouse and heirs or other beneficiaries
designated by him; and (vi) 25 days of paid vacation per year. It also provides
that Mr. Fernández will be entitled to participate in any equity-based
compensation plan, profit-sharing plan or other plans, benefits and privileges
offered by the Company to its employees and executives to the extent that he is
otherwise eligible and qualifies to participate in and receive such benefits or
privileges.
The Employment Agreement may be terminated by the Board for "just cause" (as
defined therein). In the event it is terminated for just cause or if
Mr. Fernández is removed or barred from office under applicable law, he will
have no right to compensation or other benefits for any period after such
termination. However, if the Employment Agreement is terminated by the Board
other than for just cause and other than in connection with a change in control
of the Company (as defined in his Change in Control Compensation Agreement with
the Company), or if Mr. Fernández terminated the Agreement for "good reason" (as
defined in the Employment Agreement), the Company will be required to pay him as
severance in lieu of any further compensation for periods subsequent to the date
of termination, a lump sum equal to the product of (a) his annual base salary
and incentive bonus (equal to the average cash bonus paid to him in the last two
fiscal years prior to the termination date), multiplied by (b) three.
The Amended and Restated Change in Control Compensation Agreement provides that
in the event of a Change in Control (as defined therein) of the Company and as a
result thereof or within one year after the Change in Control Mr. Fernández's
employment with the Company is terminated, Mr. Fernández will be entitled to
three times the sum of his annual base salary at the time of termination and the
last cash bonus paid to him prior to termination.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description of Document
10.1 Employment Agreement dated as of July 28, 2021, between the
Company and José R. Fernández
10.2 Amended and Restated Change in Control Compensation Agreement
dated as of July 28, 2021, between the Company and José R.
Fernández
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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