Hilton Grand Vacations Inc. (NYSE:HGV) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
As more fully described in Hilton Grand Vacation Inc.s (the
Company or HGV) Form 8-K, dated December28, 2016 and filed with
the Securities and Exchange Commission (the SEC) on January4,
2017 (the Spin-Off
Form 8-K), on January3, 2017, the Company separated from Hilton
Worldwide Holdings Inc. (Hilton) and all of the shares of the
Companys common stock that Hilton held were distributed to its
stockholders in a spin-off transaction (the Spin-Off). Prior the
Spin-Off, the
Company was operated as a wholly-owned subsidiary of
Hilton.
On March9, 2017, the
Compensation Committee (the Compensation Committee) of the Board
of Directors of the Company approved and made determinations with
respect to several matters related to the compensation
arrangements for the following executive officers, including our
principal executive officer and principal financial officer
(these officers are collectively referred to in this Form 8-K as
the named executive officers):
| Mark D. Wang, President and Chief Executive Officer; |
|
Michael D. Brown, Executive Vice President and Chief Operating Officer; |
|
James E. Mikolaichik, Executive Vice President and Chief Financial Officer; |
|
Stan R. Soroka, Executive Vice President and Chief Customer Officer; and |
|
Barbara L. Hollkamp, Executive Vice President and Chief Human Resources Officer. |
The Compensation Committee
approved and determined the following compensation arrangements
with respect to the named executive officers:
|
2016 cash bonus compensation earned by all of the named executive officers based on certain performance measures and in accordance with a bonus plan previously established by Hilton; |
|
settlement of the 2014 Performance Shares (as defined below) to certain of the named executive officers; |
|
2017 base salary, to be effective as of January1, 2017, for all of the named executive officers; |
|
2017 long-term incentive awards for all of the named executive officers; |
|
retention equity awards to certain of the named executive officers; and |
|
forms of equity grant award agreements related to the foregoing equity awards. |
Approval of 2016
Bonus Compensation
to that certain Employee
Matters Agreement, dated as of January3, 2017 (the EMA), by and
among the Company, Hilton, and Park Hotel Resorts, Inc. (Park),
entered into in connection with the Spin-Off, as more fully
described in the Spin-Off Form 8-K, the parties
agreed to allocate certain obligations and liabilities relating
to bonuses earned for the fiscal year ended December31, 2016 by
each partys respective employees. to the EMA, among other things,
the Company agreed to assume all liabilities associated with, and
pay, bonuses that its employees earned under the Hilton bonus
plan described above for the fiscal year ended December31, 2016
based in part on the performance of Hilton and its subsidiaries
as determined by Hilton. Based on the metrics and information
provided by the Hilton compensation committee and the achievement
of business area performance objectives, the Compensation
Committee approved the 2016 bonuses for the named executive
officers in the column titled 2016 Amount Earned Under Annual
Cash Incentive Program in the table below:
|
Name |
Year-End BaseSalary |
TargetAnnual CashIncentive Opportunity as a % of Base Salary(1) |
Target AnnualCash Incentive Opportunity |
Achievement Factor asa% of Target Award(2) |
2016Amount Earnedunder AnnualCash Incentive Program |
|||||||||||||||
|
Mark D. Wang |
$ | 689,585 | % | $ | 689,585 | % | $ | 732,684 | ||||||||||||
|
Michael D. Brown |
$ | 371,315 | % | $ | 222,789 | % | $ | 229,473 | ||||||||||||
|
James E. Mikolaichik |
$ | 450,000 | % | $ | 450,000 | % | $ | 450,000 | ||||||||||||
|
Stan R. Soroka |
$ | 328,879 | % | $ | 131,552 | % | $ | 156,546 | ||||||||||||
|
Barbara L. Hollkamp |
$ | 360,706 | % | $ | 180,353 | % | $ | 217,657 |
| (1) |
Established by Hilton to its bonus plan and prior to the Spin-Off. |
| (2) |
Achievement factors provided by Hilton based on 2016 Hilton performance results and business area performance results. |
Settlement of 2014
Performance Shares
Certain of our named executive
officers were granted performances shares in 2014 by Hilton with
a three-year period covering 2014 through 2016 (the 2014
Performance Shares). These performance shares were comprised of
two separate grants, with 50% of the performance shares tied to
Hiltons Adjusted EBITDA CAGR over the three-year period and 50%
tied to Hiltons Relative TSR over the three-year
period.
In connection with the
Spin-Off, all outstanding equity-based awards granted under the
Hilton incentive plans relating to Hilton common stock that were
outstanding immediately prior to the effective date of the
Spin-Off, including the 2014 Performance Shares, converted into
awards under the Hilton Grand Vacations Inc. 2017 Omnibus
Incentive Plan (the HGV Plan) with equivalent value based on, and
to be settled in, the Companys common stock, subject to the same
general terms and conditions as the original
awards.
The HGV Plan was filed as
exhibit 10.4 to the Companys Annual Report on Form 10-K for the year ended
December31, 2016 (the Form 10-K).
Since the number of the 2014
Performance Shares to be issued to certain of the named executive
officers could not be determined until the measurement of the
applicable performance thresholds during the performance period
by Hilton, the EMA further provided that Hilton would notify the
Company of the determination by the Hilton compensation committee
as to whether and to what extent the applicable performance
conditions have been satisfied with respect to the 2014
Performance Shares. Based on the information provided by Hilton,
the Compensation Committee approved the issuances of the
following Performance Shares to certain of our named executive
officers:
|
Name |
TargetPerformance Shares (#) |
Actual Performance SharesEarned (#) |
||||||
|
Mark D. Wang |
52,650 | 59,495 | ||||||
|
Michael D. Brown |
9,212 | 10,410 | ||||||
|
Barbara L. Hollkamp |
7,896 | 8,922 |
No other named executive
officer received 2014 Performance Shares. In addition, the 2014
Performance Shares have been fully vested as all applicable
performance measurements for the 2014 through 2016 periods have
been determined and no additional shares of HGV common stock are
issuable to the 2014 Performance Share
awards.
2017 Base
Salary
The Compensation Committee
approved the following base salaries for our named executive
officers, effective as of January1,
2017:
|
Name |
Title |
BaseSalary | ||||
|
Mark D. Wang |
President and Chief Executive Officer | $ | 900,000 | |||
|
Michael D. Brown |
Executive Vice President and Chief Operating Officer | $ | 500,000 | |||
|
James E. Mikolaichik |
Executive Vice President and Chief Financial Officer | $ | 450,000 | |||
|
Stan R. Soroka |
Executive Vice President and Chief Customer Officer | $ | 400,000 | |||
|
Barbara L. Hollkamp |
Executive Vice President and Chief Human Resources Officer | $ | 400,000 |
2017 Long-Term
Incentive Awards
The Compensation Committee
approved certain 2017 long-term incentive equity-based awards
under the HGV Plan to our named executive officers. The awards
are comprised of 50% of the value in stock options and remaining
50% of the value in restricted stock units (RSU). Both stock
options and RSUs vest over a three-year period at the rate of 25%
on each of the first and second anniversaries of the grant date,
and the remaining 50% on the third anniversary of the grant date.
In light of the recent Spin-Off transaction and HGVs first year
as an independent company, the Compensation Committee decided to
award the 2017 long-term incentive equity-based awards based on
time-based vesting. However, the Compensation Committee intends
to award future long-term incentive equity-based awards based on
performance objectives and peer group benchmark data, among other
factors, that will be determined and approved by the Compensation
Committee. The dollar value, the number of stock options and the
number of RSUs awarded to our named executive officers are set
forth below. The dollar value is based on $28.30 per share, the
closing price of our common stock at the close of market on the
date of the grant, which was March9,
2017.
|
Name |
Total Value | Value of Options | ValueofRSU | Numberof Options | Numberof RSUs | |||||||||||||||
|
Mark D. Wang |
$ | 3,600,000 | $ | 1,800,000 | $ | 1,800,000 | 190,813 | 63,604 | ||||||||||||
|
Michael D. Brown |
$ | 1,500,000 | $ | 750,000 | $ | 750,000 | 79,505 | 26,502 | ||||||||||||
|
James E. Mikolaichik |
$ | 900,000 | $ | 450,000 | $ | 450,000 | 47,703 | 15,901 | ||||||||||||
|
Stan R. Soroka |
$ | 800,000 | $ | 400,000 | $ | 400,000 | 42,403 | 14,134 | ||||||||||||
|
Barbara L. Hollkamp |
$ | 600,000 | $ | 300,000 | $ | 300,000 | 31,802 | 10,601 |
All of the foregoing awards
and any long-term incentive awards will be granted under the HGV
Plan.
Short-Term
Incentive Awards
The Compensation Committee has
not yet established a short-term incentive award program for
2017.
Retention Special
Long-Term Equity Awards
The Compensation Committee
approved an award to Mr.Mikolaichik of 28,269 RSUs, which have an
aggregate grant date fair value of $800,000, in accordance with
the terms of his offer letter, as previously filed as exhibit
10.13 to the Form 10-K. These RSUs will vest in three equal
annual installments beginning on the first anniversary of
Mr.Mikolaichiks start date with HGV, which is August17, 2017,
subject to his continued employment at the Company through each
applicable vesting date or otherwise provided under the terms of
the applicable award agreement. In addition, the Compensation
Committee approved an award to Ms.Hollkamp of 14,134 RSUs, which
have an aggregate grant date fair value of $400,000, in
recognition of her acceptance of the new position at HGV
following the Spin-Off. These RSUs will vest
in three equal annual installments from the grant date, subject
to her continued employment at the Company through each
applicable vesting date or otherwise provided under the terms of
the applicable award
agreement.
Each of the foregoing
compensation matters did not pertain to Mr.DavidC. Hayes, who was
previously disclosed as a named executive officer in the Companys
Registration Statement on Form 10 filed with the SEC and declared
effective on December2, 2016, as Mr.Hayes separated from the
Company on November28, 2016. The terms of such separation,
including the separation agreement entered into on December23,
2016, were previously disclosed and filed by the
Company.
The descriptions of the RSUs
and the stock options above are qualified in their entirety by
reference to the forms of the RSU and stock option agreements,
which are filed herewith as Exhibits 10.1 and 10.2, respectively,
and the terms of which are incorporated herein by
reference.
Item9.01. Financial
Statements and
Exhibits.
(d)
Exhibits.
|
Exhibit No. |
Description |
|
| 10.1 | Form of Restricted Stock Unit Agreement | |
| 10.2 | Form of Nonqualified Stock Option Agreement |
About Hilton Grand Vacations Inc. (NYSE:HGV)
Hilton Grand Vacations Inc. is a timeshare company that markets and sells vacation ownership intervals (VOIs), manages resorts in leisure and urban destinations, and operates a points-based vacation club. The Company operates its business across two segments: Real Estate Sales and Financing, and Resort Operations and Club Management. As of September 30, 2016, the Company had 46 resorts, representing 7,592 units, and approximately 265,000 Hilton Grand Vacations Club (the Club) members. Club members can exchange their Club points for stays at any resort or any property in the Hilton system of various brands across over 4,700 properties, as well as various vacation options, such as cruises and guided tours. VOI product allows customers to purchase a lifetime of vacations. The Company offers amenities, such as full kitchens, in-unit washers and dryers, spas and kids’ clubs along with beach-front locations. Hilton Grand Vacations Inc. (NYSE:HGV) Recent Trading Information
Hilton Grand Vacations Inc. (NYSE:HGV) closed its last trading session down -0.13 at 28.89 with 317,963 shares trading hands.