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 Earliest Event reported) — August 1, 2011
(July 27, 2011)
MDC PARTNERS INC.
(Exact name of registrant as specified in its charter)
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Canada
(Jurisdiction of Incorporation)
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001-13718
(Commission File Number)
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98-0364441
(IRS Employer Identification No.)
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745 Fifth Avenue
New York, NY 10151
(Address of principal executive offices and zip code)
(646) 429-1803
(Registrant’s Telephone Number)
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
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Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
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Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c))
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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 July 27, 2011, the Human Resources and Compensation Committee (the “
Committee
”) of the Board of Directors of MDC Partners Inc. (the “
Company
”) approved mid-year incentive and retention bonus payments for the Company’s executive officers in an aggregate amount equal to $3.35 million (the “
Retention Program
”). A key purpose of the Retention Program is to ensure the retention of key employees through the payment of cash incentives that will remain subject to repayment upon resignation or termination for cause.
The incentive/retention payments will be made pursuant to letter agreements signed by the Company and each recipient, including the amounts to be paid to the Company’s named executive officers set forth in Exhibit 99.1. The incentive/retention awards vary in amount for each recipient and will be paid by the Company, net of applicable withholding taxes, on or prior to August 15, 2011. If a recipient resigns his/her employment with the Company prior to July 31, 2014 or is terminated by the Company for “cause” prior to July 31, 2014, then such recipient shall be required to repay to the Company, on a net after-tax basis, a percentage of the retention bonus, determined according to the following schedule:
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Repayment
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Termination Date
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Percentage
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On or before December 31, 2011
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100%
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On or after January 1, 2012 and on or before June 30, 2012
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75%
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On or after July 1, 2012 and on or before December 31, 2012
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50%
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On or after January 1, 2013 and on or before December 31, 2013
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25%
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On or after January 1, 2014 and on or before July 31, 2014
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10%
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In addition, the Company has retained the right, in the reasonable discretion of the Committee, to require repayment of all or a portion of the net-after tax retention payments in the event that the Company does not achieve its full year financial performance target for 2011.
The foregoing description is qualified in its entirety by reference to the form of retention bonus letter agreement, which is filed herewith as Exhibit 10.1 and which is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No.
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Description
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10.1
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Form of Incentive/Retention Payment letter agreement.
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99.1
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Schedule of payments to named executive officers.
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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 by the undersigned hereunto duly authorized.
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Date: August 1, 2011
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MDC Partners Inc.
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By:
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/s/ David C. Ross
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David C. Ross
Associate General Counsel &
Assistant Secretary
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Exhibit 10.1
MDC PARTNERS INC.
745 Fifth Avenue
New York, N.Y. 10151
[Executive]
MDC Partners Inc.
745 Fifth Avenue
New York, N.Y. 10121
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RE:
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Incentive/Retention Payment
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Dear [Executive],
We are pleased to offer you the mid-year 2011 incentive and retention payment described below in exchange for your agreement to remain employed with MDC Partners Inc. (“
MDC Partners
”) through July 31, 2014. Your incentive and retention payment amount will be equal to $_____ (the “
Incentive/Retention Payment
”), less applicable tax withholdings.
The Incentive/Retention Payment will be paid on or prior to August 15, 2011, and is in addition to all other compensation paid to you by MDC Partners. By your acceptance of the terms and conditions of this Incentive/Retention Payment, you hereby agree that if (i) you voluntarily resign your employment with MDC Partners without “Good Reason” (as the same may be defined in your employment agreement) prior to July 31, 2014, or (ii) you are terminated by MDC Partners for “Cause” (as defined in your employment agreement) prior to July 31, 2014, then you shall be required to repay to MDC Partners a percentage of the Incentive/Retention Payment, determined according to the following schedule:
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Repayment
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Termination Date
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Percentage
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On or before December 31, 2011
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100%
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On or after January 1, 2012 and on or before June 30, 2012
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75%
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On or after July 1, 2012 and on or before December 31, 2012
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50%
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On or after January 1, 2013 and on or before December 31, 2013
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25%
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On or after January 1, 2014 and on or before July 31, 2014
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10%
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Any amounts to be repaid on or prior to December 31, 2011 shall be repaid in full, and any amounts to be repaid after January 1, 2012, shall be calculated on a net after-tax basis. For example, if you resign your employment with MDC Partners without Good Reason in March 2012, then you would be required to repay 75% of the net after-tax amount of the Incentive/Retention Payment to MDC Partners. Conversely, if prior to July 31, 2014, your employment is terminated due to death; by MDC Partners without Cause; or by you for Good Reason, then you will
not
have to repay any portion of your Incentive/Retention Payment. After July 31, 2014, all repayment provisions relating to the Incentive/Retention Payment shall terminate and be of no further force or effect.
In addition, you acknowledge and agree that MDC Partners shall retain the right, in the reasonable discretion of the Human Resources and Compensation Committee, to require repayment of all or a portion of the net-after tax Incentive/Retention Payment in the event that MDC Partners does not achieve its full year financial performance target for 2011, and you hereby agree to promptly repay to MDC Partners the required net-after tax amount of the Incentive/Retention Payment required, if any.
As an executive officer of MDC Partners, you are subject to MDC Partners’ Stock Ownership Guidelines, which require in part that you will spend not less than 5% of your annual incentive cash bonus (calculated on a net after-tax basis) to purchase shares of MDC Partners’ Class A stock in the open market. You hereby reaffirm your obligations to comply with Stock Ownership Guidelines, and agree to spend not less than 5% of your Incentive/Retention Payment (calculated on an after-tax basis) by purchasing shares of MDC Partners’ Class A stock in the open market during the 30-day period following receipt of the Incentive/Retention Payment.
If the terms of the Incentive/Retention Payment as outlined in this letter agreement are acceptable to you, please indicate your acceptance of them by signing both originals of this letter in the space provided below, retaining one original for your files, and returning the other original to my attention. We are very pleased to offer you this Incentive/Retention Payment and look forward to your continued achievement and success with MDC Partners.
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Sincerely,
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MDC Partners Inc.
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Name: Michael Sabatino
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Title: Chief Accounting Officer
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MDC Partners Inc.
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By:
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Name: Mitchell Gendel
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Title: General Counsel
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Acknowledged and agreed:
_______________________________
[Executive]