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

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:

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

1

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.

2