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): December 3, 2010
ORIENTAL FINANCIAL GROUP INC.
(Exact Name of Registrant as Specified in its Charter)
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| Commonwealth of Puerto Rico
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001-12647
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66-0538893 |
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| (State or other Jurisdiction of Incorporation)
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(Commission File No.)
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(I.R.S. Employer Identification No.) |
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| Professional Offices Park |
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| 997 San Roberto Street |
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| San Juan, Puerto Rico
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00926 |
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| (Address of Principal Executive Offices)
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(Zip Code) |
Registrant’s telephone number, including area code: (787) 771-6800
(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 (see General
Instruction A.2. below):
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. |
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Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers. |
José Rafael Fernández entered into a three-year employment agreement with Oriental Financial
Group Inc. (the “Company”) on December 3, 2010 (the “Agreement”). Mr. Fernández is the President
and Chief Executive Officer of the Company and the Vice Chairman of its Board of Directors (the
“Board”). The Agreement will be effective on January 1, 2011, and will replace the employment
agreement, dated October 31, 2007, between the Company and Mr. Fernández, which expires on December
31, 2010.
As provided in the Agreement, Mr. Fernández will report 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 Mr. Fernández’s 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 its Vice Chairman. He will be compensated as
follows: (i) annual base salary remains at $500,000, which may be increased by the Board’s
Compensation Committee after the first year; (ii) annual performance bonus based on an annual
target bonus of 150% of his annual base salary and car allowance under the Company’s non-equity
incentive bonus plan; (iii) annual car allowance of $30,000; (iv) annual allowance of $30,000 for
the payment of his membership and other expenses in social, business and professional organizations
which in his judgment are reasonably appropriate for the performance of his duties as President and
Chief Executive Officer of the Company; (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; (vi) a qualified stock option award for the purchase of 100,000
shares of the Company’s common stock and an award of 50,000 restricted stock units of the Company,
both awards made pursuant to the Company’s Amended and Restated 2007 Omnibus Performance Incentive
Plan (the “Plan”); and (vii) additional equity incentive Plan awards of up to 100% of his annual
base salary at the discretion of the Board’s Compensation Committee.
The 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 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 terminates the Agreement for
“good reason” (as defined in the 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, bonus (equal to the average cash bonus paid to
him in the last two fiscal years prior to the termination date), car allowance, and equity awards
(equal to the average of the aggregate grant date fair value of the equity awards granted to him in
the last two fiscal years prior to the termination date, provided that 75% of the equity awards
granted on the date of the Agreement will be deemed granted in
the first contract year and the remaining 25% in the second contract year), multiplied by (b)
three.