Velocity Financial, Inc. 8-K

What Happened
Velocity Financial, Inc. filed an 8-K (filed Jan 20, 2026) disclosing that on January 15, 2025 the Compensation Committee approved FY2026 incentive programs for three named executive officers: CEO Christopher D. Farrar, CFO Mark R. Szczepaniak and EVP, Capital Markets Jeffrey T. Taylor. The programs include an Annual Cash Incentive Program tied to 2026 Core Net Income Annual Growth and a Performance Stock Units (PSU) program with vesting tied to the average Core Net Income Annual Growth for 2026–2028.

Key Details

• Cash bonus metric: Core Net Income Annual Growth (2026 vs. 2025). If growth is below threshold, no payout; at threshold and at maximum the payouts are set; linear interpolation between points.
• Cash bonus amounts (performance-based scale):
  • Christopher D. Farrar (CEO): $750,000 at threshold; $1,500,000 at maximum (pro rata between).
  • Mark R. Szczepaniak (CFO): $350,000 at threshold; $700,000 at maximum.
  • Jeffrey T. Taylor (EVP): $275,000 at threshold; $550,000 at maximum.
• Individual performance component (separate assessment) also available, with ranges: Farrar $0–$1,500,000; Szczepaniak $0–$700,000; Taylor $0–$550,000.
• PSU grants (vesting based on three‑year average Core Net Income Annual Growth, 2026–2028): Farrar 0–178,570 shares; Szczepaniak 0–38,264 shares; Taylor 0–38,264 shares. Total potential shares = 255,098. Vesting and payouts subject to Compensation Committee certification after fiscal-year 2028.

Why It Matters
These programs tie senior executive compensation to Core Net Income growth, aligning pay with the company’s profitability metric and multi‑year performance. The cash program creates potential near‑term cash expense if 2026 targets are met; the PSU program could result in equity dilution if three‑year growth targets are achieved. Investors should watch Velocity’s Core Net Income results for 2026 (and the 2026–2028 average) and any related Compensation Committee certifications that determine actual payouts and share settlement.