Evertec execs line up to enjoy Puerto Rican tax holiday
You’ve probably heard (or at least read) about the new law in Puerto Rico. Just two weeks ago, the New York Times noted that former “hedge fund honcho” — their words, not ours — Alex Lemond had decamped there to take advantage of a change in the tax code that benefits wealthy newcomers to the island. A more recent development — known by its formal name of Act 77, which was signed into law at the beginning of July — provides additional benefits to income generated from options. (This memo from Deloitte provides a good overview of what’s otherwise boring tax lingo).
Yet, despite the law being in place for three months, we haven’t seen it really mentioned in the filings. But that changed late Friday afternoon — otherwise known as the Friday Night Dump — when Evertec filed this 8-K.
In the 5:02 p.m. Friday filing, the company, which should be noted is actually based in Puerto Rico, decided to accelerate the vesting on lots of options held by its top executives. The biggest beneficiary is CEO Peter Harrington, who on Oct. 1 will be able to exercise 46,666 options at $4.83 a share. On Wednesday, Evertec stock closed at $22.58. Three other top executives, including CFO Juan Jose Roman, are in line for an even bigger windfall. Roman will be able to exercise 26,000 shares at $1.30 each. The options were initially not set to vest until 2015, but that was before Puerto Rico enacted its tax holiday.
In the filing, the company says that its decision to accelerate the vesting was blessed by compensation consulting firm Frederic W. Cook and that it was “in the best interests of the Company to take advantage of the tax incentives.”
It will be interesting to see if other companies start to follow a similar path.