Each of Mr. Gibsons, Mr. Thorntons, Mr. Lawtons and
Mr. Tepedinos employment agreements does not provide for any potential severance payments by us upon the termination of their respective employment.
The Company does not provide excise tax
gross-up
payments to anyone under an existing employment agreement or otherwise.
In connection with a termination of employment by us without cause or by Mr. Conley for good reason, Mr. Conley is entitled to
receive acceleration of certain of his outstanding equity awards pursuant to the terms of such equity award agreements, consistent with the terms described below relating to our other NEOs. Mr. Conleys compensation that would have been
owed to him in the event of (a) his employment termination without cause or (b) by Mr. Conley with good reason on December 31, 2017 was $489,250 as a continuation of base salary, $32,157 as a continuation of benefits and
approximately $1,220,000 in accelerated RSU vesting. The employment agreements with the other NEOs do not contain similar severance provisions.
Pursuant to the terms of certain equity awards made to each of Mr. Gibson, Mr. Thornton, Mr. Lawton and Mr. Tepedino, upon (a) a termination of the executives employment
(x) without cause or due to permanent disability, (y) for good reason or (z) due to death or (b) a termination of the executives employment during the twenty-four months following a change in control either (x) without
cause or (y) due to disability or as the result of death, unvested RSUs will become fully vested upon the date of termination and will be settled within 60 days following the date of such termination.
With respect to such equity awards, Cause is generally defined as (i) gross misconduct or gross negligence in the
performance of the executives duties under their employment agreement; (ii) conviction of a crime; (iii) significant nonperformance of the executives duties under their employment agreement; (iv) material violation of our
established policies and procedures and (v) material violation of the terms of the executives employment agreement. Furthermore, Good Reason is defined under the respective equity awards as (i) a significant reduction of
the executives duties or authority, (ii) a reduction in base salary without the executives consent, (iii) a reduction in the executives bonus opportunity and (iv) a significant change in the location of the
executives principal place of employment.
Assuming one of the terminations described in clauses (a) or (b) above
occurred on December 31, 2017, the value of accelerated equity awards due would be as follows: Mr. Gibson would receive $2,080,000, Mr. Thornton would receive $2,057,000, Mr. Lawton would receive $3,334,000 and Mr. Tepedino
would receive $2,970,000.
Profit Participation Bonus Plans
Office Profit Participation Bonus Plans
The purpose of the Office
Profit Participation Bonus Plans is to attract, retain and provide incentives to employees, and to promote the financial success, of HFF LP and HFF Securities, respectively. Messrs. Gibson, Thornton, Lawton and Tepedino are currently eligible in
their roles as capital markets advisors to participate in HFF LPs Office Profit Participation Bonus Plan.
Applicability of Plan to Designated Offices
. An Office Profit Participation Bonus Plan applies to each
separate office (each, an Office) or line of business (each, a Business Line) of HFF LP and HFF Securities designated by the Managing Member of HFF LP (the Managing Member). The Managing Member is elected by
certain senior officers of HFF LP pursuant to the HFF LP partnership agreement. Joe B. Thornton, Jr. served as the Managing Member during fiscal year 2017. Mr. Thornton began in that role in 2014.
Bonus Pool Calculation
. With respect to each Office or Business Line to which an Office Profit Participation
Bonus Plan applies and for each calendar year, if a 14.5% or greater Profit Margin is generated by such Office or Business Line, then an amount equal to 15% of the Adjusted Operating Income generated by such Office or Business Line will comprise the
bonus pool. For purposes of each Office Profit Participation Bonus Plan, Profit Margin means the Net Operating Income of such Office or Business Line as a percentage of the revenue of such Office or Business Line, all as determined in
accordance with U.S. generally accepted accounting principles (GAAP), Net Operating Income means net operating income (using the same revenue and cost accounts as used in preparing the Companys audited financial
statements) of such Office or Business Line, which includes allocations for overhead expenses and servicing expenses, if applicable, plus any gain on
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