UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction | (Commission | (I.R.S. Employer |
CPI Card Group Inc. (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(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:
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of John Lowe as President and Chief Executive Officer of the Company
On January 24, 2024, the Board of Directors (the “Board”) of CPI Card Group Inc. (the “Company”) appointed John Lowe, who currently serves as Executive Vice President, End-to-End Payment Solutions, as President and Chief Executive Officer of the Company, effective January 25, 2024. Mr. Lowe will succeed Scott Scheirman, who, as previously announced by the Company, is retiring from the Company. Mr. Scheirman will end his service as President and Chief Executive Officer on January 25, 2024 but will remain employed by the Company as Senior Advisor to the new Chief Executive Officer to assist with the transition of duties to Mr. Lowe through February 28, 2024.
Mr. Lowe, 47, has been employed by the Company since June 2018 and has served as the Company’s Executive Vice President, End-to-End Payment Solutions since December 2022. He previously served as the Company’s Senior Vice President and General Manager, Secure Card, beginning in October 2021, and was the Company’s Chief Financial Officer from July 2018 until October 2021. Prior to joining CPI, Mr. Lowe spent 8 years at SquareTwo Financial Corporation, most recently as its Chief Financial Officer, and spent his early career within the Capital Markets and Audit practices of Deloitte. Mr. Lowe holds a Bachelor of Science degree in both Accounting and Finance from the Virginia Polytechnic Institute and State University.
Mr. Lowe does not have any family relationship with any director or executive officer of the Company, or any person nominated or chosen to become a director or executive officer of the Company, and there are no applicable transactions that would require disclosure under Item 404(a) of Regulation S-K.
Resignation of Scott Scheirman from the Board of Directors; Appointment of John Lowe to the Board of Directors
In connection with his previously announced retirement, and the appointment of Mr. Lowe as President and Chief Executive Officer, Mr. Scheirman will resign and step down from the Board, effective January 25, 2024. Mr. Scheirman’s decision to resign was not due to any disagreements with the Company on any matter relating to the Company’s operations, policies or practices.
To fill the vacancy on the Board as a result of Mr. Scheirman’s resignation, and consistent with the terms of the Employment Agreement with Mr. Lowe described below, on January 24, 2024, the Board appointed Mr. Lowe to serve on the Board, effective January 25, 2024.
There is no arrangement or understanding between Mr. Lowe and any other persons pursuant to which Mr. Lowe was selected as a director.
Employment Agreement with John Lowe
In connection with Mr. Lowe’s appointment, on and effective January 25, 2024, the Company entered into an employment and non-competition agreement with Mr. Lowe (the “Employment Agreement”). The Employment Agreement provides for an initial employment term commencing on January 25, 2024 and ending on February 28, 2029, and will automatically renew for additional one-year terms until terminated by either party. Pursuant to the Employment Agreement, Mr. Lowe will receive an initial annual base salary of $625,000 and will be eligible for a target annual bonus equal to 100% of his base salary, based on the achievement of performance metrics approved by the Compensation Committee of the Board (the “Compensation Committee”).
During each calendar year during the employment term, Mr. Lowe will be eligible to participate in the CPI Card Group Inc. Omnibus Incentive Plan, as amended and restated, and any successor plan (the “Omnibus Plan”), with a target grant date value of at least $2,000,000 (such grants collectively the “Annual Grants”). Any such Annual Grants awarded to Mr. Lowe will be delivered through vehicles and designs that are generally consistent with those awarded to the Company’s other senior executive officers in each year.
As provided in the Employment Agreement, subject to approval by the Compensation Committee, Mr. Lowe will be eligible for promotional long-term incentive awards granted under the Omnibus Plan in the form of (i) performance stock
units, with respect to 60,000 shares of Company common stock (the “Promotion PSU Award”) and (ii) restricted stock units, with respect to 40,000 shares of Company common stock (the “Promotion RSU Award”). The Promotion PSU Award will be earned in equal one-third increments upon the attainment of the rolling weighted average closing price of the Company’s common stock equaling or exceeding each of $35.00, $50.00 and $65.00, in each case, for at least 90 consecutive trading days (the “Stock Price Hurdle”), during the five-year performance period commencing on the grant date. The Promotion RSU Award will vest in full on the four-year anniversary of the grant date. The vesting of both the Promotion PSU Award and the Promotion RSU Award are subject to Mr. Lowe’s continuous employment with the Company or an affiliate through the four-year anniversary of the grant date.
Pursuant to the Employment Agreement, the Company will reimburse Mr. Lowe for up to $25,000 in reasonable attorneys’ fees incurred by him in connection with the negotiation of the Employment Agreement.
In the event of a termination of his employment with the Company due to his death or disability, by the Company without cause or by Mr. Lowe for good reason (each, a “Qualifying Termination”), subject to his execution and delivery of a release of claims, Mr. Lowe will receive (i) severance payments equal to 1.5 times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 18 months, and (iv) except in the case of a termination due to death or disability, six months of outplacement services. If Mr. Lowe’s Qualifying Termination occurs within 24 months following a change in control of the Company, then Mr. Lowe will instead receive (i) severance payments equal to two times the sum of Mr. Lowe’s annual base salary and target bonus for the year of the termination, (ii) a pro-rated bonus payment for the year of the termination, based on the Company’s actual performance, (iii) reimbursement for the cost of continuation coverage under the Company’s health and welfare plans for up to 24 months, (iv) except in the case of a termination due to death or disability, six months of outplacement services. and (v) his outstanding equity awards will vest in full, based on target performance with respect to any performance-based awards; provided, however, that the Promotion PSU Award will only vest to the extent the applicable Stock Price Hurdles have been achieved on or prior to the change in control of the Company.
Mr. Lowe will be subject to certain non-competition and non-solicitation covenants for 18 months following the termination of his employment with the Company for any reason.
Departure of Lane Dubin, Executive Vice President and Chief Development and Digital Officer
On January 24, 2024, the Company and Lane Dubin, who currently serves as Executive Vice President and Chief Development and Digital Officer of the Company, agreed that his employment with the Company would cease on June 30, 2024, the expiration of the employment agreement between the Company and Mr. Dubin dated December 13, 2022. In connection with Mr. Dubin’s departure, the Company expects to enter into a separation agreement with Mr. Dubin memorializing his entitlement to severance under his employment agreement with the Company, as described in the Company’s Proxy Statement for its 2023 Annual Meeting of Stockholders filed with the Securities and Exchange Commission on April 13, 2023.
Item 7.01 Regulation FD Disclosure.
On January 25, 2024, the Company issued a press release announcing the appointment of Mr. Lowe as President and Chief Executive Officer of the Company. A copy of the press release filed with this Current Report on Form 8-K as Exhibit 99.1*.
*The information in the press release attached as Exhibit 99.1 hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are included herewith:
Exhibit |
| Description |
99.1* |
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104 |
| Cover Page Interactive Data File (formatted as Inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CPI CARD GROUP INC. | |
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Dated: January 25, 2023 | By: | /s/ Jessica Browne |
| Name: | Jessica Browne |
| Title: | Acting Chief Legal and Compliance Officer and Corporate Secretary |
Exhibit 99.1
CPI Card Group Names John Lowe President and Chief Executive Officer
Littleton, CO – January 25, 2024 -- CPI Card Group Inc. (Nasdaq: PMTS) (“CPI” or the “Company”), a payment technology company and leading provider of credit, debit and prepaid solutions, today announced John Lowe has been named its new President and Chief Executive Officer and appointed to the Company’s Board of Directors, effective immediately. Lowe succeeds outgoing President and Chief Executive Officer Scott Scheirman, who had previously announced his intention to retire in early 2024.
Lowe has been with CPI Card Group since 2018, most recently as Executive Vice President, End-to-End Payment Solutions since late 2022. In this role he was responsible for a significant majority of the Company’s revenues and operations. He previously served as the Company’s Senior Vice President and General Manager, Secure Card, beginning in 2021, and was the Company’s Chief Financial Officer from 2018 through 2021.
The Board of Directors conducted a thorough search and review process before selecting Mr. Lowe as President and CEO. “John has deep knowledge of our business, customers, and industry and is a proven leader who has been a major contributor to the Company’s success,” said H. Sandford Riley, Chair of CPI’s Board of Directors. “We are very pleased to have an internal successor who can bring continuity, while also driving new business growth such as expanding into adjacent markets and product offerings, including digital opportunities, as the Company positions itself for the future.”
The Company also announced that Peggy O’Leary has been promoted to take on the role of Senior Vice President, Prepaid Solutions and Chief Development and Digital Officer, reporting to Lowe. O’Leary has been with CPI since 2017, most recently serving as Senior Vice President of Prepaid Solutions since late 2022, and Vice President of Sales of Prepaid, Personalization Solutions, and Instant Issuance from 2020 through 2022. She has played an integral role in driving the Company’s Prepaid growth and expansion into adjacent markets. Prior to joining CPI, O’Leary held a variety of roles at companies including Jingit, InteliSpend, Maritz, and Hallmark.
Scheirman announced in June 2023 his intention to retire in early 2024. He will serve as Senior Advisor to the Chief Executive Officer of the Company through his retirement date of February 28, 2024 and will work together with Lowe to ensure a smooth leadership transition. Scheirman has also stepped down from CPI’s Board of Directors, effective today.
Riley added, “On behalf of the CPI Board of Directors, I would like to express our extreme gratitude to Scott for his outstanding leadership and for delivering exceptional results that have significantly outpaced the market over the last six years. Scott leaves CPI in a strong
competitive position, with a great leadership team that is well prepared to build on the tremendous success the Company has achieved.”
“I look forward to working with our outstanding leadership team and all of our talented employees to advance our customer-centric strategy and lead the Company in its next phase of growth,” said Lowe. “We have established a strong foundation as a trusted market leader in the U.S. payments space and have great opportunities to continue to gain market share in our current business, while also expanding our service and product offerings, including digital solutions, for our thousands of valued customers.”
Lowe added, “I would like to thank the Board for the opportunity to lead this great organization and to Scott for his ongoing guidance and support.”
Lowe has more than a decade of senior executive leadership experience and over two decades of financial leadership experience. Prior to CPI, Lowe spent eight years at SquareTwo Financial Corporation, most recently as Chief Financial Officer, and spent his early career within the Capital Markets and Audit practices at Deloitte. Lowe holds a B.S. Degree in Accounting and Finance from Virginia Polytechnic Institute and State University.
“John is the right person to lead CPI and partner with our strong leadership team to build on the success of our current business and lead the Company through its next growth stage,” said Scheirman. “I am grateful to our Board for allowing me to lead CPI for the last six years and for the wonderful colleagues I have had the privilege to work with. I am fully committed to working closely with John, my colleagues and the Board to help ensure a smooth leadership transition.”
About CPI Card Group Inc.
CPI Card Group is a payment technology company providing a comprehensive range of credit, debit, and prepaid card solutions, complementary digital solutions, and Software-as-a-Service (SaaS) instant issuance. With a focus on building personal relationships and earning trust, we help our customers navigate the constantly evolving world of payments, while delivering innovative solutions that spark connections and support their brands. We serve clients across industry, size, and scale through our team of experienced, dedicated employees and our network of high-security production and card services facilities—located in the United States. CPI is committed to exceeding our customers’ expectations, transforming our industry, and enhancing the way people pay every day. Learn more at www.CPIcardgroup.com.
Forward-Looking Statements
Certain statements and information in this release (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, including statements about our
expectations, strategies or future plans, are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated. Reference is made to a more complete discussion of forward-looking statements and applicable risks that are described under the heading “Cautionary Statement Regarding Forward-Looking Information” and in Part I, Item 1A - Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 8, 2023 and our other reports filed from time to time with the SEC. We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results or other events to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
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For more information:
CPI encourages investors to use its investor relations website as a way of easily finding information about the Company. CPI promptly makes available on this website the reports that the Company files or furnishes with the SEC, corporate governance information and press releases.
CPI Card Group Inc. Investor Relations:
(877) 369-9016
InvestorRelations@cpicardgroup.com
CPI Card Group Inc. Media Relations:
Media@cpicardgroup.com
Document and Entity Information |
Jan. 24, 2024 |
|---|---|
| Document and Entity Information [Abstract] | |
| Document Type | 8-K |
| Document Period End Date | Jan. 24, 2024 |
| Entity Registrant Name | CPI CARD GROUP INC. |
| Entity Incorporation, State or Country Code | DE |
| Entity File Number | 001-37584 |
| Entity Tax Identification Number | 26-0344657 |
| Entity Address, Address Line One | 10368 W Centennial Road |
| Entity Address, City or Town | Littleton |
| Entity Address State Or Province | CO |
| Entity Address, Postal Zip Code | 80127 |
| City Area Code | 720 |
| Local Phone Number | 681-6304 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock, $0.001 par value |
| Trading Symbol | PMTS |
| Security Exchange Name | NASDAQ |
| Entity Emerging Growth Company | false |
| Entity Central Index Key | 0001641614 |
| Amendment Flag | false |
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