8-K

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): May 15, 2020

SCIENTIFIC GAMES CORPORATION

(Exact name of registrant as specified in its charter)

Nevada	001-11693	81-0422894
(State of incorporation)	(Commission File Number)	(IRS Employer
		Identification No.)

6601 Bermuda Road, Las Vegas, Nevada 89119

(Address of principal executive offices) (Zip Code)

(702) 897-7150

(Registrant’s telephone number, including area code)

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:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	SGMS	The NASDAQ Stock Market
Preferred Stock Purchase Rights	SGMS	The NASDAQ Stock Market

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 Executive Vice President and Chief Financial Officer and Departure of Executive Vice President and Chief Financial Officer

On May 21, 2020, Scientific Games Corporation (the “Company”) announced that Michael C. Eklund, 52, will succeed Michael A. Quartieri as Executive Vice President and Chief Financial Officer of the Company, effective June 1, 2020 (the “Transition”). In order to provide for a smooth and orderly Transition, Mr. Quartieri has agreed to serve as an advisor to Barry L. Cottle, the Company’s President and Chief Executive Officer, through June 30, 2020 and to provide consulting services from July 1, 2020 through December 31, 2020.

Mr. Eklund’s biography is incorporated herein by reference to the Company’s press release, dated May 21, 2020, a copy of which is attached hereto as Exhibit 99.1.

Employment Agreement with Mr. Eklund

In connection with the Transition, the Company entered into an employment agreement with Mr. Eklund, with a term ending on June 1, 2023, subject to automatic one-year extensions, and which provides that Mr. Eklund will receive: (1) an annual base salary of $750,000, which Mr. Eklund agreed to temporarily reduce by 50%, consistent with voluntary reductions by the Company’s other executive officers in connection with the COVID-19 pandemic; (2) beginning in 2021, an annual target bonus opportunity of 75% of his base salary (with a maximum possible payout of 200% of target); (3) eligibility for annual equity awards with an aggregate grant date fair value of approximately 125% of his base salary; (4) a cash sign-on award of $500,000, subject to reduction under certain circumstances; and (5) sign-on equity awards consisting of (a) 60,000 time-vesting restricted stock units (“RSUs”), with 26,667 vesting on June 1, 2021 and the remainder vesting in equal installments on June 1, 2022 and June 1, 2023, and (b) 150,000 performance-conditioned RSUs vesting on March 31, 2023, subject to the achievement of certain Attributable EBITDA (as defined in the agreement) targets the (“Sign-On Performance RSUs”).

In the event the Company terminates Mr. Eklund’s employment without “cause” or for “good reason”, Mr. Eklund will generally receive: (i) a pro rata bonus for the year of termination; (ii) cash severance equal to the sum of his base salary and “severance bonus amount” (generally, an amount equal to the highest annual bonus paid to Mr. Eklund in respect of the two most recent fiscal years but not more than his target bonus); (iii) a pro rata portion of the Sign-On Performance RSUs, subject to actual performance; and (iv) up to 12 months of continued COBRA coverage at the Company’s expense. Mr. Eklund’s employment agreement also contains, among other things, a “best net cutback” provision in the event any payments or benefits to Mr. Eklund would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, and restrictive covenants regarding non-competition, non-solicitation, non-disparagement and confidentiality.

Amendment to Mr. Quartieri’s Employment Agreement and Consulting Agreement with Mr. Quartieri

In connection with the Transition, the Company and Mr. Quartieri entered into an amendment to his employment agreement to provide that upon his contemplated termination of employment  he will: (1) receive cash payments totaling $257,632; (2) remain eligible to receive a pro rata bonus for 2020; and (3) immediately vest in all stock options and all time-vesting RSUs granted prior to January 1, 2019 and continue to vest in all stock options granted in 2019 and 2020 in accordance with their terms through December 31, 2020. As described above, on July 1, 2020, Mr. Quartieri will, subject to the effectiveness of his release of claims and pursuant to a consulting agreement entered into between the Company and Mr. Quartieri, provide consulting services to the Company through December 31, 2020 in exchange for monthly consulting payments with an aggregate value of $394,875.

Amendment to Employment Agreement with Mr. Winterscheidt

On May 18, 2020, the Company entered into an amendment to its employment agreement with Michael F. Winterscheidt, Senior Vice President and Chief Accounting Officer, to provide Mr. Winterscheidt with a cash retention award, payable $125,000 on November 30, 2020 and $50,000 on February 28, 2021, subject to Mr. Winterscheidt’s continued employment with the Company through the applicable date.

Item 7.01. Regulation FD Disclosure.

On May 21, 2020, the Company issued a press release announcing that Mr. Eklund will succeed Mr. Quartieri as Executive Vice President and Chief Financial Officer of the Company, effective June 1, 2020. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 7.01 as well as in Exhibit 99.1 is furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release of Scientific Games Corporation, dated May 21, 2020.
104	Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

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.

	SCIENTIFIC GAMES CORPORATION
Date: May 21, 2020	By:	/s/ James Sottile
		Name:	James Sottile
		Title:	Executive Vice President and Chief Legal Officer

EX-99

Exhibit 99.1

Scientific Games Hires New Chief Financial Officer

Michael Eklund will become CFO on June 1, 2020; current CFO

Michael Quartieri will remain full time until June 30 and in consulting role through December 31

LAS VEGAS – May 21, 2020 – Scientific Games Corporation (NASDAQ: SGMS) (“Scientific Games” or the “Company”) today announced that Michael Eklund will become its Chief Financial Officer on June 1, 2020.  Mike Eklund spent more than 20 years at Dell Technologies in both financial and operational roles, including leading the value creation and integration function for the $67 billion Dell-EMC combination and serving as chief financial officer of Dell’s $40 billion-plus Client Solutions Business Unit and Global Operations organization.  Most recently, he has served as CFO of IRI, a global leader in innovative data and analytic solutions and services for consumer, retail and media companies.  Michael Quartieri will remain full time with the Company until June 30, 2020 and will serve in a consulting role through December 31, 2020.

Scientific Games CEO Barry Cottle said: “Mike Quartieri has done an outstanding job over the last four years building a world class financial team, revitalizing our financial management and refinancing our debt.  The Board of Directors and I are very grateful for Mike’s constant dedication to the success of the Company and its people.  Mike now wants to move to a new industry with new challenges after many years in the gaming business.  He wanted to leave earlier this year but, after the COVID-19 pandemic hit, Mike agreed to stay to help the Company with that crisis.  Mike has led our efforts to reduce our cash burn while preserving key operations, developing plans to manage through the pandemic, preparing to be an even stronger competitor as we emerge from the crisis and working with our lenders to get our Credit Agreement amended to provide covenant relief.   With those key steps taken, we are now ready to proceed with the transition to a new CFO.

We are very fortunate to have Mike Eklund join us starting on June 1.  He has a wealth of experience in financial and operational leadership and a passion for aligning all aspects of a company’s finance and operations with its core business model that positions him well to build on Mike Quartieri’s legacy.”

^© 2020 Scientific Games Corporation. All rights reserved.

About Scientific Games

Scientific Games Corporation (NASDAQ: SGMS) is a world leader in entertainment offering dynamic games, systems and services for casino, lottery, social gaming, online gaming and sports betting. Scientific Games offers the gaming industry’s broadest and most integrated portfolio of game content, advanced systems, cutting-edge platforms and professional services. Committed to responsible gaming, Scientific Games delivers what customers and players value most: trusted security, engaging entertainment content, operating efficiencies and innovative technology. For more information, please visit scientificgames.com.

Media Inquiries:

Media@scientificgames.com

Forward-Looking Statements

In this press release, Scientific Games makes “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “will,” “may,” and “should.” These statements are based upon management’s current expectations, assumptions and estimates and are not guarantees of timing, future results or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks, uncertainties and other factors, including those factors described in our filings with the Securities and Exchange Commission (the “SEC”), including Scientific Games’ current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC on February 18, 2020 (including under the headings “Forward-Looking Statements” and “Risk Factors”). Forward-looking statements speak only as of the date they are made and, except for Scientific Games’ ongoing obligations under the U.S. federal securities laws, Scientific Games undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

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