8-KLeadership ChangesExhibits & Filings

MERCADOLIBRE INC 8-K Report, Executive Changes (Jul 21, 2009)

Filed July 21, 2009For Securities:MELI

Summary

This 8-K filing from MercadoLibre, Inc. (MELI) on July 21, 2009, details the finalization of the Company's executive compensation program for 2009. Key components include the establishment of performance criteria for annual cash bonuses and the adoption of the 2009 Long Term Retention Plan (2009 LTRP). The filing outlines the base salaries, bonus ranges, and LTRP targets for the named executive officers, including the President and CEO, Marcos Galperín. Investor focus should be on the performance metrics tied to executive bonuses, which are based on net revenues minus bad debt, net income, and free cash flow for the overall company, with specific considerations for individual performance and MercadoPago's net revenues for certain executives. The 2009 LTRP introduces a novel payment structure where a portion of the bonus is fixed, and another portion is variable and linked to the company's stock price performance over an eight-year period, starting in 2010. This structure aims to align executive incentives with long-term shareholder value creation.

Key Highlights

  • 1MercadoLibre finalized its 2009 executive compensation program, including annual cash bonus performance criteria and the 2009 Long Term Retention Plan (2009 LTRP).
  • 2Named executive officers' base salaries are set at $210,600 for top executives and $156,000 for the SVP of Payments, with defined annual cash bonus ranges.
  • 3Annual cash bonuses are contingent upon achieving General Company Performance Objectives (net revenues minus bad debt, net income, free cash flow) and Individual Qualitative Assessments.
  • 4Minimum eligibility conditions require achieving at least 80% of target General Company Performance Objectives, 80% on individual assessments, and an 80% total performance tally.
  • 5The 2009 LTRP involves an eight-year payout beginning in 2010, with a fixed annual payment component and a variable component tied to the company's stock price performance relative to a 2008 benchmark.
  • 6The 2009 LTRP's variable component is designed to reward executives if the company's stock price, averaged over the final 60 trading days of a given year, exceeds the 2008 average closing price of $13.81.
  • 7Nicolas Szekasy, formerly a named executive officer, is not included in the 2009 compensation details due to his resignation effective April 1, 2009.

Frequently Asked Questions

Executive bonuses are tied to three main General Company Performance Objectives: net revenues minus bad debt, net income, and free cash flow for MercadoLibre. Additionally, individual performance is assessed, and for Osvaldo Gimenez, the net revenues of the MercadoPago business are also a factor.

The 2009 LTRP is a long-term incentive plan with an eight-year payment schedule starting in 2010. It consists of a fixed cash payment component (6.25% of the target bonus annually) and a variable cash payment component that is also 6.25% of the target bonus, multiplied by a ratio of the current year's average stock price to the 2008 average stock price ($13.81). The total payout can exceed the target if the stock price increases.

To be eligible for any bonus, executives must meet 'Minimum Eligibility Conditions,' which include the Company achieving at least 80% of its target General Company Performance Objectives, the executive scoring at least 80% on their Individual Qualitative Assessment, and the executive's total performance tally reaching at least 80%.

The variable portion of the 2009 LTRP payout for any given year is determined by multiplying 6.25% of the executive's target 2009 LTRP bonus by a factor. This factor is the 'Applicable Year Stock Price' (average closing price of the last 60 trading days of the preceding year) divided by the '2008 Stock Price' (which is the average closing price of the last 60 trading days of 2008, set at $13.81).