What is the primary purpose of the new 2019 Long Term Retention Program (LTRP)?

The primary purpose of the 2019 LTRP is to rebalance the total compensation for named executive officers and other senior management by shifting a significant portion of their pay from the annual incentive plan to a long-term retention structure. This program is designed to incentivize continued employment and align executive interests with the company's long-term success.

How will the 2019 LTRP payments be structured?

Under the 2019 LTRP, executives will receive annual cash payments for six years, starting around March 31, 2020, provided they remain employed. The payments consist of two components: a fixed portion (16.66% of half of the target award annually) and a variable portion tied to the company's stock price. The variable component is calculated based on the average closing stock price of the preceding fiscal year relative to the average closing price during the last 60 trading days of 2018.

What are the transition bonuses, and why are they being paid?

The transition bonuses are one-time payments approved for each Named Executive Officer. They are intended to compensate for a temporary gap in the overall pay package that arises from the shift in compensation structure from annual incentives to the new LTRP. These bonuses will be paid out over three years, beginning in 2020, and are also conditional upon continued employment.

Who are the Named Executive Officers (NEOs) affected by these changes?

The Named Executive Officers (NEOs) affected by these compensation changes include Marcos Galperin (President & Chief Executive Officer), Pedro Arnt (Executive Vice President & Chief Financial Officer), Stelleo Tolda (Executive Vice President & Chief Operating Officer), Osvaldo Giménez (Executive Vice President – Payments), and Daniel Rabinovich (Executive Vice President and Chief Technology Officer).

MELI 8-K: Leadership Changes

Summary

MercadoLibre, Inc. (MELI) filed an 8-K report on April 4, 2019, detailing changes to its executive compensation structure. The primary focus is the adoption of the 2019 Long Term Retention Program (LTRP) and the approval of transition bonuses for Named Executive Officers (NEOs). These changes aim to rebalance the compensation mix, shifting a significant portion from the annual incentive plan to a longer-term retention mechanism. The 2019 LTRP is a six-year program offering annual cash payments, partly fixed and partly performance-based (linked to stock price), designed to incentivize continued employment and align executive interests with long-term shareholder value. Additionally, one-time transition bonuses are being provided to bridge any compensation gap created by this shift, payable over three years starting in 2020, also contingent on continued employment.

Key Highlights

1MercadoLibre adopted the 2019 Long Term Retention Program (LTRP) effective March 29, 2019.
2The LTRP is a six-year program designed to retain key executives by providing annual cash payments.
3A significant portion of executive compensation will shift from annual incentives to this long-term retention program.
4The LTRP includes both a fixed annual payment and a variable payment tied to the company's stock price performance relative to a baseline.
5One-time transition bonuses were approved for Named Executive Officers (NEOs) to smooth the compensation transition.
6These transition bonuses will be paid out over three years, starting in 2020, and are contingent on continued employment.

MERCADOLIBRE INC 8-K Report, Executive Changes (Apr 4, 2019)

Summary

Key Highlights

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