UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC
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):
December 2, 2009
EASTMAN
CHEMICAL COMPANY
(Exact
Name of Registrant as Specified in Its Charter)
|
Delaware
|
1-12626
|
62-1539359
|
||
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
|
||
|
200 South
Wilcox Drive, Kingsport, TN
|
37662
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(423) 229-2000
(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:
|
o
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
||
|
o
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
||
|
o
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
|
||
|
o
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
|
Item 5.02 (e) Compensatory
Arrangements of Certain Officers
On
December 2, 2009 the Compensation and Management Development Committee (the
"Compensation Committee") of the Board of Directors of Eastman Chemical Company
("Eastman" or "the Company") took the following executive compensation
actions.
Unit Performance Plan for
2010
The
Compensation Committee approved Unit Performance Plan ("UPP") performance
measures and goals, specific target objectives with respect to such performance
goals, the method for computing the amount of the UPP award allocated to the
award pool if the performance goals are attained, and the eligibility criteria
for employee participation in the UPP, for the 2010 performance year. The
UPP is on file with the Securities and Exchange Commission as Exhibit 10.09 to
the Company's Annual Report on Form 10-K for the year ended December 31, 2003,
and is available through the "Investors - SEC Filings" section of the Company's
Internet website ( www.eastman.com ) and the SEC's Internet site at www.sec.gov. An amended UPP will be
filed as an exhibit to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2009.
The UPP
is the Company's short-term incentive compensation vehicle for executive
officers and other management-level employees. The UPP is designed to provide an
incentive for superior business and individual performance by determining a
portion of annual cash compensation according to corporate performance and the
attainment of individual objectives and expectations. The amount of target
compensation that is made variable under the UPP ranges from 15% of base pay for
managers to 100% of base pay for the Chief Executive Officer. An award pool is
generated for the Company, equal to the aggregate of the UPP payouts for each
participant at target levels, multiplied by a "performance factor" determined by
corporate performance compared to the pre-set performance goal. The performance
factor can range from 0% if threshold Company performance goals are not met to
200% for specified above-goal corporate performance. The Compensation Committee
may, in its discretion, adjust the award pool to reflect overall corporate
performance and business and financial conditions.
The CEO,
in consultation with executive officers responsible for major organizations,
determines the allocation of the Company award pool to organizations within the
Company based on his assessment of the performance of the organizations relative
to objectives established at the beginning of the performance year. Once each
organization’s award pool is determined, management within each organization (or
in the case of the Chief Executive Officer, the Compensation Committee)
allocates the organization’s portion of the Company award pool for individual
payouts, based upon individual and organizational performance against objectives
and expectations established at the beginning of the performance
year.
As
established by the Compensation Committee, for 2010 the performance measure for
the UPP will be earnings from operations ("EFO"). The Compensation Committee
approved specific EFO targets and corresponding performance factors for the
Company. The target level for 2010 EFO corresponds to the Company's EFO
target under the annual business plan for 2010 as approved by the Board of
Directors.
The
amount of the Company award pool allocated to the executive officers will be
determined by aggregating their individual target variable pay amounts,
multiplied by a "performance factor" corresponding to their overall performance
compared to pre-established targets related to organizational results and
personal performance objectives. For 2010, the target variable pay for
performance that meets the pre-established objectives under the UPP (expressed
as a percentage of annual base salary) will be: 100% for the Chief Executive
Officer (James P. Rogers); 75% for the Executive Vice President,
Specialty Polymers, Coatings and Adhesives and Chief Marketing Officer
(Mark J. Costa) and for the Executive Vice President, Performance Polymers and
Chemical Intermediates (Ronald C. Lindsay); 70% for the Senior Vice President
and Chief Financial Officer (Curtis E. Espeland); 65% for the Senior Vice
President, Fibers and Global Supply Chain (Richard L. Johnson), for
the Senior Vice President, Chief Legal Officer and Corporate
Secretary (Theresa K. Lee), and for the Senior Vice President,
Manufacturing Support and Chief Administrative Officer (Norris P. Sneed); and
60% for the Senior Vice President and Chief Technology Officer (Gregory W.
Nelson). Any changes in the responsibilities or positions of executives will be
taken into account by the Compensation Committee in determining the variable pay
to executives under the UPP for 2010.
At the
end of 2010, in connection with the determination of the total amount of the
Company UPP award pool available to the executive officers, the Chief Executive
Officer will assess the other executives’ individual performance against
established goals and expectations, and determine the amounts of the
individual payouts from the portion of the allocated award pool. The Chief
Executive Officer’s assessments will be based upon his evaluation of each
executive officer’s performance against individual goals and expectations
related to corporate and organizational performance compared to established EFO
and other performance targets and the officer’s contributions to achievement of
identified key initiatives for 2010. Based on the Chief Executive Officer’s
assessment, the Compensation Committee will consider UPP payouts to the
executive officers for 2010 in early 2011. The Compensation Committee will
review the CEO’s performance against his individual financial, organizational,
and strategic objectives and determine his payout for 2010. The payouts, if any,
to the CEO and other executive officers for 2010 will be disclosed in the
Company's proxy statement for its 2011 annual meeting of
stockholders.
In
determining EFO for the purpose of measuring corporate performance, the UPP
provides for adjustments by the Compensation Committee for certain charges,
income items, or other events, typically the same as those excluded from
operating earnings in the non-GAAP pro forma financial measures disclosed by the
Company in its public sales and earnings disclosures.
Amendment of Mark J. Costa
Employment Agreement
The
Committee approved an amendment to Mr. Costa’s employment agreement eliminating
the $75,000 annual personal travel allowance. The employment agreement with Mr.
Costa is on file with the Securities and Exchange Commission as Exhibit 10.01 to
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006,
and is available through the "Investors - SEC Filings" section of the Company's
Internet website (www.eastman.com) and the SEC's Internet site at www.sec.gov. The amendment to Mr. Costa’s
employment agreement will be filed as an exhibit to the Company’s Annual Report
on Form 10-K for the year ended December 31, 2009.
Restricted Stock Unit Award
to Curtis E. Espeland
Mr.
Espeland was awarded 15,000 restricted stock units scheduled to vest and payout
in unrestricted shares of Company common stock on December 2,
2013. The form of the restricted stock unit award to Mr. Espeland
will be filed as an exhibit to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2009.
Executive Base Salary
Increases
As
previously reported, in March 2009 the Committee decreased the annual base
salaries of the Company’s executive officers by five percent, consistent with
the Company’s reduction of the base pay of employees. Effective December 7,
2009, the Company restored the five percent base salary reduction to employees,
and the Committee made a corresponding five percent increase in the base
salaries of the executive officers. In addition, the Committee increased
the annual base salary of each of the executive officers named above
(under “Unit Performance Plan for 2010”) in the amount of $10,000 effective
January 1, 2010 as partial replacement of the personal financial counseling,
estate planning, and tax preparation executive perquisite in the annual amount
of up to $25,000 which was discontinued by the Committee effective January 1,
2010, and increased Mr. Costa’s annual base salary in the amount of $43,000
effective December 31, 2009 as partial replacement of the $75,000
annual personal travel allowance previously provided under his
employment agreement.
|
EASTMAN
CHEMICAL COMPANY - EMN
|
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.
|
Eastman
Chemical Company
|
||
|
|
By: /s/ Scott V. King_______
Scott V. King
Vice President, Controller and Chief Accounting Officer
|
|
|
Date: December
8,
2009
|