Attached files
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):
February 19, 2014
LEXMARK INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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1-14050
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06-1308215
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(State or Other Jurisdiction of Incorporation )
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(Commission File Number)
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(IRS Employer Identification No.)
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One Lexmark Centre Drive
740 West New Circle Road
Lexington, Kentucky 40550
(Address of Principal Executive Offices) (Zip Code)
(859) 232-2000
(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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02.
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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2014 Incentive Compensation Award Opportunities for Named Executive Officers
On February 19, 2014, the Compensation and Pension Committee (the “Compensation Committee”) of the Board of Directors of Lexmark International, Inc. (the “Company”) granted annual incentive compensation award opportunities with respect to the 2014 calendar year (the “IC Performance Period”) to each of the Company’s Named Executive Officers (as defined in Regulation S-K Item 402(a)(3)), pursuant to the Senior Executive Incentive Compensation Plan (the “Senior Executive IC Plan”). The maximum award which may be earned under the Senior Executive IC Plan by any Named Executive Officer is equal to six-tenths of one percent (0.6%) of Operating Income (as defined in the Senior Executive IC Plan) for the IC Performance Period. The Compensation Committee, in its sole discretion, may reduce, but not increase, the award made to a Named Executive Officer based on any factors that the Compensation Committee deems appropriate, including, but not limited to, the performance objectives established by the Compensation Committee under the Company’s 2014 Incentive Compensation Plan (“2014 IC Plan”).
Under the 2014 IC Plan, the corporate performance measures include strategic revenue, operating income, cash cycle days and individual performance. Business or geographic unit performance measures under the 2014 IC Plan include business unit or geographic unit strategic revenue (including license and subscription revenue for Perceptive Software), operating income, and cash cycle days (days sales outstanding for Perceptive Software). In the event minimum performance objectives are not met for any of the corporate performance measures and any of the business unit/geographic performance measures, if applicable, the Compensation Committee has established free cash flow as an alternative performance measure. Each of the performance measures include restructuring charges, and generally exclude acquisition related adjustments and inkjet revenue. The threshold, target and maximum award opportunities established under the 2014 IC Plan for each of the Named Executive Officers, subject in each case to the maximum award amount under the Senior Executive IC Plan, are set forth in the following table.
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Name
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Threshold
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Target
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Maximum
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P.A. Rooke
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$ | 153,000 | $ | 1,020,000 | $ | 2,040,000 | ||||||
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J.W. Gamble, Jr.
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73,313 | 488,750 | 977,500 | |||||||||
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M.S. Canning
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66,938 | 446,250 | 892,500 | |||||||||
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S.T.R. Coons
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57,375 | 382,500 | 765,000 | |||||||||
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R.J. Patton
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45,000 | 300,000 | 600,000 | |||||||||
2014 Long-Term Incentive Compensation Opportunities for the Named Executive Officers
Also, on February 19, 2014, the Compensation Committee granted each Named Executive Officer, other than Mr. Rooke, a 2014 long-term incentive (“LTI”) award opportunity comprised as follows: (i) a cash-based award for the 2014-2016 performance period, representing 28% of the total LTI award opportunity; (ii) performance-based restricted stock units (“RSUs”) for the 2014-2016 performance period, representing 28% of the total LTI award opportunity; (iii) performance-based RSUs for the 2014 performance period, representing 14% of the total LTI award opportunity; and (iv) time-based RSUs, representing 30% of the total LTI award opportunity.
Mr. Rooke’s 2014 LTI award opportunity is 100% performance-based and excludes time-based RSUs. Mr. Rooke’s 2014 LTI award opportunity is comprised as follows: (i) a cash-based award for the 2014
2016 performance period, representing 40% of the total LTI award opportunity; (ii) performance-based RSUs for the 2014-2016 performance period, representing 40% of the total LTI award opportunity; and (iii) performance-based RSUs for the 2014 performance period, representing 20% of the total LTI award opportunity.
Cash-Based LTI Award Opportunity
The cash-based LTI award opportunities were granted to the Named Executive Officers pursuant to the 2014-2016 Long-Term Incentive Plan (the "2014-2016 LTIP") established under the Company’s 2013 Equity Compensation Plan (the “2013 Equity Plan”). The performance measure for the 2014-2016 LTIP is the Company’s relative Total Shareholder Return (“TSR”) measured against the TSR of companies in the S&P MidCap Technology Index for the period commencing January 1, 2014 and ending December 31, 2016. Under the 2014-2016 LTIP, each of the Named Executive Officers is eligible to receive a cash award at the end of the performance period based on the Company’s TSR rank measured against the companies in the S&P MidCap Technology Index. The Compensation Committee will make this determination in 2017, and if earned, the cash payout will occur prior to March 15, 2017.
The Named Executive Officer must be employed on the last day of the performance period to earn an LTIP payout. Termination of employment prior to such time for any reason, other than death, disability or retirement, will result in forfeiture of the award. In the event of a Named Executive Officer’s death, disability (as defined in the Company’s 2013 Equity Plan) or retirement (as defined in the Award Agreement) during the performance period, a prorated portion of the award may be earned based on the actual attainment as of the end of the performance period and will be paid to the executive or his or her estate prior to March 15, 2017.
The Compensation Committee may exercise negative discretion in determining any payout to an executive under the 2014-2016 LTIP applying any factors that it deems appropriate in its sole discretion under the circumstances.
The minimum, target and maximum award opportunities established under the 2014-2016 LTIP for each of the Named Executive Officers are set forth in the following table:
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Name
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Minimum
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Target
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Maximum
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P.A. Rooke
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$ | 480,000 | $ | 1,920,000 | $ | 3,840,000 | ||||||
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J.W. Gamble, Jr.
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126,000 | 504,000 | 1,008,000 | |||||||||
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M.S. Canning
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126,000 | 504,000 | 1,008,000 | |||||||||
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S.T.R. Coons
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119,000 | 476,000 | 952,000 | |||||||||
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R.J. Patton
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59,500 | 238,000 | 476,000 | |||||||||
Performance-Based Restricted Stock Unit Award Opportunities
2014-2016 Performance Period
The performance measure for the performance-based RSUs for the 2014-2016 performance period is the Company’s relative Return on Invested Capital (“ROIC”) measured against the ROIC of companies in the S&P MidCap Technology Index for the period commencing January 1, 2014 and ending December 31, 2016. The performance-based RSUs to be awarded based on the Company’s achievement of its objective, if any, will be determined by the Compensation Committee in 2017, and if earned will be settled on February 24, 2017. The Named Executive Officer must be employed on the last day of the performance
period to earn the performance-based RSUs. Termination of employment prior to such time for any reason, other than death, disability or retirement, will result in forfeiture of the award. In the event of a Named Executive Officer’s death, disability (as defined in the Company’s 2013 Equity Plan) or retirement (as defined in the Award Agreement) during the performance period, a prorated portion of the performance-based RSUs may be earned based on the actual attainment as of the end of the performance period and will be paid to the executive or his or her estate on February 24, 2017.
2014 Performance Period
The performance measure for the performance-based RSUs for the 2014 performance period is the Company’s services and software revenue. The performance period is January 1, 2014 through December 31, 2014. The performance-based restricted stock units to be awarded based on the Company’s achievement of its objective, if any, will be determined by the Compensation Committee in 2015, with vesting and settlement of any earned performance-based restricted stock units to occur in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2015, February 24, 2016 and February 24, 2017, based on the Named Executive Officer’s continued employment on each vesting date. The Named Executive Officer must be employed on the last day of the performance period to earn the performance-based restricted stock units. Termination of employment prior to such time for any reason will result in forfeiture of the award. The vesting of any earned performance-based restricted stock units after the end of the performance period will be accelerated in the event of the Named Executive Officer’s death or disability. In the event of the Named Executive Officer’s retirement occurring after the completion of the performance period, the earned performance-based restricted stock units will continue to vest and settle on the dates set forth in the Named Executive Officer’s Award Agreement.
The Compensation Committee may exercise negative discretion in determining whether performance-based RSUs shall be earned by a Named Executive Officer applying any factors that it deems appropriate in its sole discretion under the circumstances.
Time-Based Restricted Stock Unit Awards
The time-based RSU awards granted to each Named Executive Officer, other than Mr. Rooke, will vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2015, February 24, 2016 and February 24, 2017, based on the continued employment of the Named Executive Officer on each vesting date. The vesting of such time-based RSUs will be accelerated in the event of the Named Executive Officer’s death or disability (as defined in the Company’s 2013 Equity Plan). In the event of the Named Executive Officer’s retirement (as defined in the Award Agreement) the time-based RSUs will continue to vest and settle on the dates set forth in the Named Executive Officer’s Award Agreement.
The time-based RSUs and the minimum, target and maximum award levels for the performance-based RSU awards for the 2014-2016 performance period and the 2014 performance period are set forth in the following table.
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Time-Based RSUs
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2014-2016 Performance-Based
RSU Awards (ROIC)
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2014 Performance-Based
RSU Awards
(Services & Software Revenue)
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Name
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Min
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Target
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Max
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Min
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Target
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Max
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P.A. Rooke
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0 | 11,450 | 45,800 | 91,600 | 11,450 | 22,900 | 45,800 | |||||||||||||||||||||
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J.W. Gamble, Jr.
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12,900 | 3,000 | 12,000 | 24,000 | 3,000 | 6,000 | 12,000 | |||||||||||||||||||||
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M.S. Canning
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12,900 | 3,000 | 12,000 | 24,000 | 3,000 | 6,000 | 12,000 | |||||||||||||||||||||
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S.T.R. Coons
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12,200 | 2,850 | 11,400 | 22,800 | 2,850 | 5,700 | 11,400 | |||||||||||||||||||||
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R.J. Patton
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6,100 | 1,425 | 5,700 | 11,400 | 1,450 | 2,900 | 5,800 |
Recognition Award to Mr. Rooke
In recognition of Mr. Rooke’s services to the Company, the Compensation Committee made a one-time grant of time-based restricted stock units to Mr. Rooke at its meeting on February 19, 2014. The Compensation Committee awarded Mr. Rooke 23,900 restricted stock units which will vest and settle as follows: 20% on February 24, 2015; 30% on February 24, 2016; and 50% on February 24, 2017. The vesting of such time-based restricted stock units will be accelerated in the event of Mr. Rooke’s death or disability (as defined in the Company’s 2013 Equity Plan). In the event of Mr. Rooke’s retirement (as defined in the Award Agreement) the time-based restricted stock units will continue to vest and settle on the dates set forth in Mr. Rooke’s Award Agreement.
Item 9.01. Financial Statements and Exhibits.
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Exhibit No.
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Description of Exhibit
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10.1
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Form of Time-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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10.2
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Form of 3-Year Performance-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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10.3
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Form of 1-Year Performance-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan. +
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10.4
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Form of 3-Year Long-Term Incentive Plan Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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+Indicates management contract or compensatory plan, contract or arrangement.
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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.
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Lexmark International, Inc.
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(Registrant)
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February 25, 2014
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By:
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/s/ Robert J. Patton
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Robert J. Patton
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Vice President, General Counsel and Secretary
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EXHIBIT INDEX
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Exhibit No.
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Description of Exhibit
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10.1
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Form of Time-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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10.2
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Form of 3-Year Performance-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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10.3
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Form of 1-Year Performance-Based Restricted Stock Unit Award Agreement pursuant to the 2013 Equity Compensation Plan. +
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10.4
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Form of 3-Year Long-Term Incentive Plan Award Agreement pursuant to the 2013 Equity Compensation Plan.+
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+Indicates management contract or compensatory plan, contract or arrangement.
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