Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On December 3, 2020, Eaton Corporation plc ("Eaton") announced that Thomas B.
Okray will succeed Richard H. Fearon as Executive Vice President and Chief
Financial Officer upon Mr. Fearon's retirement on March 31, 2021. Mr. Okray will
join Eaton on January 18, 2021 and be appointed Executive Vice President and
Chief Financial Officer on April 1, 2021.
Mr. Okray, 58, comes to Eaton from W.W. Grainger Inc. ("Grainger"), where he is
Senior Vice President and Chief Financial Officer. Prior to that, from 2016 to
2018, he served as Executive Vice President, Chief Financial Officer of Advance
Auto Parts, Inc., a leading automotive aftermarket parts provider in North
America. From January 2016 to October 2016, he served as President, Finance,
North American Operations of Amazon.com, Inc., and from June 2015 to January
2016, as Vice President, Finance, Global Customer Fulfillment, at Amazon. Prior
to that he was employed by General Motors Company, a global automotive company,
in a variety of finance and supply chain related roles, culminating in his
position as CFO, Global Product Development, Purchasing & Supply Chain, from
January 2010 to June 2015.
In connection with his appointment, Mr. Okray will receive an initial base
salary of $800,000, and will participate in Eaton's short-term cash incentive
program (the "EIC Plan") with a target payout of 100% of his base salary.
Additionally, he will participate in the Company's 2021-2023 long-term incentive
plan (the "ESIP") with a grant of Performance Share Units equal to $1,100,000,
as well as grants of Stock Options and Restricted Share Units, each equal to
$550,000 in value. The terms of the Performance Share Units, Stock Options and
Restricted Share Units will be substantially the same as those in the same
awards for all other Eaton officers who receive them, and are more fully set
forth in those documents referenced as Exhibits 10.1, 10.2 and 10.3,
respectively.
Mr. Okray will also receive a cash award of approximately $2,650,000 replacing
his Grainger awards that would have vested or paid out in 2021, subject to a
final valuation based upon (i) the average closing stock price of Grainger
shares for the 20 day period immediately prior to the day his Grainger Stock
Options and Restricted Shares would have vested in 2021, and (ii) the lesser of
100% or Grainger's applicable payout factor for its short-term incentive program
reported in Grainger's 2021 Proxy Statement. The $2,650,000 award amount is
based on the target payout for Grainger's short-term incentive program and the
average closing price of Grainger Common Stock for the 20 day period ending on
November 20, 2020, but will be subject to adjustment as described above. Mr.
Okray will also receive replacements of his Grainger unvested equity with
approximately 29,948 unvested Eaton Restricted Share Units and approximately
15,549 unvested Eaton Stock Options, each of which will vest ratably over three
years. The final number of shares subject to these awards will be adjusted based
upon the average closing price of Eaton Ordinary Shares and Grainger Common
Stock for the 20 day period immediately prior to the date of grant.
Additionally, Mr. Okray will participate in the Eaton Savings Plan (ESP) that is
available to all US employees, including the companion non-qualified
Supplemental Retirement Plan into which the company will contribute $390,479 as
a beginning balance that will vest in three years, the same vesting period
specified for his Eaton Retirement Contribution Account under the ESP. He will
also receive reimbursement for financial, tax and estate planning advice as well
as relocation benefits.
Eaton will enter into an Indemnification Agreement and a Change of Control
Agreement with Mr. Okray in substantially the same form entered into with each
of the other Eaton Officers. The Indemnification Agreement will provide that, to
the fullest extent permitted by law, Eaton will indemnify Mr. Okray against
expenses (including attorneys' fees, judgments, fines and amounts paid in
settlement) actually and reasonably incurred by him in connection with any claim
against him as a result of his service. The Change of Control Agreement will
protect Mr. Okray for the two-year period following a change of control, from
certain changes to his employment, position, duties, compensation and benefits.
If, during this two-year period, the successor company terminates Mr. Okray's
employment other than for "Cause" or if he terminates his employment for "Good
Reason", he would receive a lump sum cash payment equal to the aggregate of (1)
any earned but as yet unpaid base salary and short-term and ESIP awards for
completed incentive award periods, (2) a prorated portion of his target
opportunity for any open ESIP award periods and (3) his annual base salary and
target incentive opportunity under the EIC plan multiplied by three. Under these
circumstances, he would also receive continued health and welfare benefits for a
period of three years. The Change of Control Agreement will not provide tax
protection on payments made in connection with a change in control.
These summaries of material terms of the Indemnification Agreement and Change of
Control Agreement set forth above are qualified in their entirety by reference
to the full text of the applicable agreements. (See Exhibits10.4 and 10.5,
respectively, to this Report, which are incorporated herein by reference.)
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A copy of the press release issued by the Company on December 3, 2020 is
included as Exhibit 99.1 to this Report and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Item Exhibit
10.1 Form Performance Share Grant Agreement, incorporated herein by reference to the
Form 10-K for the year ended December 31, 2016 .
10.2 Form Stock Option Agreement for Executives, incorporated herein by reference to
the Form 10-K for the year ended December 31, 2015 .
10.3 Form RSU Grant Agreement, incorporated herein by reference to the Form 10-K for
the year ended December 31, 2016 .
10.4 Form of Indemnification Agreement between Eaton Corporation and each officer
thereof, incorporated herein by reference to the Company's 10-K filed for the year
ending December 31, 2015 .
10.5 Form Change of Control Agreement between Eaton Corporation and each officer
thereof, incorporated herein by reference to Exhibit 10.1 to the Company's Form
8-K filed on December 17, 2015 .
99.1 Press Release issued December 3, 2020--------------------------------------------------------------------------------
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EATON CORPORATION PLC 
