ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
On August 20, 2020, the Board of Directors (the "Board") of Kaman Corporation
(the "Company") named Ian K. Walsh as President and Chief Executive Officer and
as a member of the Board, effective September 8, 2020. Mr. Walsh will succeed
Neal J. Keating as President and Chief Executive Officer; Mr. Keating is
retiring as described below.
Mr. Walsh previously served as Chief Operating Officer REV Group, Inc., a
leading designer, manufacturer, and distributor of specialty vehicles and
related aftermarket parts and services. Prior to joining REV Group, Mr. Walsh
worked at Textron, Inc., where he most recently served as President and Chief
Executive Officer of TRU Simulation and Training. Mr. Walsh's career with
Textron began in 1999 at Bell Helicopter and progressed through leadership roles
of increasing responsibility, including Senior Vice President and General
Manager of Lycoming Engines and Senior Vice President and General Manager of
Textron's Weapon & Sensor Systems business. Mr. Walsh is a certified Six Sigma
Black Belt and achieved the prestigious International Shingo Silver Medallion
for Operational Excellence for his work at Lycoming Engines. Prior to joining
Textron, he served as an officer and naval aviator in the U.S. Marine Corps. He
holds a bachelor's degree from Hamilton College, a Master of Public
Administration from Harvard University's John F. Kennedy School of Government,
and a Master of Business Administration from Harvard Business School. There are
no arrangements or understandings between Mr. Walsh and any other person
pursuant to which he was selected to serve on the Board, and there are no
relationships between Mr. Walsh and the Company that require disclosure under
Item 404(a) of Regulation S-K.
In connection with Mr. Walsh's appointment as President and Chief Executive
Officer, the Company has entered into an Executive Employment Agreement with
Mr. Walsh, which governs the first three years of his employment. Under the
agreement, Mr. Walsh will receive an annual base salary of $650,000 and will be
eligible to receive a target annual cash bonus equal to 100% of his annual base
salary (which will be pro-rated for 2020, subject to a minimum payout for 2020
of $125,000). He will also receive an upfront initial retention payment of
$200,000, which amount must be repaid to the Company in full if, prior to
December 31, 2021, he terminates his employment without Good Reason (as defined
in the agreement) or the Company terminates his employment for Cause (also as
defined in the agreement).
Mr. Walsh will be eligible to receive annual equity awards in such amounts and
on such terms as are determined by the Compensation Committee of the Board. He
will receive an initial grant of restricted stock units with respect to a number
of shares of Company common stock with a fair market value at the time of grant
of $1,250,000, which restricted stock units will fully vest (subject to
continued employment) on September 8, 2023 (or upon an earlier qualifying
termination of employment). Mr. Walsh will also participate in the long-term
incentive program feature of the Company's Amended and Restated 2013 Management
Incentive Plan annually beginning with the performance period commencing on
January 1, 2021 with a target opportunity to earn at least 300% of his base
salary. For the performance period of January 1, 2021 - December 31, 2023 the
target value of his long-term incentive program opportunity will be $2,550,000
(300% of base salary plus $600,000).
In the event of a qualifying termination of employment (except to the extent
covered by the Change in Control Agreement (discussed below)), Mr. Walsh will be
entitled to receive a pro-rata bonus for the year of termination (based on
actual performance) a severance payment equal to two times the sum of his base
salary and most recent annual bonus, eligibility to receive payout on
then-ongoing long-term incentive plan awards (pro-rata based on actual
performance), two years continued participation in Company benefit plans and
vesting of his initial restricted stock unit award. The forgoing payments are
all subject to the effectiveness of a release of claims in favor of the Company.
The employment agreement also contains certain restrictive covenants and
subjects compensation earned by Mr. Walsh to claw back by the Company under
certain circumstances.
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In connection with his appointment, the Company also entered into a Change in
Control Agreement with Mr. Walsh, substantially in the form described in and
attached to the Form 8-K filed by the Company on April 20, 20016, which
description and attachment are incorporated herein by reference.
The Company has also entered into a Transition and Retirement Agreement with
Mr. Keating which, along with his existing employment agreement, governs the
terms of his retirement. The Transition and Retirement Agreement provides that
Mr. Keating will continue to serve as President and Chief Executive Officer of
the Company until September 8, 2020 and will serve as a full time employee (at
an annual base salary of $800,000 for the balance of 2020 and $400,000 during
the portion of 2021 during which he is employed) and Executive Chairman until
the Company's 2021 annual meeting of shareholders (except that he will retire as
an employee on April 30, 2021 if such date is earlier than the meeting of
shareholders), following which he will retire as an employee and resign from the
Board. The Transition and Retirement Agreement further provides that upon
Mr. Keating's retirement (and subject to the effectiveness of a release of
claims in favor of the Company), Mr. Keating will receive the payments and
benefits provided under the terms of his existing employment agreement with the
Company (which, among other things, provides for payment of pro-rata portions of
outstanding long-term incentive plan awards and full vesting of unvested equity
awards. Mr. Keating's Change in Control Agreement with the Company was also
terminated in connection with the execution of the Transition and Retirement
Agreement.
On August 20, 2020, Richard R. Barnhart informed the Company that he would
retire as President of Kaman Aerospace Group, Inc. and Executive Vice President
of Kaman Corporation, effective September 30, 2020. In connection with his
retirement, the Company and Mr. Barnhart have entered into a Retirement and
Consulting Letter Agreement. The letter agreement provides that Mr. Barnhart
will provide consulting services to the Company from his retirement date through
March 31, 2021 and that for such consulting services he will be paid a fee of
$100,256.67 per month from October 1, 2020 through December 31, 2020 and $42,000
per month from January 1, 2021 through March 31, 2021. The letter agreement also
generally provides that in connection with his retirement (and subject to his
execution of a release of claims) Mr. Barnhart will be entitled to a pro-rata
2020 annual bonus (based on actual performance and pro-rated for the portion of
the year elapsed prior to his retirement), continued eligibility for payment
under his existing long-term incentive plan awards (based on actual performance
and pro-rated for the portion of the performance period during which he was
employed), full vesting of his unvested outstanding restricted shares and six
months of benefit continuation. The letter agreement also contains certain
confidentiality, non-solicitation, non-competition and similar covenants
applicable to Mr. Barnhart.
The foregoing descriptions of the terms and conditions of the employment
agreement with Mr. Walsh, the transition and retirement agreement with
Mr. Keating and the Retirement and Consulting Letter Agreement with Mr. Barnhart
do not purport to be complete and are qualified in their entirety by reference
to such agreements, which are filed as Exhibits 10.1, 10.2 and 10.3 hereto
respectively and are incorporated herein by reference.
A copy of the press release issued by the Company on August 20, 2020 is attached
as Exhibit 99.1 hereto.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
The following exhibits are filed as part of this report:
Exhibit
Number Description
10.1 Executive Employment Agreement, dated as of August 20, 2020, by and
between Ian K. Walsh and the Company.
10.2 Transition and Retirement Agreement, dated as of August 20, 2020, by
and between Neal J. Keating and the Company.
10.3 Retirement and Consulting Letter Agreement, dated as of August 20,
2020, by and between Richard R. Barnhart and the Company.
99.1 Press Release dated as of August 20, 2020.
104 Cover Page Interactive Data File, formatted in iXBRL and contained in
Exhibit 101
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