LEGGETT & PLATT, INCORPORATED Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Director Retirement
On
Amendment to Executive Stock Unit Program
On
Below is a brief description of the terms and conditions of the ESU Program.
Diversified Investments. The ESU Program is a non-qualified, deferred compensation retirement program that allows our named executive officers and other key employees to make pre-tax deferrals of up to 10% of their compensation, above certain thresholds ("Participant Contributions") into diversified investments (which are various investments including mutual funds, bonds, etc.). The Company also automatically makes a 17.65% contribution to the diversified investments acquired with Participant Contributions ("Premium Contributions").
Stock Units. The Company automatically matches 50% of the Participant Contributions in Company stock units, purchased at a 15% discount ("Matching Contributions"), which may increase up to a 100% match ("Additional Matching Contributions") based on the Company's achievement of an annual performance metric under the Company's Key Officers Incentive Plan (our annual incentive cash bonus plan). In addition, Company stock units held in the ESU Program accrue dividends, which are used to acquire additional stock units at a 15% discount ("Dividend Contributions"). One stock unit is equivalent to one share of Company common stock.
Vesting and Distribution. Participant Contributions and Premium Contributions (into diversified investments) vest when made. Matching Contributions, Additional Matching Contributions and Dividend Contributions (into stock units) vest once the executive has five years of service. The diversified investments and stock units are held until the executive's employment is terminated, and then distributed in accordance with the distribution schedule elected by the executive. At distribution, the balance of the diversified investments is paid in cash, and, with respect to the named executive officers, the stock units are converted into Company common stock on a one-to-one basis.
The amendments to the ESU Program included:
a) Definition of Disability Simplified. The definition of Disability was
simplified to mean that the participant is unable to substantially
perform duties and responsibilities by reason of any accident or
illness that can be expected to result in death or to last for a
continuous period of not less than one year.
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b) Definition of Retirement Added. The definition of Retirement was added
to mean a participant's termination, other than for cause, occurring
(i) on or after age 65, or (ii) on or after the date at which the
combination of the participant's age and years of service is greater
than or equal to 70 years.
c) Diversified Investments as Notional Investments Clarified. Since the
Company does not actually purchase the diversified investments for or
on behalf of the participant, a provision was added to clarify that
diversified investments in the ESU Program are notional investments
such that the participant's investment in diversified investments is
merely an obligation by the Company to pay an amount that provides the
same return (positive or negative) as the selected diversified
investment.
d) Participants as Unsecured Creditors Clarified. A provision was added
to clarify that the Company's obligation to participants with respect
to the diversified investments and stock units is a mere promise to
pay money or issue common stock in the future, and any participant
will have the status of a general unsecured creditor of the Company.
e) Definition of Fair Market Value Changed. The definition of Fair Market
Value was changed to state that in the absence of sales on a given
date, Fair Market Value means the closing price of our common stock on
the NYSE on the last day on which a sale occurred prior to such date.
Before the amendment, the definition stated that, in the absence of
sales on a given date, Fair Market Value was the closing price of our
common stock on the NYSE on the following day on which a sale
occurred.
f) Vesting Provisions Changed. In order to be vested in stock units
acquired under the ESU Program, generally, a participant must have 5
years of service. Prior to the amendment, a participant did not
receive credit for a year of service in any year where the participant
was eligible to make contributions to the ESU Program or the Company's
former Stock Bonus Plan but declined to do so. The amendment
eliminated this contribution requirement.
g) Compensation Threshold for Contributions Updated. The amendment
updated the compensation threshold above which participants can
contribute a percentage of compensation to the ESU Program to $31,621
for 2023. This threshold is updated annually.
h) Performance Measure for Additional Matching Contributions Changed.
Prior to the amendment, the ESU Program specifically made reference to
Return on Capital Employed for the applicable calendar year as the
financial metric used to determine whether the Additional Matching
Contributions would be made by the Company. The amendment updated this
provision to make reference to the "primary performance metric" under
the Company's Key Officers Incentive Plan for the applicable calendar
year.
i) Dividend Contributions Acquire Stock Units at 15% Discount Clarified.
The amendment clarifies that the Company will make Dividend
Contributions to the participant's account equal to the per share cash
dividend on the number of stock units credited to the participant on
the dividend record date, and will use the Dividend Contributions to
acquire stock units on behalf of the participant at a price equal to
85% of the Fair Market Value of a share of common stock on the date
such Dividend Contributions are made.
j) Elections During Blackout Restrictions Prohibited. Normally,
participant elections for contribution percentages must be made by
December 31 of the year prior to the year the compensation is earned.
However, newly eligible participants may make elections
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within 30 days of first becoming eligible for participation. The
amendment clarified that (i) with respect to existing and newly
eligible participants, no election can be made during a period where
blackout restrictions exist under the Company's insider trading policy
or applicable law (the "Blackout Restrictions") and (ii) the 30-day
period applicable to newly eligible participants' elections does not
include any period during the Blackout Restrictions.
k) Settlement of Stock Units of Section 16 Officers in Common Stock
Required. Prior to the amendment, the ESU Program provided that
although the Company intends to settle participants' stock units in
shares of Company common stock, the Company reserves the right to pay
the value of the stock units in cash. This provision was amended to
require the settlement of stock units owned by the Company's officers
subject to Section 16 of the Securities Exchange Act of 1934 (which
includes all of the above named executive officers) in shares of
common stock.
l) Data Privacy Provision Added. A provision regarding the collection,
usage and privacy of participants' personal data was added.
The foregoing is only a summary of certain terms and conditions of the ESU Program, and the amendments to the ESU Program, and is qualified in its entirety by reference to such ESU Program which is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference.
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