Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
Compensatory Arrangements of Certain Officers1
Equity Awards. Named executive officers of Philip Morris International Inc. (the
"Company") receive 40% of their targeted equity award in the form of restricted
stock units, or RSUs, and 60% in the form of performance share units, or PSUs.
Accordingly, on February 3 2021, the Compensation and Leadership Development
Committee of the Board of Directors of the Company (the "Committee") approved
the awards of RSUs and PSUs under the Philip Morris International Inc. 2017
Performance Incentive Plan to the Company's named executive officers in the
amounts indicated below, with a grant date of February 4, 2021:
Name RSUs PSUs
André Calantzopoulos 56,130 84,200
Emmanuel Babeau 19,670 29,500
Martin G. King 7,210 10,820
Jacek Olczak 21,460 32,180
The foregoing awards of RSUs are due to vest on February 21, 2024. The form of
the RSU agreement as well as the RSU agreements for Messrs. Babeau and King are
attached as Exhibits 10.1, 10.3 and 10.4, respectively, to this Item 5.02 of
this Current Report on Form 8-K and incorporated by reference herein.
The foregoing awards of PSUs are due to vest on February 21, 2024 at the end of
a three-year (2021-2023) performance cycle only to the extent performance goals
pre-established and pre-weighted by the Committee are achieved. The form of the
PSU agreement as well as the PSU agreements for Messrs. Babeau and King are
attached as Exhibits 10.2, 10.5 and 10.6, respectively, to this Item 5.02 of
this Current Report on Form 8-K and incorporated by reference herein.
_________________
1 Messrs. Marc Firestone and Miroslaw Zielinski retired during the fiscal year
ended December 31, 2020, and their early retirement agreements and releases are
described in the Company's Current Reports on Form 8-K as filed with the U.S.
Securities and Exchange Commission on November 6, 2020 and May 1, 2020,
respectively.
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Annual Incentive Compensation Awards. The Committee approved annual incentive
compensation awards for 2020, payable in cash, to the Company's named executive
officers, as indicated below:
Name CHF US$ (a)
André Calantzopoulos 2,967,320 3,289,156
Emmanuel Babeau* 994,950 1,102,862
Marc Firestone** 963,910 1,068,456
Martin G. King 684,450 758,685
Jacek Olczak 1,620,000 1,795,705
* Pro-rated reflecting commencement of employment on May 1, 2020.
** Pro-rated through early retirement date of October 31, 2020 pursuant to the
terms of the early retirement agreement and release described in the Company's
Current Report on Form 8-K filed with the U.S. Securities and Exchange
Commission on November 6, 2020.
(a) Annual incentive compensation awards are converted to U.S. dollars using the
conversion rate on February 4, 2021 of CHF 1.00 = $1.10846.
The annual incentive compensation awards were set based on a pre-established
matrix formula employing six performance measures.
As set forth in the Company's Form 8-K filed with the U.S. Securities and
Exchange Commission on December 10, 2020, Mr. André Calantzopoulos, who is
currently serving as the Company's Chief Executive Officer, will become
Executive Chairman of the Board effective immediately before the 2021 Annual
Meeting of Shareholders to be held on May 5, 2021 (the "Annual Meeting") and
will remain an employee of the Company. Mr. Jacek Olczak, who is currently
serving as the Company's Chief Operating Officer, will succeed Mr.
Calantzopoulos as Chief Executive Officer effective immediately after the Annual
Meeting.
In connection with the foregoing, on February 3, 2021, the Committee approved
the following changes to the compensation of Messrs. Olczak and Calantzopoulos,
effective May 5, 2021:
Mr. Olczak will be promoted to salary grade 28. His base salary will be
increased to CHF 1,350,000 (approximately $1,501,592).2 Mr. Olczak's annual
incentive compensation award target will be at 200% of his new base salary. His
equity award target will be at 600% of his new base salary (40% in the form of
RSUs and 60% in the form of PSUs). Mr. Olczak's stock ownership requirement will
increase from 5 to 10 times his base salary.
Recognizing the fact that, while he will fully assist in the management
transition, Mr. Calantzopoulos will no longer have management responsibility of
the Company, he will be removed from the Company's salary grade structure, and
his base salary will be reduced from CHF 1,570,010 (approximately $1,746,306) to
CHF 1,000,000 (approximately $1,112,290).2 He will no longer be eligible for
annual incentive compensation awards. Reflecting his role in assisting the Chief
Executive Officer in long-term strategy, Mr. Calantzopoulos will remain eligible
for equity compensation awards with a target of 300% of his new base salary (40%
in the form of RSUs and 60% in the form of PSUs), compared to his current target
of 600%. His stock ownership requirement will be maintained at 10 times his base
salary.
Compensation for Messrs. Calantzopoulos and Olczak for 2021 will be pro-rated to
reflect the different positions held by each of them during the year.
_________
2 Using the conversion rate on February 3, 2021 of CHF 1.00 = $1.11229.
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The Company will provide additional information regarding the compensation of
its named executive officers in the Company's proxy statement for the Annual
Meeting, which will be issued in March 2021.
Election of Directors
Mr. Bonin Bough (age 43) was appointed to the Board of Directors effective
February 4, 2021. He was appointed to the Finance and Consumer Relationships and
Regulation Committees of the Board.
Mr. Bough will be compensated for his service on the Company's Board of
Directors pursuant to the existing non-employee director compensation programs.
These compensation programs are described in detail in the Company's proxy
statement dated March 26, 2020, and filed with the U.S. Securities and Exchange
Commission on such date.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Amendments to By-Laws
Effective February 4, 2021, the Board of Directors of the Company amended
Article II, Section 2, of the Company's amended and restated by-laws in its
entirety by deleting the current text that states "Effective immediately prior
to the 2020 Annual Meeting of Shareholders, the number of directors constituting
the Board of Directors shall be ten" and replacing such text with the following:
The Board of Directors shall consist of not less than eight (8) and not more
than fourteen (14) directors as fixed from time to time solely by resolution of
a majority of the total number of directors then in office, though less than a
quorum of the Board of Directors. Any decrease in the number of directors shall
be effective at the time of the next succeeding annual meeting of the
shareholders unless there shall be vacancies in the Board of Directors, in which
case such decrease may become effective at any time prior to the next succeeding
annual meeting to the extent of the number of such vacancies.
The amended and restated by-laws are attached as Exhibit 3.1 to this Item 5.03
of this Current Report on Form 8-K and incorporated by reference herein.
Item 7.01. Regulation FD Disclosure.
On February 9, 2021, the Company issued a press release announcing the
appointment of Mr. Bonin Bough to the Board of Directors.
The press release is attached as Exhibit 99.1 to this Item 7.01 of this Current
Report on Form 8-K and incorporated by reference herein.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
3.1 Amended and Restated By-Laws .
10.1 Form of Restricted Stock Unit Agreement.
10.2 Form of Performance Stock Unit Agreement.
10.3 Restricted Stock Unit Agreement (Emmanuel Babeau).
10.4 Restricted Stock Unit Agreement (Martin G. King).
10.5 Performance Stock Unit Agreement (Emmanuel Babeau).
10.6 Performance Stock Unit Agreement (Martin G. King).
99.1 Philip Morris International Inc. Press Release dated February 9, 2021
(furnished pursuant to Item 7.01).
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the Inline XBRL document and contained in Exhibit 101).
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