Form 8-K Change in Executive Compensation
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):
January
18, 2006
Modine
Manufacturing Company
Exact
name of registrant as specified in its charter
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Wisconsin
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1-1373
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39-0482000
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State
or other jurisdiction of incorporation
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Commission
File Number
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I.R.S.
Employer Identification Number
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1500
DeKoven Avenue, Racine, Wisconsin
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53403
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Address
of principal executive offices
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Zip
Code
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Registrant
s telephone number, including area code:
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(262)
636-1200
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Check
the
appropriate below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following
provisions.
[
]
Written communications pursuant to Rule 425 under the Securities Act
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
TABLE
OF CONTENTS
ITEM
1.01. Entry into a Material Definitive
Agreement
SIGNATURE
INFORMATION
TO BE INCLUDED IN THE REPORT
ITEM
1.01. Entry into a Material Definitive
Agreement
Chief
Executive Officer Compensation. The
Modine Manufacturing Company Board of Directors voted to increase the percentage
of salary the Company’s Chief Executive Officer would be paid as an annual bonus
from 75% to 85% in the event the Company achieves its Target Return on Assets
Employed (“ROAE”) of 8%.
The
Company maintains the Modine Management Incentive Plan. The
Management Incentive Plan is our annual cash bonus plan. One corporate financial
measure is used for all participants. Using one measure fosters cooperation
among our divisions and plants and keeps managers focused on the performance
of
the corporation overall.
The
plan
has a short term focus (one year) and is based on the fiscal results of the
Company using the ROAE measure. ROAE is determined by dividing net earnings
by
average net assets. Modine moved to this measure from a Return on Equity measure
several years ago when we first focused on Value Based Management. ROAE drives
performance by focusing the organization on asset utilization, working capital
management and earnings improvement.
Overall
Company performance is the key component in determining bonuses and bonus
increases. Cash bonuses increase in a linear fashion with the Company's ROAE.
The incentive is set at a percentage of base salary and the incentive levels
are
greater for more highly compensated officers to reflect the level of
responsibility of the executive.
The
Modine ROAE Performance Schedule is as follows: to earn the Threshold bonus,
the
Company must achieve ROAE of 4%; to earn the Target bonus, the Company must
achieve ROAE of 8%; and to earn the Maximum bonus, the Company must achieve
ROAE
of 16%. The percentage of base pay paid as a bonus under the MIP varies based
upon job responsibility with the Company having eight levels with increasing
percentage of salary earned as a bonus with increasing levels of job
responsibility. If the Company achieves the Threshold ROAE (4%), an initial
level participant in the MIP would receive 3% of his or her salary with levels
increasing to 37.5% of salary as a bonus for the CEO. If the Company achieves
the Target ROAE (8%), an initial level participant in the MIP would receive
6%
of his or her salary and the CEO 85% and if the Maximum ROAE (16%) is achieved,
an initial level participant in the MIP would receive 12% of his or her salary
and the CEO would receive 150%. For ROAE between the Threshold and the Maximum,
the percentage of salary that may be earned as a bonus increases with each
100th%
change
in ROAE.
Director
Compensation. The
Modine Manufacturing Company Board of Directors voted to increase (1) the annual
retainer for non-employee directors from $25,000 to $35,000; (2) the Audit
Committee chair retainer from $4,000 to $10,000; and (3) other board committees’
chair retainer from $4,000 to $5,000. The Board also voted to change the form
and timing of equity grants from the current stock awards issued every three
years in conjunction with election or re-election to annual grants of stock.
The
changes are effective as of January 18, 2006.
As
a
result of this Board Action, the Board compensation is as follows:
Employees
of Modine do not receive any compensation for serving on the Modine board.
Non-employee directors, including the Lead Director, receive the
following:
● a
retainer fee of $8,750 per quarter;
● $1,750
for each Board meeting attended;
● $1,500
for each committee meeting attended;
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●
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a
retainer fee of $5,000 per year for acting as Chair of the Officer
Nomination & Compensation, Pension and Corporate Governance and
Nominating committees and a retainer fee of $10,000 per year for
acting as
Chair of the Audit Committee;
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●
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reimbursement
for travel, lodging, and related expenses incurred in attending meetings;
and
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● travel-accident
and director and officer liability insurance.
On
July
20, 2005, the Company’s shareholders approved the amendment and restatement of
the 2000 Stock Option Plan for Non-Employee Directors which is now named the
Amended and Restated 2000 Stock Incentive Plan for Non-Employee Directors (the
“Amended Directors’ Plan”). The Amended Directors’ Plan, which was adopted by
the Board of Directors on March 16, 2005 subject to shareholder approval, gives
discretion to the Board or a committee of the Board to grant stock options
and
stock awards to non-employee directors.
The
Amended Directors’ Plan is administered by the Board or by the Officer
Nomination & Compensation Committee of the Board (the “Committee”).
The
Committee, at its meeting in March 2005, approved, subject to the approval
of
the Amended Directors’ Plan by the shareholders, the grant of unrestricted stock
awards to the three directors elected or re-elected at the annual meeting.
The
Committee determined that the award for fiscal 2006 would equal $38,000 a year
for each of the years in the term to which the director has been elected or
re-elected. Therefore, the dollar value of the shares of unrestricted stock
that
each non-employee director would receive on the date of the annual meeting
at
which he or she is elected or re-elected is $114,000. The number of shares
of
unrestricted stock would equal $114,000 divided by the closing market price
of
the Company’s common stock on the date of award. On July 20, 2005, Ms. Williams,
Dr. Incropera and Mr. Martin received a grant of 9,900 shares of stock.
Any
member of the Board of Directors who is not an employee or officer of the
Company or any subsidiary of the Company is eligible to participate in the
Amended Directors’ Plan.
Stock
options consist of nonqualified stock options to purchase shares of the
Company’s common stock. The Committee, among other things, establishes the
number of shares subject to the option, the time or times at which options
may
be exercised and whether all of the options may be exercisable at one time
or in
increments over time. The option price will not be less than the closing market
price of the Company’s common stock on the date of the grant. A stock option may
be exercised in whole at any time or in part from time to time.
The
Board
or the Committee, as applicable, has broad discretionary authority to set the
terms of awards of stock under the Amended Directors’ Plan. Shares granted under
the Amended Directors’ Plan may or may not be subject to restrictions as
determined by the Committee. Participants will receive all dividends on, and
will have all voting rights with respect to, such shares.
There
were originally 500,000 shares of Company common stock reserved for issuance
under the 2000 Directors’ Plan and 258,000 shares remain available for the grant
of awards under the Amended Directors’ Plan. Management does not propose any
change to the number of shares available for the grant of awards under the
Amended Directors’ Plan. Shares subject to awards that lapse become available
again for award under the plan.
In
the
event the Company at any time changes the number of issued shares of common
stock without new consideration to the Company (by way of stock dividends,
stock
splits, or similar transactions), the total number of shares reserved for
issuance under the Amended Directors’ Plan and the number of shares covered by
each outstanding award will be adjusted so that the aggregate consideration
payable to the Company, if any, and the intrinsic value of each such award
will
not be changed.
Awards
may also contain provisions for their continuation, acceleration, immediate
vesting, or for other equitable adjustments after changes in the common stock
resulting from the reorganization, sale, merger, consolidation, dissolution,
liquidation, changes in control or similar occurrences.
The
term
of the Amended Directors’ Plan expires on May 16, 2010. No award may be granted
after that date. No award made under the Amended Directors’ Plan may have a term
of more than ten years from the date of grant or award and an award will
terminate no later than three years after termination of director status for
any
reason other than death.
The
Board
or the Committee may amend, alter or discontinue the Amended Directors’ Plan but
no such action may be made that will impair prior grants or rights of a director
without his or her consent or, if material, be made without shareholder
approval.
From
July
1, 2000 to July 2004, directors of the Company who are not employees
participated in the 2000 Stock Option Plan for Non-Employee Directors (the
"2000
Directors' Plan") which authorized the grant of non-qualified stock options
through May 16, 2010, exercisable for up to 500,000 shares of common stock.
These options are granted at 100% of the fair market value of the common stock
on the grant date. The options expire no later than ten years after the grant
date and terminate no later than three years after termination of director
status for any reason other than death. Within 30 days after election and each
re-election to the Board, each non-employee director so elected or re-elected
was automatically granted an option for the number of shares equal to the
product of 6,000 times the number of years in the term to which such director
was so elected or re-elected. The 2000 Directors' Plan may be administered
by
the Board or by a committee of two or more directors of the Company if deemed
necessary or advisable in order to comply with the exemptive rules promulgated
pursuant to Section 16(b) of the Securities Exchange Act of 1934. Neither the
Board nor any such committee has authority to administer the 2000 Directors'
Plan with respect to the selection of participants under such plan or the
timing, pricing, or amount of any grants.
Prior
to
July 1, 2000, directors of the Company who were not employees were eligible
to
participate in the 1994 Stock Option Plan for Non-Employee Directors (the "1994
Directors' Plan") which authorized the grant of non-qualified stock options
through July 20, 2004, exercisable for up to 500,000 shares of common stock.
These options were granted at 100% of the fair market value of the stock on
the
grant date and expire no later than ten years after the grant date and terminate
no later than three years after termination of director status for any reason
other than death. Within 30 days after election or re-election to the Board,
each director so elected or re-elected was automatically granted an option
for
the number of shares equal to the product of 5,000 times the number of years
in
the term to which such director had been so elected or re-elected. The 1994
Directors' Plan was administered by the Board or by a committee of two or more
directors of the Company if deemed necessary or advisable in order to comply
with the exemptive rules promulgated pursuant to Section 16(b) of the Securities
Exchange Act of 1934. Neither the Board nor any such committee had authority
to
administer the 1994 Directors' Plan with respect to the selection of
participants under the plan or the timing, pricing, or amount of any grants.
The
1994 Directors' Plan was terminated at the end of June 2000 and no additional
grants have been made since that time.
The
Board
of Directors adopted the Modine Manufacturing Company Director Emeritus
Retirement Plan (the "Director Emeritus Retirement Plan") pursuant to which
any
person, other than an employee of the Company, who is or becomes a director
of
Modine on or after April 1, 1992, and who retires from the Board will be paid
a
retirement benefit equal to the annualized sum directors are being paid for
their service to the Company as directors (including Board meeting attendance
fees but excluding any applicable committee attendance fees) as in effect at
the
time such director ceases his or her service as a director. The retirement
benefit continues for a duration equal to the duration of the director's Board
service. If a director dies before retirement or after retirement during such
period, his or her spouse or other beneficiary will receive the applicable
retirement benefit. In the event of a change in control (as defined in the
Director Emeritus Retirement Plan) of Modine, each eligible director, or his
or
her spouse or other beneficiary entitled to receive a retirement benefit through
him or her, would be entitled to receive a lump-sum payment equal to the present
value of the total of all benefit payments that would otherwise be payable
under
the Director Emeritus Retirement Plan. The retirement benefit is not payable
if
the director directly or indirectly competes with the Company or if the director
is convicted of fraud or a felony and such fraud or felony is determined by
disinterested members of the Board of Directors to have damaged Modine.
Effective July 1, 2000, the Director Emeritus Retirement Plan was frozen with
no
further benefits accruing under it. All eligible directors who retired prior
to
July 1, 2000 continue to receive benefits pursuant to the Director Emeritus
Retirement Plan. All current directors eligible for participation accrued
pension benefits pursuant to the Director Emeritus Retirement Plan until July
1,
2000.
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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Modine
Manufacturing Company
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By:
/s/
D.B. Rayburn
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D.
B. Rayburn
President
and Chief Executive Officer
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By:
/s/
D.R. Zakos
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D.
R. Zakos
Vice
President, General Counsel
and
Secretary
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Date:
January 24, 2006