Form 8-K NAVISTAR INTERNATIONAL For: Apr 18
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): April 18, 2018 (April 16, 2018)
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NAVISTAR INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware | 1-9618 | 36-3359573 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) | ||
2701 Navistar Drive Lisle, Illinois | 60532 | |||
(Address of principal executive offices) | (Zip Code) | |||
Registrant's telephone number, including area code: (331) 332-5000
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(Former name or former address, if changed since last report.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
Amendment to Clarke Amended and Restated Employment Agreement
On April 16, 2018 (the “Effective Date”), Navistar International Corporation (the “Company”) entered into an Amendment to Amended and Restated Employment and Services Agreement (the “Amendment”) with the Company’s President and Chief Executive Officer, Troy A. Clarke. Mr. Clarke also serves as executive Chairman of the Company’s Board of Directors (the “Board”). The Amendment modifies certain terms and extends the expiration date of Mr. Clarke’s Amended and Restated Employment and Services Agreement with the Company dated April 22, 2016 (the “Agreement”), which was scheduled to expire on April 22, 2018. The following is a description of the material terms of the Amendment, which description is qualified by reference to a copy of the Amendment attached as Exhibit 10.1 to this Current Report on Form 8-K.
Term of Employment. The term of Mr. Clarke’s employment under the Agreement is extended from April 22, 2018 to April 22, 2019, resulting in a total term of three years (the “Services Term”), unless it is terminated earlier by the Company or by Mr. Clarke, as described in the Agreement.
Compensation. Mr. Clarke’s compensation under the Amendment is as follows:
• | Base Salary. An annual base salary increase from $1,000,000 to $1,050,000. |
• | Annual Incentive. Mr. Clarke’s target annual incentive award and maximum annual incentive award remain unchanged at 125% of base salary and two times the target annual incentive award, respectively. For the fiscal year in which the Services Term ends, he will be entitled to a pro rata portion of the annual incentive bonus paid in a lump sum even if he is not employed by the Company on the payment date. |
• | Long-Term Incentive. For the 2018 fiscal year, Mr. Clarke was granted long-term incentive awards on the Effective Date in the form of (i) an award of 40,530 stock-settled restricted stock units, (ii) 56,497 non-qualified stock options at $40.71 and (ii) a performance-based restricted cash unit award with a target amount of $2,750,000 (the “2018 LTI Awards”), in each case subject to the terms and conditions of the Company’s 2013 Performance Incentive Plan (or any successor plan) and applicable award agreements in the form that applies to other senior executives’ 2018 long-term incentive awards generally (including with respect to performance goals); provided, however, that (i) the 2018 LTI Awards will be payable on his “Qualified Retirement” and (ii) “Qualified Retirement” means, with respect to Mr. Clarke, a termination from employment with the Company that occurs for any reason after he has (A) attained age 62 and (B) completed five years of continuous service. |
Terminations for any Reason. If Mr. Clarke’s employment and service with the Company terminates for any reason, including death or disability, Mr. Clarke will be entitled to: (i) any unpaid base salary, (ii) any unpaid, but earned, annual incentive for any completed fiscal year, (iii) pay for accrued but unused vacation, (iv) any benefits or compensation as provided under the terms of the employee benefit and compensation agreements and plans under which he has a vested right, including those that vest as a consequence of the termination of employment, and (v) reimbursement for unreimbursed business expenses.
Post-Services Term Agreement. Following expiration of the Services Term, if requested by the Company’s Board of Directors, Mr. Clarke agrees to serve as executive Chairman of the Company’s Board of Directors, or as a senior advisor to the Company, for a period of not less than one year. During such period, his compensation will be equal to the cash equivalent of the non-employee director cash and equity retainer. Vesting of equity awards and performance cash incentives outstanding following Mr. Clarke’s termination of employment will continue regardless of whether he has been requested by the Company’s Board of Directors to serve as executive Chairman following the Services Terms, subject only to his continued compliance with non-competition and non-solicitation covenants.
Limited Effect. Except as specifically modified in the Amendment, the Agreement continues in full force and effect.
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Director Departure and Appointment
On April 17, 2018, Raymond T. Miller was elected to the Board of Directors (the “Board”) of Navistar International Corporation (the “Company”) effective immediately, replacing Michael F. Sirignano. The Company was notified on April 16, 2018 of Mr. Sirignano's intention to resign from the Board upon acceptance thereof by the Board. Mr. Miller was appointed a member of the Board’s Audit Committee and Compensation Committee, also effective April 17, 2018. Pursuant to a Settlement Agreement effective as of October 5, 2012 entered into by the Company with MHR Holdings LLC, MHR Fund Management LLC, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Advisors LLC, MHR Institutional Advisors III LLC, MHR Institutional Partners III LP and Mark H. Rachesky, M.D. (collectively, the “MHR Group”), as amended by Amendment No. 1 to the Settlement Agreement, effective as of July 14, 2013, and Amendment No. 2 to the Settlement Agreement, effective as of September 5, 2016 (collectively, the “Settlement Agreement”), Mr. Miller has been designated by the MHR Group to serve on the Board as a MHR Nominee (as defined in the Settlement Agreement) as a replacement for Mr. Sirignano who was also a MHR Nominee.
As a director of the Company, Mr. Miller will receive compensation as a non-employee director in accordance with the Company’s non-employee director compensation practices described in the Company’s Annual Proxy Statement filed with the Securities and Exchange Commission on December 20, 2017. This compensation generally consists of an annual retainer in the amount of $120,000 ($20,000 of which is to be paid in the form of restricted stock) and an annual stock option grant of 5,000 options. The initial cash and stock award to be received by Mr. Miller will be pro-rated accordingly.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) | Exhibits | |
The following documents are filed herewith: | ||
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SIGNATURE
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.
NAVISTAR INTERNATIONAL CORPORATION |
(Registrant) |
By: | /s/ Richard E. Bond |
Name: | Richard E. Bond |
Title: | Corporate Secretary |
Dated: April 18, 2018
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Exhibit 10.1
AMENDMENT TO NAVISTAR INTERNATIONAL CORPORATION
AMENDED AND RESTATED EMPLOYMENT AND SERVICES AGREEMENT
This Amendment to the Navistar International Corporation Amended and Restated Employment and Services Agreement (dated April 22, 2016) (this "Amendment") is entered into on April 16, 2018 (the "Amendment Effective Date") by and among Navistar International Corporation, a Delaware corporation (the "Company"), its principal operating subsidiary, Navistar, Inc., a Delaware corporation ("NAVISTAR, INC."), and Troy A. Clarke ("Executive") (each a "Party" and collectively, the "Parties").
RECITALS:
A. On April 22, 2016, the Company, Navistar and Executive entered into that certain Navistar International Corporation Amended and Restated Employment and Services Agreement (the "Agreement') wherein Executive agreed to continue to serve as Chief Executive Officer and President ("CEO") of the Company and the Company and Navistar, Inc. agreed to provide compensation and benefits, among other things, to Executive for such service.
B. The term of the Agreement will expire on April 22, 2018, and the Parties desire to extend and amend the Agreement in accordance with, and subject to the terms of, this Amendment.
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Amendment. The Agreement is amended as of the Amendment Effective Date as follows:
(a) Paragraph 1(a) is amended to extend the Services Term of the Agreement by one calendar year by replacing the phrase "… shall end on the second anniversary of the Effective Date …" in the first sentence of Paragraph 1(a) with "… shall end on the third anniversary of the Effective Date …", such that the Services Term will expire on April 22, 2019.
(b) Paragraph 3(a) is amended by replacing the phrase "… the Company will pay Executive an annual salary of $1,000,000 as compensation for his services to the Company ..." to "… the Company will pay Executive an annual salary of $1,050,000 as compensation for his services to the Company …"
(c) Paragraph 3(b) is amended in its entirety to read as follows:
(b) Annual Incentive. Executive will continue to participate in the Company's Annual Incentive Plan for each fiscal year ending during the Services Term and be eligible to earn an annual incentive bonus based upon the attainment of performance goals established by the Board. Executive's target annual incentive for each fiscal year will be 125% of Executive's Base Salary during such fiscal year, based upon Board-specified levels of performance goals being achieved (the "Target Annual Incentive"). Executive's maximum annual incentive bonus for each fiscal year will be two times Executive's Target Annual Incentive for such fiscal year. The annual incentive bonus will be subject to the terms and conditions of the Company's Annual Incentive Plan or other annual incentive program, on the same terms and conditions that apply to other senior executives generally; provided, however, that with respect to the fiscal year during which Executive's Services Term ends (i.e., 2019), notwithstanding anything contained in the Company's Annual Incentive Plan or this Agreement or otherwise to the contrary, Executive shall be entitled to a Pro Rata portion of his Actual Annual Incentive (both terms "Pro Rata" and "Actual Annual Incentive" having the same meaning as set forth in Paragraph 6(b)(iii) below) for the year in question, which shall be paid to Executive in a lump sum as provided in Paragraph 6(b)(iii) for a Pro Rata Bonus, regardless of whether or not he is employed by the Company on the payment date."
(d) Paragraph 3(c) shall be amended by designating the existing paragraph as subparagraph "(i)" and by adding the following new subparagraphs (ii), (iii) and (iv) to read as follows:
"(ii) For the 2018 fiscal year, Executive will be granted long-term incentive awards on the Amendment Effective Date, in the form of (x) 20% in stock options, (y) 30% in an award of stock-settled restricted stock units and (z) 50% in a performance-based cash unit award, with a total target amount of $5,500,000 in each case subject to the terms and conditions of the Company's 2013 Performance Incentive Plan, as amended (or any successor plan) and applicable award agreements in the form that applies to other senior executives'
2018 long-term incentive awards generally (including with respect to performance goals), and the specific terms and conditions contained in Executive's 2018 long-term incentive award.
(iii) For purposes of subparagraph (ii) above, Executive's long-term incentive award for each such fiscal year shall be payable upon his Qualified Retirement and each such award agreement shall include the following definition of "Qualified Retirement": "Qualified Retirement" means with respect to the Executive, a termination from employment with the Company and all of its direct or indirect, wholly owned subsidiaries, including Navistar, Inc., that occurs for any reason (A) after Executive attains age 62 and (B) on or after the date Executive has completed five (5) or more years of continuous service as a full-time employee.
(iv) For purposes of the 2013 Performance Incentive Plan, as amended (or any successor plan) or any award agreement thereunder issued to Executive during the Services Term, any reference to "Executive Severance Agreement" will be deemed to refer to this Agreement, as amended."
(e) Paragraph 6(a) is amended in its entirety to read as follows:
"(a) In the event Executive's employment and service with the Company terminates for any reason, including due to Executive's death or disability (such date of termination of employment and service, the "Date of Termination"), Executive will be entitled to (i) unpaid Base Salary accrued up to the Date of Termination, (ii) any unpaid, but earned, annual incentive for any completed fiscal year as of the Date of Termination, (iii) the Pro Rata portion of his Actual Annual Incentive for the fiscal year in which his Date of Termination occurs, determined by and paid to Executive, as provided in Paragraph 3(b), (iv) pay for accrued but unused vacation, (v) benefits or compensation as provided under the terms of any employee benefit and compensation agreements or plans applicable to Executive and under which he has a vested right (including any right that vests in connection with the termination of his employment), and (vi) reimbursement for any unreimbursed business expenses to which Executive is entitled to reimbursement under the Company's expense reimbursement policy (collectively, the "Accrued Obligations"). Amounts due to Executive under clauses (i), (ii), (iv), and (vi) shall be paid to Executive in a single lump sum within thirty (30) days after his Date of Termination."
(f) Paragraph 6(d) of the Agreement shall be re-designated as Paragraph 6(e) and a new Paragraph 6(d) shall be inserted immediately after Paragraph 6(c) to read as follows:
"(d) In the event of a Change in Control and Executive's employment is not terminated either by the Company without Cause, or by Executive due to Constructive Termination as provided in Paragraph 6(c), clause (i) or (ii) above, Executive, upon request, will provide assistance to the Company by participating in the transition of management resulting from such Change in Control. The duration of Executive's assistance will not exceed the extended Services Term (i.e., April 22, 2019)."
(g) Paragraph 6(f) is added to the Agreement as follows:
"Following the expiration of the Term of this Agreement, Executive agrees to serve as Executive Chairman of the Board and/or as a senior advisor to the Company for a period of not less than one year. As consideration for Executive’s agreement to serve in such capacities, his compensation will be equal to the cash equivalent of the non-employee director cash and equity retainer and, for the avoidance of doubt, Executive shall continue to vest in any unvested equity awards and performance cash incentives outstanding on the date of his retirement as CEO through the date of his service as Executive Chairman of the Board or as a senior advisor. In the event the Board of Directors chooses not to elect Executive as Executive Chairman of the Board or appoint him as a senior advisor to the Company following his retirement as CEO, or at the conclusion of his service as Executive Chairman of the Board or as a senior advisor to the Company, all unvested equity and cash performance incentives will continue to vest, subject to non-compete and non-solicit covenants.”
(h) Paragraph 20 is amended in its entirety to read as follows:
"20. Legal Fees. The Company will pay the legal fees, up to a maximum of $10,000, incurred by Executive in connection with the negotiation and execution of any amendment to this Agreement, payable upon submission of the billing statement or paid receipt for such services rendered by Executive's counsel."
2. Miscellaneous.
(a) Except as specifically modified in this Amendment, the Agreement shall continue in full force and effect and the Agreement, as amended by this Amendment, is hereby ratified, confirmed and approved.
(b) This Amendment will be governed by and construed in accordance with applicable federal laws and, to the extent not inconsistent therewith or preempted thereby, with the laws of the State of Illinois, including any applicable statutes of limitation, without regard to any otherwise applicable principles of conflicts of laws or choice of law rules (whether of the State of Illinois or any other jurisdiction) that would result in the application of the substantive or procedural rules or law of any other jurisdiction.
(c) This Amendment is binding upon and shall inure to the benefit of the Parties and their respective permitted successors and assigns under the Agreement.
(d) All capitalized terms not defined in this Amendment shall have the same meaning ascribed to those terms in the Agreement, or, in the case of the term "Qualified Retirement", in the 2018 and/or 2019 long-term incentive award provided to Executive.
(e) In the event of any conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall govern and control.
(f) This Amendment may be executed in counterparts (including via facsimile or the electronic exchange of portable document format [PDF] copies), and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.
(g) The Recitals are by this reference incorporated herein and made a part of this Amendment.
[Signature Page Follows]
IN WITNESS WHEREOF, each of the Parties has executed this Amendment, in the case of the Company and NAVISTAR, INC., by a duly authorized officer, on the 16th day of April, 2018.
NAVISTAR INTERNATIONAL CORPORATION
/s/ Curt A. Kramer
By: Curt A. Kramer
Its: Senior Vice President and General Counsel
NAVISTAR, INC.
/s/ Curt A. Kramer
By: Curt A. Kramer
Its: Senior Vice President and General Counsel
EXECUTIVE
/s/ Troy A. Clarke
Troy A. Clarke