Business Context and Reporting Period
Company: Associated Banc-Corp
Filing Type: Form 8-K (Current Report)
Date of Report: September 28, 2011
Reporting Period: Events occurring on September 14, 2011, and September 28, 2011.
Key Financial Metrics
This filing does not report standard financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The report focuses exclusively on corporate governance and executive compensation arrangements.
Material Changes
- TARP Repayment: On September 14, 2011, the Company repurchased all remaining shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, from the U.S. Department of the Treasury. This action terminated the limitations on executive compensation previously imposed by the Troubled Asset Relief Program (TARP).
- Change of Control Plan Amendment: Effective September 28, 2011, the Company amended and restated its Change of Control Plan to align with current market practices and the 2010 Incentive Compensation Plan.
Guidance, Outlook, and Management Commentary
Management commentary is limited to the rationale for amending the Change of Control Plan following the TARP repayment. The Compensation and Benefits Committee reviewed the plan to maintain competitive benefit ranges and enhance consistency with the Incentive Plan. Key amendments include:
- Eligibility: Restricted to the CEO and other officers designated by the CEO (16 total participants), removing 11 employees from eligibility.
- CEO Bonus Structure: Changed from a lump sum of two times the target bonus to three times the target bonus paid in installments over three years.
- Double Trigger: Maintained the requirement for both a change of control and qualifying termination, but reduced the qualifying termination window from three years to two years post-change of control.
- Definitions: Revised definitions of "change of control," "cause," and "good reason" to align with the Incentive Plan.
- Conditions: Added requirements for non-disparagement, non-solicitation, and non-competition agreements. Eliminated the mitigation provision that reduced benefits based on new employment income.
- Tax Provisions: Added a provision regarding "excess parachute payments" under Section 280G of the Internal Revenue Code without providing for tax gross-up payments.
Estimated CEO Benefits: Assuming a separation of employment following a change of control as of September 28, 2011, the estimated maximum benefits for the President and CEO are $4,941,219, comprised of:
- Salary continuation: $3,744,000
- Incentive bonus: $0
- Medical, dental, and life insurance: $39,379
- Accrued vacation: $139,200
- Outplacement benefits: $20,000
- Retirement plan benefits: $998,640
Investor Verification Checklist
- Verify the full text of the "Associated Banc-Corp Change of Control Plan, Restated Effective September 28, 2011" attached as Exhibit 10.1.
- Confirm the specific list of 16 executive officers designated to participate in the amended plan.
- Review the Company's definitive proxy statement on Schedule 14A (filed March 3, 2011) for details on benefits for Named Executive Officers other than the CEO.
- Assess the impact of the TARP repayment on future executive compensation flexibility and potential shareholder dilution or cash outflows.