Business Context and Reporting Period
This Form 8-K Current Report, filed by Emerson Electric Co. on November 4, 2005, covers events occurring on November 1, 2005. The filing primarily addresses the voluntary resignation and retirement of James G. Berges as President and Director, and the subsequent appointment of David Farr as President.
Key Financial Metrics
The filing does not report consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics. It focuses exclusively on executive compensation and agreement terms.
- Consulting Fee: $250,000 per year for a two-year term, payable in monthly installments.
- Estimated Additional Benefits: Less than $25,000 per year for leased automobile, financial planning, and club membership.
- Performance Shares: Eligible for a pro-rata (50%) payout of the 2004 Performance Share plan.
- Stock Options: Unvested options automatically vest on the retirement date.
Material Changes
The primary material change is the leadership transition effective November 1, 2005:
- Departure: James G. Berges resigned as President and Director and retired as an employee.
- Appointment: David Farr, Chairman and Chief Executive Officer, was elected President of the Company.
- Agreements: Entry into a letter agreement and consulting contract with Mr. Berges, including non-competition and non-solicitation clauses for five years post-consulting.
Outlook, Risks, and Contingencies
The filing outlines specific contingencies regarding Mr. Berges's compensation:
- Clawback Provisions: If Mr. Berges violates his obligations (e.g., non-competition), he forfeits the performance share award, restricted stock, and supplemental plan benefits. The Company retains the right to recover gains realized from exercised stock options.
- Consulting Scope: Mr. Berges is required to be available for up to 40 days of consulting services in any 12-month period during the two-year term.
Investor Verification Checklist
- Verify the exact terms of the 2004 Performance Share plan to confirm the 50% pro-rata payout calculation.
- Review the attached Exhibits 10.1 and 10.2 for the full text of the letter agreement and consulting contract.
- Confirm the vesting schedule for the two unvested restricted stock awards (October 2007 and October 2010).
- Check the Company's Proxy Statement for the 2005 Annual Meeting to cross-reference disclosed amounts for Mr. Berges.