Business Context and Reporting Period
This Form 8-K Current Report was filed by Philip Morris International Inc. on February 9, 2012. The filing primarily addresses executive compensation decisions made by the Compensation and Leadership Development Committee and the resignation of a Named Executive Officer.
Key Financial Metrics and Compensation Awards
The filing details specific compensation awards and separation payments rather than corporate financial performance metrics such as revenue or cash flow.
- Deferred Stock Grants (2012): Approved for four executives, vesting on February 18, 2015.
- André Calantzopoulos: 86,810 shares
- Louis C. Camilleri: 189,080 shares
- Matteo L. Pellegrini: 35,290 shares
- Hermann G. Waldemer: 64,940 shares
- 2011 Annual Incentive Compensation (Cash):
- David Bernick: $4,495,117 (CHF 4,100,000)
- André Calantzopoulos: $5,741,470 (CHF 5,236,800)
- Louis C. Camilleri: $8,820,000
- Matteo L. Pellegrini: $2,346,890 (CHF 2,140,600)
- Hermann G. Waldemer: $4,319,698 (CHF 3,940,000)
- Separation Payment (David Bernick): A non-compete payment of $1,589,744 (CHF 1,450,007) payable after a 12-month period.
Material Changes and Executive Departure
Resignation of Senior Vice President and General Counsel: David Bernick informed the Company of his intention to resign, effective June 30, 2012.
- His employment agreement was terminated.
- He will not receive an equity award for 2011 service or pro-rated awards for 2012.
- His previously granted 147,440 shares of deferred stock will vest as provided in the Separation Agreement.
Guidance, Outlook, and Future Programs
The Committee approved formulae for determining maximum award amounts for 2013 equity awards and 2012 incentive compensation, designed to preserve tax deductibility under Section 162(m) of the Internal Revenue Code.
- 2013 Equity Awards Pool: Based on 0.75% of adjusted net earnings. Individual awards are limited to 1 million shares.
- 2012 Incentive Compensation Pool: Based on 0.6% of adjusted net earnings. Individual awards are limited to $12.0 million.
- Allocation Limits: The CEO's maximum award from each pool is limited to one-third of the pool; other covered officers are limited to one-sixth.
- Reporting: Additional compensation details will be provided in the proxy statement for the 2012 Annual Meeting of Shareholders, expected in April 2012.
Investor Verification Checklist
- Verify the vesting schedule and terms of the 147,440 deferred stock shares granted to David Bernick prior to his resignation.
- Confirm the exact definition of "adjusted net earnings" used to calculate the 2013 equity and 2012 incentive pools.
- Review the full Separation Agreement and Release (Exhibit 10.2) for additional covenants or conditions regarding the non-compete payment.
- Monitor the upcoming 2012 Proxy Statement for finalized compensation data and any further executive changes.