Business Context and Reporting Period
This Form 8-K Current Report was filed by Associated Banc-Corp on December 6, 2017, reporting events that occurred on December 5, 2017. The filing addresses corporate governance and executive compensation matters rather than periodic financial results.
Key Financial Metrics
The filing text does not provide a clear value for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on the adoption of new executive compensation agreements.
Material Changes
The Board of Directors terminated the Company's previous Change of Control Plan on October 24, 2017, and adopted a new form of Change of Control Agreement on December 5, 2017. This new agreement covers key executives, including Philip B. Flynn, Christopher J. Del Moral-Niles, John A. Utz, and Randall J. Erickson.
- Effective Date: January 1, 2018.
- Term: Initial three-year term with automatic two-year renewals unless non-renewal notice is given.
- Trigger Mechanism: Benefits are "double trigger," requiring both a Change of Control and a Qualifying Termination (termination without Cause or resignation with Good Reason) within a two-year protected period.
Guidance, Outlook, and Risks
The filing details specific severance benefits payable upon a Qualifying Termination following a Change of Control:
- Salary and Bonus Multiple: Three times the sum of base salary and target bonus for Mr. Flynn; two times for other executives.
- Prorated Bonus: Based on the target bonus in effect at the time of termination.
- Health and Life Insurance: A multiple of monthly premiums (36 months for Mr. Flynn; 24 months for others).
- Retirement Contributions: Maximum employer contributions and accrued benefits assuming continued employment for 36 months (Mr. Flynn) or 24 months (others).
- Tax Treatment: No excise tax gross-up is provided. Payments will be structured to yield the best after-tax outcome for the executive, either by paying the tax or reducing benefits.
- Restrictive Covenants: Includes perpetual confidentiality, mutual non-disparagement, and a six-month restriction on interfering with customers and employees post-termination.
Investor Verification Checklist
- Review Exhibit 10.1 (Form of Change of Control Agreement) for the full legal text and specific definitions of "Cause," "Good Reason," and "Change of Control."
- Verify the specific base salaries and target bonuses for the named executives to calculate potential severance liabilities.
- Confirm the status of the terminated Change of Control Plan to ensure no overlapping obligations exist.
- Assess the impact of the "double trigger" requirement on the company's exposure to severance costs in a merger scenario.