Business Context and Reporting Period
This Form 8-K filing by Emerson Electric Co. reports on events occurring on December 7, 2015. The filing specifically addresses the retirement of Charles A. Peters, Senior Executive Vice President and Director, and the subsequent compensatory arrangements agreed upon by the Company.
Key Financial Metrics
This filing does not contain general financial performance metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The only financial data provided relates to the specific compensation package for the departing executive:
- Consulting Fee: $55,000 per month until September 30, 2016, or earlier re-employment.
- Pension Benefit Increase: An annual benefit increase of $45,000 commencing at age 65, with a present value of $470,000.
- Other Benefits: Continued coverage for leased automobile, club dues, financial planning, and life insurance policies through September 30, 2016.
Material Changes
The primary material change is the departure of a senior officer and director. There are no reported changes to the Company's financial position, operations, or capital structure in this document.
Outlook, Risks, and Unusual Items
Management Commentary and Agreements:
- Equity Treatment: Mr. Peters retains eligibility for the 2013 performance share payout but forfeits the 2016 award. Unvested stock options will vest immediately, and vested options remain exercisable for five years. Restricted stock awards continue to vest per original terms.
- Restrictive Covenants: Mr. Peters is subject to a five-year non-compete and non-solicitation agreement regarding the Company and its affiliates.
- Clawback Provisions: If Mr. Peters breaches the agreement, he must forfeit all future payments and repay 50% of the economic value of benefits already received as liquidated damages.
Investor Verification Checklist
- Verify the total potential cost of the consulting arrangement ($55,000/month) against the Company's Q4 and FY2016 expense forecasts.
- Confirm the impact of the immediate vesting of unexpired options on the Company's share count and dilution.
- Review the Company's 2013 performance share program objectives to assess the likelihood of the payout to Mr. Peters.
- Monitor the appointment of a successor to the Senior Executive Vice President role and Board seat.