Business Context and Reporting Period
This Form 8-K Current Report, filed on January 22, 2010, covers events occurring between September 15, 2009, and November 13, 2009. Graphic Packaging Holding Company and its subsidiary, Graphic Packaging International, Inc., entered into new employment agreements with ten senior executives. The filing addresses Item 1.01 (Entry into a Material Definitive Agreement) and Item 5.02 (Compensatory Arrangements of Certain Officers).
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation structures and employment terms.
Material Changes and Executive Compensation
The Company updated employment agreements for ten executives to ensure compliance with Internal Revenue Code Section 409A and to standardize severance provisions, particularly regarding change in control events. Key terms include:
- Term: Initial one-year term with automatic one-year extensions.
- Base Salary: Salaries were increased by $20,000 effective January 1, 2010, to replace previous perquisite allowances.
- Severance (Termination without Cause/Good Reason): Generally provides one year of base salary and welfare benefits (two years for CEO David W. Scheible), a pro-rata bonus, and up to $25,000 in outplacement services.
- Change in Control: Adds an additional 0.5 years of base salary (one year for the CEO) and a 1.5x multiplier on the target bonus (2x for the CEO) if termination occurs within one year of a change in control.
- Restrictions: Includes one-year non-competition and non-solicitation covenants.
Executive Compensation Summary
| Executive | Position | Base Salary | Target Bonus % |
|---|---|---|---|
| David W. Scheible | President and CEO | $900,000 | 100% |
| Daniel J. Blount | SVP and CFO | $490,000 | 70% |
| Michael P. Doss | SVP, Consumer Packaging | $460,000 | 70% |
| Michael R. Schmal | SVP, Beverage Packaging | $420,000 | 70% |
| Stephen A. Hellrung | SVP, General Counsel | $409,000 | 60% |
| Kristopher L. Dover | SVP, Flexible | $309,500 | 70% |
| Alan Nichols | SVP, Mills | $293,000 | 70% |
| Joseph P. Yost | SVP, Supply Chain | $280,000 | 60% |
| John C. Best | VP, Business Development | $265,000 | 55% |
| Cynthia A. Baerman | SVP, Human Resources | $320,000 | 60% |
Guidance, Outlook, and Risks
The filing does not provide financial guidance, outlook, or management commentary on business operations. The primary risk disclosed relates to the potential financial liability associated with the new severance packages, particularly the enhanced benefits triggered by a change in control or termination without cause. The agreements also impose standard non-competition and non-solicitation risks for the executives.
Investor Verification Checklist
- Verify the total potential cash outflow for severance if a change in control occurs within the next year.
- Confirm the specific performance metrics required to achieve the target bonus percentages listed.
- Review the full text of Exhibits 10.1 through 10.10 for detailed definitions of "Good Reason," "Cause," and "Change in Control."
- Assess the impact of the $20,000 salary increase per executive on the Company's 2010 operating expenses.