Business Context and Reporting Period
This Form 8-K Current Report was filed by Philip Morris International Inc. on February 7, 2013. The filing addresses Item 5.02 regarding the departure of directors or certain officers, the election of directors, the appointment of certain officers, and compensatory arrangements of certain officers. Specifically, it details compensation decisions made by the Compensation and Leadership Development Committee on February 7, 2013.
Key Financial Metrics
The filing does not provide consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics for the company. The financial data presented is limited to specific executive compensation awards and the formulae used to calculate future incentive pools based on adjusted net earnings.
Material Changes and Compensation Awards
The Committee approved the following awards on February 7, 2013:
- Deferred Stock Grants: Shares were granted under the 2012 Performance Incentive Plan, vesting on February 17, 2016.
- André Calantzopoulos: 74,260 shares
- Louis C. Camilleri: 163,990 shares
- Jacek Olczak: 42,080 shares
- Matteo L. Pellegrini: 27,650 shares
- 2012 Annual Incentive Compensation (Cash):
- André Calantzopoulos: CHF 3,655,000 (approx. $4,016,040 USD)
- Louis C. Camilleri: CHF 7,500,000
- Jacek Olczak: CHF 2,000,000 (approx. $2,197,560 USD)
- Matteo L. Pellegrini: CHF 1,489,000 (approx. $1,636,080 USD)
- Hermann G. Waldemer: CHF 1,330,000 (approx. $1,461,380 USD). This award was pro-rated through July 31, 2012, due to his retirement.
- Base Salaries: No changes were made to the base salaries of Messrs. Calantzopoulos, Camilleri, Olczak, or Pellegrini from 2012 levels.
Guidance, Outlook, and Future Programs
The Committee approved formulae for determining maximum award amounts for equity awards issued in 2014 (for 2013 performance) and for 2013 incentive compensation awards. These formulae are designed to preserve tax deductibility under Section 162(m) of the Internal Revenue Code.
- 2014 Equity Awards Pool: Based on 0.75% of the Company's adjusted net earnings. Individual awards are capped at 500,000 shares.
- 2013 Incentive Compensation Pool: Based on 0.6% of 2013 adjusted net earnings. Individual awards are capped at $12.0 million (cash plus fair market value of stock).
- Allocation Limits: The Chairman and CEO's maximum award from each pool is limited to one-third of the pool. Remaining covered officers are eligible for a maximum of one-sixth of the pool.
- Reporting: Additional compensation details will be provided in the proxy statement for the 2013 Annual Meeting of Shareholders, expected in March 2013.
Investor Verification Checklist
- Verify the final calculation of the 2013 adjusted net earnings to determine the actual size of the 2014 equity and 2013 cash incentive pools.
- Review the upcoming 2013 Annual Meeting proxy statement for full details on executive compensation.
- Confirm the pro-rated nature of Hermann G. Waldemer's award in relation to his separation agreement filed on May 10, 2012.
- Monitor the vesting schedule for the deferred stock grants, which is set for February 17, 2016.