Business Context and Reporting Period
Company: The Bank of New York Mellon Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: July 13, 2010
Subject: Termination of existing change in control agreements for executive officers and adoption of a new Executive Severance Plan and shareholder approval policy.
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 corporate governance and executive compensation arrangements.
Material Changes
- Termination of Agreements: The Corporation notified executive officers (including Robert P. Kelly, Thomas P. Gibbons, Gerald L. Hassell, and Steven G. Elliott) of its intent to terminate existing change in control severance agreements.
- New Severance Plan: On July 13, 2010, the Corporation adopted "The Bank of New York Mellon Corporation Executive Severance Plan." Participation requires executives to waive existing agreements.
- Shareholder Approval Policy: On July 12, 2010, the Board adopted a policy requiring shareholder approval for any future senior officer severance arrangement exceeding 2.99 times the sum of annual base salary and target bonus.
Guidance, Outlook, and Management Commentary
Severance Plan Details:
- Termination without Cause: Eligible participants receive 2x base salary (or prior year if greater), pro-rata annual bonus, 2 years of benefit continuation, and 1 year of outplacement services.
- Change in Control: If terminated without cause or for "good reason" within 2 years of a change in control, benefits increase to 2x the sum of base salary and target annual bonus, plus pro-rata target bonus, 2 years of benefit continuation, and 1 year of outplacement.
- Excise Tax Reduction: Payments are reduced if necessary to avoid the excise tax under Section 4999 of the Internal Revenue Code, provided the reduction benefits the participant after-tax.
Policy Constraints: The new policy applies only to future arrangements. The Corporation determined the new Executive Severance Plan does not require shareholder approval under the terms of the Policy.
Investor Verification Checklist
- Verify the specific terms of the new Executive Severance Plan (Exhibit 99.1) to confirm eligibility criteria and benefit calculations.
- Confirm which named executive officers have agreed to waive their existing change in control agreements to participate in the new Plan.
- Review the "Policy Regarding Shareholder Approval Of Future Senior Officer Severance Arrangements" (Exhibit 99.3) to understand the 2.99x threshold for future compensation deals.
- Monitor future filings for any amendments to the new Policy or the Severance Plan.