Business Context and Reporting Period
This Form 8-K Current Report was filed by Air Products & Chemicals, Inc. on January 5, 2010. The filing addresses Item 8.01 (Other Events) to provide additional information regarding the Company's Long Term Incentive Plan (the "Plan") in response to a request from the SEC. This information supplements the Proxy Statement filed on December 10, 2009, for the 2010 Annual Meeting of Shareholders scheduled for January 28, 2010.
Key Financial Metrics and Plan Details
The filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. Instead, it details specific equity compensation data as of the fiscal year-end on September 30, 2009:
- Outstanding Options: 7,208,358 stock options granted under the Plan were outstanding in excess of six years.
- Weighted Average Exercise Price: $39.68 for the options outstanding over six years.
- Available Shares: 3,629,182 previously authorized shares were available for awards under the Plan.
- Full Value Awards Capacity: Due to the cumulative 20% limit on full value awards, 2,757,837 of the available shares could be used for such awards.
- Stock Price History: The NYSE closing price on September 30, 2009, was $77.58.
Material Changes and Shareholder Return
The filing provides a historical view of the Company's five-year total shareholder return as of September 30, 2009:
- Fiscal Year 2005: 3.56%
- Fiscal Year 2006: 22.90%
- Fiscal Year 2007: 50.05%
- Fiscal Year 2008: (28.56%)
- Fiscal Year 2009: 16.65%
- Cumulative FY2005-2009: 59.15%
No material changes to the Company's core business operations or financial condition are reported in this specific filing; the focus is strictly on the mechanics and history of the equity incentive plan.
Guidance, Outlook, and Risks
The filing contains no forward-looking guidance, management commentary on future operations, or discussion of general business risks. It does, however, clarify the vesting schedules for different employee groups:
- Senior Management: Options vest in one-third tranches on each of the first three anniversaries of the grant date.
- Nonmanagement Employees: Options (now discontinued) vested on the third anniversary of the grant date.
- Nonemployee Directors: Options (now discontinued) vested on the six-month anniversary of the grant date.
Important Facts for Investor Verification
- Verify the total number of shares available for future awards (3,629,182) and the portion eligible for full value awards (2,757,837) to assess potential dilution.
- Review the specific grant dates and exercise prices of the 7.2 million options outstanding for over six years to understand the intrinsic value relative to the current stock price.
- Confirm the details of the 20% cumulative limit on full value awards and how it impacts future compensation strategy.
- Note that this filing is a supplement to the Proxy Statement and does not contain standard quarterly or annual financial performance data.