UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 26, 2007
Kennametal Inc.
(Exact name of registrant as specified in its charter)
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Pennsylvania
(State or other jurisdiction
of incorporation)
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1-5318
(Commission File Number)
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25-0900168
(IRS Employer
Identification No.) |
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World Headquarters
1600 Technology Way
P.O. Box 231
Latrobe, Pennsylvania
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15650-0231
(Zip code) |
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Registrant’s telephone number, including area code:
(724) 539-5000
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers; Compensatory Arrangements of Certain Officers.
(b) Retirement of Stanley B. Duzy
Effective as of November 30, 2007, Stanley B. Duzy, Chief Administrative Officer of Kennametal
Inc. (the “Company”), retired from service.
(e) Adoption of Kennametal Inc. 2008 Strategic Transformational Equity Program
On November 26, 2007, the Compensation Committee of the Board of Directors (the “Committee”)
of the Company approved, adopted and otherwise ratified a new long-term, one-time program under the
Kennametal Inc. Stock and Incentive Plan of 2002 called the 2008 Strategic Transformational Equity
Program (the “Program”), and the form of award agreement thereunder.
The Program is designed to propel the Company to superior levels of performance that will
provide a significant return to the Company’s shareholders. The Program directly aligns executive
compensation opportunities for participants with the interests of the shareholders by providing an
opportunity for premium compensation if the Company achieves superior financial performance
throughout the “Performance Period” (defined below). The
Program also supports the retention of
the key employees who have been selected as participants.
Each participant will be awarded a certain maximum number of stock units under the Program
(the “Units”). Each Unit represents a contingent right to receive one share of capital stock of the
Company, to the extent such Unit is earned and becomes payable pursuant to the terms of the
Program. No dividend or voting rights attach to the Units. In general, Units can be earned at
certain measurement dates during the four-year period beginning on October 1, 2007 and ending on
September 30, 2011 (the “Performance Period”) with thirty five percent (35%) of the total number of
Units which a participant can earn based on the Company’s total shareholder return at such
measurement dates and sixty five percent (65%) of the total number of Units which a participant can
earn based on the Company’s cumulative adjusted earnings per share on the same measurement dates
(these conditions are referred to herein as the “Performance Conditions”). The Performance
Conditions for the Performance Period were approved and adopted by the Committee on November 26,
2007.
In order for the Performance Conditions to be fully satisfied, which would allow participants
to earn the maximum number of Units under the Program, the Company’s adjusted earnings per share
and current stock price would have to more than double by the end of the Performance Period. If the
Performance Conditions are not satisfied at least at threshold levels, then no Units will be
earned. The Program participants do have the opportunity to “earn and bank” a portion of their
Units during the Performance Period at two specified interim measurement dates (September 30th of
each of 2009 and 2010). If certain thresholds of adjusted earnings per share and total shareholder
return are satisfied on those interim measurement dates, a Program participant may “earn and bank”
up to 35% of the maximum number of Units subject to the award. The payment of any Units earned
under the Program, including any “earned and banked” Units, would be subject to the condition that
the participant is employed by the Company on the payment date, subject to certain limited
exceptions (such as death and disability) as described below and in the Program documents.
After the end of the Performance Period, the Committee will certify in writing the extent to
which the Performance Conditions and any other material terms of the Program have been achieved.
Any Units earned by a participant will be settled and paid in shares of capital stock of the
Company. In the event of a Change in Control, any Units “earned and banked” as of the most recently
completed measurement date will be distributed on the closing date of the Change in Control
transaction as capital stock of the Company, or at the discretion of the Committee, in cash or
other property.
Notwithstanding the foregoing, a participant’s Units will be forfeited and cancelled, whether
or not payable and without payment by the Company, in the event (i) a participant’s employment with
Company or any affiliate terminates prior to the applicable payment date, for any reason, including
retirement, other than (x) death or disability of the participant or (y) involuntary termination of
the participant by the Company without cause, or (ii) a participant breaches the confidentiality,
non-competition or non-solicitation provisions of the Program. If a
participant’s employment with the Company or any affiliate is terminated due to death or
disability or involuntarily without cause by the Company during the Performance Period, such
participant will be entitled to a portion of the Units, as determined in accordance with the
provisions of the Program. The Committee may elect to waive the forfeiture and cancellation of
Units that have been “earned and banked” in the event of a participant’s retirement from the
Company.
Unit Awards under the Program
The Committee granted and approved, with an effective grant date of December 1, 2007, the
following awards to the Company’s named executive officers: (i) for Carlos M. Cardoso, the
Company’s President and Chief Executive Officer and a member of the Company’s Board of Directors,
an award equal to that number of Units having a value of
$15.0 million on the grant date, and (ii) for
Frank P. Simpkins, the Company’s Vice President and Chief Financial Officer, an award equal to that
number of Units having a value of $2.5 million on the grant date. Awards were also made to 10 other key employees of the
Company or its affiliates in an aggregate amount equal to that number of Units having a value of
$14.5 million on the grant date. An additional $5.25 million of value under the Program remains
available for the Committee to grant to up to 3 additional key employees. The actual number of
Units granted to each participant will be based on the fair market value of the capital stock of
the Company on the date of grant, December 1, 2007. The number of Units represented by the awards
set forth above are the maximum amounts that may be earned by the named executive officers or other
key employees under the Program if the Performance Conditions are satisfied at the highest level.
If, at the end of the Performance Period, a certain minimum targeted total shareholder return
and/or adjusted earnings per share are met, but the maximum Performance Conditions are not
satisfied, the participants will be entitled to earn a portion of their awarded Units. No Units
will be earned if the minimum targeted Performance Conditions are not satisfied.
Each of the Unit awards listed above is subject to the terms and conditions of the Plan
(including the Performance Conditions), the Program and the related Award Agreement. As provided
under the Plan, the Unit awards will be appropriately adjusted to reflect the effect of the 2-for-1
stock split to be effected by the Company on December 18, 2007.
The Program document and the form of Award Agreement will be filed as exhibits to the
Company’s next Quarterly Report on Form 10-Q and the descriptions set forth herein are qualified in
their entirety by the complete documents.