UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
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 15, 2007
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THE BEAR STEARNS COMPANIES INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware File No. 1-8989 13-3286161
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
383 Madison Avenue, New York, New York 10179
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 272-2000
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Not Applicable
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(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:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| 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 Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On August 5, 2007, Warren Spector resigned from his positions as president
and co-chief operating officer, member of the Executive Committee, member of the
Management and Compensation Committee, member of the Board of Directors of The
Bear Stearns Companies Inc. (the "Company"), and all other officer, director and
committee memberships of the Company and its affiliates. Following his
resignation, Mr. Spector remained as an employee of the Company, with the title
of Senior Managing Director.
On November 15, 2007, the Company entered into an agreement with Mr. Spector to
address the terms of his separation from the Company (the "Agreement"). Under
the Agreement, Mr. Spector confirmed his resignation of officerships,
directorships and committee memberships, except remaining a Senior Managing
Director on August 5, 2007 (the "End Date") and agreed to continue as an
employee of the Company until December 28, 2007 (the "Last Date") with the title
of Senior Managing Director.
The Agreement further provides that in consideration of Mr. Spector's execution
of the Agreement and a general release (the "General Release") in the form
attached to the Agreement, he will receive certain payments and benefits as
follows; provided that Mr. Spector does not revoke the Agreement or the General
Release within the seven day period immediately following the execution of the
Agreement and General Release. Until the Last Date, Mr. Spector will receive
bi-weekly base salary payments based upon an annual base salary of $250,000 and
benefits at the level and type he was receiving before the End Date. For the
purposes of The Bear Stearns Companies Inc. Stock Award Plan, the Compensation
Committee authorized termination without cause treatment for Mr. Spector's stock
options. As a result, all unvested outstanding employee stock options previously
granted to Mr. Spector by the Company will vest on December 28, 2007, provided
that (1) Mr. Spector is an employee in good standing on that date and (2) Mr.
Spector complies with the covenants pertaining to confidentiality,
non-disparagement, cooperation and non-solicitation as described in the
applicable award agreement. Further, providing that Mr. Spector complies with
such covenants, those options which are less than three years old from the grant
date will have an exercise period of the longer of two years from the grant date
or 30 days from the Last Date and for those options that were exercisable on the
Last Date and which are three years or older from the grant date will have an
exercise period of two years from the Last Date. As of November 15, 2007, all of
the unvested options are out-of-the-money, based upon a stock price of $99.94
per share, and therefore the intrinsic value of such options is $0. For the
purposes of The Bear Stearns Companies Inc. Capital Accumulation Plan for Senior
Managing Directors (the "Plan"), the Compensation Committee authorized
termination without cause treatment for Mr. Spector's Capital Accumulation Plan
("CAP") Units granted under the Plan. As a result, all CAP Units and earnings
units under the Plan previously granted to Mr. Spector with respect to which the
vesting date has not occurred prior to the End Date will fully vest on the 180th
day following the Last Date, provided Mr. Spector complies with the terms of the
Agreement and the provisions of the Plan. As of November 15, 2007, the value of
such awards was estimated to be $22,971,709 (229,855 shares), assuming a stock
price of $99.94 per share. All such vested units will be distributed in
accordance with the regular distribution schedule set forth in the Plan. Under
the terms of the Agreement, if Mr. Spector remains with the Company as an
employee through the Last Date, Mr. Spector will be treated as a retiree for the
purposes of Mr. Spector's investments in the Company's private equity "Employee
Funds", except for one of the Employee Funds. As of June 30, 2007, the benefit
to Mr. Spector for receiving retiree treatment under such Employee Funds was
estimated to be $207,761. Mr. Spector will remain subject to all the conditions
of each such Employee Fund's limited
partnership agreement and subscription agreement, including the non-competition
and non-solicitation provisions. Notwithstanding the foregoing, the Company
agreed that it would only enforce the non-competition provisions of such
agreements with regard to a position with a direct competitor of the Company, as
set forth in the Agreement. If Mr. Spector does not comply with the provisions
of such agreements, the Company will be entitled to purchase Mr. Spector's
interests in such Employee Funds at the lower of fair market value or cost plus
interest less distributions (other than distributions for taxes). In the event
that there is a bonus paid under The Bear Stearns Companies Inc. Performance
Compensation Plan to participants who are members of the Executive Committee of
the Company, Mr. Spector will receive a pro-rata bonus from the annual bonus
pool for this group for fiscal year 2007. The Company agreed to distribute or
cause to be distributed to Mr. Spector, in accordance with the terms of the
employee benefit plans that Mr. Spector participated in, including the employee
stock ownership plan, profit sharing, PAYSOP, 401-K and pension plans, Mr.
Spector's accumulated benefits in such plans through the Last Date. The Company
agreed to pay Mr. Spector's attorney's fees in connection with the Agreement up
to a cap of $38,000. Except as otherwise expressly provided in the Agreement,
Mr. Spector will not be entitled to receive any other payments or benefits.
The Company has agreed to continue to employ Mr. Spector's executive secretary
through December 31, 2007 in order to assist Mr. Spector.
During the period that Mr. Spector remains an employee and after the Last Date,
the Company has agreed to indemnify Mr. Spector as set forth under the terms of
the Company's indemnification policy or policies, its certificate of
incorporation and its by-laws. Further, the Company has agreed to provide Mr.
Spector with a standard advancement agreement for Mr. Spector to use if he
requires separate counsel from the Company in connection with any investigation,
arbitration, regulatory matters or litigation as it relates to his activities
and services as an employee.
Under the Agreement, Mr. Spector agreed to cooperate as reasonably requested by
the Company with reasonable notice. Following the Company's guidelines, the
Company will pay all reasonable (non-legal) expenses incurred by Mr. Spector.
Under the Agreement, Mr. Spector agreed that, in addition to any restrictive
covenant that he is subject to pursuant to the terms of any Employee Fund
documents, plan or agreement, for a period of one year after the Last Date, not
to, directly or indirectly, solicit or hire any person who is employed by, was a
consultant or independent contractor to or was being recruited by, the Company.
In addition, Mr. Spector has agreed not to disparage or encourage or induce
others to disparage the Company for a period of one year from the Last Date.
The General Release was executed by Mr. Spector on November 15, 2007 and neither
the Agreement nor the General Release has been revoked as of the date of this
Current Report on Form 8-K.
The Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is
incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
10.1 Agreement and Release dated November 15, 2007 with Warren Spector.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE BEAR STEARNS COMPANIES INC.
By: /s/ Jeffrey M. Farber
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Jeffrey M. Farber
Senior Vice President - Finance, Controller
(Principal Accounting Officer)
Dated: November 21, 2007