Kaman Corporation (NYSE:KAMN) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
Item 5.02(f) – Compensatory Arrangements of Certain Officers –
LTIP Payouts
LTIP Payouts
As reported in the definitive proxy statement on Schedule 14A
(the Proxy Statement) relating to the 2017 Annual Meeting of
Shareholders of Kaman Corporation (the Company) filed with the
Securities and Exchange Commission on March 3, 2017, the
Personnel Compensation Committee (the PC Committee) of the
Companys Board of Directors previously granted cash-based
long-term incentive plan awards (each, an LTIP Award and,
collectively, the LTIP Awards) under the Kaman Corporation 2013
Management Incentive Plan (the Plan) to each of the Companys
then-current executive officers, including the Companys named
executive officers (as defined in Instruction 4 to Item 5.02 of
Form 8-K) and Mr. Steven J. Smidler, Executive Vice President of
the Company and President of Kaman Industrial Technologies
Corporation (whose 2016 compensation was provided as a voluntary
supplemental disclosure in the Proxy Statement), all of which
were scheduled to be settled during 2017 after a sufficient
number of Russell 2000 companies reported their earnings for the
year ended December 31, 2016. On June 6, 2017, the PC Committee
approved the settlement of the LTIP Awards and authorized the
resulting payments (each, an LTIP Payout and, collectively, the
LTIP Payouts) in respect thereof. The LTIP Payouts are reported
here in accordance with Instruction 1 to Item 402(c)(2)(iii) and
(iv) of Regulation S-K. Reference is hereby made to the Proxy
Statement, including the Compensation Discussion and Analysis set
forth therein, for additional information about the compensation
paid to the Companys named executive officers and Mr. Smidler.
(the Proxy Statement) relating to the 2017 Annual Meeting of
Shareholders of Kaman Corporation (the Company) filed with the
Securities and Exchange Commission on March 3, 2017, the
Personnel Compensation Committee (the PC Committee) of the
Companys Board of Directors previously granted cash-based
long-term incentive plan awards (each, an LTIP Award and,
collectively, the LTIP Awards) under the Kaman Corporation 2013
Management Incentive Plan (the Plan) to each of the Companys
then-current executive officers, including the Companys named
executive officers (as defined in Instruction 4 to Item 5.02 of
Form 8-K) and Mr. Steven J. Smidler, Executive Vice President of
the Company and President of Kaman Industrial Technologies
Corporation (whose 2016 compensation was provided as a voluntary
supplemental disclosure in the Proxy Statement), all of which
were scheduled to be settled during 2017 after a sufficient
number of Russell 2000 companies reported their earnings for the
year ended December 31, 2016. On June 6, 2017, the PC Committee
approved the settlement of the LTIP Awards and authorized the
resulting payments (each, an LTIP Payout and, collectively, the
LTIP Payouts) in respect thereof. The LTIP Payouts are reported
here in accordance with Instruction 1 to Item 402(c)(2)(iii) and
(iv) of Regulation S-K. Reference is hereby made to the Proxy
Statement, including the Compensation Discussion and Analysis set
forth therein, for additional information about the compensation
paid to the Companys named executive officers and Mr. Smidler.
The LTIP Awards related to the three-year performance period
ended December 31, 2016. The LTIP Awards provided for payouts
based on the Companys adjusted financial performance during the
relevant period as compared to the financial performance of the
companies comprising the Russell 2000 index for the same
performance period. The LTIP Awards utilized the following
performance factors and weightings: (i) 33% of each such LTIP
Award was based on average annual compound growth in earnings per
share, (ii) 33% of each such LTIP Award was based on three-year
average return on investment, and (iii) 34% of each such LTIP
Award was based on three-year average total return to
shareholders.
ended December 31, 2016. The LTIP Awards provided for payouts
based on the Companys adjusted financial performance during the
relevant period as compared to the financial performance of the
companies comprising the Russell 2000 index for the same
performance period. The LTIP Awards utilized the following
performance factors and weightings: (i) 33% of each such LTIP
Award was based on average annual compound growth in earnings per
share, (ii) 33% of each such LTIP Award was based on three-year
average return on investment, and (iii) 34% of each such LTIP
Award was based on three-year average total return to
shareholders.
The achievement or satisfaction of the performance measures
comprising the LTIP Awards was based on the adjusted financial
performance of the Company after giving effect to the inclusion
or exclusion of the following modifications approved by the PC
Committee at the time of grant, whichever produced the higher
award: (i) changes to generally accepted accounting standards
required by the Financial Accounting Standards Board; (ii)
cumulative effects of accounting changes, including but not
limited to revenue recognition rules and operating lease rules,
and the effects of tax law changes; (iii) the dilutive effect on
earnings per share that arises as a result of any additional
shares used in the calculation of diluted earnings per share as a
result of any outstanding convertible debt securities and any
related bond hedge and warrant transactions; (iv) any change in
outstanding shares of common stock of the Company by reason of
any stock dividend or split, stock repurchase, reorganization,
recapitalization, merger, consolidation, spin-off, combination,
or exchange of shares or other similar corporate change, or any
distributions to common stock shareholders other than regular
cash dividends; (v) investments, charges or costs associated with
acquisitions, divestitures or restructurings of the Company or
any joint ventures, including but not limited to Kineco Kaman
Composites – India Pvt. Ltd; (vi) capital expenditures,
depreciation expense and project expense related to developing
and implementing ERP systems; and (vii) charges or costs
associated with legacy environmental activities, including, but
not limited to, Bloomfield Connecticut (the former Navy
property), Moosup Connecticut, New Hartford Connecticut (the
former Kaman Music property), Darwen and Manchester United
Kingdom (Kaman U.K. Composites), and J.M Mills Landfill Superfund
Site.
comprising the LTIP Awards was based on the adjusted financial
performance of the Company after giving effect to the inclusion
or exclusion of the following modifications approved by the PC
Committee at the time of grant, whichever produced the higher
award: (i) changes to generally accepted accounting standards
required by the Financial Accounting Standards Board; (ii)
cumulative effects of accounting changes, including but not
limited to revenue recognition rules and operating lease rules,
and the effects of tax law changes; (iii) the dilutive effect on
earnings per share that arises as a result of any additional
shares used in the calculation of diluted earnings per share as a
result of any outstanding convertible debt securities and any
related bond hedge and warrant transactions; (iv) any change in
outstanding shares of common stock of the Company by reason of
any stock dividend or split, stock repurchase, reorganization,
recapitalization, merger, consolidation, spin-off, combination,
or exchange of shares or other similar corporate change, or any
distributions to common stock shareholders other than regular
cash dividends; (v) investments, charges or costs associated with
acquisitions, divestitures or restructurings of the Company or
any joint ventures, including but not limited to Kineco Kaman
Composites – India Pvt. Ltd; (vi) capital expenditures,
depreciation expense and project expense related to developing
and implementing ERP systems; and (vii) charges or costs
associated with legacy environmental activities, including, but
not limited to, Bloomfield Connecticut (the former Navy
property), Moosup Connecticut, New Hartford Connecticut (the
former Kaman Music property), Darwen and Manchester United
Kingdom (Kaman U.K. Composites), and J.M Mills Landfill Superfund
Site.
For each performance factor, Company financial performance below
the 1st quartile resulted in no award payment; financial
performance at the 1st quartile resulted in an award payment at
25% of target; financial performance at the median resulted in an
award payment at 50% of target; and financial performance at the
top of, or above, the 3rd quartile resulted in a maximum payment
of 200% of target. Interpolation was used to determine payments
for financial performance between the quartiles.
the 1st quartile resulted in no award payment; financial
performance at the 1st quartile resulted in an award payment at
25% of target; financial performance at the median resulted in an
award payment at 50% of target; and financial performance at the
top of, or above, the 3rd quartile resulted in a maximum payment
of 200% of target. Interpolation was used to determine payments
for financial performance between the quartiles.
The following table sets forth the calculation of the percentage
of the target award earned for each of the LTIP Awards held by
Messrs. Keating, Starr, Steiner, Smidler, Galla and Lisle:
of the target award earned for each of the LTIP Awards held by
Messrs. Keating, Starr, Steiner, Smidler, Galla and Lisle:
THREE-YEAR (2014-2016) LTIP AWARD CALCULATION
|
Modified
Company Results vs. Russell 2000
|
Percentage of Factor Earned
|
Factor Weighting
|
Percentage of Target
Award Earned
|
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|
Average Compounded Annual Growth in EPS
|
51.7%
|
107%
|
33%
|
35.3%
|
|||
|
Average Annual Return on Invested Capital
|
75%
|
200%
|
33%
|
66.0%
|
|||
|
Total Return to Shareholders
|
53.4%
|
113.4%
|
34%
|
38.6%
|
|||
|
Total Percentage of Target Award Earned
|
139.9%
|
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|
(1)
|
The modified results shown in the table reflect the
following adjustments to the Companys reported financial results: Net earnings and EPS (excluding the dilutive impact of convertible debt) for 2016, 2015 and 2014 were adjusted by disregarding $8.424 million, $9.492 million and $9.925 million, respectively, to reflect the elimination of acquisition and restructuring related costs, environmental costs related to the Moosup facility sold in 2014, ERP depreciation and project expense, acquisition net earnings/loss and investments, and the loss and related foreign exchange impact resulting from the divestiture of the Companys Mexican operation. These adjustments were also made when determining average annual return on invested capital, as well as disregarding $3.946 million, $209.067 million and $9.128 million of acquisition and ERP capital investments made during 2016, 2015 and 2014, respectively. |
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_______________
The following table shows the resulting individual LTIP Payouts
earned by each of the Companys named executive officers and Mr.
Smidler, as well as an updated total compensation amount for the
fiscal year ended December 31, 2016:
earned by each of the Companys named executive officers and Mr.
Smidler, as well as an updated total compensation amount for the
fiscal year ended December 31, 2016:
2016 LTIP AWARD PAYOUTS
|
Year-End Base Salary at Time of Grant
|
Target Award Percentage
|
Final Award Performance Factor
|
LTIP Payout(1)
|
Updated 2016 Total Compensation
|
||
|
Neal J. Keating
|
$900,000
|
275%
|
139.9%
|
$3,462,525
|
$5,743,581
|
|
|
Robert D. Starr
|
$375,000
|
140%
|
139.9%
|
$734,475
|
$1,556,531
|
|
|
Gregory L. Steiner
|
$422,300
|
150%
|
139.9%
|
$886,197
|
$1,658,075
|
|
|
Steven J. Smidler(2)
|
$355,350
|
150%
|
139.9%
|
$745,702
|
$1,232,800
|
|
|
Ronald M. Galla(3)
|
$357,313
|
90%
|
139.9%
|
$449,893
|
$1,117,238
|
|
|
Shawn G. Lisle
|
$330,000
|
90%
|
139.9%
|
$415,503
|
$1,017,933
|
|
|
(1)
|
Amounts shown exclude the value of any shares of
Company stock that may be payable in respect of stock-based LTIP Awards granted to Messrs. Keating and Steiner as an additional inducement to remain in the employ of the Company until attaining 62 years of age. On June 6, 2017, the Committee determined the number of shares payable in respect of such awards for the three-year performance period ended December 31, 2016, but the shares will not vest or be delivered to either recipient until his 62nd birthday. The number of shares payable in respect of each such stock -based LTIP Award is as follows: Mr. Keating – 8,026 shares and Mr. Steiner – 1,506 shares. |
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|
(2)
|
Not a named executive officer. As disclosed in the
Proxy Statement, the Company provided voluntary supplemental disclosure of Mr. Smidlers 2016 compensation because he is responsible for the management of the Companys largest operating segment and his compensation has been disclosed in the Companys proxy statements for the past several years. As disclosed in the Proxy Statement, we also anticipated that he would be among our most highly compensated executive officers after payment of the LTIP Payouts. |
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|
(3)
|
Retired from the Company effective as of January 3,
2017. |
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_______________
As disclosed in the Proxy Statement, the foregoing LTIP Payouts
were not set forth in the Summary Compensation Table included in
the Proxy Statement, because it was not possible to compare the
Companys financial performance to that of the companies
comprising the Russell 2000 index when the Proxy Statement was
filed, as information for only a small percentage of index
companies was available at that time. Sufficient data became
available to enable the PC Committee to make its determination at
its June 6, 2017 meeting.
were not set forth in the Summary Compensation Table included in
the Proxy Statement, because it was not possible to compare the
Companys financial performance to that of the companies
comprising the Russell 2000 index when the Proxy Statement was
filed, as information for only a small percentage of index
companies was available at that time. Sufficient data became
available to enable the PC Committee to make its determination at
its June 6, 2017 meeting.
Each of the foregoing LTIP Payouts was paid in cash, as each
officer was in compliance with the stock ownership guideline
applicable to such officer at the time of payment.
officer was in compliance with the stock ownership guideline
applicable to such officer at the time of payment.
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Change in Fiscal Year.
Change in Fiscal Year.
At the Board of Directors meeting held on June 6, 2017, the Board
of Directors adopted Amended and Restated Bylaws (as in effect
prior to the amendment, the Initial Restated Bylaws, and as
amended, the Amended Restated Bylaws) of the Company containing
certain clarifying changes and technical amendments to reflect
updates in the Connecticut Business Corporation Act since the
effective date of the Initial Restated Bylaws. The Amended
Restated Bylaws became effective immediately.
of Directors adopted Amended and Restated Bylaws (as in effect
prior to the amendment, the Initial Restated Bylaws, and as
amended, the Amended Restated Bylaws) of the Company containing
certain clarifying changes and technical amendments to reflect
updates in the Connecticut Business Corporation Act since the
effective date of the Initial Restated Bylaws. The Amended
Restated Bylaws became effective immediately.
The foregoing description is qualified in its entirety by the
Amended Restated Bylaws, a copy of which is filed as Exhibit 3.1
and incorporated herein by reference.
Amended Restated Bylaws, a copy of which is filed as Exhibit 3.1
and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following exhibits are filed as part of this report:
|
3.1
|
Amended and Restated Bylaws of the Company
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About Kaman Corporation (NYSE:KAMN)
Kaman Corporation conducts business in the aerospace and distribution markets. The Company operates through two segments: Distribution and Aerospace. Its Distribution segment is a power transmission, motion control, electrical and automation, and fluid power industrial distributor. It provides products, including bearings, mechanical and electrical power transmission, fluid power, motion control, automation, material handling components, electrical control and power distribution, and maintenance, repair and overhaul (MRO) supplies to a spectrum of industrial markets. Its Aerospace segment produces and markets aircraft bearings and components; super precision, miniature ball bearings; safe and arming solutions; subcontract helicopter work; restoration, modification and support of its SH-2G Super Seasprite maritime helicopters; manufacture and support of its K-MAX manned and unmanned medium-to-heavy lift helicopters, and engineering design, analysis and certification services.