Unassociated Document
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): June 1, 2010
Chemtura
Corporation
(Exact
name of registrant as specified in its charter)
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Delaware
(State
or other jurisdiction
of
incorporation)
|
|
1-15339
(Commission
file number)
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52-2183153
(IRS
employer identification
number)
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1818
Market Street, Suite 3700, Philadelphia, Pennsylvania
199
Benson Road, Middlebury, Connecticut
(Address
of principal executive offices)
|
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19103
06749
(Zip
Code)
|
(203)
573-2000
(Registrant's
telephone number, including area code)
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):
¨ 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)
Compensatory Arrangements of Certain Officers.
On June
1, 2010, the Organization, Compensation & Governance Committee (the
“Committee”) of the Board of Directors (the “Board”) of Chemtura Corporation
adopted the 2010 Chemtura Corporation Management Incentive Plan (the “2010
MIP”). The 2010 MIP is an annual performance-based cash incentive program
authorized pursuant to the 2005 Chemtura Corporation Short-Term Incentive Plan
and established by Order of the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”), dated May 18, 2010.
The 2010
MIP provides each participant, including executive officers, with an opportunity
to earn cash compensation in the form of an annual cash incentive award (the
“MIP Award”) based on the attainment of pre-established performance goals.
Participants in the 2010 MIP fall into one of four groups: Executive
Participants, Executive Vice Presidents of Performance and Engineered Products
(“Division Participants”), Function Participants and Business
Participants. Some participants may be allocated or split between function
and business or multiple business units depending on their positions. Each
MIP participant is assigned an incentive opportunity expressed as a percentage
of base pay (the “Target Percentage”). A participant’s final MIP Award
payment is calculated by multiplying the Target Percentage by the applicable
award percentage based on the actual results achieved for the applicable
performance goal, and may range from 0% up to a maximum of 200% of the Target
Percentage. That figure is then subject to adjustment up or down based on
the Company’s or assigned Division’s or Business Unit’s safety performance over
the performance period, as determined by reference to the Company’s or assigned
Division’s or Business Unit’s Total Recordable Case Rate (“TRCR”).
Recordable cases refer to recordable injuries in the workplace. The TRCR,
as defined by OSHA, is calculated by multiplying the number of recordable cases
by 200,000 and dividing that number by the number of labor hours at the
Company. The Committee has the discretion to further adjust each
participant’s MIP Award up or down based on the assessment of any personal,
function or other performance it determines should be considered.
The 2010
MIP Target Percentages established by the Board for Craig A. Rogerson, Chairman,
President and CEO, and by the Committee for Stephen C. Forsyth, Executive Vice
President and Chief Financial Officer, Billie S. Flaherty, Senior Vice
President, General Counsel & Secretary and Kevin V. Mahoney, Senior Vice
President and Corporate Controller, are 100%, 70%, 50% and 40%,
respectively.
Cash
awards under the 2010 MIP for Executive Participants are based upon the
achievement of consolidated earnings before interest, taxes, depreciation
expense and amortization expense, and adjusted for certain items as described in
the 2010 MIP (“Consolidated EBITDA”), Consolidated Days Sales Outstanding
(“DSO”) and Consolidated Days Cost in Inventory (“DCI”). Consolidated
EBITDA was established by the Committee as a performance metric to incentivize
management to improve cash flow and to meet or exceed the financial covenants in
the Company’s Amended and Restated DIP Credit Agreement. DSO and DCI are
formulas that measure the time it takes to convert working capital into
cash. DCI measures the average number of days that it takes to turn
inventory into sales. DSO measures the average number of days that it
takes to collect receivables after revenue has been recognized. The lower
the DSO and DCI, the more efficient the Company is managing its working
capital. DSO and DCI were established by the Committee as performance
metrics to incentivize management to improve the Company’s working
capital.
Cash
Awards under the 2010 MIP for Executive Participants are based on the
achievement of Consolidated EBITDA (weighted 70%), DSO (weighted 15%) and DCI
(weighted 15%). Cash awards under the 2010 MIP for Division Participants
are based on the achievement of Consolidated EBITDA (weighted 28%), DSO
(weighted 6%), DCI (weighted 6%), Division EBITDA (weighted 42%), Division DSO
(weighted 9%) and Division DCI (weighted 9%). Cash awards under the 2010
MIP for Business Participants are based on the achievement of Business Unit
EBITDA (weighted 70%), Business Unit DSO (weighted 15%) and Business Unit DCI
(weighted 15%). Cash awards under the 2010 MIP for Function Participants
are based on the achievement of Consolidated EBITDA (weighted 50%), DSO
(weighted 10%), DCI (weighted 10%) and Function Goals (weighted 30%). The
2010 MIP opportunity for Messrs. Rogerson, Forsyth, Mahoney and Ms. Flaherty are
based upon Executive Participant performance goals.
The
Committee approved threshold, target and maximum Consolidated, Division and
Business Unit EBITDA, DSO and DCI performance goals. For Executive and
Function Participants, there will be no payout under the 2010 MIP unless
threshold performance under the Consolidated EBITDA performance metric is
achieved. For Division Participants, there will be no payout under the
2010 MIP unless the thresholds for Consolidated EBITDA and Division EBITDA
performance metrics are achieved. For Business Participants, there will no
payout under the 2010 MIP unless the thresholds for Consolidated EBITDA and
Business Unit EBITDA performance metrics are achieved. Once performance
above the minimum threshold level is met for Consolidated EBITDA for Executive
and Function Participants, Consolidated EBITDA and Division EBITDA for Division
Participants and Consolidated EBITDA and Business Unit EBITDA for Business
Participants, the 2010 MIP is funded from 1% to 200% depending on the level of
achievement of the applicable performance goal compared to a payout
scale.
On June
1, 2010, the Committee also adopted the 2010 Emergence Incentive Plan (the “2010
EIP”). The 2010 EIP, which was established by Order of the Bankruptcy
Court, dated May 18, 2010, provides the opportunity for participants to earn an
award that will be granted upon the Company’s emergence from Chapter 11 in the
form of restricted stock units and/or stock options with time-based vesting or
in another form of consideration. The purpose of the 2010 EIP is to
motivate and incentivize key executives and employees, aligning their interests
with those of the Company’s stakeholders, maximize the value of the Company’s
Chapter 11 estate and reward exceptional performance through and beyond the
company’s emergence from Chapter 11. The number of employees included in
the 2010 EIP and the size of the award pool is based upon specific Consolidated
EBITDA levels achieved during the twelve month period ending December 31,
2010. The 2010 EIP also provides for an award pool valued at approximately
$750,000 that the Committee and/or the Company can utilize, at its discretion,
for new hires and promotions during the pendency of the Chapter 11 cases.
The 2010 EIP is currently unfunded and will be funded only following the later
of the emergence from Chapter 11 or December 31, 2010 to the specified level
associated with the 2010 Consolidated EBITDA performance achieved.
On June
1, 2010, the following values, determined at the time of grant, were established
by the Board for Mr. Rogerson and by the Committee for Messrs. Forsyth, Mahoney
and Ms. Flaherty for any award made under the 2010 EIP upon the Company’s
emergence from Chapter 11:
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Craig.
A. Rogerson
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$ |
2,500,000 |
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Stephen
C. Forsyth
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|
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625,000 |
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Billie
S. Flaherty
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350,000 |
|
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Kevin
V. Mahoney
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225,000 |
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As
previously disclosed, on July 27, 2009, the Committee adopted the 2009 Emergence
Incentive Plan (the “2009 EIP”). The 2009 EIP provided the opportunity for
participants to earn an award that will be granted upon the Company’s emergence
from Chapter 11 in the form of restricted stock units and/or stock options with
time-based vesting or in another form of consideration. The 2009 EIP also
provided that the number of employees included in the 2009 EIP and the size of
the award pool was based upon specific Consolidated EBITDA levels achieved
during the twelve month period immediately preceding the Company’s emergence
form Chapter 11. On June 1, 2010, the Committee also adopted an amendment
to the Consolidated EBITDA measurement period under the 2009 EIP from twelve
months trailing Consolidated EBITDA from emergence from Chapter 11 to twelve
months trailing Consolidated EBITDA ending March 31, 2010 (the “2009 EIP
Amendment”). The 2009 EIP Amendment was established by Order of the
Bankruptcy Court, dated May 18, 2010.
Signatures
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.
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Chemtura Corporation
(Registrant)
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By:
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/s/ Billie S. Flaherty
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Name:
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Billie
S. Flaherty
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Title:
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SVP,
General Counsel &
Secretary
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