UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 31, 2008
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DST SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation)
1-14036 43-1581814
(Commission File Number) (IRS Employer Identification No.)
333 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
(816) 435-1000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report).
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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.):
[ ] 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))
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 31, 2008, DST Systems, Inc. (the "Company") entered into
amendments to employment agreements with certain named executive officers, and
on January 1, 2009, the Company entered into amendments to a deferred fee plan
for independent directors and to certain employee benefit plans covering its
Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer.
The amendments reflect technical changes necessary to comply with section 409A
of the Internal Revenue Code of 1986, as amended ("Section 409A"), and
incorporate certain other changes as described below. Any capitalized term not
defined herein shall have the meaning in the applicable employment agreement or
plan.
Section 409A-Related Amendments to the Employment Agreements and Plans
The changes made to the employment agreements and plans as a result of
Section 409A relate to recent regulatory guidance governing the federal income
taxation of certain deferred compensation. The following employment agreements
and plans were amended to comply with Section 409A:
o Agreements (the "Employment Agreements") between:
o The Company and Thomas McDonnell, dated November 30, 2005;
o The Company and Thomas McCullough, dated November 30, 2005;
o The Company and Kenneth Hager, dated April 1, 1992, as amended
October 9, 1995;
o DST Technologies, Inc. and Thomas Abraham, dated February 12,
2007;
o DST Systems, Inc. Directors' Deferred Fee Plan, as amended and
restated as of February 26, 2002 (the "Directors' Deferred Fee Plan");
and
o DST Systems, Inc. Supplemental Executive Retirement Plan, as amended
and restated as of May 14, 2002.
Most of the changes made to the Employment Agreements and the above plans
were merely technical changes and were not material amendments. The following
paragraphs describe a few of the Section 409A-related amendments that could be
deemed material.
The Employment Agreements were modified to provide that any severance
payments thereunder upon a termination of employment would be made in a lump sum
instead of in equal installments over the applicable period. Further, the
allowance for certain cash payments of Specified Benefits upon a Change in
Control (Section 5.3 of the Employment Agreement for Mr. Abraham and Section
7(c) of the other Employment Agreements) was deleted.
The Directors' Deferred Fee Plan was modified to remove discretion by the
Board of Directors of the Company as to the form of payment (lump sum versus
installment), instead providing that each participant may elect the form of
payment within Section 409A-appropriate timeframes, and to clarify that payment
of benefits cannot be accelerated upon plan termination.
Other Amendments to the Employment Agreements and Plans
In addition to the changes required to comply with Section 409A, the
Employment Agreements with fixed expiration dates (all Employment Agreements
other than Mr. Hager's) were amended to provide for automatically renewing
one-year periods. Mr. Hager's Employment Agreement was amended to conform in
certain respects with the Employment Agreements of Messrs. McDonnell, McCullough
and Abraham. Specifically, the definition of a "Change in Control" in Mr.
Hager's Employment Agreement was replaced with the definition used by the
Company in other employment agreements and employee benefit plans. The amendment
also deleted present value discounting of Change in Control termination payments
and clarified that incentive payments upon a termination by the Company or a
resignation for good reason during the Three-Year Period or, if applicable, the
Extended Period subsequent to a Change in Control would be based on Target goal
achievement.
The DST Systems, Inc. Executive Plan, amended as of September 30, 2007 (the
"Executive Plan"), was amended to provide that the Chairperson of the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has the authority to determine whether payment of benefits under
the Executive Plan will be made in a lump sum or in installment payments. Prior
to this amendment, Messrs. McDonnell and Hager had the sole authority to make
this determination.
The foregoing descriptions of the amendments to the Employment Agreements
and plans do not purport to be complete and are qualified in their entirety by
reference to the full texts of the amended Employment Agreements and plans,
copies of which are attached hereto as Exhibits 10.1 through 10.6 and are
incorporated herein by reference. The Executive Plan amendment was by resolution
of the Committee, and is, therefore, not filed as an exhibit hereto.
Other Compensation Events
Messrs. McDonnell and McCullough have each suggested, and the Committee has
approved, a decrease for 2009 in the current Base Salary payable under their
Employment Agreements. The sole purpose for this decrease in compensation is to
appropriately reflect their individual support of, and contribution to, various
payroll cost containment and expense reduction initiatives undertaken by the
Company in light of the current economic downturn. For 2009, Mr. McDonnell's
current Base Salary will be reduced by $100,000 to $650,000 and Mr. McCullough's
current Base Salary will be reduced by $50,000 to $525,000. In determining any
incentive to be paid to such officers under the Company's Annual Incentive
Program if the Company achieves goals set by the Committee for 2009, the
incentive opportunity levels will continue to be applied to the Base Salary of
each such officer as is set forth in his Employment Agreement and prior to the
2009 reduction. After 2009, the Base Salaries of Messrs. McDonnell and
McCullough will be determined by the Committee in accordance with their
Employment Agreements.
ITEM 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
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10.1 Employment Agreement, as amended and restated, between the
Company and Thomas McDonnell
10.2 Employment Agreement, as amended and restated, between the
Company and Thomas McCullough
10.3 Employment Agreement, as amended and restated, between the
Company and Kenneth Hager
10.4 Employment Agreement, as amended and restated, between DST
Technologies, Inc. and Thomas Abraham
10.5 DST Systems, Inc. Directors' Deferred Fee Plan, as amended
and restated
10.6 DST Systems, Inc. Supplemental Executive Retirement Plan, as
amended and restated
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.
DST SYSTEMS, INC.
Date: January 7, 2009 By: /s/ Kenneth V. Hager
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Name: Kenneth V. Hager
Title: Vice President, Chief Financial
Officer and Treasurer
EXHIBIT INDEX
Exhibit Number Description
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10.1 Employment Agreement, as amended and restated, between the
Company and Thomas McDonnell
10.2 Employment Agreement, as amended and restated, between the
Company and Thomas McCullough
10.3 Employment Agreement, as amended and restated, between the
Company and Kenneth Hager
10.4 Employment Agreement, as amended and restated, between DST
Technologies, Inc. and Thomas Abraham
10.5 DST Systems, Inc. Directors' Deferred Fee Plan, as amended
and restated
10.6 DST Systems, Inc. Supplemental Executive Retirement Plan, as
amended and restated