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) March 26, 2014

 

 

LEGGETT & PLATT, INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

Missouri		001-07845		44-0324630
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
No. 1 Leggett Road, Carthage, MO				64836
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code 417-358-8131

N/A

(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):

 

¨	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.

2014 Award Formula for the Company’s 2014 Key Officers Incentive Plan. On March 26, 2014, the Compensation Committee of the Company’s Board of Directors (the “Committee”) adopted the 2014 Award Formula (the “2014 Award Formula”) for the Company’s 2014 Key Officers Incentive Plan (the “Plan”). The Plan was previously adopted by the Committee at its meeting on February 26, 2014. The Plan was filed March 25, 2014 as Appendix A to the Company’s Proxy Statement. The Plan, and indirectly the 2014 Award Formula, is subject to shareholder approval at the annual meeting of shareholders. If approved, the Plan and the 2014 Award Formula will become effective as of January 1, 2014. If not approved, no awards will be paid pursuant to the Plan or the 2014 Award Formula.

The 2014 Award Formula is applicable to the Company’s executive officers, including the named executive officers listed below. Under the 2014 Award Formula, an executive officer would be eligible to receive a cash award calculated by multiplying his annual salary at the end of the year by a percentage set by the Committee (the “Target Percentage”), then applying the award formula. Corporate Participants and Profit Center Participants have separate award calculations based on factors defined in the 2014 Award Formula as follows:

 

Participant Type		Performance Objectives		Relative Weight
Corporate Participants		Return on Capital Employed (ROCE)			60	%
		Cash Flow			20	%
		Individual Performance Goals*			20	%
Profit Center Participants		Return on Capital Employed (ROCE)			60	%
		Free Cash Flow (FCF)			20	%
		Individual Performance Goals*			20	%

 

*	These awards are established outside the Plan.

Corporate Participants. Awards for Corporate Participants are determined by the Company’s aggregate 2014 financial results. No awards are paid for ROCE achievement below 30% and Cash Flow below $200 million. The maximum payout percentage for ROCE and Cash Flow achievement is capped at 150%. David S. Haffner (Board Chair and Chief Executive Officer), Karl G. Glassman (President and Chief Operating Officer) and Matthew C. Flanigan (Executive Vice President and Chief Financial Officer) are Corporate Participants. Below are the 2014 corporate targets and payout schedule. Payouts will be interpolated for achievement levels falling between those in the schedule. Financial results from acquisitions are excluded from the calculations in the year of acquisition.

2014

Corporate Targets and Payout Schedule

 

ROCE												Cash Flow
Achievement						Payout						Achievement				Payout
Less Than			30.0%				0	%					Less Than   $    200.0 M				0	%
			30.0%				50	%		Threshold			$    200.0 M				50	%
			32.5%				75	%					$    237.5 M				75	%
			35.0%				100	%		Target			$    275.0 M				100	%
			37.5%				125	%					$    312.5 M				125	%
			40.0%				150	%		Maximum			$    350.0 M				150	%

Profit Center Participants. For Profit Center Participants, no awards are paid for achievement below 80% of the ROCE and FCF targets for the applicable profit centers under the executive’s management. The ROCE and FCF payouts are each capped at 150%. Joseph D. Downes, Jr. (Senior Vice President, President – Industrial Materials) and Jack D. Crusa (Senior Vice President, President – Specialized Products) are Profit Center Participants. Below are the 2014 profit center payout schedule and targets for Mr. Downes and Mr. Crusa. Payouts will be interpolated for achievement levels falling between those in the schedule. Financial results for each profit center may include a critical compliance adjustment, ranging from a potential 5% increase for exceptional safety performance to a 20% deduction for critical compliance failures. Financial results from acquisitions are excluded from the calculations in the year of acquisition.

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2014

Profit Center Payout Schedule

 

ROCE / FCF Achievement										Payout
Less Than		80%									0	%
		80%				Threshold					60	%
		90%									80	%
		100%				Target					100	%
		110%									120	%
		120%									140	%
		125%				Maximum					150	%

2014 Profit Center Targets

 

Segment President		ROCE Target				FCF Target
Industrial Materials (Downes)			31.9	%		$	49.1M
Specialized Products (Crusa)			39.6	%		$	80.7M

Individual Performance Goals. An executive’s cash award under the 2014 Award Formula is based, in part, on individual performance goals established outside the 2014 Key Officers Incentive Plan (20% relative weight). The goals for our named executive officers are:

David S. Haffner: Emerging markets expansion, business unit portfolio management;

Karl G. Glassman: Business unit portfolio management, margin enhancement, revenue growth, internal audit compliance, leadership development;

Matthew C. Flanigan: Working capital management, corporate allocations forecasting, information technology initiatives, leadership development;

Joseph D. Downes, Jr.: Divestiture of targeted business, growth and profitability of targeted businesses, working capital management; and

Jack D. Crusa: Expansion and reorganization of targeted businesses, succession planning, purchasing initiatives.

The achievement of the individual performance goals is measured by the following schedule.

Individual Performance Goals Payout Schedule

(1-5 scale)

 

Achievement		Payout
1 – Did not achieve goal			0	%
2 – Partially achieved goal			50	%
3 – Substantially achieved goal			75	%
4 – Fully achieved goal			100	%
5 – Significantly exceeded goal			up to 150	%

The foregoing is only a brief description of the 2014 Award Formula and is qualified in its entirety by such formula which is attached and incorporated by reference as Exhibit 10.1. The definitions of ROCE, Cash Flow and FCF and example calculations are included in the attached 2014 Award Formula.

Base Salaries and Target Percentages set for Named Executive Officers. On March 26, 2014, the Committee increased the annual base salaries and set the Target Percentages for each of the named executive officers, which are shown in the table below. Also attached and incorporated by reference as Exhibit 10.2 is the Company’s Summary Sheet for Executive Cash Compensation.

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Named Executive Officers		2013 Base Salaries				2014 Base Salaries				2013 Target Percentages				2014 Target Percentages
David S. Haffner, Board Chair and Chief Executive Officer		$	1,055,000			$	1,090,000				115	%			115	%
Karl G. Glassman, President and Chief Operating Officer		$	785,000			$	810,000				90	%			90	%
Matthew C. Flanigan, EVP and Chief Financial Officer		$	475,000			$	490,000				80	%			80	%
Joseph D. Downes, Jr., SVP, President – Industrial Materials		$	338,000			$	347,300				50	%			50	%
Jack D. Crusa, SVP, President – Specialized Products		$	332,000			$	342,000				50	%			50	%

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.		Description
10.1*		2014 Award Formula under the Company’s 2014 Key Officers Incentive Plan.
10.2*		Summary Sheet for Executive Cash Compensation.
10.3		The Company’s 2014 Key Officers Incentive Plan, effective as of January 1, 2014, filed March 25, 2014 as Appendix A to the Company’s Proxy Statement, is incorporated by reference. (SEC File No. 001-07845)

 

*	Filed with this Form 8-K.

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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.

 

		LEGGETT & PLATT, INCORPORATED
Date: March 31, 2014		By:		/s/ JOHN G. MOORE
				John G. Moore
				Senior Vice President – Chief Legal & HR Officer and Secretary

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EXHIBIT INDEX

 

Exhibit No.		Description
10.1*		2014 Award Formula under the Company’s 2014 Key Officers Incentive Plan.
10.2*		Summary Sheet for Executive Cash Compensation.
10.3		The Company’s 2014 Key Officers Incentive Plan, effective as of January 1, 2014, filed March 25, 2014 as Appendix A to the Company’s Proxy Statement, is incorporated by reference. (SEC File No. 001-07845)

 

*	Filed with this Form 8-K.

Exhibit 10.1

AWARD FORMULA FOR 2014

LEGGETT & PLATT, INCORPORATED

2014 KEY OFFICERS INCENTIVE PLAN

The 2014 Key Officers Incentive Plan (“Plan”) provides cash Awards to Participants based on the Company’s operating results for the prior year. Capitalized terms not defined in this document have the meaning ascribed under the Plan. There are separate Award Formulas under the Plan for Corporate Participants and Profit Center Participants.

Under both formulas, a Participant’s Award is calculated by reference to the Target Percentage of the Participant’s annual salary at the end of the Year. The Award Formulas and each Participant’s Target Percentage are determined by the Committee no later than 90 days after the beginning of each Year or before 25% of the Performance Period has elapsed.

Participants in the Plan are the executive officers of the Company. The Company has a separate Key Management Incentive Plan for other employees. Awards under the Key Management Incentive Plan are calculated in substantially the same manner as awards under the Plan.

For 2014, Awards under the Plan will be determined by achievement of the following Performance Objectives. Additional awards will be made based on the achievement of Individual Performance Goals, which will be established separately from this Plan and will be wholly independent of Awards under this Plan.

 

Participant Type		Performance Objectives		Relative Weight
Corporate Participants		Return on Capital Employed (ROCE)			60	%
		Cash Flow			20	%
		Individual Performance Goals*			20	%
Profit Center Participants		Return on Capital Employed (ROCE)			60	%
		Free Cash Flow (FCF)			20	%
		Individual Performance Goals*			20	%

 

*	These awards are established outside the Plan.

Award Formula for Corporate Participants

Awards for Corporate Participants are determined by the Company’s aggregate 2014 financial results. Financial results from acquisitions are excluded from calculations in the year of acquisition.

The Performance Objectives for Corporate Participants are calculated as follows:

 

ROCE  =		EBIT
		Net PP&E and Working Capital1, 2

 

1

Quarterly averaging of Net PP&E and Working Capital

2

Working Capital, excluding cash and current maturities of long-term debt, as presented on the Company’s Consolidated Balance Sheets

 

 

1

Change in Working Capital, excluding cash and current maturities of long-term debt, from December 31, 2013 to December 31, 2014, as reflected on the Company’s Consolidated Balance Sheets

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The Committee shall adjust the Performance Objectives for all items of gain, loss or expense for the fiscal year, as determined in accordance with standards established under U.S. Generally Accepted Accounting Principles, (i) from non-cash impairments; (ii) related to loss contingencies identified in Note T to the financial statements in the Company’s 2013 10-K; (iii) that are (a) extraordinary, (b) unusual in nature, or (c) infrequent in occurrence; (iv) related to the disposal of a segment of a business; or (v) related to a change in accounting principle.

Achievement targets and payout percentages for Corporate Participants’ Performance Objectives are set forth below. No Awards are paid for ROCE achievement below 30% and Cash Flow below $200M. The ROCE and Cash Flow payouts are each capped at 150%. Payouts will be interpolated for achievement levels falling between those set out in the schedule.

2014

Corporate Targets and Payout Schedule

 

ROCE										Cash Flow
Achievement				Payout						Achievement				Payout
	< 30.0%				0	%					<$200.0M				0	%
	30.0%				50	%		Threshold			$200.0M				50	%
	32.5%				75	%					$237.5M				75	%
	35.0%				100	%		Target			$275.0M				100	%
	37.5%				125	%					$312.5M				125	%
	40.0%				150	%		Maximum			$350.0M				150	%

The Award is calculated by multiplying a Participant’s year-end salary, Target Percentage, the relative weight of the Performance Objective, and the payout percentage. The sample calculation set forth below assumes a Participant with a base salary of $250,000 and a Target Percentage of 50%. If the Company achieved 35% ROCE and $200M Cash Flow, the Participant’s Award under the Plan (which does not include the Individual Performance Goals), would be $87,500.

 

Performance Objective		Participant’s Base Salary				Participant’s Target %				Relative Weight				Payout Percentage				Award
ROCE		$	250,000				50	%			60	%			100	%		$	75,000
Cash Flow		$	250,000				50	%			20	%			50	%		$	12,500
Total Award																		$	87,500

Award Formula for Profit Center Participants

Profit Center Participants manage numerous Profit Centers. The Company sets a ROCE target and a FCF target for each Profit Center every Year. The achievement of those Profit Center targets “rolls up” to an aggregate achievement for all the operations under a Profit Center Participant’s management. Financial results for each Profit Center may include a critical compliance adjustment, ranging from a potential 5% increase for exceptional safety performance to a 20% deduction for critical compliance failures. Financial results from acquisitions are excluded from calculations in the year of acquisition.

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The Performance Objectives for Profit Center Participants are calculated as follows:

 

ROCE  =		EBIT
		Net PP&E + Working Capital1, 2

 

1

Monthly averaging of Net PP&E and Working Capital, adjusted for currency effects.

2

Working Capital excludes cash and current maturities of long-term debt and balance sheet items not directly related to on-going Profit Center activity, such as interest receivable and payable, income taxes receivable and payable, current deferred tax assets and liabilities, and dividends payable.

 

 

1

Change in Working Capital (adjusted for currency effects) from December 31, 2013 to December 31, 2014 excludes cash and current maturities of long-term debt and balance sheet items not directly related to on-going Profit Center activity, such as interest receivable and payable, income taxes receivable and payable, current deferred tax assets and liabilities, and dividends payable.

The Committee shall adjust the Performance Objectives for all items of gain, loss or expense for the fiscal year, as determined in accordance with standards established under U.S. Generally Accepted Accounting Principles, (i) from non-cash impairments; (ii) related to loss contingencies identified in Note T to the financial statements in the Company’s 2013 10-K; (iii) that are (a) extraordinary, (b) unusual in nature, or (c) infrequent in occurrence; (iv) related to the disposal of a segment of a business; or (v) related to a change in accounting principle.

Achievement targets and payout percentages for Profit Center Participants are set forth below. No Awards are paid for achievement below 80% of the aggregate ROCE and FCF targets for the Profit Centers under the Participant’s management. The ROCE and FCF payouts are each capped at 150%. The payout will be interpolated for achievement levels falling between those set out in the schedule.

2014

Profit Center Targets

 

Segment President		ROCE Target				FCF Target
Residential			30.6	%		$	125.6M
Commercial			24.0	%		$	34.2M
Industrial			31.9	%		$	49.1M
Specialized			39.6	%		$	80.7M

2014

Profit Center Payout Schedule

 

Achievement						Payout
	<80%						0	%
	80%			Threshold			60	%
	90%						80	%
	100%			Target			100	%
	110%						120	%
	120%						140	%
	125%			Maximum			150	%

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The Award is calculated by multiplying a Participant’s year-end salary, Target Percentage, the relative weight of the Performance Objective, and the payout percentage. The sample calculation below assumes a Participant with a base salary of $250,000 and a Target Percentage of 50%. If the Participant’s Profit Centers achieved 100% of the aggregate ROCE target and 90% of the aggregate FCF target, as adjusted for compliance, the Participant’s Award under the Plan (which does not include the Individual Performance Goals), would be $95,000.

 

Performance Objective		Participant’s Base Salary				Participant’s Target %				Relative Weight				Payout Percentage				Award
ROCE		$	250,000				50	%			60	%			100	%		$	75,000
FCF		$	250,000				50	%			20	%			80	%		$	20,000
Total Award																		$	95,000

Exhibit 10.2

SUMMARY SHEET FOR EXECUTIVE CASH COMPENSATION

The following table sets forth annual base salaries provided to the Company’s principal executive officer, principal financial officer and other named executive officers in 2013 and the 2014 base salaries approved by the Compensation Committee of the Board of Directors (“Committee”) on March 26, 2014.

 

Named Executive Officers		2013 Base Salaries				2014 Base Salaries
David S. Haffner, Board Chair and Chief Executive Officer		$	1,055,000			$	1,090,000
Karl G. Glassman, President and Chief Operating Officer		$	785,000			$	810,000
Matthew C. Flanigan, EVP and Chief Financial Officer		$	475,000			$	490,000
Joseph D. Downes, Jr., SVP, President – Industrial Materials		$	338,000			$	347,300
Jack D. Crusa, SVP, President – Specialized Products		$	332,000			$	342,000

The executive officers will be eligible to receive a cash award under the Company’s 2014 Key Officers Incentive Plan (filed March 25, 2014 as Appendix A to the Company’s Proxy Statement) (the “Plan”) in accordance with the 2014 Award Formula (filed March 31, 2014 as Exhibit 10.1 to the Company’s Form 8-K). Both the Plan, and indirectly the 2014 Award Formula, are subject to shareholder approval at the annual meeting of shareholders. If approved, the Plan and 2014 Award Formula will become effective as of January 1, 2014. If not approved, no awards will be paid pursuant to the Plan or the 2014 Award Formula.

An executive’s cash award is calculated by multiplying his annual salary at the end of the year by a percentage (“Target Percentage”) set by the Committee, then applying an award formula adopted by the Committee for that year. The Target Percentages in 2013 and 2014 for the principal executive officer, principal financial officer and other named executive officers are shown in the following table.

 

Named Executive Officers		2013 Target Percentages				2014 Target Percentages
David S. Haffner, Board Chair and Chief Executive Officer			115	%			115	%
Karl G. Glassman, President and Chief Operating Officer			90	%			90	%
Matthew C. Flanigan, EVP and Chief Financial Officer			80	%			80	%
Joseph D. Downes, Jr., SVP, President – Industrial Materials			50	%			50	%
Jack D. Crusa, SVP, President – Specialized Products			50	%			50	%

Individual Performance Goals. An executive’s cash award under the 2014 Award Formula is based, in part, on individual performance goals established outside the 2014 Key Officers Incentive Plan (20% relative weight). The goals for our named executive officers are:

David S. Haffner: Emerging markets expansion, business unit portfolio management;

Karl G. Glassman: Business unit portfolio management, margin enhancement, revenue growth, internal audit compliance, leadership development;

Matthew C. Flanigan: Working capital management, corporate allocations forecasting, information technology initiatives, leadership development;

Joseph D. Downes, Jr.: Divestiture of targeted business, growth and profitability of targeted businesses, working capital management; and

Jack D. Crusa: Expansion and reorganization of targeted businesses, succession planning, purchasing initiatives.

The achievement of the individual performance goals is measured by the following schedule.

Individual Performance Goals Payout Schedule (1-5 scale)

 

Achievement		Payout
1 – Did not achieve goal			0	%
2 – Partially achieved goal			50	%
3 – Substantially achieved goal			75	%
4 – Fully achieved goal			100	%
5 – Significantly exceeded goal			up to 150	%