SEC Filing | Leggett & Platt

LEGGETT & PLATT, INCORPORATED

Date: March 26, 2018

/s/ SCOTT S. DOUGLAS

Scott S. Douglas

Senior Vice President –

General Counsel & Secretary

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Form 8-K

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 21, 2018

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Adoption of 2018 Award Formula under the Company’s 2014 Key Officers Incentive Plan

On March 21, 2018, the Compensation Committee (the “Committee”) adopted the 2018 Award Formula (the “2018 KOIP Award Formula”) under the Company’s 2014 Key Officers Incentive Plan (the “KOIP”). The 2018 KOIP Award Formula is applicable to the Company’s executive officers, including the named executive officers listed below. Under the 2018 KOIP Award Formula, an executive officer is eligible to receive a cash award calculated by multiplying his annual base 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 2018 KOIP Award Formula as follows:


Participant Type	Performance Objectives	Relative Weight
Corporate Participants¹	Return on Capital Employed (ROCE)		60	%
(Glassman, Flanigan & Douglas)	Cash Flow		20	%
	Individual Performance Goals²		20	%
Profit Center Participants³	Return on Capital Employed (ROCE)		60	%
(Davis & Dolloff)	Free Cash Flow (FCF)		20	%
	Individual Performance Goals²		20	%

¹	Mr. Douglas is included in this disclosure because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for the 2018 Annual Meeting of Shareholders.

²	Individual Performance Goals are established outside the Plan, as described below.

³	As previously reported, Jack D. Crusa retired as of December 31, 2017 and, therefore, will not participate in the KOIP in 2018.

Corporate Participants. Karl G. Glassman (President & Chief Executive Officer), Matthew C. Flanigan (Executive Vice President – Chief Financial Officer) and Scott S. Douglas (Senior Vice President – General Counsel & Secretary) are Corporate Participants. Awards for Corporate Participants are determined by the Company’s aggregate 2018 financial results. No awards are paid for ROCE achievement below 38% and Cash Flow below $325 million. The maximum payout percentage for ROCE and Cash Flow achievement is capped at 150%.

Below are the 2018 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. Financial results from divestitures will be included in the calculations; however, the Performance Objective targets relating to the divested businesses will be prorated to reflect only that portion of the year prior to the divestiture. Financial results from businesses classified as discontinued operations will be included in the calculations.

2018

Corporate Targets and Payout Schedule


ROCE			Cash Flow
Achievement	Payout		Achievement	Payout
< 38.0%	0%		<$325M	0%
38.0%	50%	Threshold	$325M	50%
41.5%	75%		$362.5M	75%
45.0%	100%	Target	$400M	100%
48.5%	125%		$435.5M	125%
52.0%	150%	Maximum	$475M	150%

Profit Center Participants. Perry E. Davis (Executive Vice President, President – Residential Products & Industrial Products) and J. Mitchell Dolloff (Executive Vice President, President – Specialized Products & Furniture Products) are 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%.

Below are the 2018 Profit Center Payout Schedule and Targets for Mr. Davis and Mr. Dolloff, including the weighting of each segment. 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. Financial results from divestitures will be included in the calculations; however, the Performance Objective targets relating to the divested businesses will be prorated to reflect only the portion of the year prior to the divestiture. Financial results from businesses classified as discontinued operations will be included in the calculations.


2018 Profit Center Payout Schedule					2018 Profit Center Targets by Segment
ROCE /FCF Achievement		Payout			Segment	ROCE Target			FCF Target		Relative Weight
<80%			0	%	Residential Products (Davis)		33.9	%	$	169.1M		85	%
80%	Threshold		60	%	Industrial Products (Davis)		24.0	%	$	44.3M		15	%
90%			80	%	Specialized Products (Dolloff)		53.5	%	$	124.3M		60	%
100%	Target		100	%	Furniture Products (Dolloff)		37.7	%	$	84.7M		40	%
110%			120	%
120%			140	%
125%	Maximum		150	%

Mr. Davis will have 85% of his Award based on the Performance Objectives for the Residential Products segment and 15% based on the Performance Objectives for the Industrial Products segment. Mr. Dolloff will have 60% of his Award based on the Performance Objectives for the Specialized Products segment and 40% based on the Performance Objectives for the Furniture Products segment.

2018 Base Salaries and Target Percentages for Named Executive Officers

As previously reported, on November 6, 2017, the Committee set the base salaries and Target Percentages for 2018 for each of the named executive officers.


Named Executive Officers	2018 Base Salary		2018 KOIP Target Percentage
Karl G. Glassman, President and CEO	$	1,225,000		120	%
Matthew C. Flanigan, EVP and CFO	$	572,000		80	%
Perry E. Davis, EVP, President – Residential Products & Industrial Products	$	512,000		80	%
J. Mitchell Dolloff, EVP, President – Specialized Products & Furniture Products	$	512,000		80	%
Scott S. Douglas – SVP, General Counsel & Secretary¹	$	380,000		50	%
Jack D. Crusa, SVP – Operations (through 12/31/2017)²		N/A		N/A

¹	Mr. Douglas is included in this disclosure because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for the 2018 Annual Meeting of Shareholders.

²	As previously reported, Jack D. Crusa retired as of December 31, 2017 and, therefore, will not receive a salary or participate in the KOIP in 2018.

2018 Individual Performance Goals for Named Executive Officers

The 2018 KOIP Award Formula recognizes that a portion of each executive’s cash award is based, in part, on Individual Performance Goals (the “IPGs”) established outside the KOIP (20% relative weight). As previously reported, on November 6, 2017, the Committee adopted the 2018 IPGs for our named executive officers as follows:

Karl G. Glassman: Implementation of growth strategy and succession planning;

Matthew C. Flanigan: Implementation of growth strategy, succession planning and financial partner initiatives;

Perry E. Davis: Supply chain and growth initiatives and succession planning;

J. Mitchell Dolloff: Implementation of growth strategy, succession planning and efficiency initiatives;

Scott S. Douglas¹: Implementation of growth strategy and succession planning; and

Jack D. Crusa²: Mr. Crusa was not assigned IPGs for 2018.

¹	Mr. Douglas is included in this disclosure because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for the 2018 Annual Meeting of Shareholders.

²	As previously reported, Mr. Crusa retired as of December 31, 2017. As such Mr. Crusa will not have IPGs in 2018.

The achievement of the IPGs 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 2018 KOIP 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 a sample calculation are included in the attached 2018 KOIP Award Formula. Also attached and incorporated by reference as Exhibit 10.2 is the Company’s Summary Sheet of Executive Cash Compensation regarding each executive’s 2018 base salary, Target Percentage and IPGs.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

EXHIBIT INDEX


Exhibit No.		Description

10.1*		2018 Award Formula under the Company’s 2014 Key Officers Incentive Plan

10.2*		Summary Sheet of Executive Cash Compensation

10.3		The Company’s 2014 Key Officers Incentive Plan, effective 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)

*	Denotes filed herewith.

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.

Exhibit 10.1 2018 Award Formula under the 2014 Key Officers Incentive Plan

Exhibit 10.1

AWARD FORMULA FOR 2018

LEGGETT & PLATT, INCORPORATED

2014 KEY OFFICERS INCENTIVE PLAN

The 2014 Key Officers Incentive Plan (the “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 Compensation Plan for other employees. Awards under the Key Management Incentive Compensation Plan are calculated in substantially the same manner as awards under the Plan.

For 2018, 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

The Performance Objectives for Corporate Participants are calculated as follows:


		ROCE =		Earnings Before Interest and Taxes (EBIT)
		ROCE =		Net Property Plant and Equipment (PP&E) + Working Capital^1,2

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 December 31, 2018 Consolidated Balance Sheet


		Cash Flow =		Earnings Before Interest Taxes Depreciation and Amortization (EBITDA) ± Change in Working Capital¹+ Non-Cash Impairments – Capital Expenditures

¹	Change in Working Capital, excluding cash and current maturities of long-term debt, from December 31, 2017 to December 31, 2018, as reflected on the Company’s Consolidated Balance Sheets

Awards for Corporate Participants are determined by the Company’s aggregate 2018 financial results. Financial results from acquisitions are excluded from calculations in the year of acquisition. Financial results from businesses divested during the year will be included in the calculations; however, the Performance Objective targets relating to the divested businesses will be prorated to reflect only that portion of the year prior to the divestiture. Financial results from businesses classified as discontinued operations will be included in the calculations. Financial results will exclude (i) certain currency and hedging-related gains and losses, (ii) gains and losses from asset disposals, and (iii) items that are outside the scope of the Company’s core, on-going business activities.

Performance Objectives shall be adjusted for all items of gain, loss or expense for the fiscal year, as determined in accordance with standards established under Generally Accepted Accounting Principles, (i) from non-cash impairments; (ii) related to loss contingencies identified in footnotes to the financial statements in the Company’s 2017 10-K; (iii) related to the disposal of a segment of a business; or (iv) 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 38% and Cash Flow below $325 million. 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.

2018

Corporate Targets and Payout Schedule


ROCE			Cash Flow
Achievement	Payout		Achievement	Payout
< 38.0%	0%		<$325M	0%
38.0%	50%	Threshold	$325M	50%
41.5%	75%		$362.5M	75%
45.0%	100%	Target	$400M	100%
48.5%	125%		$435.5M	125%
52.0%	150%	Maximum	$475M	150%

Award Formula for Profit Center Participants

Profit Center Participants manage numerous Profit Centers. The Company sets a ROCE target and a Free Cash Flow (FCF) target for each Profit Center every Year which aggregate to the Segment level.

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


		ROCE =		EBIT
		ROCE =		Net PP&E + Working Capital^{1, 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.


		FCF =		EBITDA (adjusted for currency effects) ± Change in Working Capital¹ + Non-Cash Impairments – Capital Expenditures

Change in Working Capital from December 31, 2017 to December 31, 2018 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 tax receivable and payable, current deferred taxes assets and liabilities, and dividends payable.

Financial results from acquisitions are excluded from calculations in the year of acquisition. Financial results from businesses divested during the year will be included in the calculations; however, the Performance Objective targets relating to the divested businesses will be prorated to reflect only that portion of the year prior to the divestiture. Financial results from businesses classified as discontinued operations will be included in the calculations. Financial results will exclude (i) results from non-operating branches, (ii) certain currency and hedging-related gains and losses, (iii) gains and losses from asset disposals, (iv) items that are outside the scope of the Company’s core, on-going business activities or relating to any other special events or change in business conditions, and (v) the impact of corporate allocations.

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.

Achievement targets and payout percentages for Profit Center Participants are set forth below. No Awards are paid for achievement below 80% of the ROCE and FCF targets. 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.

2018

Profit Center Targets by Segment


Segment	ROCE Target	FCF Target
Residential Products	33.9%		$169.1M
Industrial Products	24.0%		$44.3M
Specialized Products	53.5%		$124.3M
Furniture Products	37.7%		$84.7M

2018

Profit Center Payout Schedule


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

The President—Residential Products & Industrial Products will have 85% of his Award based upon the Performance Objectives for Residential Products and 15% based upon the Performance Objectives for Industrial Products. The President—Specialized Products & Furniture Products will have 60% of his Award based upon the Performance Objectives for Specialized Products and 40% based upon the Performance Objectives for Furniture Products.

Sample Calculation

For Corporate and Profit Center Participants, the Award is calculated by multiplying the Participant’s salary, Target Percentage, the relative weight of the Performance Objective, and the payout percentage for each Performance Objective. The sample calculation below assumes a Participant with a base salary of $500,000, a Target Percentage of 80%, a ROCE payout of 100%, and Cash Flow/FCF payout of 80%:


Performance Objective	Participant’s Base Salary		Participant’s Target %			Relative Weight			Payout Percentage			Award
ROCE	$	500,000		80	%		60	%		100	%	$	240,000
Cash Flow/FCF	$	500,000		80	%		20	%		80	%	$	64,000

Total Award												$	304,000

Exhibit 10.2 Summary Sheet of Executive Cash Compensation

Exhibit 10.2

SUMMARY SHEET OF EXECUTIVE CASH COMPENSATION

This Summary Sheet is being updated to reflect the adoption by the Company’s Compensation Committee (the “Committee”), on March 21, 2018, of the 2018 Award Formula under the Key Officers Incentive Plan (“KOIP”), as described below.

As previously reported, 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 2017 and as adopted for 2018 by the Committee on November 6, 2017.


Named Executive Officers	2017 Base Salary		2018 Base Salary
Karl G. Glassman, President and CEO	$	1,175,000	$	1,225,000
Matthew C. Flanigan, EVP and CFO	$	550,000	$	572,000
Perry E. Davis, EVP, President - Residential Products & Industrial Products	$	500,000	$	512,000
J. Mitchell Dolloff, EVP, President - Specialized Products & Furniture Products	$	500,000	$	512,000
Scott S. Douglas, SVP - General Counsel & Secretary¹	$	330,000	$	380,000
Jack D. Crusa, SVP - Operations (through 12/31/2017)²	$	152,000		N/A

¹	Mr. Douglas’ base salaries are included in this disclosure because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for the 2018 Annual Shareholders Meeting.

Mr. Crusa retired as of December 31, 2017. As part of Mr. Crusa’s retirement transition, he continued to receive an annual base salary of $380,000 until April 2, 2017 when such rate was reduced to $190,000. His salary rate was further reduced to $152,000 on July 9, 2017. He will not receive a salary in 2018.

Except as noted below, the named executive officers are eligible to receive an annual cash incentive under the Company’s 2014 KOIP (filed March 25, 2014 as Appendix A to the Company’s Proxy Statement) in accordance with the 2018 KOIP Award Formula (adopted March 21, 2018 and filed March 26, 2018 as Exhibit 10.1 to the Company’s Form 8-K). Each executive’s cash award is calculated by multiplying his annual base salary at the end of the KOIP plan year by a percentage set by the Committee (the “Target Percentage”), then applying the award formula adopted by the Committee for that year. Corporate Participants and Profit Center Participants have separate award calculations based on factors defined in the 2018 KOIP Award Formula. These factors include the achievement of Return on Capital Employed (60% relative weight), Cash Flow (for Glassman, Flanigan and Douglas) and Free Cash Flow (for Davis and Dolloff) each at 20% relative weight, and Individual Performance Goals established outside the KOIP (20% relative weight). As previously reported, the Target Percentages in 2017, and as adopted for 2018 by the Committee on November 6, 2017, for the principal executive officer, principal financial officer, and other named executive officers are shown in the following table.


Named Executive Officers	2017 KOIP Target Percentage			2018 KOIP Target Percentage
Karl G. Glassman, President and CEO		120	%		120	%
Matthew C. Flanigan, EVP and CFO		80	%		80	%
Perry E. Davis, EVP, President - Residential Products & Industrial Products		80	%		80	%
J. Mitchell Dolloff, EVP, President - Specialized Products & Furniture Products		80	%		80	%
Scott S. Douglas, SVP - General Counsel & Secretary¹		50	%		50	%
Jack D. Crusa, SVP - Operations (through 12/31/2017)²		N/A			N/A

¹	Mr. Douglas’ Target Percentages are included in this disclosure because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for its 2018 Annual Shareholders Meeting.

Mr. Crusa retired as of December 31, 2017. As determined in January 2017, as part of Mr. Crusa’s retirement transition, he participated, in 2017, in the Company’s Key Management Incentive Compensation Plan (the “KMICP”), which is a cash bonus plan for non-executive officers. The KMICP award formula for Mr. Crusa was adopted on March 22, 2017 and included performance objectives based on Return on Capital Employed (70% relative weight) and Free Cash Flow (30% relative weight). It was calculated by multiplying his weighted average annual base salary for 2017 by his target percentage of 60%, then applying the award formula. For more information about the KMICP as it applied to Mr. Crusa for 2017, refer to the Company’s Form 8-K filed March 27, 2017. Because of his retirement, Mr. Crusa will not participate in the KOIP or the KMICP in 2018.

Individual Performance Goals. As previously reported, on November 6, 2017, the Committee adopted Individual Performance Goals (“IPGs”) for our named executive officers. The 2017 and 2018 KOIP Award Formulas recognize that 20% of each executive’s cash award in 2017 and 2018 respectively, under our KOIP will be based on the achievement of the IPGs. The IPGs for our named executive officers in 2018 are, and for 2017, were:


Named Executive Officers	2017 IPGs	2018 IPGs
Karl G. Glassman President and CEO	Strategic planning and succession planning	Implementation of growth strategy and succession planning

Matthew C. Flanigan EVP and CFO	Strategic planning, information technology projects, succession planning and efficiency initiatives	Implementation of growth strategy, succession planning and financial partner initiatives

Perry E. Davis EVP, President - Residential Products & Industrial Products	Growth initiatives and succession planning	Supply chain and growth initiatives and succession planning

J. Mitchell Dolloff EVP, President - Specialized Products & Furniture Products	Strategic planning, succession planning and efficiency initiatives	Implementation of growth strategy, succession planning and efficiency initiatives

Scott S. Douglas¹ SVP - General Counsel & Secretary	Strategic planning, succession planning and cost initiatives	Implementation of growth strategy and succession planning

Jack D. Crusa² SVP – Operations (through 12/31/2017)	None assigned	N/A

¹	Mr. Douglas’ IPGs are being disclosed because he is expected to be included as a named executive officer in the Company’s definitive proxy statement for the 2018 Annual Shareholders Meeting.

Mr. Crusa retired as of December 31, 2017. As part of Mr. Crusa’s retirement transition, he participated in the KMICP in 2017, which is a cash bonus plan for non-executive officers. As such, he did not receive IPGs for 2017. Given his December 31, 2017 retirement, Mr. Crusa will not have IPGs in 2018.

The achievement of the IPGs 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	%