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): April 27, 2011 (April 21, 2011)

ARMSTRONG WORLD INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Pennsylvania
1-2116
23-0366390
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(IRS Employer
Identification No.)

P.O. Box 3001, Lancaster, Pennsylvania
17604
(Address of principal executive offices)
(Zip Code)

 
Registrant’s telephone number, including area code:
(717) 397-0611

__________________ NA _____________________
  (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:

□   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))

 
 
 
 

Section 5 – Corporate Governance and Management

Item 5.02(c).
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Armstrong World Industries, Inc. (the “Company”) has announced the appointment of Mark A. Hershey to the position of Senior Vice President, General Counsel and Secretary.  Mr. Hershey will begin employment with the Company effective on July 1, 2011.

Mr. Hershey, 41, comes to the Company from Ricoh Americas Corporation (“Ricoh Americas”) where he was appointed Senior Vice President, General Counsel and Secretary in April 2010.  In that role, he was responsible for the legal, ethics, compliance, security and regulatory affairs of Ricoh Americas.  Prior to its merger with Ricoh Americas in October 2008, Mr. Hershey served as Senior Vice President, General Counsel, Secretary and Chief Compliance Officer for IKON Office Solutions, Inc. (“IKON”).  In his role with IKON, Mr. Hershey was responsible for the legal, ethics, compliance, security and regulatory affairs of IKON, including Securities Exchange Commission, New York Stock Exchange and corporate governance matters, while overseeing all aspects of IKON’s legal operations.  Mr. Hershey holds a bachelor’s degree in finance from The Pennsylvania State University and earned his J.D. from Villanova University School of Law.

As described in an offer letter from the Company to Mr. Hershey, which was accepted by Mr. Hershey on April 21, 2011 (the “Letter”), the Company will employ Mr. Hershey as Senior Vice President, General Counsel and Secretary.  The Letter is attached hereto as Exhibit 99.1.

The Letter provides that Mr. Hershey will be paid an annual base salary of $375,000.  He is also eligible to earn an annual target bonus of 60% of base salary based upon the terms and conditions in the Company’s Management Achievement Plan.  For 2011, Mr. Hershey will only be eligible for a bonus based on the actual number of months worked by Mr. Hershey.  In addition, Mr. Hershey will be eligible to participate in the Company’s executive Bonus Replacement Retirement Plan, which allows Mr. Hershey to defer a small portion of income (up to $20,000) into a qualified, tax-deferred plan, beginning in 2012.  He will also be eligible to participate in the Company’s Long-Term Incentive Plan.  Actual awards will be determined by the Management Development and Compensation Committee based on Mr. Hershey’s and the Company’s performance and other applicable factors.

Mr. Hershey will also be eligible to participate in the retirement and employee benefit plans that are generally available to the executives of the Company.  He will also be eligible for certain perquisites generally available to the executives of the Company, a yearly physical paid by the Company and up to $4,500 per year as reimbursement for personal financial planning and tax preparation services.

In addition to his compensation package, Mr. Hershey will receive a one-time special grant with an award value of $375,000 (the “Award”).  The Award will be comprised of 60% time vested stock options and 40% performance restricted shares.  The stock options will vest in three equal installments on the first, second, and third anniversary of the grant date.  The performance restricted shares are based on a 3-year performance period ending December 31, 2013.    Additional terms and conditions will be provided at the time of the grant.

Mr. Hershey is also entitled to receive a total gross payment of $300,000 for joining the Company (inducement payment), which will be paid on October 31, 2011; provided that Mr. Hershey is actively employed by the Company on such date.

If Mr. Hershey’s employment is terminated for any reason other than voluntary resignation or for cause, he will receive a minimum severance payment equal to one year of base salary plus a pro-rata target bonus.  He will also receive health care and life insurance benefits for twelve months following termination of employment or until he is eligible for benefits from a new employer, if earlier.

Subject to Board approval, Mr. Hershey will be offered an Indemnification Agreement and a Change in Control Agreement with the Company.  The Indemnification Agreement is expected to be substantially in the form of the Indemnification Agreements generally offered to directors and officers of the Company, and would provide indemnification against liabilities relating to Mr. Hershey’s service as an officer of the Company.  The Change in Control Agreement is expected to contain provisions similar to those provided to other senior Company officers, including severance benefits amounting to two times the sum of Mr. Hershey’s base salary and annual target bonus.  In the event of a Change in Control, the Change in Control Agreement will extend for two years from the date of the Change in Control event.  If a Change in Control termination occurs prior to the completion of a bonus plan year, Mr. Hershey would receive a prorated bonus based on actual results achieved in the bonus plan year during which the termination occurs.  Mr. Hershey’s health, disability and life insurance benefits would continue for two years following a Change in Control termination, or until eligible for benefits from a new employer.
 
 

Section 9 – Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits
 
 
No. 99.1          Offer Letter from Armstrong World Industries, Inc. to Mark A. Hershey.


 
 
 
 


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.


   
ARMSTRONG WORLD INDUSTRIES, INC.
 
 Date:   April 27, 2011
By:
/s/ Thomas B. Mangas
     
Thomas B. Mangas
     
Chief Financial Officer

 








 
Exhibit 99.1

 
       
 
 
 
 
ARMSTRONG WORLD INDUSTRIES, INC.
2500 COLUMBIA AVE., LANCASTER, PA 17603
P.O. BOX 3001, LANCASTER, PA 17604
717 396 3529
 
www.armstrong.com
 
 
       
 
 
 
          
Personal & Confidential
 
Mark Hershey
9 Veteran's Way
Malvern, PA  19355

Dear Mark:

On behalf of Armstrong, I am very pleased to confirm our employment offer to become Armstrong’s Senior Vice President, General Counsel & Secretary.

Compensation Terms
 
You will earn a semi-monthly gross base salary of $15,625, or $375,000 annualized.
 
You are eligible to participate in our Management Achievement Plan with a target bonus of 60% of your annual base salary earnings.  For 2011, you will receive a pro-rata bonus based on actual months worked.  You must be an active employee on the payment date to receive payment, typically the beginning of March following the plan year.

You will participate in the executive Bonus Replacement Retirement Plan (BRRP) starting in 2012. The BRRP was established to allow executives to defer a small portion of income (up to $20,000) into a qualified, tax-deferred plan. Participants’ contributions are exempt from FICA taxation.  Your account will be maintained by Fidelity Investments, and you may choose from the same investment options provided under the 401(k) plan.

You will be eligible for long-term incentive plan (LTIP) participation which is typically made in the form of stock based grants, with a target award value of up to 120% of your annualized base salary subject to adjustment based on individual and company performance.

For 2011, you will receive a pro-rata award with an award value of $375,000.  This award will be comprised of 60% stock options and 40% performance restricted shares.  The stock options will vest in three equal installments at one, two and three years from the grant’s effective date.  The performance restricted shares are based on a 3-year performance period ending December 31, 2013.  Additional terms and conditions will be provided at the time of grant.

You will also be entitled to receive a total gross payment of $300,000 for joining Armstrong (inducement payment).  This cash payment will be paid on October 31, 2011.  You must be actively employed on this date to receive payment.
 
Benefits

Armstrong offers a number of competitive benefit plans. You will receive a document which provides detailed information on costs, scope, and coverage.  Your medical, dental, prescription drug, life insurance, and accidental death and dismemberment benefits are available to you on your first day of employment.

Armstrong provides two retirement savings plans for highly-compensated executives to defer income.  The qualified 401(k) savings plan, administered by Fidelity Investments, has both before-tax and after-tax contribution options.  Armstrong will provide a 100% match on the first 4% of your before tax contributions and a 50% match on the next 4%. You will automatically be enrolled in the plan to contribute 4% on a before-tax basis beginning 30 days from your date of hire.  You may change this contribution level at any time.  Employee contributions apply to base salary and bonus earnings only.  The company match is fully vested after 3 years of service.  You may choose to invest your contributions in the company match among a number of different investment funds.  All interest and investment gains within the plan are tax-deferred until you make a withdrawal.  You may “roll over” any before-tax monies from another tax-qualified company-sponsored plan into the Armstrong Plan.

The second plan is a nonqualified deferred compensation plan that allows executives to defer base salary and bonus compensation above a specified pay limit, $206,250 for 2011.  This plan is comparable to the qualified 401(k) plan.

You are eligible for a company-paid life insurance benefit of $150,000 and company-paid Accidental Death & Dismemberment Insurance equal to $35,000.  You will also be eligible for employee-paid term or universal life insurance up to a maximum of $600,000.

You are eligible for the company-paid Executive Long-Term Disability Insurance Program. Your disability benefit is 60% of the sum of base salary and the average bonus paid over the past two years.  The annual benefit is capped at $420,000. For your first calendar year of employment, we will use your annualized base salary to determine your disability benefit.  Coverage for eligible benefits in excess of $300,000 will be subject to proof of insurability.

The Armstrong Flexible Spending Account programs give you the option to annually contribute up to $5,000 of pre-tax dollars into medical and dependent care accounts.  These programs allow you to use your before-tax dollars for eligible health related and child or adult dependent care expenses.

As one of the company’s senior executives, you are eligible for expense reimbursement up to $4,500 per year for personal financial planning and income tax preparation services.  Reimbursement for these services would be taxable income to you.

We offer our senior executives a company-paid annual physical program.  You may select the medical institution or facility for the physical.

Severance Pay Provisions

Armstrong will provide a severance payment equal to one year of base salary in the event of an involuntary termination without cause.  Health care and life insurance benefits would continue at the active employee contribution levels until the earlier of 12 months, or until eligible for benefits from a new employer.  Additionally, Armstrong will pay a pro-rata bonus at year-end based on actual company performance in the year of termination.

Individual Change in Control and Indemnification Agreements

You will be eligible to receive an Indemnification Agreement and an Individual Change in Control (CIC) Agreement, both subject to Board approval.  In the event of a change in control, the CIC agreement will extend for two years from the date of the CIC event.  Severance benefits will equate to two times the sum of base salary and target bonus.  If the termination occurs prior to the completion of a bonus plan year, you would earn a pro-rata bonus based on actual results achieved for the year.  Health, disability, and life insurance benefits would continue until the earlier of two years following your termination of employment, or until eligible for benefits from a new employer.

All severance benefits are conditioned on you signing a release from liability and compliance with restrictive covenants.

Paid Time Off

Annually, Armstrong observes a total of eleven holidays; one of these days may be personally scheduled. You will qualify for five weeks of vacation.

Summary of Terms

The above offer equates to $600,000 annual total cash compensation at the target bonus level, with upside opportunity, and an additional $450,000 of annual target long-term incentive.  In addition, this offer includes an equity award valued at $375,000 on the grant’s effective date and a cash inducement payment of $300,000 payable October 31, 2011.


Offer Contingencies
 
1.  Passing the Background Verifications and Drug Tests.
 
In order to begin your employment with Armstrong, you must successfully complete a drug screening test and the background checks.  Our background checking vendor, HireRight, will contact you via your email account, with instructions for authorizing a background check and your drug test.
 
 
2.  Providing Proof of Your Right to Work in the United States.
 
You will be required to show proof of your right to work in the United States within three days of your start date.  Examples of suitable documentation are a current United States passport, a state issued driver’s license or I.D. card with a photograph and an original social security card, a state-issued driver’s license or I.D. card with a photograph and a birth certificate issued by the state, county, or other municipality, an Alien Registration Card with photograph, a Certificate of U.S. Citizenship, or a Certificate of Naturalization.
 
 
 3.  Agreement to the Armstrong Terms and Conditions.
 
This offer requires that you agree to the “Armstrong World Industries Inc., Statement of US Employment Terms and Conditions” found at the end of this letter. By accepting this offer, you agree that you have relied only on the terms defined in this offer.  Please note that you must satisfy the drug test requirement prior to your first day of employment .
 
Once you have acknowledged your acceptance of this employment offer, a member of our Human Resources department will contact you to discuss the next steps.

Please acknowledge your acceptance of this offer by completing the Acceptance Confirmation section found below and returning the signed letter to me by mail or by faxing it to (717) 396-6046.   The official record of this offer letter will be filed with our Human Resources Office.

Mark, I am very pleased to extend this offer to you.   You will be a valuable addition to our team and I look forward to the opportunity of working together.  If you have any questions, please do not hesitate to give me a call.
 
Sincerely,
 
/s/Matthew J. Espe

Matthew J. Espe
Chief Executive Officer
Armstrong World Industries, Inc.


 
 
 
Armstrong World Industries Inc., Statement of US Employment Terms and Conditions
  
Please understand that your employment at Armstrong World Industries Inc. will be subject to the following terms and conditions. Failure to follow these terms and conditions may result in disqualification from further consideration for employment, withdrawal of an offer of employment or termination of your employment with Armstrong.
 
1.  
Offer Contingencies
 
 
o  
Drug/Background Screens.  Your employment is contingent upon your successful completion of a substance/drug test screening, and all background checks. A confirmed positive drug screening test will exclude you from further consideration for employment. You also understand and authorize Armstrong and any of its agents, employees or contractors to investigate all of the information you provide in connection with your interest in employment with Armstrong. You also agree to waive and release any claims that may result from the use, disclosure or release of any information related to this investigation, and you understand that an unfavorable result of the background investigation may result in the withdrawal of this employment offer. You also agree and understand that all information provided in connection with your interest in employment with Armstrong will be stored electronically in the United States.  
 
o  
Employment Eligibility.  You will be required to verify that you are authorized to work in the United States.
 
 
o  
Conflict of Interest and Confidentiality.  Armstrong World Industries Inc. does not wish to receive any documents or any other confidential information concerning any business, technical or other information that you received as a result of any former employment.
 
o  
Existing Employment Agreements .  You agree that you are not bound under any agreement which prohibits you from being employed by Armstrong World Industries Inc., or any of its subsidiaries. You understand that in the event such an agreement exists, Armstrong World Industries Inc. has the right to end your employment or challenge any such agreement in its sole discretion.
 
 
o  
Intellectual Property.   You will need to sign the Armstrong World Industries Inc., Intellectual Property and Confidential Information Agreement during your orientation. 
 
 
 
2.  
Work Schedules.  Although management will make efforts to accommodate individual preferences, the company may at times require overtime, shift work, changes in work schedules and facility transfers.
 
 
3.  
Direct Deposit.  Direct deposit to employees’ bank accounts is our preferred payment method.  Armstrong's Shared Service Center will mail you a New Hire Informational Packet which includes an Authorization Agreement for Direct Deposit.  Please mail this form and a voided blank check from your bank, to the Shared Services Center. The Shared Services Center can assist you in obtaining a bank account for direct deposit purposes if you need this type of assistance.
 
 
4.  
Employment “At Will”.  You understand and agree that your employment with Armstrong World Industries Inc. is “at will" meaning that either you or Armstrong may terminate your employment and compensation with or without cause, with or without notice, at any time. You also acknowledge and agree that no Armstrong policy, handbook, manual, publication, procedure or rule is intended to create a contract of employment nor intended to modify your “at will” relationship with Armstrong. No manager, supervisor or other representative of Armstrong has any authority to modify this relationship or to make any agreements to the contrary other than the President/CEO of Armstrong. No such agreements shall be valid unless they are in writing by this officer of Armstrong. This is the entire understanding and agreement regarding your employment relationship with Armstrong and the right of Armstrong or you to terminate the relationship with or without good cause, and this understanding takes the place of all prior agreements, representations, and understandings regarding your employment at Armstrong.
 
 
 
 
5.  
Falsification.   Honesty and integrity are core values at Armstrong. You certify that all the information and statements made by you at any time in connection with your interest in employment at Armstrong are true and complete, and that Armstrong will rely upon the information you provide. You understand and agree that if you submit false information or omit information, you will no longer be considered a candidate for employment with our company or, if employed at Armstrong, you will be subject to the termination of your employment.
 
 
 
 
 
 

Acceptance Confirmation
 
I accept this offer of employment with Armstrong World Industries Inc., as outlined above and in accordance with the Terms and Conditions in this letter.
 
 
Signature:    __ /s/Mark A. Hershey ________________________________________  
                                    (Signature required)
 
Please Print Your Name:  __ Mark Hershey _________________________________ 
 
 
Date Accepted:  __ April 21, 2011 ___________________________________________
                       
 
  Armstrong New Hire Record Information
 
Please complete the following information so that we can initiate your Armstrong personnel record, your payroll and tax records, and begin planning for your arrival at the company.  We are unable to begin ordering your work related tools and equipment prior to initiating your personnel record in our systems.  Additional information will be collected during orientation for your benefit enrollments.
 
Planned Start Date:  __ July 1, 2011 ____________________
 
Personal and Confidential
 
Date of Birth:  _________________
 
Marital Status (check one):   ___ Married        ___ Single/Divorced
 
Social Security #: _________________
 
Gender (check one):   ___ Male   ___ Female
 
Home Phone Number: __________________

For Pennsylvania Residents Only:
 
Municipality: ___________________________________
 
School District: _________________________________
 

Please fax this letter to me at (717) 396-6046.

Sincerely,

/s/Matthew J. Espe

Matthew J. Espe
Chief Executive Officer
Armstrong World Industries, Inc.