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): October 25, 2017
LSC COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
| 001-37729 | 36-4829580 | |
| (Commission File Number) | (IRS Employer Identification No.) |
|
191 North Wacker Drive, Suite 1400 Chicago, Illinois |
60606 | |
| (Address of Principal Executive Offices) | (Zip Code) |
(773) 272-9200
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(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)) |
Indicate by check mark whether the registrant is an emerging growth company 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. |
On October 25, 2017, each of Thomas J. Quinlan III, the Company’s Chairman and Chief Executive Officer, and Suzanne S. Bettman, the Company’s Chief Administrative Officer and General Counsel, entered into amendments to their employment agreements (the “Amendments”) with LSC Communications, Inc. (the “Company”). Mr. Quinlan’s original employment agreement was dated as of November 30, 2008 and assumed by the Company pursuant to the Assignment of Employment Agreement and Acceptance of Assignment between R.R. Donnelley & Sons Company, the Company and Mr. Quinlan, dated as of September 29, 2016 (the “Quinlan Agreement”), and Ms. Bettman’s original employment agreement was dated as of December 18, 2008 and assumed by the Company pursuant to the Assignment of Employment Agreement and Acceptance of Assignment between R.R. Donnelley & Sons Company, the Company and Ms. Bettman, dated as of September 29, 2016 (the “Bettman Agreement”).
Under the terms of the Amendments, Mr. Quinlan and Ms. Bettman will no longer be reimbursed by the Company for any excise taxes imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) on any “excess parachute payments” within the meaning of Section 280G of the Code. The Amendments instead provide for a “net-better cutback”, under which parachute payments would be reduced so as not to trigger the excise tax if it would leave the executive in a better after-tax position. In addition, under the Amendment to the Bettman Agreement, Ms. Bettman’s performance-based equity awards would be treated in accordance with the terms of such awards upon her termination without Cause or her resignation for Good Reason (each as defined in the Bettman Agreement) to ensure compliance with Section 162(m) of the Code and to retain eligibility for the tax deductible treatment of performance awards.
All other terms and conditions of the Quinlan Agreement and the Bettman Agreement remain in full force and effect.
The description above is qualified in its entirety by reference to the Amendments, which are attached hereto as Exhibit 10.1 and Exhibit 10.2 and incorporated into this Item 5.02 by reference.
Furthermore, effective October 25, 2017, the Company determined to extend the benefit of Company-paid supplemental long-term disability insurance and life insurance to each of the following executive officers: Andrew B. Coxhead, Kent A. Hansen and Richard T. Lane.
| Item 9.01. | Exhibits. |
SIGNATURE
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.
| LSC Communications, Inc. | ||||||
| Date: October 31, 2017 | By: | /s/ Suzanne S. Bettman | ||||
| Name: | Suzanne S. Bettman | |||||
| Title: | Secretary; Chief Compliance Officer; General Counsel | |||||
Exhibit 10.1
AMENDMENT TO EMPLOYMENT AGREEMENT
Amendment dated as of October 25, 2017 (the “ Amendment ”) to the Employment Agreement by and between LSC Communications, Inc., a Delaware corporation (together with its affiliates, the “ Company ”), with its principal offices at 191 N. Wacker Drive, Suite 1400, Chicago, IL 60606, and Thomas J. Quinlan III (“ Executive ”).
Recitals
WHEREAS , the Company and Executive desire to set forth the terms upon which Executive will continue Executive’s employment with the Company;
WHEREAS , the Company and Executive are parties to the Employment Agreement dated as of November 30, 2008 and assumed by the Company pursuant to the Assignment of Employment Agreement and Acceptance of Assignment between R.R. Donnelley & Sons Company, the Company and the Executive, dated as of September 29, 2016 (the “ Existing Agreement ”); and
WHEREAS , the Company and Executive desire to amend the Existing Agreement.
NOW, THEREFORE , in consideration of the premises and the mutual covenants set forth below, the parties hereby agree as follows:
| 1. | Section II(ii)(C) of the Existing Agreement shall be amended and replaced in its entirety as follows: |
“(C) You and the Company will follow the procedures outlined in Annex B, if applicable;”
| 2. | Annex B of the Existing Agreement, “Gross-Up Payments”, shall be amended and replaced in its entirety as follows: |
“ Section 280G
Anything in this Agreement to the contrary notwithstanding, if the determination is made that any payments or benefits otherwise payable to Executive (1) constitute “parachute payments” within the meaning of Section 280G of the Code, and (2) but for this Annex B, would be subject to the excise tax imposed by Section 4999 of the Code, then such payments and benefits will be either (x) delivered in full, or (y) delivered as to such lesser extent that would result in no portion of such payments and benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent state or local excise taxes), results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such payments and benefits may be taxable under Section 4999 of the Code.
Unless the Company and Executive otherwise agree in writing, any such determination required under this Annex B will be made in writing by a nationally-recognized accounting firm selected jointly by the Company and Executive (the “ Accountants ”), whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Annex B, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. In connection with making any such determinations, the Accountants shall take into account the value of any reasonable compensation for services to be rendered by Executive before or after the change of control transaction, including any restrictive covenants applicable to Executive, and the Company and its affiliates shall cooperate in the valuation of any such services, including any restrictive covenant provisions. The Company and Executive agree to furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision.
Any reduction in payments and/or benefits required by this Annex B will occur in the following order, in each case with payments and benefits with a higher “parachute payment” value for purposes of Section 280G of the Code reduced before payments with a lower value: (1) reduction of vesting acceleration of equity awards that are not eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); (2) reduction of other benefits provided under this Agreement; (3) reduction of cash payments that are not eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); (4) reduction of vesting acceleration of equity awards that are eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); and (5) reduction of cash payments that are eligible for reduction under Treasury Regulation 1.280G Q&A-24(c). In the event that acceleration of vesting of equity awards or cash payments is to be reduced, such acceleration of vesting or reduction will be cancelled in the reverse order of the date of grant for such awards. If two or more awards were granted on the same date, each award will be reduced on a pro-rata basis.”
[ signature page follows ]
-2-
IN WITNESS WHEREOF , the parties hereto have executed this Amendment on the date first above written.
| LSC COMMUNICATIONS, INC. | EXECUTIVE | |||||||
| By: | /s/ R. Scott Bigelow | /s/ Thomas J. Quinlan III | ||||||
| R. Scott Bigelow | Thomas J. Quinlan III | |||||||
| Chief Human Resources Officer | ||||||||
[ Signature Page to Amendment to Employment Agreement ]
Exhibit 10.2
AMENDMENT TO EMPLOYMENT AGREEMENT
Amendment dated as of October 25, 2017 (the “ Amendment ”) to the Employment Agreement by and between LSC Communications, Inc., a Delaware corporation (together with its affiliates, the “ Company ”), with its principal offices at 191 N. Wacker Drive, Suite 1400, Chicago, IL 60606, and Suzanne S. Bettman (“ Executive ”).
Recitals
WHEREAS , the Company and Executive desire to set forth the terms upon which Executive will continue Executive’s employment with the Company;
WHEREAS , the Company and Executive are parties to the Employment Agreement dated as of December 18, 2008 and assumed by the Company pursuant to the Assignment of Employment Agreement and Acceptance of Assignment between R.R. Donnelley & Sons Company, the Company and the Executive, dated as of September 29, 2016 (the “ Existing Agreement ”); and
WHEREAS , the Company and Executive desire to amend the Existing Agreement.
NOW, THEREFORE , in consideration of the premises and the mutual covenants set forth below, the parties hereby agree as follows:
| 1. | Section 4(e) of the Existing Agreement, “Gross-up Payment”, shall be amended and replaced in its entirety as follows: |
“(e) Section 280G . You and the Company will follow the procedures outlined in Annex B, if applicable.”
| 2. | Section 4(f) of the Existing Agreement, “Vesting of Equity Grants”, shall be amended and replaced in its entirety as follows: |
“(f) Vesting of Equity Grants . All outstanding stock options, restricted stock or restricted stock unit awards or other equity grants (other than performance shares or performance share units) issued to you on or after October 25, 2017 will vest 100% immediately as of the date of your Separation from Service and any performance shares or performance share units will vest in accordance with the applicable award agreement.”
| 3. | Annex B of the Existing Agreement, “Gross-Up Payments”, shall be amended and replaced in its entirety as follows: |
“ Section 280G
Anything in this Agreement to the contrary notwithstanding, if the determination is made that any payments or benefits otherwise payable to you (1) constitute “parachute payments” within the meaning of Section 280G of the Code, and (2)
but for this Annex B, would be subject to the excise tax imposed by Section 4999 of the Code, then such payments and benefits will be either (x) delivered in full, or (y) delivered as to such lesser extent that would result in no portion of such payments and benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999 of the Code (and any equivalent state or local excise taxes), results in your receipt on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such payments and benefits may be taxable under Section 4999 of the Code.
Unless you and the Company otherwise agree in writing, any such determination required under this Annex B will be made in writing by a nationally-recognized accounting firm selected jointly by you and the Company (the “ Accountants ”), whose determination will be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Annex B, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. In connection with making any such determinations, the Accountants shall take into account the value of any reasonable compensation for services to be rendered by you before or after the change of control transaction, including any restrictive covenants applicable to you, and the Company and its affiliates shall cooperate in the valuation of any such services, including any restrictive covenant provisions. You and the Company agree to furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this provision. The Company will bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this provision.
Any reduction in payments and/or benefits required by this Annex B will occur in the following order, in each case with payments and benefits with a higher “parachute payment” value for purposes of Section 280G of the Code reduced before payments with a lower value: (1) reduction of vesting acceleration of equity awards that are not eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); (2) reduction of other benefits provided under this Agreement; (3) reduction of cash payments that are not eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); (4) reduction of vesting acceleration of equity awards that are eligible for reduction under Treasury Regulation 1.280G Q&A-24(c); and (5) reduction of cash payments that are eligible for reduction under Treasury Regulation 1.280G Q&A-24(c). In the event that acceleration of vesting of equity awards or cash payments is to be reduced, such acceleration of vesting or reduction will be cancelled in the reverse order of the date of grant for such awards. If two or more awards were granted on the same date, each award will be reduced on a pro-rata basis.”
[ signature page follows ]
-2-
IN WITNESS WHEREOF , the parties hereto have executed this Amendment on the date first above written.
| LSC COMMUNICATIONS, INC. | EXECUTIVE | |||||||
| By: | /s/ R. Scott Bigelow | /s/ Suzanne S. Bettman | ||||||
| R. Scott Bigelow | Suzanne S. Bettman | |||||||
| Chief Human Resources Officer | ||||||||
[ Signature Page to Amendment to Employment Agreement ]