Allegion plc (Form: 8-K, Received: 05/31/2022 07:31:22)

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): May 27, 2022

ALLEGION PUBLIC LIMITED COMPANY

(Exact name of registrant specified in its charter)

Ireland

001-35971

98-1108930

(State or Other Jurisdiction

Of Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

Block D

Iveagh Court

Harcourt Road

Dublin 2

D02 VH94

(Address of principal executive offices, including zip code)

(Zip Code)

(353)(1) 2546200

(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))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Ordinary shares, par value $0.01 per share	ALLE	New York Stock Exchange
3.500% Senior Notes due 2029	ALLE 3 ¹⁄₂	New York Stock Exchange

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.

On May 31, 2022, Allegion plc (the “Company” or “Allegion”) announced that David D. Petratis, Chairman, President and Chief Executive Officer, will be retiring from his position as President and Chief Executive Officer effective July 11, 2022 (the “Effective Date”). Mr. Petratis will serve as Executive Chairman of the Board of Directors of the Company (the “Board”) as of the Effective Date and until his retirement from the Company which is planned to occur by January 2, 2023, at which point, he will also retire from his role as Executive Chairman of the Board. There are no material changes to Mr. Petratis’ compensatory arrangement as a result of his planned retirement.

The Company also announced that John H. Stone, President, Worldwide Construction, Forestry and Power Systems, Deere & Company (“Deere”), an agricultural machinery and heavy equipment company, will join Allegion on the Effective Date and succeed Mr. Petratis as President and Chief Executive Officer of the Company. Mr. Stone, age 52, who will also join the Board on the Effective Date, has served as President of Worldwide Construction, Forestry and Power Systems at Deere since 2020, and prior to that, he served as Senior Vice President, Intelligent Solutions Group at Deere from 2016 to 2020. Mr. Stone has an M.B.A. from Harvard Business School and a B.S. in Mechanical Engineering from the United States Military Academy at West Point.

Upon assuming his new position, Mr. Stone will receive, as approved by the Compensation and Human Capital Committee of the Board, a base salary with an annualized amount of $1,000,000, and he will be eligible to receive an annual cash incentive award with a target opportunity of 125% of his base salary, which, for 2022, will be no less than the annual target amount and will not be prorated. He will also be eligible to receive an annual long-term incentive award with a current target value of $4,500,000 when the Company next grants such awards to its officers and eligible employees, with 50% of the award’s value granted in the form of Performance Stock Units (“PSUs”), 25% of the award’s value granted in the form of restricted stock units (“RSUs”), and 25% of the award’s value granted in the form of stock options, in accordance with the Company’s practice for structuring such awards for executive officers. To acknowledge the loss of Mr. Stone’s unvested long term incentive awards from Deere, Mr. Stone will also receive: (i) a one-time grant of Allegion stock options with a value equal to $2,000,000 to be granted at the next grant cycle following the Effective Date and which will vest in three equal installments over the first three anniversaries of the grant date; and (ii) a one-time grant of RSUs with a value equal to $5,500,000 to be granted at the next grant cycle following the Effective Date, 25% of which will vest on the two-year anniversary of the grant date, 25% of which will vest on the three-year anniversary of the grant date, and 50% of which will vest on the four-year anniversary of the grant date. Mr. Stone will also be eligible to participate in the Company’s other regular compensation arrangements for executive officers, including an allowance for financial and tax planning services of up to $15,000 annually and participation in the executive health program in an amount not to exceed $2,000 annually. Mr. Stone will also be eligible to participate in the Allegion Change in Control Plan and to receive severance in the unlikely event of his involuntary termination from Allegion, other than for cause, in exchange for a signed severance agreement in a form acceptable to Allegion along with a release of all claims he may have or allege. The foregoing description of Mr. Stone’s offer letter is qualified in its entirety by reference to the offer letter itself, which is attached as Exhibit 10.1 and is incorporated herein by reference. Additional information about Allegion’s executive compensation program can be found in its 2022 proxy statement.

There are no arrangements or understandings between Mr. Stone and any other person pursuant to which he was appointed to serve as the Company’s President and Chief Executive Officer or as a director of the Board. Furthermore, there is no transaction between Mr. Stone (or his immediate family) and the Company that requires disclosure in accordance with Item 404(a) of Regulation S-K.

A copy of the press release regarding the above announcements are attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits


10.1		Offer Letter dated May 24, 2022
99.1		Press release dated May 31, 2022
104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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.


Dated: May 31, 2022
				ALLEGION PLC

				By: /s/ Hatsuki Miyata
				Name: Hatsuki Miyata
				Title: Secretary

Exhibit 10.1

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Mr. John Stone

***

May 24, 2022

Dear John:

I am pleased to present you with an offer of employment to join Allegion (“Allegion”) as its President and Chief Executive Officer (“CEO”) reporting to the Board of Directors of Allegion (the “Board”). This position will be located in Carmel, Indiana and your employment date will be agreed upon, but anticipated to be on or around July, 1 2022 (“Employment Date”). Effective on the Employment Date, you will be appointed as a member of the Board. I look forward to your acceptance of this offer and you leading Allegion to further success. You will be leading Allegion’s team of experts who make the world safer by securing the places where people live and thrive.

Allegion offers valuable programs to support the health, wellness and financial security of eligible employees and their families. The compensation, benefits and other aspects of your employment are set forth below:

•

Your base salary will be set at an annual rate of $1,000,000, which will be paid bi-weekly. You will be eligible for base salary increases (not decreases) during the annual merit increase cycle based on criteria established by the Compensation and Human Capital Committee of the Board (the “Committee”). Any such increase will be your “base salary” for all purposes thereafter.

•

You will be eligible to participate in the Allegion Annual Incentive Plan (“AIP”). Your annual opportunity is targeted at 125% of your base salary. The actual award that you may receive can range from 0% to 200% of the targeted amount depending upon your performance and the performance of Allegion. For the 2022 plan year, you will be paid no less than your annual target amount (not prorated). Please see the enclosed AIP brochure for further details of this program.

•

You will be eligible to receive annual Allegion equity awards during the annual compensation planning process (during the first quarter of each calendar year, commencing 2023), subject to nomination and approval. Your current equity target value is $4,500,000 and the current mix of executive awards is delivered in the form of 50% performance stock units, 25% non-qualified stock options (“NQSO”) and 25% restricted stock units. Details regarding the terms and conditions of your award, including vesting, will be provided upon grant issuance. Annual equity grants are contingent on and variable with your sustained performance and demonstrated leadership potential. Please see the enclosed equity brochure for further details of this program.

•

When you consider each of the above items, your TDC target is $6,750,000.

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Allegion

11819 N Pennsylvania St

Carmel, IN 46032 USA

allegion.com

•

To acknowledge the forfeiture of unvested long-term incentive awards from your current employer, Allegion will make the following grants pursuant to Allegion’s 2013 Incentive Stock Plan (the “Plan”), which have been approved by the Committee:

An award of NQSO having a Black Scholes value under U.S. GAAP of $2,000,000 will be granted in the next grant cycle (anticipated to be July 28, 2022) following your Employment Date (“Options”). These Options will vest ratably on the first three anniversaries of the Grant Date (except as provided below), have a ten-year term and an exercise price equal to the fair market value of an ordinary share on the date of grant (where the fair market value is equal to the average of the high and low of the Allegion share price on the date of grant (“FMV”)). Additional details regarding the terms and conditions of this grant award will be provided upon grant issuance.

An award of restricted stock units having a value of $5,500,000 will be granted in the next grant cycle (anticipated to be July 28, 2022) following your Employment Date (“RSUs”), with the number of RSUs determined by the FMV defined above. The RSUs will vest as follows and additional details regarding the terms and conditions of this grant award will be provided upon grant issuance:

On the Two (2) Year Anniversary of your Grant Date – 25%

ii.

On the Three (3) Year Anniversary of your Grant Date – 25%

iii.

On the Four (4) Year Anniversary of your Grant Date – 50%

The foregoing to the contrary notwithstanding, in the event of an involuntary termination of your employment by Allegion without Cause, a voluntary termination by you for Good Reason, or a termination due to your death or Disability, the Options and RSUs will become immediately fully vested, the Options exercisable and the RSUs promptly settled as soon as practical upon termination, but in all cases subject to the terms of the applicable award agreement and in compliance with applicable law, inclusion (without limitation) Section 409A of the US Internal Revenue Code. For such purpose, “Cause” and “Good Reason” will have the respective meanings set forth in the Plan (except that the proviso in clause (i) of the definition of Good Reason under the Plan shall not apply), and “Disability” shall mean a disability determined under the long-term disability plan maintained by the Company under which you are covered, or, in the event no such plan exists or you are not covered under any such plan, a total and permanent disability pursuant to the Employer’s human resources determination.

•

Beginning on your Employment Date, you will be eligible to participate in all applicable benefit programs offered to Allegion employees in accordance with the terms and conditions of those programs including qualified and non-qualified 401k plans for employees in the United States. To learn more about the benefit programs, please visit http://www.mymobilewalletcard.com/allegion or view the New Hire Benefits Guide and Benefits New Hire Legal Notices.

•

Beginning on your Employment Date, you will be eligible for unlimited Paid Time Off (PTO) per our policy.

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Allegion

11819 N Pennsylvania St

Carmel, IN 46032 USA

allegion.com

•

You will be eligible for the Allegion Executive Relocation Program to the greater Indianapolis area. After we receive your acceptance of this offer, a representative from our relocation provider, Aires, will be in touch with you to explain the program and begin the process. Please see the enclosed relocation policy for further details.

•

In addition to the above, as an Officer of Allegion, the following programs will be available to you:

Financial Counseling: Effective on your Employment Date, you will be eligible for a tax, estate, and financial planning services allowance up to $15,000 annually. The entire allowance will be imputed to your annual income.

Executive Health Program: Effective on your Employment Date, you will be eligible to participate in an executive physical examination program established for Allegion in an amount not to exceed $2,000 annually.

Change-in-Control: Effective on your Employment Date and continuing for your period of employment (subject to the terms of the CIC Plan as in effect from time to time), you will be eligible to participate in the Allegion Change in Control Plan (“CIC Plan”). In addition to other certain benefits, more fully set forth within the CIC Plan, the CIC Plan generally provides severance payment and enhanced coverage under certain benefit plans in the event of a loss of job due to a Covered Termination (as defined and in accordance with the CIC Plan). Your severance payment under the CIC Plan will be equal to 3 times the sum of your base salary plus your annual incentive target bonus amount. No excise tax gross-ups will be provided; however, your CIC related cash severance benefit will be adjusted (as may be applicable) to provide you with the greater after-tax benefit between a) parachute payments (within the meaning of IRC Section 280G) paid in full, with you being responsible for all taxes incurred, and b) parachute payments reduced to avoid triggering excise tax under IRC Section 4999. You will separately be provided with a copy of this CIC Plan agreement for your acceptance.

Severance: In the unlikely event of your involuntary termination from Allegion, other than for Cause (as defined in the Plan), in exchange for a signed severance agreement, in a form acceptable to Allegion (subject to the proviso below), along with a release of all claims you may have or allege, you will receive:

Severance payment in the amount of Two (2) times your base salary (less applicable statutory tax withholdings), paid as a lump sum cash payment;

ii.

Continued participation in the AIP program, not to exceed target pro-rated to your last day worked (except, not prorated if occurring during 2022) using the same goals and objectives previously determined. Any payout under the AIP program will be made in accordance with the AIP program;

iii.

Payment of an amount equal to 12 months of benefits costs (less applicable statutory tax withholding) to assist with the cost of COBRA coverage, which will be paid in a lump sum cash payment.

iv.

Payment of $25,000 paid as a lump sum (less applicable statutory tax withholdings) to assist with the cost of outplacement support consistent with your position and needs.

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Allegion

11819 N Pennsylvania St

Carmel, IN 46032 USA

allegion.com

With the exception of the non-compete agreement, such severance agreement will (i) not impose any restrictive covenant on your conduct post-termination not previously agreed and (ii) the general release of claims therein shall not apply to claims (x) for indemnification as provided herein and for coverage as an insured under applicable directors and officers liability insurance, and (y) for accrued and vested benefits under the applicable employee benefit plans in which you are a participant and in accordance with the terms of such plans.

Stock Ownership: Based on your role in Allegion, you are restricted from transactions involving Allegion securities (for example, exercising options or buying or selling ordinary shares or debt securities on the open market) except during designated window periods. You are also required to obtain pre-clearance from Legal (Jeff Braun or Hatsuki Miyata) prior to transacting in any Allegion shares/securities. Furthermore, you will be required to comply with the Allegion executive stock ownership requirements, which is 6 times your annual base salary ($6,000,000) for your role. You will have 5 years to reach this ownership level.

This offer is contingent upon your acceptance of the enclosed Proprietary Information agreement and the Non-Compete agreement. To accept this offer, please sign the Proprietary Information agreement, the Non-compete agreement, and this letter as indicated under the Candidate Acceptance section below and return all documents to Jennifer Preczewski, Vice President – Human Resources.

Please understand that this letter agreement does not constitute a contract of employment for any specific period of time, but will create an “employment at-will” relationship, subject to the terms hereof. This means that the employment relationship may be terminated with or without cause and with or without notice at any time by you or Allegion. Allegion reserves the right to modify or amend the terms of your employment at any time for any reason, subject to the terms of this letter agreement.

John, we believe that you will make a significant contribution to Allegion and look forward to receiving your acceptance.

Sincerely,

/s/ Steven Mizell

Steven C. Mizell

Chair, Allegion Compensation and Human Capital Committee

cc : Jennifer Preczewski

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Allegion

11819 N Pennsylvania St

Carmel, IN 46032 USA

allegion.com

Attachments:

•

2022 AIP Brochure

•

2022 Equity Brochure

•

2022 New Hire Benefits Guide

•

2022 Benefits Legal Notices

•

U.S. Executive Relocation Policy

•

Non-Competition and No Solicitation Agreement

•

Proprietary Agreement

Conditions of Offer

This offer is also contingent upon the following:

Passing the required drug and background screening. All test results will be handled in strict confidence. After submitting your acceptance of employment, you will receive an email outlining the substance abuse screen requirements, instructions, list of locations and instructions on initiating your background check.

Providing proof of identity and employment eligibility pursuant to the Immigration Reform and Control Act of 1986 within three (3) working days after the actual commencement of work. After submitting your acceptance of employment, you will be provided with instructions for completing this requirement along with a list of acceptable verification documents.

Understanding, agreeing, signing and returning the Proprietary Information Agreement and Non-Compete agreement.

CANDIDATE ACCEPTANCE

I accept your offer of employment with Allegion and agree to the conditions in the offer letter.

/s/ John Stone

May 27, 2022

John Stone

Date

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Exhibit 99.1

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NEWS RELEASE

Allegion Announces CEO Succession

David D. Petratis to Retire Following Distinguished 40-Year Career,

John H. Stone to Succeed Petratis as President and CEO

DUBLIN (May 31, 2022) – Allegion plc (NYSE: ALLE), a leading global provider of security products and solutions, today announced that John H. Stone will succeed David D. Petratis as president and CEO, effective July 11, 2022. Stone will also become a member of the company’s Board of Directors at that time, and Petratis will serve as executive chairman until his retirement, which is expected by Jan. 2, 2023.

Petratis has led Allegion since its spin-off from the former Ingersoll Rand in 2013, capping off a distinguished 40-year career. During his tenure, Allegion has achieved substantial financial and business success, doubling its market capitalization and annual adjusted earnings per share (EPS), delivering industry-leading profitability and completing more than 20 acquisitions and strategic investments. The company also recently received the prestigious Robert W. Campbell award for its system of environmental, health and safety management.

“Leading Allegion has been a privilege and one of the most rewarding experiences of my professional career,” said Petratis. “Since becoming a standalone public company, our commitment to safety and providing employees with the tools and resources to get the job done right has driven our success. My heartfelt gratitude goes out to our 11,000 employees whose dedication, innovation and collaboration have built our incredibly strong and loyal customer base and helped us navigate the challenges of the pandemic. Today, Allegion has the right talent and the right strategy to successfully execute on its vision of seamless access and a safer world. I believe the best is yet to come, and now is the right time to turn the reins over to a new leader. I look forward to working alongside John, the Board and our management team to ensure a seamless transition. The future is bright at Allegion.”

“Dave has guided Allegion through an extraordinary transformation toward seamless access, and on behalf of the entire Board, I want to thank him for his leadership and invaluable contributions,” said Kirk Hachigian, lead director of the Allegion Board of Directors. “With his relentless focus on investing in innovation, operations and people, Dave has positioned Allegion to capitalize on growth opportunities in the coming years. We wish him all the best in his well-deserved retirement.”

Stone brings to Allegion more than 18 years of senior leadership experience. Most recently, he served as president of Deere & Company’s (NYSE: DE) Worldwide Construction, Forestry and Power Systems business, overseeing the nearly $11.4 billion segment. Under Stone’s leadership, the segment has delivered impressive growth and profitability. He has also been influential in Deere & Company’s rapid development of artificial intelligence (AI) and machine learning capabilities, better integration of precision-ag technology into each of its flagship products and in helping the company establish itself as a leader in technology. Prior to Deere & Company, Stone was a quality engineer at General Electric and an infantry officer in the U.S. Army.

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NEWS RELEASE

Hachigian continued, “Allegion’s leadership succession plan enables a smooth transition of the CEO role. John is an outstanding leader with a proven ability to formulate and deliver operating and business process excellence, and he possesses a deep understanding of the technological trends shaping our world. His established track record of driving innovation to adopt smarter, safer and more sustainable agricultural and construction solutions will be instrumental to the execution of Allegion’s seamless access strategy, and his transformational M&A experience will ensure a smooth integration of the pending Access Technologies acquisition. We look forward to benefiting from his expertise as Allegion drives continued growth, innovation and profitability.”

“I am excited to take on the role of CEO for Allegion, and I am grateful for the support of Dave and the Board in entrusting me to lead the company’s next chapter,” said Stone. “Allegion is an industry leader with strong growth engines and tremendous talent. I am eager to hit the ground running, to work with this great team to capitalize on Allegion’s strong portfolio of products, services and software and to drive shareholder value and a safer world through smart security solutions.”

###

About John H. Stone

Stone, 52, currently serves as president of Deere & Company’s Worldwide Construction, Forestry and Power Systems business. In this role, he is responsible for the sustainable, profitable growth of the company’s construction and forestry equipment business as well as the continued success of the Wirtgen Group. Stone previously headed Deere’s Intelligent Solutions Group, the company’s precision-ag technology arm, where he led the acquisition of tech startup Blue River Technology, the establishment of the San Francisco John Deere Labs office and the precision-ag headquarters in Urbandale, Iowa. He holds a bachelor’s degree in mechanical engineering from the United States Military Academy and an MBA from Harvard Business School.

About Allegion

Allegion (NYSE: ALLE) is a global pioneer in seamless access, with leading brands like CISA^®, Interflex^®, LCN^®, Schlage^®, SimonsVoss^® and Von Duprin^®. Focusing on security around the door and adjacent areas, Allegion secures people and assets with a range of solutions for homes, businesses, schools and institutions. Allegion had $2.9 billion in revenue in 2021, and its security products are sold around the world. For more, visit www.allegion.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including statements regarding the continued impacts of the global COVID-19

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NEWS RELEASE

pandemic, supply chain constraints, electronic component and labor shortages, inflation, rising freight and material costs, impacts of Russia’s invasion of Ukraine including further supply chain disruptions and the increased risk of cyber-attacks in connection with such invasion, the company’s 2022 financial performance, the company’s business plans and strategy, the company’s growth strategy, the company’s capital allocation strategy, the company’s tax planning strategies, and the performance of the markets in which the company operates. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. These statements are based on the company’s currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties—many of which are beyond the company’s control—as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Further information on these factors and other risks that may affect the company’s business is included in filings it makes with the Securities and Exchange Commission from time to time, including its Form 10-K for the year ended Dec. 31, 2021, Form 10-Q for the quarters ended March 31, 2022, and in its other SEC filings. The company undertakes no obligation to update these forward-looking statements.

Media:

Doshia Stewart – Vice President, Global Corporate Communications

+1.317.810.3512

Doshia.Stewart@allegion.com and PR@allegion.com

Analysts:

Tom Martineau – Vice President, Investor Relations, and Treasurer

+1.317.810.3759

Tom.Martineau@allegion.com

Source: Allegion plc

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