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 12, 2016

 

 

 

 

H.B. FULLER COMPANY

 
 

(Exact name of registrant as specified in its charter)

 

 

 

Minnesota

001-09225

41-0268370

(State or other jurisdiction

of incorporation)

(Commission file number)

(I.R.S. Employer

Identification No.)

 

 

1200 Willow Lake Boulevard

P.O. Box 64683

St. Paul, MN 55164-0683

 

 

(Address of principal executive offices, including zip code)

 

 

 

 

 

 

 

 

(651) 236-5900

 

 

(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))  

 

 
 
 

   

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

 

(e) (i) On October 12, 2016, the Compensation Committee of the Board of Directors of H.B. Fuller Company (the “Company”) approved certain changes to the Company’s Management Short-Term Incentive Plan for executive officers (the “STIP”) in order to accommodate recent changes in executive officer positions. The changes to the STIP will be effective for determining the amount of any annual cash bonuses paid to executive officers based on financial performance during the Company’s 2016 fiscal year and thereafter.

 

The STIP was revised to change the financial metrics that will determine the amount of the annual cash bonus to be paid to certain executive officers who had a recent change in management responsibilities or who recently joined the Company. Also, the STIP was simplified by grouping the financial metrics used to determine annual cash bonuses under the STIP into three categories: (a) metrics for executive officers with responsibility for corporate/global financial performance, (b) metrics for executive officers with responsibility for the financial performance of operating segments, and (c) metrics for executive officers with responsibility for the financial performance of key global markets. The financial metrics in the STIP vary based on the position and responsibilities of each executive officer.

 

The foregoing description of the STIP and the recent changes thereto is qualified in its entirety by reference to the STIP, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.  

 

 

Item 5.03   Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On July 13, 2006, the Board of Directors of the Company declared a dividend of one preferred stock purchase right (a “Right”) per share for each outstanding share of common stock of the Company. Each Right entitled the holder thereof under certain circumstances to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock (the “Series A Preferred Stock”) of the Company at a price of $95.00 per one-hundredth of a share of Series A Preferred Stock. The terms of the Rights were set forth in a Rights Agreement dated as of July 13, 2006 (the “Rights Agreement”) between the Company and Wells Fargo Bank, National Association, as Rights Agent. In connection with the Rights Agreement and the Rights, the Board of Directors of the Company adopted a resolution approving a certificate of designations (the “Certificate of Designations”) establishing the rights and preferences of the Series A Preferred Stock. The Company filed the Certificate of Designations with the Secretary of State of the State of Minnesota (the “Secretary of State”) on July 13, 2006, and, accordingly, as of such date, the Certificate of Designations became part of the Company’s Restated Articles of Incorporation, as amended (the “Articles of Incorporation”).

 

 
 
 

   

The Rights expired pursuant to the terms of the Rights Agreement on July 31, 2016. None of the shares of Series A Preferred Stock had been issued at the time of the expiration of the Rights Agreement on July 31, 2016. In addition, as a result of the expiration of the Rights, none of these shares will be issued in the future. Therefore, on October 13, 2016, the Company’s Board of Directors approved the cancellation of the Certificate of Designations. On October 14, 2016, the Company amended the Articles of Incorporation by filing a Statement of Cancellation (the “Statement of Cancellation”) with the Secretary of State that cancelled the Certificate of Designations. As a result, all shares of Series A Preferred Stock were eliminated and returned to status of authorized but unissued, undesignated shares of preferred stock.

 

A copy of the Statement of Cancellation is filed as Exhibit 3.1 to this report.

   

 
 
 

   

Item 9.01.   Financial Statements and Exhibits.      

 

(d) Exhibits.
     
 

3.1

Statement of Cancellation, dated October 13, 2016

     
 

10.1

H.B. Fuller Company Management Short-Term Incentive Plan for Executive Officers (as revised on October 12, 2016)

 

 

 

 

 

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.

 

Date: October 17, 2016

 

 

H.B. FULLER COMPANY

 

 

 

 

 

 

 

 

 

 

By:

/s/ Timothy J. Keenan

 

 

 

     Timothy J. Keenan

 

 

 

     Vice President, General Counsel

 

         and Corporate Secretary  

 

 
 
 

 

 

EXHIBIT INDEX

 

             

 

Exhibit No.    Description
   

3.1

Statement of Cancellation, dated October 13, 2016

   

10.1

H.B. Fuller Company Management Short-Term Incentive Plan for Executive Officers (as revised on October 12, 2016)

   

   

Exhibit 3.1

 

 

STATEMENT OF CANCELLATION

OF THE

CERTIFICATE OF DESIGNATIONS

OF THE

SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

OF

H.B. FULLER COMPANY

 

 

The undersigned, Timothy J. Keenan, Secretary of H.B. Fuller Company, a Minnesota corporation (the “Company”), hereby certifies that:

   

  1. The name of the Company is H.B. Fuller Company.
     
 

2.

There are currently no shares of the Series A Junior Participating Preferred Stock of the Company outstanding.

 

 

3.

In accordance with Section 302A.133 of the Minnesota Statutes, the Board of Directors of the Company has authorized the cancellation of the Certificate of Designations of the Series A Junior Participating Preferred Stock of the Company establishing the rights and preferences of such preferred stock (the “Certificate of Designations”).

 

 

4.

Pursuant to this Statement of Cancellation, the Certificate of Designations shall be canceled, and the 1,600,000 shares of preferred stock of the Company formerly designated as Series A Junior Participating Preferred Stock shall have the status of authorized but unissued, undesignated shares of preferred stock.

 

IN WITNESS WHEREOF, the undersigned, having been duly authorized by the Board of Directors of the Company, has executed this Statement of Cancellation this 13 th day of October, 2016.

 

 

 

 

/s/ Timothy J. Keenan

 

 

 

Timothy J. Keenan

 

 

 

Secretary

 

Exhibit 10.1

 

 

 

 

Purpose

The STI plan provides an annual performance-based cash bonus opportunity for eligible employees. This is intended to achieve a number of goals including:

   
  ●     Emphasizing the Company’s commitment to competitive compensation practices;
   
  ●     Driving a high performance culture;
   
  ●     Assuring accountability;
   
  ●     Focusing on results, not activity; and
   
  ●     Reinforcing the importance of measurable and aligned goals and objectives.
   

Eligibility

These guidelines apply to Executive Officers.

   
  To receive payment under the STI Plan, the participant must be actively employed as of fiscal year-end.  
   
   
  The plan design is based on the following financial metrics.
   
Plan Design ●     Operating Income/EBITDA
  ●     Organic Revenue
  ●     Earnings Per Share
  ●     Gross Margin
  ●     Contribution Margin
   
   
  Each participant’s plan design will be based on the participant’s position. Details of the design are as follows:
   
  ●     Corporate/Global

 

Weighting Per Metric

EPS

HBF Organic

Revenue

HBF Operating

Income

30%

30%

40%

 

 

  ●     Operating Segment

 

Weighting Per Metric

EPS

Operating Segment

Organic Revenue

Operating Segment

Operating Income*

30%

30%

40%

*EBITDA for Construction Products 

 

 

Page 1 of 6

 
 
 

 

 

 

          ●     Operating Segment with key global market responsibility (includes SVP, Emerging Markets)

 

Weighting Per Metric

EPS

Operating

Segment Organic

Revenue

Operating Segment

Operating Income*

Key Market

Revenue

Key Market

Gross Margin

30%

20%

25%

15%

10%

*Contribution Margin for Emerging Markets

 

 

Target

●     Each metric will have a target level of performance. Payout will be determined for each metric based on performance relative to target. The target levels of performance will be established at the beginning of each fiscal year.

 

Threshold

●     Threshold performance levels will be established for each metric as follows:

o     Sales, Organic Revenue: 90% of target

o     Operating Income/EBITDA: 80% of target

o     EPS: 80% of target

o     Gross Margin, Contribution Margin: 80% of target

 

●     Payout at the threshold level of performance will be 50% of the target allocated to that metric.

 

 

Superior

●     Superior performance levels will be established for each metric as follows:

o     Sales, Organic Revenue: 110% of target

o     Operating Income/EBITDA: 115% of target

o     EPS: 115% of target

o     Gross Margin, Contribution Margin: 115% of target

 

●     Payout at the superior level of performance will be 150% of the target allocated to that metric.

 

 

Superior Stretch Goal – E xecutive C ommittee

●     Additional superior goals will be established for metrics for the EC members as follows:

o     Organic Revenue: 115% of target

o     Operating Income/EBITDA: 125% of target

o     EPS: 125% of target

o     Gross Margin, Contribution Margin: 125% of target

 

●     Payout at the superior stretch goal will be 200% of the target allocated to that metric

 

See Appendix for payout schedule.

 

 

Page 2 of 6

 
 
 

 

 

 

Payment

Payment will be made in cash, subject to taxes and deductions as applicable.

Payment will be made as close as possible to January 31 following the conclusion of the relevant Plan Year, but will be made no later than March 15 th of the calendar year following the Plan Year.

   

Participant

Status Changes

If a participant begins employment with the company during the Plan Year, bonus potential will be pro-rated for the time the participant was employed during the Plan Year.

   
  If a participant transfers jobs and changes plan design standards, potential bonus will be pro-rated for the time spent in each job.
   
   

Administration

Participants may direct questions about the STI Plan to their local management or human resources representatives.

   
  The Compensation Committee of the Board of Directors shall make a certification decision with respect to performance of financial metrics and consider extraordinary circumstances that may have positively or negatively impacted the achievement of the objectives. The Board or management in their discretion, reserves the right at any time to enhance, diminish or terminate all or any portion of any compensation plan or program, on a collective or individual basis; provided, however, that neither the Board nor the Compensation Committee shall take any action that would cause the Section 162(m) exemption for qualified performance-based compensation to become unavailable with respect to the STI plan.
   

Relevant Terms

Actively Employed - A full-time or part-time employee on the Company payroll. It excludes any employee who has been terminated from employment with the Company – voluntarily or involuntarily – in advance of fiscal year-end.

   
  Company - H.B. Fuller Company and its wholly owned subsidiaries.
   
  Eligible Earnings  – To be determined by region/country.
   
  Payment - The cash reward payable after conclusion of the Plan Year.
   
  Plan Year  – The relevant Company fiscal year.
   
  Short Term Incentive (STI) Plan - The program described herein. May also be referred to as “STIP” or “STI Plan”.

 

 

Page 3 of 6

 
 
 

 

 

 

 

Appendix

STIP Payment Schedule f or

EPS, Operating Income/EBITDA,

Gross Margin, Contribution Margin

 

STIP Payment schedule for

Organic Revenue

 

 

 

Metric

Performance

 

Payout (as % of

target)

 

 

Metric

Performance

 

Payout (as % of

target)

 

 

125%

200.0%

 

115%

200.0%

 

 

124%

195.0%

 

114%

190.0%

 

 

123%

190.0%

 

113%

180.0%

 

 

122%

185.0%

 

112%

170.0%

 

 

121%

180.0%

 

111%

160.0%

 

 

120%

175.0%

 

110%

150.0%*

 

 

119%

170.0%

 

109%

145.0%

 

 

118%

165.0%

 

108%

140.0%

 

 

117%

160.0%

 

107%

135.0%

 

 

116%

155.0%

 

106%

130.0%

 

 

115%

150.0%*

 

105%

125.0%

 

 

114%

146.7%

 

104%

120.0%

 

 

113%

143.3%

 

103%

115.0%

 

 

112%

140.0%

 

102%

110.0%

 

 

111%

136.7%

 

101%

105.0%

 

 

110%

133.3%

 

100%

100.0%

 

 

109%

130.0%

 

99%

95.0%

 

  108% 126.7%   98% 90.0%  
  107% 123.3%   97% 85.0%  
  106% 120.0%   96% 80.0%  
  105% 116.7%   95% 75.0%  
  104% 113.3%   94% 70.0%  
  103% 110.0%   93% 65.0%  
  102% 106.7%   92% 60.0%  
  101% 103.3%   91% 55.0%  
  100% 100.0%   90% 50.0%  
  99% 97.5%        
  98% 95.0%        
  97% 92.5%        
  96% 90.0%        
  95% 87.5%        
  94% 85.0%        
  93% 82.5%        
  92% 80.0%        
  91% 77.5%        
  90% 75.0%        
  89% 72.5%        
  88% 70.0%        
  87% 67.5%        
  86% 65.0%        
  85% 62.5%        
  84% 60.0%        
  83% 57.5%        

 

82%

55.0%

 

 

 

 

  81% 52.5%        
  80% 50.0%        

 

          * Executive Committee members have a maximum opportunity of 200%.
   
  ●     Payout is calculated for each incremental increase in performance (straight line interpolation).

   

 

Page 4 of 6

 
 
 

 

 

 

Calculation Guidelines

 

 

Total Company Metrics

 

Company EPS

 

The adjusted EPS as disclosed in the Company’s quarterly earnings release.

 

   

 

 

HBF Organic Revenue

 

  ●

The adjusted reported revenue as disclosed in the Company’s quarterly earnings release is adjusted for currency impact compared to budgeted exchange rates.

 

   

 

 

  ●

Unbudgeted acquisitions and divestitures are excluded from the calculation.

 

   

 

 

HBF Operating Income

    ● The adjusted gross profit minus adjusted SG&A expenses as disclosed in the Company’s quarterly earnings release adjusted for currency impact compared to budgeted exchange rates.
       
    ● Unbudgeted acquisitions and divestitures are excluded from the calculation.
       
  Region/Operating Segment Metrics
  Organic Revenue
    ● Total company adjustments are transferred down to the region/operating segment revenue which is impacted by the adjustments, unless not approved by the CEO.
       
    ● Basis of targets is US dollars. The budgeted exchange rates will be used to assess performance.
       
    ● Unbudgeted acquisitions and divestitures are excluded from the calculation.
       
  Fully all ocated operating i ncome
    ● At the region/operating segment level, operating income targets include corporate governance allocation at budget. In determining performance, actual corporate governance allocations will be used at the region/operating segment level. Below the region/operating segment level, the corporate governance allocation will remain at budget for measuring performance, where applicable.
       
    ● Total company adjustments are transferred down to the region/operating segment operating income which is impacted by the adjustments, unless not approved by the CEO.
       
    ● Basis of targets is US dollars. The budgeted exchange rates will be used to assess performance.

 

 

Page 5 of 6

 
 
 

 

 

 

    ● Unbudgeted acquisitions and divestitures are excluded from the calculation.
       
  Adjustments
  In calculating the results, the following adjustments will be made:
    a. Individual legal settlements (payments or receipts) with a value (net of insurance) of $3 million or greater will not be included in metric calculations.
    b. Any unbudgeted reorganization or restructuring-related items which cannot be offset by related benefits in the fiscal year will not be included in metric calculations.
    c. Any unbudgeted asset write-downs in excess of $2 million will not be included in metric calculations.
    d. Adjustments needed to (1) correct any inadvertent errors or miscalculations made in setting a performance target for our key markets (such as Hygiene, Packaging, or Durable Assembly) or (2) account for changes resulting from new accounting definitions, requirements or pronouncements.
    e. Other items as publicly disclosed in the Company’s quarterly earnings release. However, the above adjustments (a-d) will not be made to the extent they are inconsistent with publicly disclosed earnings.
       
  Any discretion related to total company adjustments transferred to the region/operating segment exercised by the CEO requires approval by the Compensation Committee of the Board of Directors.

 

   

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