8-KLeadership Changes

Aon plc 8-K Report, Executive Changes (Apr 28, 2017)

Filed April 28, 2017For Securities:AON

Summary

Aon plc filed an 8-K on April 27, 2017, to report on a significant executive transition. The key event is the separation agreement with Kristi Savacool, the Chief Executive Officer of Aon Hewitt, effective December 31, 2017. Ms. Savacool will transition to a Special Advisor role to the CEO, focusing on the divestiture of the benefits administration and HR business process outsourcing platform, a critical strategic initiative for the company. This agreement outlines a substantial financial package for Ms. Savacool, including her continued base salary through the transition, a guaranteed cash payment of $3 million upon separation, and an additional discretionary payment of up to $3 million contingent on her performance during the transition period. The company will also cover relocation and home sale price protection costs, alongside legal fees. This filing provides transparency on executive compensation and organizational changes related to strategic business unit separation, which investors should monitor for potential impacts on business operations and future company structure.

Key Highlights

  • 1Kristi Savacool, CEO of Aon Hewitt, will separate from the company effective December 31, 2017.
  • 2Ms. Savacool will serve as a Special Advisor to the CEO during the transition period.
  • 3Her responsibilities as Special Advisor will include overseeing the separation of the benefits administration and HR business process outsourcing platform.
  • 4Ms. Savacool will continue to receive her current base salary until her separation date.
  • 5Upon separation, Ms. Savacool is entitled to a $3 million cash payment and up to an additional $3 million discretionary payment based on performance.
  • 6The company will provide relocation benefits and up to $300,000 for home sale price protection.
  • 7Ms. Savacool's equity awards, including under the Leadership Performance Program, will be administered according to existing plan terms, with provisions for continued eligibility for certain awards.

Frequently Asked Questions

Kristi Savacool's separation is significant because she was the CEO of Aon Hewitt, a major business unit. Her departure involves a transition to a Special Advisor role to oversee the separation of the benefits administration and HR business process outsourcing platform, indicating a strategic shift or divestiture concerning this part of Aon's business.

Aon will incur costs related to Ms. Savacool's separation. These include her base salary through December 31, 2017, a guaranteed cash payment of $3 million, a potential discretionary payment of up to $3 million, relocation benefits, and up to $300,000 for home sale price protection, plus legal fees. These are one-time or transitional costs directly tied to her departure and the separation of the business unit.

As Special Advisor, Ms. Savacool is tasked with overseeing the successful separation of the benefits administration and HR business process outsourcing platform. Her continued involvement and expertise during this crucial phase are intended to ensure a smooth and effective transition, likely leveraging her deep understanding of the business unit being separated.

Ms. Savacool's existing equity awards will continue to be governed by the terms of the applicable plans. Notably, her award under the Leadership Performance Program for the 2016-2018 performance period will be determined as if she had continued employment through the payment date, ensuring she is not penalized in terms of earned incentives due to this planned separation.