8-KLeadership ChangesExhibits & Filings

CATERPILLAR INC 8-K Report, Executive Changes (Nov 6, 2012)

Filed November 6, 2012For Securities:CAT

Summary

This Form 8-K filing by Caterpillar Inc. (CAT) on November 6, 2012, primarily details an Equity Compensation and Supplemental Pension Agreement entered into with Group President Richard P. Lavin in connection with his retirement, effective December 31, 2012. The agreement outlines specific compensation and pension benefits Mr. Lavin will receive upon his retirement, contingent on his continued service and adherence to certain covenants. Key provisions include a stock option grant valued at $2,000,000, accelerated vesting of certain restricted stock awards, and a supplemental pension benefit. The stock option's vesting is tied to the company's stock performance, requiring a per share closing price of at least $110.09 for twenty consecutive trading days, with an exception for vesting upon his death. This filing is important for investors to understand executive compensation arrangements during leadership transitions and their potential impact on shareholder value.

Key Highlights

  • 1Caterpillar entered into an Equity Compensation and Supplemental Pension Agreement with Group President Richard P. Lavin.
  • 2The agreement is in connection with Mr. Lavin's retirement, effective December 31, 2012.
  • 3Mr. Lavin will receive a stock option grant with an aggregate grant date value of $2,000,000.
  • 4The stock option will vest if Caterpillar's common stock achieves a per share closing price of at least $110.09 for twenty consecutive days.
  • 5Vesting of the stock option is accelerated upon Mr. Lavin's death.
  • 6Mr. Lavin will receive accelerated vesting of approximately 2,857 shares of restricted stock and restricted stock units.
  • 7A supplemental pension benefit is also part of the agreement, calculated based on assumed years of service and age at retirement.

Frequently Asked Questions

The main purpose of this 8-K filing is to disclose the details of an Equity Compensation and Supplemental Pension Agreement made with Group President Richard P. Lavin as he prepares for his retirement at the end of 2012.

Mr. Lavin will receive a stock option grant valued at $2,000,000, accelerated vesting of approximately 2,857 restricted stock awards, and a supplemental pension benefit designed to enhance his retirement income.

The stock option will vest if Caterpillar's common stock price reaches at least $110.09 per share for twenty consecutive trading days. Vesting is also guaranteed if Mr. Lavin passes away before his retirement date.

Yes, Mr. Lavin's receipt of these benefits is contingent on him retiring on the specified date (December 31, 2012) and not resigning or being terminated for cause before that date. The agreement also includes a release of claims and covenants regarding non-competition and cooperation.