8-KLeadership Changes

CATERPILLAR INC 8-K Report, Executive Changes (Apr 10, 2018)

Filed April 10, 2018For Securities:CAT

Summary

Caterpillar Inc. (CAT) announced the retirement of Robert B. Charter, Group President, Customer & Dealer Support, effective June 1, 2018. This departure, while routine, includes specific terms outlined in a Retention and Retirement Agreement. Investors should note the financial implications of this agreement, including a cash payment and the treatment of outstanding equity awards. The agreement details a cash payment of approximately $2.97 million to Mr. Charter upon his retirement. While most equity awards will be treated per their terms, certain awards made in March 2018 will be forfeited. Notably, a 2017 performance-based restricted stock unit award will remain active. The company has also waived relocation policy provisions, meaning Mr. Charter will not need to reimburse the company for relocation expenses. The agreement also includes standard restrictive covenants such as non-competition and confidentiality.

Key Highlights

  • 1Robert B. Charter, Group President, Customer & Dealer Support, to retire effective June 1, 2018.
  • 2Mr. Charter will receive a cash payment of $2,967,125 upon retirement.
  • 3Certain equity awards granted in March 2018 will be forfeited.
  • 4A 2017 performance-based restricted stock unit award will remain outstanding post-retirement.
  • 5Caterpillar will waive relocation reimbursement requirements for Mr. Charter.
  • 6The retirement agreement includes non-competition, non-solicitation, non-disparagement, confidentiality, and cooperation clauses.

Frequently Asked Questions

The primary financial impact is the cash payment of $2,967,125 to Mr. Charter. There is also a waiver of relocation policy reimbursement, which represents a cost saving for Mr. Charter but a benefit provided by the company. The forfeiture of some equity awards may represent a reduction in future dilution or compensation expense for the company.

Most of Mr. Charter's outstanding equity awards will be treated according to their original terms. However, equity awards granted in March 2018 will be forfeited. A specific performance-based restricted stock unit award granted in 2017 will continue to be outstanding after his retirement.

Yes, the agreement includes restrictive covenants such as non-competition, non-solicitation, non-disparagement, confidentiality, and cooperation, which will apply to Mr. Charter following his retirement.

The payment is part of a Retention and Retirement Agreement, which is common practice for senior executives. It likely serves to ensure a smooth transition, acknowledge past contributions, and secure compliance with restrictive covenants during his retirement period.