Summary
Colgate-Palmolive Company (CL) filed an 8-K on September 18, 2018, reporting on the renewal and amendment of its Executive Severance Plan. The Board of Directors met on September 13, 2018, and extended the plan through December 31, 2023. The core terms remain substantially the same as previously disclosed, with a notable change concerning potential excise taxes related to "golden parachute" provisions under Section 4999 of the Internal Revenue Code. The amendment introduces a participant-friendly option: if a "golden parachute" tax is triggered, the company will either pay out all severance and cover the associated tax, or reduce the payments to avoid the tax, whichever results in a better after-tax outcome for the executive. This change aims to provide clarity and potentially greater net benefits to participating executives in specific change-of-control scenarios, while also managing the company's tax liabilities.
Key Highlights
- 1Colgate-Palmolive Company renewed its Executive Severance Plan, extending it to December 31, 2023.
- 2The renewal maintains substantially the same terms and conditions as the previous plan.
- 3A key amendment addresses the "golden parachute" tax under Section 4999 of the Internal Revenue Code.
- 4The amended plan offers executives a choice in "golden parachute" tax situations: receive full payments and pay the tax, or receive reduced payments to avoid the tax.
- 5The company will implement whichever option provides the best after-tax outcome for the participant.
- 6This amendment aims to align executive incentives with optimal financial outcomes in potential change-of-control events.
- 7The full, amended Executive Severance Plan document is filed as an exhibit (Exhibit 10-A) to the 8-K filing.