8-KLeadership ChangesCorporate ChangesOther Events+1

CURTISS WRIGHT CORP 8-K Report, Executive Changes (Mar 23, 2012)

Filed March 23, 2012For Securities:CW

Summary

Curtiss-Wright Corporation (CW) filed an 8-K on March 23, 2012, detailing significant changes related to executive compensation and corporate governance. Most notably, CEO Martin R. Benante waived his "single trigger" change of control benefit, meaning he would only receive benefits under his agreement if terminated without cause or if he left for "good reason" following a change of control, rather than having a broader "walk away right" upon any change of control. Furthermore, the company announced substantial revisions to its executive compensation programs, driven by feedback from significant shareholders and advisory groups. These changes include aligning executive target pay with the 50th percentile of market data, modifying incentive structures to emphasize quantitative company performance, reducing the weight of qualitative individual goals, and eliminating stock options for long-term incentive awards to lower the company's burn rate. The company also amended its By-Laws to remove a previous forum selection clause designating the Delaware Chancery Court.

Key Highlights

  • 1CEO Martin R. Benante waived his "single trigger" change of control benefit in his employment agreement.
  • 2The waiver means benefits are now contingent on termination without cause or departure for "good reason" after a change of control, rather than an automatic "walk away right".
  • 3Curtiss-Wright has significantly revised its executive compensation programs based on shareholder feedback.
  • 4Executive target pay will be moved towards the 50th percentile of market data.
  • 5Stock options have been eliminated for long-term incentive awards to reduce the company's burn rate.
  • 6The company amended its By-Laws to remove the exclusive forum selection provision for the Delaware Chancery Court.
  • 7These compensation changes are designed to better align executive pay with company performance and shareholder interests.

Frequently Asked Questions

A "single trigger" change of control benefit allows an executive to receive compensation (e.g., severance, accelerated vesting) upon a change of control event, regardless of whether their employment is terminated. CEO Martin R. Benante waived this provision, meaning his benefits are now contingent on specific termination circumstances following a change of control. For investors, this signals a potentially reduced cost to the company in the event of a change of control and may reflect a commitment to aligning executive interests more closely with long-term shareholder value rather than short-term opportunistic exits.

The company is aligning executive target pay with the 50th percentile (median) of market data, moving towards this target over 2-3 years for most executives. They are also shifting incentive focus to quantitative company performance (e.g., adjusted operating income, cash flow) and reducing the weight of qualitative individual goals. Additionally, stock options have been eliminated for long-term incentive awards, and the mix of awards has changed to restricted stock units, performance shares, and long-term cash-based performance units to lower the company's burn rate.

Curtiss-Wright amended its By-Laws to remove the provision that designated the Chancery Court of Delaware as the sole and exclusive forum for adjudicating certain disputes with the Company. While the filing doesn't elaborate on the specific reasons for this change, such amendments can be made for various strategic or legal reasons, potentially to allow for broader jurisdiction or to respond to evolving corporate governance practices or legal interpretations.

The elimination of stock options for long-term incentive awards and the downward adjustment of executive incentive targets are expected to reduce Curtiss-Wright's stock "burn rate" (the rate at which shares are issued or reserved for stock-based compensation). The company states that on a pro-forma basis, these actions will reduce the burn rate to below 2% for the near term future and that they are committed to maintaining it within an industry acceptable range.