8-KLeadership ChangesOther EventsExhibits & Filings

EQUIFAX INC 8-K Report, Executive Changes (Sep 26, 2008)

Filed September 26, 2008For Securities:EFX

Summary

Equifax Inc. filed an 8-K on September 26, 2008, primarily detailing amendments to executive compensation and change-in-control (CIC) agreements. These changes are driven by recent regulatory updates concerning Section 409A and Section 162(m) of the Internal Revenue Code. Key updates include revised definitions for "annual bonus" to ensure compliance and align with IRS rulings, impacting termination compensation calculations for CEO Richard F. Smith and TALX President William W. Canfield. The company also introduced a new form of CIC agreement for other senior executives, which refines terms, clarifies benefits, and incorporates provisions related to Section 409A compliance and post-termination obligations. While the report emphasizes that the new CIC agreements are not expected to materially increase compensation compared to prior agreements, the revisions signal a proactive approach by Equifax to ensure regulatory compliance and maintain clear executive compensation structures. Additionally, the company's Governance Committee reaffirmed its decision to maintain the existing Shareholder Rights Agreement for another three-year period, concluding it remains in the best interest of shareholders amidst current market conditions.

Key Highlights

  • 1Amendments to employment agreements for CEO Richard F. Smith and TALX President William W. Canfield to comply with IRS regulations (Section 409A and 162(m)).
  • 2Introduction of a new form of Change in Control (CIC) agreement for other senior executives, superseding existing agreements if accepted by November 2, 2008.
  • 3Changes to the calculation of "annual bonus" for termination compensation, aligning with IRS interpretations to maintain deductibility of performance-based compensation.
  • 4The new CIC agreements feature updated terms including a shorter initial term (3 years), refined definitions, clarification on retirement plan benefits, a six-month payment delay for 409A compliance, and inclusion of non-compete and non-disparagement clauses.
  • 5The company stated that the new CIC agreements would not materially increase compensation payable in the event of a change in control compared to the prior agreements.
  • 6The Governance Committee evaluated and decided to maintain the current Shareholder Rights Agreement for another three-year period, concluding it serves shareholder interests.
  • 7The report references specific exhibits detailing the amended employment agreements for Mr. Smith and Mr. Canfield, and the new form of CIC agreement.

Frequently Asked Questions

Equifax is amending these agreements to ensure compliance with recently adopted rules under Section 409A and Section 162(m) of the Internal Revenue Code. These regulations pertain to executive compensation, particularly deferrals and performance-based pay, and require adjustments to avoid adverse tax consequences for both the company and its executives.

The new CIC agreements, offered to most senior executives, have an updated initial term of three years (down from five), refined definitions of key terms like 'Cause' and 'Good Reason,' clarified benefit calculations for retirement plans, and incorporated a six-month delay on payments if executives are subject to Section 409A. They also include new provisions such as release of claims, non-compete, non-disparagement clauses, and restrictions on tax gross-up timing.

Equifax stated that if the new CIC agreements had been in effect previously, they would not have materially increased the amounts reported as payable to the affected executives in connection with a change in control. The primary goal of these amendments is regulatory compliance and clarification of terms, rather than increasing compensation.

The Shareholder Rights Agreement, often referred to as a 'poison pill,' is a defensive measure designed to protect the company from hostile takeovers. The Governance Committee's decision to maintain it in its current form suggests that the Board believes it continues to be a necessary tool to protect shareholder value and that the current market and governance landscape warrants its continuation.