8-KMaterial Agreements

EMCOR Group, Inc. 8-K Report, Material Agreement (Mar 31, 2010)

Filed March 31, 2010For Securities:EME

Summary

EMCOR Group, Inc. (EME) filed this Form 8-K on March 31, 2010, to report on two significant amendments affecting executive compensation and severance. The first amendment, an Omnibus Amendment to Severance Agreements, modifies the severance packages for key executives, including the CEO, President, CFO, and General Counsel. The changes primarily relate to how pro-rata incentive awards are calculated and paid in the event of termination without cause or resignation for good reason. This aims to provide a more defined and potentially enhanced payout structure for these executives under specific termination scenarios. The second key development is an amendment to the company's Long Term Incentive Plan (LTIP). This amendment introduces changes to the calculation of "Earnings Per Share" for performance periods commencing on or after January 1, 2010, by excluding certain non-cash charges, acquisition/disposition-related fees, tax rate changes, restructuring charges, and accounting principle changes. Additionally, the LTIP amendment clarifies the pro-rata payout of awards in cases of termination due to death, disability, termination by the company without cause, or resignation for good reason, ensuring executives receive a calculated portion of their potential award based on the elapsed time within a performance period.

Key Highlights

  • 1EMCOR Group amended severance agreements for top executives, altering termination compensation provisions.
  • 2The amendments specify pro-rata calculations for incentive awards upon termination without cause or resignation for good reason.
  • 3The company updated its Long Term Incentive Plan (LTIP) with changes to the definition of Earnings Per Share (EPS) for performance calculations.
  • 4Specific exclusions (e.g., non-cash charges, M&A fees, tax changes) are now applied to EPS calculations for LTIP performance periods starting January 1, 2010.
  • 5The LTIP amendment clarifies pro-rata award payouts for events such as death, disability, termination without cause, or resignation for good reason.
  • 6These changes could impact the total compensation received by executives under various separation scenarios.
  • 7The filing includes the full text of the Omnibus Amendment to Severance Agreements and the Second Amendment to the LTIP as exhibits.

Frequently Asked Questions

The Omnibus Amendment to Severance Agreements primarily revises how pro-rata incentive awards are calculated and paid to specific executives (CEO, President, CFO, General Counsel) if their employment is terminated by the company without cause or if they resign for good reason. It ensures they receive a portion of their targeted incentive award based on the time employed in the year of termination, capped at their maximum annual incentive award.

For LTIP performance periods beginning on or after January 1, 2010, the calculation of Earnings Per Share (EPS) will exclude specific items. These include non-cash charges from asset write-downs, fees related to acquisitions or dispositions, effects of changes in statutory tax rates, restructuring charges from subsidiary closures, and cumulative changes in accounting principles. This aims to provide a 'cleaner' EPS metric for performance evaluation.

Under the amended LTIP, if a participant's employment is terminated due to death or disability, they (or their estate) will receive a pro-rata portion of their cash award for the three-year performance period. This calculation is based on the number of full and partial months elapsed in the period prior to termination, multiplied by the amount they would have received had they completed the entire period, based on actual company performance.

The Omnibus Amendment to Severance Agreements specifically applies to a select group of named executive officers, including the CEO, President, CFO, General Counsel, and EVP of Shared Services. The LTIP amendment, however, applies more broadly to participants in the Long Term Incentive Plan, though the specific details of payout calculations upon termination are clarified for various scenarios.