Summary
Illinois Tool Works Inc. (ITW) announced a strategic agreement with Relational Investors LLC and its affiliates, collectively known as the Relational Group. This agreement involves the appointment of Mr. David H. Batchelder, a representative of Relational, to ITW's Board of Directors. This appointment is contingent on Relational's request and will occur sometime after ITW's 2012 annual meeting but before the sixtieth day prior to the 2013 annual meeting. Should he join the board, ITW has committed to re-nominating him for a one-year term at the 2013 annual meeting.
Key Highlights
- 1ITW has entered into a letter agreement with Relational Investors LLC and its affiliates.
- 2Mr. David H. Batchelder is to be appointed to ITW's Board of Directors under specific conditions.
- 3The appointment of Mr. Batchelder is expected to occur between ITW's 2012 and 2013 annual shareholder meetings.
- 4ITW has agreed to re-nominate Mr. Batchelder for a one-year term at the 2013 Annual Meeting if he joins the board.
- 5The Relational Group has agreed to vote for the Board's director nominees at annual meetings.
- 6The Relational Group has committed to certain standstill provisions, limiting their ability to solicit proxies, propose shareholder actions, or seek control of the company (with the exception of Mr. Batchelder's board seat).
- 7The agreement includes a cap on the Relational Group's ownership of ITW's voting securities at 9.9%.
Frequently Asked Questions
The main purpose of the agreement is to settle potential disagreements and bring a representative from Relational Investors LLC onto ITW's Board of Directors. This aims to ensure alignment and cooperation between the company and a significant shareholder group.
David H. Batchelder is a representative of Relational Investors LLC. Under the agreement, ITW has committed to appoint him to its Board of Directors, subject to certain conditions and timing requirements.
The Relational Group has committed to vote for ITW's slate of director nominees and has agreed to several 'standstill' provisions. These provisions restrict their ability to solicit proxies, initiate shareholder proposals, seek board representation (beyond Mr. Batchelder), or attempt to control the company's management or board. They also agreed not to own more than 9.9% of ITW's voting securities.
Mr. Batchelder can be appointed to the Board if requested by Relational any time after ITW's 2012 annual meeting of stockholders but before the sixtieth day prior to ITW's 2013 annual meeting of stockholders.