What is the main reason for these changes to equity awards?

The changes are being made in preparation for Tyco International's planned separation into three independent, publicly-traded companies. These adjustments ensure clarity and fairness in how executive and employee equity awards are handled during and after this significant corporate restructuring.

How will my unvested equity awards be treated if my employment is terminated by Tyco in connection with the separation?

If your employment is terminated by Tyco due to the separation, unvested stock options, restricted share units, and performance share units may fully vest upon termination. For performance share units, this is subject to the completion of the applicable performance period. Additionally, stock options granted between January 1, 2008, and October 11, 2011, may have their exercise period extended by one year. You may also receive a pro-rated bonus and full vesting of your company match under the Supplemental Savings and Retirement Plan.

What happens to my existing equity awards after the separation is complete?

Upon the completion of the separation, all outstanding equity awards will convert into "like-kind" equity awards of the three newly formed, independent companies. This conversion will be at an equivalent value, determined using the intrinsic value methodology, ensuring that your awards reflect the new corporate structures.

Are there any special provisions for the CEO, Edward D. Breen?

Yes, the terms of Mr. Breen's employment agreement will govern the benefits applicable to him. Notably, Mr. Breen has agreed to waive the provisions of his employment agreement that would have provided for full acceleration of his fiscal year 2012 equity awards.

JCI 8-K: Leadership Changes

Summary

This 8-K filing from Tyco International Ltd. (JCI) on October 14, 2011, details significant changes to outstanding equity awards in anticipation of the company's planned separation into three independent publicly-traded entities. The primary focus is on how unvested equity awards, including stock options and various units (restricted, performance, deferred), will be treated upon termination of employment in connection with the separation, as well as how these awards will convert into new awards for the newly formed companies. Key adjustments include accelerated vesting provisions for employees terminated due to the separation, with specific terms for awards granted before and after October 12, 2011. For employees whose employment is terminated by the company in relation to the separation, unvested awards may fully vest (subject to performance period completion for performance units) and exercise periods for stock options may be extended. The filing also outlines the conversion of existing equity awards into equivalent awards for the three new companies post-separation, ensuring a "like-kind" conversion at equivalent value based on intrinsic value.

Key Highlights

1Tyco International Ltd. is modifying its equity award policies in preparation for a three-way corporate separation.
2Unvested equity awards (stock options, RSUs, PSUs) for employees terminated due to the separation may receive accelerated vesting.
3Specific vesting acceleration terms differ for awards granted prior to and on/after October 12, 2011.
4Stock option exercise periods may be extended for employees whose employment is terminated in connection with the separation.
5Employees terminated due to the separation may receive pro-rated bonuses and full vesting of company match under retirement plans.
6Outstanding equity awards will convert into "like-kind" awards for the three new independent companies post-separation.
7The conversion of equity awards will be based on equivalent value determined using the intrinsic value methodology.

Johnson Controls International plc 8-K Report, Executive Changes (Oct 14, 2011)

Summary

Key Highlights

Frequently Asked Questions