8-KLeadership ChangesOther EventsExhibits & Filings

Johnson Controls International plc 8-K Report, Executive Changes (Aug 21, 2017)

Filed August 21, 2017For Securities:JCI

Summary

This 8-K filing from Johnson Controls International plc (JCI) announces an accelerated leadership transition, with George R. Oliver set to become Chairman and Chief Executive Officer effective September 1, 2017. This accelerates a previously planned succession where Alex A. Molinaroli was to transition to Executive Chairman before Mr. Oliver assumed the CEO role. Mr. Molinaroli will also step down from the Board of Directors on the same date. The company is also reporting the resignation of a director, Jeffrey Joerres, who was not departing due to any disagreements. The Board has appointed a new lead director and made changes to the Compensation Committee. Investors should note the implications of this accelerated leadership change on company strategy and the financial impact of Mr. Molinaroli's departure, including a significant severance package.

Key Highlights

  • 1George R. Oliver to assume roles of Chairman and CEO effective September 1, 2017, accelerating the previously planned leadership transition.
  • 2Alex A. Molinaroli to depart as CEO and step down from the Board of Directors effective September 1, 2017.
  • 3Mr. Molinaroli is eligible for approximately $63 million in severance, including cash and pro rata bonus payments, based on his existing Change of Control Agreement.
  • 4Mr. Molinaroli will also receive the lump sum value of certain 401(k) and Retirement Restoration Plan contributions and continued medical benefits until September 2, 2018.
  • 5Mr. Molinaroli will forfeit a restricted share unit award with a grant date fair value of $20 million but may be eligible for full or partial vesting of other specified equity awards.
  • 6Jeffrey Joerres resigned from the Board of Directors on August 16, 2017, with no stated disagreements with the Company.
  • 7Jürgen Tinggren has been designated as the new lead director.

Frequently Asked Questions

The Board of Directors determined to accelerate the transition of the Chairman and Chief Executive Officer roles. While the original plan involved Alex A. Molinaroli becoming Executive Chairman before George R. Oliver succeeded him as CEO, the Board decided for Mr. Oliver to assume both Chairman and CEO roles on September 1, 2017.

Mr. Molinaroli is entitled to significant severance benefits under his Change of Control Agreement, estimated at approximately $63 million, which includes cash severance and pro rata bonus payments. He will also receive the value of certain retirement plan contributions and continued medical benefits until September 2, 2018.

Yes, Mr. Molinaroli is subject to customary covenants not to compete with the Company and not to solicit employees for specified periods following his departure.

Jeffrey Joerres resigned from the Board. In response, Jürgen Tinggren was designated as the new lead director, and the Compensation Committee saw changes with W. Roy Dunbar appointed as a member and Michael E. Daniels appointed as its Chairman.