Summary
Johnson Controls International plc (JCI) filed an 8-K on September 15, 2017, detailing a significant executive compensation and retention arrangement for its Executive Vice President and Chief Financial Officer, Brian J. Stief. To ensure continuity in senior management and support post-merger integration and succession planning, JCI has entered into a comprehensive retention agreement with Mr. Stief, extending his commitment through December 2020. This agreement aims to incentivize him to forgo his rights under a prior Change of Control Executive Employment Agreement, which could have entitled him to approximately $12 million in severance following the 2016 merger with Tyco. The new arrangement includes substantial equity awards totaling $20 million in target value, comprising restricted share units (RSUs) and performance share units (PSUs). These awards are designed to vest by December 2020, with provisions for accelerated vesting upon certain events like death, disability, or involuntary termination. Furthermore, a separate letter agreement guarantees a minimum cash payout of $12 million related to the equity awards, ensuring Mr. Stief receives at least that amount upon vesting, regardless of share performance, and includes customary non-compete and non-solicitation clauses.
Key Highlights
- 1JCI has secured the continued service of EVP and CFO Brian J. Stief through December 2020.
- 2Mr. Stief's retention incentivizes him to waive potential severance benefits of approximately $12 million under his previous Change of Control agreement.
- 3A new comprehensive retention package includes equity awards with a target value of $20 million ($12 million in RSUs/PSUs and $4 million in PSUs and $4 million in RSUs).
- 4The retention equity awards are scheduled to vest on or about December 7, 2020, with accelerated vesting for death, disability, retirement, or involuntary termination.
- 5Performance-based equity awards are tied to the company's Long-Term Incentive Performance Program, with potential payouts up to 200% of the target for top performance.
- 6A supplemental letter agreement guarantees Mr. Stief a minimum cash value of $12 million from his retention equity awards upon vesting.
- 7The agreement includes customary non-compete and non-solicitation covenants from Mr. Stief.