Why is JCI closing its existing deferred compensation plans?

JCI is closing its existing Executive Deferred Compensation Plan (Prior DCP) and Tyco Supplemental Savings and Retirement Plan (TSSRP) to new participants and deferrals to streamline its executive compensation structure and transition to a new plan that aligns with its post-merger strategy. This move signifies a shift in how executive compensation is offered.

What is the new Executive DCP and how does it differ from the old plans?

The new Johnson Controls International plc Senior Executive Deferred Compensation Plan (Executive DCP) allows eligible senior executives to defer compensation. Key differences include the company's decision not to provide any matching or discretionary contributions and placing all investment risk on the participant, unlike some previous plans which may have offered company contributions or guarantees.

Who is eligible to participate in the new Senior Executive Deferred Compensation Plan?

Eligibility for the new plan is limited to certain high-level employees and officers, specifically those who were participants in the Retirement Restoration Plan (RPP) prior to the merger or officers immediately following the merger, and are deemed eligible by the company.

What happens to compensation already deferred in the existing plans?

The filing indicates that the plans are being amended and restated. While new deferrals are prohibited from January 1, 2018, participants with existing balances or elections in the Prior DCP and TSSRP would generally continue to have those balances managed and distributed according to the terms of the respective plans as they are amended and restated, though specific details would be in the full plan documents.

JCI 8-K: Leadership Changes

Summary

Johnson Controls International plc (JCI) filed an 8-K on September 18, 2017, to report significant changes to its executive compensation and deferred compensation plans, effective January 1, 2018. The company is phasing out new participation and deferrals under its existing Executive Deferred Compensation Plan (Prior DCP) and the Tyco Supplemental Savings and Retirement Plan (TSSRP). This indicates a strategic shift in how executive compensation and long-term incentives are structured post-merger. In conjunction with these changes, JCI is introducing a new Johnson Controls International plc Senior Executive Deferred Compensation Plan (Executive DCP). This new plan will allow eligible senior executives to defer a portion of their base salary and bonuses, and potentially equity awards. Notably, the company will not provide any matching or discretionary contributions to this new plan, and participants bear all investment risk. These amendments signal a move towards a more participant-risk-oriented deferred compensation structure for executives.

Key Highlights

1Effective January 1, 2018, Johnson Controls is closing its Executive Deferred Compensation Plan (Prior DCP) to new participants and new compensation deferrals.
2The Tyco Supplemental Savings and Retirement Plan (TSSRP) will also be closed to new participants and new deferrals/credits as of January 1, 2018.
3A new Johnson Controls International plc Senior Executive Deferred Compensation Plan (Executive DCP) will be effective January 1, 2018.
4The new Executive DCP allows eligible senior executives to defer up to 50% of base salary and up to 95% of qualifying bonuses, with potential deferrals of certain equity awards.
5The Company will not offer any matching or discretionary contributions under the new Executive DCP.
6Participants in the Executive DCP will bear all investment risk, with gains/losses allocated based on selected investments, and no guaranteed rate of return.
7Distributions from both the RPP and the new Executive DCP can be taken as a lump sum or over up to ten annual installments upon termination of employment.

Johnson Controls International plc 8-K Report, Executive Changes (Sep 19, 2017)

Summary

Key Highlights

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