8-KLeadership ChangesExhibits & Filings

NIKE, Inc. 8-K Report, Executive Changes (Dec 19, 2006)

Filed December 19, 2006For Securities:NKE

Summary

This Form 8-K filing from NIKE, Inc., dated December 18, 2006, announces significant amendments to its Deferred Compensation Plan, effective January 1, 2005. The primary driver for these changes is to ensure compliance with Section 409A of the Internal Revenue Code, which governs nonqualified deferred compensation. Investors should note that these amendments do not affect amounts deferred before January 1, 2005, that were vested as of December 31, 2004. The core of the amendments revolves around changes to distribution elections and deferral timing for long-term incentive payments and bonuses. Specifically, the ability for participants to elect changes to their distribution methods has been modified to include a mandatory five-year waiting period after the original payment commencement date. Additionally, the deadline for deferring long-term incentive payments has been moved up, requiring elections to be made earlier in the preceding calendar year. These adjustments are designed to align the plan with new tax regulations, potentially impacting executive compensation structures and the timing of benefit payouts for covered employees.

Key Highlights

  • 1NIKE, Inc. amended and restated its Deferred Compensation Plan, effective January 1, 2005.
  • 2The amendments are primarily to comply with Section 409A of the Internal Revenue Code.
  • 3Changes impact the ability of plan participants to elect changes to their benefit distribution methods.
  • 4A new requirement mandates a minimum five-year delay for new distribution methods selected by participants.
  • 5The deadline for electing to defer long-term incentive payments has been moved to an earlier date.
  • 6The amendments restrict the types of bonuses and long-term incentive payments eligible for deferral.
  • 7Pre-2005 vested deferred amounts are not subject to these new Section 409A compliance amendments.

Frequently Asked Questions

The primary reason for the amendments is to ensure compliance with Section 409A of the Internal Revenue Code, which sets strict rules for nonqualified deferred compensation plans.

The amendments do not apply to amounts deferred prior to January 1, 2005, that were vested as of December 31, 2004. Only amounts deferred on or after January 1, 2005, are subject to the new rules.

Participants can no longer elect to change their method of benefit distribution without a significant delay. Any new distribution method selected must have its first payment occur at least five years after the original payment commencement date for the prior method.

The deadline to elect deferral of long-term incentive payments has been moved earlier, generally requiring elections by November 30 of the calendar year preceding the payment year, rather than December 15 of the second preceding year.