Summary
This 8-K filing from NIKE, Inc., dated July 24, 2008, announces the execution of Amended and Restated Covenant Not to Compete and Non-Disclosure Agreements with two key executives, Mark G. Parker and Charles D. Denson. The primary purpose of these amendments is to ensure compliance with Section 409A of the Internal Revenue Code, which governs deferred compensation arrangements. For investors, the key takeaway is that these agreements have been updated to avoid potential tax penalties for the named executives. Specifically, any payments that would normally be made during a two-year non-competition period following termination of employment (whether voluntary or involuntary) will now be delayed by six months after the executive's separation from service. This delay is a necessary adjustment to comply with Section 409A. The company will accumulate these delayed payments and issue them in a lump sum, with interest, after the six-month waiting period.
Key Highlights
- 1NIKE, Inc. amended and restated non-compete and non-disclosure agreements with executives Mark G. Parker and Charles D. Denson.
- 2The amendments are specifically to comply with Section 409A of the Internal Revenue Code.
- 3The goal of the amendments is to prevent tax penalties for the executives related to deferred compensation.
- 4Non-compete payments, previously made monthly during a two-year post-termination period, will now be delayed for six months after the executive's separation from service.
- 5Payments due before the six-month mark will be paid in a lump sum, with interest, after the waiting period.
- 6The non-compete period remains two years following termination of employment.
- 7The filing includes the amended agreements as exhibits (10.1 and 10.2).