What is the significance of the share increase and dilution control under the 1990 Stock Incentive Plan?

The increase of 31,000,000 shares provides NIKE with more flexibility to grant equity-based compensation. The 2.8x share count for full value awards exceeding 3,000,000 shares is a crucial investor protection mechanism designed to limit potential dilution to shareholders from future equity grants, ensuring that such awards are more meaningfully accounted for against the available share pool.

Were there any negative votes or broker non-votes on the key proposals?

Yes, for Proposal 2 (Executive Performance Sharing Plan), there were approximately 4.98 million votes against and 27.32 million broker non-votes. For Proposal 3 (1990 Stock Incentive Plan), there were approximately 38.26 million votes against and 27.32 million broker non-votes. These votes indicate some level of shareholder dissent or abstention on the plan amendments.

NKE 8-K: Material Agreements & Shareholder Matters

Q: What were the main outcomes of the 2010 Annual Meeting of Shareholders for NKE?

The main outcomes were the shareholder approval of amendments to the Executive Performance Sharing Plan and the 1990 Stock Incentive Plan, the election of all director nominees, and the ratification of PricewaterhouseCoopers LLP as the independent auditor for FY2011. The plan amendments were approved by the requisite shareholder votes and became effective on September 20, 2010.

Q: How were the Executive Performance Sharing Plan and the 1990 Stock Incentive Plan amended?

The Executive Performance Sharing Plan was amended to add Earnings Before Interest and Taxes (EBIT) as a permissible performance measurement and to extend its term for another five years. The 1990 Stock Incentive Plan saw an increase in authorized shares, the introduction of a dilution-control mechanism for full value awards (2.8x share count for excess awards), provisions for 'performance-based compensation' to qualify for tax deductibility, and enhanced governance features like a ban on option repricing and 'double trigger' acceleration on change in control.

Summary

This 8-K filing from NIKE, Inc. (NKE) on September 23, 2010, primarily details the outcomes of its Annual Meeting of Shareholders held on September 20, 2010. Key information for investors includes the shareholder approval of amendments to two significant executive compensation plans: the Executive Performance Sharing Plan and the 1990 Stock Incentive Plan. These amendments aim to extend the duration of the Executive Performance Sharing Plan and enhance the flexibility and shareholder alignment of the 1990 Stock Incentive Plan, including an increase in authorized shares and specific provisions for performance-based awards and stock options. Additionally, the filing confirms the election of all director nominees and the ratification of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal year 2011. The approved amendments to the incentive plans are designed to maintain competitive executive compensation practices while incorporating stronger governance and performance linkage, which are crucial considerations for investors evaluating corporate governance and long-term incentive structures.

Key Highlights

1Shareholder approval secured for amendments to the Executive Performance Sharing Plan, extending its term for an additional five years.
2Amendments to the 1990 Stock Incentive Plan were approved, increasing the authorized Class B Common Stock by 31,000,000 shares to a total of 163,000,000 shares.
3New provisions under the 1990 Plan amendments include limitations on full value performance-based awards to prevent excessive dilution and ensure a 2.8x share count for awards exceeding a specific threshold.
4The 1990 Plan now allows for "performance-based compensation" to qualify for full deductibility under Section 162(m) of the Code.
5Key governance enhancements to the 1990 Plan include an express prohibition on option repricing, a minimum exercise price of 100% fair market value, a maximum option term of 10 years, and 'double trigger' acceleration on change in control.
6All director nominees were elected by shareholders for both Class A and Class B Common Stock.
7PricewaterhouseCoopers LLP was ratified as NIKE's independent registered public accounting firm for fiscal year 2011.

NIKE, Inc. 8-K Report, Material Agreement (Sep 24, 2010)

Summary

Key Highlights

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