8-KMaterial AgreementsExhibits & Filings

SHERWIN WILLIAMS CO 8-K Report, Material Agreement (Feb 24, 2006)

Filed February 24, 2006For Securities:SHW

Summary

This SEC filing by The Sherwin-Williams Company on February 23, 2006, details the Compensation Committee's decisions regarding executive compensation for 2006. Key actions include approving base salary increases for named executive officers, announcing annual cash bonus awards earned in 2005, and establishing performance-based incentive compensation levels and individual performance goals for 2006. The filing also discloses the grant of restricted stock to these executives, with vesting tied to company performance over a four-year period. This information provides insight into the company's strategy for retaining and motivating its senior leadership through a combination of fixed and performance-based compensation tied to key financial metrics.

Key Highlights

  • 1Approved base salary increases for named executive officers, with CEO C.M. Connor's salary set at $1,116,648 for 2006.
  • 2Announced 2005 annual cash bonus awards, with CEO C.M. Connor receiving $1,505,000.
  • 3Established 2006 incentive compensation ranges (minimum, target, maximum) as a percentage of base salary for named executive officers, indicating performance-based pay structure.
  • 4Granted restricted stock to named executive officers, with a total of 99,700 shares awarded.
  • 5Restricted stock vesting is performance-based, contingent on achieving specified goals for average return on equity and cumulative EBITDA over four years.
  • 6Individual performance goals for 2006 are detailed for various executives, focusing on metrics such as net sales, diluted EPS, return on equity, and cash flow.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose material agreements and decisions made by The Sherwin-Williams Company's Compensation Committee regarding the compensation of its named executive officers for the 2005 and 2006 fiscal years. This includes salary adjustments, bonus awards, and stock grants.

Executive compensation is structured with a base salary, annual cash incentive bonuses, and long-term equity awards (restricted stock). The annual bonuses and the vesting of restricted stock are tied to specific performance metrics, aiming to align executive interests with shareholder value.

Additional information regarding the compensation paid to named executive officers for the 2005 fiscal year will be provided in Sherwin-Williams' proxy statement for the 2006 Annual Meeting of Shareholders, which was expected to be filed in March 2006.

Performance metrics vary by executive role but generally include consolidated net sales, diluted earnings per share (EPS), after-tax return on shareholders' equity, free cash flow, working capital as a percentage of sales, earnings before interest, taxes, depreciation, and amortization (EBITDA), return on sales, return on net assets employed, new store openings, budget achievement, and legal/business development matters. For restricted stock, the key metrics are average return on average equity and cumulative EBITDA over a four-year period.