8-KLeadership ChangesExhibits & Filings

SHERWIN WILLIAMS CO 8-K Report, Executive Changes (Feb 26, 2007)

Filed February 26, 2007For Securities:SHW

Summary

This 8-K filing from The Sherwin-Williams Company (SHW) announces the approval of the 2007 Executive Performance Bonus Plan and new forms of Severance Agreements. The 2007 Performance Plan is designed to allow annual cash incentive awards to executive officers and key employees to be eligible for tax deductions under Section 162(m) of the Internal Revenue Code, contingent on shareholder approval at the upcoming 2007 Annual Meeting. If not approved, incentive compensation may not be fully tax-deductible as "performance-based" compensation. The filing also details the performance goals for the Named Executive Officers under the new bonus plan, which include metrics such as consolidated net sales, diluted earnings per share, return on equity, and free cash flow. Additionally, new Severance Agreements were approved for executive officers and key employees, replacing previous agreements. These new agreements outline payments under specific termination circumstances following a change in control.

Key Highlights

  • 1Sherwin-Williams approved the 2007 Executive Performance Bonus Plan, replacing the prior Management Incentive Plan.
  • 2The new bonus plan requires shareholder approval at the 2007 Annual Meeting to ensure tax deductibility under Section 162(m) of the Code.
  • 3Performance goals for Named Executive Officers under the 2007 plan include financial metrics like net sales, EPS, and return on equity, as well as operational targets.
  • 4New forms of Severance Agreements were approved for executive officers and key employees.
  • 5The Severance Agreements provide for payments upon termination following a change in control, replacing existing agreements.
  • 6The filing indicates that detailed information about the 2007 Performance Plan will be included in the company's 2007 Proxy Statement.

Frequently Asked Questions

The primary purpose of the 2007 Executive Performance Bonus Plan is to provide an annual cash incentive program for Sherwin-Williams' executive officers and key employees. A key objective is to ensure that awards made under this plan are eligible for tax deductions for the company under Section 162(m) of the Internal Revenue Code, which requires shareholder approval.

No, the bonus payments are performance-based. The 2007 plan includes threshold company earnings goals and individual performance goals for Named Executive Officers. These goals cover a range of financial metrics like consolidated net sales and diluted earnings per share, as well as operational targets.

If shareholders do not approve the 2007 Performance Plan at the 2007 Annual Meeting, the annual cash incentive compensation paid to executive officers and other key employees may not be fully tax-deductible for Sherwin-Williams as 'performance-based' compensation under Section 162(m) of the Code.

The newly approved Severance Agreements are designed to provide financial protection for executive officers and certain key employees in the event of their termination of employment following a 'change in control' of the company. These agreements replace prior severance pay arrangements and specify conditions under which payments would be made, excluding terminations for cause, death, or disability.