What is the main purpose of the Key Employee Separation Plan?

The plan's primary purpose is to provide financial security and benefits to key employees and executive officers in the event their employment is involuntarily terminated by the company for reasons other than cause, death, or disability. This helps retain talent and provides a safety net during leadership transitions.

What specific benefits are covered under the plan?

Eligible employees can receive cash severance (based on salary and target bonus), a pro-rata annual incentive bonus, continuation of medical and dental coverage until age 65 (or until other employer benefits are available), outplacement assistance, and continued vesting of equity awards for a specified period.

Are the severance benefits the same for all key employees?

No, the severance benefits are not uniform. The plan specifies different multipliers for cash severance and vesting periods for equity awards based on the executive's position. For example, the CEO receives a multiplier of two times their annual base salary plus target bonus, while certain Senior Vice Presidents receive a multiplier of one and a half times.

What happens if there is a change in control of the company?

The plan includes provisions that restrict the Compensation Committee from amending the plan in a manner adverse to a participant's interests within 90 days prior to a change in control, without the participant's consent. This protects participants from adverse changes to their severance benefits during such critical periods.

SHW 8-K: Leadership Changes

Summary

The Sherwin-Williams Company (SHW) filed an 8-K on January 5, 2018, announcing the adoption of The Sherwin-Williams Company Key Employee Separation Plan, effective January 1, 2018. This plan establishes severance payments and benefits for executive officers and other key employees in the event of involuntary termination under specific circumstances. The plan aims to provide financial security and support to key personnel, ensuring continuity and stability within the company's leadership during potential transitions. Key provisions of the plan include cash severance, pro-rata annual bonuses, continuation of medical and dental benefits, outplacement assistance, and continued vesting of equity awards for eligible employees. The severance multiples and vesting periods vary based on the executive's role, with the Chief Executive Officer (John G. Morikis) and other senior executives receiving specific multipliers and vesting schedules. The plan is administered by the Compensation and Management Development Committee and includes provisions regarding amendments and change-in-control scenarios.

Key Highlights

1Sherwin-Williams adopted a Key Employee Separation Plan effective January 1, 2018.
2The plan provides severance benefits for involuntary termination (not for cause, death, or disability) of executive officers and key employees.
3Severance includes cash payments (salary + target bonus), pro-rata bonus, extended medical/dental benefits, outplacement, and equity vesting.
4Severance multiples and equity vesting periods are differentiated by executive role, with the CEO receiving a higher multiplier and longer vesting.
5The Chief Executive Officer, John G. Morikis, is entitled to 2x base salary + target bonus.
6Senior Vice Presidents Sean P. Hennessey, Allen J. Mistysyn, and Robert J. Davisson are entitled to 1.5x base salary + target bonus.
7The plan allows for amendments by the Compensation Committee, with limitations concerning change-in-control events.

SHERWIN WILLIAMS CO 8-K Report, Executive Changes (Jan 5, 2018)

Summary

Key Highlights

Frequently Asked Questions