What is the primary purpose of this 8-K filing?

The primary purpose of this 8-K filing is to report on the entry into a material definitive agreement, specifically an amended and restated employment agreement with W. Nicholas Howley, the Company's Chairman and CEO, and the adoption of a new Dividend Equivalent Plan.

What are the key terms of W. Nicholas Howley's new employment agreement?

The agreement extends Mr. Howley's employment through April 25, 2013 (with potential for annual extensions), guarantees a base salary of at least $550,000 annually, and provides for a substantial stock option grant of 800,000 shares (contingent on shareholder approval). It also outlines specific perquisites and severance provisions in case of termination.

What is the Dividend Equivalent Plan and how does it affect option holders?

The Dividend Equivalent Plan allows participants in the 2006 Stock Incentive Plan to receive the economic benefit of dividends declared on the Company's stock. Depending on the type of dividend and the status of the option (vested or unvested), participants may receive a cash payment equivalent to the dividend or a reduction in the exercise price of their unvested stock options. This plan is effective October 1, 2008.

Are there any restrictions on W. Nicholas Howley after his employment terminates?

Yes, the employment agreement includes a 24-month post-termination non-compete clause prohibiting Mr. Howley from engaging in competing businesses or assisting others in acquiring businesses that TransDigm pursued. He is also subject to a 24-month non-solicitation clause for employees and consultants.

TDG 8-K: Material Agreements

Summary

TransDigm Group Incorporated filed an 8-K on June 6, 2008, detailing a material definitive agreement related to an amended and restated employment agreement for its Chairman and CEO, W. Nicholas Howley. This agreement extends Mr. Howley's tenure through April 2013, with provisions for automatic one-year extensions. Key aspects include an annual base salary of at least $550,000, eligibility for stock options and other employee benefits, and specific perquisites such as an automobile allowance, club memberships, tax preparation assistance, and limited personal use of company aircraft. The filing also introduces the TransDigm Group Incorporated 2006 Stock Incentive Plan Dividend Equivalent Plan, effective October 1, 2008. This plan allows participants in the 2006 Stock Incentive Plan to receive dividend equivalent payments, either in cash or as a reduction in the exercise price of unvested stock options, contingent upon the declaration of dividends and specific transaction types. This move aims to align executive compensation with shareholder value and provide enhanced incentives.

Key Highlights

1Amended and Restated Employment Agreement with W. Nicholas Howley, Chairman and CEO, extending his contract through April 25, 2013.
2Mr. Howley's annual base salary to be no less than $550,000, subject to annual review.
3Mr. Howley is eligible for a significant grant of 800,000 stock options, subject to stockholder approval of a plan amendment.
4Perquisites for Mr. Howley include automobile allowance, country club fees, tax/financial planning expense reimbursement (up to $33,500 annually), and limited personal use of company aircraft.
5New Dividend Equivalent Plan adopted for the 2006 Stock Incentive Plan, effective October 1, 2008.
6Dividend Equivalent Plan allows participants to receive cash payments or exercise price reductions on stock options related to declared dividends.
7The agreement includes standard non-compete and non-solicitation clauses for Mr. Howley, lasting 24 months post-termination.

TransDigm Group INC 8-K Report, Material Agreement (Jun 6, 2008)

Summary

Key Highlights

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