8-KLeadership ChangesOther EventsExhibits & Filings

THERMO FISHER SCIENTIFIC INC. 8-K Report, Executive Changes (Jul 9, 2009)

Filed July 9, 2009For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) filed an 8-K on July 8, 2009, reporting two key events. Firstly, the Compensation Committee approved a Supplemental Retirement Agreement for CEO Marijn Dekkers, granting him 124,000 phantom shares. These shares are split between time-based and performance-based vesting, with a long-term performance horizon tied to shareholder return relative to the S&P Industrials Composite Index through 2017. The agreement also outlines provisions for accelerated vesting and payout terms in cash, indexed to the company's stock price, upon separation from service under various conditions. Secondly, the company is filing this report to reflect certain accounting adjustments impacting its 2008 Form 10-K. These adjustments are due to the adoption of new Financial Accounting Standards Board (FASB) pronouncements FSP APB No. 14-1 (affecting convertible debt accounting) and FSP EITF 03-6-1 (clarifying participating securities in share-based payments). Additionally, prior period segment information has been reclassified due to a product line transfer between segments to better align with strategic focus. These changes require a recast of financial statements for Items 6, 7, and 8 of the 2008 Form 10-K.

Key Highlights

  • 1CEO Marijn Dekkers awarded 124,000 phantom shares under a new Supplemental Retirement Agreement.
  • 2Phantom shares are subject to both time-based and performance-based vesting schedules extending through 2017.
  • 3Performance-based vesting is contingent on Thermo Fisher's total shareholder return relative to the S&P Industrials Composite Index.
  • 4Payout of vested phantom shares will be in cash, based on average stock price over 90 days preceding separation, with installment payments over the executive's life expectancy.
  • 5Specific provisions for accelerated vesting exist in cases of change in control, termination without cause, termination for good reason, or disability.
  • 6Company is recasting financial data in its 2008 10-K due to adoption of new FASB accounting standards (FSP APB No. 14-1 and FSP EITF 03-6-1).
  • 7Prior period segment information has been reclassified following a product line transfer between business segments.

Frequently Asked Questions

The agreement is designed to provide long-term incentive compensation to CEO Marijn Dekkers, aligning his interests with those of shareholders through the award of phantom shares. It incentivizes his continued employment and the company's performance over an extended period.

Upon vesting, the phantom shares will be settled in cash. The cash value will be determined by the average closing price of Thermo Fisher's common stock for the 90 days prior to his separation from service. Payments will be made in quarterly installments over a period equal to his life expectancy, starting at the earliest six months and one day after separation or his 60th birthday.

The adoption of FSP APB No. 14-1 and FSP EITF 03-6-1 necessitates adjustments to how convertible debt and share-based payments are accounted for. This may affect reported earnings per share and other financial metrics, requiring investors to review the recast financial statements to understand the precise impact on past performance and financial position.

The reclassification of segment information was due to a management decision to transfer a product line between business segments. This was done to better align the product line's strategic focus with the reporting segment, ensuring more accurate financial reporting and operational oversight.