UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): November 13, 2008 (November 11,
2008)
Kaman
Corporation
(Exact
Name of Registrant as Specified in Its Charter)
Connecticut
(State or
Other Jurisdiction of Incorporation)
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0-1093
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06-0613548
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(Commission
File Number)
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(IRS
Employer Identification No.)
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1332
Blue Hills Avenue, Bloomfield, Connecticut
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06002
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(860)
243-7100
(Registrant's
Telephone Number, Including Area Code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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5.02 Departure
of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers' Compensatory Arrangements of Certain Officers.
Appointment of William C.
Denninger
On
November 13, 2008, the Company announced the selection of Mr. William C.
Denninger, 58, as the next Chief Financial Officer of the
Company. This appointment was made by the Company's Board of
Directors (the "Board") at its meeting held on November 11, 2008. Mr. Denninger
will join the Company on November 17, 2008 (the "Effective Date") as Senior Vice
President-Finance, to be followed by his appointment as Senior Vice President
and Chief Financial Officer upon the retirement of Mr. Robert M. Garneau, 64,
the Company's current Executive Vice President and Chief Financial Officer. Mr.
Garneau has indicated his intention to retire as of November 30,
2008.
Mr.
Denninger most recently served for eight years as Senior Vice President and
Chief Financial Officer at Barnes Group, Inc., a $1.5 billion global industrial
products manufacturer and distributor. He also served on that company's board of
directors.
On
November 11, 2008, the Board approved, and the parties have since signed, an
Executive Employment Agreement and Change in Control Agreement, which are
attached to this Form 8-K as Exhibits 10.1 and 10.2, respectively, and are
incorporated by reference. The following summary of the Executive
Employment Agreement and Change in Control Agreement does not purport to be
complete and is subject to and qualified in its entirety by reference to
Exhibits 10.1 and 10.2.
Executive Employment
Agreement (the "Employment Agreement")
The
Company's commitment to name Mr. Denninger to the posts described above is set
forth in the Employment Agreement as are the following terms:
Employment
Agreement
Term;
Cash Compensation
The term
of the Employment Agreement is two (2) years, beginning on the Effective Date,
subject to annual renewal thereafter. Mr. Denninger's initial annual
base salary will be $440,000, and any increases thereafter will be at the
discretion of the Board. There will be no further increase in salary associated
with Mr. Denninger's appointment as Chief Financial Officer, as described
above. Mr. Denninger will participate in the Company's Cash Bonus
Plan and his target bonus will be at 50% of annual base salary. His bonus for
plan year 2008 will be prorated to reflect the number of days from the Effective
Date to December 31, 2008, divided by 365 and will otherwise be determined in
accordance with the terms of the Company's Cash Bonus Plan.
Restricted
Stock Award
The
Company has agreed to provide Mr. Denninger, on the Effective Date, with
non-qualified stock options for 10,000 shares of Common Stock and a restricted
stock award for 2,500 shares of Common Stock under the terms of the Company's
2003 Stock Incentive Plan. Generally, the options will vest and the restrictions
will lapse at the rate of twenty percent per year each, beginning one year after
the grant date. Acceleration of vesting and lapsing of restrictions may be
accelerated upon death, disability, retirement or upon termination of employment
following a change in control event or in other termination of employment
circumstances in accordance with the Employment Agreement and Change in Control
Agreement. The Personnel and Compensation Committee of the Board has delegated
authority to its Chairman to approve these awards on or before the Effective
Date, with the option exercise price being the fair market value of a share of
the Company’s stock on the grant date, as defined by the plan.
Supplemental
Employees' Retirement Plan
At its
meeting on November 11, 2008, the Board approved Mr. Denninger as a participant
in the Company's Supplemental Employees' Retirement Plan, an unqualified excess
benefits plan which generally makes each participant "whole" for the benefits
that cannot be provided under the Company's tax-qualified defined benefit
pension plan due to limits under federal tax law.
Long-Term
Incentive Program
The
Company has agreed that Mr. Denninger will be considered for participation in
the long-term incentive program feature of the Company's 2003 Stock Incentive
Plan effective for the performance period beginning on January 1, 2009. His
target percentage for that performance period would be 95%.
Other Employment
Benefits
Mr.
Denninger will also receive the following benefits:
Life Insurance. In
accordance with the terms of the Company's Senior Executive Life Insurance
Program, Mr. Denninger will be provided with $1.0 million of life insurance
coverage.
Vacation. Mr.
Denninger will be entitled to three (3) weeks' vacation per year and otherwise
in accordance with the Company's Vacation Policy.
Automobile. In
accordance with the Company's Perquisites Policy, the Company will lease a
vehicle of Mr. Denninger's choice, with a stipulated cost up to
$69,900.
Tax and Estate Planning
Services. At its meeting on November 11, 2008, the Company
added Mr. Denninger to the group of eight executives for whom tax accounting and
tax and estate planning services are currently provided on an annual basis,
subject to a current overall limitation of $70,000 for the group.
Severance
Benefits
Mr.
Denninger shall be entitled to severance benefits only if (1) his employment is
terminated without “cause” (as defined) or he resigns with “good reason” (as
defined) during the Employment Term, and (2) he signs a release
agreement.
a) Severance
benefits payable to Mr. Denninger upon a termination of employment without cause
or resignation for good reason are:
i) unpaid
base salary through the date of termination, any accrued vacation, any earned
and unpaid bonus or long-term performance award ("LTIP") with respect to a
completed performance period, reimbursement for any unreimbursed expenses
through the date of termination and all accrued and vested benefits under the
Company's compensation and benefit plans, programs and arrangements
(collectively, “Accrued Amounts”);
ii) a
pro-rata portion of Mr. Denninger's annual bonus for the performance year in
which the termination occurs based upon the Company’s actual
performance;
iii) a
lump-sum payment equal to two times Mr. Denninger's then current base salary and
most recent bonus paid or earned, subject to a reduction as set forth in the
employment agreement if termination of employment occurs within two years of Mr.
Denninger's “retirement eligibility date” (as defined);
iv) pro-rata
payment of each outstanding cash-based LTIP award for which the performance
period has not yet been completed as of the date of termination based on 100% of
the target value for any performance period beginning on or prior to January 1,
2009 and the Company’s actual performance for any performance period beginning
after January 1, 2009;
v) immediate
title to Mr. Denninger's Company automobile on an “as is” basis, with the
automobile's fair market value being taxable to him; and
vi) continued
participation at the Company's expense on a monthly basis for up to 24 months in
all medical, dental and vision plans which cover him and his eligible
dependents, subject to offset due to future employment.
b) If
Mr. Denninger is discharged with cause or resigns without good reason, he will
receive only his Accrued Amounts.
c) If
Mr. Denninger's employment is terminated due to his death or disability, Mr.
Denninger or his estate, as applicable, will receive his Accrued Amounts and a
pro-rata portion of his annual bonus for the performance year in which his death
or disability occurred based on target performance.
d) If
Mr. Denninger retires, he will receive (i) a pro-rata portion of his annual
bonus for the year of retirement based on the Company’s actual performance, (ii)
pro-rata vesting of LTIP awards as described in section (a)(iv) above, (iii)
immediate title to the Company automobile on an “as is” basis, with the
automobile's fair market value being taxable to him, and (iv) the Accrued
Amounts.
e) Mr.
Denninger's outstanding equity awards shall become fully vested upon (i) his
“retirement” (as defined), (ii) the termination of his employment without cause,
for “disability” (as defined), or due to death, (iii) his resignation for good
reason, or (iv) a “change in control” (as defined).
Mr.
Denninger has agreed that in the event he is entitled to receive severance
benefits upon termination of employment, he will not solicit the employees of
the Company and its subsidiaries for 2 years following the date of termination
and will refrain from competing with the Company and its subsidiaries until his
retirement eligibility date or two years from the date that his employment
terminates, whichever is earlier.
Following
termination of employment for any reason, Mr. Denninger will assist and
cooperate with the Company and its subsidiaries regarding any matter or project
in which he was involved during his employment. The Company shall compensate Mr.
Denninger for any lost wages or expenses associated with such cooperation and
assistance.
Change in Control
Agreement
The
Change in Control Agreement provides Mr. Denninger with enhanced severance
protection after a "change of control" of the Company (as defined in the Change
in Control Agreement and consistent with the agreements of other Company
executives). The term of the Change in Control Agreement is four (4) years,
subject to annual renewal thereafter.
The terms
of the Change in Control Agreement include the following:
a) If
Mr. Denninger's employment is terminated for any reason following a change in
control (as defined), he will be entitled to all Accrued Amounts (as defined
above) as of the time of employment termination.
b) If
Mr. Denninger's employment is terminated due to death, “disability” or “good
reason” (as defined in the Change in Control Agreement) then he shall receive a
pro-rata portion of his annual bonus for the performance year in which the
termination occurs at the time that annual bonuses are paid to other senior
executives.
c) If
Mr. Denninger's employment is terminated without cause or by Mr. Denninger for
good reason within 90 days prior to the execution of a purchase and sale
agreement resulting in a change in control or anytime thereafter until the
second anniversary of a change in control, he will be entitled to receive the
following “Severance Benefits”:
i) lump-sum
cash payment equal to the two times his base salary plus two times the last
annual bonus paid or awarded to him in the three years preceding the date of
termination;
ii) continued
participation at the Company's expense on a monthly basis for 24 months in all
medical, dental and vision plans which cover him and his eligible dependents,
subject to offset due to future employment;
iii) full
vesting of his outstanding equity awards;
iv) a
pro-rata payment of each outstanding cash-based LTIP award for which the
performance period has not yet been completed as of the date of termination
based on target performance for any performance period beginning on or prior to
January 1, 2009 and the Company’s actual performance for any performance period
beginning after January 1, 2009;
v) an
additional two years of credited and continuous service under the Kaman
Corporation Supplemental Employees' Retirement Plan ;
vi) benefits
under the post-retirement health care plans if he would have otherwise become
eligible for those benefits by remaining employed through the second anniversary
of the employment termination date;
vii) the
Company shall transfer ownership of any life insurance policy insuring his life
and establish an irrevocable grantor trust holding an amount of assets
sufficient to pay all remaining premiums under any such life insurance policy,
consistent with applicable tax law requirements. If premiums become
payable during the six month period beginning on the date of termination, the
Executive shall make such payments and will be reimbursed at the end of such
period, with interest;
viii) reimbursement
for up to $30,000 (in the aggregate) for outplacement services and relocation
costs until the earlier of the first anniversary of the date of termination or
the first day of employment with a new employer; and
ix)
use of his Company automobile for six months after termination and transfer of
the automobile on an “as is” basis immediately thereafter.
Mr.
Denninger shall be entitled to Severance Benefits under the Change in Control
Agreement only if (1) he signs a release agreement, and (2) he agrees not to
compete with the Company and its subsidiaries or to solicit their employees
during the 2-year period following termination of employment. Following
termination of employment, Mr. Denninger will assist and cooperate with the
Company regarding any matter or project in which he was involved during his
employment and the Company shall compensate him for any lost wages or expenses
associated with such assistance and cooperation.
Compliance with Section 409A
of the Internal Revenue Code
The
parties intend that the benefits and payments provided under the Employment
Agreement and the Change in Control Agreement shall be exempt from, or comply
with, the requirements of Section 409A of the Internal Revenue Code, but in no
event is the Company obligated to indemnify Mr. Denninger for any taxes or
interest that may be assessed by the Internal Revenue Service pursuant to that
Section.
Coordination Between
Employment Agreement and Change in Control Agreement
Mr.
Denninger will not be entitled to receive full severance benefits under both the
Employment Agreement and the Change in Control Agreement. A tax gross-up for
excise taxes under Section 4999 of the Internal Revenue Code (and income taxes
on the gross-up) that become payable by Mr. Denninger will be paid only if
payments (including vesting of outstanding equity compensation awards)
contingent on a change in ownership or control of the Company exceed the maximum
amount (as determined under applicable tax rules) that Mr. Denninger could
receive without having any such payments become subject to such tax by at least
$100,000.
Retirement of Mr. Robert
Garneau as Executive Vice President and Chief Financial
Officer
On
November 11, 2008, Robert M. Garneau, Executive Vice President and Chief
Financial Officer of the Company, notified the Company that he will cease
employment effective November 30, 2008 after approximately twenty-eight years of
service. On November 11, 2008, the Board approved the principal terms
of a Retirement and Consulting Letter Agreement (the “Letter Agreement”) with
Mr. Garneau. In order to insure a smooth transition, Mr. Garneau will
serve as a consultant to the Company from December 1, 2008 until March 31,
2009. The consulting services will involve assisting Mr. Denninger as
Chief Financial Officer for up to 30 hours per month. Mr. Garneau
will be paid $25,000 per month during the consulting period and will receive
title to his Company automobile on an “as is” basis, with the automobile’s fair
market value being taxable to him. Mr. Garneau is entitled to the following
retirement benefits under the Letter Agreement:
i) a
pro-rata portion of his annual bonus for the 2008 year, based on the Company’s
actual financial performance; and
ii)
pro-rata cash payment of his currently outstanding long-term performance awards,
based on target performance.
Mr.
Garneau will provide a general release of claims in exchange for these
benefits.
These
benefits are in addition to his accrued and vested benefits under the Company’s
compensation and benefit programs, which include existing rights to supplemental
pension benefits and stock options.
The
parties entered into the Letter Agreement on November 13, 2008, a copy of which
is attached hereto as Exhibit 10.3 to this Form 8-K, and is incorporated herein
by reference. The foregoing summary of the Letter Agreement does not
purport to be complete and is subject to and qualified in its entirety by
reference to the attached Letter Agreement.
Item
9.01 Financial Statements and Exhibits
(c) Exhibits
The following documents are filed as
Exhibits herewith:
Exhibit
99.1 - Press Release dated November 13, 2008 announcing the appointment of
William C. Denninger and the retirement of Robert M. Garneau
Exhibit
10.1 - Executive Employment Agreement dated November 17, 2008 between Kaman
Corporation and William C. Denninger and Offer Letter dated November 11,
2008
Exhibit
10.2 – Change in Control Agreement dated November 17, 2008 between Kaman
Corporation and William C. Denninger
Exhibit
10.3 – Retirement and Consulting Letter Agreement dated November 13, 2008
between Kaman Corporation and Robert M. Garneau
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
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KAMAN
CORPORATION
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By:
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/s/
Candace A. Clark
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Candace
A. Clark
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Senior
Vice President and
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Chief
Legal Officer
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Date:
November 13, 2008
KAMAN
CORPORATION AND SUBSIDIARIES
Index to
Exhibits
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Exhibit
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Description
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99.1
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Press
release dated November 13, 2008
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Attached
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10.1
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Executive
Employment Agreement dated November 17, 2008 between Kaman Corporation and
William C. Denninger and Offer Letter dated November 11,
2008
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Attached
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10.2
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Change
in Control Agreement dated November 17, 2008 between Kaman Corporation and
William C. Denninger
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Attached
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10.3
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Retirement
and Consulting Letter Agreement dated November 13, 2008 between Kaman
Corporation and Robert M. Garneau
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Attached
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