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Item
5.02.
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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(e)
Amended
and Restated Employment Agreement
On
January 15, 2009, Darling International Inc. (the “Company”) entered
into that certain Amended and Restated Employment Agreement with Randall C.
Stuewe, the Company’s Chairman and Chief Executive Officer (the “Amended Employment
Agreement”), effective January 1, 2009, which was approved by the
compensation committee (the “Compensation
Committee”) of the Board of Directors of the Company (the “Board”) on January
15, 2009. The Amended Employment Agreement amends and restates that
certain Employment Agreement, dated February 3, 2003, as amended by Amendment
No. 1, dated July 1, 2003, and Amendment No. 2, dated October 13,
2006.
Set forth
below is a brief description of the material terms and conditions of the Amended
Employment Agreement. The summary set forth below is not intended to
be complete and is qualified in its entirety by reference to the full text of
the Amended Employment Agreement attached hereto as Exhibit 10.1.
Pursuant
to the Amended Employment Agreement, Mr. Stuewe is employed as the Company’s
Chairman and Chief Executive Officer through December 31, 2009 with automatic
one year extensions thereafter unless Mr. Stuewe’s employment is terminated
earlier (i) by the Company without cause (as defined in the Amended
Employment Agreement) on not less than thirty days prior notice to Mr. Stuewe,
(ii) by the Company for cause or upon Mr. Stuewe’s death or disability or
(iii) by Mr. Stuewe for good reason (as defined in the Amended Employment
Agreement).
The
Amended Employment Agreement provides for a minimum annual base salary of
$675,000, subject to increases at the discretion of the Compensation Committee,
and an annual bonus paid pursuant to the Company’s employee bonus plan in
accordance with personal and Company performance targets established annually by
the Compensation Committee in consultation with Mr. Stuewe. The
Amended Employment Agreement also provides for Mr. Stuewe to receive standard
retirement and welfare benefits for executive officers of the
Company. Further, Mr. Stuewe is entitled to receive an allowance of
$2,000 per month for the exclusive purpose of purchasing or leasing a new
automobile of his choice.
Pursuant
to the Amended Employment Agreement, Mr. Stuewe is entitled to the following
severance and other payments upon his termination:
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·
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Termination
upon Death: In the event that Mr. Stuewe’s employment with the
Company terminates as the result of his death, Mr. Stuewe’s designated
beneficiary is entitled to receive the following amounts: (i) accrued
but unpaid base salary through the date of termination, in a lump sum
payment, within thirty days of termination; (ii) earned but unpaid
bonus for a completed fiscal year, in a lump sum payment, within thirty
days of termination; (iii) business expenses and accrued vacation
pay, in a lump sum payment, within thirty days of termination;
(iv) amounts to which Mr. Stuewe is entitled pursuant to Mr. Stuewe’s
participation in employee benefit plans (collectively, the above amounts,
the “Accrued
Entitlements” ); and (v) death benefits equal to two times Mr.
Stuewe’s then-effective base salary pursuant to a group life insurance
policy maintained at the Company’s
expense.
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·
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Termination
upon Disability: In the event that Mr. Stuewe’s employment with
the Company terminates as the result of his disability (as defined in the
Amended Employment Agreement), Mr. Stuewe is entitled to receive
(i) the Accrued Entitlements and (ii) $10,000 per month until
Mr. Stuewe reaches sixty-five years of age pursuant to a group disability
policy maintained at the Company’s expense.
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·
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Termination
for Cause; Resignation without Good Reason: If the Company
terminates Mr. Stuewe for cause (as defined in the Amended Employment
Agreement) or Mr. Stuewe resigns without good reason (as defined in the
Amended Employment Agreement), Mr. Stuewe is entitled to receive the
Accrued Entitlements only.
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·
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Termination
without Cause; Resignation for Good Reason: If the Company
terminates Mr. Stuewe without cause or Mr. Stuewe resigns for good reason
(other than following a change of control), Mr. Stuewe is entitled to
receive the following payments, among others: (i) the
Accrued Entitlements; (ii) a lump sum payment, within thirty days of
the date of termination, equal to two times Mr. Stuewe’s base salary at
the highest rate in effect in the preceding twelve months; and
(iii) an amount equal to the bonus that he would have been entitled
to at year end, but only if the Company’s performance to the termination
date would entitle him to such bonus.
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·
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Termination
upon a Change of Control of the Company: If the Company
terminates Mr. Stuewe without cause within twelve months following a
change of control (as defined in the Amended Employment Agreement) or Mr.
Stuewe resigns for good reason within ninety days following a change of
control, Mr. Stuewe is entitled to the following payments, among
others: (i) the Accrued Entitlements; (ii) a lump sum
payment, within thirty days of the date of termination, equal to three
times Mr. Stuewe’s base salary at the highest rate in effect in the
preceding twelve months; and (iii) an amount equal to the bonus that
he would have been entitled to at year end, but only if the Company’s
performance to the termination date would entitle him to such
bonus.
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Pursuant
to the Amended Employment Agreement, subject to certain exceptions, during Mr.
Stuewe’s employment with the Company and for a period of (i) two years
thereafter in the event of termination without cause, (ii) three years
thereafter in the event of termination upon a change of control and
(iii) one year thereafter in each other instance (the “Restricted Period”),
Mr. Stuewe may not have any ownership interest in, or be an employee, salesman,
consultant, officer or director of, any entity that engages in the United
States, Canada or Mexico in a business that is similar to that in which the
Company is engaged in such territory. Subject to certain limitations,
the Amended Employment Agreement also prohibits Mr. Stuewe from soliciting the
Company’s customers, employees or consultants during the Restricted
Period. Further, Mr. Stuewe is required by the Amended Employment
Agreement to keep all confidential information in confidence during his
employment and at all times thereafter.
The
Amended Employment Agreement contains a provision that provides that, if
following a change of control, Mr. Stuewe’s employment is terminated and as a
result of such change of control an excise tax penalty is imposed on Mr. Stuewe
under Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), the Company
would be required to make a gross-up payment to Mr. Stuewe sufficient to cover
such excise tax. Additionally, the Amended Employment Agreement was
amended in certain respects to comply with Section 409A of the Code and the
guidance promulgated thereunder.
Amended
and Restated Senior Executive Termination Benefits Agreement
On
January 15, 2009, the Board entered into that certain Amended and Restated
Senior Executive Termination Benefits Agreement with John O. Muse (the “Amended Termination Benefits
Agreement”), which was approved by the Compensation Committee on January
15, 2009. The Amended Termination Benefits Agreement amends that
certain Senior Executive Termination Benefits Agreement, dated December 31,
2007, as amended by that First Addendum to Senior Executive Termination Benefits
Agreement, dated December 9, 2008.
Set forth
below is a brief description of the material terms and conditions of the Amended
Termination Benefits Agreement. The summary set forth below is not
intended to be complete and is qualified in its entirety by reference to the
full text of the Amended Termination Benefits Agreement attached hereto as
Exhibit 10.2.
Pursuant
to the Amended Termination Benefits Agreement, the Company must provide Mr. Muse
certain benefits (discussed below) upon any termination of his employment except
(i) termination by reason of the voluntary resignation by Mr. Muse (other than
termination following a change in control), (ii) termination for cause (as
defined in the Amended Termination Benefits Agreement) or (iii) termination
upon normal retirement (as defined in the Amended Termination Benefits
Agreement) by Mr. Muse. Neither permanent nor long-term disability
status nor the death of Mr. Muse is deemed a termination for purposes of the
Amended Termination Benefits Agreement. Termination with the
exceptions set forth above is referred to herein as an “Eligible Termination
Event.”
Subject
to the mitigation provisions discussed below and Mr. Muse’s execution of a
release of claims in respect of his employment with the Company, the Company
must provide Mr. Muse the following benefits upon an Eligible Termination Event:
(i) (A) periodic payment in the amount of Mr. Muse’s then-effective
base salary until Mr. Muse has been paid one and one-half times his annual base
salary at the highest rate in effect in the preceding twelve months (the “Termination Payment
Amount”) or (B) in the case of a change in control (as defined in the
Amended Termination Benefits Agreement) and if the Company terminates Mr. Muse’s
employment without cause within twelve months following such change in control
or Mr. Muse resigns within ninety days following such change in control (a
“Change in Control
Termination”), a lump sum payment, within thirty days of the date of
termination or resignation, equal to three times Mr. Muse’s annual base salary
at the highest rate in effect in the preceding twelve months, (ii) any
accrued vacation pay due but not yet taken at the date of the Eligible
Termination Event, (iii) life, disability, health and dental insurance, and
certain other similar fringe benefits of the Company (or similar benefits
provided by the Company) (the “Fringe Benefits”) in
effect immediately prior to the date of termination for a period of eighteen
months from the date of termination, or thirty-six months in the case of a
Change in Control Termination, to the extent allowed under the applicable
policies.
Mr. Muse
is not entitled to any bonus under any Company executive bonus plan for the year
in which the Eligible Termination Event occurs.
In
addition, upon an Eligible Termination Event, the Company will engage an
outplacement counseling service of national reputation, at its own expense, to
assist Mr. Muse in obtaining employment until the earliest of (i) two years
from the date of the Eligible Termination Event, (ii) such date as Mr. Muse
obtains employment or (iii) Company expenses related thereto equal
$10,000.
Mr. Muse
is required to mitigate any Termination Payment Amount paid under the Amended
Termination Benefits Agreement by seeking other comparable employment as
promptly as practicable after the Eligible Termination Event. Such
Termination Payment Amount due under the Amended Termination Benefits Agreement
will be offset against or reduced by any amount earned from such other
employment. The Fringe Benefits will terminate upon Mr. Muse’s
obtaining such other employment.
The
Amended Termination Benefits Agreement also contains obligations on Mr. Muse’s
part regarding nondisclosure of confidential information, return of Company
property, non-solicitation of employees during employment and for a period of
one year following the termination of employment for any reason,
non-disparagement of the Company and its business and continued cooperation in
certain matters involving the Company.
The
Amended Termination Benefits Agreement contains a provision that provides that,
if following a change of control, Mr. Muse’s employment is terminated and as a
result of such change of control an excise tax penalty is imposed on Mr. Muse
under Section 280G of the Code, the Company would be required to make a gross-up
payment to Mr. Muse sufficient to cover such excise tax.
Executive Compensation
Program
On
January 15, 2009, the Compensation Committee adopted an executive compensation
program (the “Program”) for certain
executives, including the Company’s Chief Executive Officer (the “CEO”), the Company’s
Executive Vice Presidents (including the Company’s principal financial officer),
the three most highly compensated executive officers, if any, other than the
CEO, the principal financial officer and the Executive Vice Presidents, and such
other executive officers as the Compensation Committee or the CEO may determine
from time to time, pursuant to the Company’s 2004 Omnibus Incentive Plan (the
“Omnibus
Plan”). The Program also provides for equity grants to the
Company’s non-employee directors.
The
Program supersedes the Company’s Long-Term Incentive Program Policy Statement,
which was adopted under the Omnibus Plan on June 16, 2005; however, such prior
program will remain in effect in respect of awards granted
thereunder.
Set forth
below is a brief description of the material terms and conditions of the
Program. The summary set forth below is not intended to be complete
and is qualified in its entirety by reference to the full text of the Program
attached hereto as Exhibit 10.3.
Elements
of Compensation.
Base
Salary: Base salary ranges will be determined for a program
participant based on the participant’s position and responsibility and will
generally be set at or near the 50th percentile of base salary paid to similarly
situated executives of general industrial companies that have similar total
revenue and market capitalization and/or compete with the Company for management
talent (“Peer
Companies”). However, the Compensation Committee has the
authority to deviate from such percentile target.
Annual
Incentives: Each program participant has the opportunity to receive
an annual cash incentive award, which will be awarded upon the program
participant’s achievement of both of two separate components: the
Company’s realization of certain financial measures (which will comprise 75% of
the annual cash incentive award) and the achievement of specific strategic,
operational and personal goals (“SOPs”) designed for
each plan participant (which will comprise 25% of the annual cash incentive
award).
The
financial measures component of the annual cash incentive award will be based on
the Company’s yearly return on gross investment (“ROGI”), which is defined as
earnings before interest, taxes, depreciation and amortization divided by the
sum of total assets plus accumulated depreciation minus other liabilities (other
than those incurred to financing institutions), including, but not limited to,
accounts payable, accrued expenses, pension liabilities, other non-current
liabilities and deferred income taxes. The Compensation Committee has
the ability to adjust annual ROGI based on extraordinary events. A
program participant may receive between 25% and 400% of his/her target payout
depending on the Company’s annual ROGI as compared to the ROGI of its Peer
Companies during the same period.
The SOPs
component of the annual cash incentive award is based on both the Company’s
achievement of a minimum ROGI target and a program participant’s achievement of
individual SOPs. A program participant may receive between 0% and
100% of his/her target payout with respect to the SOPs component depending on
such participant’s performance for the fiscal year. Each program
participant must achieve a minimum of 75% of his/her SOPs to receive any payout
for the SOPs component of the annual cash incentive award.
Long Term
Incentives: The long term incentive element of compensation will be
awarded to program participants in the form of a yearly equity grant, which will
be composed of 75% restricted stock and 25% stock options; however, the Company
will only award such yearly equity grants if the Company meets certain defined
financial objective(s) for the relevant prior fiscal year as determined by the
Compensation Committee. A program participant’s target dollar value
of his/her grant will be set at an amount between 20% and 70% of his/her base
salary, and the program participant can receive a grant equal to between 50% and
150% of such target dollar value depending on the Company’s trailing five-year
ROGI as compared to the trailing five-year ROGI of Peer Companies.
Restricted
stock grants will have no exercise price and will vest over a period of three
years, with 25% vesting immediately upon issuance and 25% vesting on each of the
next three anniversaries of the grant date. Stock options will have
an exercise price equal to the fair market value of the Company’s common stock
on the third business day after the Company releases its annual financial
results and will vest over a period of three years with 25% vesting immediately
upon issuance and 25% on each of the next three anniversaries of the grant
date.
Non-Employee
Director Grants.
Non-employee
directors will automatically be granted stock options for 4,000 shares of the
Company’s common stock on the date of their initial election to the Board by the
stockholders. The stock options will have an exercise price equal to
the grant date fair market value and will vest in 25% increments on the sixth
month anniversary of the grant and on each of the first, second and third annual
anniversaries of the date of the grant.
Each
non-employee director will automatically be granted stock options for 4,000
shares of the Company’s common stock if the Company achieves 90% of the 50th
percentile for the Peer Group ROGI for the most recently completed fiscal
year. The stock options will have an exercise price equal to the fair
market value of the Company’s common stock on the third business day after the
Company releases its annual financial results and will vest in 25% increments on
the sixth month anniversary of the grant date and on each of the first, second
and third annual anniversaries of the grant date.
Amendment
No. 1 to Non-Employee Director Restricted Stock Award Plan
On
January 15, 2009, the Compensation Committee adopted an amendment to the
Non-Employee Director Restricted Stock Award Plan approved on March 9, 2006
pursuant to the Omnibus Incentive Plan. Set forth below is a brief
description of Amendment No. 1 to Non-Employee Director Restricted Stock Award
Plan (the “Amendment”), which is
not intended to be complete and is qualified in its entirety by reference to the
full text of the Amendment attached hereto as Exhibit 10.4.
The
Amendment changes the date on which awards are granted from the third business
day to the fourth business day after the Company releases its annual financial
results for its last completed fiscal year. The Amendment also
changes the date on which the fair market value used in calculating the number
of shares of restricted stock to be awarded is determined from the second
business day to the third business day after the Company releases its annual
financial results for its last completed fiscal year.
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Item
9.01.
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Financial
Statements and Exhibits.
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(d) Exhibits.
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10.1
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Amended
and Restated Employment Agreement, dated as of January 1, 2009, between
Darling International Inc. and Randall C.
Stuewe
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10.2
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Amended
and Restated Senior Executive Termination Benefits Agreement, dated as of
January 15, 2009, between Darling International Inc. and John O.
Muse
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10.3
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Darling
International Inc. Compensation Committee Executive Compensation Program
Policy Statement adopted January 15,
2009
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10.4
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Amendment
No. 1 to Non-Employee Director Restricted Stock Award Plan, effective as
of January 15, 2009
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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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DARLING INTERNATIONAL INC. |
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| Date:
January 21, 2009 |
By:
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/s/ John O. Muse |
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John O.
Muse |
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Executive Vice
President |
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Finance and
Administration |
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EXHIBIT
LIST
10.1 Amended
and Restated Employment Agreement, dated as of January 1, 2009, betweenDarling
International Inc. and Randall C. Stuewe
10.2 Amended
and Restated Senior Executive Termination Benefits Agreement, dated as ofJanuary
15, 2009, between Darling International Inc. and John O. Muse
10.3 Darling
International Inc. Compensation Committee Executive Compensation ProgramPolicy
Statement adopted January 15, 2009
10.4 Amendment
No. 1 to Non-Employee Director Restricted Stock Award Plan, effective asof
January 15, 2009