Engelhard Corporation 8K - 01/18/06
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 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): January 18, 2006
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ENGELHARD
CORPORATION
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(Exact
name of registrant as specified in its charter)
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Delaware
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1-8142
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22-1586002
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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101
Wood Avenue, Iselin, New Jersey
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08830
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code (732)
205-5000
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:
[
]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[
]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
[
]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement
On
January 20, 2006, the Board of Directors (the “Board”) of Engelhard Corporation
(the “Company”), upon recommendation of the Company’s Compensation Committee,
approved a change in control agreement with Edward T. Wolynic, the Chief
Technology Officer of the Company. The agreement provides that if his employment
is terminated by the Company not for “Cause” or by him for “Good Reason”
(defined as a reduction in base salary or incentive compensation opportunity,
material diminution of job authorities or responsibilities (not including any
diminution resulting solely due to the fact that the Company is no longer public
or that it is a subsidiary of another company), relocation of his office more
than 35 miles or failure of a successor to assume the agreement) within three
years following a change in control, he will receive salary through the date
of
termination together with salary in lieu of accrued vacation and an immediate
lump sum payment equal to two times the sum of his base salary and the cash
value of his target incentive compensation awards for the year of the change
in
control, determined as set forth in the agreement. He will also be entitled
to
continued participation in the Company’s group medical and dental plans for up
to two years. The agreement also provides for an after-tax gross-up for any
excise tax payable by the executive under Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), and it also includes the provisions
described below relating to the new Code rules governing deferred compensation.
A copy of this agreement is included as Exhibit 10.1 hereto and incorporated
by
reference herein.
In
order
to address the uncertainty in the application of the new Code rules governing
deferred compensation and to ensure that any amendments necessary to bring
the
Company’s plans and agreements into compliance with those rules are timely made,
on January 20, 2006 the Board, upon recommendation of the Compensation
Committee, approved letter agreements with each of the executives with a change
in control agreement (“Change in Control Agreement”) with the Company. The Form
of the Company’s Change in Control Agreement was filed with the SEC as Exhibit
10(g) to the Company’s Annual Report on Form 10-K and is incorporated by
reference herein. The letter agreements (1) obligate the Company to make timely
amendments necessary to bring the Company’s plans and agreements into compliance
with the new deferred compensation rules in a manner that does not reduce the
economic value to the executives, and (2) obligate the executives to not
unreasonably withhold their consent to such amendments and report for tax
purposes on a basis consistent with the Company’s reporting. The letter
agreements also provide that the Company will indemnify the executive, on an
after-tax basis, against any additional tax or interest imposed due to failure
to comply with the deferred compensation rules. In addition, if compliance
with
the rules requires that payment of amounts to the executive be deferred from
the
date otherwise payable, the deferred amounts would be deposited in the Company’s
Supplemental Retirement Trust for the benefit of the executive. The letter
agreements also address the change in the Company’s independent auditors since
the date of the Change in Control Agreements. A copy of the form of letter
agreement is included as Exhibit 10.2 hereto and incorporated by reference
herein.
On
January 20, 2006 the Board, upon recommendation of the Compensation
Committee, amended the Company’s salary continuation policies to provide that,
during the period beginning at the time of a change in control and ending on
December 31, 2007, no amendment can be made to either policy that is adverse
to
participants without their consent. The Board also amended the Enhanced Salary
Continuation Policy to provide for a reduction of salary continuation benefits
thereunder if, but only to the extent, such a reduction would result in a
greater after-tax (taking into account any excise tax imposed on the participant
under Section 4999 of the Code) benefit to the participant. Copies of the
Company’s salary continuation policies are included as Exhibits 10.3 and 10.4
hereto and incorporated by reference herein.
On
January 20, 2006 the Board, upon recommendation of the Compensation
Committee, approved stay bonuses for fifty (50) employees, none of whom have
Change in Control Agreements. Stay bonus payments will be made to covered
employees if they remain employed by the Company through the earlier of six
months after a change in control or December 31, 2006. In addition, if the
Company terminates a covered employee not for cause prior to the earlier of
such
dates, the covered employee will receive an amount equal to the stay bonus.
The
stay bonus amounts will be 25% of base salary for covered employees below salary
band 5, 50% of base salary for covered employees in salary bands 5 through
10
and 100% of base salary for covered employees in salary bands 11 and above.
The
aggregate amount of stay bonuses payable is approximately $3.56 million,
approximately $220,000 of which is payable to one executive officer. The stay
bonuses provide for a reduction of payments thereunder if, but only to the
extent, such a reduction would result in a greater after-tax (taking into
account any excise tax imposed on the covered employee under Section 4999 of
the
Code) payment to the covered employee. Amounts payable under the stay bonuses
are in addition to any salary continuation benefits payable to covered employees
under the Company’s salary continuation policies.
On
January 18, 2006 the Company, as required by the Company’s Supplemental
Retirement Trust, funded approximately $111.2 million into the Supplemental
Retirement Trust to assist the Company in meeting its benefits obligations
under
the deferred compensation plans for retired and current members of management
and directors and the Supplemental Retirement Program. More than half of this
amount relates to benefit obligations to former members of management and former
directors and $41.7 million relates to the benefit obligations to current
executive officers and directors. On January 20, 2006, in order to consolidate
the Company’s trusts under its deferred compensation plans and as required under
the Supplemental Retirement Trust, the Compensation Committee approved the
termination of a trust holding shares of the Company’s Common Stock par value
$1.00 per share (the “Company Common Stock”) including the associated Series A
Junior Participating Preferred Stock purchase rights (the “Rights” and together
with the Company Common Stock the “Shares”) pursuant to the Company’s deferred
compensation plans and directed the trustee to deposit those Shares in the
Company’s Supplemental Retirement Trust.
Item
9.01 Financial
Statements and Exhibits.
(c)
Exhibits
The
following are filed as exhibits to this report:
10.1 Change
in
Control Agreement for Edward Wolynic, effective January 21, 2006.
10.2 Form
of
letter agreement
10.3 Salary
Continuation Policy
10.4 Enhanced
Salary Continuation Policy
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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ENGELHARD
CORPORATION
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(Registrant)
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Date:
January 23, 2006
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/s/
Michael A. Sperduto
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Name: Michael A. Sperduto
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Title: Vice President and Chief
Financial
Officer
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