| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On May 23, 2019, at the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Lennox International Inc. (the “Company”), the stockholders of the Company approved the Lennox International Inc. 2019 Equity and Incentive Compensation Plan (the “Equity Plan”). The following description of the Equity Plan is qualified in its entirety by reference to the Equity Plan, which is filed as Exhibit 10.1 to this Current Report on Form8-K and incorporated herein by reference.
In general, the Equity Plan will be administered by the Compensation and Human Resources Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) and will enable the Compensation Committee to provide equity and incentive compensation to (1) the Company’s officers and other employees (and those of its subsidiaries),including persons who have agreed to commence serving in such capacity within 90 days of the grant of the applicable award, (2) the Company’snon-employee directors and (3) certain other individuals, including certain consultants, who provide employee-type services. Pursuant to the Equity Plan, the Company may grant equity-based and cash-based compensation generally in form of stock options, appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash incentive awards, dividend equivalents and other stock-based awards upon terms and conditions as further described in the Equity Plan.
Subject to adjustment as described in the Equity Plan, and subject to the Equity Plan’s share counting rules, a total of 1,454,000 shares of common stock of the Company are available for awards granted under the Equity Plan, minus one share of common stock for every share subject to an award granted under the Company’s 2010 Incentive Plan between December 31, 2018 and May 23, 2019. These shares may be shares of original issuance or treasury shares, or a combination of both. The aggregate number of shares available under the Equity Plan will generally be reduced by one share of common stock for every one share subject to an award granted under the Equity Plan. Shares underlying certain awards under the Equity Plan and the Company’s 2010 Incentive Plan, including as amended or amended and restated, that are cancelled or forfeited, expire, are settled for cash, or are unearned, will again be available under the Equity Plan, as further described in the Equity Plan.
The Equity Plan also provides that: (1) subject to adjustment as described in the Equity Plan, the aggregate number of shares of common stock actually issued or transferred upon the exercise of incentive stock options will not exceed 1,454,000 shares; and (2) no Companynon-employee director will be granted, in any period of one calendar year, compensation for such service having an aggregate maximum value (measured at the grant date as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $700,000 or, in the case of anynon-employee chairperson of the Board, $1,200,000.
The Equity Plan provides that awards granted under the Equity Plan will vest no earlier than after a minimumone-year vesting period orone-year performance period, as applicable, except that an aggregate of up to 5% of the shares available for awards under the Equity Plan (as may be adjusted under the adjustment provisions of the Equity Plan) may be used for awards that do not at grant comply with the minimum vesting requirement. However, notwithstanding the minimum vesting requirement, the Compensation Committee is permitted to (1) provide for continued vesting or accelerated vesting for any award under the Equity Plan upon certain events, including in connection with or following a participant’s death, disability, or termination of service or a change in control, or (2) exercise its discretionary vesting authority under the Equity Plan (as described in the Equity Plan) at any time following the grant of an award.
The Equity Plan permits the Compensation Committee to make certain performance-based awards to participants under the Equity Plan, which awards will be earned based upon the achievement of management objectives. Anon-exhaustive list of performance measures that could be used for such performance-based awards includes the following: net sales; revenue; revenue growth or product revenue growth; operating income (before or after taxes);pre- orafter-tax income (before or after allocation of corporate overhead and bonus); earnings per share; net income (before or after taxes); return on equity; total stockholder return; return on assets or net assets; appreciation in or
