| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On September 5, 2023, Xylem Inc. (“Xylem” or the “Company”) announced that Patrick K. Decker will retire from his position as President and Chief Executive Officer and resign from the Board of Directors (“Board”) effective December 31, 2023, in advance of his planned retirement from the Company on March 31, 2024. The Company and Mr. Decker entered into a Transition Services Agreement under which he will remain employed by the Company as a senior advisor through his March 31, 2024 retirement date to facilitate a smooth and orderly transition.
Pursuant to the Transition Services Agreement, during the transition period, Mr. Decker will continue to receive his base salary at an annual rate of $1,196,000 and will continue to participate in the Company’s employee benefit plans. Mr. Decker’s outstanding equity awards will be eligible to continue vesting through March 31, 2024 in accordance with the terms of the applicable Long-Term Incentive Plans (“LTIP”) and award agreements. He will also be eligible to receive an annual incentive plan payout based on the Company’s actual performance for the 2023 fiscal year pursuant to the Company’s Annual Incentive Plan for the Senior Leadership Team, an exhibit to the Company’s Quarterly Report on Form 10-Q filed on August 2, 2022 (“AIP”). Consistent with the Company’s LTIP, the Transition Services Agreement also provides for pro-rated vesting and payout of Mr. Decker’s outstanding performance share units based on the Company’s actual performance and payout dates for related performance cycles, and pro-rated vesting of his unvested restricted stock units and stock options. The above description of the Transition Services Agreement is qualified in its entirety by reference to the full text of the Transition Services Agreement, a copy of which is filed herewith as Exhibit 10.1.
On September 1, 2023, Xylem’s Board appointed Mattew F. Pine, age 52, as the Company’s President and Chief Executive Officer to succeed Mr. Decker and to serve as a member of the Board, effective January 1, 2024.
Mr. Pine joined the Company in March 2020 as Senior Vice President and President, Applied Water Systems and Americas Commercial Team. In May 2022, he was appointed to the role of Senior Vice President and President, Americas, Applied Water Systems and Measurement and Control Solutions. In December 2022, Mr. Pine was appointed to the role of Chief Operating Officer effective January 1, 2023. Prior to joining the Company, Mr. Pine served as Vice President and General Manager of Carrier Residential, a United Technologies Corporation business, from 2017 to 2018, and then as President of Carrier Residential from 2018 until 2020.
In connection with his appointment as President and Chief Executive Officer, Mr. Pine will receive an annual base salary of $1,100,000, subject to annual adjustment. Mr. Pine will be eligible for (1) an annual cash incentive under the Company’s AIP with a target of 135% of his base salary for 2024 and a maximum possible payout of 200% of target, based on actual 2024 performance results, subject to the Board’s Leadership Development and Compensation Committee’s (“LDCC”) approval of the Company’s 2024 AIP program and performance criteria; and (2) an annual target equity grant under the Company’s LTIP of $6,500,000 for 2024, subject to the LDCC’s approval of the Company’s 2024 LTIP program and performance criteria. The LTIP award, if approved, will be provided as performance share units (50%), restricted stock units (25%) and stock options (25%) on terms consistent with the Company’s existing performance share unit, restricted stock unit, and non-qualified stock option grant agreements, or grant agreements subsequently updated, as appropriate, in connection with 2024 grants.
Mr. Pine will participate in the Company’s Senior Executive Severance Pay Plan and the Special Senior Executive Severance Pay Plan, as filed with the Company’s Quarterly Reports on Form 10-Q filed on August 1, 2017 and August 2, 2022, respectively. Each plan provides for the payment of severance benefits to certain senior executives upon involuntary termination in specified circumstances. Mr. Pine will also receive standard benefits generally available to the Company’s US-based salaried employees.
Mr. Pine and his immediate family members are not party to any related person transactions for which disclosure would be required pursuant to Item 404(a) of Regulation S-K. There is no family relationship between Mr. Pine and any of the Company’s directors or executive officers.
Effective October 1, 2023, Sandra E. Rowland will cease to serve as Senior Vice President and Chief Financial Officer. The Company and Ms. Rowland entered into a Transition Services Agreement under which she will remain employed by the Company as a strategic advisor to facilitate a smooth and orderly transition until her termination from employment by the Company without cause on March 31, 2024. Ms. Rowland’s
