UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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)
February 25, 2005
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THERMO ELECTRON CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-8002 04-2209186
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
81 Wyman Street, P.O. Box 9046 02454-9046
Waltham, Massachusetts (Zip Code)
(Address of Principal Executive Offices)
(781) 622-1000
(Registrant's Telephone Number,
Including Area Code)
N/A
(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):
[ ] 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 February 25, 2005, the Board of Directors (the "Board") of Thermo
Electron Corporation (the "Company") and the Compensation Committee of the Board
(the "Compensation Committee") took the following actions relating to executive
and director compensation:
2004 Executive Compensation Matters
Annual Cash Incentive Plans - Approval of Payout of Cash Bonuses for
2004. The Compensation Committee approved the payout of cash bonuses for 2004 to
the Company's executive officers under the Company's 2003 Annual Incentive Award
Plan (the "162(m) Plan"), which was approved by the stockholders of the Company
at its 2003 Annual Meeting of Stockholders. The Compensation Committee exercised
its discretion to lower the amount of the cash bonuses payable under the 162(m)
Plan based on its determinations as to the level of achievement of the
applicable supplemental performance metrics for 2004 under the Company's annual
cash incentive program, which operates in connection with the 162(m) Plan. The
amount of cash bonuses approved by the Compensation Committee to be paid to the
Company's "named executive officers" (as defined by Item 402(a)(3) of Regulation
S-K) are set forth in the table below.
2005 Executive Compensation Matters
Annual Cash Incentive Plans - Establishment of Criteria for 2005 Bonus.
The Compensation Committee established the performance goal under the 162(m)
Plan for 2005 as earnings before interest, taxes and amortization, excluding the
impact of charges for restructuring, discontinued operations, extraordinary
items, other unusual or non-recurring items and cumulative effects of accounting
changes ("Adjusted EBITA"); and determined the percentage of Adjusted EBITA that
each of the Company's executive officers is entitled to receive as a cash bonus
for 2005 under the 162(m) Plan, subject to the Compensation Committee's right to
lower, but not raise, the actual cash bonus to be paid to such executive officer
for the year. The Compensation Committee's determination as to whether to lower
the actual cash bonus to be paid to executive officers is generally based on the
results of its determinations under the Company's annual cash incentive program
for that year (which is described in the next paragraph).
The Compensation Committee also established a target cash bonus amount
for each of the Company's executive officers as well as supplemental performance
metrics for such officers and the Company as a whole under the Company's annual
cash incentive program for 2005. The target amount for each of the Company's
executive officers, which is a percentage of base salary (ranging from 40% to
95%), was determined by the Compensation Committee based on the salary level and
position of such officer within the Company. The supplemental performance
metrics are based on (a) (70%) financial measures for the Company, comprised of
growth in (i) revenue (adjusted for the impact of acquisitions and divestitures
and for foreign currency changes) (35%) and (ii) earnings (adjusted for
restructuring charges and certain other items of income or expense) before
interest, taxes and amortization as a percentage of revenue (35%) and (b) (30%)
qualitative measures of the Company's executive officers' contributions to the
achievement of certain business objectives of the Company. For each of the
financial measures, the Company's actual performance will be measured relative
to the Company's internal operating plan for 2005. For
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both the financial and the qualitative measures, a range of performance for each
such measure corresponds with a multiplier of 0 to 2. After giving effect to the
weighting of the supplemental performance metrics, a composite final multiplier
will be applied to the target cash bonus amounts for all of the Company's
officers, including its executive officers. The sum of these amounts will be
added together to form a bonus pool for all of the Company's officers, including
its executive officers, and will allocated by the Compensation Committee among
such officers.
Base Salary - Approval of Increases for 2005. Effective April 1, 2005,
the Compensation Committee increased the annual base salary of the Company's
executive officers (other than the Company's chief executive officer and general
counsel whose annual base salaries remain the same). The annual base salary
approved by the Compensation Committee for the Company's named executive
officers is set forth in the table below.
Stock Options and Restricted Stock - Approval of Grants for 2005. The
Compensation Committee granted stock options to the Company's executive officers
under the Company's equity incentive plans. The stock option grants for the
executive officers, other than the chief executive officer, are evidenced by the
Company's standard form of Stock Option Agreement to its officers, a copy of
which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
The stock option grant to the chief executive officer, Marijn E. Dekkers, is
evidenced by the Company's standard form of Stock Option Agreement for Mr.
Dekkers, a copy of which is attached hereto as Exhibit 99.2 and incorporated
herein by reference. The options all (a) vest in equal annual installments over
the three-year period commencing on the date of grant (i.e., the first 1/3 of a
stock option grant would vest on the first anniversary of the date of grant)
so long as the executive officer is employed by the Company on each such date,
(b) have an exercise price equal to the average of the opening and closing
prices of the Company's common stock on the New York Stock Exchange on the date
of grant, and (c) have a term of 7 years from such date. In addition, the
Compensation Committee awarded 100,000 shares of restricted common stock of the
Company to Mr. Dekkers that vest in annual equal installments over the
three-year period commencing on November 21, 2005 (i.e., the first 1/3 of the
restricted shares would vest on November 21, 2006) assuming continuous
employment with the Company on each such date. The award is evidenced by the
Company's standard form of Restricted Stock Agreement for Mr. Dekkers, a copy of
which is attached hereto as Exhibit 99.3 and incorporated herein by reference.
The stock option grants approved by the Compensation Committee for the Company's
named executive officers are set forth in the table below.
CEO Employment Agreement -Amendment. The Compensation Committee
approved, and the Company and Mr. Dekkers entered into, a letter agreement dated
as of February 25, 2005 that (a) amended the second sentence of Section 6(c) of
Mr. Dekkers' Amended and Restated Employment Agreement dated as of November 21,
2002, as amended (the "Employment Agreement"), to provide that the exercise
price of the stock options to be granted to Mr. Dekkers in 2005, 2006 and 2007
shall be the average of the opening and closing prices of the Company's common
stock on the New York Stock Exchange on the date of each grant and (b) provided
that the stock option to purchase 260,000 shares of the Company's common stock
granted to Mr. Dekkers on February 25, 2005 pursuant to Section 6(c) of the
Employment Agreement shall have a term of 7 years from the date of grant rather
than a term of 10 years as provided in the last sentence of Section 6(c) of the
Employment Agreement.
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- -----------------------------------------------------------------------------------------------------
2005
Securities
2005 Underlying
2004 Salary Option
Name Cash Bonus (1) (effective April 1, 2005) Grant
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Marijn E. Dekkers $1,107,000 $1,000,000 438,000 (2)
President and Chief Executive Officer
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Guy Broadbent $ 191,580 $ 350,000 125,000
Vice President; President
Bioscience Technologies Division
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Marc N. Casper $ 359,550 $ 600,000 265,000
Senior Vice President
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Seth H. Hoogasian $ 223,245 $ 363,000 125,000
Vice President, General Counsel and
Secretary
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Peter M. Wilver $ 196,890 $ 363,825 125,000
Vice President, Chief Financial Officer
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(1) The Compensation Committee has reserved the right to re-examine the qualitative portion of the
2004 cash bonuses in the event that the Company's annual report on Form 10-K for the year ended
December 31, 2004 includes an assessment by the Company's registered public accounting firm other
than that the Company maintained, in all material respects, effective internal control over
financial reporting as of the year end.
(2) The amount reported for the number of shares of the Company's common stock underlying Mr. Dekkers'
stock option grant for 2005 include the option to purchase 260,000 shares of the Company's common
stock that Mr. Dekkers was entitled to receive pursuant to the terms of his Employment Agreement
(as defined above).
2005 Director Compensation Matters
Annual Cash Retainer - Approval of Increase. Effective February 25,
2005, the Board increased the annual retainer that is provided to the chairman
of the Audit Committee to $20,000.
Restricted Stock - Approval of Award. The Compensation Committee
awarded 2,500 shares of restricted common stock of the Company to the Chairman
of the Board, Jim P. Manzi, that vest in equal installments over the three-year
period commencing on the date of grant (i.e., the first 1/3 of the restricted
shares would vest on the first anniversary of the date of grant) assuming
continued service as Chairman of the Board on each such date. The award is
evidenced by the Company's standard form of Restricted Stock Agreement for Mr.
Manzi, a copy of which is attached hereto as Exhibit 99.4 and incorporated
herein by reference.
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Item 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Form of Thermo Electron Corporation Stock Option Agreement for
use in connection with the grant of stock options under the
Registrant's equity incentive plans to officers and directors
of the Registrant.
99.2 Form of Thermo Electron Corporation Stock Option Agreement for
use in connection with the grant of stock options under the
Registrant's equity incentive plans to Mr. Dekkers.
99.3 Form of Thermo Electron Corporation Restricted Stock Agreement
for use in connection with the grant of restricted stock under
the Registrant's equity incentive plans to Mr. Dekkers.
99.4 Form of Thermo Electron Corporation Restricted Stock Agreement
for use in connection with the grant of restricted stock under
the Registrant's equity incentive plans to Mr. Manzi.
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SIGNATURE
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, on this 2nd day of March 2005.
THERMO ELECTRON CORPORATION
/s/ Seth H. Hoogasian
By: -----------------------------
Name: Seth H. Hoogasian
Title: Vice President
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