UNITED STATES
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): December 13, 2004
FLEETWOOD ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-07699 95-1948322
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
3125 Myers Street, Riverside, California 92503-5527
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (951) 351-3500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K 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
CFR230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR240.14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR240.13e-4(c))
Item 8.01. Other Events.
On December 13, 2004 the Compensation Committee of the Board of Directors
of Fleetwood Enterprises, Inc. amended certain of the terms of the
Registrant's executive compensation structure. An exhibit describing the
changes is attached as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
(a) Inapplicable
(b) Inapplicable
(c) Exhibits
99.1 Description of amendments to terms of certain executive
compensation of Fleetwood Enterprises, Inc.
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 thereunto duly authorized.
FLEETWOOD ENTERPRISES, INC.
(Registrant)
Date: December 17, 2004 By: /s/ Leonard J. McGill
----------------------------
Leonard J. McGill
Senior Vice President and
Chief Governance Office
Exhibit 99.1
FLEETWOOD ENTERPRISES, INC.
3125 Myers Street
Riverside, California 92503-5527
Base Salary and Short-Term Incentive Compensation
Total cash compensation, comprised of base salary and short-term bonus,
is established through an individual and financial performance model that
maintains competitive base salaries while providing sizable short-term bonus
opportunities based upon the achievement of individual and organizational
performance objectives. This performance-based approach is a reflection of
the Company's belief that executives should have an opportunity to earn
bonuses based on operational performance, including profitability. The
management compensation plan is designed to hold executives more closely
accountable for specific objectives under their control.
Base salaries and salary ranges are determined in relation to competitive
market data provided in national compensation surveys, and also based on an
evaluation of individual job performance. Compensation surveys utilized
include those conducted by nationally recognized compensation consulting
firms on an annual basis as well as others when appropriate. The services of
a nationally recognized consulting firm were retained in 2004 to review
Fleetwood's executive compensation plan. In order to enhance the recruitment
and retention of executive positions, the consulting firm recommended we
change our approach in comparing targeted management compensation to
competitive market data. This change involved comparing the targeted Total
Cash Compensation (TCC) to market data at the 75th percentile instead of the
previously utilized 50th percentile. The Long-Term Incentive Compensation
will continue to be compared at the 50th percentile, thus, creating a Total
Direct Compensation (TDC), comprised of TCC and Long-Term Incentive
Compensation, that is approximately 62.5% of market data.
In addition to the market comparison, the consulting firm suggested that
the compensation of our key executives was too highly leveraged. The
consulting firm recommended that we increase the amount of base compensation
and reduce the amount of targeted short term incentive compensation for most
of our executives. For most executives, the amount of their TCC delivered in
base compensation increased by 10% and the amount of their compensation
delivered in short term incentive compensation reduced by 10%. Short-term
incentive compensation targets are based on comparative market data and
require the executive to meet individual performance objectives as well as
company-wide financial performance measures in the case of more senior
executives who have responsibilities across multiple business units, or based
on group or divisional financial performance measures in the case of senior
executives who have responsibilities solely within these particular
functional areas.
Long-Term Incentive Compensation
The consulting firm also reviewed the Long-Term Incentive Compensation
for Fleetwood executives. Their review suggested the following:
1. Stock options should continue to be a significant part of the overall
long term incentive compensation.
2. Black Scholes should continue to be the main valuation method for stock
options but the computed value should be reviewed and possibly adjusted
based upon subjective factors such as significant stock price
fluctuations, overhang, etc.
3. The overall structure of the Long Term Performance Plan should remain
intact but components of the Long Term Performance Plan should be
adjusted as follows:
a. The Plan targets should more directly align with shareholder
value through performance targets such as Return on Equity or
Operating Income.
b. The award targets should more closely align with external market
data.
c. The cycle of the Plan should be extended from two to three years.
d. Because Fleetwood does not have specific peer companies to
compare our performance to, it was suggested that we incorporate
a broader equity index as our "peer" comparison.
e. The "peer" comparison should not result in a complete elimination
of Long-Term Incentive payout. Instead, payout should be limited
to a partial reduction if performance does not meet index results
and should result in a partial increase in payout if performance
exceeds index results.
Consistent with the shareholder-approved 2002 Long-Term Performance Plan; the
following changes were implemented to the plan at the December 2004
Compensation Committee meeting:
1. The Plan performance measures were adjusted to more directly align with
shareholder value and the new measures are Return on Equity and
Operating Income dollars and/or margin.
2. The award targets were reviewed and adjusted as necessary to better
align our LTPP compensation with external market data.
3. The performance cycle of the Plan was extended from two to three years.
Also, a two year transition cycle was approved to bridge the gap
created by converting to a three year performance cycle.
4. We selected the Russell 2000 index as our "peer" comparison for use in
the Total Shareholder Return calculation.
5. The "peer" comparison was changed to result in a 30% reduction if
Fleetwood stock performance does not meet index results and result in a
30% increase in payout if Fleetwood stock performance exceeds index
results. No adjustment is made if the performance of Fleetwood stock
approximates the average of the index.
Chief Executive Officer Compensation
The compensation package for Mr. Caudill provides a competitive salary
with the potential of significant bonus plan compensation in the event the
Company performs well under his leadership. Based on the review of executive
compensation and recommendations by the nationally recognized consulting
firm, the Committee, in September of 2004, approved, effective retroactive to
July of 2004, Mr. Caudill's annual base pay as Chief Executive Officer be
increased from $725,600 to $873,000 and his annual target bonus compensation
opportunity be increased from $725,700 to $1,067,000. This change includes a
decrease in the amount of base salary by 5%, as a percent of total cash
compensation, and increases the short-term bonus opportunity by 5%. 50% of
the bonus award is based on individual performance and 50% is based on
company-wide performance. Mr. Caudill's total direct compensation target now
includes an annual long-term performance target of $1,127,000 and annual
stock option grant targets, issued in March and September of each year, of
$563,500. He will receive long-term performance and stock option grants on
essentially the same schedule as other officers. Separately, the
Compensation Committee approved the transfer of Mr. Caudill's options and
restricted stock into a family trust for estate planning purposes.
Non-Qualified Benefit Plans
In light of recent legislation impacting our three non-qualified plans - our
Deferred Compensation Plan, our Benefit Restoration Plan and our Supplemental
Benefit Plan - Fleetwood's Board of Directors took action to freeze all three
non-qualified plans in their December 2004 meeting. The plans will remain in
existence but no new deferrals or contributions will be allowed to the plans.
To accommodate certain excess retirement contributions for our executives and
to provide a plan in which we can fulfill previous commitments, Fleetwood's
Board of Directors delegated to its Compensation Committee the responsibility
to approve the establishment of a new non-qualified plan, which will be
subject to all aspects of the recent legislation.