UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 7, 2005
TOLL BROTHERS, INC.
-------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 001-09186 23-2416878
- ----------------------------- ------------ -------------------
(State or Other Jurisdiction) (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
250 GIBRALTAR ROAD, HORSHAM, PA 19044
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 938-8000
-------------------------------------------------------------------------
(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.
AMENDMENT TO THE TOLL BROTHERS, INC. CASH BONUS PLAN
As more fully described below, the Toll Brothers, Inc. Cash Bonus Plan, as
amended (the "Plan"), was amended on December 7, 2005 to reduce the amount of
bonus payable under the Plan for fiscal 2005 to Mr. Robert I. Toll, Chairman and
Chief Executive Officer of Toll Brothers, Inc. (the "Company"). In addition, the
Plan was further amended to reduce the potential bonus amount payable under the
Plan to Mr. Toll for fiscal 2006 and fiscal 2007 by reducing the potential
benefit of the stock conversion feature of the Plan.
The Plan currently provides that Mr. Toll will receive a cash bonus award
(before the stock conversion feature described below) for the Company's fiscal
year ended October 31, 2005 and for subsequent fiscal years in an amount equal
to the sum of (i) 1.5% of the Company's income before income taxes (as defined
in the Plan) in excess of 10% and up to 20% of shareholders' equity (as defined
in the Plan) of the Company as of the end of the preceding fiscal year, (ii)
2.25% of the Company's income before income taxes in excess of 20% and up to 30%
of shareholders' equity of the Company as of the end of the preceding fiscal
year, and (iii) 3.5% of the Company's income before income taxes in excess of
30% of shareholders' equity of the Company as of the end of the preceding fiscal
year. The Plan also provides that for each of the fiscal years ending October
31, 2005, 2006 and 2007, the cash bonus award will be adjusted by applying a
stock conversion feature as follows: (a) the cash bonus award will be converted
into shares by dividing the cash bonus award by the closing price on the New
York Stock Exchange ("NYSE") of the Company's common stock on the last trading
day of the Company's 2004 fiscal year, October 29, 2004 (the "Award Conversion
Price"), and (b) the number of shares calculated in (a) will then be multiplied
by the closing price of the Company's common stock on the NYSE on the last
trading day of the fiscal year for which the bonus is being calculated (the
"Stock-Adjusted Bonus Value"). The Stock-Adjusted Bonus Value, subject to the
caps or limitations outlined below, will be paid 60% in cash, with the remaining
40% being paid in shares of the Company's common stock, calculated by dividing
40% of the Stock-Adjusted Bonus Value by the closing price of the Company's
common stock on the NYSE on the last trading day of the fiscal year for which
the bonus is applicable. The Plan provides that the price of the Company's
common stock used in determining the Stock-Adjusted Bonus Value may not exceed
160% of the Award Conversion Price, and further provides that the Stock-Adjusted
Bonus Value be capped at 2.9% of the Company's pre-tax/pre-bonus income for the
fiscal year for which the Stock-Adjusted Bonus Value is being calculated.
On December 7, 2005, upon approval by the Executive Compensation Committee of
the Board of Directors, the Company and Mr. Toll agreed to further amend the
Plan (the "Plan Amendment") to apply certain restrictions and additional caps to
the amount of bonus payable to Mr. Toll under the Plan. The Plan Amendment
provides for a cap on the bonus amount payable to Mr. Toll under the Plan for
fiscal 2005 equal to $27,322,547 (the highest of the probable stock-adjusted
bonus values projected for fiscal 2005, as presented to the Board of Directors
of the Company at their October 21, 2004 meeting). Mr. Toll's fiscal 2005 bonus
shall be payable 60% in cash and 40% in shares. The portion of such bonus
payable in shares shall be paid by means of delivery of a number of shares
determined by dividing 40% of $27,322,547 by $36.91 (the closing price of the
Company's common stock on the NYSE as of the last day of the Company's fiscal
year ended October 31, 2005). The Company has agreed to indemnify Mr. Toll from
and against any damages or financial liabilities he suffers or incurs, including
any liabilities to the United States government, solely arising out of or
resulting from this Plan Amendment.
The Plan Amendment also provides that, with respect to the Company's fiscal
years ending October 31, 2006 and October 31, 2007, in the event, as of the last
day of either such fiscal year, the closing price per share of the Company's
common stock on the NYSE is equal to or less than $36.91, and greater than or
equal to the Award Conversion Price, the cash bonus award will not be adjusted
by applying the stock conversion feature as described above to achieve a
Stock-Adjusted Bonus Value, and Mr. Toll shall only be entitled to a bonus equal
to the cash bonus award for such fiscal year, payable 60% in cash, and 40% in
shares. The portion of such bonus payable in shares shall be paid by means of
delivery of a number of shares determined by dividing 40% of the bonus payable
by $36.91. The cash bonus award payable under these circumstances will be capped
at 2.9% of the Company's pre-tax/pre-bonus income for the fiscal year for which
the cash bonus award is being calculated.
The Plan Amendment further provides that, with respect to the Company's fiscal
years ending October 31, 2006 and October 31, 2007, in the event, as of the last
day of either such fiscal year, the closing price per share of the Company's
common stock on the NYSE is greater than $36.91, or less than the Award
Conversion Price, the cash bonus award will be adjusted by applying the stock
conversion feature as described above to achieve a Stock-Adjusted Bonus Value.
The Stock Adjusted Bonus Value payable under these circumstances will be capped
at 2.9% of the Company's pre-tax/pre-bonus income for the fiscal year for which
the Stock Adjusted Bonus Value is being calculated. In addition, in the event
the closing price per share of the Company's common stock on the NYSE is greater
than $36.91, the Stock-Adjusted Bonus Value payable to Mr. Toll under the Plan
for such fiscal year will also be capped at an amount that does not exceed the
cash bonus award for such fiscal year by a greater percentage than the fiscal
year end price per share exceeds $36.91.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c). Exhibits.
The following Exhibit is filed as part of this Current Report on Form 8-K:
Exhibit
No. Item
- ------- ----
10.1* Amendment to the Toll Brothers, Inc. Cash Bonus Plan dated
December 7, 2005.
* Filed electronically herewith.
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.
TOLL BROTHERS, INC. Dated: December 8, 2005
By: Joseph R. Sicree
-------------------------
Joseph R. Sicree
Vice President, Chief
Accounting Officer