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): APRIL 10, 2007
TECUMSEH PRODUCTS COMPANY
(Exact name of registrant as specified in its charter)
MICHIGAN 0-452 38-1093240
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 EAST PATTERSON STREET
TECUMSEH, MICHIGAN 49286
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 423-8411
(NOT APPLICABLE)
(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 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF PRINCIPAL OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS.
Resignation of Todd W. Herrick from Board; Appointment of Kent B. Herrick
On April 2, 2007, we signed a Settlement and Release Agreement among the
following parties: Tecumseh Products Company; Herrick Foundation; Todd W.
Herrick and Toni Herrick in their capacities as trustees of specified Herrick
family trusts; Todd W. Herrick, Kent B. Herrick, and Michael Indenbaum in their
capacities as members of the board of trustees of Herrick Foundation; Todd W.
Herrick, Kent B. Herrick, Michael Indenbaum, and Toni Herrick in their
individual capacities; and Albert A. Koch, Peter Banks, and David M. Risley in
their capacities as directors of Tecumseh Products Company. The description of
the Settlement and Release Agreement contained in the Current Report on Form 8-K
that we filed on April 10, 2007 is incorporated into this Item 5.02 by
reference.
On April 10, 2007, pursuant to the Settlement and Release Agreement, Todd
W. Herrick resigned from our board of directors, and the board appointed Kent B.
Herrick to the board of directors to fill the vacancy created by Todd W.
Herrick's resignation. At this time, Kent B. Herrick is not expected to be named
to any board committees.
As a non-employee director, Kent B. Herrick will receive a monthly retainer
of $2,500, a $1,500 fee for each board meeting attended, and a $1,200 fee for
each committee meeting attended and will be entitled to reimbursement for travel
expenses. He also will be eligible to receive phantom share awards under our
Director Retention Phantom Share Plan, under which each non-employee director
receives an annual award denominated in phantom Class A shares. The minimum
award is $5,000, and the maximum is 100% of the director's annual retainer fee.
The board of directors makes the awards at its organizational meeting following
each annual meeting of shareholders on the basis of our actual return on equity
for the preceding year as compared to a target established for that year. In
addition, Mr. Herrick will be eligible to participate in our Outside Directors'
Voluntary Deferred Compensation Plan, under which our non-employee directors can
elect to defer receipt of a portion of their retainers and meeting fees.
Key Employee Bonus Plan
On April 10, 2007, on the recommendation of the Governance, Compensation,
and Nominating Committee, our board of directors adopted a new Key Employee
Bonus Plan that provides for annual performance-based cash bonuses for key
employees of Tecumseh Products Company and our subsidiaries who are selected to
participate in the plan for a given year. The new Key Employee Bonus Plan
replaces our Management Incentive Plan, under which employees could receive both
cash bonuses and restricted phantom shares of Class A common stock. While the
Management Incentive Plan continues to govern previously granted, unvested
phantom share awards, we do not expect to grant any new awards under it.
Under the new plan, early in each year we will select the key employees who
will participate in the plan for that year, and for each participating employee
for that year we will establish:
- a potential bonus amount;
- company-wide or employer level performance goals;
- individual goals, if any; and
- the amount of the employee's total potential bonus attributable to
each goal.
After the year is completed, we will determine the extent to which each
employee's goals have been met and the amount of his or her potential bonus that
actually has been earned. We will pay bonuses earned for a given year in cash no
later than March 15 of the following year.
Our Governance, Compensation, and Nominating Committee is responsible for
making key determinations under the plan with respect to executive officers (as
defined in the SEC's rules) who participate in the plan, including setting
potential bonus amounts, establishing performance goals, and determining the
portion of potential bonuses actually earned. In making these determinations,
the committee will consider the President's recommendations and such other
factors as the committee deems appropriate.
For 2007, the committee has approved potential bonuses for some of our
executive officers covered by Item 5.02(e) of Regulation S-K. Amounts actually
paid will depend on the extent to which the applicable company-wide or employer
level performance goals and individual goals are met. Company-wide or employer
level performance goals for 2007 include goals relating to Compressor Group
operating profit before interest, taxes, and restructuring charges, liquidity
maintenance in North America, Compressor Group revenue per employee, and
Electrical Component Group earnings before interest and taxes.
For more detailed information about the terms of the plan, please see the
copy filed as an exhibit to this report.
Contingent Severance Agreement with James S. Nicholson
On April 10, 2007, on the recommendation of the Governance, Compensation,
and Nominating Committee, our board of directors approved an agreement with
James S. Nicholson, our Chief Financial Officer, under which he would be
entitled to one year's continuation of salary and benefits if his employment is
terminated, contingent on his executing a release. Mr. Nicholson would not be
entitled to benefits under the agreement in some circumstances, including if he
resigns, if we sell our compressor business and he is offered employment by the
buyer, if he becomes entitled to receive benefits under another agreement
triggered by a change in control of the company, if his employment is terminated
for specified causes, or if he dies or becomes disabled. The agreement contains
confidentiality and noncompetition provisions.
For more detailed information about the terms of the agreement, please see
the copy filed as an exhibit to this report.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibit is furnished with this report:
Exhibit No. Description
- ----------- -----------
10.1 Key Employee Bonus Plan (management contract or compensatory plan
or arrangement)
10.2 Severance Agreement with James S. Nicholson (management contract
or compensatory plan or arrangement)
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.
TECUMSEH PRODUCTS COMPANY
Date: April 16, 2007 By /s/ James S. Nicholson
-------------------------------------
James S. Nicholson
Vice President, Treasurer and Chief
Financial Officer
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Key Employee Bonus Plan (management contract or compensatory plan
or arrangement)
10.2 Severance Agreement with James S. Nicholson (management contract
or compensatory plan or arrangement)