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): March 11, 2005
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PACTIV CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation or organization)
1-15157 36-2552989
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(Commission File Number) (IRS Employer Identification No)
1900 West Field Court, Lake Forest, Illinois 60045
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 482-2000
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
Executive Officer Compensation Arrangements
On March 11, 2005, the Board of Directors, upon the advice of the
Compensation/ Nominating/Governance ("C/N/G") Committee, approved certain
matters in connection with the Annual Incentive Awards for 2005 and the
Performance Shares Awards for 2005-07 under the Company's 2002 Incentive
Compensation Plan (the "Plan"). A copy of the Plan, which was approved by the
Company's shareholders, is filed as Exhibit 10.14 to the Company's Form 10-K.
Annual Incentive Awards
Under the Plan, the C/N/G Committee is authorized to grant Annual
Incentive Awards to participants in amounts that are earned based on the
Company's performance against identified business and/or financial performance
measures. A list of the performance measures from which the C/N/G Committee may
select is included in the Plan. The amount that may be earned is 0% to 200% of
the target amount for a participant, depending on performance. The target amount
for each participant is a percentage, varying from 34% to 100%, of the midpoint
of the salary range for the participant's salary grade or base salary. The
performance measures selected by the C/N/G Committee for determining Annual
Incentive Awards for 2005 are (i) earnings per share, excluding Extraordinary
Items (as defined in the Plan), which is weighted 70%, and (ii) free cash flow,
which is weighted 30%. The C/N/G Committee may adjust the amounts so determined
by up to 30% to reflect other factors the C/N/G Committee determines to be
appropriate.
For the Company's CEO and the four other most highly compensated
executive officers for its last completed fiscal year (collectively, the "named
executives"), the Plan has a formula that creates a pool for the Annual
Incentive Award available to the named executives, and no named executive can
receive more than his or her allocable share of the pool. For 2005, the C/N/G
Committee determined that, for purpose of determining the individual caps for
the Annual Incentive Awards, the pool would be allocated 40% to the CEO and 15%
to each of the other four named executives.
Performance Share Awards
Under the Plan, the Company may grant key executives Performance
Shares. These awards are granted over a three-year period, and may be earned at
0 to 200% of the grant amount based on the Company's performance against the
performance measures determined by the C/N/G Committee each year, subject to
adjustment by the C/N/G Committee based on the Company's performance over the
entire three-year period. The amounts earned are measured in shares, and may be
paid out in cash or shares as determined by the C/N/G Committee. A list of the
performance measures from which the C/N/G Committee may select is included in
the Plan.
For the named executives, the C/N/G Committee has established a "pool"
equal to the greater of 2.5% of the average of the Company's annual consolidated
earnings (less Extraordinary Items, as defined in the Plan), and 5% of the
Company's annual average free cash flow over such three years, and the number of
Performance Shares that may be earned by any named executive cannot exceed his
allocable portion of such pool (based on the Company's share price as of the
last day of the three-year performance period). The C/N/G Committee has
allocated the percentage interests in such pool for the 2005-07 grant of 40% to
the CEO and 15% to each of the other four named executives.
SIGNATURES
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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.
Date: March 17, 2005
PACTIV CORPORATION
By: /s/ James V. Faulkner, Jr.
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James V. Faulkner, Jr.
Vice President and General Counsel