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 8, 2006
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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 February 3, 2006, the Compensation/ Nominating/Governance ("C/N/G")
Committee, of the Board of Directors approved certain matters in connection
with the Annual Incentive Awards for 2006 and the Performance Shares Awards
for 2006-08 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. For the Company's CEO and the four
other most highly compensated executive officers (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 2006, 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.
Subject to the pool defined above, the amount that may be earned is 0% to
200% of the target amount for a participant, depending on performance. The
target amount for the named executives is a percentage, varying from 55% to
100% of the midpoint of the salary range for their grade or base salary.
Performance measures selected by the C/N/G Committee for determining Annual
Incentive Awards for 2006 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.
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 or "target" 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 of the Company's consolidated earnings
(less Extraordinary Items, as defined in the Plan) over the three-year
performance period, and 5% of the Company's free cash flow over such
period, and the value 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 2006-08 grant of 40% to the CEO and 15% to each of the other
four named executives.
On February 3, 2006, the C/N/G Committee determined the target amounts of
the 2006-08 Performance Share Awards for the participants in the Plan. The
target amounts for the named executives are as follows:
Richard L. Wambold: 120,000 shares
Andrew A. Campbell: 50,000 shares
Peter J. Lazaredes: 55,000 shares
John N. Schwab: 45,000 shares
James V. Faulkner, Jr.: 20,000 shares
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 8, 2006
PACTIV CORPORATION
By: /s/ James V. Faulkner, Jr.
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James V. Faulkner, Jr.
Vice President and General Counsel