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): February 6, 2008
ESCO TECHNOLOGIES INC.
(Exact Name of Registrant as Specified in Charter)
Missouri 1-10596 43-1554045
(State or Other (Commission (I.R.S. Employer
Jurisdiction of Incorporation) File Number) Identification No.)
9900A Clayton Road, St. Louis, Missouri 63124-1186
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 314-213-7200
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:
[ ] 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 240.113d-4 (c))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
Fiscal Year 2008 Bonus Criteria
On February 6, 2008, the Human Resources and Compensation Committee (the
"Committee") of the Registrant's Board of Directors took the following actions
with respect to the fiscal year 2008 bonuses to be paid to the Registrant's
executive officers after the end of the fiscal year 2008. Each executive
officer's bonus target is divided between two plans: (i) the Performance
Compensation Plan (the "PCP") and (ii) the Incentive Compensation Plan For
Executive Officers (the "ICP"):
1. Under the PCP, the Committee approved the fiscal year 2008 evaluation
criteria for the determination of the actual PCP bonuses to be paid to the
executive officers after the end of fiscal year 2008. The Committee will
evaluate and measure the performance of the executive officers based on the
achievement of various Registrant and individual objectives, weighted as
follows: cash flow - 40%; Doble Engineering Company sales and earnings
before interest and taxes (EBIT) - 20%; proceeds from the divestiture of
the Filtertek businesses - 10%; and individual objectives - 30%. The
achievement of each of these three Registrant objectives is measured
utilizing a relevant matrix. The target multiplier under the PCP for fiscal
2008 ranges from 0.2 to 2.0 times the bonus target.
2. Under the ICP, the Committee modified the fiscal year 2008 earnings per
share (EPS) matrix, which is the evaluation criterion for the determination
of the actual ICP bonuses to be paid to the executive officers after the
end of fiscal year 2008. The modified EPS matrix for fiscal 2008 under the
ICP has an EPS range from $1.45 to $1.97. The bonus target multiplier under
the ICP for fiscal 2008 ranges from 0.2 to 2.0 times the bonus target.
Actual bonuses to be paid under each of the PCP and the ICP for fiscal year 2008
may vary from their respective bonus targets: (i) depending on the extent to
which performance exceeds or falls below the fiscal year 2008 evaluation
criteria described in paragraph 1 above, in the case of the PCP; and (ii) based
upon the application of the fiscal year 2008 ICP earnings per share matrix
described in paragraph 2 above, in the case of the ICP.
Compensatory Arrangements For G.E. Muenster
Effective February 11, 2008, the Registrant's Board of Directors changed the
title of executive officer G.E. Muenster (the "executive") from Senior Vice
President and Chief Financial Officer to Executive Vice President and Chief
Financial Officer.
On February 6, 2008, the Committee took the following actions with regard to the
executive:
1. The executive's fiscal year 2008 base salary was increased from
$340,000 to $430,000.
2. The Committee, under the PCP and the ICP jointly, changed the fiscal
year 2008 bonus target for the executive from 30% to 35% of fiscal
year 2008 total cash compensation, with such change to be pro-rated
effective as of February 1, 2008. As a result, the executive's fiscal
year 2008 bonus target was increased from $140,000 to $230,000.
3. The executive's current employment agreement, as amended, (the
"Employment Agreement") was further amended effective February 6, 2008
to extend, in the case of a termination as described below, from one
year to two years the period for which the executive will receive (i)
the continuation of his then-current base salary and bonus (bonus
calculated using the annual percentage of base salary for the last
fiscal year prior to termination), and (ii) continuation of his
perquisites and certain employee benefits. Such a termination would
exist if the executive's employment is terminated by the Registrant
other than for cause, or if the executive terminates his employment
following certain actions by the Registrant, such as failing to comply
with the Employment Agreement, materially reducing the executive's
responsibilities or requiring the executive to relocate. This
amendment is furnished herewith as Exhibit 10.1. If the executive's
employment is terminated in connection with a Change of Control (as
defined), he will not receive the foregoing benefits, and will receive
instead the benefits payable under the Registrant's Severance Plan.
The Employment Agreement became effective on or about November 1,
1999. It was amended to extend until November 2, 2004, and again
amended on May 5, 2004 to provide automatic renewal after November 2,
2004 for subsequent one-year periods unless a six month notice of
non-renewal is given by the Registrant or the executive. It was
further amended on December 31, 2007 to provide that the amounts
payable under the Employment Agreement upon termination of employment
would not be subject to Section 409A of the Internal Revenue Code.
The Employment Agreement provides for a base salary of not less than
the executive's fiscal year 1999 base salary, as increased in
accordance with the Registrant's compensation policy, and an annual
bonus. The executive is also entitled to participate in any stock
options, restricted stock or performance shares awards and other
compensation as the Registrant's Human Resources and Compensation
Committee shall determine. The executive is further entitled to
participate in all employee benefit programs of the Registrant
applicable to senior executives, and the Registrant will continue to
provide certain perquisites, including financial planning, an
automobile allowance and club membership.
For further information concerning the Employment Agreement, see ITEM
5.02 of the Registrant's Current Report on Form 8-K dated December 31,
2007, which is incorporated herein by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit No. Description of Exhibit
10.1 Fourth Amendment to Employment Agreement with
G.E. Muenster, dated February 6, 2008
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 hereunto duly authorized.
ESCO TECHNOLOGIES INC.
Dated: February 12, 2008 By: /s/ G.E. Muenster
G.E. Muenster
Executive Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Description of Exhibit
10.1 Fourth Amendment to Employment Agreement with
G.E. Muenster, dated February 6, 2008
EXHIBIT 10.1
FOURTH AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT entered into as of the 6th day of February, 2008, between
ESCO Technologies Inc. ("Company") and Gary E. Muenster ("Executive").
WITNESSETH:
WHEREAS, the Company and the Executive entered into an Employment Agreement
as of the 3rd day of November, 1999 ("Agreement"), which Agreement was amended
as of the 9th day of August, 2001; the 5th day of May, 2004; and the 3rd day of
October, 2007; and
WHEREAS, the parties retained the right to amend the Agreement pursuant to
Article 15 thereof; and
WHEREAS, the parties desire to again amend the Agreement effective as of
February 6, 2008.
NOW, THEREFORE, effective as of February 6, 2008, the Agreement is amended
as follows:
1. The first sentence of Subparagraph (1) of Paragraph 9.a is revised to
read as follows:
The Company shall pay the Executive an amount equal to his base salary
for 24 months following such termination of employment ("Severance
Period") at the rate in effect at the date of such termination.
2. The first sentence of Subparagraph (2) of Paragraph 9.a is revised to
read as follows:
As a supplement to the payment of the Executive's base salary under
Subparagraph (a)1, above, the Company shall also pay the Executive an
amount equal to his PCP Percentage and ICP Percentage (as herinafter
defined), as applicable, for 24 months following such termination in
the same manner as determined under Subparagraph (a)1.
IN WITNESS WHEREOF, the foregoing Agreement was executed effective as of
February 6, 2008.
ESCO TECHNOLOGIES INC.
By: /s/ Deborah J. Hanlon /s/ G. E. Muenster
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Executive