Item 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
On August 1, 2014, the Board of Directors of Brady Corporation (the "Company")
appointed J. Michael Nauman as President and Chief Executive Officer of the
Company, effective August 4, 2014. In addition, Mr. Nauman was appointed as a
member of the Board of Directors, effective as of August 4, 2014, with a term
expiring at the next annual meeting of shareholders in November 2014.
Michael Nauman, age 52, joins the Company after 20 years in a number of senior
management positions at Molex Incorporated, a global electronic components
company based in Lisle, Illinois. For the past five years, Mr. Nauman was
Molex's Executive Vice President and President of the Global Integrated Products
Division, where he led six global business units in the automotive, datacom,
industrial, medical, military/aerospace and mobile markets. Prior to joining
Molex in 1994, Mr. Nauman was Controller and then President of Ohio Associated
Enterprises, Inc., a manufacturer based in Painesville, Ohio, and prior to that
was a tax accountant and auditor for Arthur Andersen and Company.
There are no arrangements or understandings between Mr. Nauman and any other
persons pursuant to which he was selected as an officer of the Company, he has
no family relationships with any of the Company's directors or executive
officers, and he has no direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The Company entered into an employment offer letter dated August 1, 2014 with
Mr. Nauman (the "Offer Letter"). The Offer Letter provides that Mr. Nauman will
receive an annual base salary of $675,000, subject to periodic review and
adjustment. The Offer Letter also provides that he will participate in the
Company's annual cash incentive plan in fiscal 2015, with a targeted annual
incentive opportunity of 100% of base salary and a maximum annual incentive
opportunity of 200% of base salary. The Offer Letter further provides the
Mr. Nauman will receive awards under the Company's 2012 Omnibus Incentive Stock
Plan (the "Incentive Stock Plan") in September 2014, subject to the discretion
of the Management Development and Compensation Committee, with a grant date
value of $1.8 million, divided equally between time-based options and restricted
stock units. Under the terms of the Offer Letter, Mr. Nauman will be required
to hold, directly or indirectly, shares of Brady common stock equal to five
times his base salary within five years of his appointment.
The Offer Letter provides that Mr. Nauman will be able to participate in all
employee benefit plans and programs generally available to the Company's
executive officers, including perquisites covering a car allowance, financial
planning and executive physical program, and will be reimbursed for certain of
his relocation expenses. The Offer Letter also contains 24-month
non-competition and non-solicitation provisions, as well as standard
confidentiality, waiver and non-disparagement provisions. Should Mr. Nauman's
employment be terminated by the Company without cause or should he resign for
good reason (as such events are defined in the Offer Letter), the Company will
pay Mr. Nauman a severance benefit equal to two times the sum of his base salary
and target bonus.
Upon commencement of his employment on August 4, 2014, and pursuant to the terms
of the Offer Letter, the Company entered into a Restricted Stock Unit Agreement
with Mr. Nauman (the "RSU Agreement") under which Mr. Nauman received 53,668
restricted stock units with an aggregate award value of $1.5 million, as
calculated based on the 30-day average NYSE closing price of the Company's
Class A Non-Voting Common Stock. The restricted stock units will vest in equal
annual increments on the third, fourth and fifth anniversaries of the grant
date, with vesting accelerated in the event of death, disability, termination
following a change of control, or termination by the Company without cause (as
such events are defined in the RSU Agreement).
Effective August 4, 2014, the Company also entered into a Change of Control
Agreement with Mr. Nauman (the "Change of Control Agreement"). Under the terms
of the Change of Control Agreement, in the event of a qualifying termination
within 24 months following a change of control (as such events are defined in
Change of Control Agreement), Mr. Nauman will receive two times his annual base
salary, two times his target bonus, and the amount of his target bonus prorated
based on when the termination occurs.
Upon Mr. Nauman's appointment as President and Chief Executive Officer, Thomas
will step down as Interim President and Chief Executive Officer and
will continue to serve as the Company's Senior Vice President and Chief
Financial Officer. The Management Development and Compensation Committee
Board of Directors authorized an award of 5,000 restricted stock units to
, effective August 4, 2014
, which will vest upon the first anniversary
of the grant date, with vesting accelerated in the event of death, disability,
termination following a change of control, or termination by the Company without
A copy of the Company's press release announcing Mr. Nauman's appointment is
attached hereto as Exhibit 99.1 and is incorporated herein by reference. The
foregoing descriptions of the Offer Letter, RSU Agreement and Change of Control
Agreement are qualified in their entirety by reference to the full text of such
agreements, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3,
respectively, and are incorporated herein by reference.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
The following are filed as Exhibits to this Report.
Exhibit No. Description of Exhibit
10.1 Employment Offer Letter between the Company and Mr. Nauman dated as
of August 1, 2014.
10.2 Restricted Stock Unit Agreement between the Company and Mr. Nauman
dated as of August 4, 2014.
10.3 Change of Control Agreement between the Company and Mr. Nauman dated
as of August 4, 2014.
99.1 Press Release of Brady Corporation, dated August 4, 2014.