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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):
June 26, 2020 (June
23, 2020)
____________________________________
NAVISTAR
INTERNATIONAL CORPORATION
(Exact name
of registrant as specified in its charter)
_____________________________________
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Delaware
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1-9618
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36-3359573
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(State or
other jurisdiction of
incorporation
or organization)
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(Commission
File No.)
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(I.R.S.
Employer
Identification
No.)
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2701
Navistar Drive
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Lisle
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Illinois
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60532
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(Address of
principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (331)
332-5000
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(Former
name or former address, if changed since last report.)
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_____________________________________
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 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value
$0.10
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NAV
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New York Stock
Exchange
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Cumulative convertible
junior preference stock, Series D (par value
$1.00)
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NAV-D
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New York Stock
Exchange
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Indicate by check
mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (§230.405 of this
chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging Growth
Company ☐
If an emerging
growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 5.02
DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
Lisboa
Appointment as President and Chief Executive Officer
On June 23, 2020,
the Board of Directors (the “Board”) of Navistar International
Corporation, a Delaware corporation (the “Company”), appointed
Persio V. Lisboa as President and Chief Executive Officer
(collectively “CEO”) of the Company effective July 1, 2020 upon the
expiration of the Company’s CEO Employment and Services Agreement
with Troy A. Clarke and Mr. Clarke’s assumption of the newly
created executive officer position of Executive Chairman, as
described below.
Persio V. Lisboa,
age 54, has served as Executive Vice President and Chief Operating
Officer of the Company since March 2017. Prior to holding this
position, Mr. Lisboa served as the President, Operations of
Navistar, Inc., the Company’s principal operating subsidiary (“NI”)
from November 2014 to March 2017, as Senior Vice President, Chief
Procurement Officer of NI from December 2012 to November 2014, as
Vice President, Purchasing and Logistics and Chief Procurement
Officer of NI from October 2011 to November 2012 and Vice
President, Purchasing and Logistics of NI from August 2008 to
October 2011. Prior to these positions, Mr. Lisboa held various
management positions within the Company’s North American and South
American operations. During his tenure as Executive Vice President
and Chief Operating Officer of the Company and President,
Operations of NI, Mr. Lisboa has played a key role in guiding the
Company through its strategic and operational business
initiatives.
Lisboa
Employment Agreement
On June 25, 2020,
the Company entered into an Employment and Services Agreement (the
“Agreement”) with Persio V. Lisboa. The term of the Agreement
commences on July 1, 2020, the effective date of Mr. Lisboa’s
appointment to CEO of the Company. The following is a description
of the material terms of the Agreement, which description is
qualified by reference to a copy of the Agreement attached as
Exhibit 10.1 to this Current Report on Form 8-K. Capitalized terms
used but not otherwise defined herein shall have the meaning given
to them in the Agreement.
Term
of Employment. The Services Term of Mr.
Lisboa’s employment under the Agreement is three years, commencing
on July 1, 2020 (the “Effective Date”) and ending on July 1, 2023,
unless it is terminated earlier by the Company or by Mr. Lisboa, as
described in the Agreement.
Compensation.
Mr. Lisboa’s compensation under the Agreement is as
follows:
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Base
Salary.
Mr. Lisboa’s annual base salary as of the Effective Date is
$890,000. The Board will review the base salary not less than
annually and may increase, but not decrease, the base salary. From
the Effective Date through no later than December 31, 2020, 35% of
Mr. Lisboa’s base salary will be deferred and paid no later than
March 15, 2021, or such earlier date designated by the Company,
together with interest at a 6% annual rate.
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Annual
Incentive.
Mr. Lisboa’s target annual incentive award is 115% of base salary
with a maximum annual incentive award of 2.0 times the target
annual incentive award.
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Long-Term
Incentive.
For the 2020 fiscal year, in addition to the previously granted
long-term incentive awards made to Mr. Lisboa with a target amount
of $1,800,000, Mr. Lisboa will be granted long-term incentive
awards on the Effective Date with a target amount of $2,700,000,
consisting of 50% restricted cash units (cash-settled or
stock-settled as determined by the Board’s Compensation Committee)
and 50% performance cash, in each case subject to the terms and
conditions of the Company’s 2013 Performance Incentive Plan (or any
successor plan) (the "PIP") and applicable award agreements in the
form that applies to other senior executives’ 2020 long-term
incentive awards.
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Termination
and Severance. Mr. Lisboa’s employment and
service relationship with the Company may be terminated at any
time: (i) for any reason, including death or disability;
(ii) by the Company involuntarily with or without Cause (as
defined by the Agreement); or (iii) by Mr. Lisboa due to
Good Reason or Constructive Termination (as defined by the
Agreement), in all cases in accordance with the procedures set
forth in the Agreement.
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Terminations
Other Than Without Cause or a Good Reason or Constructive
Termination. If Mr. Lisboa’s employment
and service with the Company terminates for any reason other than
due to a termination by the Company involuntarily without Cause or
by Mr. Lisboa due to Good Reason or Constructive Termination,
including death or disability, Mr. Lisboa will be entitled to: (i)
any unpaid base salary accrued up to the Date of Termination, (ii)
any annual incentive for any completed fiscal year as of the Date
of Termination that has not already been paid to the extent that
the applicable performance conditions are met, (iii) pay for
accrued but unused vacation, (iv) any benefits or compensation as
provided under the terms of the employee benefit and compensation
agreements and plans under which he has a vested right, including
those that vest as a consequence of the termination of employment,
and (v) reimbursement for unreimbursed business expenses
(collectively, “Accrued Obligations”).
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Terminations
Without Cause or Good Reason (Other Than in Connection With a
Change in Control). If Mr. Lisboa’s
employment and service with the Company is terminated either:
(i) by the Company involuntarily without Cause, or
(ii) by Mr. Lisboa due to Good Reason (as defined by the
Agreement), then, subject to his execution of a release in a
commercially reasonable form acceptable to the Company (a
“Release”), Mr. Lisboa, in addition to Accrued Obligations,
will also be entitled to: (i) a lump sum severance payment
equal to 200% of the sum of his then base salary and target annual
incentive, and (ii) a lump sum payment of a pro rata portion
(based on the number of whole months of employment during the
fiscal year) of the actual annual incentive that would have been
payable under the Company’s Annual Incentive Plan for the fiscal
year in which the termination occurred based on actual performance.
In addition, Mr. Lisboa will be entitled to:
(i) continued healthcare coverage for twenty-four months;
(ii) continued life insurance coverage for twenty-four months,
(iii) Company-paid outplacement services, (iv) retention
of any flexible perquisite allowance actually paid at or before the
date of termination and (v) any post-retirement health and
life insurance benefits due upon termination pursuant to or in
accordance with Company-sponsored benefit plans, programs or
policies (collectively, “Additional Benefits”). All stock options,
restricted stock or other equity-based awards will be governed by
the respective plans and agreements pursuant to which they were
granted.
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Terminations
Without Cause or a Constructive Termination in Connection With a
Change of Control. If Mr. Lisboa’s
employment and service with the Company is terminated: (i) by
the Company without Cause, or (ii) by Mr. Lisboa due to
Constructive Termination (as defined by the Agreement), in either
case during the twenty-four months after the date of the then-most
recent Change in Control then, subject to his execution of a
Release, Mr. Lisboa, in addition to Accrued Obligations, will
be entitled to: (i) a lump sum severance payment equal to 200%
of the sum of his then base salary and target annual incentive,
(ii) a lump sum payment of a pro rata portion (based on the
full number of months of employment during the fiscal year) of his
target annual incentive under the Company’s Annual Incentive Plan
for the fiscal year in which the termination occurred, and
(iii) the Additional Benefits. Per the terms of the PIP, if
Mr. Lisboa experiences a Constructive Termination or an involuntary
termination for any reason other than Cause either immediately
before the date on which a Change in Control occurs or during the
thirty-six (36) month-period after the date of the then-most recent
Change in Control, all awarded restricted stock, stock units, and
other equity-based or long-term incentive compensation granted or
awarded to Mr. Lisboa will be deemed fully earned and not subject
to forfeiture and all outstanding stock options and stock
appreciation rights will be exercisable for the three-year period
commencing on the date of the Change in Control regardless of
employment status.
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Limitation
on Payments. If any payment or benefit
received or to be received by Mr. Lisboa under the Agreement
or under any other plan, arrangement or agreement, including
payment or benefit received in connection with a Change in Control
or a termination of employment (collectively, the “Total Payments”)
would be subject to the excise tax imposed under Section 4999
of the Internal Revenue Code of 1986, as amended (the “Excise
Tax”), then the payments to which Mr. Lisboa otherwise is
entitled will be reduced to the extent necessary so that no portion
of the Total Payments will be subject to the Excise Tax, but only
if the net after-tax amount of such Total Payments, as so reduced,
is greater than or equal to the net after-tax (including the excise
tax) amount of such Total Payments without such
reduction.
Restrictive
Covenants.
The Agreement contains covenants of Mr. Lisboa with regard to
the non-disclosure of confidential information, non-disparagement,
and cooperation while employed and for an unlimited period
thereafter, and with regard to non-competition and non-solicitation
while employed and for a period of twenty-four months following a
termination.
Indemnification.
Under the Agreement, Mr. Lisboa will be provided
indemnification to the maximum extent permitted by the Company’s
Certificate of Incorporation and Bylaws, subject to applicable law,
including coverage, if applicable, under any directors and officers
insurance policies maintained by the Company.
Clarke
Appointment as Executive Chairman
On June 23, 2020,
the Board appointed Troy A. Clarke to the newly created executive
officer position of Executive Chairman effective July 1, 2020. Mr.
Clarke, age 65, has served as President and Chief Executive Officer
and as member of the Board since April 2013, and as Chairman of the
Board since February 2017. While continuing to serve as executive
Chairman of the Board, Mr. Clarke’s primary role as Executive
Chairman will be to ensure a smooth leadership transition in
supporting Mr. Lisboa and to manage certain strategic business
discussions.
In connection
with Mr. Clarke’s appointment as Executive Chairman, the
Compensation Committee of the Board approved the following revised
compensation terms effective July 1, 2020: (i) a reduction in
annual base salary to $850,000 and (ii) a reduction in the target
annual incentive award to 100% of annual base salary with a maximum
annual incentive award of 2.25 times the target annual incentive
award. There will be no change to his previously granted 2020
long-term incentive award. The Company will enter into an Executive
Severance Agreement with Mr. Clarke providing certain compensation
and benefits only upon a change in control event. In addition, Mr.
Clarke will continue to receive other compensation, and participate
in other benefit plans, consistent with Company policy for an
executive at his level.
ITEM 5.03
AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL
YEAR
On June 23, 2020,
the Board amended Article VI, Section 1 of the Company’s by-laws,
effective immediately, as follows (changes shown in
blackline):
Section
1. Registered
Office
The
Corporation
shall maintain a registered office
of
the Corporation in the State of
Delaware.
shall
be in the City of Wilmington, County of New Castle, and the name
of The
location of the registered office, and the resident agent in charge
thereof,
shall be
determined
by the Board of Directors from time to time.
ITEM 9.01
FINANCIAL STATEMENTS AND EXHIBITS
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Exhibit No.
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Description
of Exhibit
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10.1
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99.1
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104
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Cover Page Interactive Data
File (embedded within the Inline XBRL document)
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Forward-Looking Statements
Information
provided and statements contained in this report that are not
purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended
(“Securities Act”), Section 21E of the Securities Exchange Act
of 1934, as amended (“Exchange Act”), and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements only
speak as of the date of this report and Navistar International
Corporation assumes no obligation to update the information
included in this report. Such forward-looking statements include
information concerning our possible or assumed future results of
operations, including descriptions of our business strategy. These
statements often include words such as believe, expect, anticipate,
intend, plan, estimate, or similar expressions. These statements
are not guarantees of performance or results and they involve
risks, uncertainties, and assumptions. For a further description of
these factors, see the risk factors set forth in our filings with
the Securities and Exchange Commission, including our annual report
on Form 10-K for the fiscal year ended October 31,
2019, and our quarterly report on Form 10-Q for the period ended
April 30, 2020. Although we believe that these forward-looking
statements are based on reasonable assumptions, there are many
factors that could affect our actual financial results or results
of operations and could cause actual results to differ materially
from those in the forward-looking statements. All future written
and oral forward-looking statements by us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary
statements contained or referred to above. Except for our ongoing
obligations to disclose material information as required by the
federal securities laws, we do not have any obligations or
intention to release publicly any revisions to any forward-looking
statements to reflect events or circumstances in the future or to
reflect the occurrence of unanticipated events.
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.
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NAVISTAR INTERNATIONAL
CORPORATION
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(Registrant)
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By:
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/s/ Walter G.
Borst
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Name:
Title:
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Walter G. Borst
Executive Vice President
and
Chief Financial
Officer
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Dated:
June 26,
2020
