Maytag board approves executive incentive plans; Whirlpool says merger ‘on track’

Maytag board approves executive incentive plans; Whirlpool says merger ‘on track’
 
Date November 16, 2005
Section(s) Local News
Brief  
 
By Associated Press

Newton Daily News

The Maytag Corp. board’s compensation committee set bonuses for company executives if the appliance manufacturer meets certain financial goals.

Maytag CEO Ralph Hake could earn an additional $1.4 million and three others would get more than $200,000 in bonuses.

The grants are part of a rolling three-year program and are not effective until Jan. 1, 2006, to executives employed on that date. The bonuses will not be awarded if the purchase by Whirlpool Corp. closes before Jan. 1, according to documents filed Tuesday with the Securities and Exchange Commission.

The bonuses are based on a percentage of the executives’ annual salary. They are paid in cash or company stock, which will be decided by the compensation committee.

The company must see growth in annual earnings, sales and working capital as a percent of sales.

The bonuses, approved by the committee Nov. 9, are granted under the company’s 2002 Employee and Director Stock Incentive Plan, which was approved by stockholders in 2002.

Awards under the 2006 plan are based on a percentage of an executive’s annual salary as of the first day of the performance period.

On Nov. 10, the Maytag board issued the automatic grant of options to purchase 3,000 shares of the company’s common stock to each of the nine non-employee directors on the board.

The grant, which is provided for under the 2002 Stock Incentive Plan, had previously been delayed from the regular issuance date earlier in the year.

The options vest three years after the date of grant, but could vest sooner under certain circumstances, including Whirlpool’s successful takeover of Maytag.

In a separate filing with the SEC, Whirlpool told its employees that its acquisition of rival appliance maker Maytag remains “on track” for closure as early as the first quarter 2006 pending Maytag shareholder approval and regulatory clearance.

“We remain on track with our acquisition plans and continue to believe that the combination will create substantial benefits for consumers, trade customers and our shareholders,” the filing said. “This transaction will translate into better products, quality and service, as well as other efficiencies that will allow us to offer a more competitive, wider range of products to a much broader consumer base.”

In a previous SEC filing, Whirlpool said it expected the merger to generate between $300 million and $400 million in annual pre-tax cost savings by the third year following completion of the merger. It said achieving those results would require one-time costs and capital investments between $350 million and $500 million, costs expected to be incurred during the first two years after completion of the merger.

Whirlpool said the cost savings estimated do not take into account the impact of any divestitures. After the completion of the merger, Whirlpool said it would evaluate Maytag operations and determine whether or not to pursue the sale of any Maytag operations.

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