SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 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): July
27, 2006
|
Tasty
Baking Company
|
|
(Exact
Name of Registrant as Specified in
Charter)
|
|
Pennsylvania
|
|
1-5084
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23-1145880
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|
(State
or Other Jurisdiction of
Incorporation
or
Organization)
|
|
(Commission
File
Number)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
2801
Hunting Park Avenue, Philadelphia, Pennsylvania
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19129
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(Address
of Principal Executive Offices)
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(Zip
Code)
|
Registrant’s
telephone number, including area code:
(215) 221-8500
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
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))
Item
1.01. Entry into a Material Definitive Agreement.
As
mandated by the charter of the Compensation Committee (the “Committee”) of the
Board of Directors of Tasty Baking Company (the “Company”), on July 27, 2006 the
following actions of the Committee were reviewed and ratified by the independent
directors of the Board of Directors of the Company:
Base
Salaries.
An
increase in base salary of the following executive officers of the Company
was
approved:
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Name
|
Title
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New
Base Salary
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Charles
P. Pizzi
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President
and CEO
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$500,000
|
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Autumn
R. Bayles
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SVP
Operations and Technology
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$200,000
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David
S. Marberger
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EVP
and Chief Financial Officer
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$290,000
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David
A. Vidovich
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VP
Human Resources and Labor Relations
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$157,000
|
| These
base salaries will become effective on July 31,
2006. |
Annual
Incentive Plan.
An Annual
Incentive Plan (“AIP”) was approved, effective July 27, 2006, which provides
that the Compensation Committee has the authority to grant annual cash bonuses
to any regular full-time or part-time employee of the Company. The AIP provides
that the Committee will set performance goals that may be based on various
financial, operational and strategic criteria that the Committee deems
appropriate, which may be adjusted for individual performance and extraordinary
items, such as extraordinary, unusual and/or non-recurring items of gain
or
loss; gains or losses on the disposition of a business; changes in tax or
accounting regulations or laws; or the effect of a merger or acquisition.
The
Committee will retain discretion regarding the granting of any award. The
AIP
will be the plan under which annual cash bonuses, if any, will be awarded
for
the achievement of the 2006 Performance Goals that were originally approved
by
the Committee on February 28, 2006. The 2006 Performance Goals were described
in
the Company’s Form 8-K filed on March 6, 2006, and include, among other
considerations, the Company’s diluted earnings per share and the Company’s
performance in executing the Strategic Transformation Plan; provided, however,
the final award is subject to the discretion of the Committee as described
above. Increases to the target grants for certain of the executive officers
were
also approved. The potential payout for 2006 ranges from 0% to 250% of the
target award. The target award for the executive officers of the Company
vary
from 20% to 60% of base salary.
Three-Year
Restricted Stock Program.
A
three-year restricted stock award program (fiscal year 2006 - fiscal year
2008)
was approved pursuant to the terms of the Company’s 2006 Long Term Incentive
Plan (“LTIP”). Two-hundred fifty thousand (250,000) shares were allocated to the
program with 50,000 shares allotted for awards for performance in 2006. Under
this program, executive officers (including the Company’s Named Executive
Officers as defined under SEC rules) and certain other employees are eligible
for an annual award of restricted stock based on the Company’s achievement of
certain financial and operational performance measures which will be set
each
year. The 2006 performance measures relate to the Company’s operational
strategy. Any awards granted under the program will vest in 2009, subject
to
Committee approval. The Committee retains discretion regarding the granting
of
any award and any additional vesting requirements. In addition, any awards
not
granted in any one year may be included in future awards. The target three-year
award for the executive officers of the Company vary from 3,600 shares to
45,000
shares.
Change
of Control Agreements.
As of
July 27, 2006, the Company entered into a change of control agreement with
Ms.
Autumn R. Bayles, who was recently promoted to Senior Vice President Operations
and Technology, and an amended and restated change of control agreement with
Mr.
Laurence Weilheimer, who was recently named as General Counsel and Corporate
Secretary (collectively and individually referred to as “Executive” and
“Agreements”). Pursuant to these Agreements, in the event that Executive’s
employment is terminated (i) by the Company (other than for cause) within
one
year following a change of control or, in certain circumstances, prior to
or in
anticipation of a change of control, (ii) by Executive for “good reason” within
one year following a change of control, or (iii) by Executive at Executive’s
election at any time between six and thirteen months following a change of
control, Executive will be entitled to receive certain compensation benefits
from the Company as described below. For purposes of these Agreements, “good
reason” means, among other conditions, any material change in the authority,
duties and responsibilities of Executive so as to be inconsistent with
Executive’s background, training and experience, relocation outside a 30-mile
radius from Executive’s principal place of business (other than the Company’s
Oxford plant), the Company’s material breach of the Agreements, which breach has
not been cured within 20 days after written notice has been given by Executive
to the Company, or the failure of the Company to obtain an agreement, reasonably
satisfactory to Executive, from any successor or assign of the Company to
assume
and agree to perform the Agreement.
The
compensation benefits which Executive will be entitled to receive as a result
of
a termination of employment in connection with a change of control as provided
under the agreement include: (i) one times Executive’s annual base salary
payable over 12 months, (ii) a cash bonus, payable for the first fiscal year
following termination, equal to the greater of Executive’s target bonus in the
year in which the change of control occurred or the average of the annual
bonuses paid or payable during the two full fiscal years immediately prior
to
the change of control, and (iii) medical and life insurance benefits for
a
period of 12 months after termination. In the event of a change of control,
and
regardless of whether Executive is terminated in connection with the change
of
control, Executive will be entitled to acceleration of vesting of all
outstanding equity-based compensation (although the Company can still exercise
any rights it may have under any employee benefit plan or grant agreement
if
Executive is terminated for cause). Payment of the benefits is subject to
the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(“Code”), and is conditioned upon Executive’s signing a general release in favor
of the Company.
The
aggregate amount of the benefits payable to Executive under the Agreements
is
subject to certain limitations. The Company will not be obligated to make
payments to Executive to the extent that the aggregate amount of benefits
payable to Executive upon a change of control exceeds the “parachute payment”
limitations under Section 280G(b)(3) of the Internal Revenue Code of 1986,
as
amended. In addition, in no event shall the aggregate amount of the compensation
benefits payable to Executive and all other senior executives of the Company
as
a result of a change of control exceed three percent (3%) of the total
transaction value for such change of control. In the event the aggregate
amount
of compensation benefits payable on a change of control would exceed such
limit,
the amount of benefits payable to Executive and all other senior executives
will
be proportionally reduced.
The
Agreements remain in effect until the respective Executive’s death, disability,
normal or early retirement, termination for cause, or voluntary termination
of
employment. The Agreements expressly provide that the Agreements do not
constitute a contract for future employment and that the Executive’s employment
shall continue to be at-will, as defined by applicable law.
Amended
and Restated Change of Control and Employment Agreement
- As of
July 27, 2006, the Company entered into an Amended and Restated Change of
Control and Employment Agreement (“Agreement”) with Mr. David R. Marberger, who
was recently promoted to Executive Vice President and Chief Financial Officer.
The Agreement is for a one-year term and will be automatically renewed for
additional one year periods if not terminated by either Mr. Marberger or
the
Company on at least 90 days notice prior to the end of the then current term.
Pursuant to the Agreement, Mr. Marberger (i) receives a base salary of not
less
than $250,000 per year; (ii) is entitled to the use of an automobile; (iii)
is
entitled to reimbursement for membership at one business or country club,
subject to the approval of the President of the Company; and (iv) is entitled
to
reimbursement for up to $5,000 per annum for personal professional services.
Other perquisites and benefits are provided to Mr. Marberger consistent with
the
policies of the Company.
Subject
to
the requirements of Section 409A of the Code, in the event that Mr. Marberger’s
employment is terminated under any of the circumstances described below,
Mr.
Marberger will be entitled to receive certain compensation benefits from
the
Company: (i) termination by the Company without cause; (ii) if the Company
elects not to renew Mr. Marberger’s Agreement; (iii) if Mr. Marberger terminates
employment for “good reason;” (iv) if Mr. Marberger terminates employment any
time between six and eighteen months after a change of control; or (v) if
the
Company terminates Mr. Marberger’s employment (other than for cause) within 18
months after a change of control or, in certain circumstances, prior to or
in
anticipation of a change of control. The compensation benefits which Mr.
Marberger will be entitled to receive (other than in connection with a change
of
control) include: (a) a lump sum payment equal to one times his annual base
salary; (b) a lump sum payment equal to the greater of Mr. Marberger’s target
bonus in the year in which the termination occurred or the average of the
annual
bonuses paid or payable during the two full fiscal years immediately prior
to
the termination; and (c) medical and life insurance benefits for a period
of 12
months after termination. The compensation benefits which Mr. Marberger will
be
entitled to receive as a result of termination of his employment in connection
with a change of control include: (a) a lump sum payment equal to two times
his
annual base salary; (b) a lump sum payment equal to two times the greater
of Mr.
Marberger’s target bonus in the year in which the change of control occurred or
the average of the annual bonuses paid or payable during the two full fiscal
years immediately prior to the change of control; and (c) medical and life
insurance benefits for a period of 24 months after termination. In the event
of
a change of control, and regardless of whether Mr. Marberger is terminated
in
connection with the change of control, Mr. Marberger will be entitled to
acceleration of vesting of all outstanding equity-based compensation (although
the Company can still exercise any rights it may have under any employee
benefit
plan or grant agreement if Mr. Marberger is terminated for cause).
Subject
to
the requirements of Section 409A of the Code, if there is a change of control
and Mr. Marberger has the right to receive the change of control benefits
outlined above, the Company is then obligated to make a gross up payment
to Mr.
Marberger in the event that the payments to Mr. Marberger constitute “parachute
payments” within the meaning of Section 280G of the Code, which are subject to
the excise tax imposed by Section 4999 of the Code; provided that the Company
shall not be obligated to make the gross up payment unless the after-tax
value
of the payment to Mr. Marberger is at least $25,000. In no event shall the
aggregate amount of the compensation benefits payable to Mr. Marberger and
all
other senior executives of the Company as a result of a change of control
exceed
three percent (3%) of the total transaction value for such change of control.
In
the event the aggregate amount of compensation benefits payable on a change
of
control would exceed such limit, the amount of benefits payable to each of
Mr.
Marberger and the other senior executives will be proportionally
reduced.
For
purposes of this Agreement, “good reason” means, among other conditions, any
material change in the authority, duties and responsibilities of Executive
so as
to be inconsistent with Executive’s background, training and experience,
relocation outside a 30-mile radius from the Company’s Hunting Park Avenue plant
in Philadelphia (other than the Company’s Oxford plant), the Company’s continued
failure to perform its duties under the Agreement in any material respect,
which
failure has not been cured within 20 days after written notice has been given
by
Mr. Marberger to the Company, or the failure of the Company to obtain an
agreement, satisfactory to Mr. Marberger, from any successor or assign of
the
Company to assume and agree to perform the Agreement.
Amended
and Restated Employment Agreement and Amended and Restated Supplemental
Executive Retirement Plan Agreement
- As of
July 27, 2006, the Company and Mr. Charles P. Pizzi entered into an Amended
and
Restated Employment Agreement for three years beginning July 27, 2006 (the
“Agreement”) and an Amended and Restated Supplemental Executive Retirement Plan
Agreement (the “SERP Agreement”). Mr. Pizzi is the President and Chief Executive
Officer of the Company. Every year his Agreement will be automatically renewed
for additional three year periods if not terminated by either Mr. Pizzi or
the
Company on at least 90 days notice prior to the end of the then current term.
Pursuant to the Agreement, Mr. Pizzi (i) receives a base salary of not less
than
$400,000 per year; (ii) is entitled to Company contributions to a Supplemental
Executive Retirement Plan (“SERP”); (iii) is entitled to the use of an
automobile; (iv) is entitled to reimbursement for membership in two business
or
country clubs, subject to approval of the Committee; and (v) is entitled
to
reimbursement for up to $10,000 per annum for personal professional services.
Other perquisites and benefits are provided to Mr. Pizzi commensurate with
his
position as President and Chief Executive Officer.
Subject
to
the requirements of Section 409A of the Code, in the event that Mr. Pizzi’s
employment is terminated under any of the circumstances described below,
Mr.
Pizzi will be entitled to receive certain compensation benefits from the
Company: (i) termination by the Company without cause; (ii) if the Company
elects not to renew Mr. Pizzi’s Agreement; (iii) if Mr. Pizzi terminates
employment for “good reason,” (iv) if Mr. Pizzi terminates employment any time
between six and eighteen months after a change of control, or (v) if the
Company
terminates Mr. Pizzi’s employment (other than for cause) within 18 months after
a change of control or, in certain circumstances, prior to or in anticipation
of
a change of control. The compensation benefits which Mr. Pizzi will be entitled
to receive (other than in connection with a change of control) include: (a)
a
lump sum equal to Mr. Pizzi’s annual base salary which would otherwise have been
payable for a period equal to the remainder of the current term; (b) a lump
sum
payment equal to two times the greater of Mr. Pizzi’s target bonus for the year
in which the termination occurred or the average of the annual bonuses paid
or
payable to Mr. Pizzi during the two full fiscal years immediately prior to
termination; (c) medical and life insurance benefits for a period of 24 months
after termination; and (d) a lump sum payment equal to any payments to which
Mr.
Pizzi would have been entitled to have contributed to the SERP for a period
equal to the remainder of the current term of the Agreement. The compensation
benefits which Mr. Pizzi will be entitled to receive as a result of termination
of his employment in connection with a change of control include: (a) a lump
sum
payment equal to three times his annual base salary; (b) a lump sum payment
equal to three times the greater of Mr. Pizzi’s target bonus for the year in
which the change of control occurred or the average of the annual bonuses
paid
or payable to Mr. Pizzi during the two full fiscal years immediately prior
to
the change of control; (c) medical and life insurance benefits for a period
of
36 months after termination; and (d) a lump sum equal to any payments to
which
Mr. Pizzi would have been entitled to have contributed to the SERP for three
years less any additional annual contribution credits that are guaranteed
under
the SERP Agreement. In the event of a change of control, and regardless of
whether Mr. Pizzi is terminated in connection with the change of control,
Mr.
Pizzi will be entitled to acceleration of vesting of all outstanding
equity-based compensation (although the Company can still exercise any rights
it
may have under any employee benefit plan or grant agreement if Mr. Pizzi
is
terminated for cause).
Subject
to
the requirements of Section 409A of the Code, if there is a change of control
and Mr. Pizzi has the right to receive the change of control benefits outlined
above, the Company is then obligated to make a gross up payment to Mr. Pizzi
in
the event that the payments to Mr. Pizzi constitute “parachute payments” within
the meaning of Section 280G of the Code, which are subject to the excise
tax
imposed by Section 4999 of the Code; provided that the Company shall not
be
obligated to make the gross up payment unless the after-tax value of the
payment
to Mr. Pizzi is at least $25,000. In no event shall the aggregate amount
of the
compensation benefits payable to Mr. Pizzi and all other senior executives
of
the Company as a result of a change of control exceed three percent (3%)
of the
total transaction value for such change of control. In the event the aggregate
amount of compensation benefits payable on a change of control would exceed
such
limit, the amount of benefits payable to each of Mr. Pizzi and the other
senior
executives will be proportionally reduced.
For
purposes of the Agreement, “good reason” means, among other conditions, (i) any
material change in the authority, duties and responsibilities of Mr. Pizzi
which
is inconsistent with those of President and Chief Executive Officer of the
Company, (ii) relocation of his principal place of employment to a place
(other
than the Company’s Oxford facility) outside of a radius of 30 miles from the
Company’s Hunting Park Avenue facility, (iii) the Company’s continued failure to
perform its duties under the Agreement in any material respect, which failure
has not been cured within 20 days after written notice of such failure has
been
given by Mr. Pizzi to the Company, (iv) a material reduction in the
indemnification provided by the Company which is not applicable to all directors
and officers, (v) Mr. Pizzi ceasing to be a member of the Board of Directors,
other than as a result of his resignation, death, disability or termination
by
the Company with cause or (vi) the failure of the Company to obtain an
agreement, satisfactory to Mr. Pizzi, from any successor or assign of the
Company to assume and agree to perform the Agreement.
The
SERP
Agreement was amended and restated effective as of January 1, 2005. Under
the
terms of the SERP Agreement, the Company credits a contribution to an unfunded
notional account at the end of each month of an amount equal to 39% of the
base
salary and bonus paid to Mr. Pizzi in such month. Interest is credited to
the
account on a monthly basis equal to the product of (i) one twelfth of the
interest crediting rate for the calendar year and (ii) the account balance
at
the beginning of the month. The interest crediting rate for the calendar
year is
the Moody’s Aa rate for corporate bonds as of the last business day preceding
the beginning of the calendar year. Mr. Pizzi is immediately and fully vested
in
all amounts credited to such account on his behalf, unless he is terminated
by
the Company for gross or willful misconduct or in the event of his death
while
unmarried.
Subject
to
the requirements of Section 409A of the Code, Mr. Pizzi will be entitled
to the
payment of benefits from the SERP account on the first day of the month
immediately following death, permanent disability or retirement on or after
age
57. Payment of benefits is deferred until age 57 if Mr. Pizzi terminates
employment before age 57 (for reasons other than disability or permanent
disability). Benefits will be paid to Mr. Pizzi in a lump sum equal to the
account balance as of the end of the month preceding payment to him. In the
event of a change of control, Mr. Pizzi is guaranteed three additional annual
contribution credits if he does not receive at least 36 months of contribution
credits subsequent to September 30, 2004; provided, however, that this guarantee
is reduced for each year after a change in control that he remains employed
and
receives such credits. In no event is the guarantee of the additional
contribution credits applicable for any years after the calendar year in
which
he attains age 62.
The
description of the foregoing agreements are qualified in their entirety by
reference to the full text of these agreements included in the exhibits to
this
Form 8-K as referenced in Item 9.01.
Item
2.02. Result of Operations and Financial Condition.
On
July
31, 2006, the Company announced its financial results for the second quarter
ended July 1, 2006. A copy of the press release is attached to this Report
as
Exhibit 99.1 and is incorporated herein by reference. The information disclosed
in this Item 2.02 of this Report, including Exhibit 99.1 hereto, is being
furnished and shall not be deemed “filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, nor shall it be incorporated
by
reference into any registration statement or other document pursuant to the
Securities Act of 1933, as amended.
Item
5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
| The
following current executive officer was appointed to the following
new
position effective July 27, 2006: |
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Name
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Title
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David
S. Marberger
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Executive
Vice President and Chief Financial Officer
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Mr.
Marberger has been Senior Vice President and Chief Financial Officer of the
Company prior to this new appointment. Biographical information related to
Mr.
Marberger’s business experience is contained in the Company’s proxy statement
for the 2006 Annual Meeting of Shareholders, as filed with the SEC on April
7,
2006. A summary of the material terms of Mr. Marberger’s Amended and Restated
Change of Control and Employment Agreement with the Company is set forth
in Item
1.01 above.
Item
7.01 Regulation FD Disclosure.
A
copy of
the press release announcing financial results for the Company’s second quarter
of 2006 and the appointment of officers and employees to new positions is
attached to this Report as Exhibit 99.1 and is incorporated herein by reference.
The information disclosed in this Item 7.01 of this Report, including Exhibit
99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended, nor shall
it be
incorporated by reference into any registration statement or other document
pursuant to the Securities Act of 1933, as amended.
Item
9.01. Financial Statements and Exhibits
(c)
The
following exhibits are filed herewith:
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Exhibit
99.1
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Press
Release dated July 31, 2006
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| |
|
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Exhibit
99.2
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Form
of Change of Control Agreement between the Company and
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certain
executive officers (revised July 2006).
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Exhibit
99.3
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Amended
and Restated Change of Control and Employment
|
| |
Agreement,
dated as of July 27, 2006, between the Company and
|
| |
David
S. Marberger.
|
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|
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Exhibit
99.4
|
Amended
and Restated Employment Agreement, dated as of July
|
| |
27,
2006, between the Company and Charles P. Pizzi.
|
| |
|
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Exhibit
99.5
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Amended
and Restated Supplemental Executive Retirement Plan
|
| |
Agreement,
dated as of July 27, 2006, between the Company and
|
| |
Charles
P. Pizzi.
|
| |
|
|
Exhibit
99.6
|
Tasty
Baking Company Annual Incentive Plan, dated as of July 27, 2006.
|
SIGNATURES
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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TASTY
BAKING
COMPANY
|
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(Registrant)
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| |
|
| |
|
|
Date:
July 31, 2006
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/S/
David S. Marberger
|
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David
S. Marberger
|
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Senior
Vice President and Chief
|
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Financial
Officer
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