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)  December 19, 2006

 

---

TENNANT COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Registrant’s telephone number, including area code  (763) 540-1200

 

---

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 (see General Instruction A.2. below):

 

 

 

 

---

On December 19, 2006, the Compensation Committee (the “Committee”) of Tennant Company (the “Company”) approved the following:

Long-Term Incentive Plan 2007.   The Committee approved the Long-Term Incentive Plan for 2007 (“2007 LTIP”).  The 2007 LTIP provides for the issuance of performance shares under the Company’s equity compensation plans, based on the achievement of economic profit improvement of the Company over a three-year performance period from commencing in 2007 through the end of 2009.  Awards are paid based on a sliding scale for economic profit improvement, with a maximum payout at 200% of target.  Each participant’s target is based on a percentage of base salary in effect as of March 31 of the first year in the measurement period, with 70% of the target incentive set in shares and 30% of the target set in cash.  For each award, 70% of the award is denominated in shares of the Company’s common stock, which pays out in the form of stock, and 30% of the award is denominated in dollars, which pays out in the form of cash.

Short-Term Incentive Plan 2007.   The Committee approved the Short-Term Incentive Plan for 2007 (“2007 STIP”).  The 2007 STIP provides for bonuses to members of the Company’s management team based on achievement of economic profit improvement at the corporate and business unit levels and achievement of individual goals.  Each participant’s target is based on a percentage of base salary.  In order to determine the amount of the payout, the target is multiplied by (i) an economic profit improvement factor based on a sliding scale for economic profit improvement and (ii) an individual performance factor based on achievement of individual performance expectations, as determined by the Committee. At least 50% of each participant’s target award will be based upon achievement of economic profit improvement at the corporate level.  If the corporate and business unit levels of economic profit are below 25% of the target improvement level, the economic profit payout will be no more than 25% (the exact amount will be determined in the Committee’s discretion) so long as (i) the payout does not equal more than 25% of the actual net operating profit before taxes of the Company or the business unit and (ii) the individual objectives score is at least 95% of the target performance level. The individual performance factors include personal and business objectives approved by the Management Committee (as defined in the 2007 STIP).  Awards under the 2007 STIP are paid in cash; however, any payout in excess of 200% of target is paid in the form of shares of restricted stock with a vesting schedule of 50% per year over two years. If a participant announces his or her retirement after receipt of the restricted stock, the restrictions shall lapse. If a participant retires during the performance year for the 2007 STIP, payouts in excess of 200% of target will be made in cash.

Targets for the Company’s named executive officers under the 2007 LTIP and the 2007 STIP will be approved by the Committee in February 2007.

 

---

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, thereunto duly authorized.

 

 

---