Item 5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
On May 31, 2022, Allegion plc (the “Company” or “Allegion”)
announced that David D. Petratis, Chairman, President and Chief
Executive Officer, will be retiring from his position as President
and Chief Executive Officer effective July 11, 2022 (the
“Effective Date”). Mr. Petratis will serve as Executive
Chairman of the Board of Directors of the Company (the “Board”) as
of the Effective Date and until his retirement from the Company
which is planned to occur by January 2, 2023, at which point,
he will also retire from his role as Executive Chairman of the
Board. There are no material changes to Mr. Petratis’
compensatory arrangement as a result of his planned retirement.
The Company also announced that John H. Stone, President, Worldwide
Construction, Forestry and Power Systems, Deere & Company
(“Deere”), an agricultural machinery and heavy equipment company,
will join Allegion on the Effective Date and succeed
Mr. Petratis as President and Chief Executive Officer of the
Company. Mr. Stone, age 52, who will also join the Board on
the Effective Date, has served as President of Worldwide
Construction, Forestry and Power Systems at Deere since 2020, and
prior to that, he served as Senior Vice President, Intelligent
Solutions Group at Deere from 2016 to 2020. Mr. Stone has
an M.B.A. from Harvard Business School and a B.S. in Mechanical
Engineering from the United States Military Academy at West
Point.
Upon assuming his new position, Mr. Stone will receive, as
approved by the Compensation and Human Capital Committee of the
Board, a base salary with an annualized amount of $1,000,000, and
he will be eligible to receive an annual cash incentive award with
a target opportunity of 125% of his base salary, which, for 2022,
will be no less than the annual target amount and will not be
prorated. He will also be eligible to receive an annual long-term
incentive award with a current target value of $4,500,000 when the
Company next grants such awards to its officers and eligible
employees, with 50% of the award’s value granted in the form of
Performance Stock Units (“PSUs”), 25% of the award’s value granted
in the form of restricted stock units (“RSUs”), and 25% of the
award’s value granted in the form of stock options, in accordance
with the Company’s practice for structuring such awards for
executive officers. To acknowledge the loss of Mr. Stone’s
unvested long term incentive awards from Deere, Mr. Stone will
also receive: (i) a one-time grant of Allegion stock
options with a value equal to $2,000,000 to be granted at the next
grant cycle following the Effective Date and which will vest in
three equal installments over the first three anniversaries of the
grant date; and (ii) a one-time grant of RSUs with a value
equal to $5,500,000 to be granted at the next grant cycle following
the Effective Date, 25% of which will vest on the two-year anniversary of the grant date,
25% of which will vest on the three-year anniversary of the grant
date, and 50% of which will vest on the four-year anniversary of
the grant date. Mr. Stone will also be eligible to participate
in the Company’s other regular compensation arrangements for
executive officers, including an allowance for financial and tax
planning services of up to $15,000 annually and participation in
the executive health program in an amount not to exceed $2,000
annually. Mr. Stone will also be eligible to participate in
the Allegion Change in Control Plan and to receive severance in the
unlikely event of his involuntary termination from Allegion, other
than for cause, in exchange for a signed severance agreement in a
form acceptable to Allegion along with a release of all claims he
may have or allege. The foregoing description of Mr. Stone’s
offer letter is qualified in its entirety by reference to the offer
letter itself, which is attached as Exhibit 10.1 and is
incorporated herein by reference. Additional information about
Allegion’s executive compensation program can be found in its 2022
proxy statement.
There are no arrangements or understandings between Mr. Stone
and any other person pursuant to which he was appointed to serve as
the Company’s President and Chief Executive Officer or as a
director of the Board. Furthermore, there is no transaction between
Mr. Stone (or his immediate family) and the Company that
requires disclosure in accordance with
Item 404(a) of Regulation S-K.
A copy of the press release regarding the above announcements are
attached as Exhibit 99.1 to this Current Report on Form
8-K and is incorporated
herein by reference.