8-K

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):  January 15, 2020

H.B. Fuller Company

(Exact Name of Company as Specified in Charter)

Minnesota	001-09225	41-0268370
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1200 Willow Lake Boulevard, P.O. Box 64683, St. Paul, Minnesota	55164-0683
(Address of principal executive offices)	(Zip Code)

Company’s telephone number, including area code: (651) 236-5900

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00	FUL	NYSE

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 DFR 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))

Indicate by check mark whether the registrant is an emerging growth company as defined in 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. ☐

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)(1) On January 15, 2020, the Compensation Committee of the Company approved changes to the design of the H.B. Fuller Company Management Short-Term Incentive Plan (the “STIP”) applicable to certain executive officers as attached to this Current Report on Form 8-K as Exhibit 10.1. The changes made include:

(i)	The Operating Income metric is replaced with Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”);
(ii)	Key Market metrics have been deleted for Executive Officers;
(iii)	The weighting of EBITDA is 35% and Net Revenue is 35%, while Earnings Per Share (“EPS”) remains at a weighting of 30%; and
(iv)	There are two plan designs: one for corporate positions (e.g., Chief Executive Officer and Chief Financial Officer) and one for executive officers in Operating Segments.

The changes to the STIP will be effective for any short-term incentive awards related to the Company’s 2020 fiscal year (or portion thereof, as applicable) and thereafter. The STIP provides an annual performance-based cash incentive opportunity for eligible employees. In general, the STIP design is based on financial metrics. The metrics will vary based on position and will generally include (i) EBITDA, (ii) net revenue and (iii) earnings per share. Each metric will have a target level of performance. Threshold and superior levels will be set for each metric. Payout will be determined for each metric based on performance relative to target. The target, threshold and superior levels of performance will be established at the beginning of each fiscal year. The foregoing description is qualified in its entirety by reference to the STIP, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

(e)(2) On January 15, 2020, the Compensation Committee of the Company approved the following increase in compensation for James J. Owens, President and Chief Executive Officer of the Company after review of market information and in recognition of his performance:

• Annual Base Salary effective February 1, 2020: $1,236,165, an increase of 5% in line with Company merit guidelines.

• Effective January 15, 2020, the target value of Mr. Owens’ stock-based awards under the Company’s Annual and Long-Term Incentive Plan (the “LTIP”) was increased from 350% of his base salary to 400% of his base salary.   

• Mr. Owens’ incentive opportunity under the Company’s Management Short-Term Incentive Plan (the “STIP”) increased to a target incentive opportunity of 120% (from 110% in fiscal year 2019) of his base salary with a maximum incentive opportunity of up to 240% of his base salary under the STIP for the Company’s 2020 fiscal year.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

10.1	H.B. Fuller Company Management Short-Term Incentive Plan for Executive Officers
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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.

Date: January 21, 2020

H.B. FULLER COMPANY
By:	/s/ Timothy J. Keenan
	Timothy J. Keenan
	Vice President, General Counsel and Corporate Secretary

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EX-10.1

Exhibit 10.1

Purpose	The STI plan provides an annual performance-based cash bonus opportunity for eligible employees. This is intended to achieve a number of goals including:
	●	Emphasizing the Company’s commitment to competitive compensation practices;
	●	Driving a high performance culture;
	●	Assuring accountability;
	●	Focusing on results, not activity; and
	●	Reinforcing the importance of measurable and aligned goals and objectives.
Eligibility	These guidelines apply to Executive Officers. To receive payment under the STI Plan, the participant must be actively employed as of November 30.
Plan Design	The plan design is based on the following financial metrics.
	●	EBITDA
	●	Net Revenue
	●	Earnings Per Share
	Each participant’s plan design will be based on the participant’s position. Details of the design are as follows:
	●	Corporate/Global

Weighting Per Metric
EPS	HBF Net Revenue	HBF EBITDA
30%	35%	35%

● Operating Segment 

Weighting Per Metric
EPS	Operating Segment Net Revenue	Operating Segment EBITDA
30%	35%	35%

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	Target
	●	Each metric will have a target level of performance. Payout will be determined for each metric based on performance relative to target. The target levels of performance will be established at the beginning of each fiscal year.
	Threshold
	●	Threshold performance levels will be established for each metric as follows:
		o	Net Revenue: 90% of target
		o	EBITDA: 80% of target
		o	EPS: 80% of target
	●	Payout at the threshold level of performance will be 50% of the target allocated to that metric.
	Superior
	●	Superior performance levels will be established for each metric as follows:
		o	Net Revenue: 110% of target
		o	EBITDA: 120% of target
		o	EPS: 120% of target
	●	Payout at the superior level of performance will be 200% of the target allocated to that metric.
	See Appendix for payout schedule.
Payment	Payment will be made in cash, subject to taxes and deductions as applicable. Payment will be made as close as possible to January 31 following the conclusion of the relevant Plan Year, but will be made no later than March 15th of the calendar year following the Plan Year.
Participant Status Changes	If a participant begins employment with the company during the Plan Year, bonus potential will be pro-rated for the time the participant was employed during the Plan Year. If a participant transfers jobs and changes plan design standards, potential bonus will be pro-rated for the time spent in each job.
Administration	Participants may direct questions about the STI Plan to their local management or human resources representatives. The Compensation Committee of the Board of Directors shall make a certification decision with respect to performance of financial metrics and consider extraordinary circumstances that may have positively or negatively impacted the achievement of the objectives. The Board or management in their discretion, reserves the right at any time to enhance, diminish or terminate all or any portion of any compensation plan or program, on a collective or individual basis; provided.

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Relevant Terms Actively Employed - A full-time or part-time employee on the Company payroll. It excludes any employee who has been terminated from employment with the Company – voluntarily or involuntarily –prior to November 30.   Company - H.B. Fuller Company and its wholly owned subsidiaries.   Eligible Earnings – To be determined by region/country.   Payment - The cash reward payable after conclusion of the Plan Year.   Plan Year – The relevant Company fiscal year.   Short Term Incentive (STI) Plan - The program described herein. May also be referred to as “STIP” or “STI Plan”.

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Appendix

STIP Payment Schedule for EPS,		STIP Payment schedule for
EBITDA		Net Revenue
Metric Performance	Payout (as % of target)	Metric Performance	Payout (as % of target)
120%	200.0%	110%	200%
119%	195.0%	109%	190%
118%	190.0%	108%	180%
117%	185.0%	107%	170%
116%	180.0%	106%	160%
115%	175.0%	105%	150%
114%	170.0%	104%	140%
113%	165.0%	103%	130%
112%	160.0%	102%	120%
111%	155.0%	101%	110%
110%	150.0%	100%	100%
109%	145.0%	99%	95%
108%	140.0%	98%	90%
107%	135.0%	97%	85%
106%	130.0%	96%	80%
105%	125.0%	95%	75%
104%	120.0%	94%	70%
103%	115.0%	93%	65%
102%	110.0%	92%	60%
101%	105.0%	91%	55%
100%	100.0%	90%	50%
99%	97.5%
98%	95.0%
97%	92.5%
96%	90.0%
95%	87.5%
94%	85.0%
93%	82.5%
92%	80.0%
91%	77.5%
90%	75.0%
89%	72.5%
88%	70.0%
87%	67.5%
86%	65.0%
85%	62.5%
84%	60.0%
83%	57.5%
82%	55.0%
81%	52.5%
80%	50.0%

● Payout is calculated for each incremental increase in performance (straight line interpolation).

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Calculation Guidelines

Total Company Metrics Company EPS    The adjusted EPS as disclosed in the Company’s quarterly earnings release. HBF Net Revenue
	●	The adjusted reported revenue as disclosed in the Company’s quarterly earnings release is adjusted for currency impact compared to budgeted exchange rates.
	●	Unbudgeted acquisitions and divestitures are excluded from the calculation.
HBF EBITDA (Consolidated)
	●	Adjusted Net Income plus Income Tax Expense plus Interest Expense, net, plus Depreciation Expense plus Amortization Expense
	●	Unbudgeted acquisitions and divestitures are excluded from the calculation.
Operating Segment Metrics Net Revenue
	●	Total company adjustments are transferred down to the region/operating segment revenue which is impacted by the adjustments, unless not approved by the CEO.
	●	Basis of targets is US dollars. The budgeted exchange rates will be used to assess performance.
	●	Unbudgeted acquisitions and divestitures are excluded from the calculation.
Fully allocated EBITDA
	●	Adjusted Gross Profit minus Adjusted SG&A expenses plus Depreciation Expense and Amortization Expense
	●	EBITDA targets include corporate governance allocation at budget. In determining performance, actual corporate governance allocations will be used.
	●	Total company adjustments are transferred down to the region/operating segment EBITDA which is impacted by the adjustments, unless not approved by the CEO.
	●	Basis of targets is US dollars. The budgeted exchange rates will be used to assess performance.
	●	Unbudgeted acquisitions and divestitures are excluded from the calculation.

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Adjustments In calculating the results, the following adjustments will be made:
	a.	Individual legal settlements (payments or receipts) with a value (net of insurance) of $3 million or greater will not be included in metric calculations.
	b.	Any unbudgeted reorganization or restructuring-related items which cannot be offset by related benefits in the fiscal year will not be included in metric calculations.
	c.	Any unbudgeted asset write-downs in excess of $2 million will not be included in metric calculations.
	d.	Adjustments needed to (1) correct any inadvertent errors or miscalculations made in setting a performance target for our key markets (such as Hygiene, Packaging, or Durable Assembly) or (2) account for changes resulting from new accounting definitions, requirements or pronouncements.
	e.	Other items as publicly disclosed in the Company’s quarterly earnings release. However, the above adjustments (a-d) will not be made to the extent they are inconsistent with publicly disclosed earnings.
Any discretion related to total company adjustments transferred to the operating segment exercised by the CEO requires approval by the Compensation Committee of the Board of Directors.

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XML

Document And Entity Information	Jan. 15, 2020
Document Information [Line Items]
Entity, Registrant Name	H.B. Fuller Company
Document, Type	8-K
Document, Period End Date	Jan. 15, 2020
Entity, Incorporation, State or Country Code	MN
Entity, File Number	001-09225
Entity, Tax Identification Number	41-0268370
Entity, Address, Address Line One	1200 Willow Lake Boulevard
Entity, Address, Address Line Two	P.O. Box 64683
Entity, Address, City or Town	St. Paul
Entity, Address, State or Province	MN
Entity, Address, Postal Zip Code	55164-0683
City Area Code	651
Local Phone Number	236-5900
Title of 12(b) Security	Common Stock
Trading Symbol	FUL
Security Exchange Name	NYSE
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity, Emerging Growth Company	false
Amendment Flag	false
Entity, Central Index Key	0000039368