Form 10-Q |
MARYLAND | 52-0408290 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
18 Loveton Circle, P. O. Box 6000, Sparks, MD | 21152-6000 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (410) 771-7301 |
Large Accelerated Filer | x | Accelerated Filer | ¨ |
Non-Accelerated Filer | ¨ | Smaller Reporting Company | ¨ |
Shares Outstanding | ||||
February 28, 2017 | ||||
Common Stock | 11,451,748 | |||
Common Stock Non-Voting | 113,226,723 | |||
ITEM 1 | |||
ITEM 2 | |||
ITEM 3 | |||
ITEM 4 | |||
ITEM 1 | |||
ITEM 1a | |||
ITEM 2 | |||
ITEM 3 | DEFAULTS UPON SENIOR SECURITIES | ||
ITEM 4 | |||
ITEM 5 | OTHER INFORMATION | ||
ITEM 6 | |||
ITEM 1. | FINANCIAL STATEMENTS |
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Net sales | $ | 1,043.7 | $ | 1,030.2 | |||
Cost of goods sold | 630.7 | 625.2 | |||||
Gross profit | 413.0 | 405.0 | |||||
Selling, general and administrative expense | 275.2 | 274.3 | |||||
Special charges | 3.6 | 1.6 | |||||
Operating income | 134.2 | 129.1 | |||||
Interest expense | 14.5 | 13.9 | |||||
Other income, net | 0.1 | 1.1 | |||||
Income from consolidated operations before income taxes | 119.8 | 116.3 | |||||
Income taxes | 33.3 | 31.3 | |||||
Net income from consolidated operations | 86.5 | 85.0 | |||||
Income from unconsolidated operations | 7.0 | 8.4 | |||||
Net income | $ | 93.5 | $ | 93.4 | |||
Earnings per share – basic | $ | 0.75 | $ | 0.73 | |||
Average shares outstanding – basic | 125.1 | 127.1 | |||||
Earnings per share – diluted | $ | 0.74 | $ | 0.73 | |||
Average shares outstanding – diluted | 126.9 | 128.3 | |||||
Cash dividends paid per share | $ | 0.47 | $ | 0.43 | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Net income | $ | 93.5 | $ | 93.4 | |||
Net income attributable to non-controlling interest | 1.1 | 0.7 | |||||
Other comprehensive income (loss): | |||||||
Unrealized components of pension plans (including curtailment gains of $76.7 for 2017) | 86.5 | 7.7 | |||||
Currency translation adjustments | 15.1 | (25.2 | ) | ||||
Change in derivative financial instruments | (2.6 | ) | 1.6 | ||||
Deferred taxes | (29.6 | ) | (1.7 | ) | |||
Comprehensive income | $ | 164.0 | $ | 76.5 | |||
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||||
(unaudited) | (unaudited) | ||||||||||
ASSETS | |||||||||||
Current Assets | |||||||||||
Cash and cash equivalents | $ | 125.7 | $ | 111.8 | $ | 118.4 | |||||
Trade accounts receivables, net | 404.4 | 371.2 | 465.2 | ||||||||
Inventories, net | |||||||||||
Finished products | 351.4 | 320.0 | 336.3 | ||||||||
Raw materials and work-in-process | 415.8 | 382.2 | 420.0 | ||||||||
767.2 | 702.2 | 756.3 | |||||||||
Prepaid expenses and other current assets | 87.8 | 72.9 | 81.9 | ||||||||
Total current assets | 1,385.1 | 1,258.1 | 1,421.8 | ||||||||
Property, plant and equipment | 1,665.2 | 1,533.3 | 1,630.2 | ||||||||
Less: accumulated depreciation | (982.4 | ) | (924.2 | ) | (960.8 | ) | |||||
Property, plant and equipment, net | 682.8 | 609.1 | 669.4 | ||||||||
Goodwill | 1,857.6 | 1,764.0 | 1,771.4 | ||||||||
Intangible assets, net | 473.9 | 370.1 | 424.9 | ||||||||
Investments and other assets | 351.7 | 363.7 | 348.4 | ||||||||
Total assets | $ | 4,751.1 | $ | 4,365.0 | $ | 4,635.9 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Current Liabilities | |||||||||||
Short-term borrowings | $ | 638.9 | $ | 389.6 | $ | 390.3 | |||||
Current portion of long-term debt | 250.7 | 0.6 | 2.9 | ||||||||
Trade accounts payable | 448.4 | 336.7 | 450.8 | ||||||||
Other accrued liabilities | 400.4 | 363.7 | 578.7 | ||||||||
Total current liabilities | 1,738.4 | 1,090.6 | 1,422.7 | ||||||||
Long-term debt | 803.5 | 1,055.0 | 1,054.0 | ||||||||
Other long-term liabilities | 477.6 | 492.5 | 521.1 | ||||||||
Total liabilities | 3,019.5 | 2,638.1 | 2,997.8 | ||||||||
Shareholders’ Equity | |||||||||||
Common stock | 413.1 | 386.5 | 409.7 | ||||||||
Common stock non-voting | 678.0 | 661.1 | 674.5 | ||||||||
Retained earnings | 1,073.1 | 1,086.3 | 1,056.8 | ||||||||
Accumulated other comprehensive loss | (445.0 | ) | (423.7 | ) | (514.4 | ) | |||||
Non-controlling interests | 12.4 | 16.7 | 11.5 | ||||||||
Total shareholders’ equity | 1,731.6 | 1,726.9 | 1,638.1 | ||||||||
Total liabilities and shareholders’ equity | $ | 4,751.1 | $ | 4,365.0 | $ | 4,635.9 | |||||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Operating activities | |||||||
Net income | $ | 93.5 | $ | 93.4 | |||
Adjustments to reconcile net income to net cash flow provided by operating activities: | |||||||
Depreciation and amortization | 28.3 | 26.4 | |||||
Stock-based compensation | 4.1 | 3.0 | |||||
Income from unconsolidated operations | (7.0 | ) | (8.4 | ) | |||
Changes in operating assets and liabilities | (80.2 | ) | (43.7 | ) | |||
Dividends from unconsolidated affiliates | 5.6 | 7.9 | |||||
Net cash flow provided by operating activities | 44.3 | 78.6 | |||||
Investing activities | |||||||
Acquisition of businesses (net of cash acquired) | (124.0 | ) | — | ||||
Capital expenditures | (29.6 | ) | (22.4 | ) | |||
Proceeds from sale of property, plant and equipment | 0.9 | 0.2 | |||||
Net cash flow used in investing activities | (152.7 | ) | (22.2 | ) | |||
Financing activities | |||||||
Short-term borrowings, net | 247.8 | 250.8 | |||||
Long-term debt repayments | (2.5 | ) | (201.7 | ) | |||
Proceeds from exercised stock options | 8.2 | 7.8 | |||||
Taxes withheld and paid on employee stock awards | (1.7 | ) | (0.7 | ) | |||
Common stock acquired by purchase | (82.7 | ) | (47.8 | ) | |||
Dividends paid | (58.9 | ) | (54.6 | ) | |||
Net cash flow provided by (used in) financing activities | 110.2 | (46.2 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 5.5 | (11.0 | ) | ||||
Increase (decrease) in cash and cash equivalents | 7.3 | (0.8 | ) | ||||
Cash and cash equivalents at beginning of period | 118.4 | 112.6 | |||||
Cash and cash equivalents at end of period | $ | 125.7 | $ | 111.8 | |||
1. | ACCOUNTING POLICIES |
• | We recognized discrete tax benefits of $1.6 million in the income taxes line item of our consolidated income statement for the three months ended February 28, 2017 related to excess tax benefits upon vesting or settlement in that period. |
• | We elected to adopt the cash flow presentation of the excess tax benefits prospectively, commencing with our cash flow statement for the three months ended February 28, 2017, where these benefits are classified along with other income tax cash flows as an operating activity. |
• | We have elected to continue to estimate the number of stock-based awards expected to vest, rather than electing to account for forfeitures as they occur to determine the amount of compensation cost to be recognized in each period. |
• | At this time, we have not changed our policy on statutory withholding requirements and will continue to allow an employee to withhold at the minimum statutory withholding requirements. Amounts paid by us to taxing authorities when directly withholding shares associated with employees’ income tax withholding obligations are classified as a financing activity in our cash flow statement for the three months ended February 28, 2017. ASU 2016-09 requires that this cash flow presentation be made retrospectively and the cash flow statement for the three months ended February 29, 2016 has been restated accordingly. |
• | We excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of our diluted earnings per share for the three months ended February 28, 2017. |
2. | ACQUISITIONS |
3. | SPECIAL CHARGES |
Employee severance and related benefits | Other related costs | Total | |||||||||
Balance as of November 30, 2016 | $ | 10.5 | $ | 0.5 | $ | 11.0 | |||||
Cash paid | (0.9 | ) | — | (0.9 | ) | ||||||
Balance as of February 28, 2017 | $ | 9.6 | $ | 0.5 | $ | 10.1 | |||||
Balance as of November 30, 2015 | $ | 16.2 | $ | 0.6 | $ | 16.8 | |||||
Special charges | — | 1.1 | 1.1 | ||||||||
Cash paid | (1.2 | ) | (1.1 | ) | (2.3 | ) | |||||
Impact of foreign exchange | 0.1 | — | 0.1 | ||||||||
Balance as of February 29, 2016 | $ | 15.1 | $ | 0.6 | $ | 15.7 | |||||
4. | GOODWILL |
2017 | 2016 | |||||||||||||||
Consumer | Industrial | Consumer | Industrial | |||||||||||||
Beginning of year | $ | 1,608.3 | $ | 163.1 | $ | 1,587.7 | $ | 171.6 | ||||||||
Changes in preliminary purchase price allocation | (0.4 | ) | — | — | — | |||||||||||
Increases in goodwill from acquisitions | — | 74.9 | — | — | ||||||||||||
Foreign currency fluctuations and other | 10.4 | 1.3 | 7.6 | (2.9 | ) | |||||||||||
Balance as of end of February | $ | 1,618.3 | $ | 239.3 | $ | 1,595.3 | $ | 168.7 | ||||||||
5. | FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS |
As of February 28, 2017 | Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance sheet location | Notional amount | Fair value | Balance sheet location | Notional amount | Fair value | ||||||||||||||
Interest rate contracts | Other current assets | $ | — | $ | — | Other accrued liabilities | $ | 175.0 | $ | 2.1 | |||||||||
Foreign exchange contracts | Other current assets | 111.3 | 3.5 | Other accrued liabilities | $ | 284.5 | 8.5 | ||||||||||||
Total | $ | 3.5 | $ | 10.6 | |||||||||||||||
As of February 29, 2016 | Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance sheet location | Notional amount | Fair value | Balance sheet location | Notional amount | Fair value | ||||||||||||||
Interest rate contracts | Other current assets | $ | 100.0 | $ | 4.5 | Other accrued liabilities | $ | — | $ | — | |||||||||
Foreign exchange contracts | Other current assets | 150.5 | 4.4 | Other accrued liabilities | 119.8 | 1.8 | |||||||||||||
Total | $ | 8.9 | $ | 1.8 | |||||||||||||||
As of November 30, 2016 | Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance sheet location | Notional amount | Fair value | Balance sheet location | Notional amount | Fair value | ||||||||||||||
Interest rate contracts | Other current assets | $ | — | $ | — | Other accrued liabilities | $ | 100.0 | $ | 1.2 | |||||||||
Foreign exchange contracts | Other current assets | 204.3 | 4.9 | Other accrued liabilities | 244.9 | 5.4 | |||||||||||||
Total | $ | 4.9 | $ | 6.6 | |||||||||||||||
Fair Value Hedges | ||||||||||
Derivative | Income statement location | Income (expense) | ||||||||
2017 | 2016 | |||||||||
Interest rate contracts | Interest expense | $ | 0.3 | $ | 0.6 | |||||
Income statement location | Gain (loss) recognized in income | Income statement location | Gain (loss) recognized in income | ||||||||||||
Derivative | 2017 | 2016 | Hedged item | 2017 | 2016 | ||||||||||
Foreign exchange contracts | Other income, net | $ | (2.7 | ) | $ | — | Intercompany loans | Other income, net | $ | 2.5 | $ | — | |||
Cash Flow Hedges | ||||||||||||||||||
Derivative | Gain or (loss) recognized in OCI | Income statement location | Gain or (loss) reclassified from AOCI | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Interest rate contracts | $ | (0.2 | ) | $ | — | Interest expense | $ | (0.1 | ) | $ | (0.1 | ) | ||||||
Foreign exchange contracts | (0.4 | ) | 2.1 | Cost of goods sold | 1.1 | 1.3 | ||||||||||||
Total | $ | (0.6 | ) | $ | 2.1 | $ | 1.0 | $ | 1.2 | |||||||||
6. | FAIR VALUE MEASUREMENTS |
• | Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. |
• | Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. |
February 28, 2017 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 125.7 | $ | 125.7 | $ | — | $ | — | ||||||||
Insurance contracts | 111.1 | — | 111.1 | — | ||||||||||||
Bonds and other long-term investments | 9.0 | 9.0 | — | — | ||||||||||||
Foreign currency derivatives | 3.5 | — | 3.5 | — | ||||||||||||
Total | $ | 249.3 | $ | 134.7 | $ | 114.6 | $ | — | ||||||||
Liabilities | ||||||||||||||||
Foreign currency derivatives | $ | 8.5 | $ | — | $ | 8.5 | $ | — | ||||||||
Interest rate derivatives | 2.1 | — | 2.1 | — | ||||||||||||
Contingent consideration related to D&A acquisition | 29.3 | — | — | 29.3 | ||||||||||||
Total | $ | 39.9 | $ | — | $ | 10.6 | $ | 29.3 | ||||||||
February 29, 2016 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 111.8 | $ | 111.8 | $ | — | $ | — | ||||||||
Insurance contracts | 97.7 | — | 97.7 | — | ||||||||||||
Bonds and other long-term investments | 9.2 | 9.2 | — | — | ||||||||||||
Interest rate derivatives | 4.5 | — | 4.5 | — | ||||||||||||
Foreign currency derivatives | 4.4 | — | 4.4 | — | ||||||||||||
Total | $ | 227.6 | $ | 121.0 | $ | 106.6 | $ | — | ||||||||
Liabilities | ||||||||||||||||
Foreign currency derivatives | $ | 1.8 | $ | — | $ | 1.8 | $ | — | ||||||||
Contingent consideration related to D&A acquisition | 28.4 | — | — | 28.4 | ||||||||||||
Total | $ | 30.2 | $ | — | $ | 1.8 | $ | 28.4 | ||||||||
November 30, 2016 | ||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 118.4 | $ | 118.4 | $ | — | $ | — | ||||||||
Insurance contracts | 106.0 | — | 106.0 | — | ||||||||||||
Bonds and other long-term investments | 10.2 | 10.2 | — | — | ||||||||||||
Foreign currency derivatives | 4.9 | — | 4.9 | — | ||||||||||||
Total | $ | 239.5 | $ | 128.6 | $ | 110.9 | $ | — | ||||||||
Liabilities | ||||||||||||||||
Foreign currency derivatives | $ | 5.4 | $ | — | $ | 5.4 | $ | — | ||||||||
Interest rate derivatives | 1.2 | — | 1.2 | — | ||||||||||||
Contingent consideration related to D&A acquisition | 28.9 | — | — | 28.9 | ||||||||||||
Total | $ | 35.5 | $ | — | $ | 6.6 | $ | 28.9 | ||||||||
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||||
Carrying amount | $ | 1,054.2 | $ | 1,055.6 | $ | 1,056.9 | |||||
Fair value | 1,107.4 | 1,147.3 | 1,118.3 | ||||||||
Beginning of year | Settlements | Changes in fair value including accretion | Impact of foreign currency | Balance as of end of period | |||||||||||||||
First quarter 2017 | $ | 28.9 | $ | — | $ | 0.3 | $ | 0.1 | $ | 29.3 | |||||||||
First quarter 2016 | $ | 27.1 | $ | — | $ | 0.4 | $ | 0.9 | $ | 28.4 | |||||||||
7. | EMPLOYEE BENEFIT AND RETIREMENT PLANS |
• | On December 1, 2016, the Management Committee approved the freezing of benefits under the McCormick U.K. Pension and Life Assurance Scheme (the U.K. plan). The effective date of this freeze is December 31, 2016. Although the U.K. plan has been frozen, employees who are participants in that plan retained benefits accumulated up to the date of the freeze, based on credited service and eligible earnings, in accordance with the terms of the plan. |
• | On January 3, 2017, the Management Committee approved the freezing of benefits under the McCormick Pension Plan, the defined benefit pension plan available to U.S. employees hired on or prior to December 31, 2011. The effective date of this freeze is November 30, 2018. Although the U.S. Pension plan will be frozen, employees who are participants in that plan will retain benefits accumulated up to the date of the freeze, based on credited service and eligible earnings, in accordance with the terms of the plan. |
• | On January 3, 2017, the Compensation Committee of our Board of Directors approved the freezing of benefits under the McCormick Supplemental Executive Retirement Plan (the “SERP”). The effective date of this freeze is January 31, 2017. Although the SERP has been frozen, executives who are participants in the SERP as of the date of the freeze, including certain named executive officers, retained benefits accumulated up to that date, based on credited service and eligible earnings, in accordance with the SERP’s terms. |
United States | International | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Defined benefit plans | |||||||||||||||
Service cost | $ | 3.9 | $ | 5.4 | $ | 1.5 | $ | 1.7 | |||||||
Interest costs | 8.0 | 8.3 | 2.5 | 2.9 | |||||||||||
Expected return on plan assets | (10.2 | ) | (10.1 | ) | (3.7 | ) | (4.1 | ) | |||||||
Amortization of prior service costs | — | — | 0.5 | 0.1 | |||||||||||
Amortization of net actuarial losses | 1.9 | 3.1 | 1.0 | 1.0 | |||||||||||
Total pension expense | $ | 3.6 | $ | 6.7 | $ | 1.8 | $ | 1.6 | |||||||
Three months ended | ||||||||
February 28, 2017 | February 29, 2016 | |||||||
Other postretirement benefits | ||||||||
Service cost | $ | 0.7 | $ | 0.8 | ||||
Interest costs | 0.9 | 0.9 | ||||||
Amortization of gains | — | (0.1 | ) | |||||
Total other postretirement expense | $ | 1.6 | $ | 1.6 | ||||
8. | STOCK-BASED COMPENSATION |
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Stock-based compensation expense | $ | 4.1 | $ | 3.0 | |||
2017 | 2016 | ||||||||||||
(shares in millions) | Number of Shares | Weighted- Average Exercise Price | Number of Shares | Weighted- Average Exercise Price | |||||||||
Outstanding at beginning of period | 4.9 | $ | 66.00 | 4.8 | $ | 59.20 | |||||||
Exercised | (0.1 | ) | 63.75 | (0.1 | ) | 41.95 | |||||||
Outstanding at end of the period | 4.8 | $ | 66.04 | 4.7 | $ | 59.64 | |||||||
Exercisable at end of the period | 3.7 | $ | 59.93 | 3.0 | $ | 52.41 | |||||||
2017 | 2016 | ||||||||||||
(shares in thousands) | Number of Shares | Weighted- Average Grant-Date Fair Value | Number of Shares | Weighted- Average Grant-Date Fair Value | |||||||||
Outstanding at beginning of period | 267 | $ | 80.08 | 270 | $ | 71.03 | |||||||
Vested | (3 | ) | 71.35 | (4 | ) | 37.94 | |||||||
Forfeited | (2 | ) | 85.37 | (3 | ) | 74.11 | |||||||
Outstanding at end of period | 262 | $ | 80.13 | 263 | $ | 71.49 | |||||||
2017 | 2016 | ||||||||||||
(shares in thousands) | Number of Shares | Weighted- Average Grant-Date Fair Value | Number of Shares | Weighted- Average Grant-Date Fair Value | |||||||||
Outstanding at beginning of period | 201 | $ | 78.10 | 192 | $ | 70.94 | |||||||
Granted | 78 | 89.96 | 108 | 86.40 | |||||||||
Vested | (43 | ) | 69.04 | (18 | ) | 64.74 | |||||||
Forfeited | — | — | (1 | ) | 74.02 | ||||||||
Outstanding at end of period | 236 | $ | 83.63 | 281 | $ | 77.28 | |||||||
9. | INCOME TAXES |
10. | EARNINGS PER SHARE AND STOCK ISSUANCE |
Three months ended | |||||
February 28, 2017 | February 29, 2016 | ||||
Average shares outstanding – basic | 125.1 | 127.1 | |||
Effect of dilutive securities: | |||||
Stock options/RSUs/LTPP | 1.8 | 1.2 | |||
Average shares outstanding – diluted | 126.9 | 128.3 | |||
Three months ended | |||||
February 28, 2017 | February 29, 2016 | ||||
Anti-dilutive securities | 0.8 | 0.2 | |||
Three months ended | |||||
February 28, 2017 | February 29, 2016 | ||||
Shares issued under stock option, employee stock purchase plans and RSUs | 0.2 | 0.1 | |||
Shares repurchased in connection with the stock repurchase program | 0.9 | 0.6 | |||
11. | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||||
Foreign currency translation adjustment | $ | (284.3 | ) | $ | (231.8 | ) | $ | (299.4 | ) | ||
Unrealized gain on foreign currency exchange contracts | 2.2 | 2.5 | 3.9 | ||||||||
Fair value of interest rate swaps (excluding settled interest rate swaps) | (0.1 | ) | — | — | |||||||
Unamortized value of settled interest rate swaps | 2.3 | 2.3 | 2.4 | ||||||||
Pension and other postretirement costs | (165.1 | ) | (196.7 | ) | (221.3 | ) | |||||
Accumulated other comprehensive loss | $ | (445.0 | ) | $ | (423.7 | ) | $ | (514.4 | ) | ||
Three months ended | Affected Line Items in the Condensed Consolidated Income Statement | ||||||||||
Accumulated Other Comprehensive Income (Loss) Components | February 28, 2017 | February 29, 2016 | |||||||||
(Gains)/losses on cash flow hedges: | |||||||||||
Interest rate derivatives | $ | 0.1 | $ | 0.1 | Interest expense | ||||||
Foreign exchange contracts | (1.1 | ) | (1.3 | ) | Cost of goods sold | ||||||
Total before tax | (1.0 | ) | (1.2 | ) | |||||||
Tax effect | 0.3 | 0.3 | Income taxes | ||||||||
Net, after tax | $ | (0.7 | ) | $ | (0.9 | ) | |||||
Amortization of pension and postretirement benefit adjustments: | |||||||||||
Amortization of prior service costs (1) | $ | 0.5 | $ | 0.1 | SG&A expense/ Cost of goods sold | ||||||
Amortization of net actuarial losses (1) | 2.9 | 4.0 | SG&A expense/ Cost of goods sold | ||||||||
Total before tax | 3.4 | 4.1 | |||||||||
Tax effect | (1.2 | ) | (1.4 | ) | Income taxes | ||||||
Net, after tax | $ | 2.2 | $ | 2.7 | |||||||
12. | BUSINESS SEGMENTS |
Consumer | Industrial | Total | |||||||||
(in millions) | |||||||||||
Three months ended February 28, 2017 | |||||||||||
Net sales | $ | 638.6 | $ | 405.1 | $ | 1,043.7 | |||||
Operating income excluding special charges | 97.9 | 39.9 | 137.8 | ||||||||
Income from unconsolidated operations | 6.5 | 0.5 | 7.0 | ||||||||
Three months ended February 29, 2016 | |||||||||||
Net sales | $ | 633.8 | $ | 396.4 | $ | 1,030.2 | |||||
Operating income excluding special charges | 94.3 | 36.4 | 130.7 | ||||||||
Income from unconsolidated operations | 7.6 | 0.8 | 8.4 | ||||||||
Consumer | Industrial | Total | |||||||||
Three months ended February 28, 2017 | |||||||||||
Operating income | $ | 95.4 | $ | 38.8 | $ | 134.2 | |||||
Add: Special charges | 2.5 | 1.1 | 3.6 | ||||||||
Operating income excluding special charges | $ | 97.9 | $ | 39.9 | $ | 137.8 | |||||
Three months ended February 29, 2016 | |||||||||||
Operating income | $ | 93.0 | $ | 36.1 | $ | 129.1 | |||||
Add: Special charges | 1.3 | 0.3 | 1.6 | ||||||||
Operating income excluding special charges | $ | 94.3 | $ | 36.4 | $ | 130.7 | |||||
13. | SUBSEQUENT EVENT |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Net sales | $ | 1,043.7 | $ | 1,030.2 | |||
Percent increase | 1.3 | % | 2.0 | % | |||
Gross profit | $ | 413.0 | $ | 405.0 | |||
Gross profit margin | 39.6 | % | 39.3 | % | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Selling, general & administrative expense (SG&A) | $ | 275.2 | $ | 274.3 | |||
Percent of net sales | 26.4 | % | 26.6 | % | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Special charges | $ | 3.6 | $ | 1.6 | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Interest expense | $ | 14.5 | $ | 13.9 | |||
Other income, net | 0.1 | 1.1 | |||||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Income from consolidated operations before income taxes | $ | 119.8 | $ | 116.3 | |||
Income taxes | 33.3 | 31.3 | |||||
Effective tax rate | 27.8 | % | 26.9 | % | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Income from unconsolidated operations | $ | 7.0 | $ | 8.4 | |||
Three months ended February | |||
2016 Earnings per share – diluted | $ | 0.73 | |
Increase in special charges | (0.01 | ) | |
Increase in operating income | 0.04 | ||
Impact of effective tax rate | (0.01 | ) | |
Decrease in income from unconsolidated operations | (0.01 | ) | |
Decrease in other income | (0.01 | ) | |
Impact of lower shares outstanding | 0.01 | ||
2017 Earnings per share – diluted | $ | 0.74 | |
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
(in millions) | |||||||
Net sales | $ | 638.6 | $ | 633.8 | |||
Percent increase | 0.8 | % | 2.2 | % | |||
Operating income, excluding special charges | $ | 97.9 | $ | 94.3 | |||
Operating income margin, excluding special charges | 15.3 | % | 14.9 | % | |||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Net sales | $ | 405.1 | $ | 396.4 | |||
Percent increase | 2.2 | % | 1.6 | % | |||
Operating income, excluding special charges | $ | 39.9 | $ | 36.4 | |||
Operating income margin, excluding special charges | 9.8 | % | 9.2 | % | |||
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||||
Notional value | $ | 395.8 | $ | 270.3 | $ | 449.2 | |||||
Unrealized net (loss) gain | (5.0 | ) | 2.6 | (0.5 | ) | ||||||
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||||
Notional value | $ | 175.0 | $ | 100.0 | $ | 100.0 | |||||
Unrealized net (loss) gain | (2.1 | ) | 4.5 | (1.2 | ) | ||||||
For the year ended November 30, 2016 | For the three months ended | Estimated for the year ending November 30, 2017 | ||||||||||||
February 28, 2017 | February 29, 2016 | |||||||||||||
Operating income | $ | 641.0 | $ | 134.2 | $ | 129.1 | ||||||||
Impact of special charges included in cost of goods sold | 0.3 | — | — | |||||||||||
Impact of other special charges | 15.7 | 3.6 | 1.6 | |||||||||||
Total special charges | 16.0 | 3.6 | 1.6 | |||||||||||
Adjusted operating income | $ | 657.0 | $ | 137.8 | $ | 130.7 | ||||||||
Income from unconsolidated operations | $ | 36.1 | $ | 7.0 | $ | 8.4 | ||||||||
Impact of special charges attributable to non-controlling interests (2) | (1.9 | ) | — | — | ||||||||||
Adjusted income from unconsolidated operations | $ | 34.2 | $ | 7.0 | $ | 8.4 | ||||||||
Net income | $ | 472.3 | $ | 93.5 | $ | 93.4 | ||||||||
Impact of total special charges (1) | 13.0 | 2.5 | 1.3 | |||||||||||
Impact of special charges attributable to non-controlling interests (2) | (1.9 | ) | — | — | ||||||||||
Adjusted net income | $ | 483.4 | $ | 96.0 | $ | 94.7 | ||||||||
Earnings per share – diluted | $ | 3.69 | $ | 0.74 | $ | 0.73 | $3.98 to $4.06 | |||||||
Impact of total special charges | 0.10 | 0.02 | 0.01 | 0.07 | ||||||||||
Impact of special charges attributable to non-controlling interests (2) | (0.01 | ) | — | — | — | |||||||||
Adjusted earnings per share – diluted | $ | 3.78 | $ | 0.76 | $ | 0.74 | $4.05 to $4.13 | |||||||
Three Months Ended February 28, 2017 | ||||||
Percentage Change as Reported | Impact of Foreign Currency Exchange | Percentage Change on Constant Currency Basis | ||||
Net sales: | ||||||
Consumer segment: | ||||||
Americas | 2.1 | % | 0.3 | % | 1.8 | % |
EMEA | (7.2 | )% | (2.7 | )% | (4.5 | )% |
Asia/Pacific | 7.0 | % | (5.8 | )% | 12.8 | % |
Total Consumer | 0.8 | % | (1.4 | )% | 2.2 | % |
Industrial segment: | ||||||
Americas | 1.9 | % | (1.4 | )% | 3.3 | % |
EMEA | 0.5 | % | (12.2 | )% | 12.7 | % |
Asia/Pacific | 6.7 | % | (3.2 | )% | 9.9 | % |
Total Industrial | 2.2 | % | (3.7 | )% | 5.9 | % |
Total net sales | 1.3 | % | (2.3 | )% | 3.6 | % |
Adjusted operating income: | ||||||
Consumer segment | 3.8 | % | (0.8 | )% | 4.6 | % |
Industrial segment | 9.6 | % | (7.9 | )% | 17.5 | % |
Total adjusted operating income | 5.4 | % | (2.8 | )% | 8.2 | % |
Projection for Year Ending November 30, 2017 | |||
Percentage change in adjusted earnings per share | 7% to 9% | ||
Impact of foreign currency exchange | (2 | )% | |
Percentage change in adjusted earnings per share in constant currency | 9% to 11% | ||
February 28, 2017 | February 29, 2016 | November 30, 2016 | |||||||
Net income | $ | 472.4 | $ | 424.5 | $ | 472.3 | |||
Depreciation and amortization | 110.6 | 107.4 | 108.7 | ||||||
Interest expense | 56.6 | 54.3 | 56.0 | ||||||
Income tax expense | 155.0 | 142.6 | 153.0 | ||||||
EBITDA | $ | 794.6 | $ | 728.8 | $ | 790.0 | |||
Total debt | $ | 1,693.1 | $ | 1,445.2 | $ | 1,447.2 | |||
Total debt to EBITDA | 2.13 | 1.98 | 1.83 | ||||||
Three months ended | |||||||
February 28, 2017 | February 29, 2016 | ||||||
Net cash provided by operating activities | $ | 44.3 | $ | 78.6 | |||
Net cash used in investing activities | (152.7 | ) | (22.2 | ) | |||
Net cash provided by (used in) financing activities | 110.2 | (46.2 | ) | ||||
2017 | 2016 | ||||||
Number of shares of common stock repurchased | 0.9 | 0.6 | |||||
Dollar amount | $ | 82.7 | $ | 47.8 | |||
February 28, 2017 | February 29, 2016 | November 30, 2016 | ||||||
Total debt to EBITDA | 2.13 | 1.98 | 1.83 | |||||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1.A | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ISSUER PURCHASES OF EQUITY SECURITIES | ||||||||||
Period | Total Number of Shares Purchased | Average Price Paid per share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||
December 1, 2016 to December 31, 2016 | CS – 0 | $ | — | — | $301 million | |||||
CSNV – 279,200 | $ | 92.06 | 279,200 | |||||||
January 1, 2017 to January 31, 2017 | CS – 0 | $ | — | — | $277 million | |||||
CSNV – 265,222 | $ | 92.61 | 265,222 | |||||||
February 1, 2017 to February 28, 2017 | CS – 58,587 (1) | $ | 96.76 | 58,587 | $244 million | |||||
CSNV – 277,740 | $ | 96.40 | 277,740 | |||||||
Total | CS – 58,587 | $ | 96.76 | 58,587 | $244 million | |||||
CSNV – 822,162 | $ | 93.70 | 822,162 | |||||||
(1) | On February 9, 2017, we purchased 17,087 shares of our common stock from our U.S. defined contribution retirement plan to manage shares, based upon participant activity, in the plan's company stock fund. The price paid per share of $96.85 represented the closing price of the common shares on February 9, 2017. |
ITEM 6. | EXHIBITS |
Exhibit Number | Description | |||
(3) | (i) | Articles of Incorporation and By-Laws | ||
Restatement of Charter of McCormick & Company, Incorporated dated April 16, 1990 | Incorporated by reference from Exhibit 4 of Registration Form S-8, Registration No. 33-39582 as filed with the Securities and Exchange Commission on March 25, 1991. | |||
Articles of Amendment to Charter of McCormick & Company, Incorporated dated April 1, 1992 | Incorporated by reference from Exhibit 4 of Registration Form S-8, Registration Statement No. 33-59842 as filed with the Securities and Exchange Commission on March 19, 1993. | |||
Articles of Amendment to Charter of McCormick & Company, Incorporated dated March 27, 2003 | Incorporated by reference from Exhibit 4 of Registration Form S-8, Registration Statement No. 333-104084 as filed with the Securities and Exchange Commission on March 28, 2003. | |||
(ii) | By-Laws | |||
By-Laws of McCormick & Company, Incorporated Amended and Restated on November 29, 2016 | Incorporated by reference from Exhibit 99.1 of McCormick's Form 8-K dated November 29, 2016, File No. 1-14920, as filed with the Securities and Exchange Commission on November 30, 2016. | |||
(4) | Instruments defining the rights of security holders, including indentures |
(i) | See Exhibit 3 (Restatement of Charter and By-Laws) |
(ii) | Summary of Certain Exchange Rights, incorporated by reference from Exhibit 4.1 of McCormick’s Form 10-Q for the quarter ended August 31, 2001, File No. 0-748, as filed with the Securities and Exchange Commission on October 12, 2001. |
(iii) | Indenture dated December 7, 2007 between McCormick and The Bank of New York, incorporated by reference from Exhibit 4.1 of McCormick’s Form 8-K dated December 4, 2007, File No. 0-748, as filed with the Securities and Exchange Commission on December 10, 2007. |
(iv) | Indenture dated July 8, 2011 between McCormick and U.S. Bank National Association, incorporated by reference from Exhibit 4.1 of McCormick’s Form 8-K dated July 5, 2011, File No. 1-14920, as filed with the Securities and Exchange Commission on July 8, 2011. |
(v) | Form of 5.75% Notes due 2017, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated December 4, 2007, File No. 0-748, as filed with the Securities and Exchange Commission on December 10, 2007. |
(vi) | Form of 3.90% Notes due 2021, incorporated by reference from Exhibit 4.2 of McCormick’s Form 8-K dated July 5, 2011, File No. 1-14920, as filed with the Securities and Exchange Commission on July 8, 2011. |
(vii) | Form of 3.50% Notes due 2023, incorporated by reference from Exhibit 4.2 of McCormick's Form 8-K dated August 14, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on August 19, 2013. |
(viii) | Form of 3.25% Notes due 2025, incorporated by reference from Exhibit 4.2 of McCormick's Form 8-K dated November 3, 2015, File No. 1-14920, as filed with the Securities and Exchange Commission on November 6, 2015. |
(10) | Material Contracts |
(i) | The 2001 Stock Option Plan, in which officers and certain other management employees participate, is set forth on pages 33 through 36 of McCormick’s definitive Proxy Statement dated February 15, 2001, File No. 1-14920, as filed with the Securities and Exchange Commission on February 14, 2001, and incorporated by reference herein.* |
(ii) | 2004 Directors’ Non-Qualified Stock Option Plan, provided to members of McCormick’s Board of Directors who are not also employees of McCormick, is set forth in Exhibit B of McCormick’s definitive Proxy Statement dated February 17, 2004, File No. 1-14920, as filed with the Securities and Exchange Commission on February 17, 2004, and incorporated by reference herein.* |
(iii) | Directors’ Share Ownership Program, provided to members of McCormick’s Board of Directors who are not also employees of McCormick, is set forth on page 28 of McCormick’s definitive Proxy Statement dated February 17, 2004, File No. 1-14920, as filed with the Securities and Exchange Commission on February 17, 2004, and incorporated by reference herein.* |
(iv) | Deferred Compensation Plan, as restated on January 1, 2000, and amended on August 29, 2000, September 5, 2000 and May 16, 2003, in which directors, officers and certain other management employees participate, a copy of which Plan document and amendments was attached as Exhibit 10(viii) of McCormick’s Form 10-Q for the quarter ended August 31, 2003, File No. 1-14920, as filed with the Securities and Exchange Commission on October 14, 2003, and incorporated by reference herein.* |
(v) | Non-Qualified Retirement Savings Plan, with an effective date of February 1, 2017, in which directors, officers and certain other management employees participate.* Filed herewith |
(vi) | The 2007 Omnibus Incentive Plan, in which directors, officers and certain other management employees participate, is set forth in Exhibit A of McCormick’s definitive Proxy Statement dated February 20, 2008, File No. 1-14920, as filed with the Securities and Exchange Commission on February 20, 2008, and incorporated by reference herein, as amended by Amendment No. 1 thereto, which Amendment is incorporated by reference from Exhibit 10(xi) of McCormick’s 10-K for the fiscal year ended November 30, 2008, File No. 1-14920, as filed with the Securities and Exchange Commission on January 28, 2009.* |
(vii) | The 2013 Omnibus Incentive Plan, in which directors, officers and certain other management employees participate, is incorporated by reference from Exhibit 4.1 of McCormick's Form S-8, Registration No. 333-187703, as filed with the Securities and Exchange Commission on April 3, 2013, as amended, which Amendment No. 1 is incorporated by reference from Exhibit 10(x) of McCormick’s Form 10-Q for the quarter ended February 28, 2015, File No. 1-14920, as filed with the Securities and Exchange Commission on March 31, 2015.* |
(viii) | Form of Long-Term Performance Plan Agreement, formerly known as the Mid-Term Incentive Plan, incorporated by reference from Exhibit 10(x) of McCormick's Form 10-Q for the quarter ended May 31, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on June 28, 2013. |
(ix) | Form of Restricted Stock Units Agreement, incorporated by reference from Exhibit 10(xi) of McCormick's Form 10-Q for the quarter ended May 31, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on June 28, 2013. |
(x) | Form of Restricted Stock Units Agreement for Directors, incorporated by reference from Exhibit 10(xii) of McCormick's Form 10-Q for the quarter ended May 31, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on June 28, 2013. |
(xi) | Form of Non-Qualified Stock Option Agreement, incorporated by reference from Exhibit 10(xiii) of McCormick's Form 10-Q for the quarter ended May 31, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on June 28, 2013, as amended, which Amendment No. 1 is incorporated by reference from Exhibit 10(xv) of McCormick’s Form 10-Q for the quarter ended |
(xii) | Form of Non-Qualified Stock Option Agreement for Directors, incorporated by reference from Exhibit 10(xiv) of McCormick's Form 10-Q for the quarter ended May 31, 2013, File No. 1-14920, as filed with the Securities and Exchange Commission on June 28, 2013. |
(xiii) | Form of Indemnification Agreement, incorporated by reference from Exhibit 10(xv) of McCormick's Form 10-Q for the quarter ended February 28, 2014, File No. 1-14920, as filed with the Securities and Exchange Commission on March 26, 2014. |
(xiv) | Employment Agreement between McCormick (UK) Limited and Malcolm Swift, incorporated by reference from Exhibit 10.1 of McCormick's Form 8-K, File No. 1-14920, as filed with the Securities and Exchange Commission on January 29, 2015.* |
(xv) | Severance Plan for Executives, incorporated by reference from Exhibit 10(xix) of McCormick's Form 10-Q for the quarter ended February 28, 2015, File No. 1-14920, as filed with the Securities and Exchange Commission on March 31, 2015.* |
* | Management contract or compensatory plan or arrangement. |
McCORMICK & COMPANY, INCORPORATED | |||
March 28, 2017 | By: | /s/ Michael R. Smith | |
Michael R. Smith | |||
Executive Vice President & Chief Financial Officer | |||
March 28, 2017 | By: | /s/ Christina M. McMullen | |
Christina M. McMullen | |||
Vice President & Controller | |||
Article 1 . General Provisions | 1 | ||
Section 1.1. | Purpose. | 1 | |
Section 1.2. | History of the Plan. | 1 | |
Section 1.3. | Benefit Structures and Merged Plans. | 2 | |
Section 1.4. | Effective Date. | 3 | |
Article 2 . Definitions and Construction | 4 | ||
Section 2.1. | Definitions. | 4 | |
Section 2.2. | Construction. | 11 | |
Article 3 . Eligibility and Participation | 12 | ||
Section 3.1. | Eligibility, Selection by Committee. | 12 | |
Section 3.2. | Commencement of Participation. | 12 | |
Section 3.3. | Reemployment | 12 | |
Section 3.4. | Change of Employment Category | 12 | |
Section 3.5. | Termination of Participation | 13 | |
Article 4 . Contributions and Accounts | 14 | ||
Section 4.1. | Deferral Contributions. | 14 | |
Section 4.2. | Deferral Contribution Elections. | 15 | |
Section 4.3. | Suspension of Deferrals. | 16 | |
Section 4.4. | Matching Contributions. | 16 | |
Section 4.5. | Non-Elective Contributions. | 17 | |
Section 4.6. | Transition Credits. | 18 | |
Section 4.7. | Discretionary Contributions. | 19 | |
Section 4.8. | Selection of Hypothetical Investments. | 20 | |
Section 4.9. | Adjustment of Participant Accounts. | 21 | |
Section 4.10. | Withholding of Taxes. | 21 | |
Section 4.11. | Vesting. | 22 | |
Section 4.12. | Forfeitures | 23 | |
Article 5 . Payments from the Plan | 24 | ||
Section 5.1. | Default Time and Forms of Payment. | 24 | |
Section 5.2. | Election of Alternate Time or Form of Payment. | 24 | |
Section 5.3. | Cash Out of Small Benefits. | 25 | |
Section 5.4. | Forms of Payment. | 25 | |
Section 5.5. | Time of Benefit Payments. | 25 | |
Section 5.6. | Withdrawal in the Event of a Financial Emergency. | 26 | |
Section 5.7. | Medium of Distributions. | 26 | |
McCormick Non-Qualified Retirement Savings Plan | Table of Contents | |
Article 6 . Death Benefits | 26 | ||
Section 6.1. | Payments in the Event of Death. | 26 | |
Section 6.2. | Beneficiary. | 27 | |
Section 6.3. | Beneficiary Designation; Change. | 27 | |
Section 6.4. | Receipt. | 27 | |
Section 6.5. | No Beneficiary Designation. | 27 | |
Section 6.6. | Doubt as to Beneficiary. | 27 | |
Section 6.7. | Discharge of Obligations. | 27 | |
Article 7 . Administration of the Plan | 28 | ||
Section 7.1. | Designation of Committee. | 28 | |
Section 7.2. | Authority of Committee. | 28 | |
Section 7.3. | Agents. | 28 | |
Section 7.4. | Binding Effect of Decisions. | 28 | |
Section 7.5. | Indemnity of Committee. | 28 | |
Section 7.6. | Employer Information. | 28 | |
Section 7.7. | Finality of Decisions. | 29 | |
Article 8 . Amendment and Termination | 30 | ||
Section 8.1. | Amendment, Suspension, and Termination. | 30 | |
Section 8.2. | Effect of Payment. | 31 | |
Section 8.3. | Section 409A of the Code. | 31 | |
Article 9 . Claims Procedures | 32 | ||
Section 9.1. | Presentation of Claim. | 32 | |
Section 9.2. | Notification of Decision. | 32 | |
Section 9.3. | Review of a Denied Claim. | 32 | |
Section 9.4. | Decision on Review. | 33 | |
Section 9.5. | Section 409A of the Code. | 33 | |
Section 9.6. | Time Limit on Commencing Litigation. | 33 | |
Article 10 . Trust | 35 | ||
Section 10.1. | Establishment of the Trust. | 35 | |
Section 10.2. | Automatic Funding of Trust. | 35 | |
Section 10.3. | Interrelationship of the Plan and the Trust. | 35 | |
Section 10.4. | Distributions From the Trust. | 35 | |
Article 11 . Miscellaneous | 36 | ||
Section 11.1. | Status of Plan. | 36 | |
Section 11.2. | Unsecured General Creditor. | 36 | |
McCormick Non-Qualified Retirement Savings Plan | Table of Contents | |
Section 11.3. | Employer’s Liability. | 36 | |
Section 11.4. | Nonassignability. | 36 | |
Section 11.5. | Not a Contract of Employment. | 36 | |
Section 11.6. | Furnishing Information. | 37 | |
Section 11.7. | Governing Law. | 37 | |
Section 11.8. | Forum Selection. | 37 | |
Section 11.9. | Notices, Signature, Delivery. | 38 | |
Section 11.10. | Successors. | 38 | |
Section 11.11. | Severability. | 38 | |
Section 11.12. | Payment on Behalf of Person Unable to Manage Affairs. | 38 | |
Section 11.13. | Distribution in the Event of Taxation. | 38 | |
Section 11.14. | Insurance. | 39 | |
Section 11.15. | Section 409A of the Code. | 39 | |
Section 11.16. | Other Benefits and Agreements. | 40 | |
Section 11.17. | Complete Statement of the Plan | 40 | |
Addendum A | Terms of the McCormick & Company, Incorporated 2005 Deferred Compensation Plan | A-42 | |
Addendum B | Terms of the McCormick & Company, Incorporated Restoration Plan | B-1 | |
Addendum C | Terms of The McCormick Supplemental Executive Retirement Plan | C-1 | |
McCormick Non-Qualified Retirement Savings Plan | Table of Contents | |
(a) | This Plan is maintained to provide Participants an opportunity to defer compensation and to provide supplemental retirement benefits to Participants. |
(b) | This Plan is an unfunded deferred compensation plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Title I of ERISA. Sections 201(2), 301(a)(3), and 401(a)(1) of ERISA provide that such benefits are not subject to the participation and vesting, funding, or fiduciary requirements (Parts 2, 3, and 4 of Title I) of ERISA. |
(c) | Benefits under the Plan shall be payable from the Company’s general assets or, in the sole discretion of the Committee, from the assets of the Employer or a Trust. All benefits under the Plan are subject to the claims of the Company’s general creditors if the Company becomes bankrupt or insolvent. |
(a) | Before 2005, the Company provided deferred compensation benefits under a plan known as the “McCormick & Company, Incorporated Deferred Compensation Plan,” which was effective January 1, 2000 (the “2000 Plan”). The 2000 Plan was frozen effective January 1, 2005, and no further deferrals were permitted under the 2000 Plan after 2004. All benefits under the 2000 Plan were vested as of December 31, 2004. |
(b) | This Plan, originally known as the McCormick & Company, Incorporated 2005 Deferred Compensation Plan, was first effective January 1, 2005, and it incorporated the terms of the 2000 Plan, except to the extent those terms were inconsistent with the requirements of Section 409A of the Code. The provisions of the Plan, as in effect before February 1, 2017, are referred to in this document as the “Pre-2017 Plan.” |
(c) | Effective February 1, 2017, this Plan is being amended and restated in its entirety, and is being renamed as the McCormick & Company Non-Qualified Retirement Savings Plan. In addition to allowing Participants to defer compensation, the newly amended and restated Plan will provide employer contributions for Participants who receive Total Compensation that exceeds the limit set forth in Section 401(a)(17) of the Code ($270,000 in 2017) from an Employer during a Plan Year. |
(d) | Effective January 31, 2017, the McCormick & Company, Incorporated Restoration Plan (“Restoration Plan”) and The McCormick Supplemental Executive Retirement Plan (“DB SERP”) (collectively, the “Frozen Non-Qualified Plans”) were frozen. |
(e) | As a result of the amendment and restatement of this Plan and the freeze of the Frozen Non-Qualified Plans, (1) effective February 1, 2017, contributions to the Plan (including deferrals of compensation payable after January 31, 2017) shall be subject to the terms of the Plan rather than the terms of the Pre-2017 Plan, except to the extent such treatment would result in additional income tax under Section 409A of the Code, (2) no additional contributions shall be made to the Restoration Plan on or after February 1, 2017, (3) no benefits shall accrue under the DB SERP on or after February 1, 2017, (4) the amount of |
McCormick Non-Qualified Retirement Savings Plan | Page 1 | |
(a) | Benefits under the Pre-2017 Plan. Except as provided in this subsection (a), the payment of amounts deferred and contributions made under the Pre-2017 Plan shall be governed by the Pre-2017 Plan, which is set forth in Addendum A. Addendum A generally reflects the terms of the Pre-2017 Plan in effect immediately before the merger and is a continuation of the terms of the Pre-2017 Plan. Amounts deferred after January 31, 2017, will be treated as contributed under the Plan (rather than the Pre-2017 Plan), even if the applicable deferral election was made before February 1, 2017, except to the extent such treatment would result in a Participant owing additional income tax under Section 409A of the Code. |
(b) | Benefits under the Restoration Plan. Except as provided in this subsection (b), the payment of Restoration Plan benefits shall be governed by the Restoration Plan, which is set forth in Addendum B. Addendum B generally reflects the terms of the Restoration Plan in effect immediately before the merger and is a continuation of the terms of the Restoration Plan. Notwithstanding the foregoing, article 8 (“Administration of the Plan”), article 9 (“Amendment and Termination”), article 10 (“Claims Procedures”), and article 12 (“Miscellaneous”) of the Restoration Plan, which do not affect the payment or calculation of benefits, are no longer in effect, and instead the Governance Provisions of the Plan shall apply to Restoration Plan benefits. |
(c) | Benefits under the DB SERP. Except as provided in this subsection (c), the payment of DB SERP benefits shall be governed by the DB SERP, which is set forth in Addendum C. Addendum C generally reflects the terms of the DB SERP in effect immediately before |
McCormick Non-Qualified Retirement Savings Plan | Page 2 | |
McCormick Non-Qualified Retirement Savings Plan | Page 3 | |
(a) | Account Balance. As of any given date called for under the Plan, the sum of the balances of the Participant’s: (1) Deferral Contribution Account, (2) Matching Contribution Account, (3) Non-Elective Contribution Account, (4) Transition Credit Account, and (5) Discretionary Contribution Account, as such accounts have been adjusted to reflect all applicable Investment Adjustments and all prior withdrawals and distributions, in accordance with Article 4 and Article 5 of the Plan. |
(b) | Article. An Article of the Plan. |
(c) | Base Annual Compensation. The base annual compensation (including disability benefits whether or not includible in gross income under Code §§ 104(a)(3), 105(a), or 105(h)) payable to a Participant by an Employer during a Plan Year, but (1) excluding Bonuses, commissions, director fees and other additional incentives and awards payable to the Participant, but (2) before reduction for any Elective Deductions. With respect to directors of the Company who are not employees of the Company or any Employer, Base Annual Compensation shall mean the director fees payable to such individuals during a Plan Year. |
(d) | Beneficiary. One or more persons, trusts, estates or other entities, designated (or deemed designated) by the Participant in accordance with Article 6. |
(e) | Beneficiary Designation Form. The document prescribed by the Committee to be used by the Participant to designate his Beneficiary for the Plan. |
(f) | Board. The Board of Directors of the Company. |
(g) | Bonus. The amounts payable to a Participant during a Plan Year under any annual bonus or incentive plan or arrangement sponsored by an Employer, before reduction for any Elective Deductions, but excluding commissions, multi-year bonuses, stock-related awards, long-term performance plan payments, and other non-monetary incentives. |
(h) | Cause. As determined by the Committee, (1) gross negligence or willful misconduct in connection with the performance of duties; (2) conviction of, or plea of nolo contendre to, a criminal offense (other than minor traffic offenses); or (3) material breach of any term of any employment, consulting, or other service, confidentiality, intellectual property, nonsolicitation or non-competition agreements, if any, between the Participant and an Employer. |
(i) | Change in Control Event. One or more of the following events: |
(1) | the consolidation or merger of the Company with or into another entity where the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company’s capital stock are converted into cash, securities or other |
McCormick Non-Qualified Retirement Savings Plan | Page 4 | |
(2) | any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; |
(3) | any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becoming the beneficial owner (as defined in Section 4, “Common Stock,” subsection (b)(2)(C) of the Charter), directly or indirectly, of securities of the Company representing more than 13% (the “Specified Percentage”) of the voting power of all the outstanding securities of the Company having the right to vote in an election of the Board (after giving effect, to the extent applicable, to the operation of Section 4, “Common Stock,” subsection (b) of the Charter) (including, without limitation, any securities of the Company that any such person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, which shall be deemed beneficially owned by such person), provided, however, that in the event that the vote limitation with respect to Substantial Stockholders set forth in Section 4, “Common Stock,” subsection (b) of the Charter becomes inoperative by virtue of the operation of Section 4, “Common Stock,” subsection (b)(12) of the Charter, or otherwise, the “Specified Percentage” shall be increased, without requirement for further action, to 35%; or |
(4) | individuals, who constitute the entire Board elected by the Company’s stockholders at its most recent annual meeting of stockholders and any new directors who have been appointed to the Board by a vote of at least a majority of the directors then in office, having ceased for any reason to constitute a majority of the members of the Board. |
(j) | Change in Control Termination. During the period that begins six months before a Change in Control Event and ends two-years after a Change in Control Event, the involuntary termination of a Participant’s employment by the Employer (other than for Cause or due to death or Disability) or the voluntary termination of a Participant’s employment for Good Reason; provided, however, that any Participant who terminates |
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(k) | Claimant. The person or persons described in Article 9 who apply for benefits or amounts that may be payable under the Plan. |
(l) | Code. The Internal Revenue Code of 1986, as amended. |
(m) | Committee. Either of the Committees designated in Article 7, as applicable. |
(n) | Company. McCormick & Company, Incorporated, and any successors and assigns. |
(o) | Contributions. Deferral Contributions and Employer Contributions. |
(p) | Deferral Contribution. The amount of Total Compensation deferred from each regularly scheduled payment of Base Annual Compensation and from any Bonus payment by a Participant in accordance with the terms of the Plan and credited to the Participant’s Deferral Contribution Account. |
(q) | Deferral Contribution Account. A Participant’s aggregate Deferral Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(r) | Director. Non-employee member of the Board. |
(s) | Disabled/Disability. “Totally and Permanently Disabled” or “Temporarily Disabled” within the meaning of the Company’s long-term disability plan, or “Disabled” within the meaning of the Company’s short-term disability plan, provided that no Disability shall be treated as a triggering event for the payment of benefits under the Plan unless such Disability constitutes a “disability” within the meaning of Treas. Reg. § 1.409A-3(i)(4), and no Disability shall be the basis upon which a deferral election is suspended in accordance with Section 4.3 (“Suspension of Deferrals”) unless such Disability constitutes a “disability” within the meaning of Treas. Reg. § 1.409A-3(j)(4)(xii). |
(t) | Discretionary Contribution. The amount, if any, credited by the Employer to the Participant’s Discretionary Contribution Account in accordance with the terms of the Plan. |
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(u) | Discretionary Contribution Account. A Participant’s aggregate Discretionary Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(v) | Election Form. The document required by the Committee to be submitted by a Participant, on a timely basis, which specifies (1) the amount of Total Compensation (or Directors’ fees) the Participant elects to defer for a given Plan Year, and (2) in accordance with Article 5, the form of payment and Interim Distribution Date (if any) for Contributions made by and on behalf of the Participant for that Plan Year. |
(w) | Elective Deductions. Those deductions from a Participant’s Base Annual Compensation or Bonus for amounts voluntarily deferred or contributed by the Participant pursuant to any qualified or non-qualified deferred compensation plan, including, without limitation, amounts deferred pursuant to Sections 125, 402(e)(3) and 402(h) of the Code, to the extent that all such amounts would have been payable to the Participant in cash had there been no such deferral or contribution. |
(x) | Eligible Employee. Any employee of an Employer who is determined to be part of a select group of management or highly compensated employees, but excluding any person designated by an Employer as an independent contractor or leased employee. If an Employer mistakenly classifies an individual as having a status other than common law employee (e.g., an independent contractor) and such individual is later reclassified as a common law employee, such individual shall be treated as an employee prospectively from the date of such reclassification but not for any period before such reclassification. |
(y) | Employer. The Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Management Committee to participate in the Plan. |
(z) | Employer Contributions. Matching Contributions, Non-Elective Contributions, Transition Credits, and Discretionary Contributions. |
(aa) | ERISA. The Employee Retirement Income Security Act of 1974, as amended. |
(bb) | Financial Emergency. An unanticipated emergency or severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, a loss of the Participant’s property due to casualty, or such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that constitute an unforeseeable emergency will be determined by the Committee and shall depend upon the facts of each case, provided that a Financial Emergency shall not be deemed to exist to the extent that such hardship is or may be relieved: |
(1) | through reimbursement or compensation by insurance or otherwise, |
(2) | by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or |
(3) | by cessation of Deferral Contributions under the Plan, provided that this clause (3) shall not apply for purposes of Section 4.3(a). |
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(cc) | Good Reason. A Participant’s Separation from Service as a result of the occurrence of any of the events listed below; provided that, (A) the Participant gives the Employer the opportunity to “cure” the conditions constituting Good Reason by notifying the Employer within ninety (90) days of the initial existence of the conditions constituting Good Reason, (B) the Employer fails to remedy the conditions within thirty (30) days of the Participant’s notification, and (C) the Participant terminates employment within thirty (30) days of the Employer’s failure to remedy: |
(1) | Re-assignment of the Participant to a position which is at a substantially lower level in the organizational structure than his previous position, as defined by any one or a combination of the following factors: reporting relationship, compensation compared to others in the organization, and authority, duties and responsibilities; |
(2) | Substantial diminution in the Participant’s authority, duties or responsibilities, or the assignment of duties and responsibilities which are unsuitable for an individual having the position, experience and stature of the Participant; |
(3) | Substantial reduction in the Participant’s total compensation (including salary, bonus opportunity, deferred compensation, stock options, profit sharing and retirement programs and other benefits); provided, however, that, before a Change in Control Event, a reduction that applies generally to all employees of the Employer, for example, a reduction or elimination of the employer matching contribution or profit sharing contribution under The McCormick 401(k) Retirement Plan, shall not be Good Reason; or |
(4) | Relocation of the Participant’s principal workplace to a location which is more than 50 miles from the Participant’s previous principal workplace. |
(dd) | Hypothetical Investment. An investment fund or benchmark made available to Participants by the Committee for purposes of valuing amounts credited under the Plan. The Committee shall have the discretion to offer a Hypothetical Investment that is intended to track the returns of the Common Stock of the Company (“Stock”). |
(ee) | Interim Distribution Date. The first day of any calendar year, selected by the Participant, upon which the designated portion of Contributions (as well as any appreciation or depreciation of such amounts due to Investment Adjustments) attributable to a given Plan Year shall be distributed. A Participant shall be permitted to have only one Interim Distribution Date with respect to Deferral Contributions, Matching Contributions, Non-Elective Contributions, Transition Credits, and Discretionary Contributions for any Plan Year, but shall be permitted to have separate Interim Distribution Dates with respect to Contributions for different Plan Years. In addition, the Committee can designate a different Interim Distribution Date for Discretionary Contributions. |
(ff) | Investment Adjustment(s). Any appreciation credited to (as income or gains) or depreciation deducted from (as expenses or losses) a Participant’s Deferral Contribution |
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(gg) | Matching Contribution. The amount, if any, credited by the Employer to the Participant’s Matching Contribution Account in accordance with the terms of the Plan. |
(hh) | Matching Contribution Account. A Participant’s aggregate Matching Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(ii) | Non-Elective Contribution. The amount, if any, credited by the Employer to the Participant’s Non-Elective Contribution Account in accordance with the terms of the Plan. |
(jj) | Non-Elective Contribution Account. A Participant’s aggregate Non-Elective Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(kk) | Participant. Any Eligible Employee or member of the Board who (1) is eligible to participate in the Plan in accordance with Section 3.1, and (2) elects to participate in the Plan in accordance with Section 3.2. |
(ll) | Plan. McCormick & Company Non-Qualified Retirement Savings Plan. |
(mm) | Plan Year. A 12-month period commencing January 1 and ending December 31 of the same calendar year. Accordingly, Plan quarters shall commence on January 1, April 1, July 1 and October 1 of each year. |
(nn) | Qualifying Termination. The involuntary termination of a Participant’s employment by the Employer (other than for Cause, or due to death or Disability, or, before a Change in Control Event, for performance reasons) or the voluntary termination of a Participant’s employment for Good Reason, and that is not a Change in Control Termination. A Participant who has been notified by the Employer of his termination of employment does not have a Qualifying Termination until the effective date of such termination as established by the Employer. Any Participant who terminates employment with the Employer voluntarily without Good Reason (or is terminated involuntarily for Cause, or due to death or Disability, or, before a Change in Control, for performance reasons) before the effective date of the Participant’s termination established by the Employer has not had a Qualifying Termination. The termination of employment at the end of a leave of absence or period of short- or long-term disability as a result of a Participant’s inability or failure to return to his prior position in accordance with applicable law is not an involuntary termination of employment, except to the extent required by law. |
(oo) | Retirement. The earlier of (1) the date on which the Participant has attained at least age 55, or (2) the date on which the Participant becomes “Totally and Permanently Disabled” within the meaning of the Company’s long-term disability plan. |
(pp) | Section 401(a)(17) Limit. The limit set forth in Section 401(a)(17) of the Code ($270,000 in 2017). |
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(qq) | Separation from Service. A termination of a Participant’s employment relationship with the Employers that constitutes a “separation from service” within the meaning of Section 409A of the Code. |
(rr) | Total Compensation. The sum of Base Annual Compensation and Bonus paid during a Plan Year. |
(ss) | Transition Credit. The amount, if any, credited by the Employer to the Participant’s Transition Credit Account in accordance with the terms of the Plan. |
(tt) | Transition Credit Account. A Participant’s aggregate Transition Credits, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(uu) | Trust. The McCormick & Company, Incorporated Deferred Compensation Plan Trust or such other trust as may be established by an Employer to fund benefits under this Plan. The Plan, notwithstanding the creation of the Trust, is intended to be unfunded for purposes of the Code and Title I of ERISA. The Trust shall maintain separate subaccounts for each of the Frozen Non-Qualified Plans and this Plan. |
(vv) | Vested Account Balance. As of any given measurement date called for under the Plan, the sum of the following: (1) the balance of the Participant’s Deferral Contribution Account, (2) the balance of the Participant’s Matching Contribution Account, (3) the vested portion of the Participant’s Non-Elective Contribution Account, (4) the vested portion of the Participant’s Transition Credit Account, and (5) the vested portion of the balance of the Participant’s Discretionary Contribution Account, as such accounts have been adjusted to reflect all applicable Investment Adjustments and all prior withdrawals and distributions. |
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(a) | the use of the masculine gender shall also include within its meaning the feminine and vice versa, |
(b) | the use of the singular shall also include within its meaning the plural and vice versa, |
(c) | the word “include” shall mean to include without limitation, and |
(d) | the captions of the articles, sections, or paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of its provisions. |
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(a) | Deferral Contributions. Participants and Directors are eligible to make Deferral Contributions. |
(b) | Matching Contributions and Non-Elective Contributions. Participants (excluding Directors) who earn Total Compensation that exceeds the Section 401(a)(17) Limit from an Employer during a Plan Year, shall be eligible to receive Matching Contributions and Non-Elective Contributions for that Plan Year. |
(c) | Transition Credits. Participants (excluding Directors) who are participating in the Senior Executive Program, Executive Program, or Management Program of the DB SERP on January 31, 2017, shall be eligible for Transition Credits. |
(d) | Discretionary Contributions. The Employer shall have sole discretion to determine with respect to each Plan Year which Participants (excluding Directors), if any, shall be eligible for a Discretionary Contribution. |
(a) | An Eligible Employee who has satisfied the requirements of Section 3.1 and met all enrollment requirements established by the Committee shall commence participation in the Plan as of the date established by the Committee. |
(b) | If a Participant fails to meet all such requirements within the specified time period with respect to any Plan Year, the Participant shall not be eligible to make any Deferral Contributions or receive any Employer Contributions during that Plan Year. |
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(a) | Any Deferral Contribution election in place for the Plan Year in which a Participant becomes an Ineligible Employee shall remain in effect for the duration of the Plan Year in accordance with Section 4.2 (“Deferral Contribution Elections”). |
(b) | If the Participant becomes an Ineligible Employee after May 30, his Deferral Contribution election will remain in place with respect to Total Compensation paid in the Plan Year following the Plan Year in which he becomes an Ineligible Employee. |
(c) | The Participant will remain eligible for Employer Contributions through the end of the Plan Year in which his Deferral Contribution election terminates under subsections (a) and (b), above; provided that he otherwise satisfies the requirements for such Employer Contributions. |
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(a) | Amounts Eligible for Deferral. Subject to Section 4.1(b) and (c): |
(1) | Total Compensation at or below Section 401(a)(17) Limit. A Participant (other than a Director) may designate a whole percentage to be deducted from his Total Compensation that is equal to or below the Section 401(a)(17) Limit. Such amount shall be deducted from each regularly scheduled payment of Base Annual Compensation and from any Bonus payment before the Participant’s Total Compensation reaches the Section 401(a)(17) Limit. |
(2) | Total Compensation above Section 401(a)(17) Limit. A Participant (other than a Director) may designate a whole percentage to be deducted from his Total Compensation that exceeds the Section 401(a)(17) Limit, if any. Such amount, if any, shall be deducted from each regularly scheduled payment of Base Annual Compensation and from any Bonus payment after the Participant’s Total Compensation reaches the Section 401(a)(17) Limit. |
(3) | Directors’ Fees. A Participant who is a Director may designate a whole percentage (or, if permitted by the Committee, a fixed dollar amount) to be deducted from his directors’ fees. Such amount shall be deducted from each regularly scheduled payment of directors’ fees. |
(b) | Minimum Deferral. |
(c) | Maximum Deferral. |
Type of Compensation | Maximum Deferral Percentage |
Total Compensation | 80% |
Directors’ Fees | 100% |
(d) | Time of Crediting Deferral Contributions. |
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(a) | Subject to the requirements of this Article 4, a Participant may elect to defer the receipt of Total Compensation during any Plan Year. |
(b) | The Participant’s intent to defer shall be evidenced by an annual Election Form, completed and submitted (either electronically or in writing) to the Committee or its designee in accordance with such procedures and time frames as may be established by the Committee. |
(c) | Amounts deferred by a Participant with respect to a given Plan Year shall be referred to collectively as Deferral Contributions and shall be credited to a Deferral Contribution Account established in the name of the Participant. The Deferral Contribution Account shall be used solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Deferral Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to any such account shall not be considered “plan assets” for ERISA purposes. The Deferral Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide to the Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(d) | Except with respect to a newly eligible Participant, as provided in subsection (e), below, the Election Form must be submitted by May 30 of the Plan Year preceding the Plan Year during which the Total Compensation will be paid in order to comply with the requirement in Treas. Reg. § 1.409A-2(a)(8) that elections with respect to deferrals of Bonus that constitute “performance-based compensation” within the meaning of Section 409A of the Code be submitted at least six months before the end of the applicable performance cycle. |
(e) | A newly eligible Participant shall be permitted to defer Base Annual Compensation and Bonus as follows: |
(1) | Compensation Paid in Plan Year in which Participant Becomes Eligible. A newly eligible Participant cannot elect to defer Total Compensation paid in the Plan Year in which he becomes eligible. |
(2) | Compensation Paid in Plan Year Following Plan Year in which Participant Becomes Eligible. |
(A) | After May 30. If a newly eligible Participant becomes eligible after May 30, he cannot elect to defer Total Compensation paid during the Plan Year following the Plan Year in which he becomes eligible. |
(B) | On or Before May 30. If a newly eligible Participant becomes eligible on or before May 30, he will submit an Election Form, in accordance with |
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(f) | An Election Form shall remain in effect, notwithstanding any change in the Participant’s Base Annual Compensation and Bonuses, until changed or terminated in accordance with this Section 4.2 or Section 4.3 (“Suspension of Deferrals”). For the avoidance of doubt, to increase, decrease, or terminate his Deferral Contribution election, Election Forms must be filed by May 30 of the Plan Year preceding the Plan Year during which the Total Compensation will be paid. If a Participant becomes an Ineligible Employee after May 30, as described in Section 3.4 (“Change of Employment Category”), his Deferral Contribution election will remain in place with respect to Total Compensation paid in the Plan Year following the Plan Year in which he becomes an Ineligible Employee. |
(g) | If a Participant fails to submit an Election Form or fails to submit such form on a timely basis (and one is not already in effect in accordance with subsection (f), above) with respect to Total Compensation for a Plan Year, the Participant shall not make Deferral Contributions with respect to Total Compensation paid during that Plan Year. |
(h) | Except to the extent specifically permitted under Section 409A of the Code, a Participant’s Election Form with respect to Total Compensation is irrevocable once that election period ends and may not be changed until the following election period. |
(a) | Financial Emergencies. If a Participant experiences a Financial Emergency, the Participant may petition the Committee to suspend any deferrals required to be made by the Participant pursuant to his current Election Form. The Committee shall determine whether to approve the Participant’s petition. If the petition for a suspension is approved, suspension shall commence upon the date of approval and shall continue until the end of the Plan Year during which the Financial Emergency occurs. |
(b) | Disability. If a Participant is deemed to have suffered a Disability, any current Election Form of the Participant shall automatically be suspended and no further deferrals shall be required to be made by the Participant pursuant to his current Election Form as of the date on which the Participant incurs the Disability. |
(c) | Discretionary Contributions. If a Participant’s Deferral Contributions are suspended pursuant to Section 4.3(a) or (b), the Committee may also suspend the Participant’s eligibility for Discretionary Contributions, Non-Elective Contributions, and Transition Credits. |
(a) | 2018 Plan Year. For the Plan Year beginning January 1, 2018, the Employer shall make a Matching Contribution to the Plan with respect to each payroll period on behalf of each Participant who satisfies the eligibility requirements in Section 3.1(b), in an amount equal to (A) 100% of the Participant’s Deferral Contributions with respect to Total |
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(b) | 2019 Plan Year and Beyond. For Plan Years beginning on and after January 1, 2019, the Employer shall make a Matching Contribution to the Plan with respect to each payroll period on behalf of each Participant who satisfies the eligibility requirements in Section 3.1(b), in an amount equal to (A) 100% of the Participant’s Deferral Contributions with respect to Total Compensation that exceeds the Section 401(a)(17) Limit, to the extent that such Deferral Contributions do not exceed 3% of the Participant’s Total Compensation; and (B) 66-2/3% of the Participant’s Deferral Contributions with respect to Total Compensation that exceeds the Section 401(a)(17) Limit, to the extent that such Deferral Contributions do not exceed 3% of the Participant’s Total Compensation. |
(c) | True-up. At the end of each Plan Year the Committee shall re-determine any Matching Contribution for each Participant based on the Participant’s Total Compensation paid during the Plan Year in accordance with the Matching Contribution formula in subsection (a) or (b) above, as applicable. Any Participant for whom any Matching Contribution has not been sufficiently made in accordance with the Matching Contribution formula shall receive an additional Matching Contribution so that the total Deferral Contributions for the Plan Year reflected as a percentage of Total Compensation paid during the Plan Year are matched in accordance with the applicable Matching Contribution formula (“true-up” of Matching Contributions). |
(d) | Last Day Requirement. A Participant must be employed by an Employer on December 31 of the applicable Plan Year to receive a true-up in accordance with subsection (c) above, unless Separation of Service is due to Retirement or death. |
(e) | Hypothetical Account. The Matching Contribution Account shall be used solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Matching Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Matching Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide to the Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(a) | 2017 Plan Year. The Employer shall make a Non-Elective Contribution to the Plan on behalf of each Participant who satisfies the eligibility requirements in Section 3.1(b), in an amount equal to 7% of the Participant’s Total Compensation paid during the period beginning February 1, 2017 and ending December 31, 2017, that exceeds the Section 401(a)(17) Limit. |
(b) | 2018 Plan Year and Beyond. For each Plan Year beginning on and after January 1, 2018, the Employer shall make a Non-Elective Contribution to the Plan on behalf of each Participant who satisfies the eligibility requirements in Section 3.1(b), in an amount equal |
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(c) | Last Day Requirement. A Participant must be employed by an Employer on December 31 of the applicable Plan Year to receive a Non-Elective Contribution, unless Separation of Service is due to Retirement or death. |
(d) | Newly Eligible Participant. Non-Elective Contributions shall be calculated taking into account only Total Compensation paid after a Participant becomes eligible to participate in the Plan. |
(e) | Hypothetical Account. The Non-Elective Contribution Account shall be used solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Non-Elective Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Non-Elective Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide to the Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(a) | Amount. The Employer shall make a Transition Credit to the Plan on behalf of each Participant who satisfies the eligibility requirements in Section 3.1(c) in the following amount: |
(1) | For the 2017 Plan Year, the Applicable Percentage multiplied by the Participant’s Total Compensation paid during the period beginning February 1, 2017 and ending December 31, 2017, that exceeds eleven twelfths of the Section 401(a)(17) Limit. |
(2) | For the 2018 Plan Year, the sum of (A) the Applicable Percentage based on a Participant’s Points determined at midnight Eastern Standard Time on January 31, 2017, under subsection (c) below, multiplied by the Participant’s Total Compensation paid during the period beginning on January 1, 2018 and ending November 30, 2018, that exceeds the Section 401(a)(17) Limit for the Plan Year, and (B) the Applicable Percentage based on a Participant’s Points determined at midnight Eastern Standard Time on November 30, 2018, under subsection (c) below, multiplied by the Participant’s Total Compensation paid during the period beginning on December 1, 2018 and ending December 31, 2018, to the extent the Total Compensation for such period, when added to the Total Compensation paid during the period January 1, 2018, to November 30, 2018, exceeds the Section 401(a)(17) Limit for the Plan Year. |
(3) | For the 2019 Plan Year, the Applicable Percentage multiplied by the Participant’s Total Compensation paid during the 2019 Plan Year that exceeds the Section 401(a)(17) Limit. |
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(4) | For the 2020 Plan Year, the Applicable Percentage multiplied by the Participant’s Total Compensation paid during the period beginning January 1, 2020 and ending November 30, 2020, that exceeds eleven twelfths of the Section 401(a)(17) Limit. |
(b) | Applicable Percentage. The Applicable Percentage is the percentage specified in the following table: |
Points | Applicable Percentage for Participants who first became eligible to participate in the McCormick Pension Plan before December 1, 2001 | Applicable Percentage for Participants who first became eligible to participate in the McCormick Pension Plan on or after December 1, 2001 |
Less than 55 | 2% | 0% |
55 to 64 | 3% | 1% |
65 to 74 | 4% | 2% |
75 to 84 | 6% | 3% |
85 or more | 8% | 4% |
(c) | Points. A Participant’s Points shall equal the sum of his age and whole years of Benefit Service under the McCormick Pension Plan at midnight Eastern Standard Time on January 31, 2017. Points will be recalculated at midnight Eastern Standard Time on November 30, 2018. |
(d) | Last Day Requirement. A Participant must be employed by an Employer on December 31 of the applicable Plan Year to receive a Transition Credit, unless Separation of Service is due to Retirement or death. |
(e) | Newly Eligible Participant. Transition Credits shall be calculated taking into account only Total Compensation paid after a Participant becomes eligible to participate in the Plan. |
(f) | Hypothetical Account. The Transition Credit Account shall be used solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Transition Credit Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Transition Credit Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide to the Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(a) | A Participant may be credited with Discretionary Contributions for any Plan Year in which such amounts are declared by the applicable Employer with respect to the Participant. Such Discretionary Contributions shall be credited to a Discretionary Contribution Account in the name of the Participant. |
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(b) | The applicable Employer shall have sole discretion to determine with respect to each Plan Year and each Participant (1) whether any Discretionary Contribution was declared with respect to the Participant, (2) the amount of such Discretionary Contribution, (3) the date as of which such Discretionary Contribution shall be credited to a Participant’s Discretionary Contribution Account, and (4) any other condition (such as a vesting schedule or time and form of payment that differs from those set forth in Section 4.11(e) and Article 5) that applies with respect to such Discretionary Contribution. |
(c) | The Discretionary Contribution Account shall be used solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Discretionary Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Discretionary Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide to the Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(a) | Hypothetical Investments. The Committee shall provide each Participant with a list of Hypothetical Investments available under the Plan. From time to time, the Committee may revise the Hypothetical Investments available within the Plan. |
(b) | Investment Forms. The Participant shall, via his Investment Allocation Form(s) and his Investment Re-Allocation Form(s), select one or more Hypothetical Investments among which his various contributions shall be allocated. |
(1) | Investment Allocation Form. The document that (A) shall apply with respect to those Contributions made to the Plan after the effective date of the Investment Allocation Form but before the effective date of a timely filed subsequent Investment Allocation Form and (B) shall determine the manner in which such Contributions shall be initially allocated by the Participant among the various Hypothetical Investments within the Plan. A new Investment Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
(2) | Investment Re-allocation Form. The document required by the Committee that shall re-direct the manner in which earlier Contributions, as well as any appreciation (or depreciation) to-date, are invested within the Hypothetical Investments available in the Plan. An Investment Re-Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
(c) | Investment Selections. All Hypothetical Investment selections must be denominated in whole percentages unless the Committee determines that lower increments (or whole dollar amounts) are acceptable. A Participant may make changes in his selected Hypothetical Investments on a daily basis via submission of a new Investment Allocation Form or submission of a new Investment Re-Allocation Form. A Participant shall be permitted to increase or decrease an allocation with respect to Stock in accordance with |
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(d) | Default Investment. Any Participant who does not have on file a valid selection of Hypothetical Investments for his Account Balance shall be deemed to have elected to invest any portion for which there is no valid selection in the Hypothetical Investment that the Committee selects for this purpose. |
(a) | Adjustment. While a Participant’s accounts do not represent the Participant’s ownership of, or any ownership interest in, any particular assets, the Participant’s accounts shall be adjusted in accordance with the Hypothetical Investment(s) chosen by the Participant on his Investment Allocation Form or Investment Re-Allocation Form, subject to the conditions and procedures set forth herein or established by the Committee. |
(b) | Investment of Earnings. Any cash earnings generated under a Hypothetical Investment (such as hypothetical interest and cash dividends) shall, in the Committee’s sole discretion, either be deemed to be reinvested in that Hypothetical Investment or reinvested in one or more other Hypothetical Investment(s) designated by the Committee. |
(c) | Valuation. All notional acquisitions and dispositions of Hypothetical Investments that occur within a Participant’s accounts, pursuant to the terms of the Plan, shall be deemed to occur at such times as the Committee shall determine to be administratively feasible and the Participant’s accounts shall be adjusted accordingly. Accordingly, if a distribution or re-allocation must occur pursuant to the terms of the Plan and all or some portion of the Account Balance must be valued in connection with such distribution or re-allocation (to reflect Investment Adjustments), the Committee may, unless otherwise provided for in the Plan, select a date or dates that shall be used for valuation purposes. |
(d) | Change in Control Event. Notwithstanding anything in the Plan to the contrary, any Investment Adjustments made to any Participants’ accounts following a Change in Control Event shall be made in a manner no less favorable to Participants than the practices and procedures employed under the Plan, or as otherwise in effect, as of the date of the Change in Control Event. |
(a) | Annual Withholding from Compensation. |
(1) | Immediately Vested Contributions. For any Plan Year in which Contributions are credited under the Plan and are either immediately vested (such as Deferral Contributions and Matching Contributions) or vest during the Plan Year in which they are contributed, the Employer shall withhold the Participant’s share of FICA and other employment taxes attributable to such Contributions from the portion of the Participant’s Base Annual Compensation and/or Bonus not deferred. If deemed appropriate by the Committee, the Committee may reduce the amount deferred pursuant to the Participant’s Election Form where necessary to facilitate compliance with applicable withholding requirements. |
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(2) | Not Immediately Vested Contributions. For any Plan Year in which previously unvested Employer Contributions vest and become nonforfeitable under the Plan, the Employer shall withhold the Participant’s share of FICA and other employment taxes attributable to such Employer Contributions and any appreciation (or depreciation) attributable to such contributions due to Investment Adjustments, from the portion of the Participant’s Base Annual Compensation not deferred. If deemed appropriate by the Committee, the Committee may reduce the amount deferred pursuant to the Participant’s Election Form where necessary to facilitate compliance with applicable withholding requirements. |
(b) | Withholding from Benefit Distributions. The Participant’s Employer (or the trustee of the Trust, as applicable), shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer (or the trustee of the Trust, as applicable). |
(a) | Deferral Contributions. The Participant shall at all times be one hundred percent (100%) vested in all Deferral Contributions, adjusted to reflect any appreciation (or depreciation) specifically attributable to such contributions due to Investment Adjustments. |
(b) | Matching Contributions. The Participant shall at all times be one hundred percent (100%) vested in all Matching Contributions, adjusted to reflect any appreciation (or depreciation) specifically attributable to such contributions due to Investment Adjustments. |
(c) | Non-Elective Contributions. A Participant shall not vest in his Non-Elective Contributions, adjusted to reflect any appreciation (or depreciation) specifically attributable to such contributions due to Investment Adjustments, until the earlier of (1) the date on which the Participant completes three years of service under The McCormick 401(k) Retirement Plan or (2) the date on which the Participant has attained at least age 55. |
(d) | Transition Credits. A Participant shall not vest in his Transition Credits, adjusted to reflect any appreciation (or depreciation) specifically attributable to such contributions due to Investment Adjustments, until the earlier of (1) the date on which the Participant completes three years of service under The McCormick 401(k) Retirement Plan or (2) the date on which the Participant has attained at least age 55. |
(e) | Discretionary Contributions. Unless otherwise specified by the Committee at the time the Discretionary Contribution is made, a Participant shall not vest in his Discretionary Contributions, adjusted to reflect any appreciation (or depreciation) specifically attributable to such contributions due to Investment Adjustments, until the earlier of (1) the date on which the Participant completes three years of service under The McCormick 401(k) Retirement Plan or (2) the date on which the Participant has attained at least age 55. |
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(f) | Accelerated Vesting. |
(1) | Qualifying Termination, Death, or Disability. If a Participant has a Qualifying Termination or a Separation from Service as a result of death or Disability, the portion of such Participant’s unvested Account Balance that would have vested in the twelve-month period (eighteen-month period for the CEO) beginning on the date immediately preceding the date of such Participant’s Qualifying Termination or Separation from Service as a result of death or Disability, shall vest and become nonforfeitable on the first day of such twelve-month period (eighteen-month period for the CEO). Any portion of the Participant’s unvested Account Balance that does not vest under the preceding sentence, shall be forfeited in accordance with Section 4.12 (“Forfeitures”). |
(2) | Change in Control Termination. If a Participant has a Change in Control Termination, the Participant’s unvested Account Balance shall vest and become nonforfeitable on the date immediately preceding the date of such Participant’s Separation from Service. |
(3) | Plan Termination Following a Change in Control. If the Plan is terminated following a Change in Control Event, Participants’ unvested Account Balances shall vest and become nonforfeitable as of the date of such Change in Control Event. |
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(a) | In General. Except as provided in Section 5.3 (“Cash Out of Small Benefits”), if the Participant has a valid election on file with the Company as to the time and form of payment for his Contributions, payment of such Contributions and any appreciation or depreciation of such Contributions due to Investment Adjustments shall be paid at the time and in the form designated in his election. Valid elections shall remain in effect until changed in accordance with subsections (b) and (c), below. |
(b) | Initial Election. |
(1) | The Participant may elect a time and/or form of payment for his Contributions under the Plan from among the different alternatives available under the Plan as provided in Section 5.4 (“Forms of Payment”). |
(2) | When the Participant submits his Election Form(s) in accordance with the requirements of Section 4.2 (“Deferral Contribution Elections”) for a Plan Year, he shall specify the time and form of payment that shall apply with respect to the deferrals of Total Compensation for that Plan Year that are to be deferred pursuant to the Election Form submitted. A Participant’s time and form of payment election shall also apply to all Employer Contributions made for that Plan Year, except as otherwise provided with respect to Discretionary Contributions. The Participant may elect a different time and/or form of payment for different Plan Years. |
(c) | Changes to Election. A Participant may file an election to change the timing or form of the payment of his Contributions for a Plan Year and any appreciation or depreciation of such amount due to Investment Adjustments at the time and in the manner designated by the Committee, subject to the following conditions: |
(1) | the election to change the time or form of payment shall not take effect until twelve (12) months after the election is made; |
(2) | the election to change the time or form of payment must be filed at least twelve (12) months prior to the date on which payments to the Participant are otherwise scheduled to commence; and |
(3) | the first payment with respect to which such election to change the form of payment is made must be deferred for a period of five (5) years from the date such payment would otherwise have been made. |
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(a) | Separation from Service. If a Participant has elected to be paid in connection with the Participant’s Separation from Service with respect to any Contributions, payment of such Contributions and any appreciation or depreciation of such amount due to Investment Adjustments shall commence on the date of the Participant’s Separation from Service, except that any payments that are scheduled to be made on or within the first six months after Separation from Service shall be paid in one lump sum on the date that is six (6) months after the Participant’s Separation from Service. |
(b) | Disability. Any portion of a Participant’s Vested Account Balance that has not begun to be paid as of the date that the Participant is determined to be Disabled shall commence (in the case of installments) or be paid (in the case of a lump sum) within thirty (30) days after the Participant is determined to be Disabled. |
(c) | Interim Distribution Date. If the Participant has elected an Interim Distribution Date with respect to any Contributions, payment of such Contributions and any appreciation or depreciation of such amount due to Investment Adjustments shall commence within thirty (30) days after the earlier of (1) such Interim Distribution Date or (2) the Participant’s Separation from Service (subject to the six-month delay described in subsection (a) above). Notwithstanding the prior sentence, in no event shall a Participant be permitted |
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(d) | Change in Control Event. If a Participant’s Account Balance is vested in accordance with Section 4.11(f)(2) (“Change in Control Termination”) or Section 4.11(f)(3) (“Plan Termination Following a Change in Control”), his Account Balance shall be paid in a single lump sum within ten (10) days after the Change in Control Event. |
(a) | Medium. All distributions, other than distributions of amounts allocated to Stock, shall be made in cash. The value of a fractional share of Stock shall in all cases be distributed in cash. |
(b) | Installment Distributions. Distributions made in installment payments will be deemed to be made on a pro rata basis from each Hypothetical Investment in which a Participant’s Account Balance is deemed to be invested pursuant to Section 4.8 (“Selection of Hypothetical Investments”). The Participant’s Account Balance shall continue to be adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments in accordance with Section 4.9 (“Adjustment of Participant Accounts”) up until the last business day preceding each installment distribution. |
(a) | Death Benefit. If the Participant dies before the payment date designated in Article 5, the Participant’s Beneficiary shall receive the pre-retirement death benefit described below and no other benefits shall be payable under the Plan. If the Participant dies after installment payments have begun and before the last installment payment has been made, the Participant’s Beneficiary shall receive a lump sum payment of the remainder of Participant’s installment payments. |
(b) | Payment of Pre-Retirement Death Benefit. The pre-retirement death benefit shall be a lump-sum payment equal to the Participant’s Vested Account Balance and shall be made no later than sixty (60) days after the occurrence of the Participant’s death. |
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(a) | Subject to subsections (b), (c), and (d), below, the Company, or a committee designated by the Company, may, at any time, amend, suspend, or terminate the Plan in whole or in part with respect to any or all Employers. Subject to subsections (b), (c), and (d), below, the Committee shall have the authority, except to the extent corporate governance documents (including the Compensation Committee Charter) or applicable law require the Board to adopt amendments to the Plan, to adopt any amendments to the Plan that the Committee determines does not materially increase the Company’s costs or expenses relating to the Plan; provided that any action of the Committee to amend the Plan shall be in writing. |
(b) | No amendment, suspension, or termination shall decrease or restrict the value of a Participant’s Vested Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Separation from Service as of the effective date of the amendment, suspension, or termination, unless such affected Participant or Beneficiary consents in writing to such amendment. |
(c) | Any resolution to amend, suspend, or terminate the Plan that is adopted or becomes effective during the period beginning six (6) months before a Change in Control Event and ending two (2) years after a Change in Control Event, shall not adversely affect in a material way an individual who was a Participant or Beneficiary as of immediately before the Change in Control Event, unless such affected Participant or Beneficiary consents in writing to such amendment. |
(d) | Notwithstanding the foregoing, either the Company or the Committee may amend the Plan at any time to the extent necessary to avoid adverse consequences under any applicable law. Any such amendment shall, to the maximum extent possible, preserve the Plan’s benefits for all Participants and Beneficiaries. |
(e) | Although the Employers anticipate that they will continue the Plan for an indefinite period of time, there is no guarantee that any Employer will continue the Plan or will not terminate the Plan at any time in the future. Accordingly, each Employer, subject to subsections (b), (c), and (d), above, reserves the right to discontinue its sponsorship of the Plan and to terminate the Plan, at any time, with respect to its participating employees by action of its board of directors. |
(f) | Upon the termination of the Plan with respect to any Employer (and any other plan required to be aggregated with this Plan pursuant to Section 409A of the Code), the Company may, in its discretion, elect to distribute to each Participant the full amount of his benefit under the Plan in a lump sum no earlier than the 13th month and no later than the 24th month after the termination of the Plan, provided that the termination of the Plan is not proximate to a downturn in the Company’s financial health and the Company does not adopt any new arrangement that would have been aggregated with the Plan under Section 409A of the Code within three years following the date of the Plan’s termination. |
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(a) | that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or |
(b) | that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and in that event, such notice shall set forth in a manner calculated to be understood by the Claimant: |
(1) | the specific reason(s) for the denial of the claim, or any part of it; |
(2) | specific reference(s) to pertinent provisions of the Plan upon which such denial was based; |
(3) | a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and |
(4) | an explanation of the review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review. |
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(a) | may review and request copies of pertinent documents, records, and other information relevant to the claim for benefits; |
(b) | may submit written comments, documents, records, and other information relating to the claim for benefits (regardless of whether such comments, documents, records, or other information was submitted or considered in connection with the initial claim); and/or |
(c) | may, but not later than thirty (30) days after the review procedure began, request a hearing, which the Committee may grant. |
(a) | specific reasons for the decision; |
(b) | specific reference(s) to the pertinent Plan provisions upon which the decision was based; |
(c) | a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits; and |
(d) | a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA. |
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(a) | If a Claimant wishes to file a lawsuit against the Plan (1) to recover benefits believed due under the terms of the Plan or any law, (2) to clarify the Claimant’s right to future benefits under the Plan, (3) to enforce the Claimant’s rights under the Plan, or (4) to seek a remedy, ruling or judgment of any kind against the Plan that relates to the Plan, the claimant must file the suit within the Applicable Limitations Period or the suit will be time-barred. |
(b) | The “Applicable Limitations Period” is the period ending two years after: |
(1) | In the case of a claim to recover benefits allegedly due under the Plan or to clarify rights to future benefits from the Plan, the earliest of (A) the date the first benefit payment was actually made; (B) the date the first benefit payment was allegedly due; or (C) the date the Company, the Plan, or the Committee first repudiated the alleged obligation to provide such benefits. |
(2) | In the case of a claim or action to enforce an alleged right under the Plan (other than a claim for plan benefits), the date the Plan first denied the Claimant’s request to exercise such right; or |
(3) | In the case of any other claim or action, the earliest date on which the Claimant knew or should have known of the material facts on which such claim or action is based, regardless of whether the Claimant was aware of the legal theory underlying the claim or action. |
(c) | If a request for administrative review under the procedures established by the Committee is pending when the Applicable Limitations Period expires, the Applicable Limitations Period will be extended to the date that is sixty (60) calendar days after the final denial (including a deemed denial) of such claim on administrative review. |
(d) | The Applicable Limitations Period replaces and supersedes any limitations period that ends at a later time and that otherwise might be deemed applicable under state or federal law in the absence of this Section 9.6. The Applicable Limitations Period does not extend any limitations period under state or federal law. |
(e) | The Committee may extend the Applicable Limitations Period upon a showing of exceptional circumstances, but such an extension is at the discretion of the Committee and is not subject to review. |
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(a) | To the fullest extent permitted by law, any lawsuit brought in whole or in part under Section 502 of ERISA (or any successor provision) and relating to the Plan, the lawfulness of any Plan provision or the administration of the Plan must be filed in one of the following courts: |
(1) | the United States District Court for the District of Maryland or for the district in which the Company is headquartered; |
(2) | in the case of an action brought by an individual plaintiff, the United States District Court for the district in which such plaintiff resides; or |
(3) | in the case of an action brought by more than one plaintiff, the United States District Court for the district in which the largest number of plaintiffs (or in the case of a putative class action, the largest number of putative class members) resides or is reasonably believed to reside. |
(b) | If any action within the scope of subsection (a) is filed in a jurisdiction other than one of those described in subsection (a), or if any non-class action filed in such a jurisdiction is subsequently amended or altered to add additional plaintiffs or to add class action allegations, then the Plan, any plaintiffs, and all alleged Plan participants must take all necessary steps to have the action removed to, transferred to, or re-filed in a jurisdiction described in subsection (a). Such steps may include, but are not limited to (1) a joint motion to transfer the action or (2) a joint motion to dismiss the action without prejudice to its re-filing in a jurisdiction described in subsection (a), with any applicable time limits or statutes of limitations applied as if the suit or class action allegation had originally been filed or asserted in a jurisdiction described in subsection (a) at the same time that it was filed or asserted in a jurisdiction not described therein. |
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(c) | This forum selection provision is waived if no party invokes it within 120 days of the filing of a putative class action, the addition of plaintiffs or the assertion of class action allegations. |
(d) | This Section 11.8 does not relieve the Plan or any putative class member of any obligation existing under the Plan or by law to exhaust administrative remedies before initiating litigation or to comply with the limitation of actions provision set forth in Section 9.6 (“Time Limit on Commencing Litigation”). |
(a) | If, for any reason, all or any portion of a Participant’s benefit under this Plan becomes includable in the Participant’s gross income for Federal income tax purposes prior to |
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(b) | In its discretion, the Committee may distribute all or a portion of the Participant’s benefit prior to the date the benefit would otherwise commence under Article 5 to the extent necessary to pay any FICA or income taxes which may be owed by the Participant on his benefit under the Plan and to the extent permitted by Section 409A of the Code. |
(a) | The Plan will be interpreted to ensure that the payments contemplated hereby to be made by the Company to a Participant are exempt from or comply with Section 409A of the Code; provided, however, that nothing in this Plan shall be interpreted or construed to transfer any liability for any tax (including a tax or penalty due as a result of a failure to comply with Section 409A of the Code) from any Participant, Participant’s spouse, Beneficiary, or estate to the Company, any Employer, or any other individual or entity. |
(b) | Any payment under the Plan that is subject to Section 409A of the Code and that is contingent on a termination of employment is contingent on a “separation from service” within the meaning of Section 409A of the Code. Each such payment will be considered to be a separate payment for purposes of Section 409A of the Code. |
(c) | If, upon separation from service, a Participant is a “specified employee” within the meaning of Section 409A of the Code, any payment to such Participant that is subject to Section 409A of the Code and would otherwise be paid within six months after the Participant’s separation from service will instead be paid in the seventh month following the Participant’s separation from service (to the extent required by Section 409A(a)(2)(B)(i) of the Code). |
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Article 1 . General Provisions | 1 | |
Section 1.1. | Purpose. | 1 |
Section 1.2. | History of the Plan. | 1 |
Section 1.3. | Effective Date. | 1 |
Article 2 . Definitions and Construction | 2 | |
Section 2.1. | Definitions. | 2 |
Section 2.2. | Construction. | 6 |
Article 3 . Eligibility, Selection and Enrollment | 7 | |
Section 3.1. | Eligibility, Selection by Committee. | 7 |
Section 3.2. | Commencement of Participation. | 7 |
Article 4 . Contributions and Accounts | 8 | |
Section 4.1. | Deferral Contributions. | 8 |
Section 4.2. | Elections to Defer. | 9 |
Section 4.3. | Suspension of Deferrals. | 10 |
Section 4.4. | Discretionary Contributions. | 10 |
Section 4.5. | Selection of Hypothetical Investments. | 11 |
Section 4.6. | Adjustment of Participant Accounts. | 12 |
Section 4.7. | Withholding of Taxes. | 12 |
Section 4.8. | Vesting. | 13 |
Article 5 . Payments from the Plan | 14 | |
Section 5.1. | Default Time and Forms of Payment. | 14 |
Section 5.2. | Election of Alternate Time or Form of Payment. | 14 |
Section 5.3. | Cash Out of Small Benefits. | 15 |
Section 5.4. | Forms of Payment. | 15 |
Section 5.5. | Time of Benefit Payments. | 15 |
Section 5.6. | Withdrawal in the Event of a Financial Emergency. | 16 |
Article 6 . Death Benefits | 17 | |
Section 6.1. | Payments in the Event of Death. | 17 |
Section 6.2. | Beneficiary. | 17 |
Section 6.3. | Beneficiary Designation; Change; Spousal Consent. | 17 |
Section 6.4. | Acknowledgment. | 17 |
Section 6.5. | No Beneficiary Designation. | 17 |
Section 6.6. | Doubt as to Beneficiary. | 18 |
Section 6.7. | Discharge of Obligations. | 18 |
Article 7 . Administration of the Plan | 18 | |
Section 7.1. | Designation of Committee. | 18 |
Section 7.2. | Authority of Committee. | 18 |
Section 7.3. | Agents. | 18 |
Section 7.4. | Binding Effect of Decisions. | 18 |
Section 7.5. | Indemnity of Committee. | 19 |
Section 7.6. | Employer Information. | 19 |
Section 7.7. | Finality of Decisions. | 19 |
Article 8 . Amendment and Termination | 19 | |
Section 8.1. | Amendment. | 19 |
Section 8.2. | Termination. | 19 |
Section 8.3. | Effect of Payment. | 20 |
Section 8.4. | Section 409A of the Code. | 20 |
Article 9 . Claims Procedures | 20 | |
Section 9.1. | Presentation of Claim. | 20 |
Section 9.2. | Notification of Decision. | 20 |
Section 9.3. | Review of a Denied Claim. | 21 |
Section 9.4. | Decision on Review. | 22 |
Section 9.5. | Section 409A of the Code. | 22 |
Article 10 . Trust | 23 | |
Section 10.1. | Establishment of the Trust. | 23 |
Section 10.2. | Interrelationship of the Plan and the Trust. | 23 |
Section 10.3. | Distributions From the Trust. | 23 |
Article 11 . Miscellaneous | 248 | |
Section 11.1. | Status of Plan. | 24 |
Section 11.2. | Unsecured General Creditor. | 24 |
Section 11.3. | Employer’s Liability. | 24 |
Section 11.4. | Nonassignability. | 24 |
Section 11.5. | Not a Contract of Employment. | 25 |
Section 11.6. | Furnishing Information. | 25 |
Section 11.7. | Governing Law. | 25 |
Section 11.8. | Required or Permitted Notices. | 25 |
Section 11.9. | Successors. | 25 |
Section 11.10. | Severability. | 26 |
McCormick Deferred Compensation Plan | Table of Contents | |
Section 11.11. | Payment on Behalf of Person Unable to Manage Affairs. | 26 |
Section 11.12. | Distribution in the Event of Taxation. | 26 |
Section 11.13. | Insurance. | 26 |
Section 11.14. | Section 409A of the Code. | 27 |
Section 11.15. | Other Benefits and Agreements. | 27 |
McCormick Deferred Compensation Plan | Table of Contents | |
(a) | This Plan is maintained to provide Participants an opportunity to defer compensation that would otherwise be currently payable to such Participants. |
(b) | This Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Title I of the Employee Income Retirement Security Act of 1974, as amended. |
(a) | Before 2005, the Company provided deferred compensation benefits under a plan known as the “McCormick & Company, Incorporated Deferred Compensation Plan,” which was effective January 1, 2000 (the “2000 Plan”). On December 23, 2004, the 2000 Plan was frozen effective January 1, 2005, and no further deferrals were permitted under the 2000 Plan after 2004. All benefits under the 2000 Plan were vested as of December 31, 2004. |
(b) | This Plan was first effective January 1, 2005, and it incorporated the terms of the 2000 Plan, except to the extent those terms were inconsistent with the requirements of Section 409A of the Code. Since January 1, 2005, the Plan has been operated in good faith compliance with Section 409A of the Code and the applicable guidance thereunder. |
(a) | Account Balance. As of any given date called for under the Plan, the sum of: (1) the balance of the Participant’s Deferral Contribution Account and (2) the balance of the Participant’s Discretionary Contribution Account, as such accounts have been adjusted to reflect all applicable Investment Adjustments and all prior withdrawals and distributions, in accordance with Article 4 and Article 5 of the Plan. |
(b) | Article. An Article of the Plan. |
(c) | Base Annual Salary. The base annual compensation payable to a Participant by an Employer for services rendered during a Plan Year, (1) excluding Bonuses, commissions, director fees and other additional incentives and awards payable to the Participant, but (2) before reduction for any Elective Deductions. With respect to directors of the Company who are not employees of the Company or any Employer, Base Annual Salary shall mean the director fees payable to such individuals. |
(d) | Beneficiary. One or more persons, trusts, estates or other entities, designated (or deemed designated) by the Participant in accordance with Article 6. |
(e) | Beneficiary Designation Form. The document prescribed by the Committee to be used by the Participant to designate his Beneficiary for the Plan. |
(f) | Board. The Board of Directors of the Company. |
(g) | Bonus. The amounts payable to a Participant during a Plan Year under any annual bonus or incentive plan or arrangement sponsored by an Employer, before reduction for any Elective Deductions, but excluding commissions, multi-year bonuses, stock-related awards and other non-monetary incentives. |
(h) | Change in Control Event. One or more of the following events: |
(1) | the consolidation or merger of the Company with or into another entity where the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company’s capital stock are converted into cash, securities or other property, except for any consolidation or merger of the Company in which the holders (excluding any “Substantial Stockholders” as defined in Section 4, “Common Stock,” subsection (b)(2)(H) of the Certificate of Incorporation of the Company as in effect as of the date hereof (the “Charter”)) of the Company’s (A) voting common stock, (B) non-voting common stock, and (C) other classes of voting stock, if any, immediately before the consolidation or merger shall, upon |
(2) | any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; |
(3) | any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becoming the beneficial owner (as defined in Section 4, “Common Stock,” subsection (b)(2)(C) of the Charter), directly or indirectly, of securities of the Company representing more than 13% (the “Specified Percentage”) of the voting power of all the outstanding securities of the Company having the right to vote in an election of the Board (after giving effect, to the extent applicable, to the operation of Section 4, “Common Stock,” subsection (b) of the Charter) (including, without limitation, any securities of the Company that any such person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, which shall be deemed beneficially owned by such person), provided, however, that in the event that the vote limitation with respect to Substantial Stockholders set forth in Section 4, “Common Stock,” subsection (b) of the Charter becomes inoperative by virtue of the operation of Section 4, “Common Stock,” subsection (b)(12) of the Charter, or otherwise, the “Specified Percentage” shall be increased, without requirement for further action, to 35%; or |
(4) | individuals, who constitute the entire Board elected by the Company’s stockholders at its most recent annual meeting of stockholders and any new directors who have been appointed to the Board by a vote of at least a majority of the directors then in office, having ceased for any reason to constitute a majority of the members of the Board. |
(i) | Claimant. The person or persons described in Article 9 who apply for benefits or amounts that may be payable under the Plan. |
(j) | Code. The Internal Revenue Code of 1986, as amended. |
(k) | Committee. Either of the Committees designated in Article 7, as applicable. |
(l) | Company. McCormick & Company, Incorporated, and any successors and assigns. |
(m) | Deferral Contribution. The aggregate amount of Base Annual Salary or Bonus deferred by a Participant during a given Plan Year in accordance with the terms of the Plan and credited to the Participant’s Deferral Contribution Account. |
(n) | Deferral Contribution Account. A Participant’s aggregate Deferral Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(o) | Disabled/Disability. “Totally and Permanently Disabled” within the meaning of the Company’s long-term disability plan, provided that no Disability shall be treated as a triggering event for the payment of benefits under the Plan unless such Disability constitutes a “disability” within the meaning of Treas. Reg. § 1.409A-3(i)(4), and no Disability shall be the basis upon which a deferral election is suspended in accordance with Section 4.3 unless such Disability constitutes a “disability” within the meaning of Treas. Reg. § 1.409A-3(j)(4)(xii). |
(p) | Discretionary Contribution. The aggregate amounts, if any, credited by the Employer to the Participant’s Discretionary Contribution Account during a given Plan Year in accordance with the terms of the Plan and credited to a Participant’s Discretionary Contribution Account. |
(q) | Discretionary Contribution Account. A Participant’s aggregate Discretionary Contributions, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments and prior distributions and withdrawals. |
(r) | Election Form. The document required by the Committee to be submitted by a Participant, on a timely basis, which specifies (1) the amount of Base Annual Salary and/or Bonus the Participant elects to defer from a given Plan Year and (2) the portion (if any) of Deferral Contributions that shall be distributable upon an Interim Distribution Date rather than the Benefit Distribution Date. |
(s) | Elective Deductions. Those deductions from a Participant’s Base Annual Salary or Bonus for amounts voluntarily deferred or contributed by the Participant pursuant to any qualified or non-qualified deferred compensation plan, including, without limitation, amounts deferred pursuant to Code Sections 125, 402(e)(3) and 402(h), to the extent that all such amounts would have been payable to the Participant in cash had there been no such deferral or contribution. |
(t) | Employer. The Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Management Committee to participate in the Plan. |
(u) | ERISA. The Employee Retirement Income Security Act of 1974, as amended. |
(v) | Financial Emergency. An unanticipated emergency or severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant |
(1) | through reimbursement or compensation by insurance or otherwise, |
(2) | by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or |
(3) | by cessation of Deferral Contributions under the Plan, provided that this clause (3) shall not apply for purposes of Section 4.3(a). |
(w) | Hypothetical Investment. An investment fund or benchmark made available to Participants by the Committee for purposes of valuing amounts credited under the Plan. The Committee shall have the discretion to offer a Hypothetical Investment that is intended to track the returns of the Common Stock of the Company (“Stock”). |
(x) | Interim Distribution Date. The first day of any calendar year, selected by the Participant, upon which the designated portion of Deferral (as well as any appreciation or depreciation of such amounts due to Investment Adjustments) attributable to a given Plan Year shall be distributed. A Participant shall be permitted to have only one Interim Distribution Date with respect to the Deferral Contributions for any Plan Year, but shall be permitted to have separate Interim Distribution Dates with respect to Deferral Contributions for different Plan Years. |
(y) | Investment Adjustment(s). Any appreciation credited to (as income or gains) or depreciation deducted from (as expenses or losses) a Participant’s Deferral Contribution Account and/or Discretionary Contribution Account, in accordance with such Participant’s selection of Hypothetical Investments. |
(z) | Participant. Any employee or member of the Board who (1) is selected to participate in the Plan in accordance with Section 3.1, and (2) elects to participate in the Plan in accordance with Section 3.2. |
(aa) | Plan. The McCormick & Company, Incorporated, 2005 Deferred Compensation Plan. |
(bb) | Plan Year. A 12-month period commencing January 1 and ending December 31 of the same calendar year. Accordingly, Plan quarters shall commence on January 1, April 1, July 1 and October 1 of each year. |
(cc) | Separation from Service. A termination of a Participant’s employment relationship with the Employers that constitutes a “separation from service” within the meaning of Section 409A of the Code. |
(dd) | Trust. The McCormick & Company, Incorporated Deferred Compensation Plan Trust or such other trust as may be established by a member of the Affiliated Group to fund benefits under this Plan. The Plan, notwithstanding the creation of the Trust, is intended to be unfunded for purposes of the Code and Title I of ERISA. |
(ee) | Vested Account Balance. As of any given measurement date called for under the Plan, the sum of the following: (1) the balance of the Participant’s Deferral Contribution Account and (2) the vested portion of the balance of the Participant’s Discretionary Contribution Account, as such accounts have been adjusted to reflect all applicable Investment Adjustments and all prior withdrawals and distributions. |
(a) | the use of the masculine gender shall also include within it meaning the feminine and vice versa, |
(b) | the use of the singular shall also include within its meaning the plural and vice versa, |
(c) | the word “include” shall mean to include without limitation, and |
(d) | the captions of the articles, sections or paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. |
(a) | An employee who has satisfied the requirements of Section 3.1 and met all enrollment requirements established by the Committee shall commence participation in the Plan as of the date established by the Committee. |
(b) | If a Participant fails to meet all such requirements within the specified time period with respect to any Plan Year, the Participant shall not be eligible to make any Deferral Contributions during that Plan Year. |
(a) | Amounts Eligible for Deferral. Subject to Section 4.1(b) and (c): |
(1) | Base Annual Salary. A Participant may designate a whole percentage (or, if permitted by the Committee, a fixed dollar amount) to be deducted from his Base Annual Salary. Such amount shall be deducted from each regularly scheduled payment of Base Annual Salary. |
(2) | Bonus. A Participant may designate a fixed dollar amount, a whole percentage, or a percentage above a fixed dollar amount to be deducted from his Bonus. If a fixed dollar amount is designated by the Participant to be deducted from any Bonus payment and such fixed dollar amount exceeds the Bonus actually payable to the Participant, the entire amount of such Bonus shall be deducted. |
(3) | Directors’ Fees. A Participant may designate a whole percentage (or, if permitted by the Committee, a fixed dollar amount) to be deducted from his directors’ fees. Such amount shall be deducted from each regularly scheduled payment of directors’ fees. |
(b) | Minimum Deferral. |
Type of Compensation | Minimum Deferral Percentage |
Base Annual Salary | 10% |
Bonus | 10% |
Directors’ Fees | 10% |
(c) | Maximum Deferral. |
Type of Compensation | Maximum Deferral Percentage |
Base Annual Salary | 80% |
Bonus | 80% |
Directors’ Fees | 100% |
(d) | Time of Crediting Deferral Contributions. |
(a) | Subject to the requirements of this Article 4, a Participant may elect to defer the receipt of Base Annual Salary and/or Bonus during any Plan Year. |
(b) | The Participant's intent to defer shall be evidenced by an annual Election Form, completed and submitted (either electronically or in writing) to the Committee or its designee in accordance with such procedures and time frames as may be established by the Committee. |
(c) | Amounts deferred by a Participant with respect to a given Plan Year shall be referred to collectively as Deferral Contributions and shall be credited to a Deferral Contribution Account established in the name of the Participant. The Deferral Contribution Account shall be utilized solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Deferral Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to any such account shall not be considered “plan assets” for ERISA purposes. The Deferral Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(d) | The Election Form must be submitted by the end of the immediately preceding Plan Year in order to be deemed timely for the following Plan Year with respect to deferrals of Base Annual Salary, except that a newly eligible Participant shall be permitted to submit an Election Form within 30 days of first becoming eligible to participate in the Plan within the meaning of Treas. Reg. § 1.409A-2(a)(7). |
(e) | The Election Form must be submitted by the end of the Plan Year preceding the Plan Year for which the Bonus is earned in order to be deemed timely for the following Plan Year |
(f) | An Election Form shall be effective only with respect to (1) Base Annual Salary earned in the Plan Year to which the Election Form applies and (2) Bonuses earned for the Plan Year for which the Election Form applies (not Bonuses paid in the Plan Year for which the Election Form applies). |
(g) | If a Participant fails to submit an Election Form with respect to Base Salary for a Plan Year or fails to submit such form on a timely basis, the Participant shall not make Deferral Contributions with respect to Base Salary during the Plan Year. If a Participant fails to submit an Election Form with respect to Bonus for a Plan Year or fails to submit such form on a timely basis, the Participant shall not make Deferral Contributions with respect to the Participant’s Bonus earned during the Plan Year. |
(a) | Financial Emergencies. If a Participant experiences a Financial Emergency, the Participant may petition the Committee to suspend any deferrals required to be made by the Participant pursuant to his current Election Form. The Committee shall determine whether to approve the Participant’s petition. If the petition for a suspension is approved, suspension shall commence upon the date of approval and shall continue until the end of the Plan Year during which the Financial Emergency occurs. The Participant’s eligibility for Discretionary Contributions may also be similarly suspended. |
(b) | Disability. If a Participant is deemed to have suffered a Disability, any current Election Form of the Participant shall automatically be suspended and no further deferrals shall be required to be made by the Participant pursuant to his current Election Form as of the date on which the Participant incurs the Disability. |
(c) | If a Participant’s Deferral Contributions are suspended pursuant to Section 4.3(a) or (b), the Committee may also suspend the Participant’s eligibility for Discretionary Contributions. |
(a) | A Participant may be credited with Discretionary Contributions for any Plan Year in which such amounts are declared by the applicable Employer with respect to the Participant. Such Discretionary Contributions shall be credited to a Discretionary Contribution Account in the name of the Participant. |
(b) | The applicable Employer shall have sole discretion to determine with respect to each Plan Year and each Participant (1) whether any Discretionary Contribution was declared with respect to the Participant, (2) the amount of such Discretionary Contribution, (3) the date as of which such Discretionary Contribution shall be credited to a Participant’s Discretionary Contribution Account, and (4) any other condition (such as vesting) that applies with respect to such Discretionary Contribution. |
(c) | The Discretionary Contribution Account shall be utilized solely as a device for the measurement of amounts to be paid to the Participant under the Plan. The Discretionary Contribution Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Discretionary Contribution Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide Participant and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
(a) | The Committee shall provide each Participant with a list of Hypothetical Investments available under the Plan. From time to time, the Committee may revise the Hypothetical Investments available within the Plan. |
(b) | The Participant shall, via his Investment Allocation Form(s) and his Investment Re-Allocation Form(s), select one or more Hypothetical Investments among which his various contributions shall be allocated. |
(1) | Investment Allocation Form. The document that (A) shall apply with respect to those Deferral Contributions and Discretionary Contributions made to the Plan after the effective date of the Investment Allocation Form but before the effective date of a timely filed subsequent Investment Allocation Form and (B) shall determine the manner in which such Deferral Contributions and/or Discretionary Contributions shall be initially allocated by the Participant among the various Hypothetical Investments within the Plan. A new Investment Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
(2) | Investment Re-allocation Form. The document required by the Committee that shall re-direct the manner in which earlier Deferral Contributions and/or Discretionary Contributions, as well as any appreciation (or depreciation) to-date, are invested within the Hypothetical Investments (except Stock) available in the Plan. An Investment Re-Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
(c) | All Hypothetical Investment selections must be denominated in whole percentages unless the Committee determines that lower increments (or whole dollar amounts) are |
(d) | Any Participant who does not have on file a valid selection of Hypothetical Investments for his entire account shall be deemed to have elected to invest any portion for which there is no valid selection in the Hypothetical Investment that the Committee selects for this purpose. |
(a) | While a Participant’s accounts do not represent the Participant’s ownership of, or any ownership interest in, any particular assets, the Participant’s accounts shall be adjusted in accordance with the Hypothetical Investment(s) chosen by the Participant on his Investment Allocation Form or Investment Re-Allocation Form, subject to the conditions and procedures set forth herein or established by the Committee. |
(b) | Any cash earnings generated under a Hypothetical Investment (such as hypothetical interest and cash dividends) shall, in the Committee’s sole discretion, either be deemed to be reinvested in that Hypothetical Investment or reinvested in one or more other Hypothetical Investment(s) designated by the Committee. |
(c) | All notional acquisitions and dispositions of Hypothetical Investments that occur within a Participant’s accounts, pursuant to the terms of the Plan, shall be deemed to occur at such times as the Committee shall determine to be administratively feasible and the Participant’s accounts shall be adjusted accordingly. Accordingly, if a distribution or re-allocation must occur pursuant to the terms of the Plan and all or some portion of the Account Balance must be valued in connection such distribution or re-allocation (to reflect Investment Adjustments), the Committee may, unless otherwise provided for in the Plan, select a date or dates that shall be used for valuation purposes. |
(d) | Notwithstanding anything in the Plan to the contrary, any Investment Adjustments made to any Participants’ accounts following a Change in Control shall be made in a manner no less favorable to Participants than the practices and procedures employed under the Plan, or as otherwise in effect, as of the date of the Change in Control. |
(a) | Annual Withholding from Compensation. For any Plan Year in which Deferral Contributions are credited under the Plan, the Employer shall withhold the Participant’s share of FICA and other employment taxes from the portion of the Participant’s Base Annual Salary and/or Bonus not deferred. If deemed appropriate by the Committee, the Committee may reduce the amount deferred pursuant to the Participant’s Election Form where necessary to facilitate compliance with applicable withholding requirements. |
(b) | Withholding from Benefit Distributions. The Participant’s Employer (or the trustee of the Trust, as applicable), shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer (or the trustee of the Trust, as applicable). |
(a) | In General. Except as provided in Section 5.3, if the Participant has a valid election on file with the Company as to the time and form of his benefit payment under the Plan, his benefit shall be paid at the time and in the form designated in his election. |
(b) | Initial Election. |
(1) | The Participant may elect a different time and/or form of payment for his benefit under the Plan from among the different alternatives available under the Plan as provided in Section 5.4. |
(2) | When the Participant submits his Election Form(s) in accordance with the requirements of Section 4.2 for a Plan Year, he shall specify the time and form of payment that shall apply with respect to the deferrals of Base Salary or Bonus for that Plan Year that are to be deferred pursuant to the Election Form submitted. The Participant may elect a different time and/or form of payment with respect to the deferral of Base Salary and Bonus for the same Plan Year, and with respect to the deferral of Base Salary and Bonus for different Plan Years. |
(c) | Changes to Election. A Participant may file an election to change the timing of his benefit payments or the form of benefit payments at the time and in the manner designated by the Committee, subject to the following conditions: |
(1) | the election to change the time or form of payment shall not take effect until twelve (12) months after the election is made; |
(2) | the election to change the time or form of payment must be filed at least 12 months prior to the date on which payments to the Participant are otherwise scheduled to commence; and |
(3) | the first payment with respect to which such election to change the form of payment is made must be deferred for a period of 5 years from the date such payment would otherwise have been made. |
(d) | Special Election in 2008. Notwithstanding the requirements of Section 5.2(c), Participants may make elections on or before December 31, 2008 as to the time and/or |
(a) | Separation from Service. If a Participant has elected to be paid in connection with the Participant’s Separation from Service with respect to any Deferral Contribution, payment of such Deferral Contribution and any appreciation or depreciation of such amount due to Investment Adjustments shall commence on the date of the Participant’s Separation from Service, except that any payments that are scheduled to be made on or within the first six months after Separation from Service shall be paid in one lump sum on the date that is six months after the Participant’s Separation from Service. |
(b) | Disability. Any portion of a Participant’s Account Balance that has not begun to be paid as of the date that the Participant is determined to be Disabled shall commence (in the case of installments) or be paid (in the case of a lump sum) within thirty (30) days after the Participant is determined to be Disabled. |
(c) | Interim Distribution Date. If the Participant has elected an Interim Distribution Date with respect to any Deferral Contribution, payment of such Deferral Contribution and any appreciation or depreciation of such amount due to Investment Adjustments shall commence within thirty (30) days after the earlier of (1) such Interim Distribution Date or (2) the Participant’s Separation from Service (subject to the six-month delay described in |
(d) | Change in Control Event. Any portion of a Participant’s Account Balance that has not been paid as of the date of a Change in Control Event shall be paid in a single lump sum within ten (10) days after such Change in Control Event. |
(a) | Death Benefit. If the Participant dies before the payment date designated in Article 5, the Participant’s Beneficiary shall receive the pre-retirement death benefit described below and no other benefits shall be payable under the Plan. |
(b) | Payment of Pre-Retirement Death Benefit. The pre-retirement death benefit shall be a lump-sum payment equal to the Participant’s Vested Account Balance and shall be made no later than sixty (60) days after the occurrence of the Participant's death. |
(a) | that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or |
(b) | that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and in that event, such notice shall set forth in a manner calculated to be understood by the Claimant: |
(1) | the specific reason(s) for the denial of the claim, or any part of it; |
(2) | specific reference(s) to pertinent provisions of the Plan upon which such denial was based; |
(3) | a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and |
(4) | an explanation of the review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse benefit determination on review. |
(a) | may review and request copies of pertinent documents, records, and other information relevant to the claim for benefits; |
(b) | may submit written comments, documents, records, and other information relating to the claim for benefits (regardless of whether such comments, documents, records, or other information was submitted or considered in connection with the initial claim); and/or |
(c) | may request a hearing, which the Committee may grant. |
(a) | specific reasons for the decision; |
(b) | specific reference(s) to the pertinent Plan provisions upon which the decision was based; |
(c) | a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits; and |
(d) | a statement of the Claimant's right to bring an action under Section 502(a) of ERISA. |
(a) | If, for any reason, all or any portion of a Participant’s benefit under this Plan becomes includable in the Participant’s gross income for Federal income tax purposes prior to receipt of such benefit, the Participant may petition the Committee for a distribution of that portion of his benefit that has become taxable. Upon the grant of such a petition, which grant shall not be unreasonably withheld, the Participant’s Employer shall immediately distribute to the Participant funds in an amount equal to the taxable portion of his benefit (which amount shall not exceed the Participant’s unpaid Vested Account Balance under the Plan). If the petition is granted, the tax liability distribution shall be made within ninety (90) days of the date when the Participant’s petition is granted. Such a distribution shall correspondingly reduce the benefits with respect to the Participant under this Plan. |
(b) | In its discretion, the Committee may distribute all or a portion of the Participant’s benefit prior to his Benefit Commencement Date to the extent necessary to pay any FICA or income taxes which may be owed by the Participant on his benefit under the Plan and to the extent permitted by Section 409A of the Code. |
Page | |||
Article 1. | General Provisions | 1 | |
Section 1.1. | Purpose. | 1 | |
Section 1.2. | Effective Date. | 1 | |
Article 2. | Definitions and Construction | 1 | |
Section 2.1. | Definitions. | 1 | |
Section 2.2. | Construction. | 5 | |
Article 3. | Eligibility and Participation | 5 | |
Section 3.1. | Commencement of Participation. | 5 | |
Section 3.2. | Re-Employment. | 5 | |
Section 3.3. | Change of Employment Category. | 5 | |
Article 4. | Credits | 5 | |
Section 4.1. | Employer Contribution Credits. | 5 | |
Section 4.2. | Vesting of Employer Contribution Credit Accounts. | 6 | |
Article 5. | Allocation of Funds | 7 | |
Section 5.1. | Selection of Hypothetical Investments. | 7 | |
Section 5.2. | Adjustment of Participant Accounts. | 8 | |
Section 5.3. | Expenses and Taxes. | 9 | |
Article 6. | Payments from The Plan | 9 | |
Section 6.1. | Default Time of Payment. | 9 | |
Section 6.2. | Disability. | 9 | |
Section 6.3. | Change in Control Event. | 9 | |
Section 6.4. | Forfeitures. | 9 | |
Article 7. | Death Benefits | 9 | |
Section 7.1. | Death Benefit. | 10 | |
Section 7.2. | Payment of Pre-Retirement Death Benefit. | 10 | |
Section 7.3. | Beneficiary. | 10 | |
Section 7.4. | Beneficiary Designation. | 10 | |
Section 7.5. | Acknowledgment. | 10 | |
Section 7.6. | No Beneficiary Designation. | 10 | |
Section 7.7. | Doubt as to Beneficiary. | 11 | |
Restoration Plan | i | |
Section 7.8. | Discharge of Obligations. | 11 | |
Article 8. | Administration of the Plan | 11 | |
Section 8.1. | In General. | 11 | |
Article 9. | Amendment and Termination | 11 | |
Section 9.1. | In General. | 11 | |
Article 10. | Claims Procedures | 11 | |
Section 10.1. | In General. | 11 | |
Article 11. | The Trust | 11 | |
Section 11.1. | Establishment or the Trust. | 11 | |
Section 11.2. | Automatic Funding of Trust. | 12 | |
Section 11.3. | Interrelationship of the Plan and the Trust. | 12 | |
Section 11.4. | Distributions from the Trust. | 12 | |
Article 12. | Miscellaneous | 12 | |
Section 12.1. | In General. | 12 | |
Restoration Plan | ii | |
Section 1.1. | Purpose. |
(a) | This Plan is designed to restore benefits that would have accrued under The McCormick 401(k) Retirement Plan but are restricted due to the limits on compensation imposed by Sections 415 and 401(a)(17) of the Code. |
(b) | This Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended. |
(c) | Effective January 31, 2017, the Plan has been frozen and merged into the McCormick & Company Incorporated Nonqualified Retirement Savings Plan. After that date, no Participant shall accrue any additional benefits under the Plan and no individual shall become a Participant in the Plan. |
Section 1.2. | Effective Date. |
Section 2.1. | Definitions. |
(a) | Account. As of any given date called tor under the Plan, a Participant’s aggregate Employer Contribution Credits, as adjusted to reflect any appreciation (or depreciation) due to Investment Adjustments. |
(b) | Beneficiary. One or more persons. trusts, estates or other entities, designated (or deemed designated) by the Participant in accordance with Article 7. |
(c) | Board. The Board of Directors of the Company. |
(d) | Cause. Any willful and continuous failure by the Participant to substantially perform his duties with the Employer (unless the failure to perform is due to the Participant’s Disability) or any willful misconduct or gross negligence by the Participant which results in material economic harm to the Employer. or any conviction of the Participant of a felony. No act or failure to act shall be considered “willful” for purposes of this definition if the Participant reasonably believed in good faith that such act or failure to act was in, or not opposed to, the best interests of the Employer. In the event of a willful and continuous failure by the Participant to substantially perform his duties, the Employer shall notify the Participant in |
Restoration Plan | i | |
(e) | Change in Control Event. The occurrence of one or more of the following events: |
(1) | the consolidation or merger of the Company with or into another entity where the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company’s capital stock are converted into cash, securities or other property, except for any consolidation or merger of the Company in which the holders (excluding any “Substantial Stockholders” as defined in Section 4, “Common Stock,” subsection (b)(2)(H) of the Certificate of Incorporation of the Company as in effect as of the date hereof(the “Charter”)) of the Company’s (A) voting common stock, (B) non-voting common stock, and (C) other classes of voting stock, if any, immediately before the consolidation or merger shall, upon consummation of the consolidation or merger, own in excess of 50% of the voting stock of the surviving corporation; |
(2) | any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; |
(3) | any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becoming the beneficial owner (as defined in Section 4, “Common Stock,” subsection (b)(2)(C) of the Charter), directly or indirectly, of securities of the Company representing more than 13% (the “Specified Percentage”) of the voting power of all the outstanding securities of the Company having the right to vote in an election of the Board (after giving effect, to the extent applicable, to the operation of Section 4, “Common Stock,” subsection (b) of the Charter) (including, without limitation, any securities of the Company that any such person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise, which shall be deemed beneficially owned by such person), provided, however, that in the event that the vote limitation with respect to Substantial Stockholders set forth in Section 4, “Common Stock,” subsection (b) of the Charter becomes inoperative by virtue of the operation of Section 4, “Common Stock,” subsection (b)(12) of the Charter, or otherwise, the “Specified Percentage” shall be increased, without requirement for further action, to 35%; or |
(4) | individuals, who constitute the entire Board elected by the Company’s stockholders at its most recent annual meeting of stockholders and any new directors who have been appointed to the Board by a vote of at least a majority of the directors then in office, having ceased for any reason to constitute a majority of the members of the Board. |
Restoration Plan | ii | |
(f) | Code. The Internal Revenue Code of 1986, as amended, |
(g) | Committee. Either of the Committees designated in Article 8, as applicable. |
(h) | Company. McCormick & Company, Incorporated and any successors or assigns. |
(i) | Constructive Discharge. A Participant’s Separation from Service as a result of the occurrence of any of the events listed below; provided that, (A) the Participant gives the Employer the opportunity to “cure” the conditions constituting a Constructive Discharge by notifying the Employer within ninety (90) days of the initial existence of the conditions constituting a Constructive Discharge, and (B) the Employer fails to remedy the conditions within thirty (30) days of the Employee’s notification: |
(1) | Re-assignment of the Participant lo a position which is at a substantially lower level in the organizational structure than his previous position, as defined by any one or a combination of the following factors: reporting relationship, compensation compared to others in the organization, and authority, duties and responsibilities; |
(2) | Substantial diminution in the Participant’s authority, duties or responsibilities, or the assignment of duties and responsibilities which are unsuitable for an individual having the position, experience and stature of the Participant; |
(3) | Substantial reduction in the Participant’s total compensation (including salary, bonus opportunity, deferred compensation, stock options, profit sharing and retirement programs and other benefits); provided, however, that a reduction that applies generally to all employees of the Employer, for example, a reduction or elimination of the employer matching contribution or profit sharing contribution under the Qualified Plan, shall not be a Constructive Discharge; |
(4) | Relocation of the Participant’s principal workplace to a location which is more than 50 miles from the Participant’s previous principal workplace; or |
(5) | Any failure by the Employer to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets or the Employer to assume expressly and agree to perform under the Plan in the same manner and to the same extent that the Employer would be required to perform thereunder with respect to the Participant if the transaction or event resulting in a successor had not taken place. |
(j) | Disabled/Disability. “Totally and Permanently Disabled” within the meaning of the Company’s long-term disability plan, provided that no Disability shall be treated as a |
Restoration Plan | iii | |
(k) | Effective Date. February 1, 2017. |
(l) | Eligible Employee. A person hired on or after January 1, 2012 who is (i) determined to be in a select group of management or highly compensated employees, (ii) specifically chosen by the applicable Employer to participate in the Plan and (iii) approved for such participation by the Committee. |
(m) | Employer. The Company and/or any of its subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Management Committee to participate in the Plan. |
(n) | Employer Contribution Credits is defined in Section 4.1. |
(o) | ERISA. The Employee Retirement Income Security Act of 1974, as amended. |
(p) | Hypothetical Investment. An investment fund or benchmark made available to Participants by the Committee for purposes of valuing amounts credited under the Plan. |
(q) | Investment Adjustment(s). Any appreciation credited to (as income or gains) or depreciation deducted from (as expenses or losses) a Participant’s Account, in accordance with such Participant’s selection of Hypothetical Investments. |
(r) | Participant. Any Eligible Employee who becomes a Participant in accordance with the provisions of Article 3. |
(s) | Plan. The McCormick & Company, Incorporated Restoration Plan, as amended from time to time. |
(t) | Plan Year. A twelve (12) month period commencing December 1 and ending November 30 of the subsequent calendar year. The Plan shall have an initial short Plan Year commencing January 1, 2014 and ending November 30, 2014. |
(u) | Qualified Plan. The McCormick 401(k) Retirement Plan. |
(v) | Separation From Service. A termination of a Participant’s employment relationship with the Employers that constitutes a “separation from service” within the meaning of Section 409A of the Code. |
(w) | Trust. A trust established by an Employer to fund benefits under the Plan. The Plan, notwithstanding the creation of a Trust, is intended to be unfunded for purposes of the Code and Title I of ERISA. |
Restoration Plan | iv | |
Section 2.2. | Construction. |
(a) | the use of the masculine gender shall also include within its meaning the feminine and vice versa. |
(b) | the use of the singular shall also include within its meaning the plural and vice versa. |
(c) | the word “include” shall mean to include without limitation, and |
(d) | the captions of the articles, sections, or paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of its provisions. |
Section 3.1. | Commencement of Participation. |
Section 3.2. | Re-Employment. |
Section 3.3. | Change of Employment Category. |
Section 4.1. | Employer Contribution Credits. |
(a) | Annual Employer Contribution Credits. For each Plan Year ending before the Effective Date in which an individual is a Participant in the Plan and the Qualified Plan, an Employer Contribution Credit shall be made on behalf of the Participant equal to the amount described in subparagraph (1) minus the amount described in subparagraph (2). |
(1) | The Post-2011 Profit Sharing Contributions, if any, that would have been contributed under the Qualified Plan on behalf of the Participant for the applicable Plan Year, disregarding the limitations of Sections 415 and 401(a)(17) or the Code, as they may be implemented in the Qualified Plan. |
Restoration Plan | v | |
(2) | The Post-2011 Profit Sharing Contributions, if any, actually contributed to the Qualified Plan on behalf of the Participant for the applicable Plan Year. |
(b) | Timing of Contribution Credit. The Employer Contribution Credit for a Plan Year shall be credited to a Participant’s Account as of a date determined by the Committee; such date shall be no later than the end of the calendar year following the end of such Plan Year. Any earnings and losses attributable to such Employer Contribution Credit shall begin to accrue on the date on which such Employer Contribution Credit is credited to a Participant’s Account. |
(c) | Initial Plan Year. Notwithstanding paragraph (a), above, in the case or the initial short Plan Year ending November 30, 2014, an Employer Contribution Credit shall be made on behalf of the Participant equal to the amount described in paragraph (a), above, for the Plan Year beginning December 1, 2012 and the Plan Year beginning December 1, 2013. |
(d) | Last Day Requirement. A Participant must be employed on November 30 of the applicable Plan Year to receive an Employer Contribution Credit. |
(e) | Employer Contribution Credit Accounts. There shall be established and maintained by the Employer a separate Account in the name of each Participant to which shall be credited or debited: (a) amounts equal to the Employer Contribution Credits made on behalf of the Participant, if any; and (b) any deemed earnings and losses allocated to such Account in accordance with Article 5. The Account shall not be, constitute or be treated as an escrow, trust fund, or any other type of funded account for Code or ERISA purposes, and amounts credited to such an account shall not be considered “plan assets” for ERISA purposes. The Account merely provides a record of the bookkeeping entries relating to the benefits that the Employer intends to provide Participants and shall thus reflect a mere unsecured promise to pay such amounts in the future. |
Section 4.2. | Vesting of Employer Contribution Credit Accounts. |
(a) | Vesting Schedule. Subject to deemed vesting as provided in paragraph (b), below, and forfeiture as provided in Section 6.4, a Participant shall become vested in his Account in accordance with the schedule, below; provided he remains continuously in the employ of the Employer (regardless of whether he ceases to be eligible to receive Employer Contribution Credits under the Plan) from his initial entry into the Plan until attainment of the age specified below). |
Restoration Plan | vi | |
Attainment of Age | Vested Percentage |
50 | 0% |
51 | 10% |
52 | 20% |
53 | 30% |
54 | 40% |
55 | 50% |
56 | 60% |
57 | 70% |
58 | 80% |
59 | 90% |
60 | 100% |
(b) | Deemed Vesting. The right or a Participant to a benefit under this Plan shall be deemed to vest and become nonforfeitable upon the earliest of: |
(1) | the date or a Change in Control Event; |
(2) | the date immediately preceding the date of such Employee’s Separation from Service as a result of death, a Constructive Discharge, or discharge by the Employer without Cause. |
Section 5.1. | Selection of Hypothetical Investments. |
(a) | Hypothetical Investments. The Committee shall provide each Participant with a list of Hypothetical Investments available under the Plan. From time to time, the Committee may revise the Hypothetical Investments available within the Plan. |
(b) | Investment Forms. The Participant shall, via his Investment Allocation Form(s) and his Investment Re-Allocation Form(s), select one or more Hypothetical Investments among which his various contributions shall be allocated. |
(1) | Investment Allocation Form. The document that (A) shall apply with respect to those Employer Contribution Credits (as well as any appreciation (or depreciation) on such amounts) made to the Plan after the effective date of the Investment Allocation Form but before the effective date of a timely filed subsequent Investment Allocation Form and (B) shall determine the manner in which such Employer Contribution Credits (as well as any appreciation (or depreciation) on such amounts) shall be initially allocated by the Participant among the various Hypothetical Investments within the Plan. A new Investment Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
Restoration Plan | vii | |
(2) | Investment Re-allocation Form. The document required by the Committee that shall re-direct the manner in which earlier Employer Contribution Credits, as well as any appreciation (or depreciation) to-date, are invested within the Hypothetical Investments available in the Plan. An Investment Re-Allocation Form may be submitted by the Participant in written or electronic format, at such times and according to such procedures as the Committee shall establish. |
(c) | Investment Selections. All Hypothetical Investment selections must be denominated in whole percentages unless the Committee determines that lower increments (or whole dollar amounts) are acceptable. A Participant may make changes in his selected Hypothetical Investments on a daily basis via submission of a new Investment Allocation Form or submission of a new Investment Re-Allocation Form. |
(d) | Default Investment. Any Participant who does not have on file a valid selection of Hypothetical Investments for his Account shall he deemed to have elected to invest any portion for which there is no valid selection in the Hypothetical Investment that the Committee selects for this purpose. |
Section 5.2. | Adjustment of Participant Accounts. |
(a) | Adjustment. While a Participant’s Account does not represent the Participant’s ownership of, or any ownership interest in, any particular assets, the Participant’s Account shall be adjusted in accordance with the Hypothetical Investment(s) chosen by the Participant on his Investment Allocation Form or Investment Re-Allocation Form, subject to the conditions and procedures set forth herein or established by the Committee. |
(b) | Investment of Earnings. Any cash earnings generated under a Hypothetical Investment (such as hypothetical interest and cash dividends) shall, in the Committee’s sole discretion, either be deemed to be reinvested in that Hypothetical Investment or reinvested in one or more other Hypothetical Investment(s) designated by the Committee. |
(c) | Valuation. All notional acquisitions and dispositions or Hypothetical Investments that occur within a Participant’s Account, pursuant to the terms of the Plan, shall be deemed to occur at such times as the Committee shall determine to be administratively feasible and the Participant’s Account shall be adjusted accordingly. Accordingly, if a distribution or re-allocation must occur pursuant to the terms of the Plan and all or some portion of the Account must be valued in connection with such distribution or reallocation (to reflect Investment Adjustments), the Committee may, unless otherwise provided for in the Plan, select a date or dates that shall be used for valuation purposes. |
(d) | Change in Control Event. Notwithstanding anything in the Plan to the contrary, any Investment Adjustments made to any Participants’ Accounts following a Change in Control Event shall be made in a manner no less favorable to Participants than the practices and procedures employed under the Plan, or as otherwise in effect, as of the date of the Change in Control Event. |
Restoration Plan | viii | |
Section 5.3. | Expenses and Taxes. |
(a) | Expenses. Expenses, including fees of the trustee of the Trust, associated with the administration or operation of the Plan shall be paid by the Employer from its general assets unless the Employer elects to charge such expenses against the appropriate Participant’s Account. |
(b) | Taxes Allocable to an Account. Any taxes allocable to an Account (or portion thereof) maintained under the Plan which are payable prior to the distribution or the Account (or portion thereof), as determined by the Employer, shall be paid by the Employer unless the Employer elects to charge such taxes against the appropriate Participant’s Account. |
(c) | Withholding from Benefit Distributions. The Participant’s Employer (or the trustee of the Trust. as applicable), shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld in connection with such payments, in amounts and in a manner to be determined in the sole discretion of the Employer (or the trustee of the Trust, as applicable). |
Section 6.1. | Default Time of Payment. |
Section 6.2. | Disability. |
Section 6.3. | Change in Control Event. |
Section 6.4. | Forfeitures. |
Restoration Plan | ix | |
Section 7.1. | Death Benefit. |
Section 7.2. | Payment of Pre-Retirement Death Benefit. |
Section 7.3. | Beneficiary. |
Section 7.4. | Beneficiary Designation. |
Section 7.5. | Acknowledgment. |
Section 7.6. | No Beneficiary Designation. |
Restoration Plan | x | |
Section 7.7. | Doubt as to Beneficiary. |
Section 7.8. | Discharge of Obligations. |
Section 8.1. | In General. |
Section 9.1. | In General. |
Section 10.1. | In General. |
Section 11.1. | Establishment or the Trust. |
Restoration Plan | xi | |
Section 11.2. | Automatic Funding of Trust. |
Section 11.3. | Interrelationship of the Plan and the Trust. |
Section 11.4. | Distributions from the Trust. |
Section 12.1. | In General. |
Restoration Plan | xii | |
Article 1 . General Provisions | 3 | ||
Section 1.1. | Purpose. | 3 | |
Section 1.2. | History of the Plan. | 3 | |
Section 1.3. | Effective Date. | 3 | |
Article 2 . Definitions and Construction | 3 | ||
Section 2.1. | Definitions. | 3 | |
Section 2.2. | Construction. | 7 | |
Article 3 . Eligibility, Benefit Amounts and Vesting | 7 | ||
Section 3.1. | Eligibility. | 7 | |
Section 3.2. | Special Rules for Calculating Benefits. | 7 | |
Section 3.3. | Senior Executive Program Benefit. | 7 | |
Section 3.4. | Executive Program Benefit. | 9 | |
Section 3.5. | Foreign Service Senior Executive Program Benefit. | 10 | |
Section 3.6. | Management Program Benefit. | 11 | |
Section 3.7. | Special Program Benefit. | 11 | |
Section 3.8. | Vesting and Nonforfeitability of Benefits. | 11 | |
Article 4 . Payment of Plan Benefits | 12 | ||
Section 4.1. | Default Forms of Payment. | 12 | |
Section 4.2. | Cash Out of Small Benefits. | 12 | |
Section 4.3. | Alternate Forms of Payment. | 12 | |
Section 4.4. | Time of Benefit Payments. | 13 | |
Section 4.5. | Election of Alternate Time and Form of Payment. | 13 | |
Section 4.6. | Beneficiary in the Event of Death. | 14 | |
Article 5 . Administration of the Plan | 14 | ||
Section 5.1. | In General. | 14 | |
Article 6 . Claims Procedures | 15 | ||
Section 6.1. | In General. | 15 | |
Article 7 . Amendment and Termination | 15 | ||
Section 7.1. | In General. | 15 | |
Section 7.2. | Contractual Obligation. | 15 | |
McCormick Supplemental Executive Retirement Plan | Table of Contents | |
Article 8 . Trust | 15 | ||
Section 8.1. | Establishment of the Trust. | 15 | |
Section 8.2. | Automatic Funding of Trust. | 16 | |
Section 8.3. | Interrelationship of the Plan and the Trust. | 16 | |
Section 8.4. | Distributions From the Trust. | 16 | |
Article 9 . Miscellaneous | 16 | ||
Section 9.1. | In General. | 16 | |
Article 10 . Grandfathered Benefits | 16 | ||
Section 10.1. | Grandfathered Benefits. | 16 | |
APPENDIX A | The McCormick Supplemental Executive Retirement Plan, | ||
as amended and restated June 19, 2001 | |||
EXHIBIT 1 | Sample Participation Agreements | ||
McCormick Supplemental Executive Retirement Plan | Table of Contents | |
(a) | Effective June 19, 2001, the Company amended and restated the Plan. The terms of the Plan, as set forth in the 2001 restatement, continue to apply to Grandfathered Benefits, which are not subject to Section 409A of the Code, and are set forth in Appendix A of the current restatement. |
(b) | On December 24, 2004, the Company adopted a resolution to amend the Plan to the extent necessary to comply with Section 409A of the Code. As part of this resolution, the Company undertook to administer the Plan in accordance with a reasonable interpretation of Section 409A of the Code. This resolution was effective January 1, 2005. |
(c) | In accordance with the December 24, 2004, resolution and amendment, the Plan has been operated in good faith compliance with Section 409A of the Code and the applicable guidance since January 1, 2005. |
(d) | Effective January 31, 2017, the Plan has been frozen and merged into the McCormick & Company Incorporated Nonqualified Retirement Savings Plan. After that date, no Participant shall accrue any additional benefits under the Plan and no individual shall become a Participant in the Plan. In addition, the calculation of a Participant’s benefit under the McCormick Pension Plan used to offset the benefit under the Plan shall be frozen effective January 31, 2017. |
(a) | Affiliated Group. The Company and all subsidiary corporations which are participating employers under the Pension Plan. |
(b) | Article. An Article of the Plan. |
(c) | Benefit Commencement Date. The date on which an Employee’s benefit under the Plan commences as determined under Section 4.4. |
(d) | Benefit Trigger. The earliest to occur of (1) a Change in Control Event, (2) the Employee’s Disability, or (3) the Employee’s Separation from Service. |
(e) | Board. The Board of Directors of the Company. |
(f) | Cause. Any willful and continuous failure by the Employee to substantially perform his duties with the Company (unless the failure to perform is due to the Employee’s Disability) or any willful misconduct or gross negligence by the Employee which results in material economic harm to the Company, or any conviction of the Employee of a felony. No act or failure to act shall be considered “willful” for purposes of this definition if the Employee reasonably believed in good faith that such act or failure to act was in, or not opposed to, the best interests of the Company. In the event of a willful and continuous failure by the Employee to substantially perform his duties, the Company shall notify the Employee in writing of such failure to perform, and the Employee shall have a period of thirty (30) days after such notice to resume substantial performance of his duties. |
(g) | Change in Control Event. The occurrence of one or more of the following events: |
(1) | the consolidation or merger of the Company with or into another entity where the Company is not the continuing or surviving corporation, or pursuant to which shares of the Company’s capital stock are converted into cash, securities or other property, except for any consolidation or merger of the Company in which the holders (excluding any “Substantial Stockholders” as defined in Section 4, “Common Stock,” subsection (b)(2)(H) of the Certificate of Incorporation of the Company as in effect as of the date hereof (the “Charter”)) of the Company’s (A) voting common stock, (B) non-voting common stock, and (C) other classes of voting stock, if any, immediately before the consolidation or merger shall, upon consummation of the consolidation or merger, own in excess of 50% of the voting stock of the surviving corporation; |
(2) | any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company; |
(3) | any person (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) becoming the beneficial owner (as defined in Section 4, “Common Stock,” subsection (b)(2)(C) of the Charter), directly or |
(4) | individuals, who constitute the entire Board elected by the Company’s stockholders at its most recent annual meeting of stockholders and any new directors who have been appointed to the Board by a vote of at least a majority of the directors then in office, having ceased for any reason to constitute a majority of the members of the Board. |
(h) | Claimant. The person or persons described in Article 9 who apply for benefits or amounts that may be payable under the Plan. |
(i) | Code. The Internal Revenue Code of 1986, as amended. |
(j) | Committee. Either of the Committees designated in Article 7, as applicable. |
(k) | Company. McCormick & Company, Incorporated, and any successors or assigns. |
(l) | Constructive Discharge. An Employee’s Separation from Service as a result of, and within a period of thirty (30) days after the occurrence of, any of the following events: |
(1) | Re-assignment of the Employee to a position which is at a substantially lower level in the organizational structure than his previous position, as defined by any one or a combination of the following factors: reporting relationship, compensation compared to others in the organization, and authority, duties and responsibilities; |
(2) | Substantial diminution in the Employee’s authority, duties or responsibilities, or the assignment of duties and responsibilities which are unsuitable for an individual having the position, experience and stature of the Employee; |
(3) | Substantial reduction in the Employee’s total compensation (including salary, bonus opportunity, deferred compensation, stock options, retirement programs and other benefits); |
(4) | Relocation of the Employee’s principal workplace to a location which is more than 50 miles from the Employee’s previous principal workplace; or |
(5) | Any failure by the Company to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform under the Plan in the same manner and to the same extent that the Company would be required to perform thereunder with respect to the Employee if the transaction or event resulting in a successor had not taken place. |
(m) | Disabled/Disability. “Totally and Permanently Disabled” within the meaning of the Company’s long-term disability plan, provided that such disability constitutes a “disability” within the meaning of Treas. Reg. § 1.409A-3(i)(4). |
(n) | Employee. A participant in the Pension Plan who is employed by one or more members of the Affiliated Group. |
(o) | ERISA. The Employee Retirement Income Security Act of 1974, as amended. |
(p) | Grandfathered Benefits. An Employee’s benefit under the Plan, to the extent that such benefit was earned and vested (within the meaning of Section 409A of the Code) before January 1, 2005. |
(q) | Participation Agreement. A contract between an Employee and the Company, as described in Section 7.2. |
(r) | Plan. The McCormick Supplemental Executive Retirement Plan, as amended and restated as of February 1, 2017. |
(s) | Pension Plan. The McCormick Pension Plan. |
(t) | Separation from Service. A termination of an Employee’s employment relationship with the Affiliated Group that constitutes a “separation from service” within the meaning of Section 409A of the Code. |
(u) | Trust. The McCormick Supplemental Executive Retirement Trust or such other trust as may be established by a member of the Affiliated Group to fund benefits under this Plan. The Plan, notwithstanding the creation of the Trust, is intended to be unfunded for purposes of the Code and Title I of ERISA. |
(a) | the use of the masculine gender shall also include within it meaning the feminine and vice versa, |
(b) | the use of the singular shall also include within its meaning the plural and vice versa, and |
(c) | the word “include” shall mean to include without limitation. |
(a) | For purposes of calculating an Employee’s benefit under this Article 3, the fact that the Employee would not be able to commence payment under the Pension Plan (or a pension or retirement plan provided by a subsidiary or affiliate of the Company located outside the United States which formerly employed the Employee) on the Benefit Commencement Date because he would not yet have reached a certain age on the Benefit Commencement Date shall be disregarded. In such circumstances, the value of the benefit under the Pension Plan (or applicable non-U.S. plan) on the Benefit Commencement Date shall be the actuarial equivalent of the benefit earned as of January 31, 2017, under such plan calculated as if it were payable on the Benefit Commencement Date using actuarial assumptions (including early retirement factors) as determined by the Committee. |
(b) | For purposes of calculating an Employee’s benefit under Sections 3.3, 3.4, or 3.5, the term “annual bonus” shall not include any payment made to an Employee pursuant to a cash-based long-term incentive award. |
(a) | Employees Who Participated in Pension Plan Before December 1, 2001. |
(1) | The Employee’s benefit earned as of January 31, 2017, that would have been payable under the Pension Plan on the Benefit Commencement Date, in the single life annuity form of payment, disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan, calculated as if he had attained an adjusted retirement age on January 31, 2017, determined as follows: |
(A) | The adjusted retirement age will be the Employee’s actual attained age on January 31, 2017, increased by one month for each month of service after age 55 during which the Employee participated in the Plan. However, the adjusted retirement age cannot be greater than 65. |
(B) | In the benefit calculation, credited service and average monthly earnings will be determined to the adjusted retirement age, assuming that the Employee’s rate of pay in effect on January 31, 2017, had remained in effect until his adjusted retirement age. |
(C) | Average monthly earnings shall include 90% of 1/12th of the average of the five highest annual bonuses earned by the Employee in any five of the ten calendar years immediately prior to January 31, 2017. |
(2) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(b) | Employees Who Did Not Participate in Pension Plan Before December 1, 2001. |
(1) | The Employee’s benefit that would have been earned as of January 31, 2017, and payable under the Pension Plan on the Benefit Commencement Date, in the single life annuity form of payment, disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan, calculated as if he had attained an adjusted retirement age on January 31, 2017, determined as follows: |
(A) | The adjusted retirement age will be the Employee’s actual attained age on January 31, 2017, increased by one month for each month of service after age 55 during which the Employee participated in the Plan. However, the adjusted retirement age cannot be greater than 65. |
(B) | In the benefit calculation, credited service and average monthly earnings will be determined to the adjusted retirement age, assuming that the Employee’s full calendar year compensation in effect immediately preceding January 31, 2017, had remained in effect until his adjusted retirement age. |
(2) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(3) | If the Employee was in compensation grade 69 or below on January 31, 2017, the multiplier shall be 1.4; if the Employee was in compensation grade 70 or above on January 31, 2017, the multiplier shall be 1.5; provided, however, that the Committee may increase the multiplier with respect to any Employee. |
(a) | Employees Who Participated in Pension Plan Before December 1, 2001. |
(1) | The Employee’s benefit that would have been earned as of January 31, 2017, and payable under the Pension Plan on the Benefit Commencement Date, in the single life annuity form of payment, disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan, calculated as if average monthly earnings had included 90% of 1/12th of the average of the five highest annual bonuses earned by the Employee in any five of the ten calendar years immediately prior to his Benefit Trigger. |
(2) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(b) | Employees Who Did Not Participate in Pension Plan Before December 1, 2001. |
(1) | The Employee’s benefit earned as of January 31, 2017, that would have been payable under the Pension Plan on the Benefit Commencement Date in the single life annuity form of payment, disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan. |
(2) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(3) | If the Employee was in compensation grade 69 or below on January 31, 2017, the multiplier shall be 1.4; if the Employee was in compensation grade 70 or above on January 31, 2017, the multiplier shall be 1.5. |
(1) | The Employee’s benefit earned as of January 31, 2017, that would have been payable under the Pension Plan on the Benefit Commencement Date in the single life annuity form of payment, including in such calculation all periods of service by the Employee with any subsidiary or affiliate of the Company located outside the United States, and disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan, calculated as if he had attained an adjusted retirement age on January 31, 2017, determined as follows: |
(A) | The adjusted retirement age will be the Employee’s actual attained age on January 31, 2017, increased by one month for each month of service after age 55 during which the Employee participated in the Plan. However, the adjusted retirement age cannot be greater than 65. |
(B) | In the benefit calculation, credited service and average monthly earnings will be determined to the adjusted retirement age, assuming that the Employee’s rate of pay in effect on January 31, 2017, had remained in effect until his adjusted retirement age. |
(C) | Average monthly earnings shall include 90% of 1/12th of the average of the five highest annual bonuses earned by the Employee in any five of the ten calendar years immediately prior to January 31, 2017. |
(2) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(3) | The benefit that the Employee earned as of January 31, 2017, and is actually eligible to receive on the Benefit Commencement Date under any pension or retirement plan provided by a subsidiary or affiliate of the Company located outside the United States which formerly employed the Employee. |
(a) | The benefit earned as of January 31, 2017, that would have been payable under the Pension Plan on the Benefit Commencement Date in the single life annuity form of payment, disregarding the limitations of Sections 415 and 401(a)(17) of the Code as they may be implemented in the Pension Plan. |
(b) | The benefit earned as of January 31, 2017, that the Employee is actually eligible to receive under the Pension Plan on the Benefit Commencement Date under the single life annuity form of payment. |
(a) | the date on which the Employee reaches age 55; |
(b) | the date of a Change in Control Event; |
(c) | the date on which the Employee becomes Disabled; or |
(d) | the date immediately preceding the date of such Employee’s Separation from Service as a result of death, a Constructive Discharge or a discharge by the Company without Cause. |
(a) | If the Employee’s Benefit Trigger is his Disability or his Separation from Service and he is married on the Benefit Commencement Date, his benefit shall be paid in the form of a fifty (50) percent joint and survivor annuity with his spouse as the survivor annuitant. |
(b) | If the Employee’s Benefit Trigger is his Disability or his Separation from Service and he is unmarried on the Benefit Commencement Date, his benefit shall be paid in the form of a single life annuity. |
(c) | If the Employee’s Benefit Trigger is a Change in Control Event, his benefit shall be paid in a lump sum. |
(a) | Benefits under the Plan paid due to a Separation from Service or Disability may be payable in the following actuarially equivalent forms (to the extent available under the Pension Plan): |
(1) | a single life annuity; |
(2) | a 50%, 66 and 2/3%, 75% or 100% joint and survivor annuity; |
(3) | an annuity described in Section 4.3(a)(1) or (2) with guaranteed payments for the first 5, 10, or 15 years; |
(4) | any other form of payment permitted by the Committee that would be treated as an actuarially equivalent life annuity within the meaning of Treas. Reg. § 1.409A-2(b)(2)(ii)(B); and, |
(5) | to the extent required by Section 5.3, a lump sum. |
(b) | Each form of payment under the Plan shall be the actuarial equivalent of Employee’s benefit calculated as a single life annuity beginning on his Benefit Commencement Date. Actuarial equivalence shall be determined under this Plan by using the actuarial assumptions that are used for that purpose under the Pension Plan as in effect when such actuarial equivalence under this Plan is being determined. Any actuarially equivalent |
(a) | Except to the extent that a different time of payment is elected pursuant to Section 4.5, if the Employee’s Benefit Trigger is his Separation from Service, the Employee’s Benefit Commencement Date shall be determined as follows and the following rules shall apply: |
(1) | Except as provided in Section 4.4(a)(2), the Employee’s Benefit Commencement Date shall be the first of the month following the later of his Separation from Service or the date on which he attains age 55. |
(2) | No payment shall be made during the six-month period immediately following the Employee’s Separation from Service (other than in the case of the Employee’s death). |
(3) | Any payments otherwise due during the six-month period immediately following the Employee’s Separation from Service shall be paid on the first business day that occurs six months following the Employee’s Separation from Service (or, if earlier, the date of the Employee’s death). During this six-month period, the amounts otherwise payable to the Employee shall accrue interest at the yield on the 30-year Treasury Bond in effect for November of the year before the year in which the Employee experiences a Separation from Service. |
(b) | If an Employee’s Benefit Trigger is a Change in Control Event, the Employee’s Benefit Commencement Date shall be the date of the Change in Control Event. |
(c) | Except to the extent that a different time of payment is elected pursuant to Section 4.5, if an Employee’s Benefit Trigger is his Disability, the Employee’s Benefit Commencement Date shall be the first of the month following the later of the date of his Disability or the date on which he attains age 55. |
(a) | In General. Except as provided in Section 5.3, before his Benefit Commencement Date, an Employee may elect to receive his benefit following a Separation from Service or Disability in any form permitted under Section 4.3(a) that is treated as an actuarially equivalent life annuity (within the meaning of Treas. Reg. § 1.409A-2(b)(2)(ii)(B)) with respect to benefit that he would have received under the single life annuity form of payment. An Employee shall not be permitted to change his form of benefit after his Benefit Commencement Date. |
(b) | Changes to Form of Payment. An Employee may file an election to change his time of payment upon a Separation from Service or Disability to an alternate time of payment permitted by the Committee or to change his form of payment upon a Separation from |
(1) | the election to change the time or form of payment shall not take effect until twelve (12) months after the election is made; |
(2) | the election to change the time or form of payment must be filed at least 12 months prior to the date on which payments to the Employee are otherwise scheduled to commence; and |
(3) | the first payment with respect to which such election to change the time or form of payment is made must be deferred for a period of 5 years from the date such payment would otherwise have been made. |
Date: March 28, 2017 | /s/ Lawrence E. Kurzius |
Lawrence E. Kurzius | |
Chairman, President & Chief Executive Officer | |
Date: March 28, 2017 | /s/ Michael R. Smith |
Michael R. Smith | |
Executive Vice President & Chief Financial Officer | |
/s/ Lawrence E. Kurzius | |
Lawrence E. Kurzius | |
Chairman, President & Chief Executive Officer | |
Date: March 28, 2017 | |
/s/ Michael R. Smith | |
Michael R. Smith | |
Executive Vice President & Chief Financial Officer | |
Date: March 28, 2017 | |
Document and Entity Information |
3 Months Ended |
|---|---|
|
Feb. 28, 2017
shares
| |
| Document Information [Line Items] | |
| Entity Registrant Name | MCCORMICK & CO INC |
| Entity Central Index Key | 0000063754 |
| Current Fiscal Year End Date | --11-30 |
| Entity Filer Category | Accelerated Filer |
| Document Type | 10-Q |
| Document Period End Date | Feb. 28, 2017 |
| Document Fiscal Year Focus | 2017 |
| Document Fiscal Period Focus | Q1 |
| Amendment Flag | false |
| Common Stock | |
| Document Information [Line Items] | |
| Entity Common Stock, Shares Outstanding | 11,451,748 |
| Nonvoting Common Stock | |
| Document Information [Line Items] | |
| Entity Common Stock, Shares Outstanding | 113,226,723 |
CONDENSED CONSOLIDATED INCOME STATEMENT - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Income Statement [Abstract] | ||
| Net sales | $ 1,043.7 | $ 1,030.2 |
| Cost of goods sold | 630.7 | 625.2 |
| Gross profit | 413.0 | 405.0 |
| Selling, general and administrative expense | 275.2 | 274.3 |
| Special Charges | 3.6 | 1.6 |
| Operating income | 134.2 | 129.1 |
| Interest expense | 14.5 | 13.9 |
| Other income, net | 0.1 | 1.1 |
| Income from consolidated operations before income taxes | 119.8 | 116.3 |
| Income taxes | 33.3 | 31.3 |
| Net income from consolidated operations | 86.5 | 85.0 |
| Income from unconsolidated operations | 7.0 | 8.4 |
| Net income | $ 93.5 | $ 93.4 |
| Earnings per share - basic (usd per share) | $ 0.75 | $ 0.73 |
| Average shares outstanding - basic (shares) | 125.1 | 127.1 |
| Earnings per share - diluted (usd per share) | $ 0.74 | $ 0.73 |
| Average shares outstanding - diluted (shares) | 126.9 | 128.3 |
| Cash dividends paid per common share (usd per share) | $ 0.47 | $ 0.43 |
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME [Abstract] | ||
| Net income | $ 93.5 | $ 93.4 |
| Net Income (Loss) Attributable to Noncontrolling Interest | 1.1 | 0.7 |
| Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax (including curtailment gains of $76.7 for 2017) | 86.5 | 7.7 |
| Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax | 15.1 | (25.2) |
| Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, before Tax | (2.6) | 1.6 |
| Other Comprehensive Income (Loss), Tax, Portion Attributable to Parent | (29.6) | (1.7) |
| Comprehensive Income | $ 164.0 | $ 76.5 |
Accounting Policies |
3 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 28, 2017 | |||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||
| ACCOUNTING POLICIES | ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by United States generally accepted accounting principles (U.S. GAAP) for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented. The results of consolidated operations for the three month period ended February 28, 2017 are not necessarily indicative of the results to be expected for the full year. Historically, our net sales, net income and cash flow from operations are lower in the first half of the fiscal year and increase in the second half. The typical increase in net sales, net income and cash flow from operations in the second half of the year is largely due to the consumer business cycle in the U.S., where customers typically purchase more products in the fourth quarter due to the Thanksgiving and Christmas holiday seasons. For further information, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended November 30, 2016. As of November 30, 2016, we adopted ASU 2015-03 Simplifying the Presentation of Debt Issuance Costs, which eliminated the prior requirement to recognize debt issuance costs as an asset and instead requires classification as a direct reduction from the carrying amount of the debt liability, and ASU 2015-17 Balance Sheet Classification of Deferred Taxes (Topic 740), which, for entities with a classified balance sheet, eliminated the prior requirement to classify deferred tax assets and liabilities as current and non-current and instead requires the presentation of all deferred tax assets and liabilities as noncurrent. As a result, the accompanying condensed consolidated balance sheet as of February 29, 2016, has been restated to reflect the requirements of these newly adopted standards. Accounting Pronouncement Adopted in 2017 In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-09 Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires, among its other provisions, that excess tax benefits (which represent the excess of actual tax benefits received at the date of vesting or settlement over the benefits recognized over the vesting period or upon issuance of share-based payments) and tax deficiencies (which represent the amount by which actual tax benefits received at the date of vesting or settlement is lower than the benefits recognized over the vesting period or upon issuance of share-based payments) be recorded in the income statement as an increase or decrease in income taxes when the awards vest or are settled. This is in comparison to the prior requirement that these excess tax benefits be recognized in additional paid-in capital and these tax deficiencies be recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. The new guidance also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows rather than, as previously required, a financing activity. The new guidance is effective for the first quarter of our fiscal year ending November 30, 2018, with early adoption permitted. We have elected to early adopt ASU 2016-09 effective December 1, 2016 on a prospective basis where permitted by the new standard. As a result of this adoption:
Recently Issued Accounting Pronouncements In March 2017, the FASB issued Accounting Standards Update No. 2017-07 Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance revises how employers that sponsor defined benefit pension and other postretirement plans present the net periodic benefit cost in their income statement and requires that the service cost component of net periodic benefit cost be presented in the same income statement line items as other employee compensation costs from services rendered during the period. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. The other components of the net periodic benefit cost must be presented separately from the line items that include the service cost and outside of any subtotal of operating income on the income statement. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted as of the beginning of an annual reporting period for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-04 Intangibles-Goodwill and Other Topics (Topic 350)-Simplifying the Test for Goodwill Impairment. This guidance eliminates the requirement to calculate the implied fair value of goodwill of a reporting unit to measure a goodwill impairment charge. Instead, a company will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2021. Early adoption is permitted for all entities for annual and interim goodwill impairment testing dates after January 1, 2017. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-01 Business Combinations (Topic 805)-Clarifying the Definition of a Business. This guidance changes the definition of a business to assist entities in evaluating when a set of transferred assets and activities constitutes a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in Accounting Standards Codification (ASC 606) Revenue from Contracts with Customers. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 Leases (Topic 842). This guidance revises existing practice related to accounting for leases under Accounting Standards Codification Topic 840 Leases (ASC 840) for both lessees and lessors. Our leases as of February 28, 2017 principally relate to: (i) certain real estate, including that related to a number of administrative, distribution and manufacturing locations; (ii) certain machinery and equipment, including a corporate airplane and automobiles; and (iii) certain software. In addition, in 2016, we entered into a 15-year lease for a headquarters building, which is expected to commence upon completion of building construction and fit-out, currently scheduled for the second half of 2018. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2020. Early adoption is permitted for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In July 2015, the FASB issued Accounting Standards Update No. 2015-11 Simplifying the Measurement of Inventory (Topic 330). This guidance is intended to simplify the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost and net realizable value test. It will be effective for the first quarter of our fiscal year ending November 30, 2018, and early adoption is permitted. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606). This guidance is intended to improve—and converge with international standards—the financial reporting requirements for revenue from contracts with customers. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted for all entities, but not before the original effective date for public business entities (that is, annual reporting periods beginning after December 15, 2016 or our fiscal year ending November 30, 2018). We do not expect to early adopt this new accounting pronouncement. In preparation for our adoption of the new standard in our fiscal year ending November 30, 2019, we have obtained representative samples of contracts and other forms of agreements with our customers in the U.S. and international locations and are evaluating the provisions contained therein in light of the five-step model specified by the new guidance. That five-step model includes: (1) determination of whether a contract—an agreement between two or more parties that creates legally enforceable rights and obligations—exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. We are also evaluating the impact of the new standard on certain common practices currently employed by us and by other manufacturers of consumer products, such as slotting fees, co-operative advertising, rebates and other pricing allowances, merchandising funds and consumer coupons. We have not yet determined the impact of the new standard on our financial statements or whether we will adopt on a prospective or retrospective basis in the first quarter of our fiscal year ending November 30, 2019. |
Acquisitions |
3 Months Ended |
|---|---|
Feb. 28, 2017 | |
| Business Combinations [Abstract] | |
| ACQUISITIONS | ACQUISITIONS Acquisitions are part of our strategy to increase sales and profits. On December 15, 2016, we purchased 100% of the shares of Enrico Giotti SpA (Giotti), a leading European flavor manufacturer located in Italy, for a cash payment of $124.0 million (net of cash acquired of $1.2 million), subject to certain post-closing adjustments. The acquisition was funded with cash and short-term borrowings. Giotti is well known in the industry for its innovative beverage, sweet, savory and dairy flavor applications. At the time of the acquisition, annual sales of Giotti were approximately €53 million. Our acquisition of Giotti in fiscal 2017 expands the breadth of value-added products for McCormick's industrial segment, including additional expertise in flavoring health and nutrition products. As of February 28, 2017, a preliminary valuation of the acquired net assets of Giotti resulted in $2.5 million allocated to net tangible assets acquired, $9.8 million allocated to indefinite lived brand asset, $38.0 million allocated to definite lived intangible assets with a weighted-average life of 11.9 years and $74.9 million allocated to goodwill. Goodwill related to the Giotti acquisition, which is not deductible for tax purposes, primarily represents the intangible assets that do not qualify for separate recognition, such as the value of leveraging the customer intimacy and value-added flavor solutions we provide to our industrial customers to Giotti’s relationships with industrial customers of their flavors solutions and extracts, as well as from expected synergies from the combined operations and assembled workforces, and the future development initiatives of the assembled workforces. The preliminary valuation, based on a comparison of acquisitions of similar industrial businesses, provided average percentages of purchase prices assigned to goodwill and other identifiable intangible assets, which we used to initially value the Giotti acquisition. We expect to finalize the determination of the fair value of the acquired net assets of Giotti in the fourth quarter of 2017. Giotti has been included in our industrial segment since its acquisition. During the three months ended February 28, 2017, we recorded $2.1 million in transaction-related expenses associated with this acquisition. Due to the estimated impact of financing, acquisition and integration costs, we do not expect the operating income contribution of Giotti to be significant to our overall results for 2017. On April 19, 2016, we completed the purchase of 100% of the shares of Botanical Food Company, Pty Ltd, owner of the Gourmet Garden brand of packaged herbs (Gourmet Garden), a privately held company based in Australia. Gourmet Garden is a global market leader in chilled convenient packaged herbs. Gourmet Garden's products complement our existing branded herb portfolio with the addition of chilled convenient herbs located in the perimeter of the grocery store. We plan to drive sales of the Gourmet Garden brand by expanding global distribution and building awareness with increased brand investment. At the time of acquisition, annual sales of Gourmet Garden were approximately 70 million Australian dollars. The purchase price was $116.2 million, net of cash acquired of $3.3 million and after closing adjustments, and was financed with a combination of cash and short-term borrowings. A preliminary valuation of the acquired net assets of Gourmet Garden resulted in $20.4 million allocated to net tangible assets acquired, $20.3 million allocated to indefinite lived brand asset, $14.2 million allocated to definite lived intangible assets with a weighted-average life of 12.0 years and $61.3 million allocated to goodwill. Goodwill related to the Gourmet Garden acquisition, which is not deductible for tax purposes, primarily represents the intangible assets that do not qualify for separate recognition, such as the value of leveraging our brand building expertise, our insights in demand from consumers for herbs, and our supply chain capabilities, as well as expected synergies from the combined operations and assembled workforce. The preliminary valuation, based on a comparison of acquisitions of similar consumer businesses, provided average percentages of purchase prices assigned to goodwill and other identifiable intangible assets, which we used to initially value the Gourmet Garden acquisition. We expect to finalize the determination of the fair value of the acquired net assets of Gourmet Garden in the second quarter of 2017. Gourmet Garden has been included in our consumer segment since its acquisition. While this business has an industrial component, the industrial component was not material to its overall business in 2016. Beginning in 2017, the industrial component of Gourmet Garden is being reflected as a component of our industrial segment. For the first quarter of 2017, Gourmet Garden and Giotti added $16.6 million and $11.1 million, respectively, to our sales. Due to financing, acquisition and integration costs, the aggregate incremental operating income contributed by Gourmet Garden and Giotti was not significant to our overall results for the three months ended February 28, 2017. Proforma financial information for these acquisitions has not been presented because the financial impact is not material. |
Special Charges |
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| Special Charges [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Special Charges [Text Block] |
We continue to evaluate changes to our organization structure to enable us to reduce fixed costs, simplify or improve processes, and improve our competitiveness. In our consolidated income statement, we include a separate line item captioned “special charges” in arriving at our consolidated operating income. Special charges consist of expenses associated with certain actions undertaken by the Company to reduce fixed costs, simplify or improve processes, and improve our competitiveness and are of such significance in terms of both up-front costs and organizational/structural impact to require advance approval by our Management Committee, comprised of our senior management, including our Chairman, President and Chief Executive Officer. Upon presentation of any such proposed action (generally including details with respect to estimated costs, which typically consist principally of employee severance and related benefits, together with ancillary costs associated with the action that may include a non-cash component or a component which relates to inventory adjustments that are included in cost of goods sold; impacted employees or operations; expected timing; and expected savings) to the Management Committee and the Committee’s advance approval, expenses associated with the approved action are classified as special charges upon recognition and monitored on an on-going basis through completion. During the three months ended February 28, 2017, we recorded $3.6 million of special charges, consisting primarily of $1.9 million for severance and other exit costs associated with our Europe, Middle East and Africa (EMEA) region’s closure of its manufacturing plant in Portugal in mid-2017; $1.0 million related to third party expenses incurred associated with our evaluation of organizational streamlining activities; $0.3 million for other exit costs related to the 2015 discontinuance of Kohinoor's non-profitable bulk-packaged and broken basmati rice product lines, and $0.2 million for other exit costs related to the planned exit from our current leased manufacturing facilities in Singapore and Thailand upon construction of a new manufacturing facility in Thailand, which was initiated in 2016. Of the $3.6 million in special charges recorded during the three months ended February 28, 2017, approximately $1.3 million were paid in cash and $0.5 million represented a non-cash asset impairment, with the remaining accrual expected to be substantially paid in 2017. In addition to the amounts recognized in the first quarter of 2017, we expect to incur additional special charges during the balance of 2017 of $7.4 million, consisting of $1.1 million associated with the plant closure in Portugal and related relocation of manufacturing, $3.3 million of additional third party expenses associated with our evaluation of organizational streamlining activities, and approximately $3 million for other streamlining actions approved by our Management Committee and more fully described in our Annual Report on Form 10-K for the year ended November 30, 2016. These other streamlining actions include: (1) the write-off of the foreign currency translation adjustment, which is included as a component of other comprehensive income, associated with our former consolidated joint venture in South Africa, which we exited in late 2016, upon its liquidation; (2) other costs associated with the planned exit of two leased manufacturing facilities in Singapore and Thailand described above; (3) other exit costs related to our Kohinoor business described above; and (4) other amounts associated with the EMEA reorganization plans initiated in 2015. During the three months ended February 29, 2016, we recorded $1.6 million of special charges, consisting of $1.1 million related to other exit costs associated with actions undertaken to enhance organization efficiency and streamline processes in our EMEA region (which is more fully described below), $0.3 million for other exit costs related to the discontinuance of Kohinoor's non-profitable bulk-packaged and broken basmati rice product lines, and $0.2 million for employee severance and related costs associated with our North America effectiveness initiative. All of these are a continuation of actions that were initiated in 2015. Substantially all of the $1.6 million of 2016 special charges were paid in cash during the three months ended February 29, 2016. Of the $3.6 million of special charges recorded in our consolidated financial statements in the first quarter of 2017, $2.5 million related to our consumer segment and $1.1 million related to our industrial segment. Of the $1.6 million of special charges recorded in our consolidated financial statements for the first quarter of 2016, $1.3 million related to our consumer segment and $0.3 million related to our industrial segment. All balances associated with our special charges are included in other accrued liabilities in our consolidated balance sheet. In 2015, we initiated projects to enhance organization efficiency and streamline processes in EMEA in order to support our competitiveness and long-term growth. These initiatives center on actions intended to reduce fixed costs and improve business processes, as well as continue to drive simplification across the business and supply chain. These actions include the transfer of certain additional activities to our shared services center in Poland. These projects were continued in 2016. The following table outlines the major components of accrual balances and activity relating to the special charges associated with the EMEA reorganization plans that were initiated in 2015 for the three months ended February 28, 2017 and February 29, 2016 (in millions):
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Goodwill (Notes) |
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| Goodwill Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Text Block] | GOODWILL The changes in the carrying amount of goodwill by segment for the three months ended February 28, 2017 and February 29, 2016 were as follows (in millions):
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Financial Instruments |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCIAL INSTRUMENTS | FINANCING ARRANGEMENTS AND FINANCIAL INSTRUMENTS In July 2016, we entered into a 15-year lease for a headquarters building in Hunt Valley, Maryland. The lease, which is expected to commence upon completion of building construction and fit-out, currently scheduled for the second half of 2018, requires monthly lease payments of approximately $0.9 million beginning six months after lease commencement. The $0.9 million monthly lease payment is subject to adjustment after an initial 60-month period and thereafter on an annual basis as specified in the lease agreement. In addition, the initial $0.9 million monthly lease payment is subject to increase in the event of agreed-upon changes to specifications related to the headquarters building. We expect to consolidate our Corporate staff and certain non-manufacturing U.S. employees, currently housed in four locations in the Hunt Valley, Maryland area, to the new headquarters building. We use derivative financial instruments to enhance our ability to manage risk, including foreign currency and interest rate exposures, which exist as part of our ongoing business operations. We do not enter into contracts for trading purposes, nor are we a party to any leveraged derivative instruments. The use of derivative financial instruments is monitored through regular communication with senior management and the use of written guidelines. During fiscal year 2016, we entered into multiple fair value foreign currency exchange contracts to hedge the currency component of certain intercompany loans between our subsidiaries. At February 28, 2017, the notional value of these contracts was $113.0 million. During the three months ended February 28, 2017, we recognized a $2.7 million loss on the change in fair value of these contracts, which was offset by a $2.5 million gain on the change in the currency component of the underlying loans. Both the loss and the gain were recognized in our consolidated income statement as other income, net. During the three months ended February 28, 2017, we entered into a total of $75 million of forward starting interest rate swap agreements to manage our interest rate risk associated with the anticipated issuance of at least $75 million of fixed rate notes by December 2017. The weighted average fixed rate of these agreements is 2.49% and is based upon the applicable U.S. LIBOR swap rate at the inception of each agreement. We intend to cash settle these agreements upon issuance of the notes. If the applicable U.S. LIBOR swap rate increases at the time of settlement of the agreements, we will receive a one-time cash payment from the counterparties. If the applicable U.S. LIBOR swap rate decreases at the time of settlement of the agreements, we will make a one-time cash payment to the counterparties.We have designated these forward starting interest rate swap agreements, which expire on December 15, 2017, as cash flow hedges. Amounts associated with these agreements, including the related mark-to-market prior to settlement, will be deferred in other comprehensive income; upon settlement, any gain or loss realized will be amortized over the life of the fixed rate notes as a component of interest expense. As of February 28, 2017, the maximum time frame for our foreign exchange forward contracts is 9 months. For all derivatives, the net amount of accumulated other comprehensive income expected to be reclassified in the next 12 months is $2.1 million as an increase to earnings. All derivatives are recognized at fair value in the balance sheet and recorded in either current or noncurrent other assets or other accrued liabilities or other long-term liabilities depending upon their nature and maturity. The following table discloses the fair values of derivative instruments on our balance sheet (in millions):
The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our income statement for the three month periods ended February 28, 2017 and February 29, 2016 (in millions):
The amount of gain or loss recognized in income on the ineffective portion of derivative instruments is not material. The amounts noted in the tables above for OCI do not include any adjustments for the impact of deferred income taxes. |
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value can be measured using valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). Accounting standards utilize a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Our population of financial assets and liabilities subject to fair value measurements on a recurring basis are as follows (in millions):
Because of their short-term nature, the amounts reported in the balance sheet for cash and cash equivalents, receivables, short-term borrowings and trade accounts payable approximate fair value. The fair values of insurance contracts are based upon the underlying values of the securities in which they are invested and are from quoted market prices from various stock and bond exchanges for similar type assets. The fair values of bonds and other long-term investments are based on quoted market prices from various stock and bond exchanges. The fair values for interest rate and foreign currency derivatives are based on values for similar instruments using models with market based inputs. The following table sets forth the carrying amount and fair values of our long-term debt (including the current portion thereof) at February 28, 2017, February 29, 2016 and November 30, 2016 (in millions):
The acquisition-date fair value of the liability for contingent consideration related to our acquisition of Drogheria & Alimentari (D&A) was approximately $27.7 million as of the acquisition date in May 2015. The fair value of the liability as of February 28, 2017 was $29.3 million and was included in other long-term liabilities in our consolidated balance sheet. The fair value of the liability both at acquisition and as of each reporting period is estimated using a discounted cash flow technique applied to the expected payout with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in the FASB's Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures. The significant inputs in the Level 3 measurement not supported by market activity included our probability assessments of expected future cash flows related to our acquisition of D&A during the calendar 2017 earn-out period, adjusted for expectations of the amounts and ultimate resolution of likely disputes to be raised by the seller and by us as provided in the purchase agreement, discounted considering the uncertainties associated with the obligation, and calculated in accordance with the terms of the purchase agreement. Changes in the fair value of the liability for contingent consideration, excluding the impact of foreign currency, will be recognized in income on a quarterly basis until settlement in fiscal 2018. The change in fair value of our Level 3 liabilities, which relates solely to the contingent consideration related to our acquisition of D&A, for the three months ended February 28, 2017 and February 29, 2016 is summarized as follows (in millions):
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Employee Benefit and Retirement Plans |
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| Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EMPLOYEE BENEFIT AND RETIREMENT PLANS | EMPLOYEE BENEFIT AND RETIREMENT PLANS During the quarter ending February 28, 2017, we made the following significant changes to our employee benefit and retirement plans:
As a result of these changes, we remeasured pension assets and benefit obligations as of the dates of the approvals indicated above and reduced the U.S. and U.K. plan benefit obligations by $69.9 million and $7.8 million, respectively. These remeasurements resulted in non-cash, pre-tax net actuarial gains of $77.7 million, which principally consist of curtailment gains of $76.7 million, and are included in our Consolidated Statement of Comprehensive Income for the three months ended February 28, 2017, as a component of Other comprehensive income (loss) on the line entitled Unrealized components of pension plans. Deferred taxes associated with these actuarial gains, together with other unrealized components of pension plans recognized during the three months ended February 28, 2017, are also included in that statement as a component of Other comprehensive income (loss). The following table presents the components of our pension expense of the defined benefit plans for the three months ended February 28, 2017 and February 29, 2016 (in millions):
During the three months ended February 28, 2017 and February 29, 2016, we contributed $6.3 million and $6.9 million, respectively, to our pension plans. Total contributions to our pension plans in fiscal year 2016 were $25.1 million. The following table presents the components of our other postretirement benefits expense (in millions):
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Stock-based Compensation |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation | STOCK-BASED COMPENSATION We have three types of stock-based compensation awards: restricted stock units (RSUs), stock options and company stock awarded as part of our long-term performance plan (LTPP). The following table sets forth the stock-based compensation expense recorded in selling, general and administrative (SG&A) expense (in millions):
Our 2017 annual grant of stock options and RSUs is expected to occur in the second quarter, similar to the 2016 annual grant. The following is a summary of our stock option activity for the three months ended February 28, 2017 and February 29, 2016:
As of February 28, 2017, the intrinsic value (the difference between the exercise price and the market price) for all options outstanding was $155.2 million and for options currently exercisable was $142.4 million. The total intrinsic value of all options exercised during the three months ended February 28, 2017 and February 29, 2016 was $4.4 million and $5.6 million, respectively. The following is a summary of our RSU activity for the three months ended February 28, 2017 and February 29, 2016:
The following is a summary of our LTPP activity for the three months ended February 28, 2017 and February 29, 2016:
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Income Taxes |
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Feb. 28, 2017 | |
| Income Tax Disclosure [Abstract] | |
| Income tax disclosure | INCOME TAXES Income taxes for the three months ended February 28, 2017 included $2.4 million of discrete tax benefits consisting of the following: (i) $1.6 million related to excess tax benefits associated with share-based compensation, and (ii) the reversal of unrecognized tax benefits and related interest of $0.9 million associated with the expiration of statute of limitations in various jurisdictions; offset by a $0.1 million net detriment for the revaluation of deferred tax assets related to legislation enacted in our first quarter. Other than the discrete tax benefits mentioned previously and additions for current year tax positions, there were no significant changes to unrecognized tax benefits during the three months ended February 28, 2017. Income taxes for the three months ended February 29, 2016 included $3.8 million of discrete tax benefits consisting of the following: (i) recognition of the tax year 2015 research tax credit of $2.4 million related to new legislation enacted in our first quarter of 2016; (ii) the reversal of unrecognized tax benefits and related interest of $0.7 million associated with the expiration of statute of limitations in various jurisdictions; and (iii) a $0.7 million revaluation of a deferred tax liability related to legislation enacted in our first quarter of 2016 reducing the statutory tax rate for a non-US jurisdiction. As of February 28, 2017, we believe the reasonably possible total amount of unrecognized tax benefits that could increase or decrease in the next 12 months as a result of various statute expirations, audit closures, and/or tax settlements would not be material to our consolidated financial statements. |
Earnings Per Share and Stock Issuances |
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| Earnings Per Share, Basic and Diluted [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EARNINGS PER SHARE AND STOCK ISSUANCES | EARNINGS PER SHARE AND STOCK ISSUANCE The following table sets forth the reconciliation of average shares outstanding (in millions):
The following table sets forth the stock options and RSUs for the three months ended February 28, 2017 and February 29, 2016 which were not considered in our earnings per share calculation since they were anti-dilutive (in millions):
The following table sets forth the common stock activity for the three months ended February 28, 2017 and February 29, 2016 under the Company’s stock option and employee stock purchase plans and the repurchases of common stock under its stock repurchase program (in millions):
As of February 28, 2017, $244 million remained of the $600 million share repurchase authorization that was authorized by the Board of Directors in March 2015. |
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Accumulated Other Comprehensive Income |
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| Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMPREHENSIVE INCOME | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table sets forth the components of accumulated other comprehensive income (loss), net of tax where applicable (in millions):
The following table sets forth the amounts reclassified from accumulated other comprehensive income (loss) and into consolidated net income for the three months ended February 28, 2017 and February 29, 2016 (in millions):
(1) This accumulated other comprehensive income component is included in the computation of total pension expense (refer to note 7 for additional details). |
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Business Segments |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS SEGMENTS | BUSINESS SEGMENTS We operate in two business segments: consumer and industrial. The consumer and industrial segments manufacture, market and distribute spices, seasoning mixes, condiments and other flavorful products throughout the world. Our consumer segment sells to retail outlets, including grocery, mass merchandise, warehouse clubs, discount and drug stores under the “McCormick” brand and a variety of brands around the world, including “Lawry’s”, “Zatarain’s”, “Simply Asia”, “Thai Kitchen”, “Ducros”, “Vahine”, “Schwartz”, “Club House”, “Kamis”, “Kohinoor”, “DaQiao”, “Drogheria & Alimentari”, "Stubb's", and "Gourmet Garden". Our industrial segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors. In each of our segments, we produce and sell many individual products which are similar in composition and nature. With their primary attribute being flavor, we regard the products within each of our segments to be fairly homogenous. It is impracticable to segregate and identify sales and profits for each of these individual product lines. We measure segment performance based on operating income excluding special charges as this activity is managed separately from the business segments. Although the segments are managed separately due to their distinct distribution channels and marketing strategies, manufacturing and warehousing are often integrated to maximize cost efficiencies. We do not segregate jointly utilized assets by individual segment for internal reporting, evaluating performance or allocating capital. Because of manufacturing integration for certain products within the segments, products are not sold from one segment to another but rather inventory is transferred at cost. Intersegment sales are not material.
A reconciliation of operating income excluding special charges (which we use to measure segment profitability) to operating income is as follows (in millions):
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Subsequent Event (Notes) |
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| Subsequent Event [Line Items] | |
| Subsequent Events [Text Block] | SUBSEQUENT EVENT On March 24, 2017, we entered into a 364-day $250 million revolving credit facility, which will support our commercial paper program and expire in March 2018. The pricing for the credit facility, on a fully drawn basis, is LIBOR plus 0.75%. |
Accounting Policies (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||
| Basis of presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and notes required by United States generally accepted accounting principles (U.S. GAAP) for complete financial statements. In our opinion, the accompanying condensed consolidated financial statements contain all adjustments, which are of a normal and recurring nature, necessary to present fairly the financial position and the results of operations for the interim periods presented. The results of consolidated operations for the three month period ended February 28, 2017 are not necessarily indicative of the results to be expected for the full year. Historically, our net sales, net income and cash flow from operations are lower in the first half of the fiscal year and increase in the second half. The typical increase in net sales, net income and cash flow from operations in the second half of the year is largely due to the consumer business cycle in the U.S., where customers typically purchase more products in the fourth quarter due to the Thanksgiving and Christmas holiday seasons. For further information, refer to the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended November 30, 2016. As of November 30, 2016, we adopted ASU 2015-03 Simplifying the Presentation of Debt Issuance Costs, which eliminated the prior requirement to recognize debt issuance costs as an asset and instead requires classification as a direct reduction from the carrying amount of the debt liability, and ASU 2015-17 Balance Sheet Classification of Deferred Taxes (Topic 740), which, for entities with a classified balance sheet, eliminated the prior requirement to classify deferred tax assets and liabilities as current and non-current and instead requires the presentation of all deferred tax assets and liabilities as noncurrent. As a result, the accompanying condensed consolidated balance sheet as of February 29, 2016, has been restated to reflect the requirements of these newly adopted standards. |
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| Accounting and disclosure charges | In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-09 Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which changes the accounting for certain aspects of share-based payments to employees. The new guidance requires, among its other provisions, that excess tax benefits (which represent the excess of actual tax benefits received at the date of vesting or settlement over the benefits recognized over the vesting period or upon issuance of share-based payments) and tax deficiencies (which represent the amount by which actual tax benefits received at the date of vesting or settlement is lower than the benefits recognized over the vesting period or upon issuance of share-based payments) be recorded in the income statement as an increase or decrease in income taxes when the awards vest or are settled. This is in comparison to the prior requirement that these excess tax benefits be recognized in additional paid-in capital and these tax deficiencies be recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement. The new guidance also requires excess tax benefits to be classified along with other income tax cash flows as an operating activity in the statement of cash flows rather than, as previously required, a financing activity. The new guidance is effective for the first quarter of our fiscal year ending November 30, 2018, with early adoption permitted. We have elected to early adopt ASU 2016-09 effective December 1, 2016 on a prospective basis where permitted by the new standard. As a result of this adoption:
Recently Issued Accounting Pronouncements In March 2017, the FASB issued Accounting Standards Update No. 2017-07 Compensation-Retirement Benefits (Topic 715)-Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This guidance revises how employers that sponsor defined benefit pension and other postretirement plans present the net periodic benefit cost in their income statement and requires that the service cost component of net periodic benefit cost be presented in the same income statement line items as other employee compensation costs from services rendered during the period. Of the components of net periodic benefit cost, only the service cost component will be eligible for asset capitalization. The other components of the net periodic benefit cost must be presented separately from the line items that include the service cost and outside of any subtotal of operating income on the income statement. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted as of the beginning of an annual reporting period for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-04 Intangibles-Goodwill and Other Topics (Topic 350)-Simplifying the Test for Goodwill Impairment. This guidance eliminates the requirement to calculate the implied fair value of goodwill of a reporting unit to measure a goodwill impairment charge. Instead, a company will record an impairment charge based on the excess of a reporting unit's carrying amount over its fair value. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2021. Early adoption is permitted for all entities for annual and interim goodwill impairment testing dates after January 1, 2017. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In January 2017, the FASB issued Accounting Standards Update No. 2017-01 Business Combinations (Topic 805)-Clarifying the Definition of a Business. This guidance changes the definition of a business to assist entities in evaluating when a set of transferred assets and activities constitutes a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The guidance also requires a business to include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in Accounting Standards Codification (ASC 606) Revenue from Contracts with Customers. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02 Leases (Topic 842). This guidance revises existing practice related to accounting for leases under Accounting Standards Codification Topic 840 Leases (ASC 840) for both lessees and lessors. Our leases as of February 28, 2017 principally relate to: (i) certain real estate, including that related to a number of administrative, distribution and manufacturing locations; (ii) certain machinery and equipment, including a corporate airplane and automobiles; and (iii) certain software. In addition, in 2016, we entered into a 15-year lease for a headquarters building, which is expected to commence upon completion of building construction and fit-out, currently scheduled for the second half of 2018. The new guidance in ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The lease liability will be equal to the present value of lease payments and the right-of-use asset will be based on the lease liability, subject to adjustment such as for initial direct costs. For income statement purposes, the new standard retains a dual model similar to ASC 840, requiring leases to be classified as either operating or finance. For lessees, operating leases will result in straight-line expense (similar to current accounting by lessees for operating leases under ASC 840) while finance leases will result in a front-loaded expense pattern (similar to current accounting by lessees for capital leases under ASC 840). While the new standard maintains similar accounting for lessors as under ASC 840, the new standard reflects updates to, among other things, align with certain changes to the lessee model. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2020. Early adoption is permitted for all entities. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In July 2015, the FASB issued Accounting Standards Update No. 2015-11 Simplifying the Measurement of Inventory (Topic 330). This guidance is intended to simplify the subsequent measurement of inventories by replacing the current lower of cost or market test with a lower of cost and net realizable value test. It will be effective for the first quarter of our fiscal year ending November 30, 2018, and early adoption is permitted. We have not yet determined the impact from adoption of this new accounting pronouncement on our financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Topic 606). This guidance is intended to improve—and converge with international standards—the financial reporting requirements for revenue from contracts with customers. The new standard will be effective for the first quarter of our fiscal year ending November 30, 2019. Early adoption is permitted for all entities, but not before the original effective date for public business entities (that is, annual reporting periods beginning after December 15, 2016 or our fiscal year ending November 30, 2018). We do not expect to early adopt this new accounting pronouncement. In preparation for our adoption of the new standard in our fiscal year ending November 30, 2019, we have obtained representative samples of contracts and other forms of agreements with our customers in the U.S. and international locations and are evaluating the provisions contained therein in light of the five-step model specified by the new guidance. That five-step model includes: (1) determination of whether a contract—an agreement between two or more parties that creates legally enforceable rights and obligations—exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. We are also evaluating the impact of the new standard on certain common practices currently employed by us and by other manufacturers of consumer products, such as slotting fees, co-operative advertising, rebates and other pricing allowances, merchandising funds and consumer coupons. We have not yet determined the impact of the new standard on our financial statements or whether we will adopt on a prospective or retrospective basis in the first quarter of our fiscal year ending November 30, 2019. |
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| Special charges rollforward [Table Text Block] | The following table outlines the major components of accrual balances and activity relating to the special charges associated with the EMEA reorganization plans that were initiated in 2015 for the three months ended February 28, 2017 and February 29, 2016 (in millions):
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Feb. 28, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Goodwill [Table Text Block] | The changes in the carrying amount of goodwill by segment for the three months ended February 28, 2017 and February 29, 2016 were as follows (in millions):
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Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair values of derivative instruments on balance sheet | The following table discloses the fair values of derivative instruments on our balance sheet (in millions):
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| Fair Value Hedging [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impact of fair value and cash flow hedges on other comprehensive income, accumulated other comprehensive income and income statement | The following tables disclose the impact of derivative instruments on our other comprehensive income (OCI), accumulated other comprehensive income (AOCI) and our income statement for the three month periods ended February 28, 2017 and February 29, 2016 (in millions):
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| Cash Flow Hedging [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impact of fair value and cash flow hedges on other comprehensive income, accumulated other comprehensive income and income statement |
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Fair Value Measurements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Assets and liabilities measured at fair value on recurring basis | Our population of financial assets and liabilities subject to fair value measurements on a recurring basis are as follows (in millions):
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| Fair Value, by Balance Sheet Grouping [Table Text Block] | The following table sets forth the carrying amount and fair values of our long-term debt (including the current portion thereof) at February 28, 2017, February 29, 2016 and November 30, 2016 (in millions):
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| Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The change in fair value of our Level 3 liabilities, which relates solely to the contingent consideration related to our acquisition of D&A, for the three months ended February 28, 2017 and February 29, 2016 is summarized as follows (in millions):
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Employee Benefit and Retirement Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of defined benefit plans disclosures | The following table presents the components of our pension expense of the defined benefit plans for the three months ended February 28, 2017 and February 29, 2016 (in millions):
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| Schedule of costs of retirement plans | The following table presents the components of our other postretirement benefits expense (in millions):
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Compensation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Assumptions Used [Table Text Block] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Based Compensation in Selling, General and Administrative Expense | The following table sets forth the stock-based compensation expense recorded in selling, general and administrative (SG&A) expense (in millions):
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| Summary of Option Activity | The following is a summary of our stock option activity for the three months ended February 28, 2017 and February 29, 2016:
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| Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] | The following is a summary of our RSU activity for the three months ended February 28, 2017 and February 29, 2016:
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| Schedule of Share Based Compensation, Performance Shares, Activity [Table Text Block] | The following is a summary of our LTPP activity for the three months ended February 28, 2017 and February 29, 2016:
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Earnings Per Share and Stock Issuances (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Feb. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share, Basic and Diluted [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of average shares outstanding | The following table sets forth the reconciliation of average shares outstanding (in millions):
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| Anti-dilutive securities not considered in earnings per share calculation | The following table sets forth the stock options and RSUs for the three months ended February 28, 2017 and February 29, 2016 which were not considered in our earnings per share calculation since they were anti-dilutive (in millions):
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| Common stock activity | The following table sets forth the common stock activity for the three months ended February 28, 2017 and February 29, 2016 under the Company’s stock option and employee stock purchase plans and the repurchases of common stock under its stock repurchase program (in millions):
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Accumulated Other Comprehensive Income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accumulated other comprehensive income (loss) | The following table sets forth the components of accumulated other comprehensive income (loss), net of tax where applicable (in millions):
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| Comprehensive Income (Loss) Note [Text Block] | The following table sets forth the amounts reclassified from accumulated other comprehensive income (loss) and into consolidated net income for the three months ended February 28, 2017 and February 29, 2016 (in millions):
(1) This accumulated other comprehensive income component is included in the computation of total pension expense (refer to note 7 for additional details). |
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Business Segments (Tables) |
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Feb. 28, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting, Revenue Reconciling Item [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reconciliation of Revenue from Segments to Consolidated [Table Text Block] | A reconciliation of operating income excluding special charges (which we use to measure segment profitability) to operating income is as follows (in millions):
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| Business segments |
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Accounting Policies Accounting Policies - Additional Information (Details) $ in Millions |
3 Months Ended |
|---|---|
|
Feb. 28, 2017
USD ($)
| |
| Accounting Policies [Abstract] | |
| New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 1.6 |
Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | |||
|---|---|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
Nov. 30, 2016 |
Nov. 30, 2015 |
|
| Goodwill [Line Items] | ||||
| Goodwill | $ 1,857.6 | $ 1,764.0 | $ 1,771.4 | |
| Consumer Segment [Member] | ||||
| Goodwill [Line Items] | ||||
| Goodwill, Acquired During Period | 0.0 | 0.0 | ||
| Goodwill | 1,618.3 | 1,595.3 | 1,608.3 | $ 1,587.7 |
| Goodwill, Purchase Accounting Adjustments | (0.4) | 0.0 | ||
| Goodwill, Translation Adjustments | 10.4 | 7.6 | ||
| Industrial Segment [Member] | ||||
| Goodwill [Line Items] | ||||
| Goodwill, Acquired During Period | 74.9 | 0.0 | ||
| Goodwill | 239.3 | 168.7 | $ 163.1 | $ 171.6 |
| Goodwill, Purchase Accounting Adjustments | 0.0 | 0.0 | ||
| Goodwill, Translation Adjustments | $ 1.3 | $ (2.9) | ||
Financial Instruments - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Debt Instrument [Line Items] | ||
| Lessee Leasing Arrangements, Operating Leases, Term of Contract | 15 years | |
| Operating Leases, Rent Expense, Net | $ 0.9 | |
| Maximum time frame for foreign exchange contracts, months | 9 months | |
| Amount of accumulated other comprehensive income expected to be reclassified to earnings in next 12 months | $ 2.1 | |
| Other Income [Member] | Fair Value Hedging [Member] | Foreign Exchange Contract [Member] | ||
| Debt Instrument [Line Items] | ||
| Foreign Currency Transaction Gain (Loss), Realized | (2.7) | $ 0.0 |
| Other Income [Member] | Fair Value Hedging [Member] | Loans Payable [Member] | ||
| Debt Instrument [Line Items] | ||
| Foreign Currency Transaction Gain (Loss), Realized | $ 2.5 | $ 0.0 |
Financial Instruments-Impact of Cash Flow Hedges on Other Comprehensive Income, Accumulated Other Comprehensive Income and Income Statement (Details) - Cash Flow Hedging [Member] - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Gain or (Loss) recognized in OCI | $ (0.6) | $ 2.1 |
| Gain or (Loss) reclassified from AOCI | 1.0 | 1.2 |
| Interest Rate Contract [Member] | ||
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Gain or (Loss) recognized in OCI | (0.2) | 0.0 |
| Interest Rate Contract [Member] | Interest Expense [Member] | ||
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Gain or (Loss) reclassified from AOCI | (0.1) | (0.1) |
| Foreign Exchange Contract [Member] | ||
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Gain or (Loss) recognized in OCI | (0.4) | 2.1 |
| Foreign Exchange Contract [Member] | Cost of Sales [Member] | ||
| Derivative Instruments, Gain (Loss) [Line Items] | ||
| Gain or (Loss) reclassified from AOCI | $ 1.1 | $ 1.3 |
Fair Value Measurements Changes in Level 3 Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
| Contingent consideration related to acquisition, beginning balance | $ 28.9 | $ 27.1 |
| Post acquisition | 0.3 | 0.4 |
| Impact of foreign currency | 0.1 | 0.9 |
| Contingent consideration related to acquisition, ending balance | $ 29.3 | $ 28.4 |
Employee Benefit And Retirement Plans-Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
Nov. 30, 2015 |
|
| Compensation and Retirement Disclosure [Abstract] | |||
| Pension Contributions | $ 6.3 | $ 6.9 | $ 25.1 |
Employee Benefit and Retirement Plans-Components of Other Postretirement Benefit Expenses (Details) - Other postretirement benefits [Member] - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
| Service cost | $ 0.7 | $ 0.8 |
| Interest costs | 0.9 | 0.9 |
| Defined Benefit Plan, Amortization of Gains (Losses) | 0.0 | 0.1 |
| Total other postretirement expense | $ 1.6 | $ 1.6 |
Stock-Based Compensation - Additional Information (Detail) $ in Millions |
3 Months Ended | |
|---|---|---|
|
Feb. 28, 2017
USD ($)
award_type
|
Feb. 29, 2016
USD ($)
|
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Number of Stock-based Compensation Award Types | award_type | 3 | |
| Intrinsic value for all options outstanding | $ 155.2 | |
| Intrinsic value for exercisable options | 142.4 | |
| Total Intrinsic Value of all options exercised | $ 4.4 | $ 5.6 |
Stock-Based Compensation-Selling, General and Administrative Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Share-based Compensation [Abstract] | ||
| Total stock-based compensation expense | $ 4.1 | $ 3.0 |
Stock-Based Compensation-Range of Assumptions for Various Stock Compensation Plans (Details) |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Risk-free interest rate, minimum | 0.00% | 0.00% |
| Risk-free interest rate, maximum | 0.00% | 0.00% |
| Expected volatility, minimum | 0.00% | 0.00% |
| Expected volatility, maximum | 0.00% | 0.00% |
Stock-Based Compensation-Summary of Stock Option Activity (Details) - Stock Options [Member] - $ / shares shares in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
| Outstanding at beginning of period, Number of Shares | 4.9 | 4.8 |
| Exercised, Number of Shares | 0.1 | 0.1 |
| Outstanding at end of period, Number of Shares | 4.8 | 4.7 |
| Excercisable at end of the period, Number of Shares | 3.7 | 3.0 |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
| Outstanding at beginning of period, Weighted-Average Exercise Price | $ 66.00 | $ 59.20 |
| Exercised, Weighted-Average Exercise Price | 63.75 | 41.95 |
| Outstanding at end of period, Weighted-Average Exercise Price | 66.04 | 59.64 |
| Exercisable at end of the period, Weighted-Average Exercise Price | $ 59.93 | $ 52.41 |
Stock-Based Compensation-Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares shares in Thousands |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
| Outstanding at beginning of period, Number of Shares | 267 | 270 |
| Vested, Number of Shares | 3 | 4 |
| Forfeited, Number of Shares | 2 | 3 |
| Outstanding at end of period, Number of Shares | 262 | 263 |
| Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
| Outstanding at beginning of period, Weighted-Average Grant-Date Fair Value | $ 80.08 | $ 71.03 |
| Vested, Weighted-Average Grant-Date Fair Value | 71.35 | 37.94 |
| Forfeited, Weighted-Average Grant-Date Fair Value | 85.37 | 74.11 |
| Outstanding at end of period, Weighted-Average Grant-Date Fair Value | $ 80.13 | $ 71.49 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Income Tax Examination [Line Items] | ||
| Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | $ 0.9 | $ 0.7 |
| Effective Income Tax Rate Reconciliation, Tax Credit, Amount | 2.4 | 3.8 |
| Foreign Tax Authority [Member] | ||
| Income Tax Examination [Line Items] | ||
| Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | 0.1 | |
| Change in enacted tax rate | 0.7 | |
| Domestic Tax Authority [Member] | ||
| Income Tax Examination [Line Items] | ||
| Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | $ 1.6 | |
| Effective Income Tax Rate Reconciliation, Tax Credit, Research, Amount | $ 2.4 | |
Earnings Per Share and Stock Issuances-Reconciliation of Average Shares Outstanding (Details) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Earnings Per Share, Basic and Diluted [Abstract] | ||
| Average shares outstanding - basic (shares) | 125.1 | 127.1 |
| Effect of dilutive securities: [Abstract] | ||
| Stock options/Restricted Stock Units (RSUs)/MTIP | 1.8 | 1.2 |
| Average shares outstanding-diluted | 126.9 | 128.3 |
Earnings Per Share and Stock Issuances-Antidilutive Securities not Considered in Earnings Per Share Calculation (Details) - shares shares in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Earnings Per Share, Basic and Diluted [Abstract] | ||
| Anti-dilutive securities | 0.8 | 0.2 |
Earnings Per Share and Stock Issuances-Common Stock Activity (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Employee Stock Purchase Plan [Line Items] | ||
| Stock Repurchase Program, Authorized Amount | $ 600 | |
| Stock Options And Restricted Stock Units [Member] | ||
| Employee Stock Purchase Plan [Line Items] | ||
| Shares issued under stock option, employee stock purchase plans and RSUs | 0.2 | 0.1 |
| Share Repurchase Program [Member] | ||
| Employee Stock Purchase Plan [Line Items] | ||
| Stock Repurchased During Period, Shares | 0.9 | 0.6 |
Earnings Per Share and Stock Issuances-Additional Information (Details) $ in Millions |
Feb. 28, 2017
USD ($)
|
|---|---|
| Earnings Per Share, Basic and Diluted [Abstract] | |
| Stock repurchase program, remaining authorized repurchase amount | $ 244 |
| Stock Repurchase Program, Authorized Amount | $ 600 |
Business Segments - Additional Information (Detail) |
3 Months Ended |
|---|---|
|
Feb. 28, 2017
segment
| |
| Segment Reporting [Abstract] | |
| Number of operating segments | 2 |
Business Segments (Detail) - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Feb. 28, 2017 |
Feb. 29, 2016 |
|
| Segment Reporting Information [Line Items] | ||
| Operating Income (Loss) | $ 134.2 | $ 129.1 |
| Special Charges | 3.6 | 1.6 |
| Net sales | 1,043.7 | 1,030.2 |
| Income from unconsolidated operations | 7.0 | 8.4 |
| Operating income excluding special charges | 137.8 | 130.7 |
| Consumer [Member] | ||
| Segment Reporting Information [Line Items] | ||
| Operating Income (Loss) | 95.4 | 93.0 |
| Special Charges | 2.5 | 1.3 |
| Net sales | 638.6 | 633.8 |
| Income from unconsolidated operations | 6.5 | 7.6 |
| Operating income excluding special charges | 97.9 | 94.3 |
| Industrial [Member] | ||
| Segment Reporting Information [Line Items] | ||
| Operating Income (Loss) | 38.8 | 36.1 |
| Special Charges | 1.1 | 0.3 |
| Net sales | 405.1 | 396.4 |
| Income from unconsolidated operations | 0.5 | 0.8 |
| Operating income excluding special charges | $ 39.9 | $ 36.4 |
Subsequent Event (Details) - Line of Credit [Member] - Current Credit Facility [Member] $ in Millions |
3 Months Ended |
|---|---|
|
Feb. 28, 2017
USD ($)
| |
| Subsequent Event [Line Items] | |
| Long-term Line of Credit | $ 250 |
| Debt Instrument, Basis Spread on Variable Rate | 0.75% |
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