UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
November 8, 2005
Date of Report (Date of earliest event reported)
BOWATER INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 1-8712 62-0721803
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number ) Identification No.)
55 East Camperdown Way, P.O. Box 1028, Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
(864) 271-7733
(Registrant's telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry Into a Material Definitive Agreement.
On November 8, 2005, the Human Resources and Compensation Committee of the
Board of Directors (the "Committee") of Bowater Incorporated (the "Company")
approved certain amendments to its Supplemental Benefit Plan for Designated
Employees of Bowater Incorporated and Affiliated Companies, as amended ("SERP"),
the Bowater Incorporated Benefits Equalization Plan, as amended ("Equalization
Plan") and the Bowater Incorporated Compensatory Benefit Plan, as amended
("Compensatory Plan") (collectively, the "Plans"), which were designed to comply
with new Section 409A of the Internal Revenue Code of 1986, as amended, for any
distributions to be made in 2006.
Changes to the Plans include the following. Benefit amounts accrued and
vested under each Plan prior to January 1, 2005 will continue to be governed by
the law applicable to non-qualified deferred compensation prior to the adoption
of Section 409A as well as the provisions of the Plans prior to amendments for
compliance with Section 409A. In addition, the distribution of any portion of
the Plans' benefits subject to Section 409A will be made in a lump sum upon a
participant's separation from service, subject to a six-month delay in payment
for participants determined to be key employees (within the meaning of Section
409A). The interest rate used to calculate lump sum amounts under the SERP and
Equalization Plan will be the interest rate in effect at the time the
participant separates from service in the event the amounts of such benefits are
paid in different years because of the six-month delay in payment. Further, the
same interest rate shall be used to calculate interest due on the portion of the
Plans' benefits subject to the six-month delay. Finally, the Compensatory Plan
was amended to eliminate the discretion to pay benefits in installments upon a
participant's termination from employment after age 55 or age 50 with ten years
of service (whichever is earlier), or disability.
The Committee, pursuant to the authority granted to the Committee under the
Corporation's 1997, 2000 and 2002 stock option plans, approved the accelerated
vesting to December 15, 2005, of all unvested stock options granted to employees
on January 27, 2004, January 25, 2005, and May 10, 2005. The January 2004 stock
option awards, one-half of which have already vested, were granted at an
exercise price of $45.03. The remaining unvested half covering 428,500 shares
would have vested on January 27, 2006. The January 2005 awards covering 741,250
shares were granted at an exercise price of $37.295. One-half would have vested
on January 25, 2006, and one-half would have vested on January 25, 2007. Two
small awards (15,000 total shares) were granted at an exercise price of $32.07
and would have vested one-half on May 10, 2006, and one-half on May 10, 2007.
The closing market price of Bowater stock as of November 8, 2005, was $28.35,
well below the exercise price for substantially all the unvested grants. The
decision to accelerate the vesting of these options was to reduce non-cash
compensation expense that would have been recorded in the Corporation's income
statement in future periods upon the adoption of Financial Accounting Standards
Board Statement No. 123R (Share-Based Payment) in January 2006. The Corporation
estimates that, as a result of this action and based on the options' market
value as of the date of grant, approximately $2.3 million of compensation
expense will be eliminated in 2006 and a lesser amount of compensation expense
will be eliminated in 2007.
Of the 1,184,750 total stock options for which vesting was accelerated,
547,500 are held by Executive Officers of the Company. Options held by
non-employee directors were excluded from the vesting acceleration.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOWATER INCORPORATED
Date: November 15, 2005 By:/s/ James T. Wright
----------------------
Name: James T. Wright
Title: Senior Vice President -
Human Resources