Waters Corp 8-K, filed Jul 15, 2020
Waters Corp /De/ (WAT)
About this 8-K
Waters Corp filed this 8-K on July 15, 2020, reporting on events of July 14, 2020.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company
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| Item 2.02 | Results of Operations and Financial Condition |
On July 15, 2020, Waters Corporation (the “Company”) announced certain preliminary sales results for the fiscal quarter ended June 27, 2020. A copy of the related press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference, to the extent applicable.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On July 15, 2020, the Company announced that Dr. Udit Batra has been hired to serve as its President and Chief Executive Officer (“CEO”) and as a member of its Board of Directors, commencing on September 1, 2020. Previously, Dr. Batra, age 49, served as the Chief Executive Officer of the $7.7 billion Life Sciences business of publicly traded Merck KGaA, Darmstadt, Germany, which operates as MilliporeSigma in the United States and Canada.
In connection with Dr. Batra’s hiring, on July 14, 2020, the Company entered into an offer letter (the “Employment Agreement”) with Dr. Batra. The Employment Agreement provides that, effective September 1, 2020, Dr. Batra will serve as the President and CEO of the Company and will be appointed as a member of its Board of Directors. Pursuant to the terms of the Employment Agreement, Dr. Batra is entitled to receive an annual base salary of $1,000,000 and is eligible for an annual bonus based on achievement of performance objectives established by the Compensation Committee of the Company’s Board of Directors in its discretion. The target amount of the annual bonus is 125% of Dr. Batra’s base salary, and Dr. Batra’s maximum annual bonus opportunity is 250% of his base salary. In addition, Dr. Batra will be entitled to receive, as his 2021 equity award at the time annual equity awards are granted to Company executives generally (which is expected to be in February 2021), an equity incentive award having a value on the date of grant of $5,000,000. The award will be structured in the same form and subject to the same terms and conditions as those provided to other executive officers of the Company.
The Employment Agreement also provides that in connection with the commencement of his employment, Dr. Batra will receive the following:
| • | a restricted stock unit award on September 1, 2020, with the number of restricted stock units subject to the award determined by dividing $2,500,000 by the closing price of a share of Company common stock on such date. The restricted stock unit award will vest as to one-third of the award on each of the first three anniversaries of the date of grant, generally subject to continued employment on each vesting date and subject to the other terms and conditions of the Company’s equity incentive plan. The award will vest in full upon a termination of employment due to death or Disability (as defined in the Employment Agreement), a termination by the Company without Cause (as defined in the Employment Agreement) or a termination by Dr. Batra for Good Reason (as defined in the Employment Agreement). |
| • | a non-qualified stock option award on September 1, 2020, having a Black-Scholes value on such date of $2,500,000. The non-qualified stock option award will vest as to 20% of the shares of common stock underlying the award on each of the first five anniversaries of the date of grant, generally subject to continued employment on each vesting date and subject to the other terms and conditions of the Company’s equity incentive plan. The award will vest in full upon a termination of employment due to death or Disability, a termination by the Company without Cause or a termination by Dr. Batra for Good Reason. |
If Dr. Batra’s employment is terminated by the Company other than for Cause or if he resigns for Good Reason, Dr. Batra will be entitled to receive, subject to the execution of a release of claims and continued compliance with the restrictive covenants contained in the Employment Agreement, continued salary and target annual bonus for a period of twenty-four (24) months. In addition, Dr. Batra will be entitled to receive a lump sum payment equal to the amount that the Company would have paid in premiums under the life, accident, health and dental insurance plans in which Dr. Batra and his dependents were participating immediately prior to the termination of his employment for the twenty-four (24) - month period following the date of termination. If Dr. Batra is employed on or after July 1 of the year in which his employment termination occurs, he will also be entitled to a pro-rata annual bonus for such year, based on actual performance (with any subjective performance measures deemed satisfied). Dr. Batra will be
subject to noncompetition and non-solicitation restrictions for a period of one to two years following the termination of his employment depending on the circumstances of his termination. The Agreement includes certain other customary terms, including with respect to protection of confidential information and documents, assignment of intellectual property rights, reimbursement of business expenses, indemnification and insurance coverage, and reimbursement of professional fees.
In connection with the execution of the Employment Agreement, the Company entered into a Change of Control/Severance Agreement dated July 14, 2020 (the “Change of Control Agreement”) with Dr. Batra. The Change of Control Agreement provides that if, within nine months prior to a Change of Control (as defined in the Change of Control Agreement) and subsequent to the commencement of substantive discussions that ultimately result in the Change of Control, or within eighteen (18) months following a Change of Control, the Company terminates Dr. Batra’s employment for a reason other than Cause (as defined in the Change of Control Agreement), death or Disability (as defined in the Change of Control Agreement), or Dr. Batra resigns for Good Reason (as defined in the Change of Control Agreement), then, subject to the execution of a release of claims, the Company will pay to Dr. Batra a lump sum amount equal to (I) thirty-six (36) times his monthly base salary, plus (II) the amount payable pursuant to (I) multiplied by his target bonus percentage (or, if greater, his accrued bonus percentage for the current year), plus (III) the amount that the Company would have paid in premiums under the life, accident, health and dental insurance plans in which Dr. Batra and his dependents were participating immediately prior to the termination of his employment for the thirty-six (36) -month period following the date of the Change of Control. The foregoing amounts payable under the Change of Control Agreement will be reduced by the amount of any severance or similar amounts paid or payable under the Agreement. In addition, the Change of Control Agreement provides for any outstanding equity awards and qualified or non-qualified capital accumulation benefits under certain Company benefit plans that are unvested or unexercisable and held by Dr. Batra on the date of such termination of employment to vest or become exercisable upon such Change of Control.
The foregoing descriptions of the Employment Agreement and the Change of Control Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Employment Agreement and the Change of Control Agreement, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 27, 2020.
| Item 7.01 | Regulation FD Disclosures |
On July 15, 2020, the Company issued a press release announcing the CEO hiring as described above. A copy of the press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits |
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Description | |||
| 99.1 |
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WATERS CORPORATION | ||||||
| Dated: July 15, 2020 |
By: |
/s/ SHERRY L. BUCK | ||||
| Name: |
Sherry L. Buck | |||||
| Title: |
Senior Vice President and | |||||
| Chief Financial Officer | ||||||
Exhibit 99.1
Waters Corporation Names Udit Batra President and Chief Executive Officer
Announces Preliminary Second Quarter 2020 Sales
MILFORD, Mass. — July 15, 2020 — Waters Corporation (NYSE:WAT) (“Waters” or the “Company”) today announced that Udit Batra, Ph.D. has been named the Company’s President and Chief Executive Officer, effective September 1, 2020. He will also join Waters’ Board of Directors at that time. Dr. Batra succeeds Christopher O’Connell who will remain in his current roles as President and Chief Executive Officer, and as a member of the Board until September 1, 2020. As previously announced, Mr. O’Connell will also remain with Waters as an advisor until the end of this year to support the transition.
Dr. Batra brings to Waters more than two decades of leadership and operational expertise in the healthcare and life sciences industry, including a proven track record of driving results at the top of the industry and successfully managing a global organization. Most recently, Dr. Batra served as Chief Executive Officer of the $7.7 billion Life Science business of publicly traded Merck KGaA, Darmstadt, Germany, which operates as MilliporeSigma in the United States and Canada. In this role, he led the business’ successful integration of Sigma-Aldrich, which was acquired in 2015, resulting in the creation of MilliporeSigma. Since that time, Dr. Batra oversaw a strategic transformation of the business and drove above-market organic sales growth and margins, which remain the highest among MilliporeSigma’s integrated peers. Prior to that, Dr. Batra served as President and Chief Executive Officer of the global Consumer Health business of Merck KGaA, Darmstadt, Germany, where he led a turnaround that almost doubled its profitability and achieved organic growth rates in the top tier of the consumer health industry.
“We are pleased to have identified such an accomplished and experienced candidate and are confident that Udit is the right leader to take Waters to the next level,” said Dr. Flemming Ornskov, Chairman of the Board. “His focus on commercial execution and innovation, proven ability to build strong and collaborative cultures and intense commitment to serving customers have translated into tangible results. Building on Waters’ strong foundation, we look forward to the Company’s next phase of innovation and growth with Udit at the helm. We are grateful for the continued hard work and leadership of Chris and the entire Waters team to remain focused on our business, continue our progress and ensure a seamless transition.”
Dr. Batra said, “As a research engineer, I have a deep knowledge of Waters and TA instruments, and I have long admired the Company and its global impact. Waters’ team of world-renowned scientists, researchers and other professionals has consistently delivered scientific and technological excellence to enhance human health and well-being. With a continued focus on organic innovation, strategic M&A and disciplined capital allocation, I am confident we will capitalize on Waters’ significant growth opportunities.”
“Throughout my career, I have focused on starting with listening and learning, embracing challenges and working with talented people. I join Waters with energy and a shared passion for technology development and serving our customers to drive value for shareholders while making the world a better place,” continued Dr. Batra.
The Board retained Heidrick & Struggles, a leading global executive search firm, to assist in its search process.
Preliminary Second Quarter 2020 Sales Results
Based on preliminary unaudited financial information, the Company expects to report sales in the range of $517 million to $523 million for the second quarter of 2020, a decrease of approximately 13.6% to 12.8% compared to sales of $599 million for the second quarter of 2019.
Waters will provide full financial results for the second quarter on its upcoming earnings call, which is scheduled for July 28, 2020.
About Dr. Udit Batra
Dr. Udit Batra most recently served as Chief Executive Officer of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates as MilliporeSigma in the United States and Canada, and as a member of its Executive Board, roles he has held since 2014 and 2016, respectively. Prior to that, Dr. Batra spent nearly two and a half years as President and Chief Executive Officer of Merck KGaA, Darmstadt, Germany’s Consumer Health business. Dr. Batra oversaw the company’s Bioethics Advisory Panel and had Board responsibility for the global Information Technology function. Before joining Merck KGaA, Darmstadt, Germany, Dr. Batra held several positions of increasing responsibility at Novartis, including Global Head of Corporate Strategy in Switzerland, Country President for the Pharma Business of Novartis in Australia and New Zealand, and the Global Head of Public Health and Market Access in Cambridge, Massachusetts. He also served at the global consultancy McKinsey & Company across the healthcare, consumer and non-profit sectors. Dr. Batra started his career at Merck Research Labs in West Point, Pennsylvania as a research engineer.
Dr. Batra currently serves as the Chairman of the Massachusetts High Technology Council and as a Board member on the Boston Chamber of Commerce and MassBio. He is also a member of the Advisory Council at Princeton University’s Department of Chemical Engineering and a member of the Advisory Council at the University of Delaware’s Department of Chemical Engineering.
He holds a Ph.D. in Chemical Engineering from Princeton University and a BS in Chemical Engineering from the University of Delaware.
About Waters
Waters Corporation (NYSE:WAT), the world’s leading specialty measurement company, has pioneered chromatography, mass spectrometry, and thermal analysis innovations serving the life, materials, and food sciences for more than 60 years. With more than 7,000 employees worldwide, Waters operates directly in 35 countries, including 15 manufacturing facilities, and with products available in more than 100 countries.
Cautionary Statement
This release contains “forward-looking” statements regarding future results and events, including statements regarding Dr. Batra’s appointment and the Company’s recent performance. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words “feels”, “believes”, “anticipates”, “plans”, “expects”, “intends”, “suggests”, “appears”, “estimates”, “projects”, and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements. The Company’s actual future results may differ significantly from the results discussed in the forward-looking statements within this release for a variety of reasons, including and without limitation, risks related to the effects of the COVID-19 pandemic on our business, financial condition, results of operations and prospects, including: portions of our global workforce being unable to work fully and/or effectively due to working remotely, illness, quarantines, government actions, facility closures or other reasons related to the pandemic, increased risks of cyber attacks resulting from our temporary remote working model, disruptions in our manufacturing capabilities or to our supply chain, volatility and uncertainty in global capital markets limiting our ability to access capital, customers being unable to make timely payment for purchases and volatility in demand for our products; foreign exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results; the impact on demand for the Company’s products among the Company’s various market sectors or geographies from economic, sovereign and political uncertainties, particularly regarding the effect of new or proposed tariff or trade regulations or changes in the interpretation or enforcement of existing regulations; the effect on the Company’s financial results from the United Kingdom exiting the European Union; fluctuations in expenditures by the Company’s customers, in particular large pharmaceutical companies; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory, economic and competitive obstacles to new product introductions; other changes in demand for the Company’s products from the effect of mergers and acquisitions by the Company’s customers; increased regulatory burdens as the Company’s business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different effective tax rates; the
outcome of tax examinations or changes in respective country legislation affecting the Company’s effective tax rate; the effect of the adoption of new accounting standards; the ability to access capital, maintain liquidity and service the Company’s debt in volatile market conditions, particularly in the U.S., as a large portion of the Company’s cash is held and operating cash flows are generated outside the U.S.; environmental and logistical obstacles affecting the distribution of products and risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights. Such factors and others are discussed more fully in the sections entitled “Forward-Looking Statements” and “Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission (“SEC”), which “Forward-Looking Statements” and “Risk Factors” discussions are incorporated by reference in this release, as updated by the Company’s subsequent filings with the SEC. The forward-looking statements included in this release represent the Company’s estimates or views as of the date of this release and should not be relied upon as representing the Company’s estimates or views as of any date subsequent to the date of this release. Except as required by law, the Company does not assume any obligation to update any forward-looking statements.
The preliminary estimated financial information set forth herein includes the Company’s preliminary estimates of certain financial results for the second quarter of 2020, based on currently available information. The Company has not yet finalized its results for this period and its consolidated financial statements for the second quarter of 2020 are not currently available. The Company’s actual results remain subject to the completion of the quarter-end closing process, which includes review by management and the Company’s board of directors, including the audit committee. While carrying out such procedures, the Company may identify items that require it to make adjustments to the preliminary estimated financial information set forth herein. As a result, the Company’s actual results could be different from those set forth herein and the differences could be material. Therefore, a reader should not place undue reliance on the preliminary estimated financial information. The preliminary estimated financial information included herein have been prepared by, and are the responsibility of, the Company’s management. The Company’s independent auditors have not audited, reviewed or compiled such preliminary estimated financial information. Accordingly, PricewaterhouseCoopers LLP expresses no opinion or any other form of assurance with respect thereto. The preliminary estimated financial information set forth herein should not be considered a substitute for the information to be filed with the SEC in the Company’s quarterly report on Form 10-Q for the second quarter of 2020 once it becomes available.
Contacts
Waters Corporation
Bryan Brokmeier, 508-482-3448
investor_relations@waters.com
Senior Director Investor Relations
Waters Corporation
Kevin Kempskie, 617-413-4333
corporate_communications@waters.com
Senior Director Public Relations