UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 4, 2006
BOWATER INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 1-8712 62-0721803
(State or other jurisdiction (Commission (IRS Employer
of 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): Not applicable
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 (see General Instruction A.2. below):
[ ] 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))
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Item 1.01 Entry Into a Material Definitive Agreement
On April 4, 2006, Bowater Incorporated (the "Company") entered into an
Employment Agreement with David J. Paterson (the "Agreement"), pursuant to which
the Company will employ Mr. Paterson as President and Chief Executive Officer,
reporting to the Board of Directors, commencing on May 1, 2006. The terms of the
Agreement are summarized below:
Position: President and Chief Executive Officer.
Annual Compensation: Mr. Paterson will receive an annual base salary of
$825,000. Under the Company's annual incentive plan, he will be eligible for an
annual bonus with target payout equal to 68% of his base salary and a maximum
payout of 136% of his base salary. For the year ending December 31, 2006, Mr.
Paterson will be guaranteed a bonus of $374,000 that is payable in 2007.
Restricted Stock Units: Mr. Paterson will also receive a grant of 50,000 shares
of restricted stock units, which the Company intends to grant under its 2006
Stock Option and Restricted Stock Plan that will be voted upon at the Company's
2006 annual meeting of shareholders. This grant was made partly in recognition
of various equity and cash forfeitures incurred by Mr. Paterson as a result of
entering into this Agreement. The shares will vest in full after the earlier of
one year or the termination of Mr. Paterson's employment by the Company without
cause or by Mr. Paterson for good reason.
Options: The Company will grant Mr. Paterson options to purchase 250,000 shares
of the Company's common stock (the "Options"). The exercise price of the Options
shall be the fair market value of the Company's common stock on the date of
grant, May 1, 2006. The Options will vest ratably over three years and have a
ten year exercise term. The Options also will be subject to the terms and
conditions that apply generally to unexercised options previously granted by the
Company.
Benefits: During the term of the Agreement, Mr. Paterson will be entitled to
receive perquisites and participate in incentive and benefit plans that the
Company provides for its senior executives.
Severance: If Mr. Paterson's employment is terminated for reasons other than
death, disability, retirement, or cause, he will receive a lump sum severance
payment equal to twice his base salary at the time of termination plus between
two and three times the last annual bonus paid to Mr. Paterson.
Change of Control: The Agreement anticipates that, following the commencement of
Mr. Paterson's employment, the Company and Mr. Paterson will enter into a change
of control agreement, which the Company anticipates will be similar to its
change of control agreements with its current executives. If Mr. Paterson is
eligible for both a severance payment under the Agreement and a payment under
the change of control agreement, he may elect which of those payments he shall
receive.
Noncompetition: The Agreement contains noncompetition, nonsolicitation and
nondisclosure provisions.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On April 4, 2006, the Company announced the appointment of David J.
Paterson as the Company's President and Chief Executive Officer. Mr. Paterson
will assume his duties with the Company on May 1, 2006. The Company will employ
Mr. Paterson pursuant to the terms of the Employment Agreement as described
under Item 1.01 of this Form 8-K. The news release containing this announcement
is attached as Exhibit 99.1.
Mr. Paterson, age 51, has been Executive Vice President of Georgia-Pacific
Corporation, in charge of its Building Products Division since 2003. At various
times since 2000, Mr. Paterson has been responsible for Georgia-Pacific's Pulp
and Paperboard Division, Paper and Bleached Board Division, and Communication
Papers Division. Mr. Paterson joined Georgia-Pacific in 1987. Mr. Paterson holds
a Bachelor of Science degree from the School of Industrial and Labor Relations,
Cornell University and a Masters in Business Administration from the University
of Michigan.
In 2005, Georgia-Pacific resold approximately $80 million of paper produced
by Bowater at typical market prices and commission rates. Bowater also sold
approximately $13 million of fiber and steam to Georgia-Pacific in 2005. These
transactions are expected to continue at approximately the same level for 2006.
In January 2006, Mr. Nemirow announced that he intended to retire during
2006. On April 4, 2006, Mr. Nemirow announced his retirement as Bowater's
President and Chief Executive Officer effective April 30, 2006. Accordingly,
and as required by Section 4.15 of the Company's By-Laws, Mr. Nemirow has
resigned from the board upon the effectiveness of his retirement. The Board is
expected to re-elect Mr. Nemirow in May as a Class II director and as Chairman
of the Board. The Company expects that Mr. Nemirow will remain as non-executive
Chairman until later this year.
Item 9.01. Financial Statements And Exhibits
(d) Exhibits.
99.1 Press Release of Bowater Incorporated April 4, 2006.
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 INCOPORATED
(Registrant)
Date: April 10, 2006 By: /s/ Ronald T. Lindsay
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Name: Ronald T. Lindsay
Title: Senior Vice President -
General Counsel and
Secretary