UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 28, 2006
(February 23, 2006)
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DST SYSTEMS, INC.
(Exact Name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation)
1-14036 43-1581814
(Commission File Number) (IRS Employer Identification No.)
333 West 11th Street, Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
(816) 435-1000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report).
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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.):
[ ] 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 February 23, 2006, the Compensation Committee (the "Committee") of the
Board of Directors of DST Systems, Inc. ("DST") granted a deferred cash award
(an "Award") to certain participants in DST's 2005 Equity Incentive Plan (the
"Plan"). The Award is part of DST's overall compensation strategy described
below. The participants included executive officers Thomas McDonnell, Thomas
McCullough, Stephen Towle, and Kenneth Hager (the "Grantees"). Each of the
Grantees will be named in the Summary Compensation Table in DST's 2006 annual
meeting proxy statement to be filed in March 2006. DST's annual meeting proxy
statement following each performance period will set forth the amount of the
Award for each executive officer for whom compensation amounts are to be given.
Incentive bonuses are made by the Committee pursuant to the Annual
Incentive Award provisions of the Plan and procedures established by the
Committee under the Plan (the "Incentive Program"). The bonuses depend 50% on
performance against three-year cumulative threshold, target or maximum
consolidated diluted DST earnings per share ("EPS") goals and 50% on performance
against either current year annual threshold, target or maximum consolidated
diluted DST EPS goals or current year annual threshold, target, or maximum
business unit pretax income goals (collectively, the "Goals"). The Committee
determines the percentage of each Incentive Program participant's salary to be
awarded as a bonus at each level of Goals met by DST. Incentive compensation
awarded for exceeding the threshold incentive levels consists of a combination
of cash and a deferred award. If a threshold Goal is met but not exceeded, all
of the incentive bonus is paid in cash; for that portion of the bonus
attributable to performance above the threshold Goal, 50% of the bonus is paid
in cash and 50% is paid in the form of a deferred award that cliff vests in
approximately three years.
The grant of an Award is subject to Grantee's execution of a Deferred Cash
Award Agreement. This summary of the material terms and conditions of such
agreement is not intended to be complete, and is qualified in its entirety by
reference to the Incentive Program and to the form of Deferred Cash Award
Agreement included as Exhibit 10.1 to this report and incorporated herein by
reference.
Subject to forfeiture and early vesting provisions set forth in the
Deferred Cash Agreement, the vesting period for an Award is two years and 11
months from the end of the applicable performance period. The "Vesting Date,"
which also triggers a right to receive payment of the deferred cash amount, is,
therefore, the December 1 that occurs during the third calendar year following
such performance period. Early vesting and payment will occur on death,
disability, or retirement after Grantee reaches age 59 1/2. Pursuant to the
Plan, the Committee has established procedures permitting Grantees to further
defer payment of the Award past the Vesting Date. The Award will be adjusted
during the deferral period based on hypothetical investments selected by Grantee
from choices provided by DST. The Award is not transferable except upon death.
Subject to certain exceptions, the Award will be forfeited upon a
termination of Grantee's employment prior to the Vesting Date that is not a
result of death, disability or retirement after age 59 1/2. Exceptions to
forfeiture rules apply if the termination of employment is in connection with a
Reduction in Force ("RIF") or Business Unit Divesture ("BUD") or occurs in
certain circumstances following a "Change in Control", as those terms are
defined in the Deferred Cash Award Agreement. The Award is forfeited in all
events upon a termination for cause or violation of any of the non-compete,
non-use or non-disclosure provisions of the Deferred Cash Award Agreement.
ITEM 9.01 Financial Statements and Exhibits
(c). Exhibits
Exhibit
Number Description
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10.1 Form of Deferred Cash Award Agreement
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 on this 28th day of February, 2006.
DST SYSTEMS, INC.
By: /s/ Randall D. Young
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Randall D. Young
Vice President, General Counsel and Secretary