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): December 23, 2004
FRANKLIN RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9318 13-2670991
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One Franklin Parkway, San Mateo, California 94403
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 312-3000
Not Applicable
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(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 (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))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On December 15, 2004, after the fiscal year 2004, the Compensation Committee of
the Board of Directors approved the grant of restricted stock awards under the
2002 Stock Plan to Mr. Flanagan and Mr. G. Johnson, the Company's Presidents and
Co-Chief Executive Officers. The following were the numbers of shares and value
of the restricted stock awards that were granted to Mr. Flanagan: 15,625 shares,
($1,000,000) and Mr. G. Johnson: 15,625 shares, ($1,000,000). The restricted
stock awards vest upon the achievement of certain increases in pre-tax operating
income for a fiscal year of the Corporation. Pre-tax operating income is defined
as total operating revenue less total operating expenses determined on a
consolidated basis and is reported in the Corporation's annual financial
statements as operating income. One-third of the shares of restricted stock
shall vest if pre-tax operating income for the 2005, 2006 or 2007 fiscal year is
at least 15% greater than pre-tax operating income for the 2004 fiscal year.
Two-thirds of the shares of restricted stock shall vest if pre-tax operating
income for the 2005, 2006 or 2007 fiscal year is at least 32.25% greater than
pre-tax operating income for the 2004 fiscal year. All of the shares of
restricted stock shall vest if pre-tax operating income for the 2005, 2006 or
2007 fiscal year is at least 52.09% greater than pre-tax operating income for
the 2004 fiscal year. After the conclusion of the 2007 fiscal year, any shares
of restricted stock that do not vest based upon the achievement of the foregoing
performance goals related to increases in pre-tax operating income shall be
forfeited back to the Corporation. These awards differ in structure from those
granted to other top contributing employees and officers of the Company, in that
specific installments of restricted stock are subject to company-related
performance metrics in order to be vested over a three-year period. Should those
performance metrics not be achieved, the awards will be forfeited either in
whole or in part at the end of the performance-vesting period. The Compensation
Committee intended that the design and structure of the Co-Chief Executive
Officer performance share awards be aligned wholly and clearly with the
Company's performance, and therefore, the stockholders' interests.
On December 23, 2004, the Compensation Committee of the Board of Directors
established maximum individual target awards of $5,000,000 for the 2005 fiscal
year for each of Mr. Flanagan and Mr. G. Johnson under the Company's 2004 Key
Executive Incentive Compensation Plan. If the Company's operating profit margin
is at least 26.35% for the 2005 fiscal year, then each participant will receive
$1,500,000 of the aggregate maximum individual target awards. If such operating
profit margin is less than 26.35%, then each participant will forfeit any right
to receive this $1,500,000 portion of the target awards. If the average
percentage growth of earnings per share and pre-tax operating income for the
2005 fiscal year is 25% or greater, then each participant will receive
$3,500,000 of the aggregate maximum individual target awards. If such percentage
is 20% to 24%, then the award will be $2,800,000; if the percentage is 15% to
19%, then the award will be $2,100,000; if the percentage is 10% to 14%, then
the award will be $1,400,000; and if the percentage is 5% to 9%, then the award
will be $700,000. If such percentage is less than 5%, then each participant will
forfeit any right to receive this $3,500,000 portion of the maximum target
award. Notwithstanding these potential target awards, the actual awards payable
to either or both of Mr. Flanagan and Mr. G. Johnson are subject to the
Compensation Committee's authority to reduce the award otherwise payable to the
participant. The awards are payable in cash or Company stock at the discretion
of the Compensation Committee.
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.
FRANKLIN RESOURCES, INC.
Date: December 30, 2004 /s/ Barbara J. Green
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Barbara J. Green
Vice President, Deputy General Counsel
and Secretary