Advanced Medical Optics (EYE)

Compensation of the Chief Executive Officer

Base Salary.   Mr. Mazzo’s annual base salary was set at $625,000 for 2005 and $650,000 for 2006. In determining Mr. Mazzo’s base salary in each year, the committee considered competitive data based on a set of comparator companies reviewed and approved by the committee each year, his experience level, and his performance as President and Chief Executive Officer of the company.

Bonus.   For 2005, the committee designated Mr. Mazzo as a “162(m) Participant” under the 2002 Bonus Plan and established a 2005 maximum bonus for Mr. Mazzo of $1,000,000 if the company achieved the targets for operating income and/or revenue established by the committee. After reviewing AMO’s performance as compared to the target, the committee awarded Mr. Mazzo a bonus of $500,000 for 2005. In determining Mr. Mazzo’s bonus award, the committee also considered the following, among other factors:

·       Mr. Mazzo’s leadership ability amidst the complexity of two integration plans and times of change — for AMO and for the marketplace for AMO’s products.

·       Successful acquisition and integration of the VISX business.

·       Successful completion of the Pfizer transaction integration.

·       AMO’s performance in key product areas and overall.

·       The discipline of devising and instituting the product rationalization and repositioning program.

·       The development and implementation of a new organizational alignment among the three strategic business units.

·       Positioning AMO for future growth and success.

The committee also considered the corporation’s financial performance as compared to comparator companies and relevant indices, competitive data for CEOs of similarly situated companies, and historical bonus compensation paid to Mr. Mazzo.

On February 8, 2006, the Board again designated Mr. Mazzo as a “162(m) Participant” under the 2002 Bonus Plan for 2006. The committee further established a maximum 2006 bonus for Mr. Mazzo of $1,000,000 if the company achieves the operating income and/or revenue targets established by the committee. The committee reserved the right to decrease the bonus to be paid below $1,000,000 based on the company’s financial performance and Mr. Mazzo’s individual performance relative to the goals established for Mr. Mazzo.

Equity Incentives.   In May 2005, the Board granted to Mr. Mazzo nonqualified options to purchase 185,000 shares of our common stock. The committee considered a number of factors in determining the number of options, including competitive market data, the performance of the businesses and Mr. Mazzo’s individual performance in leading successful corporate initiatives. The Board also established a target for Mr. Mazzo’s 2005 performance award based on the same total shareholder return criteria as discussed above for the other executive officers, with a maximum dollar value of $570,000 if we achieved 75th percentile total shareholder return. Like the other corporate officers, Mr. Mazzo received no shares of restricted stock under this grant because our total shareholder return did not exceed the 50th percentile in 2005. In February 2006, we established targets for Mr. Mazzo’s 2006 performance award, providing up to $750,000 in restricted stock if AMO’s total shareholder return is in the 50th to 75th percentile range within the identified comparator group for 2005-2006.

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