A » Topics » Compensation Philosophy

This excerpt taken from the A DEF 14A filed Jan 19, 2010.

Compensation Philosophy

        The objectives of our executive compensation program are to:

    align pay with performance;

    keep overall compensation competitive with our peer group and the larger business market where applicable, and

    ensure that we can recruit, motivate and retain executives in the larger marketplace.

        Executive compensation at Agilent is comprised of four basic elements.

        Base Salary.    Base salaries have historically accounted for 50% or less of total compensation for our executives. This element is intended to establish the minimum or base-line competitive compensation level that sits beneath the incentive compensation components.

        Discretionary Bonus.    The Compensation Committee may award discretionary bonuses in order to recognize outstanding individual performance or assist in the retention of key talent. No such awards were made in fiscal 2009.

        Short-Term Cash Incentives.    We use short-term cash performance incentives using both revenue growth and Return On Invested Capital ("ROIC") metrics to determine the short-term bonus payout. ROIC is a non-GAAP measure and defined as:

        Income (loss) from operations less other (income) expense and taxes, annualized, divided by the average of the three most recent quarter-end balances of assets less net current liabilities.

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        Long-Term Incentives.    Long-term performance incentives are a combination of (1) regular stock options and (2) equity awards that vest based on total shareholder return of Agilent vs. peer companies over a three-year period. This long-term incentive component has both a medium-term incentive with the three-year performance-based stock awards under our Long-term Performance Program (the "LTP Program") as well as a longer-term incentive in the form of time-based stock option awards, which vest annually over a 4-year period and have a 10-year exercise term. For a technology company such as Agilent, we feel that a compensation perspective spanning a range of short-term to very long-term helps in retaining key executives. Our executive compensation program provides this range while also adding the security of competitive base salary and a good benefits package.

        Our target total rewards package for each named executive officer will vary based on (i) company performance measured against external metrics that correlate to long-term stockholder value, (ii) performance of the business organizations against specific targets, and (iii) individual performance measured against internal metrics. These performance measures form the basis of the Compensation Committee's decisions regarding each of our four principal elements of pay: base salary, discretionary bonuses, short-term incentive compensation and long-term incentive compensation, each of which is discussed in detail below.

        Additionally, we designed our total rewards package such that our short-term and long-term incentives programs do not encourage executives to take unnecessary risks. This is accomplished through the following measures:

    Mix of short-term and long-term incentives do not overemphasize short-term incentives over long-term incentives;

    Performance metrics with thresholds, targets and maximums (not to exceed 150-200% of target under the Performance-Based Compensation Plan (as described below) and the LTP Program) are presented to and approved by the Compensation Committee for both short-term and long-term incentive programs;

    The Compensation Committee considers the full range of potential upside and downside payouts;

    The short-term incentives program allows the Compensation Committee to exercise downward discretion where appropriate; and

    The newly adopted Executive Compensation Recoupment Policy permits recoupment of both short-term and long-term incentives from executives across a broad range of circumstances.
This excerpt taken from the A DEF 14A filed Jan 27, 2009.

Compensation Philosophy

        The objectives of our executive compensation program are to:

    align pay with performance;

    keep overall compensation competitive with our peer group and the larger business market where applicable, and

    ensure that we can recruit, motivate and retain executives in the larger marketplace.

        Executive compensation at Agilent is comprised of four basic elements.

        Base Salary.    Base salaries have historically accounted for 50% or less of total compensation for our executives. This element is intended to establish the minimum or base-line competitive compensation level that sits beneath the incentive compensation components.

        Discretionary Bonus.    The Compensation Committee may award discretionary bonuses in order to recognize outstanding individual performance or assist in the retention of key talent. No such awards were made in fiscal 2008.

        Short-Term Cash Incentives.    We use short-term cash performance incentives using both revenue growth and Return On Invested Capital ("ROIC") metrics to determine the short-term bonus payout. ROIC is a non-GAAP measure and defined as:

        (Income (loss) from operations—other (income) expense and taxes, annualized) / (Average of the 2 most recent quarter-end balances of assets—average of the 2 most recent quarter-end net current liabilities, revenue and operating profit at an enterprise-wide level for Agilent).

        Long-Term Incentives.    Long-term performance incentives are a combination of (1) regular stock options and (2) equity awards based on total shareholder return of Agilent vs. peer companies over a three-year period. This long-term incentive component has both a medium-term incentive with the three-year performance-based stock awards under our Long-term Performance

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Program (the "LTP Program") as well as a longer-term incentive in the form of time-based stock option awards, which vest annually over a 4-year period and have a 10-year exercise term. For a technology company such as Agilent, we feel that a compensation perspective spanning a range of short-term to very long-term helps in retaining key executives. Our executive compensation program provides this range while also adding the security of competitive base salary and a good benefits package.

        Our target total rewards package for each named executive officer will vary based on (i) company performance measured against external metrics that correlate to long-term stockholder value, (ii) performance of the business organizations against specific targets, and (iii) individual performance measured against internal metrics. These performance measures form the basis of the Compensation Committee's decisions regarding each of our four principal elements of pay: base salary, discretionary bonuses, short-term incentive compensation and long-term incentive compensation, each of which is discussed in detail below.

This excerpt taken from the A DEF 14A filed Jan 14, 2008.

Compensation Philosophy

        The philosophy of our executive compensation program is to align pay with performance, keep overall compensation competitive with our peer group and the larger business market where applicable, and ensure that we can recruit, motivate and retain executives in the larger marketplace. Our total rewards package for a named executive officer varies with individual performance based on (i) company performance measured against external metrics that correlate to long-term stockholder value, (ii) performance of the business organizations against specific targets, and (iii) individual performance measured against internal metrics. This philosophy is the basis of the Compensation Committee's decisions regarding each of the following four elements of pay: base salary, discretionary bonuses, short-term incentive compensation and long-term incentive compensation, each of which is discussed in detail below.

This excerpt taken from the A DEF 14A filed Jan 12, 2007.

Compensation Philosophy

The goal of the executive compensation program is to provide a total compensation package composed of cash, equity and benefits which will attract, motivate and retain talented executives responsible for the success of Agilent. The total package reflects Agilent's Pay for Performance philosophy and is designed to inspire and reward according to the performance of executives, business organizations and Agilent.

This excerpt taken from the A DEF 14A filed Jan 17, 2006.

Compensation Philosophy

The goal of the executive compensation program is to provide a total compensation package composed of cash, equity and benefits which will attract, motivate and retain talented executives responsible for the success of Agilent. The total package reflects Agilent's Pay for Performance philosophy and is designed to inspire and reward according to the performance of executives, business organizations and Agilent.

This excerpt taken from the A DEF 14A filed Jan 10, 2005.

Compensation Philosophy

 

The goal of the executive compensation program is to provide a competitive total compensation package composed of cash, equity and benefits. The total package reflects Agilent’s Pay for Performance philosophy and is designed to inspire and reward superior performance by executives, business organizations and Agilent.

 

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