This excerpt taken from the AMGN DEF 14A filed Mar 22, 2007.
We believe that our executive compensation program should:
To achieve these objectives, the Compensation Committee has designed our executive compensation program so that total direct compensation (consisting of base compensation and both annual and long-term incentive compensation) is earned largely based on attaining pre-established strategic objectives, outperforming our competitors, stock appreciation and individual achievement. Our long-term incentive programs, in particular, are sized and structured so that a significant portion of total direct compensation is delivered in the form of equity (performance units and stock options), rather than cash, to create incentives for long-term performance and to promote alignment with stockholder returns over the relevant periods.
To be consistent in the way that we reward those at all levels of the Company who contribute to our success, every staff member worldwide is eligible to earn an annual bonus based in large part on the same set of strategic goals used by the Compensation Committee in exercising its discretion to reward performance in our executive compensation program. In addition, nearly every staff member receives an annual equity grant, managed within an overall annual grant budget that uses less than 1% of our outstanding shares, to provide long-term incentives for employees across the entire company. The equity incentive program is designed so that equity awards for staff members at lower job levels are granted in a form with the least risk (restricted stock units), while equity awards for the Named Executive Officers and other executives involve greater risk (performance units and stock options) because their ultimate value is determined by Company financial performance and stock appreciation.
We take a comprehensive approach, known internally as Total Rewards, in the design of our compensation and benefits programs for the Named Executive Officersand we employ the same approach and philosophy for every staff member around the world. Total Rewards is made up of the total direct compensation programs
referenced above plus welfare benefits, savings plans and other reward elements. For the Named Executive Officers, our Total Rewards approach consists of the following: