CBS » Topics » Terms of LTMIP Awards

This excerpt taken from the CBS DEF 14A filed Apr 24, 2009.

Terms of LTMIP Awards

              For a description of certain material terms of the RSU grants (including PRSUs and time-based RSUs) and stock option grants, see "Grants of Plan-Based Awards During 2008—Description of Plan-Based Awards."

              PSUs—PSUs are notional units of measurement and represent the right to receive a number of shares of the Company's Class B Common Stock determined on the basis of the total stockholder return ("TSR") of the Company's Class B Common Stock relative to the TSR of the common stock of companies comprising the Standard & Poor's 500 Composite Index (with limited exceptions) (the "reference group") over one or more defined measurement periods and, under certain circumstances described below, determined on the basis of achievement of a pre-determined performance threshold.

              The following terms apply to PSU grants made in 2008 to Messrs. Reynolds, Briskman and Ianniello: The number of target shares is determined on the basis of the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant (for 2008 awards, February 28, 2008). Payouts under the PSUs range from zero to a maximum of 200% of the target number of shares of the Company's Class B Common Stock for the award. Grants of PSUs made in 2008 are subject to two separate measurement periods. The measurement period for 50% of the award runs from January 1, 2008 through December 31, 2010, and the measurement period for the remaining 50% of the award runs from January 1, 2009 through December 31, 2011. The number of shares to be delivered for each measurement period is determined in accordance with the following schedule:

    if the Company achieves less than the 25th percentile TSR, the award of PSUs will be forfeited;

    if the Company achieves the 25th percentile TSR, the number of shares to be delivered under the award will be 25% of the target number of shares;

    if the Company achieves the 50th percentile TSR, the number of shares to be delivered under the award will be 100% of the target number of shares; and

    if the Company achieves the 100th percentile TSR (that is, if it is the first ranked company in the reference group for TSR), the number of shares to be delivered under the award will be 200% of the target number of shares.

              For Company achievement at intermediate points between the 25th and 50th percentile, or between the 50th percentile and the 100th percentile, the number of shares of Class B Common Stock to be delivered will be interpolated between the respective number of shares delivered at such percentiles. Notwithstanding the schedule set forth above, in the event the Company achieves less than the 50th percentile TSR for any measurement period but either of the performance thresholds set forth below are met, the number of shares to be awarded will be determined in accordance with the following:

    if the Company's TSR for such measurement period does not meet the 50th percentile, but the Company's three-year average budgeted free cash flow is met or exceeded by the three-year average actual free cash flow during such measurement period, then the number of shares to be awarded will be the average of the target award and the number of shares that would be awarded based on the resulting TSR relative performance for such measurement period in accordance with the schedule above; or

    for PSU awards made in FY 2007, if the Company's TSR in the last year of such measurement period is at or above the 50th percentile, then the number of shares to be awarded will be the target award for such measurement period; for PSU awards made in FY 2008, if the Company's TSR in the last year of such measurement period is at or above the 50th percentile, then the number of shares to be awarded will be equal to the greater of

42


Table of Contents

      one-third (1/3) of the target award for such measurement period or the number of shares to be awarded in accordance with the above schedule.

              If neither of these performance thresholds are met, then the number of shares to be awarded will be in accordance with the schedule above.

              Mr. Redstone's PSU grants made in 2008 are made on substantially the same terms as the grants to our other named executive officers, but with the following differences:

    Mr. Redstone's PSU grant is set at January 1 of each year and the target shares are determined on the basis of the average closing price of a share of the Company's Class B Common Stock on the NYSE for the ten trading days prior to the date of grant;

    The maximum number of shares that may be earned under Mr. Redstone's award is 300% of target;

    Mr. Redstone's entire PSU grant is subject to a single measurement period, which, for his 2008 PSU grant, runs from January 1, 2008 through December 31, 2010; and

    The only performance threshold applicable to Mr. Redstone's award in the event that the Company achieves less than the 50th percentile TSR for a measurement period is based on the Company's three-year average budgeted OIBDA.

              Certain terms of Mr. Redstone's PSU awards differ from the terms of PSU awards to other named executive officers because of the relative impact of his position on Company performance.

              Performance Goals (PRSUs)—The vesting of the PRSUs is subject to the achievement of a certain pre-determined performance goal set by the Compensation Committee in the first quarter of the fiscal year. Dividend equivalents accrue on the PRSUs and equal the value of regular cash dividends paid on the shares of the Company's Class B Common Stock. Dividend equivalents are paid in cash, less applicable withholdings, when the PRSUs vest. If the PRSUs do not vest, then the dividend equivalents accrued on those PRSUs are forfeited.

              The performance goal is set based on financial and operational goals for the relevant fiscal year which take into account expected performance of the Company's industry peers for that year as determined by media industry analysts. At the beginning of each year, the Compensation Committee reviews the performance goal and considers which metrics offer the best measure of Company performance.

              In setting the 2008 performance goal, the Compensation Committee selected two metrics: (i) OIBDA without inter-company eliminations (i.e., operating income before depreciation, amortization and inter-company eliminations) (the "OIBDA metric") and (ii) free cash flow (i.e., operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures) (the "FCF metric"). The "OIBDA Metric Target" is calculated by starting with the Company's budget for 2008 for the OIBDA metric and then taking into account items pre-approved by the Compensation Committee that may otherwise distort the calculation of the performance goal. The "FCF Metric Target" is calculated by starting with the Company's budget for 2008 for the FCF metric and then taking into account the same items. The items that were pre-approved by the Committee and taken into account in the calculation of the OIBDA Metric Target and the FCF Metric Target were with respect to restructuring charges, impairment charges, the disposition of the Company's investment in the Sundance Channel, the acquisitions of IOA and CNET and the Company's voluntary contribution to the qualified pension plan. The OIBDA metric was selected because it is an important indicator of the Company's operational strength and performance of its businesses, as it provides a link between profitability and operating cash flow. The FCF metric was also selected because it gives a clear view of the Company's ability to generate cash (and thus profits) and allows the Company to pursue opportunities that enhance stockholder value.

43


Table of Contents

              For 2008, the performance goal for the most senior levels of management, including the named executive officers (except for Mr. Redstone who does not receive PRSUs and except for PRSUs granted to Mr. Moonves under his employment agreement), was the achievement during 2008 of a 90% or greater level of the weighted average performance of (i) the percentage of an OIBDA Metric Target of $3.075 billion actually achieved (75% weighting) and (ii) the percentage of an FCF Metric Target of $1.295 billion actually achieved (25% weighting). The performance goal for Mr. Moonves was the achievement during 2008 of an FCF Metric Target of $1.295 billion.

              At its first meeting after the 2008 fiscal year end, the Compensation Committee reviewed and discussed the Company's performance versus the 2008 performance goals. Actual performance with respect to the OIBDA metric was $2.554 billion and with respect to the FCF metric was $1.672 billion. The Committee then certified that the 2008 performance goal had been achieved, noting that, in particular, such achievement reflected the solid underlying performance of operations within management's control in the face of challenging operating conditions facing the media industry as a result of the ongoing unprecedented national and global economic conditions.

              Grant Date of Awards—The grant date for RSUs, PSUs and stock option awards is the date on which the Compensation Committee approves awards under the Company's LTMIP or, if so determined by the Committee, a future grant date. The Committee may approve an award that will have a future grant date, with the exercise price of any stock option not to be less than the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant. The Company does not set grant dates intentionally to precede the release of material non-public information. Communications regarding individual grant awards, including the terms and conditions, are provided to recipients as soon as administratively feasible. For annual management grants made in 2008, the Committee set, at its February 20, 2008 meeting, a grant date of February 28, 2008, which reflected the second business day following the date of the Company's public announcement of its earnings report for the fourth quarter and full year 2007.

              Delegation of Authority to Grant Awards—The Compensation Committee has delegated to the President and Chief Executive Officer limited authority, with respect to executives who are not senior executives, to grant long-term incentive awards under the LTMIP to such executives in connection with their hiring, promotion or contract renewal and to modify the terms of outstanding equity grants in certain post-termination scenarios. The Committee delegated this authority in order for the Company to have the ability to (i) act in a timely manner in a competitive environment in connection with the hiring of new executives or the compensating of an existing executive being given a significant increase in responsibility and (ii) maintain flexibility to manage compensation in post-termination scenarios when mutually beneficial to the Company and the executive. The Committee's delegation specifies the circumstances in which the authority can be used; limits the amount that can be awarded to an individual, the total amount that can be awarded in any period, and aggregate incremental expense that can be incurred by the Company resulting from modifications of the terms of outstanding equity grants; and specifies the method for establishing the grant date. The delegation also requires that the President and Chief Executive Officer report to the Committee periodically on his exercise of this delegated authority.

This excerpt taken from the CBS DEF 14A filed Apr 11, 2008.

Terms of LTMIP Awards

              For a description of certain material terms of the RSU grants (including PRSUs and time-based RSUs) and stock option grants, see "Grants of Plan-Based Awards During 2007—Description of Plan-Based Awards."

              PSUs—PSUs are notional units of measurement and represent the right to receive a number of shares of the Company's Class B Common Stock determined on the basis of the total stockholder return ("TSR") of the Company's Class B Common Stock relative to the TSR of the common stock of companies comprising the Standard & Poor's 500 Composite Index (with limited exceptions) (the "reference group") over one or more defined measurement periods and, under certain circumstances described below, determined on the basis of achievement of a pre-determined performance threshold.

              The following terms apply to PSU grants made in 2007 to Messrs. Briskman and Reynolds and Ms. Gordon: The number of target shares is determined on the basis of the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant (which for 2007 awards was March 6, 2007). Payouts under the PSUs range from zero to a maximum of 200% of the target number of shares of the Company's Class B Common Stock for the award. Grants of PSUs made in 2007 are subject to two separate measurement periods. The measurement period for 50% of the award runs from January 1, 2007 through December 31, 2009, and the measurement period for the remaining 50% of the award runs from January 1, 2008 through December 31, 2010. The number of shares to be delivered for each measurement period is determined in accordance with the following schedule:

    if the Company achieves less than the 25th percentile TSR, the award of PSUs will be forfeited;

    if the Company achieves the 25th percentile TSR, the number of shares to be delivered under the award will be 25% of the target number of shares;

41


    if the Company achieves the 50th percentile TSR, the number of shares to be delivered under the award will be 100% of the target number of shares; and

    if the Company achieves the 100th percentile TSR (that is, if it is the first ranked company in the reference group for TSR), the number of shares to be delivered under the award will be 200% of the target number of shares.

              For Company achievement at intermediate points between the 25th and 50th percentile, or between the 50th percentile and the 100th percentile, the number of shares of Class B Common Stock to be delivered will be interpolated between the respective number of shares delivered at such percentiles. Notwithstanding the schedule set forth above, in the event the Company achieves less than the 50th percentile TSR for any measurement period but either of the performance thresholds set forth below are met, the number of shares to be awarded will be determined in accordance with the following:

    if the Company's TSR in the last year of such measurement period is at or above the 50th percentile, then the number of shares to be awarded will be the target award for such measurement period; and

    if the Company's TSR in the last year of such measurement period does not meet the 50th percentile but the Company's three-year average budgeted free cash flow is met or exceeded by the three-year average actual free cash flow during such measurement period, then the number of shares to be awarded will be the average of the target award and the number of shares that would be awarded based on the resulting TSR relative performance for such measurement period in accordance with the schedule above.

              If neither of these performance thresholds are met, then the number of shares to be awarded will be in accordance with the schedule above.

              Mr. Redstone's PSU grants are made on substantially the same terms as the grants to our other named executive officers, but with the following differences:

    Mr. Redstone's PSU grant is set at January 1 of each year and the target shares are determined on the basis of the average closing price of a share of the Company's Class B Common Stock on the NYSE for the ten trading days prior to the date of grant;

    The maximum number of shares that may be earned under Mr. Redstone's award is 300% of target;

    Mr. Redstone's entire PSU grant is subject to a single measurement period, which, for his 2007 PSU grant, runs from January 1, 2007 through December 31, 2009; and

    The only performance threshold applicable to Mr. Redstone's award in the event that the Company achieves less than the 50th percentile TSR for a measurement period is based on the Company's three-year average budgeted OIBDA.

              Certain terms of Mr. Redstone's PSU awards differ from the terms of PSU awards to other named executive officers because of the relative impact of his position on Company performance.

              Performance Goals (PRSUs)—The vesting of the PRSUs is subject to the achievement of a certain pre-determined performance goal set by the Compensation Committee in the first quarter of the fiscal year for Section 162(m) purposes. Dividend equivalents accrue on the PRSUs and equal the value of regular cash dividends paid on the shares of the Company's Class B Common Stock. Dividend equivalents are paid in cash, less applicable withholdings, when the PRSUs vest. If the PRSUs do not vest, then the dividend equivalents accrued on those PRSUs are forfeited.

42


              The performance goal is set based on budget determinations for the relevant year which take into account expected growth rates of the Company's industry peers for that year. At the beginning of each year, the Compensation Committee reviews the performance goal and considers which metrics offer the best measure of Company performance. In setting the 2007 performance goal, the Committee selected two metrics: (i) OIBDA without inter-company eliminations (i.e., operating income before depreciation, amortization and inter-company eliminations) (the "OIBDA metric") and (ii) free cash flow (i.e., operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures) (the "FCF metric"). The OIBDA metric was selected because it is an important indicator of the Company's operational strength and performance of its businesses, as it provides a link between profitability and operating cash flow. The FCF metric was also selected because it gives a clear view of the Company's ability to generate cash (and thus profits) and allows the Company to pursue opportunities that enhance stockholder value. The OIBDA metric reflects net earnings (without inter-company eliminations) adjusted to exclude the following line items presented in the Company's Statements of Operations: Net earnings from discontinued operations; Minority interest, net of tax; Equity in loss of investee companies, net of tax; Provision for income taxes; Other items, net; Loss on early extinguishment of debt; Interest income; Interest expense; and Depreciation and amortization. The FCF metric reflects the Company's net cash flow from operating activities less capital expenditures and operating cash flow of discontinued operations.

              For 2007, the performance goal for the most senior levels of management, including the named executive officers (except for Mr. Redstone who does not receive PRSUs, and except for PRSUs granted to Mr. Moonves under his new agreement which are subject to 2008 performance) was the achievement during 2007 of a 90% or greater level of the weighted average performance of (i) the percentage of an OIBDA metric target of $3.062 billion actually achieved (75% weighting) and (ii) the percentage of an FCF metric target of $1.275 billion actually achieved (25% weighting).

              At its first meeting after the 2007 fiscal year end, the Compensation Committee reviewed and discussed the Company's performance versus the 2007 performance goal. Actual performance with respect to the OIBDA metric was $3.078 billion and with respect to the FCF metric was $1.711 billion. The Committee then certified that the 2007 performance goal had been exceeded, noting that (i) the level of increase in OIBDA reflected a solid underlying performance considering, among other items, that the Company had divested a number of small-market radio station assets during the year and (ii) the significant achievement with respect to the FCF metric resulted from successful implementation of management initiatives including, principally, a number of effective corporate reorganization strategies which will have ongoing benefits, as well as efforts to install tighter controls on programming spending.

              Grant Date of Awards—The grant date for RSUs, PSUs and stock option awards is the date on which the Compensation Committee approves awards under the Company's LTMIP or, if so determined by the Committee, a future grant date. The Committee may approve an award that will have a future grant date, with the exercise price of any stock options equal to the closing price of a share of the Company's Class B Common Stock on the NYSE on the date of grant. The Company does not set grant dates intentionally to precede the release of material non-public information. Communications regarding individual grant awards, including the terms and conditions, are provided to recipients as soon as administratively feasible.

              Delegation of Authority to Grant Awards—The Compensation Committee has delegated to the President and Chief Executive Officer limited authority, with respect to executives who are not senior executives, to grant long-term incentive awards under the LTMIP to such executives in connection with their hiring, promotion or contract renewal and to modify the terms of outstanding equity grants in certain post-termination scenarios. The Committee delegated this authority in order for the Company to have the ability to (i) act in a timely manner in a competitive environment in connection with the hiring of new executives or the compensating of an existing executive being given a significant increase

43



in responsibility, and (ii) maintain flexibility to manage compensation in post-termination scenarios when mutually beneficial to the Company and the executive. The Committee's delegation specifies the circumstances in which the authority can be used; limits the amount that can be awarded to an individual, the total amount that can be awarded in any period, and aggregate incremental expense that can be incurred by the Company resulting from modifications of the terms of outstanding equity grants; and specifies the method for establishing the grant date. The delegation also requires that the President and Chief Executive Officer report to the Committee periodically on his exercise of this delegated authority.

This excerpt taken from the CBS DEF 14A filed Apr 13, 2007.

Terms of LTMIP Awards

The number of RSUs awarded is determined on the basis of the closing price of a share of the Company’s Class B Common Stock on the NYSE on the date of grant. The number of stock options awarded is determined on the basis of the Black-Scholes value (as determined by the Compensation Committee’s independent consultant) using the closing price of the Company’s Class B Common Stock on the date of grant. Stock options have an exercise price equal to the closing price of a share of the Company’s Class B Common Stock on the NYSE on the date of grant and generally have an eight-year term. In general, vesting for stock options and RSUs occurs in equal annual installments over four years, contingent on continued employment (and in the case of performance-based RSUs, satisfaction of the performance goal).

35




The Compensation Committee establishes performance goals for grants of RSUs that are performance-based. The performance goals are set based on budget considerations similar to those taken into account under the Senior Executive STIP. In approving the performance goals, the Compensation Committee’s intent is that, over time, actual performance relative to the set goals will demonstrate that the goals have been set at a level which is challenging, but achievable, and by no means assured. For 2006, the performance criterion was the achievement of a specific, pre-established level of free cash flow (defined as operating income before depreciation and amortization, less cash interest, taxes paid, working capital requirements and capital expenditures). With respect to Messrs. Moonves and Reynolds, pursuant to the terms of their respective employment contracts, the performance criterion for their RSUs is operating income before depreciation, amortization, and inter-company eliminations. If the Company has not achieved the established performance goal, the performance-based RSUs will not vest and will be canceled. Dividend equivalents accrue on the RSUs and equal the value of regular cash dividends paid on the shares of the Company’s Class B Common Stock. Dividend equivalents are paid in cash, less applicable withholdings, when the RSUs vest. If the RSUs do not vest, then the dividend equivalents accrued on those RSUs are forfeited.

The date on which the Compensation Committee approves awards under the Company’s LTMIP is usually the grant date for both RSUs and stock option awards. In connection with new hires, the renewal of an employment agreement and in certain other cases, the Compensation Committee may grant an award that will become effective on a future date, with the exercise price of any stock options equal to the closing price of a share of the Company’s Class B Common Stock on the NYSE on or after the date of grant. The Company does not set grant dates intentionally to precede the release of material non-public information. Communications regarding individual grant awards, including the terms and conditions, are provided to recipients as soon as administratively feasible.

In 2006, the Compensation Committee delegated to the President and Chief Executive Officer limited authority to grant long-term incentive awards to executives who are not senior executives under the LTMIP. The Compensation Committee’s delegation specified the circumstances in which the authority could be used, limited the amount that can be awarded to an individual and the total amount that can be awarded in any period, and specified the method for establishing the grant date as a future date. The delegation also requires that the President and Chief Executive Officer report to the Compensation Committee periodically on his exercise of this delegated authority. The Compensation Committee delegated this authority in order for the Company to have the ability to act in a timely manner in a competitive environment in connection with the hiring of new executives or the compensating of an existing executive being given a significant increase in responsibility.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki