This excerpt taken from the MOLX DEF 14A filed Sep 10, 2009.
Annual Cash Incentives
Annual cash incentives are provided under the Molex Annual Incentive Plan (the AIP) to reward executives both for Molexs performance toward meeting corporate growth objectives and the executives performance toward meeting their individual objectives. This is a short-term annual incentive paid in cash pursuant to arrangements that cover all executive officers and provide that an incentive will be paid upon the achievement of two performance metrics: a quantitative performance measure, which makes up 80%, and performance against previously defined individual goals, which makes up the remaining 20%. The quantitative performance measure must be met in order for any payout to be earned. In other words, no matter how well an executive performed against individual goals, if the quantitative performance goal is not met then no cash incentive will be paid out. The Committee selects the performance measure at the beginning of each fiscal year. The annual cash incentive is targeted at the median of the peer group, and depending on Molex and individual performance, actual bonuses can vary widely.
Individual performance goals are established by the Committee and the CEO at the beginning of each fiscal year. These individual performance goals may be based on a variety of factors, including internal budget goals, investor expectations, peer company results, prior year Molex performance, upcoming fiscal year business plans and strategic initiatives, and may exclude specified items that are not reflective of the performance of the ongoing business. Each officers performance against individual goals is assessed at the end of the fiscal year.
For FY09, the Committee determined that incentives would be paid out upon the achievement of any incremental improvement in operating income (before restructuring charges) as compared to FY08, with target incentives set at 15% growth in operating income and maximum incentives set at 30% growth in operating income. Operating income is equal to gross profit less selling, general and
administrative expense. The target and maximum award opportunities as a percent of base salary for our NEOs are as follows: