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SYK » Topics » 2008 Bonus Plans

This excerpt taken from the SYK DEF 14A filed Mar 20, 2009.
2008 Bonus Plans
 
The 2008 annual bonus objectives, weightings and goals for each NEO, other than the overachievement factor discussed on page 15, are shown in the tables on pages 17 to 20. The following information is relevant to an understanding of those tables:
 
  •  Threshold is the performance required before any bonus begins accruing. Results at or below the threshold level result in a zero bonus payment for that performance measure. For example, for Mr. MacMillan and Mr. Bergy, the threshold of earnings per share in 2008 of $2.85 per share — an 18.8% increase over 2007 — was not met, so no bonus was earned on that measure. Results for all quantitative measures are prorated between threshold and target, as well as between target and maximum goal in the case of overachievement. Meeting the target goal equals 100% of bonus opportunity for the particular measure.
 
  •  The tables express the goals for quantitative performance measures as a percentage change from 2007 actual results in order to show the degree of improvement required, relative to the prior year, to achieve Bonus Plan payment levels.


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  •  For performance measures that are qualitative in nature, the determination of performance requires subjective evaluations rather than quantifiable calculations of achievement to goal. These subjective performance evaluations are made by our President and Chief Executive Officer in the case of the other NEOs and by the Compensation Committee in the case of the President and Chief Executive Officer, after consideration is given to how the individual or business area has performed in this regard. We consider the threshold payment for qualitative measures to be zero percent.
 
  •  The financial measures used to establish Bonus Plan goals and performance results were adjusted to exclude the effect of currency fluctuations, the restructuring charges recorded in 2008 as a result of the decisions to simplify the structure of the Company’s Japanese distribution business and to substantially reduce development efforts associated with Sightline product technologies acquired in 2006 and the intangible asset impairment charge recorded in 2007 to write off patents associated with intervertebral body fusion cage products. These adjustments were made in order to measure operating results and Bonus Plan performance on a consistent and comparable basis year to year.
 
  •  Cash from operations is an internal performance measure that, at the corporate level, adjusts net cash provided by operating activities as reported in our Consolidated Financial Statements for the effect of purchases and sales of property, plant and equipment and the excess income tax benefit from the exercise of stock options.
 
  •  An overachievement factor was in place in 2008 permitting a maximum bonus award at 20% above target. No overachievement bonuses were paid for 2008 as previously discussed on page 15.
 
  •  For 2008, Stryker sales was the only bonus plan measure that could have exceeded 100% of target payout opportunity. All other bonus plan measures are capped at 100% of target payment opportunity.
 
This excerpt taken from the SYK DEF 14A filed Mar 14, 2008.
2007 Bonus Plans
 
The 2007 annual bonus objectives, weightings and goals for each NEO, other than the overachievement factor discussed on page 12, are shown in the tables that follow. The following information is relevant to an understanding of those tables:
 
  •  Threshold is the performance required before any bonus begins accruing. Results at or below the threshold level result in a zero bonus payment for that performance measure. For example, for Mr. MacMillan and Mr. Bergy, if adjusted earnings per share in 2007 had been $2.37 per share — an 18.5% increase over 2006 — or less, no bonus would have been earned on that measure. Results for all quantitative measures are prorated between threshold and target. Meeting the target goal equals 100% of bonus for the particular measure.
 
  •  The tables express the goals for quantitative performance measures as a percentage change from 2006 actual results in order to show the degree of improvement required, relative to prior year, to achieve Bonus Plan payment levels. For inventory management (days sales in inventory), a negative number represents an improvement in the performance measure.
 
  •  For performance measures that are qualitative in nature, the determination of performance requires subjective evaluations rather than quantifiable calculations of achievement to goal. These subjective performance evaluations are made by our President and Chief Executive Officer in the case of the other NEOs and by the Compensation Committee in the case of the President and Chief Executive Officer, after consideration is given to how the individual or business area has improved. We consider the threshold payment for qualitative measures to be zero percent.
 
  •  The financial measures used to establish Bonus Plan goals and performance results were adjusted to exclude the effect of currency fluctuations, the divestiture of Physiotherapy Associates in June 2007 and the impact on earnings per share of the charges to reflect an intangible asset impairment in 2007 and to write off purchased in-process research and development in conjunction with an acquisition in 2006. These adjustments are made in order to measure operating results and Bonus Plan performance on a consistent and comparable basis year to year.
 
  •  Cash from operations is an internal performance measure that, at the corporate level, adjusts net cash provided by operating activities as reported in our Consolidated Financial Statements for the effect of purchases and sales of property, plant and equipment and the excess income tax benefit from the exercise of stock options.


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  •  All Bonus Plan measures, other than the overachievement factor on page 12, are capped at 100% of target payment opportunity.
 

EXCERPTS ON THIS PAGE:

DEF 14A
Mar 20, 2009
DEF 14A
Mar 14, 2008

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