8-KLeadership ChangesExhibits & Filings

ADOBE INC. 8-K Report, Executive Changes (Jan 26, 2018)

Filed January 26, 2018For Securities:ADBE

Summary

This 8-K filing from Adobe Inc. (ADBE) announces the approval of two key executive compensation programs for fiscal year 2018: the 2018 Performance Share Program and the 2018 Executive Annual Incentive Plan. The Performance Share Program ties a portion of executive compensation to the company's relative Total Stockholder Return (TSR) over a three-year period (2018-2020) compared to the NASDAQ 100 Index. This program aims to align executive interests with those of shareholders and serves as a retention tool. The Executive Annual Incentive Plan offers cash bonuses based on the achievement of corporate financial targets, specifically related to net new annualized recurring revenue in Digital Media (ARR) and net new subscription bookings for Digital Experience (Bookings), along with individual performance. Both plans include mechanisms for clawbacks and are designed to drive performance and retain key talent.

Key Highlights

  • 1Adobe approved the 2018 Performance Share Program, linking executive awards to relative Total Stockholder Return (TSR) over three years (FY18-FY20).
  • 2The Performance Share Program measures TSR against the NASDAQ 100 Index, with performance payouts based on percentile rank.
  • 3Awards under the Performance Share Program are capped at 200% of target and require continued service through the certification date (post-FY20) and into January 2021 for retention.
  • 4The 2018 Executive Annual Incentive Plan was also approved, offering cash bonuses to eligible executives.
  • 5The Incentive Plan's payouts are contingent on achieving at least 90% of the fiscal year 2018 GAAP revenue target.
  • 6Bonus calculations for the Incentive Plan incorporate corporate performance (ARR and Bookings achievement) and individual performance, with potential adjustments.
  • 7The filing details target and maximum award percentages for key executives, including CEO Shantanu Narayen, under both programs.

Frequently Asked Questions

The primary objective is to align the interests of key employees, particularly executive management, with stockholder value creation by tying a portion of their compensation to the company's relative Total Stockholder Return (TSR) over a three-year period. It also serves as a significant retention mechanism.

Performance is measured by Adobe's relative Total Stockholder Return (TSR) compared to the TSR of companies within the NASDAQ 100 Index over the fiscal years 2018 through 2020. Awards are earned based on Adobe's TSR percentile rank within the index.

The key corporate performance metrics are net new annualized recurring revenue (ARR) in Digital Media and net new subscription bookings for Digital Experience (Bookings). The plan also incorporates an assessment of individual performance, and payouts are subject to achieving at least 90% of the fiscal year 2018 GAAP revenue target.

Yes, a minimum performance threshold of achieving at least 90% of the GAAP revenue target set forth in the company's annual operating plan for fiscal year 2018 is required before any incentive bonus can be earned by participants.