8-KLeadership ChangesExhibits & Filings

ANALOG DEVICES INC 8-K Report, Executive Changes (Dec 22, 2006)

Filed December 22, 2006For Securities:ADI

Summary

Analog Devices, Inc. (ADI) filed an 8-K on December 22, 2006, primarily announcing the details of its Executive Performance Bonus Plan for Fiscal Year 2007. This plan outlines a structured approach to executive compensation, linking bonuses to both company financial performance and individual achievements. The bonus structure is multi-faceted, beginning with a base bonus target calculated from eligible earnings and a committee-determined bonus target percentage. This target is then modified by a "Bonus Payout Factor" based on the company's operating profit before tax as a percentage of revenue, with the potential to range from zero to three times the target. Furthermore, an "Individual Payout Factor," ranging from -50% to +50%, will be applied based on individual goal achievement, with the CEO and Compensation Committee evaluating performance. The filing also notes the approval of a revised form for granting non-qualified stock options under the company's 2006 Stock Incentive Plan, indicating ongoing equity-based compensation mechanisms.

Key Highlights

  • 1ADI established an Executive Performance Bonus Plan for Fiscal Year 2007.
  • 2The bonus plan ties compensation to company financial performance (operating profit before tax as a percentage of revenue) and individual executive performance.
  • 3Bonuses can be significantly adjusted: the company performance component can scale the target bonus by a factor of 0 to 3.
  • 4Individual performance further adjusts the bonus by +/- 50% through an Individual Payout Factor.
  • 5Bonus payments will be calculated quarterly but adjusted for individual performance annually.
  • 6The Compensation Committee has significant discretion in setting bonus target percentages and the Bonus Payout Factor, and in determining individual performance evaluations.
  • 7A revised form for granting non-qualified stock options under the 2006 Stock Incentive Plan was approved.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce the approval of Analog Devices, Inc.'s Executive Performance Bonus Plan for Fiscal Year 2007, detailing how executive compensation will be structured and performance will be measured. It also notes the approval of a revised form for stock option grants.

Executive bonuses are calculated in a multi-step process: first, a bonus target is set based on eligible earnings and a percentage determined by the Compensation Committee (35%-160%). This target is then multiplied by a Bonus Payout Factor (0-3) based on company operating profit margin. Finally, an Individual Payout Factor (+/- 50%) based on individual goals adjusts the total bonus amount.

The Bonus Payout Factor is primarily based on the company's operating profit before tax as a percentage of revenue. The Compensation Committee has the discretion to adjust this factor to exclude special, non-recurring, or non-cash items, such as stock-based compensation, restructuring costs, or acquisition-related expenses.

Individual performance is evaluated against a set of goals focused on key performance indicators, including business unit financial performance, strategic initiatives, and overall leadership. The Chief Executive Officer reviews other participants' performance and makes recommendations to the Compensation Committee, which then determines the Individual Payout Factor for all participants.