8-KLeadership Changes

ANALOG DEVICES INC 8-K Report, Executive Changes (Nov 4, 2010)

Filed November 4, 2010For Securities:ADI

Summary

Analog Devices Inc. (ADI) filed an 8-K on November 3, 2010, to report on the approval of its 2011 Executive Performance Incentive Plan by its Compensation Committee on October 29, 2010. This plan outlines the structure for bonus payments to executive officers and senior management for Fiscal Year 2011, linking compensation directly to company performance metrics. The plan establishes a bonus target based on an individual's base salary and a predetermined Individual Target Bonus Percentage, which can range from 50% to 160%. This target is then adjusted by a Bonus Payout Factor, which is determined quarterly. The Bonus Payout Factor is a weighted average (50/50) of the company's performance against operating profit before tax (OPBT) as a percentage of revenue and revenue growth compared to the prior fiscal year. Performance thresholds are set, notably a minimum OPBT of 15% of revenue is required for any bonus payout factor to be generated from the OPBT component.

Key Highlights

  • 1Approval of the 2011 Executive Performance Incentive Plan for executive officers and senior management.
  • 2Bonus targets are calculated based on base salary multiplied by an Individual Target Bonus Percentage (50%-160%).
  • 3Bonus Payout Factor is determined quarterly, based 50% on OPBT as a percentage of revenue and 50% on quarterly revenue growth.
  • 4A minimum OPBT of 15% of revenue is required for the OPBT component of the Bonus Payout Factor to be non-zero.
  • 5The Bonus Payout Factor can range from 0% to 300%, impacting the final bonus payment.
  • 6Individual bonuses can range from 0% to 300% of the calculated Fiscal 2011 Bonus Target.
  • 7Certain participants (excluding Ray Stata and Jerald Fishman) are eligible for an additional individual payout factor of up to 30% for superior business performance.

Frequently Asked Questions

The plan's main purpose is to incentivize executive officers and senior management by linking a significant portion of their compensation to the company's financial performance in Fiscal Year 2011. It aims to align management's interests with those of shareholders by focusing on key metrics like operating profit and revenue growth.

A participant's bonus is determined by multiplying their Fiscal 2011 Bonus Target (Base Salary x Individual Target Bonus Percentage) by a quarterly Bonus Payout Factor. This factor is a 50/50 blend of company performance on OPBT margin and revenue growth, with specific thresholds and payout scales defined.

Yes, a critical minimum performance requirement is that Operating Profit Before Tax (OPBT) must be at least 15% of revenue for the OPBT component of the Bonus Payout Factor to generate any payout. If this threshold is not met, that portion of the payout factor will be zero, even if revenue growth is strong.

Yes, most participants (excluding Ray Stata and Jerald Fishman) are eligible for an additional Individual Payout Factor of up to 30%. This is discretionary and awarded based on evidence of superior business performance, such as exceeding revenue and profitability goals or achieving significant non-financial results, as assessed by the CEO and approved by the Compensation Committee.