8-KMaterial Agreements

APPLIED MATERIALS INC /DE 8-K Report, Material Agreement (Dec 13, 2004)

Filed December 13, 2004For Securities:AMAT

Summary

This 8-K filing from Applied Materials, Inc. (AMAT) on December 13, 2004, primarily details the compensation decisions made by the Human Resources and Compensation Committee of the Board of Directors for fiscal year 2005. The key focus is on the performance goals and bonus formulas established for senior executives, including the CEO and CFO, which are tied to achieving specific levels of annual revenue and net income. For other executives, such as the Senior Vice President of Sales and Marketing, the performance metrics are more diversified, incorporating revenue from specific business units, earnings per share, and management by objectives related to customer satisfaction, productivity, and cost reduction. The filing also announces an increase in the annual cash retainer for the lead independent director, effective for fiscal year 2005, from an unspecified amount to $30,000. This change is highlighted as the only modification to Board compensation, with retainers for other committee chairs and directors remaining the same. Investors should note that actual bonuses are contingent upon achieving the set performance targets and the Committee's discretion, with a cap of $5 million per individual and a requirement for continued employment throughout fiscal year 2005.

Key Highlights

  • 1Applied Materials' Compensation Committee approved performance goals and a bonus formula for senior executives for fiscal year 2005.
  • 2Performance metrics for the CEO and CFO are based on achieving certain levels of annual revenue and net income.
  • 3Performance metrics for the Senior Vice President of Sales and Marketing include revenue targets (company and business units), EPS, and management by objectives (customer satisfaction, productivity, cost reduction).
  • 4The maximum bonus payable to any individual executive for fiscal year 2005 is capped at $5 million.
  • 5Executives must remain employed for the entirety of fiscal year 2005 to be eligible for any bonus.
  • 6The annual retainer for the lead independent director has been increased to $30,000 for fiscal year 2005.
  • 7No other changes were made to Board compensation, with retainers for other committee chairs and directors remaining at their previous levels.

Frequently Asked Questions

For the President & CEO and Group VP & CFO, performance is measured against achieving specific levels of annual revenue and net income. For the Senior VP of Sales and Marketing, metrics include revenue targets (overall and by business unit), earnings per share, and management by objectives focused on customer satisfaction, productivity, and cost reduction.

Yes, the filing states that in no event may any individual's bonus under the Plan for fiscal year 2005 exceed $5 million.

Effective for fiscal year 2005, the annual cash retainer for the lead independent director has been increased to $30,000 per year. This is the only change made to Board compensation.

Executives must achieve the approved performance goals for fiscal year 2005, and the Committee retains discretion to reduce or eliminate bonuses. Furthermore, each executive must remain an employee for the entire fiscal year 2005 to be eligible for any bonus.