8-KLeadership Changes

APPLIED MATERIALS INC /DE 8-K Report, Executive Changes (Jan 30, 2008)

Filed January 30, 2008For Securities:AMAT

Summary

This 8-K filing from Applied Materials, Inc. (AMAT) on January 30, 2008, details the approved performance goals and bonus formula for its Senior Executive Bonus Plan for fiscal year 2008. The company's Human Resources and Compensation Committee has established specific metrics for its named executive officers, which include a mix of financial targets, market share growth, operational objectives, and employee engagement. The primary drivers for executive bonuses are adjusted earnings per share (non-GAAP) and corporate scorecard metrics. Notably, the CEO's bonus is weighted at 50% towards adjusted EPS and 25% towards market share growth, with the remaining 25% for operational and strategic objectives. For other executives, the corporate scorecard plays a more significant role, accounting for 50% of their bonus calculation, alongside business unit-specific goals. A minimum profit after tax of 5% is required for any bonus payout, with potential additional bonuses tied to total stockholder return relative to the S&P 500.

Key Highlights

  • 1Applied Materials' Compensation Committee approved fiscal 2008 performance goals and bonus formula for senior executives.
  • 2CEO Michael R. Splinter's bonus is primarily tied to adjusted earnings per share (50%) and market share growth (25%).
  • 3Other named executive officers' bonuses are significantly influenced by a corporate scorecard (50%) and specific business unit objectives.
  • 4The corporate scorecard comprises 12 measures, including revenue, profitability, market share, operational efficiency, and employee engagement.
  • 5A minimum company profit after tax of 5% (adjusted net income to net sales) is a prerequisite for any bonus payout.
  • 6Executive bonuses can be enhanced by strong total stockholder return relative to the S&P 500.
  • 7Maximum bonus payouts are capped at $5 million per executive and are contingent on significantly exceeding all targets and achieving top-tier total stockholder return.

Frequently Asked Questions

This 8-K filing announces the specific performance goals and the formula used to calculate bonus awards for Applied Materials' senior executives under its Senior Executive Bonus Plan for the fiscal year 2008. It outlines the metrics the company will use to determine potential bonus payouts for its top officers.

Bonuses will be determined based on a combination of key performance indicators. For the CEO, adjusted earnings per share (non-GAAP) and market share growth are significant factors. For other named executives, a corporate scorecard containing 12 diverse metrics, along with specific business unit goals, will be used. A minimum profit after tax of 5% is required for any bonus to be paid.

Yes, two key conditions exist. First, Applied Materials must achieve at least 5% profit after tax (calculated as adjusted net income as a percentage of net sales). Second, while not guaranteed, total stockholder return relative to the S&P 500 can influence bonus amounts, potentially increasing them if performance is strong.

The potential bonus for the CEO can range from zero to 525% of his base salary, and for Mr. Kerschbaum from zero to 345%. For other named executives, it's zero to 375% of base salary. However, a strict cap of $5 million per executive applies to all bonus payouts, with maximum awards contingent on exceeding targets and achieving superior stockholder return.