What is the primary purpose of this 8-K filing?

This 8-K filing announces actions taken by Amgen's Compensation Committee regarding executive compensation. Specifically, it details the approval of 2006 bonus payouts and the establishment of performance goals and target awards for 2007 under the Executive Incentive Plan (EIP).

What is 'negative discretion' in the context of Amgen's executive compensation?

'Negative discretion' refers to the Compensation Committee's right to award an executive less than their targeted bonus amount. They can exercise this discretion based on factors like individual performance or overall company performance, but they cannot award more than the target.

How will executive bonuses be determined for 2007?

For 2007, executive bonuses under the EIP will be primarily tied to the company's "Adjusted Net Income." Target awards are set as a percentage of this figure for each named executive officer. The Compensation Committee may still use negative discretion and can consider other financial, strategic, or individual goals in determining final payouts.

What adjustments are made to calculate 'Adjusted Net Income' for 2007?

Adjusted Net Income for 2007 will be based on net income per U.S. GAAP, but will be adjusted by the Compensation Committee for specific items. These include gains/losses from changes in accounting principles, amortization of acquired intangible assets, expenses for acquired in-process R&D, and retention/severance costs related to acquisitions.

AMGN 8-K: Material Agreements

Summary

Amgen Inc. (AMGN) filed an 8-K on March 12, 2007, reporting on actions taken by its Compensation and Management Development Committee (Compensation Committee) on March 6, 2007. The committee approved cash bonus awards for certain executives under the Executive Incentive Plan (EIP) based on 2006 performance and established performance goals and target awards for 2007. The report details the specific payout amounts for named executive officers for 2006, which were less than their targeted awards due to the committee exercising its 'negative discretion.' For 2007, the Compensation Committee set "Adjusted Net Income" as the primary performance goal for EIP awards. Target awards for named executive officers were established as a percentage of this Adjusted Net Income, which is defined with specific adjustments for items like changes in accounting principles, amortization of acquired intangibles, and acquisition-related expenses. The company's intention is for these EIP awards to satisfy requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code.

Key Highlights

1Amgen's Compensation Committee approved and authorized payouts for 2006 EIP awards to named executive officers, noting that actual payouts were below target due to negative discretion.
2Specific 2006 EIP award amounts are disclosed for key executives, including Kevin Sharer ($4,525,000), Dennis Fenton ($1,295,000), George Morrow ($1,520,000), Richard Nanula ($1,240,000), and Roger Perlmutter ($1,445,000).
3The Compensation Committee established "Adjusted Net Income" as the primary performance goal for the 2007 EIP awards.
4Target awards for 2007 are set as a percentage of Adjusted Net Income for each named executive officer, with Kevin Sharer having a higher percentage (0.125%) compared to others (0.075%).
5A specific definition for "Adjusted Net Income" for 2007 is provided, including adjustments for accounting changes, amortization of acquired intangibles, in-process R&D expenses, and severance costs related to acquisitions.
6The company intends for EIP awards to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code.
7The Compensation Committee retains the discretion to adjust awards downwards ('negative discretion') and considers various performance factors, including individual performance and broader company strategic goals.

AMGEN INC 8-K Report, Material Agreement (Mar 12, 2007)

Summary

Key Highlights

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