8-KMaterial Agreements

BRISTOL MYERS SQUIBB CO 8-K Report, Material Agreement (Mar 4, 2005)

Filed March 4, 2005For Securities:BMYCELG-RIBMYMP

Summary

This Form 8-K filing from Bristol-Myers Squibb (BMY), dated March 4, 2005, primarily details compensation decisions made by the Compensation and Management Development Committee for the company's Named Executive Officers. Key actions include the authorization of 2004 annual cash bonus awards, with CEO Peter R. Dolan receiving $2,125,000, and the approval of base salaries for the upcoming fiscal year, effective April 1, 2005, with most executive salaries remaining unchanged from the previous year, except for Dr. Elliott Sigal whose salary reflects a promotion. Furthermore, the filing announces the grant of performance share units for the 2005-2007 period. These units are tied to achieving cumulative earnings per share and sales goals, with potential payouts ranging from zero to 253% of target, and further adjusted by total shareholder return relative to peers. The company emphasizes that these compensation decisions are structured to comply with Section 162(m) of the Internal Revenue Code, aiming for tax deductibility of cash compensation paid to officers.

Key Highlights

  • 1BMY's Compensation Committee authorized 2004 annual cash bonus awards for Named Executive Officers, with CEO Peter R. Dolan receiving $2.125 million.
  • 2The 2004 bonuses were based on company pre-tax earnings targets and individual executive performance.
  • 3Base salaries for Named Executive Officers were approved, effective April 1, 2005. Most remained at their 2004 levels, with an adjustment for Dr. Elliott Sigal due to a promotion.
  • 4The company granted performance share units for the 2005-2007 period to Named Executive Officers.
  • 5Payouts for performance share units are contingent on achieving cumulative EPS and sales goals over the three-year period.
  • 6The maximum payout for performance share units can reach 253% of the target, with a minimum of zero.
  • 7The compensation structure is designed to qualify for tax deductibility under Section 162(m) of the Internal Revenue Code.

Frequently Asked Questions

The filing details the approval of 2004 annual cash bonuses for executive officers, the setting of base salaries effective April 1, 2005, and the granting of performance share units for the 2005-2007 period. These actions are overseen by the Compensation and Management Development Committee.

The 2004 annual cash bonus awards were determined based on the company's performance against a pre-set total company pre-tax earnings target and each individual executive's performance.

The performance share units are tied to achieving two main objectives over the three-year period: a pre-determined cumulative earnings per share goal (weighted at 50%) and a pre-determined cumulative sales goal (weighted at 50%). The total award is also subject to modification based on the company's total shareholder return relative to its peer group.

Yes, there is a risk of no payout. The filing explicitly states that if threshold targets for earnings per share or sales are not achieved, there will be no payout under this award. This was also the case for previous Long-term Performance Awards (2001-2003 and 2002-2004).