What is the primary purpose of the new performance share plans?

The primary purpose of the new 2012 Total Shareholder Return (TSR) Performance Share Plan and the 2012 Free Cash Flow (FCF) Performance Share Plan is to align executive compensation with shareholder interests and reinforce a 'pay for performance' philosophy by linking a greater portion of long-term incentives to specific company and market performance metrics.

How will the 2012 TSR Performance Share Plan measure performance?

The 2012 TSR Performance Share Plan measures Boston Scientific's Total Shareholder Return (TSR) against the TSR of other companies in the S&P 500 Healthcare Index over a three-year performance period (January 1, 2012 - December 31, 2014). Performance is assessed across three annual cycles, with a final calculation based on the average TSR of these cycles.

What are the key changes in the updated severance plans compared to previous policies?

The updated severance plans, particularly the Bridge Plan, introduce a lump-sum payment structure for severance pay instead of continuation pay. Additionally, pro-rated bonus payments may not be available unless specific employment and termination conditions related to a 'Layoff' are met. The new plans also introduce a separate plan for exempt employees hired after a certain date and outline benefits such as severance pay, outplacement, and COBRA subsidies.

Who is eligible for the new severance plans?

The Bridge Plan generally covers eligible U.S. employees hired before January 1, 2012, who experience an involuntary termination due to a Layoff between January 1, 2012, and December 31, 2013. The U.S. Severance Plan for Exempt Employees covers eligible U.S. exempt employees hired on or after January 1, 2012, and will also apply to existing exempt employees hired before January 1, 2012, starting January 1, 2014, under specific layoff conditions.

BSX 8-K: Leadership Changes

Summary

Boston Scientific Corporation (BSX) announced significant updates to its executive compensation and severance plans through an 8-K filing on December 15, 2011, effective primarily in early 2012. The company's Board of Directors, upon committee recommendation, adopted two new performance share plans: the 2012 Total Shareholder Return Performance Share Plan (2012 TSR PSP) and the 2012 Free Cash Flow Performance Share Plan (2012 FCF PSP). These plans aim to align executive incentives with shareholder interests and key business objectives, with awards granted as deferred stock units under the existing 2011 Long Term Incentive Plan. The 2012 TSR PSP will measure executive performance over a three-year period against the S&P 500 Healthcare Index, while the 2012 FCF PSP will focus on annual free cash flow achievement against the company's financial plan. Additionally, BSX updated its severance policies by adopting the Amended and Restated Boston Scientific Corporation Severance Pay and Layoff Notification Plan (Bridge Plan) and the Boston Scientific Corporation U.S. Severance Plan for Exempt Employees. These revised plans, effective January 1, 2012, outline severance benefits including pay, outplacement, and COBRA subsidies for eligible employees under specific termination circumstances, with some material changes in benefit payment structure compared to prior plans.

Key Highlights

1Adoption of two new performance share plans for 2012: Total Shareholder Return (TSR) Performance Share Plan and Free Cash Flow (FCF) Performance Share Plan.
2The 2012 TSR PSP links executive compensation to BSX's stock performance relative to the S&P 500 Healthcare Index over a three-year period.
3The 2012 FCF PSP incentivizes executive performance based on achieving annual free cash flow targets.
4Executive compensation mix will see a greater percentage allocated to these performance share awards in 2012.
5Introduction of an Amended and Restated Severance Pay and Layoff Notification Plan (Bridge Plan) effective January 1, 2012, for employees hired before this date.
6Establishment of a new U.S. Severance Plan for Exempt Employees effective January 1, 2012, covering new hires and providing a future transition for existing exempt employees.
7Severance benefits under the new plans generally include severance pay, outplacement services, and subsidized COBRA continuation.

BOSTON SCIENTIFIC CORP 8-K Report, Executive Changes (Dec 16, 2011)

Summary

Key Highlights

Frequently Asked Questions