What is the main change to Boston Scientific's bonus plan for 2012?

The primary change is the shift from a unit-based bonus system to a single, consolidated "Total Annual Bonus" pool that is tied to corporate-level performance metrics, specifically adjusted earnings per share and global sales on a constant currency basis.

How will the total bonus pool be affected by sales performance?

The total bonus pool will be capped at 95% of the aggregate annual target if global sales performance falls below 95% of the approved performance goal. The pool also has a maximum payout of 150% and a minimum payout of 50% of the target.

Does the company's quality performance influence executive bonuses?

Yes, the Board of Directors has retained the ability to terminate, suspend, modify the plan, or reduce the Total Annual Bonus based on the company's performance relative to its quality objectives and the performance of its quality systems.

How are individual bonuses determined after the total pool is set?

The Total Annual Bonus pool is first allocated to different business units based on their performance against predetermined "Scorecard" metrics. Within each unit, managers then evaluate individual employee performance to determine the final bonus award, which can range from 0% to 200% of the participant's target annual bonus.

BSX 8-K: Leadership Changes

Summary

Boston Scientific Corporation (BSX) filed an 8-K on March 2, 2012, detailing amendments to its 2012 Annual Bonus Plan, effective January 1, 2012. The key change shifts the bonus structure from unit-based performance to a company-wide "Total Annual Bonus" pool. This pool will be determined by the achievement of corporate-level goals for adjusted earnings per share and global sales on a constant currency basis. This consolidation aims to align executive and employee incentives more directly with overall company performance. While the new plan introduces a single, consolidated bonus pool, it also incorporates specific performance gates and caps. The total bonus pool is capped at 95% if global sales fall below 95% of their target. Furthermore, the pool has a ceiling of 150% and a floor of 50% of the Aggregate Annual Target. The Board retains discretion to adjust bonuses based on quality objectives and performance, underscoring a continued focus on both financial results and operational quality. The allocated bonus pools will then be distributed to individual employees based on a combination of unit performance metrics ('Scorecard') and individual manager assessments.

Key Highlights

1Effective January 1, 2012, Boston Scientific has amended and restated its 2012 Annual Bonus Plan.
2The bonus structure has been consolidated into a single "Total Annual Bonus" pool based on corporate-level performance metrics.
3Key performance metrics for the bonus pool are adjusted earnings per share (EPS) and global sales on a constant currency basis.
4The Total Annual Bonus pool is subject to a cap of 95% if global sales performance is below 95% of the target.
5The Total Annual Bonus pool has a ceiling of 150% and a floor of 50% of the Aggregate Annual Target.
6The Board of Directors retains the ability to terminate, suspend, modify the plan, or reduce bonuses based on quality objectives and performance.
7Individual bonus allocations will be determined by unit performance against "Scorecard" metrics and individual manager evaluations.

BOSTON SCIENTIFIC CORP 8-K Report, Executive Changes (Mar 2, 2012)

Summary

Key Highlights

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