Summary
Boston Scientific Corporation (BSX) filed an 8-K on October 25, 2013, detailing the approval of its 2014 executive compensation plans by the Board of Directors. The report primarily focuses on the 2014 Annual Bonus Plan and two new performance share programs: the 2014 Total Shareholder Return Performance Share Program (TSR PSP) and the 2014 Free Cash Flow Performance Share Program (FCF PSP). These plans are designed to align executive compensation with company performance and shareholder interests. The Annual Bonus Plan is based on corporate financial metrics like adjusted earnings per share and global sales, with specific caps and floors, and includes provisions for quality objectives. The TSR PSP links executive rewards to the company's stock performance relative to the S&P 500 Healthcare Index over a three-year period, while the FCF PSP incentivizes the achievement of free cash flow targets over a one-year period. Both performance share programs and the annual bonus plan for certain officers are subject to the company's recoupment policy, including provisions for misconduct, financial restatements, and Dodd-Frank Act requirements.
Key Highlights
- 1Boston Scientific approved its 2014 Annual Bonus Plan, effective January 1, 2014, to incentivize eligible salaried personnel.
- 2The 2014 Annual Bonus Plan's total bonus pool is contingent on achieving corporate goals for adjusted earnings per share and global sales (on a constant currency basis).
- 3The bonus plan includes a cap of 95% of the target bonus pool if global sales fall below 95% of the goal, with overall bonus payouts ranging from 50% to 150% of the aggregate target.
- 4The Board retains discretion to adjust bonuses based on quality objectives and performance of quality systems.
- 5Two new performance share programs were approved for 2014: the Total Shareholder Return Performance Share Program (TSR PSP) and the Free Cash Flow Performance Share Program (FCF PSP).
- 6The TSR PSP measures performance against the S&P 500 Healthcare Index over three years (2014-2016), with awards ranging from 0% to 200% of target.
- 7The FCF PSP rewards achievement of free cash flow targets against the 2014 financial plan over one year, with awards ranging from 0% to 150% of target.
- 8Awards to certain executive officers under these plans are subject to a recoupment policy, covering misconduct, financial restatements, and Dodd-Frank Act 'clawback' provisions.