What are the key performance metrics for the 2018 Annual Bonus Plan?

The 2018 Annual Bonus Plan's bonus pool is based on the company's performance against corporate-level goals for adjusted earnings per share (EPS) and global sales on a constant currency basis.

How do the 2018 Performance Share Programs align with shareholder interests?

The 2018 Total Shareholder Return (TSR) Performance Share Program aligns executive compensation with shareholder returns by comparing BSX's TSR to that of the S&P 500 Healthcare Index over three years. The 2018 Free Cash Flow (FCF) Performance Share Program incentivizes executives to achieve key financial objectives critical to the company's success, measured by free cash flow performance against financial plan targets.

Are there any provisions for clawing back executive bonuses or awards?

Yes, awards to certain executive officers under both the 2018 Annual Bonus Plan and the 2018 Performance Share Programs are subject to the company's recoupment policy. This allows for reimbursement in cases of executive misconduct resulting in significant harm to the company, material policy violations, or if there is a restatement of financial results that would have reduced the bonus amount. Provisions also apply as required by law, such as under the Dodd-Frank Act.

What is the range for individual bonus payouts under the 2018 Annual Bonus Plan?

Individual bonus awards can range from 50% to 150% of a participant's target annual bonus, with the Board retaining discretion to adjust these amounts based on company performance relative to quality objectives.

BSX 8-K: Leadership Changes

Summary

Boston Scientific Corporation (BSX) filed an 8-K on November 16, 2017, detailing its executive compensation plans for 2018. The company approved a 2018 Annual Bonus Plan, which is substantially similar to the prior year's plan. This plan ties cash incentives to corporate performance metrics, specifically adjusted earnings per share and global sales on a constant currency basis. The bonus pool has a cap of 90% of the target if global sales fall below 97% of the goal, and individual bonuses can range from 50% to 150% of target, with board discretion for adjustments based on quality objectives. Furthermore, BSX also adopted two new performance share programs for 2018: the Total Shareholder Return Performance Share Program (TSR PSP) and the Free Cash Flow Performance Share Program (FCF PSP). These programs aim to align executive interests with those of shareholders by linking long-term incentives to the company's relative stock performance against the S&P 500 Healthcare Index over three years (TSR PSP) and achievement of free cash flow targets (FCF PSP) over one year. Both programs include provisions for recoupment of awards in cases of executive misconduct or financial restatements, aligning with the Dodd-Frank Act.

Key Highlights

1Approval of the 2018 Annual Bonus Plan, largely mirroring the 2017 plan, focusing on adjusted EPS and global sales.
2The 2018 Annual Bonus Plan includes a floor of 50% and a ceiling of 150% of the aggregate annual bonus pool target.
3A provision caps the total bonus pool at 90% if global sales performance is below 97% of the target.
4Board discretion exists to adjust bonus payouts based on quality objectives and performance of quality systems.
5Introduction of two 2018 Performance Share Programs: a Total Shareholder Return (TSR) program and a Free Cash Flow (FCF) program.
6The 2018 TSR PSP links executive compensation to BSX's relative stock performance against the S&P 500 Healthcare Index over three years.
7The 2018 FCF PSP incentivizes executives based on achieving specific free cash flow targets within the fiscal year.
8Both new performance share programs and the annual bonus plan include recoupment provisions for misconduct, financial restatements, or as required by law (e.g., Dodd-Frank Act).

BOSTON SCIENTIFIC CORP 8-K Report, Executive Changes (Nov 17, 2017)

Summary

Key Highlights

Frequently Asked Questions