8-KMaterial AgreementsExhibits & Filings

COSTCO WHOLESALE CORP /NEW 8-K Report, Material Agreement (Nov 16, 2009)

Filed November 16, 2009For Securities:COST

Summary

This 8-K filing from Costco Wholesale Corp. on November 16, 2009, details the approval of the company's fiscal year 2010 executive compensation and incentive plans. The Compensation Committee of the Board of Directors established performance criteria for bonuses and restricted stock unit (RSU) grants for executive officers. These plans are designed to align executive compensation with company performance and are subject to specific targets and vesting schedules. Key components include bonus eligibility based on pre-tax income and operational metrics for most executives, with specific provisions for the CEO and Chairman. Additionally, significant RSU grants were approved for senior leadership, contingent on achieving fiscal 2010 sales or pre-tax income growth targets compared to fiscal 2009. These RSUs have a multi-year vesting period, extending through October 2014, emphasizing long-term commitment and performance alignment.

Key Highlights

  • 1Fiscal 2010 performance criteria for executive bonuses were approved by the Compensation Committee.
  • 2Executive officers (excluding Chairman and CEO) can receive bonuses up to 20% of salary based on pre-tax income and operational targets.
  • 3CEO James D. Sinegal's bonus is discretionary, up to $200,000, with Board/Committee approval.
  • 4Restricted Stock Units (RSUs) were granted to key officers, including 50,000 shares each to the Chairman and CEO.
  • 5RSU grants are performance-based, contingent on achieving specified percentage increases in total sales or pre-tax income for fiscal 2010 relative to fiscal 2009.
  • 6RSUs are subject to continued employment through October 2014, with 20% vesting annually starting in 2010.

Frequently Asked Questions

The primary purpose of this 8-K filing is to inform investors about the approval of Costco's fiscal year 2010 executive compensation plans, including bonus structures and restricted stock unit (RSU) grants, and the performance criteria associated with them.

For fiscal 2010, executive bonuses for officers other than the Chairman and CEO are determined by achieving specified targets related to pre-tax income and operational characteristics relevant to their roles. The actual bonus amounts are determined by the CEO, subject to further Committee approval. The CEO's bonus is discretionary, up to $200,000, and the Chairman's bonus is also at the discretion of the Board or Committee.

The RSU grants are intended to qualify as performance-based compensation. They are contingent upon Costco achieving specific percentage increases in either total sales or pre-tax income for fiscal 2010 compared to fiscal 2009. If these targets are met, the RSUs will be granted after the fiscal year-end and will vest over five years, with 20% vesting each year from 2010 to 2014, provided the executive remains employed by the company.

The RSU grants were awarded to key officers: James D. Sinegal (CEO) received 50,000 shares, Jeffrey H. Brotman (Chairman) received 50,000 shares, Richard D. DiCerchio (senior executive vice president) received 30,000 shares, and all other executive officers received 25,000 shares each.