Summary
Eaton Corporation plc (ETN) filed an 8-K on March 1, 2018, detailing the establishment of corporate performance criteria for its 2018 Executive Incentive Compensation Plan. The primary metrics for determining incentive payouts will be Adjusted Earnings Per Share (EPS) and Cash Flow Return on Gross Capital. The Compensation Committee retains discretion to consider other qualitative factors, such as performance against profit plans, peer performance, and strategic growth execution, in finalizing awards. This filing also outlines the structure for the 2018-2020 long-term performance-based incentive program, which uses relative Total Shareholder Return (TSR) against a peer group as its core performance measure, with awards potentially ranging from 0% to 200% of target.
Key Highlights
- 1Eaton's Compensation Committee has set corporate performance criteria for the 2018 Executive Incentive Compensation Plan.
- 2Key quantitative metrics for 2018 incentives are Adjusted Earnings Per Share (EPS) and Cash Flow Return on Gross Capital.
- 3Discretionary qualitative factors, including performance against profit plans, peer comparison, and growth strategy execution, can influence final incentive awards.
- 4The 2018-2020 long-term incentive program is based on performance share units.
- 5The long-term incentive program's payout is determined by Eaton's Total Shareholder Return (TSR) relative to a peer group of 20 companies.
- 6Awards for the long-term incentive program can range from 0% to 200% of the target performance share units.
- 7Executive officers' individual incentive targets for 2018 range from 75% to 150% of their target amounts.