8-KLeadership Changes

FLEX LTD. 8-K Report, Executive Changes (Jun 30, 2017)

Filed June 30, 2017For Securities:FLEX

Summary

Flex Ltd. (FLEX) filed an 8-K on June 30, 2017, to announce the approval of its executive compensation plans for fiscal year 2018. The Board of Directors adopted an Annual Incentive Bonus Plan and a Performance Long Term Cash Incentive Plan. These plans are designed to incentivize executive officers through cash bonuses tied to specific, pre-established performance metrics. The Annual Incentive Bonus Plan for Fiscal 2018 focuses on both quarterly and annual objectives, with 50% of the bonus opportunity linked to quarterly goals and the other 50% to annual goals. Performance metrics include revenue growth, earnings per share, operating profit, and return on invested capital at the company level, with additional business-unit specific targets for certain executives. The plan uses adjusted, non-GAAP measures for performance evaluation and allows for payout opportunities ranging from 50% to 200% of target for quarterly components and up to 300% of target for annual bonuses.

Key Highlights

  • 1Flex Ltd. approved its Annual Incentive Bonus Plan for Fiscal Year 2018 on June 29, 2017.
  • 2The Annual Incentive Bonus Plan links 50% of bonus opportunities to quarterly objectives and 50% to annual objectives.
  • 3Key performance indicators for the annual bonus include revenue growth, EPS, operating profit, and ROIC at the company level, plus business unit-specific targets for some executives.
  • 4Target bonus opportunities are set as percentages of base salary: 200% for CEO, 110% for CFO, and 80-110% for other officers.
  • 5Actual bonus payouts can range from 50% to 200% of target for quarterly components and up to 300% of target for annual bonuses.
  • 6The company also approved a Performance Long Term Cash Incentive Plan for fiscal year 2018, excluding the CEO.
  • 7This long-term plan is based on cumulative three-year objectives, specifically increases to free cash flow, with payouts occurring on the third anniversary of the grant date if targets are met.

Frequently Asked Questions

Flex Ltd. approved two main plans: an Annual Incentive Bonus Plan for FY2018, which focuses on short-term performance, and a Performance Long Term Cash Incentive Plan for FY2018, which targets longer-term achievements over three years, specifically related to free cash flow.

The annual bonuses are split equally between quarterly (50%) and annual (50%) objectives. Performance is measured against company-level targets such as revenue growth, EPS, operating profit, and ROIC, as well as specific business unit goals for certain executives. Payouts are contingent on meeting at least a threshold level for each performance measure.

Target bonus opportunities are set as a percentage of base salary, with the CEO eligible for up to 200%, the CFO up to 110%, and other officers between 80% and 110%. Actual payouts can range from 50% of target (threshold) up to 200% of target for quarterly components and a maximum of 300% of target for annual bonuses, based on performance.

The Performance Long Term Cash Incentive Plan (excluding the CEO) is based on the achievement of cumulative three-year objectives, specifically increases in free cash flow, using an adjusted, non-GAAP measure. Payouts will occur on the third anniversary of the grant date if the performance targets are met or exceeded.