How was executive compensation determined for 2004 performance?

For 2004 performance, executive officers like James R. Houghton, Wendell P. Weeks, James B. Flaws, Peter F. Volanakis, and Joseph A. Miller, Jr. received 200% of their target award under the Variable Compensation Plan, primarily based on the company's adjusted net profit after taxes. They also received performance share restricted stock awards based on meeting a 150% adjusted net profit after taxes metric.

What are the key performance metrics for 2005 compensation?

For 2005 variable compensation (payable in 2006), the metrics for executive officers include a corporate performance factor based on adjusted net profit after taxes. For performance shares in 2005, the metrics are based on adjusted earnings per share and operating cash flow of the Company in 2005.

Were there any changes to director compensation?

Yes, the Board of Directors voted to amend the non-employee director compensation package for 2005. While the total target equity compensation remained approximately $80,000, the annual cash retainer was increased from $30,000 to $50,000. Annual retainers for the Audit Committee Chair and Compensation Committee Chair were raised from $10,000 to $15,000 each, and other Committee Chair retainers were increased to $10,000 per year.

What is the nature of the performance share awards?

Performance shares are a form of restricted stock that are subject to forfeiture if certain performance conditions are not met. Awards granted for 2004 performance are restricted through February 1, 2007, and awards related to 2005 performance will be restricted through February 1, 2008. These awards are tied to corporate financial performance metrics.

GLW 8-K: Material Agreements

Summary

This 8-K filing from Corning Inc. (GLW) on February 8, 2005, details actions taken by the Compensation Committee of its Board of Directors on February 2, 2005, primarily concerning executive and director compensation. Key decisions include adjustments to non-employee director compensation, confirmation of 2004 variable compensation payouts, and the establishment of performance metrics for 2005 compensation plans. For investors, the most significant aspect is the linkage of executive compensation to corporate financial performance, specifically adjusted net profit after taxes for 2004 and a combination of adjusted net profit after taxes and adjusted earnings per share/operating cash flow for 2005. The filing also outlines the achievement of performance metrics for 2004, resulting in significant payouts for a large number of employees, including executive officers, through the Variable Compensation Plan and Goalsharing Plans. Additionally, performance share restricted stock awards for 2004 were granted to approximately 150 executives, contingent on corporate performance and subject to forfeiture and transfer restrictions. New performance metrics for 2005 performance shares have been established, tied to 2005 financial results and also subject to restrictions.

Key Highlights

1Corning's Compensation Committee confirmed 2004 performance metrics were met, leading to 200% of target awards for participating executive officers under the Variable Compensation Plan.
2Approximately 700 employees, including executive officers, are part of the Variable Compensation Plan, with payouts for 2004 based on adjusted net profit after taxes.
3Corning also adopted performance metrics for 2005 variable compensation, payable in 2006, which will include corporate performance (adjusted net profit after taxes) and individual/business unit performance.
4The company granted an additional 794,750 performance shares (restricted stock) to approximately 150 executives for 2004 performance, subject to restrictions until February 1, 2007.
5Performance metrics for 2005 performance shares were adopted, based on adjusted earnings per share and operating cash flow, with shares earned restricted until February 1, 2008.
6Non-employee director compensation for 2005 was adjusted, increasing annual cash retainers and committee chair retainers while maintaining the total target equity compensation.
7Specific performance metrics and target compensation percentages for named executive officers (Houghton, Weeks, Flaws, Volanakis, Miller) are detailed for both 2004 and 2005 plans.

CORNING INC /NY 8-K Report, Material Agreement (Feb 8, 2005)

Summary

Key Highlights

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