01—Abstract
Summary
Summary of the 8-K filed September 26, 2008. Cited figures are marked; the original filing is the authoritative source.
This 8-K filing from Procter & Gamble (PG) dated September 26, 2008, announces material modifications to its Business Growth Program (BGP), a long-term incentive plan for its top approximately 40 executives.
The program has been renewed for a three-year performance period from July 1, 2008, to June 30, 2011. The key change involves the performance metrics used to determine executive compensation. The new BGP broadens the performance criteria to include organic sales growth and before-tax operating profit growth, in addition to earnings per share (EPS) growth.
Free cash flow efficiency has also been added as a critical performance measure. Furthermore, interim payments are now restricted to a maximum of 100%a of target, and all payments will be delivered in cash and restricted stock units at the conclusion of the three-year performance period, unlike the previous program which allowed for interim payouts and potentially more immediate stock unit vesting.
02—Key points
Key Highlights
- Procter & Gamble has renewed its Business Growth Program (BGP) for senior executives for a three-year term (July 1, 2008 - June 30, 2011).
- The BGP is a performance-based incentive program for approximately 40 of the Company's most senior executive officers.
- Performance metrics have been expanded to include four key areas: EPS growth, organic sales growth, before-tax operating profit growth, and free cash flow efficiency.
- This represents a shift from the previous BGP's focus on EPS growth and operating total shareholder return (OTSR).
- Interim payments under the new BGP are capped at 100% of target, a stricter limit than the previous program.
- Payments will be made in cash and restricted stock units, with delivery occurring at the end of the three-year performance period.
- The Compensation & Leadership Development Committee approved these modifications.
03—Questions
Frequently Asked Questions
What is the Business Growth Program (BGP) and who does it cover?
The Business Growth Program (BGP) is a long-term incentive program designed to reward approximately 40 of Procter & Gamble's most senior executive officers based on the company's financial performance over a three-year period.
What are the key changes in the renewed BGP for the 2008-2011 period?
The renewed BGP expands the performance metrics to include organic sales growth and before-tax operating profit growth, in addition to EPS growth. Free cash flow efficiency has also been added as a performance measure. Restrictions on interim payments and the timing of restricted stock unit delivery have also been modified.
How does the new BGP differ from the previous one in terms of performance measures?
The previous BGP focused primarily on diluted EPS growth and operating total shareholder return (OTSR). The new BGP broadens this to include organic sales growth, before-tax operating profit growth, and free cash flow efficiency alongside EPS growth.
When will the executive compensation under the new BGP be paid out?
Payments under the new BGP will be made in the form of cash and restricted stock units, and these will be delivered at the conclusion of the three-year performance period, which runs from July 1, 2008, to June 30, 2011.
04—Continue