What is the main purpose of the 2005 Incentive Compensation Program (ICP)?

The 2005 ICP is designed to provide cash incentive compensation to approximately 320 executives and key employees, aligning their rewards with the company's financial and operational performance for fiscal year 2005. It aims to motivate employees by tying a portion of their compensation to achieving specific company goals.

How is incentive compensation calculated under the 2005 ICP?

Incentive compensation is determined by first setting an incentive target as a percentage of base salary. This target is then adjusted upwards or downwards based on a financial performance factor (up to 200% of target, tied to EPS, sales, operating return on sales, and cash flow measures), an operating goals performance factor (up to +/- 20%), and an individual performance factor.

Are there any minimum requirements for incentive payments?

Yes, the company's earnings per share (EPS) must exceed a minimum threshold for any incentive payments to be made under the 2005 ICP. This ensures that base-level profitability is achieved before performance-based bonuses are distributed.

What are the implications of the $21 million bonus approval for fiscal year 2004?

The approval of approximately $21 million in bonus payments for fiscal year 2004 indicates that Rockwell Automation achieved certain financial and operating performance goals for that year. This demonstrates a commitment to rewarding employees for past performance while setting the stage for future incentive structures.

ROK 8-K: Material Agreements

Summary

Rockwell Automation, Inc. (ROK) filed an 8-K on December 7, 2004, detailing the approval of its 2005 Incentive Compensation Program (ICP) and related bonus payments for fiscal year 2004. The 2005 ICP outlines a structured approach to cash incentive compensation for approximately 320 executives and key employees, excluding the CEO and top four officers who participate in a separate Senior ICP. The program is designed to align employee rewards with company performance, incorporating financial metrics such as earnings per share, sales, operating return on sales, and cash flow, as well as operational and individual performance factors.

Key Highlights

1Approval of the 2005 Incentive Compensation Program (ICP) for executives and key employees.
2The 2005 ICP includes financial and operating performance measures and goals.
3Incentive compensation targets are set as a percentage of base salary and can be adjusted based on financial, operating, and individual performance.
4Key financial performance measures include earnings per share (EPS), sales, operating return on sales, free cash flow, and operating cash flow.
5A minimum EPS threshold must be met for any payments under the 2005 ICP to be made.
6The Compensation and Management Development Committee retains discretion to adjust or eliminate incentive compensation payments.
7Approximately $21 million in bonus payments were approved for fiscal year 2004 to around 300 executives and key employees.

ROCKWELL AUTOMATION, INC 8-K Report, Material Agreement (Dec 7, 2004)

Summary

Key Highlights

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