8-KMaterial AgreementsExhibits & Filings

STRYKER CORP 8-K Report, Material Agreement (Feb 9, 2006)

Filed February 9, 2006For Securities:SYK

Summary

Stryker Corporation (SYK) filed an 8-K on February 9, 2006, reporting on significant compensation-related events approved by its Board of Directors on February 7, 2006. The primary focus is the adoption of the 2006 Long-Term Incentive Plan, which is subject to shareholder approval and makes available 20 million shares of common stock for awards such as stock options and restricted stock. This plan aims to incentivize employees and directors and includes provisions for changes in control. Additionally, the company amended its 1998 Stock Option Plan to allow for delegation of authority to the CEO for granting options and to introduce forfeiture provisions similar to the new plan. A notable event is the granting of a special, large stock option award to Stephen P. MacMillan, the President and CEO, under the amended 1998 Plan. This award includes specific vesting schedules, exercise requirements, holding period restrictions, and significant clawback provisions tied to non-compete and other restrictive covenants.

Key Highlights

  • 1Adoption of the 2006 Long-Term Incentive Plan, making 20 million shares available for employee and director awards.
  • 2The 2006 Plan requires shareholder approval and includes provisions for stock options, restricted stock, and other equity-based awards.
  • 3Amendments to the 1998 Stock Option Plan permit delegation of option grants to the CEO and introduce forfeiture clauses.
  • 4A special stock option award of 1,000,000 shares was granted to CEO Stephen P. MacMillan at an exercise price of $46.85.
  • 5The CEO's stock option award has an eight-year vesting schedule, starting in 2007.
  • 6Strict holding period requirements and forfeiture clauses are included for the CEO's award, tied to non-compete and non-solicitation agreements.
  • 7The 2006 Plan includes provisions for accelerated vesting or cash settlement in the event of a change in control.

Frequently Asked Questions

The primary purpose of the 2006 Long-Term Incentive Plan is to attract, retain, and motivate employees and directors of Stryker Corporation by providing them with equity-based compensation, such as stock options and restricted stock, to align their interests with those of shareholders.

The special award grants Mr. MacMillan the option to purchase 1,000,000 shares at $46.85 per share. It vests over eight years, starting in 2007, with specific exercise and holding period requirements designed to ensure continued commitment and compliance with restrictive covenants. The award is intended to be in lieu of other stock-based awards for the next five years.

The 2006 Long-Term Incentive Plan requires shareholder approval at the 2006 Annual Meeting. Until shareholder approval is obtained, awards under this plan cannot be fully implemented. Shareholders will have the opportunity to vote on the plan.

The 'change in control' provisions give the Compensation Committee discretion to accelerate vesting, eliminate restrictions, or deem performance measures satisfied. In certain scenarios, participants holding options may have the right to receive cash equal to the excess of the 'change in control price' over the option's exercise price, providing potential upside for employees in such events.