8-KLeadership ChangesExhibits & Filings

STRYKER CORP 8-K Report, Executive Changes (Feb 21, 2007)

Filed February 21, 2007For Securities:SYK

Summary

This Form 8-K filing from Stryker Corporation (SYK) reports the adoption of a new Executive Bonus Plan by its Board of Directors, effective January 1, 2007, pending shareholder approval. The plan outlines a framework for executive compensation tied to company performance, specifically adjusting operating income. This is a significant development for investors as it details how key executives will be incentivized and compensated based on the company's financial results. The Executive Bonus Plan establishes a maximum award of 0.75% of adjusted operating income, with an absolute cap of $12 million per participant annually. Importantly, the Compensation Committee retains discretion to adjust bonus percentages and individual awards, introducing an element of performance-based flexibility. The plan also allows for bonuses to be paid in cash, restricted stock, or a combination thereof, aligning executive interests with shareholder value creation through equity awards.

Key Highlights

  • 1Stryker Corporation adopted a new Executive Bonus Plan, effective January 1, 2007, which requires shareholder approval.
  • 2The plan ties executive bonuses to adjusted operating income, with a maximum award set at 0.75% of this metric.
  • 3Individual annual bonus payouts are capped at $12 million per participant.
  • 4The Compensation Committee has the discretion to reduce bonus percentages and individual awards based on additional performance criteria.
  • 5Bonuses can be paid in cash, restricted stock (issued under the 2006 Long-Term Incentive Plan), or a mix of both.
  • 6Eligible participants for 2007 include the CEO and other executive officers subject to Section 162(m) of the Internal Revenue Code.
  • 7The Compensation Committee will administer the plan, with their interpretations and actions being final and binding.

Frequently Asked Questions

The primary purpose of the Executive Bonus Plan is to incentivize and compensate key executives based on the company's financial performance, specifically by linking bonuses to adjusted operating income.

The maximum bonus award is calculated as 0.75% of the company's adjusted operating income for the performance period (typically the fiscal year). However, there is an absolute cap of $12 million for any individual participant in a given fiscal year.

Yes, the Compensation Committee has significant discretion. They can choose to reduce the bonus percentage below 0.75% and can also lower an individual's actual bonus from the calculated 'formula bonus' or even forgo a bonus payment altogether. They intend to set additional performance criteria annually to guide these decisions.

Bonuses can be paid out in cash, in shares of Stryker's Common Stock (restricted or unrestricted, issued under the 2006 Long-Term Incentive Plan or a future approved plan), or a combination of cash and shares.