Summary
TE Connectivity plc (TEL) filed an 8-K on November 15, 2017, detailing executive compensation adjustments and equity awards effective in late 2017. The key event is the formalized compensation structure for CEO Terrence Curtin, who succeeded Thomas Lynch earlier in the year. Mr. Curtin's base salary was increased, and his annual bonus target was significantly raised, reflecting his expanded role and responsibilities. Additionally, both Mr. Curtin and Executive Chairman Thomas Lynch received substantial equity awards in the form of stock options and performance stock units (PSUs). These awards are designed to incentivize long-term performance, with PSUs tied to the company's relative Earnings Per Share (EPS) growth against a benchmark index over a three-year period. Investors should note the performance hurdles for the PSUs, which require a minimum EPS growth to earn any shares and a higher threshold for maximum payout, aligning executive rewards with shareholder value creation.
Key Highlights
- 1CEO Terrence Curtin's base salary increased to $1,150,000, effective December 25, 2017.
- 2CEO Terrence Curtin's annual bonus target increased to 150% of base salary.
- 3CEO Terrence Curtin granted 189,350 non-qualified stock options and 35,980 target PSUs.
- 4Executive Chairman Thomas Lynch granted 43,700 non-qualified stock options and 8,300 target PSUs.
- 5Stock options vest over four years and expire ten years from the grant date.
- 6PSUs are performance-based, tied to relative EPS growth against the S&P 500 Non-Financial Companies Index over a three-year period (FY2020 conclusion).
- 7PSU vesting requires achieving at least the 25th percentile EPS growth; 100% target achieved at 50th percentile; maximum 200% payout at 75th percentile.