8-KMaterial Agreements

THERMO FISHER SCIENTIFIC INC. 8-K Report, Material Agreement (Mar 1, 2006)

Filed March 1, 2006For Securities:TMO

Summary

This 8-K filing from Thermo Fisher Scientific Inc. (TMO) on March 1, 2006, details executive and director compensation decisions made by the Compensation Committee and the Board of Directors in late February 2006. Key actions include the approval of 2005 cash bonuses for named executive officers, with the Compensation Committee exercising discretion to lower payout amounts based on performance metrics. For 2006, the company established performance criteria for executive bonuses based on Adjusted Operating Income and introduced a comprehensive annual cash incentive program with financial and qualitative performance metrics. The filing also outlines adjustments to executive base salaries and approvals for stock option grants for 2006. Notably, the CEO, Marijn E. Dekkers, received an amendment to his employment agreement regarding his bonus reference amount and a significant stock option grant that replaced a previous entitlement. Director compensation for 2006 was also revised, including annual retainers, meeting fees, and stock option grants for non-management directors and specific arrangements for the Chairman of the Board.

Key Highlights

  • 1Thermo Fisher Scientific approved 2005 cash bonuses for named executive officers, with the Compensation Committee adjusting payouts downward based on performance.
  • 2For 2006, performance criteria for executive bonuses were set, focusing on 'Adjusted Operating Income' and a new annual incentive program with financial (revenue growth, profit margins) and qualitative goals.
  • 3Effective April 1, 2006, executive officers received base salary increases.
  • 4Stock options were granted to executive officers for 2006, with vesting over three years and a 7-year term; specific details provided for CEO Marijn E. Dekkers and Guy Broadbent.
  • 5CEO Marijn E. Dekkers' employment agreement was amended to clarify his 'Reference Bonus Amount' and he received a new stock option grant of 450,000 shares, replacing a prior grant.
  • 6Director compensation for 2006 was updated, including annual cash retainers (e.g., $70,000 for Board Members, $250,000 for Chairman), committee chair stipends, and meeting fees.
  • 7Non-management directors will receive initial and annual stock option grants, while the Chairman of the Board has a separate arrangement involving stock options and restricted stock.

Frequently Asked Questions

For 2005, the company approved and paid cash bonuses to executive officers, with the Compensation Committee exercising discretion to lower the payout amounts based on performance metrics. For 2006, performance criteria for bonuses were established, focusing on Adjusted Operating Income, and a new incentive program was detailed with financial and qualitative targets. Additionally, base salaries were increased, and stock options were granted to executives.

The CEO, Marijn E. Dekkers, received an amendment to his employment agreement clarifying his 'Reference Bonus Amount' to be 100% of his salary. He was also granted a new stock option award for 450,000 shares, replacing a previously agreed-upon grant of 260,000 shares with a longer exercise period.

Non-management directors will receive an annual cash retainer of $70,000, with additional retainers for specific roles like Presiding Director and Committee Chairs. Meeting fees are also structured for in-person and telephone attendance. All non-management directors are eligible for initial and annual stock option grants. The Chairman of the Board has a distinct compensation package, including a $250,000 annual cash compensation and existing stock options and restricted stock awards.

The 2006 bonus plan has a primary performance goal based on 'Adjusted Operating Income' (earnings before interest, taxes, and amortization, excluding certain charges). A supplemental incentive program uses a weighted combination of financial measures (revenue growth and earnings margin, each at 35%) and qualitative measures (30%) of executive contributions to business objectives. Actual performance will be measured against the 2006 operating plan.