Summary
This 8-K filing from Thermo Fisher Scientific Inc. (TMO) dated March 26, 2009, details actions taken by the Compensation Committee of the Board of Directors on March 25, 2009, primarily concerning executive compensation for the 2009 fiscal year. The key event is the establishment of performance criteria for annual cash incentive plans. These plans are designed to align executive bonuses with company performance, incorporating both financial and non-financial metrics.
Key Highlights
- 1Establishment of performance criteria for the 2009 Annual Incentive Award Plan (162(m) Plan).
- 2The primary financial metric for the 162(m) Plan is Adjusted Operating Income, with specific exclusions for certain unusual items.
- 3A supplemental annual cash incentive program was also established for a group of executives, including executive officers.
- 4The supplemental program uses a balanced scorecard approach with 70% weighting for financial measures (revenue growth and Adjusted Operating Income as a percentage of revenue) and 30% for non-financial contributions.
- 5Financial measures for the supplemental program will be assessed on a six-month basis, with separate performance metrics to be set for the second half of 2009.
- 6The Compensation Committee retains the discretion to lower, but not raise, the actual cash bonus paid to executives based on overall company performance.
- 7The ultimate bonus payout for 2009 will be determined in early 2010 using a multiplier ranging from 0 to 2 applied to target bonus amounts, based on performance against set goals.
Frequently Asked Questions
The main purpose of this 8-K filing is to report on the actions taken by Thermo Fisher Scientific's Compensation Committee regarding executive compensation for the 2009 fiscal year, specifically outlining the performance criteria and metrics for annual cash incentive plans.
Executive bonuses for 2009 will be determined based on a combination of financial and non-financial performance metrics. For the 162(m) Plan, 'Adjusted Operating Income' is the key metric. A supplemental program also incorporates revenue growth and profit margins, alongside contributions to business objectives. The Compensation Committee has discretion to adjust bonus payouts downwards based on company performance.
The supplemental incentive plan uses two primary financial metrics: growth in revenue (adjusted for acquisitions, divestitures, and currency changes) and earnings before interest, taxes, and amortization (EBITDA) as a percentage of revenue (adjusted for restructuring and other items). Each of these financial measures carries a 35% weighting, totaling 70% for financial performance.
The final bonus amounts for 2009 will be determined in early 2010. A multiplier ranging from 0 to 2 will be applied to the target cash bonus amounts based on the company's performance against the established financial and non-financial goals for the year.