Business Context and Reporting Period
This Form 8-K Current Report was filed by SYNNEX Corporation on January 10, 2005, covering events that occurred on January 4, 2005. The filing details the approval of executive compensation under the Company's 2004 profit sharing program and the establishment of the 2005 profit sharing framework.
Key Financial Metrics
The filing does not provide consolidated revenue, profit, cash flow, margin, debt, or liquidity figures for the Company. It specifically discloses the following compensation-related financial data:
- 2004 Executive Cash Bonuses Approved:
- Robert Huang (CEO): $1,800,000
- Peter Larocque: $420,000
- Dennis Polk: $180,000
- John Paget: $130,000
- Simon Leung: $75,000
- 2005 Profit Sharing Accrual Rate: 12.75% of pre-tax, before profit sharing accrual profits.
- 2005 Chairman Retainer: $225,000 for Matthew Miau.
Material Changes Versus Prior Period
The filing indicates the following comparisons to the prior year:
- CEO Bonus Percentage: Robert Huang's bonus was calculated at 16.70% of the 2004 profit sharing program, which is the same percentage as the prior year.
- Chairman Retainer: Matthew Miau's 2005 retainer of $225,000 remained the same as the prior year.
- Program Structure: The 2005 program introduces specific quantitative goals based on pre-tax profits for executive officers, whereas prior bonus allocations for non-executive employees were based primarily on individual contribution without specific goal amounts.
Guidance, Outlook, and Management Commentary
The filing outlines the mechanics for the 2005 compensation program rather than providing financial guidance or market outlook:
- Performance Criteria: Executive bonuses for 2005 are contingent on meeting or exceeding threshold target performance percentages of an internally established pre-tax profit goal.
- Payment Structure: Actual bonuses will be paid on a sliding scale based on the target performance percentage achieved, subject to dollar limits set by the Compensation Committee.
- Discretionary Adjustments: Robert Huang retains the discretion to increase or decrease the bonuses of Messrs. Larocque, Polk, Paget, and Leung by up to 30% based on qualitative and quantitative goals.
- Non-Executive Employees: Bonus allocations for other employees remain at the Company's discretion, based on individual contribution and manager recommendations, with no specific goal amounts.
Important Facts for Investor Verification
- Verify the total aggregate cost of the 2004 executive bonuses ($2,605,000) against the Company's reported 2004 net income to assess the payout ratio.
- Confirm the specific "internally established pre-tax, before profit sharing accrual, profits goal" for 2005 to evaluate the likelihood of future executive bonus payouts.
- Review the Company's 2004 annual report to compare the 12.75% accrual rate for 2005 against the actual profit sharing percentage utilized in 2004.
- Monitor the impact of the 30% discretionary adjustment authority held by the CEO on the final compensation expense for key executives.