Business Context and Reporting Period
This Form 8-K Current Report was filed by Aerovironment, Inc. on July 22, 2010. The filing discloses the adoption of a new long-term compensation program and the granting of initial awards to executive officers under the Company's 2006 Equity Incentive Plan.
Key Financial Metrics
The filing does not provide specific revenue, profit, cash flow, margin, debt, or liquidity figures for the Company. The document focuses exclusively on executive compensation structures and target goals rather than historical financial performance.
Material Changes and Compensation Program Details
On July 22, 2010, the Compensation Committee approved a long-term compensation program designed to reward the achievement of specific financial objectives over performance cycles. Key features include:
- Performance Cycles: Awards were granted for a standard three-year period (FY2011-FY2013) and a transitional two-year period (FY2011-FY2012).
- Objectives: Goals are based on revenue and operating profits, reflecting aggressive compounded growth targets.
- Payout Structure:
- Minimum achievement of 80% is required for any payout.
- 80% achievement yields 50% of the goal bonus.
- 100% achievement yields 100% of the goal bonus.
- 150% achievement yields 200% of the goal bonus (maximum cap).
- Payment Method: 50% of the award is paid in cash; the remaining 50% is paid in restricted stock units (RSUs) vesting in two equal tranches.
- Forfeiture: Awards are forfeited if employment terminates before the end of the performance period or prior to payment/vesting.
Executive Awards Granted
The following executive officers received awards for both the FY2011-FY2013 and FY2011-FY2012 performance periods with the listed goal bonus amounts:
| Name | Title | Goal Bonus Amount ($) |
|---|---|---|
| Timothy E. Conver | Chairman, President & CEO | 486,678 |
| Jikun Kim | SVP and CFO | 172,000 |
| Tom Herring | SVP and GM, Unmanned Aircraft Systems | 195,000 |
| Michael Bissonette | SVP and GM, Efficient Energy Systems | 195,000 |
| Cathleen Cline | SVP, Administration | 138,000 |
Guidance, Outlook, and Risks
The filing indicates that the Compensation Committee has established "aggressive compounded growth targets" for revenue and operating profits for the 2011-2013 period, though specific numerical targets are not disclosed in this text. The Committee retains discretion to reduce or eliminate awards based on external factors. The program is intended to be ongoing, but the Committee is not obligated to grant awards annually.
Investor Verification Checklist
- Verify the specific revenue and operating profit targets for the FY2011-FY2013 period in the attached Exhibit 10.1 (Award Agreement).
- Review the full text of the 2006 Equity Incentive Plan to understand the total pool of shares available for these RSU awards.
- Monitor future filings for the actual performance results against the "aggressive" targets set in July 2010.
- Confirm the fair market value of the stock on the Certification Date to calculate the exact number of RSUs issued.