Business Context and Reporting Period
This Form 8-K Current Report was filed by Applied Materials, Inc. on January 24, 2006. The filing discloses the entry into a material definitive agreement regarding the approval of performance goals and bonus formulas for senior executive officers for fiscal year 2006.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation structures rather than reporting period financial results.
Material Changes
The material change reported is the formal approval by the Human Resources and Compensation Committee of the Board of Directors regarding the Senior Executive Bonus Plan for fiscal year 2006. This establishes the specific performance metrics and payout ranges for named executive officers.
Executive Compensation Details
- Eligible Officers: Michael R. Splinter (CEO), Franz Janker (EVP Sales & Marketing), Nancy H. Handel (SVP CFO), Farhad Moghadam (SVP Thin Films), Thomas St. Dennis (SVP Etch), and Mark R. Pinto (SVP CTO).
- Performance Measures:
- For Splinter, Janker, and Handel: Earnings per share (EPS), relative annual revenue growth, and strategic goals (new markets, leadership, operational performance).
- For Moghadam, St. Dennis, and Pinto: EPS, business unit financial/operational objectives (revenue, profits, quality, efficiency, innovation), and strategic goals.
- Payout Conditions:
- A specified level of profit after tax must be achieved for any bonus to be paid.
- Bonuses may be increased if total stockholder return exceeds a diversified group of large-cap companies, but stockholder return alone cannot trigger a bonus.
- Officers must remain employed for the entire fiscal year 2006 to be eligible.
- Bonus Ranges:
- Michael R. Splinter: 0% to 450% of annual base salary.
- Other named officers: 0% to 375% of annual base salary.
Outlook, Risks, and Contingencies
The Committee retains discretion to reduce or eliminate bonuses based on actual performance, even if targets are met. Extraordinary, non-recurring items will generally be excluded from performance calculations. The filing does not contain specific forward-looking guidance on company revenue or earnings, nor does it detail new risks beyond the standard contingencies of executive compensation plans.
Investor Verification Checklist
- Verify the specific numerical targets for EPS and revenue growth set by the Committee for fiscal year 2006 (not disclosed in this filing).
- Confirm the definition of the "diversified group of other large capitalization companies" used for the total stockholder return comparison.
- Review the company's fiscal year 2006 earnings reports to determine if the "specified level of profit after tax" threshold was met.
- Check subsequent filings for any adjustments to the bonus plan or changes in executive employment status during fiscal 2006.