2007 PERFORMANCE OBJECTIVE (Amended Effective July 25, 2007)

EX-10.4 5 dex104.htm AMENDED 2007 PERFORMANCE OBJECTIVES Amended 2007 Performance Objectives

EXHIBIT 10.4

 

AMO BONUS PLAN  

 

2007 PERFORMANCE OBJECTIVE

 

(Amended Effective July 25, 2007)

 

 


2007 PERFORMANCE OBJECTIVE

The funding for the 2007 Bonus Plan is weighted as follows:

 

o 75% based on achievement of the Adjusted Operating Income goal, and

 

o 25% based on achievement of the Revenue goal.

The goals will be for the full year of AMO performance.

“Adjusted Operating Income” is defined as sales less cost of goods sold and all basic operating expenses of the business. “Adjusted Operating Income” excludes the impact of charges or write-offs associated with acquisitions, recapitalizations, and unrealized gains or losses on derivative instruments. “Revenue” is defined as the total dollar payment for goods and services that are credited to the income statement over the measurement period. Targets for both Adjusted Operating Income and Revenue include the impact of the May 2007 product recall. The target bonus funding level has been reduced from 100% to 85% of previously set individual targets.

Each segment of the bonus is funded when AMO achieves the levels of Adjusted Operating Income and Revenue performance, respectively, as indicated below. The plan will be funded at a minimum of 40%.

 


FUNDING TRIGGER ELEMENTS

 

75% - ADJUSTED OPERATING INCOME       25% - REVENUE

Performance

Level

  2007 Adj Op
Range
Variance to
Target
  Funding %
to Adj Op
Target
  Plan
Funding
     

Performance

Level

  2007 Revenue
Range
Variance to
Target
 

Funding %
to Revenue

Target

  Plan
Funding

Threshold

  -5.84 mm   50%   31.875%       Threshold   -53.00 mm   50%   10.625%
                  Tier 1   -10.00 mm   95%    
    Target   100%   63.75%         Target   100%   21.25%
                  Tier 2   +10.00 mm   102%    

Maximum

  +5.83 mm   150%   95.625%     Maximum   +159.00 mm   150%   31.875%

If actual Adjusted Operating Income results fall

between the performance levels shown above, the

portion of bonus funding will be prorated accordingly.

     

If actual Revenue results fall between the Tiers shown

above, the portion of bonus funding will be prorated
accordingly.

 



BONUS POOL FUNDING

At the end of the year, the President and Chief Executive Officer of Advanced Medical Optics, Inc. may recommend adjustments to the bonus funding levels to the Organization, Compensation and Corporate Governance Committee (the “Committee”) after consideration of key operating results. When calculating Adjusted Operating Income and Revenue performance for purposes of this Plan, the Committee has the discretion to include or exclude any or all of the following items:

 

 

Extraordinary, unusual or non-recurring items

 

 

Effects of accounting changes

 

 

Effects of financing activities

 

 

Expenses for restructuring or productivity initiatives

 

 

Other non-operating items

 

 

Spending for acquisitions

 

 

Effects of divestitures

 


BONUS POOL DIFFERENTIATION BY BUSINESS UNIT/FUNCTION

The target bonus pool is determined by performance against Adjusted Operating Income (75%) and Revenue (25%). The factors below will be considered for allocation of SBU/function bonus pools:

CORPORATE STAFFS

 

 

Corporate Adjusted Operating Income

 

 

Corporate Revenue

 

 

Strategic metrics and milestones

STRATEGIC BUSINESS UNITS

 

 

Business Unit Adjusted Operating Income

 

 

Business Unit Revenue

 

 

Strategic metrics

RESEARCH & DEVELOPMENT, WORLD WIDE MANUFACTURING, GLOBAL CUSTOMER SERVICES, IT

 

 

Strategic metrics and milestones



INDIVIDUAL BONUS AWARD CALCULATION

Target bonus awards are expressed as a percentage of the participant’s year-end annualized base salary. The target percentages for managers other than corporate officers, as revised for 2007, vary by salary grade:

 

SALARY GRADE

 

TARGET BONUS

 5E *

  4.25%

 6E *

  8.5%

  7E    

  12.75%

  8E    

  17%

  9E    

  21.25%

10E    

  25.5%

11E    

  29.75%

Target percentages or amounts for corporate officers are individually established by the Committee. The 2007 performance objectives do not apply to corporate officers who have been designated as 162(m) Participants. Performance targets for 162(m) Participants have not been amended.

A participant’s actual bonus award may vary above or below the targeted level based on the supervisor’s evaluation of his or her performance in relation to the predetermined MBOs. Each participant may receive from 0% to 150% of his or her target bonus amount, which may be adjusted upwards or downwards based on the Company’s relative attainment of the pre-established financial performance objectives.

* U.S. and Puerto Rico employees only.