Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 1, 2014, at the 2014 Annual Meeting of Shareholders (the "Annual
Meeting") of St. Jude Medical, Inc. (the "Company"), the Company's shareholders
approved the St. Jude Medical, Inc. Management Incentive Compensation Plan (the
"Plan"). The Plan is designed to attract, retain and reward highly qualified
executives who are important to the Company's success and to provide incentives
relating directly to the financial performance and long-term growth of the
Company. Executive officers and other designated employees of the Company are
eligible to participate in the Plan.
Pursuant to the Plan, within the first 90 days of each fiscal year, the
Compensation Committee determines (1) the percentage of each employee's salary
that may be awarded as a cash bonus for the fiscal year (up to a maximum award
of the greater of $5,000,000 or 1.5% of the Company's consolidated after tax net
profits for the fiscal year); (2) the employees eligible to participate in the
Plan for the fiscal year; (3) financial performance goals for each employee on
which a cash bonus will be paid; (4) each employee's cash bonus for the fiscal
year; and (5) the frequency at which each employee's cash bonus will be paid
when attained. Individual awards will be based on attainment of performance
goals based on the following: net earnings; operating earnings or income;
earnings growth; net income; cash flow (including operating cash flow, free cash
flow, discounted cash flow return on investment, and cash flow in excess of cost
of capital); earnings per share; earnings per share growth; stock price; total
shareholder return; absolute and/or relative return on common shareholders
equity; return on shareholders equity; return on capital; return on assets;
economic value added (income in excess of cost of capital); independent customer
satisfaction studies or indices; expense reduction; sales; ratio of operating
expenses to operating revenues; market share; or the expenses or profitability
of the Company or any division or subsidiary; or any combination of these goals.
For non-executive employees, subjective, individual performance goals may also
be established. Because the amounts to be received under the Plan can only be
determined based on the future performance of the Company and the eligible
employees, it is not possible to determine the benefits that will be received by
employees under the Plan. The Compensation Committee has the right to reduce the
amount of any award even if the goals have been attained.
This summary of the Plan is qualified in its entirety by reference to the full
text of the Plan, a copy of which is attached as Exhibit 10.1 and incorporated
herein by reference. A more detailed summary of the Plan can be found in the
Company's Proxy Statement for the Annual Meeting filed with the Securities and
Exchange Commission on March 21, 2014.
Item 9.01 Financial Statements and Exhibits.
10.1 St. Jude Medical, Inc. Management Incentive Compensation Plan.