2. SHORT-TERM INCENTIVE
Short-Term Incentive Program (STIP)
Purpose
• Our STIP is designed to motivate and reward our employees for achieving corporate financial and operational objectives, and for individual accomplishments in a given year.
Form of Award
• Annual bonus, paid in cash after the end of the fiscal year.
STIP Award Determination
• The STIP award in a year may vary between zero and 150% of the STIP target, depending on performance relative to financial and operational performance metrics and individual performance goals. • The STIP award is based on (1) Base Salary; (2) the STIP target; and (3) the performance multiplier determined by two core components (financial and operational performance, and individual performance): 1. STIP target is established as a percentage of base salary, which generally increases with the executive’s seniority
Fiscal 2022 STIP Target
President and CEO
100% of Base Salary
Group Head, CPW
80% of Base Salary
All other NEOs
75% of Base Salary
2. Performance Multiplier is based on two core components
i. Financial and Operational Performance (70% Weighting) • At the beginning of each fiscal year, the HR Committee sets performance goals using specific financial and operational performance metrics. Interim performance against these goals is reviewed periodically over the course of the fiscal year.
ii. Individual Performance (30% Weighting)
• At the beginning of each fiscal year, the CEO establishes, and the HR Committee approves, specific strategic and leadership objectives for each NEO.
• At the end of each fiscal year, the HR Committee reviews our financial and operational results and discusses performance against the target metrics with the CEO. • These metrics are used to calculate 70% of the STIP performance multiplier. • Individual performance progress is assessed regularly. • The HR Committee reviews the CEO’s achievements against his strategic and leadership objectives and the CEO’s assessment of the performance of each of his direct reports, including the other NEOs. • These individual goals are used to calculate 30% of the STIP performance multiplier. • The HR Committee establishes STIP performance goals and targets after considering expectations regarding the external business environment (GDP growth, expected interest rates, regulatory and other changes) and internal factors such as the operating budget for the year.
How STIP Awards are Calculated
• The following chart shows how STIP awards are calculated for NEOs:
• For illustrative purposes, the CEO’s STIP award calculation for fiscal 202 2 is shown below:
(1) Performance multiplier equal to 84% (rounded) consisting of 50.1% of the 70% available (72% of target) for financial and operational performance and 34% of the 30% available (113% of target) for individual performance.
Other Discretionary Adjustments
• The HR Committee understands that strict adherence to formulas for determining the annual performance incentive may lead to unintended consequences and not be aligned with creating long-term shareholder value, particularly in a rapidly changing environment. • Accordingly, the HR Committee may exercise appropriate discretion to adjust STIP awards based on adjustment principles adopted by the HR Committee, as described under the heading “Executive Compensation Philosophy” on page 35. • Although the HR Committee may reduce a calculated award to zero, the HR Committee may not increase a calculated award by an amount exceeding 50% of the NEO’s target award level.
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