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Table of Contents 23 are likely in the future to make, separation payments to persons who were NEOs based on the specific facts and circumstances. See "Transition Agreement with Mr. Jellison" on page 32. Company Tax and Accounting Issues In general, consideration is given to the tax and accounting treatment of our compensation plans at the time of developing the plans, when making changes to plans, in light of any regulatory changes or when making specific compensation decisions related to individual elements. The accounting treatments considered include any that may apply to amounts awarded or paid to our NEOs. The tax considerations include Sections 162(m) and 409A of the Internal Revenue Code. Deductibility of Executive Compensation: In evaluating the compensation programs covering our NEOs and making decisions related to payments, the Compensation Committee considers the potential impact on the Company of Section 162(m) of the Internal Revenue Code. Section 162(m) generally eliminates the deductibility of compensation over $1 million paid to NEOs, other than the principal financial officer, excluding "performance-based compensation" meeting certain requirements. The Compensation Committee generally intends to maximize deductibility of compensation under Section 162(m) of the Internal Revenue Code to the extent consistent with our overall compensation program objectives, while also maintaining maximum flexibility in the design and administration of our compensation programs and in making appropriate payments to executives. Accordingly, the Compensation Committee may choose to authorize compensation that does not meet the requirements of Section 162(m) if it determines such payments are appropriate. Share-Based Compensation: We account for compensation expense from our stock awards in accordance with the Compensation — Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification ("FASB Codification") that requires companies to measure the cost of employee stock awards based on the grant-date fair value and recognize that cost over the period during which a recipient is required to provide services in exchange for the stock awards, typically the vesting period. We consider the impact on the Company's compensation expense when determining and making stock awards. 2016 Compensation Decisions The table below summarizes the 2016 compensation decisions for the 2015 NEOs other than Mr. Jellison (see "Transition Agreement with Mr. Jellison" on page 32). These decisions will be more fully discussed in the proxy statement for our 2017 annual meeting. Name Annualized Base Salary ($) Target Bonus ($) (1) Number of Stock Options (#) (2) Number of Performance Stock Units at Target (#) (3) Kevin A. Lobo 1,135,000 1,589,000 206,955 41,390 Timothy J. Scannell 615,000 492,000 75,020 15,004 David K. Floyd 580,000 464,000 64,675 12,934 Lonny J. Carpenter 500,000 400,000 54,325 10,866 ____________ (1) Each NEO bonus plan for 2016 includes an opportunity to earn an overachievement bonus of up to an additional 100% of target bonus based on sales and earnings metrics. (2) Stock options to purchase shares of the Company's Common Stock were granted at an exercise price of $96.64 per share (the closing price as reported by the NYSE Composite Transactions on February 9, 2016, the last trading day before the grant date). (3) Key design features for the 2016 performance stock units include the following: • In order to earn any shares, a pre-established threshold level of three-year average adjusted diluted net earnings per share growth must be achieved, with the actual number of shares earned based on actual average adjusted diluted net earnings per share growth and sales growth relative to a comparison group of companies over the three-year performance period; • Payout range of 0% to 200% of the target award; and • Settled in Common Stock in early 2019 following the completion of the three-year performance period.