Issue link: http://catalog.e-digitaleditions.com/i/801297
14 for Mr. Floyd includes an upward adjustment of $6,960 in recognition of his efforts related to his leadership in progressing multiple cost transformation initiatives. The Compensation Committee recommended the bonus plan target opportunity and goals for the Chief Executive Officer position and the independent directors approved them at meetings in February 2016. The actual payment for Mr. Lobo was approved by the independent directors in February 2017 based on his accomplishments as measured under his individual bonus plan. The Compensation Committee reviewed and approved the bonus targets and actual payments for the other NEOs after receiving recommendations from the Chief Executive Officer. Why We Chose Particular Performance Metrics and Goals We generally established our 2016 bonus goals with a focus on our budget and growth over actual prior year outcomes. Stryker used sales and earnings goals as the primary measures in the NEO bonus plans for the following reasons: • These are key measures that are the objectives of our strategic plan; • These metrics focus our NEOs on growth and profitability, which are key to our long-term success; • Company-level sales, operating income and earnings per share goals generally align with our annual budget; and • We believe these are the primary measures our investors monitor in evaluating our performance and making investment decisions regarding Stryker stock. Historical Analysis of NEO Achievement of Bonus Plan Goals The following information is useful in understanding the difficulty associated with achievement of the goals established for our NEOs in the 2016 bonus plans: • Comparisons of Stryker's annualized sales and earnings growth rates over the preceding five years relative to those of the other medical technology companies that we use for comparison purposes showed that Stryker generally outperformed the majority of that group. The fact that we have not significantly, on average, overachieved our goals historically, as demonstrated below, but have generally exceeded the growth rates of the comparison group indicates that the sales and earnings goals we have established historically were challenging to achieve. • On average, over the past five years, the persons who held the Chief Executive Officer position, the Chief Financial Officer position and the other persons who were our NEOs during those years achieved the goals and bonus payments under their bonus plans as displayed in the table below. Beginning with 2013 NEO bonus plans, earnings per share and cash from operations ceased to be used as core bonus plan measures, with earnings per share being used as an overachievement measure and cash from operations no longer being used in NEO bonus plans. Bonus Plan Measure Average Goal Achievement (%) Range of Goal Achievement (%) Average Bonus Payment vs. Target (%) Range of Bonus Payment vs. Target (%) Sales (Company level) 100 98 to 100 104 92 to 111 Sales (Group/Division level) 99 95 to 103 107 66 to 163 Operating Income/Earnings per Share (Company) 99 99 to 101 91 50 to 100 Operating Income (Group/Division) 98 90 to 103 103 52 to 162 Cash from Operations (Company) 97 86 to 97 85 28 to 85 Cash from Operations (Group/Division level) 111 98 to 128 97 91 to 100 Qualitative (CEO) 108 70 to 125 108 70 to 125 Qualitative (CFO) 102 97 to 110 102 97 to 110 Qualitative (other NEOs) 102 75 to 125 102 75 to 125 The qualitative goals reflected in the table above were subjectively evaluated. As previously noted, beginning with NEO bonus plans in 2013, earnings per share is used only as an overachievement bonus plan measure. In addition to earnings per share, international sales for the Company was used as an overachievement bonus plan measure from 2013 to 2015. The following table presents the achievement for those overachievement measures and the associated payouts since 2013. Overachievement Metrics Not Also Used as Core Bonus Metrics Average Goal Achievement (%) Range of Goal Achievement (%) Average Bonus Payment vs. Opportunity (%) Range of Bonus Payment vs. Opportunity (%) International Sales (Company) 96 94 to 97 0 0 for all years Earnings per Share (Company) 98 96 to 100 43 0 to 100