Short-Term Achievement Reward Program – Procter & Gamble Co.
Summary of the Company’s Short Term Achievement RewardProgram
SHORT TERM ACHIEVEMENT REWARD PROGRAM
The Short Term Achievement Reward (“STAR”) Program is The Procter &
Gamble Company’s (the “Company”) annual bonus program designed to motivate and
reward employees for achieving outstanding short term business results for the
Company and its subsidiaries. STAR awards are made pursuant to authority
delegated to the Compensation & Leadership Development Committee (the
“C&LD Committee”) by the Board of Directors for awarding compensation to the
Company’s principal officers and for making awards under the Procter &
Gamble 2009 Stock and Incentive Compensation Plan (the “2009 Plan”) or any
successor stock plan approved in accordance with applicable listing standards.
I. ELIGIBILITY
Employees at Band 3 or above and who worked at least 28 days (four calendar
weeks) during the applicable fiscal year are eligible to participate. Eligible
employees who do not work a full schedule (e.g., leaves of absence, disability,
and less-than-full time schedules) in the fiscal year in which the award is
payable may have awards pro-rated.
II. Calculation
The individual STAR Award is calculated as follows:
(STAR Target) x (Business Unit Performance
Factor) x (Total Company Performance Factor)
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The STAR Target for each participant is calculated as: |
(Base Salary) x (STAR Target percent)
Base Salary at the end of the applicable fiscal year is used to
calculate the STAR award.
Generally, the STAR Target Percent is dependent on the individual’s
position and level (Band) in the organization. The STAR Target percent for
participants at Band 7 or above is set by the C&LD Committee. The STAR
Target percent for all other participants is set by the Chief Executive Officer,
with the concurrence of the Global Human Resources Officer, pursuant to
authority delegated to them by the C&LD Committee. If an individual’s
position and/or level changes during a fiscal year, and that change results in a
new STAR Target Percent, the STAR Target Percent is pro-rated according to the
amount of time in each position/level during the fiscal year.
The Business Unit Performance Factor is based on the fiscal
year success for the appropriate STAR business unit. The STAR business units are
defined by the Global Human Resources Officer and may consist of business
categories, segments, geographies, functions, organizations or a combination of
one or more of these items. The STAR business units will be defined within
ninety (90) days of the beginning of the fiscal year, but may be adjusted as
necessary to reflect business and/or organizational changes (e.g.,
reorganization, acquisition, merger, divestiture, etc.). The Business Unit
Performance Factors can range from 53% to 167% with a target of 100%. In
general, a committee consisting of at least two of the Chairman of the Board,
Chief Executive Officer, Chief Financial Officer, Global Human Resources Officer
and/or the Chief Operating Officer (the “STAR Committee”), conducts a
comprehensive retrospective assessment of the fiscal year performance of each
STAR business unit against previously established goals for one or more of the
following measures: Operating Total Shareholder Return, Key Competitor
Comparison, After Tax Profit, Operating Cash Flow, Value Share, Volume, Net
Outside Sales, Customer spending effectiveness, SRAP cost progress,
Transportation and warehouse cost progress, Internal controls, Accounts
receivable payscore (collection effectiveness), Organization Head Self
Assessment, and Cross Organization Assessment. The STAR Committee makes a
recommendation of an appropriate Business Unit Performance Factor to the
C&LD Committee. There may also be other factors significantly affecting STAR
business unit results positively or negatively which can be considered by the
STAR Committee when making its recommendation. No member of the STAR Committee
makes any recommendation or determination as to their
own STAR award. As a result, there are certain instances in which a Business
Unit Performance Factor recommendation to the C&LD Committee must be made
exclusively by the Chief Executive Officer.
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The Total Company Performance Factor is based on the total |
While the STAR Committee makes recommendations to the C&LD Committee
regarding the Business Unit and Total Company performance factors to be applied
to all STAR awards (except those for the STAR Committee members), only the final
award amounts for principal officers are approved specifically by the C&LD
Committee. The C&LD Committee has delegated the approval of STAR awards for
other participants to the Chief Executive Officer. The C&LD Committee has
discretion to use, increase or decrease the performance factors recommended by
the STAR Committee and/or to choose not to pay STAR awards during a given year.
Each year the C&LD Committee approves a cash pool for STAR awards equal
to a percentage of profit, and the C&LD Committee sets a limit on the
portion of that pool which can be awarded to each of the Named Executives
subject to Section 162(m) of the Internal Revenue Service code. This ensures
that any STAR awards paid to such executives are fully tax deductible by the
Company.
III. timing and form
STAR awards are determined after the close of the fiscal year and are paid on
or about September 15. The award form choices and relevant considerations are
explained in payment preference materials generally in the form of Appendix
1. Participants receive written notice of their award detailing the
calculation, generally in the form of Appendix 2. The grant letters used
for those employees who elect to receive awards in stock options or restricted
stock units are generally in the form of Appendix 3.
Generally, STAR awards are paid in cash. However, before the end of the
calendar year preceding the award date, eligible participants can elect to
receive their STAR award in forms other than cash. Alternatives to cash include
stock options, local deferral programs (depending on local regulations in some
countries), or restricted stock units and/or deferred compensation (for
participants also in the Business Growth Program). The Company converts cash to
other forms of payment (e.g., stock options, restricted stock units, etc.) using
a conversion factor that is reviewed and approved by the C&LD Committee
annually. Any STAR award paid in stock options, restricted stock units or other
form of equity shall be awarded pursuant to this program and the terms and
conditions of the 2009 Plan or any successor stock plan approved in accordance
with applicable listing standards, as they may be revised from time to time.
IV. SEPARATION FROM THE COMPANY
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Retirement, Death or Special Separation with a Separation |
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Voluntary Resignation or Termination for cause: Separating |
Eligible participants who have left the Company will receive a cash payment
(equity such as stock options and RSUs can only be issued to active employees)
on the same timing as STAR awards or as soon thereafter as possible.
V. CHANGE IN CONTROL
Notwithstanding the foregoing, if there is a Change in Control in any fiscal
year, STAR awards will be calculated in
accordance with Section II above, but each factor will be calculated for the
period from the beginning of the fiscal year in which a Change in Control
occurred up to and including the date of such Change in Control (“CIC Period”).
“Change in Control” shall have the same meaning as defined in the 2009 Plan or
any successor stock plan.
VI. GENERAL TERMS AND CONDITIONS
While any STAR award amount received by one individual for any year shall be
considered as earned remuneration in addition to salary paid, it shall be
understood that this plan does not give to any officer or employee any contract
rights, express or implied, against any Company for any STAR award or for
compensation in addition to the salary paid to him or her, or any right to
question the action of the Board of Directors or the C&LD or STAR
Committees.
Each award to the Chairman of the Board, Chief Executive Officer,
Vice-Chairs, Group Presidents, Presidents, Global Function Heads and Senior Vice
Presidents and equivalents, made pursuant to this plan, is subject to the Senior
Executive Recoupment Policy adopted by the C&LD Committee in December 2006.
This program document may be amended at any time by the C&LD Committee.
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