DEF 14A
KAMAN CORP filed this Form DEF 14A on 03/03/2017
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payouts during the month of February. We use these performance measures because they are among the metrics used by management and the Board to evaluate the Company’s performance.
Company performance in the bottom quartile of the Russell 2000 earns no cash incentive award payment for the performance goal; performance at the 25th percentile results in a cash incentive award at 25% of target for the performance goal; performance at the median results in a cash incentive award at 100% of target for the performance goal; and performance in the top quartile, or above, results in a maximum cash incentive award payment at 200% of the target for the performance goal. Interpolation is used to determine payments for financial performance between the 25th percentile up to the median, and above the median up to the 75th percentile. This performance measurement methodology remains constant through the years although the performance of the Russell 2000 changes annually, thus increasing or decreasing the targets annually.
The Company’s annual business plan is developed jointly by business segment and corporate senior management, incorporating revenue, earnings and cash flow generation goals that take into account global economic circumstances, market conditions, and existing or targeted business opportunities. The business plan is reviewed and approved by both the Finance Committee and the full Board of Directors. If the Company’s modified earnings per share meets at least 70% of the business plan projection, a threshold award for this factor is earned. To the extent that actual earnings per share exceed the business plan projection, a greater award is earned, up to a maximum of 200% of target.
The following table shows the relationship between the Company's 2016 modified financial performance and each performance factor described above, the degree to which each performance factor was attained, and the resulting corporate performance factor. As set forth below, the Company’s 2016 modified return on investment compared favorably to the Russell 2000, the Company's growth in adjusted earnings per share compared less favorably to the Russell 2000, and the Company's modified earnings per share was 86.2% of the business plan projection, resulting in an overall corporate performance factor of 90.3%.
2016 ANNUAL INCENTIVE AWARD CALCULATIONS FOR CORPORATE NEOs
 
2016
Modified Results(3)
 
Financial Targets
 
Percentage
of Factor Earned
 
Weighting
Factor
 
% Of
Target Award(4)
Return on Investment(1)
6.2%
 
4.1%
 
145.7%
 
33%
 
48.1%
Growth in EPS(2)
3.7%
 
8.4%
 
53.5%
 
33%
 
17.6%
EPS vs. Plan
$2.25
 
$2.61
 
72.4%
 
34%
 
24.6%
Resulting Corporate
Performance Award Factor
 
90.3%
_______________
(1)
The return on investment for the 25th percentile was (2.9)% and the average return on investment for the 75th percentile was 8.7%.
(2)
The average annual compound EPS growth rate for the 25th percentile was (1.7)% and the average annual compound growth rate for the 75th percentile was 20.0%.
(3)
In accordance with the original authorization of the 2016 annual incentive awards, the modified results shown in the table reflect the following adjustments to our reported financial results: Net earnings and diluted EPS were favorably adjusted by $2.5 million and $0.15, respectively, resulting from adjustments for the dilutive effect from the convertible debt, restructuring costs, and a 2016 liability to the U.S. Government recorded in connection with the freezing of our defined benefit pension plan. Total capitalization was favorably impacted by $2.5 million related to the aforementioned costs incurred during 2016.
(4)
This column represents the product of the Percentage of Factor Earned figures multiplied by the Weighting Factor.
The following table shows the calculation of the 2016 annual cash incentive awards earned by our Corporate Named Executive Officers, together with the resulting percentages of base salary such awards represent:
Named Executive Officer
 
2016
Base Salary
 
Target Award %
 
Annual Incentive Award Perf. Factor
 
2016 Annual
Cash Incentive
Award
 
Incentive Award
Expressed as a
Percentage of
Base Salary
Neal J. Keating
 
$984,000
 
105%
 
90.3%
 
$932,980
 
94.8%
Robert D. Starr
 
$453,200
 
65%
 
90.3%
 
$266,006
 
58.7%
Ronald M. Galla
 
$377,750
 
55%
 
90.3%
 
$187,610
 
49.7%
Shawn G. Lisle
 
$360,500
 
55%
 
90.3%
 
$179,042
 
49.7%

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