2018 Compensation Actions
Below is a discussion of compensation actions taken in 2018 with respect to the named executive officers.
The base salaries of the named executive officers are reviewed each November, and any adjustments go into effect on January 1 of the following calendar year. Effective January 1, 2018, Mr. Forlenza’s base salary was increased from $1,165,000 to $1,200,000 in order to recognize his performance and keep his base salary competitive with the median of the Comparison Group. Messrs. Reidy and Polen received base salary increases that were in line with increases at BD generally. Messrs. Kaltenbach and Khichi joined BD during the year, and information on their starting base salary is discussed later in this section.
The threshold performance, target performance and maximum performance for each metric under the PIP for 2018, along with BD’s adjusted performance during the year, are set forth on the following table.
Range of Performance
Adjusted EPS (40%)
Revenues (40%) (in millions)
Free cash flow as % of sales (20%)
For information on how Adjusted Performance is calculated, see Appendix A.
The original EPS and revenue targets for 2018 were $10.70 and $12.817 billion, respectively. These targets were adjusted upwards following our acquisition of Bard to account for the expected contribution of the Bard business for the balance of 2018. As BD owned Bard for most of 2018, the Compensation Committee believed it appropriate to measure PIP performance based on the performance of the combined company rather than just on BD stand-alone results. Including Bard’s results also incentivized management to focus on the successful integration of the company. No change was made to the free cash flow metric, as it was not anticipated that the Bard acquisition would impact BD's performance with respect to that metric.
In reviewing BD’s 2018 performance, the Compensation Committee made adjustments for unbudgeted items, including acquisitions and certain other matters that occurred during the fiscal year. The Compensation Committee made these adjustments to eliminate items that are not considered part of BD’s ordinary operations, so that the PIP funding factor appropriately reflected BD’s underlying operating results. These adjustments are generally consistent with how we reported our operating results to the financial community. Adjustments were also made for the impact (favorable or unfavorable) of foreign currency fluctuations in excess of what was budgeted when the targets were set, again so that only BD’s underlying performance is considered in determining PIP awards. The reconciliations on Appendix A provide additional detail on the adjustments made by the Compensation Committee.
Based on BD’s results, the funding factor under the PIP was 110%. The following table shows the PIP awards granted to the named executive officers for 2018. These awards are also set forth in the Summary Compensation Table on page 37 under the heading “Non-Equity Incentive Plan Compensation.”
Vincent A. Forlenza
Christopher R. Reidy
Patrick K. Kaltenbach
Samrat S. Khichi
Thomas E. Polen