EXHIBIT 10.20
AMENDED AND RESTATED AMGEN
PERFORMANCE BASED
MANAGEMENT INCENTIVE PLAN
I. Purpose
This Amended and Restated Amgen Performance Based Management Incentive Plan
(the "MIP" or the "Plan") is maintained by Amgen, Inc. (the "Company") to:
A. Attract and retain persons of outstanding competence.
B. Broaden the total compensation program.
C. Stimulate outstanding effort to bring about exceptional operating
performance and to reward the contributors to this performance by
providing them with a share of the resulting benefits.
The Plan is intended to supplement the Participant's base salary and result
in total cash compensation for above average performance which exceeds the
average compensation levels of comparable companies. The MIP consists of
two plans: one plan for the payment of incentive awards that are intended
to satisfy Internal Revenue Code Section 162(m)'s "qualified performance-
based compensation" requirements and one plan for the payment of incentive
awards that are not intended to satisfy Internal Revenue Code Section
162(m)'s "qualified performance-based compensation" requirements.
II. Basic Concepts
Since the purpose of this Management Incentive Plan is to stimulate and
reward outstanding performance in the accomplishment of specific
objectives, the Plan should generally be formally integrated with the
objectives of the total management system. The Plan should thus support a
continuing and meaningful emphasis on the effective use of goal setting and
management by objectives and generally should be aligned with the goals
reflected in the approved Annual Plan of the Company.
Annual incentive award programs under the Plan shall be developed under the
following basic concepts:
A. The advance identification of the participants in the Plan and the
establishment of target incentive awards, specific performance goals
and the extent to which each such objective shall determine the actual
award.
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B. The establishment of a range in the actual awards available under the
Plan to reflect the achievements of the respective participants as
well as the achievement of the Company-wide performance goals.
III. Eligibility
A. Participation in the Amgen Management Incentive Plan shall be limited
to all executive officers of the Company and its subsidiaries and
certain other key employees of the Company and its subsidiaries
nominated by the Chairman of the Board (the "Chairman") and approved
by the Compensation Committee of the Board of Directors (each a
"Participant").
B. Unless otherwise specifically authorized by the Compensation
Committee, persons approved for participation in the Amgen Management
Incentive Plan shall be excluded from participation in any other cash
bonus or incentive program.
IV. Basis of Participation
A. Participants may receive incentive awards under the Management
Incentive Plan on the basis of percentages established in advance --
as recommended by the Chairman and approved by the Compensation
Committee of the Board of Directors as part of the annual compensation
plan.
B. The target incentive award for a Participant shall be developed in
accordance with the following:
1. In connection with the planning of their performance goals for
the MIP year, the Chairman shall recommend (for approval by the
Compensation Committee) the individual Participants and the
target incentive award for each such Participant (expressed as a
% of the base pay of the Participant).
2. The target incentive award for each Participant (expressed as a %
of base pay of the Participant) shall be established in
accordance with guidelines established by the Compensation
Committee. The Compensation Committee shall designate those
target incentive awards intended to constitute "qualified
performance based compensation" for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), as
"Section 162(m) Awards" (such awards are hereinafter referred to
as "Section 162(m) Awards").
(a) Because of the many variables in establishing base salary
structures, the Plan does not contemplate achieving any
degree of uniformity in the relationship of awards to base
pay. Therefore, the range of target incentive awards will be
rather broad. Individual target incentive awards should be
based upon consideration of:
(1) Relative significance of the individual's function in
directly influencing the performance of the Company.
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(2) Relative performance rating of the individual.
(3) Length of time in position and/or Plan. Generally, it
should be expected that initial percentages for new
Participants will be set at levels which allow for
gradual increases within the established range based
upon Participant's performance.
(4) The relative competitive total compensation for the
respective positions.
C. Each Plan year, the Compensation Committee shall establish a formula
for determining the amount of incentive award a Participant may
receive and such formula shall specify the Participants or class of
Participants to which such formula applies. Generally, a formula
established by the Compensation Committee should reflect both (i)
Company-wide goals ("Corporate Goals") which generally should be based
on key elements of the Company's Annual Plan and (ii) specific goals
relating to the performance of the respective Participant ("Individual
Goals"). Corporate Goals and Individual Goals with respect to a
Section 162(m) Award shall be objective and the formula with respect
to a Section 162(m) Award must be objective and state the method for
computing the amount that may be paid to the Participant if the
performance goal or goals are attained. A formula established by the
Compensation Committee may provide that if certain specified goals are
not met, no incentive awards will be awarded under the Plan for the
Plan year to which such formula applies.
D. Subject to Sections IV.E.4., VII.C., VIII.B., VIII.C. and VIII.D., the
actual incentive award to a Participant under the Plan shall be
computed according to the formula determined pursuant to Section
IV.C.; provided, however, that the Compensation Committee shall have
the discretion to increase or decrease the amount of the award payable
(except that with respect to Section 162(m) Awards, the Committee
shall not have the discretion to increase the amount payable pursuant
to the formula). A Participant may receive an award that is less than,
equal to or greater than his or her target incentive award provided,
however, that the calculation of any Section 162(m) Award (including
any increase above the target incentive award but excluding any
decrease in the award payable) shall not be discretionary but rather
shall be pursuant to an objective formula for computing the amount of
compensation payable to the Participant if the applicable performance
goals are attained.
E. Individual Goals shall be established as follows:
1. Individual Goals should generally be based on business criteria
underlying the Corporate Goals and relate to significant and
measurable areas that require special attention during the
current year. The purpose is to add special emphasis to those
particular activities and reward for their accomplishments. From
year-to-year, it is expected that the emphasis will change both
in relation to the selected Individual Goals as well as to the
importance of such goals in determining the actual incentive
award.
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Individual Goals with respect to a Section 162(m) Award shall be
based on one or more of the business criteria set forth in
Section V.A.
2. Individual Goals should generally be precise in establishing the
targets and the basis for measurement of accomplishment. Wherever
there can be variations in the degree of accomplishment (such as
a dollar target for total revenues or joint ventures; a target
for filing IND's or PLA's; etc.), the extent to which such goal
will be considered satisfied upon attainment of the levels of
accomplishment should be clearly stated. Individual Goals with
respect to a Section 162(m) Award shall be precise in
establishing the targets and the basis for measurement of
accomplishment, and if there can be variations in the degree of
accomplishment of an Individual Goal with respect to a Section
162(m) Award, the extent to which such goal will be considered
satisfied upon attainment of the levels of accomplishment shall
be clearly stated.
3. Where Individual Goals relate to dollar objectives, they should
be identified with or reconciled to amounts reflected in the
Company's approved Annual Plan.
4. If operating conditions during the year make it desirable to
change emphasis on established Individual Goals or to establish
new Individual Goals, a revised formula should be submitted to
and approved by the Compensation Committee; provided, however,
that this subsection IV.E.4. shall in no event apply to Section
162(m) Awards.
V. Provisions Applicable to Section 162(M) Awards
A. Notwithstanding any provision of the Plan to the contrary, Section
162(m) Awards shall be paid solely on account of the attainment of one
or more objective performance goals which are (i) preestablished by
the Compensation Committee, (ii) based on one or more of the business
criteria listed below in subsection V.B. and (iii) state, in terms of
an objective formula or standard, the method for computing the amount
of compensation payable to the Participant if the goal is attained;
provided, however, that Section 162(m) Awards may also be paid in
accordance with Section VIII.B.
B. Notwithstanding any provision of the Plan to the contrary, performance
goals with respect to which Section 162(m) Awards may be paid shall be
based on one or more of the following business criteria: return on
capital employed, revenue growth, profit after taxes, product
development, research, sales, in-licensing, out-licensing, mergers,
acquisitions, sales of assets or subsidiaries, litigation, human
resources, information services, manufacturing, production, inventory,
support services, site development, plant development, building
development, facility development, government relations, product
market share, management, Board of Directors composition, year 2000,
finance, net income, pre-tax income, operating income, cash flow,
earnings per share, return on equity, return on invested capital,
return on assets, cost reductions or savings, funds from operations,
appreciation
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in the fair market value of common stock, total return to stockholders
and earnings before any one or more of the following items: interest,
taxes, depreciation or amortization.
C. Notwithstanding any provision of the Plan to the contrary, the final
award of any Section 162(m) Award (including any increase above the
target incentive award but excluding any decrease in the award
payable) shall not be discretionary but rather shall be pursuant to an
objective formula for computing the amount of incentive award payable
to the Participant if the applicable goals are attained.
D. Notwithstanding any provision of the Plan to the contrary, for any
Plan year the Committee may establish for any Participant a target
incentive award intended to constitute a Section 162(m) Award or a
target incentive award not intended to constitute a Section 162(m)
Award ("Non-Section 162(m) Award") or both; provided, however, that if
for any Plan year, the Committee establishes for any one Participant
both a target Section 162(m) Award and a target Non-Section 162(m)
Award, the performance goals underlying the target Section 162(m)
Award must be different from the performance goals underlying the
target Non-Section 162(m) Award. Furthermore, the Section 162(m) Award
must be calculated separately from and without regard to the Non-
Section 162(m) Award and the Non-Section 162(m) Award must be
calculated separately from and without regard to the Section 162(m)
Award.
E. Notwithstanding any provision of the Plan to the contrary, to the
extent necessary to comply with the qualified performance-based
compensation requirements of Code Section 162(m), award formulas for
any Section 162(m) Awards shall be adopted in each performance period
by the Compensation Committee no later than the latest time permitted
by Code Section 162(m) (generally, for performance periods of one year
or more, no later than 90 days after the commencement of the
performance period). No Section 162(m) Awards shall be paid to
Participants unless and until the Compensation Committee makes a
certification in writing with respect to the attainment of the
performance goals with respect to such Section 162(m) Award as
required by Code Section 162(m). Although the Compensation Committee
may in its sole discretion reduce a Section 162(m) Award payable to a
Participant pursuant to the applicable formula, subject to Section
VIII.B. the Compensation Committee shall have no discretion to
increase the amount of a Participant's Section 162(m) Award as
determined under the applicable formula.
VI. Administration
A. The overall administration of this Management Incentive Plan shall be
under the direction of the Compensation Committee of the Company's
Board of Directors. The Compensation Committee shall consist solely of
two or more members of the Company's Board of Directors who qualify as
"outside directors" for Section 162(m) purposes.
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B. Responsibility for the operating administration of the Plan shall be
under the direction of the Company's Vice President of Human
Resources.
VII. Determination of Awards
A. Promptly following the close of the Plan year, the respective managers
shall evaluate the performance of the Participants, determine the
extent to which Individual Goals were achieved (in terms of %
achievement, subject to a maximum percentage established annually by
the Compensation Committee, which in no event shall be more than 150%)
and forward for review and approval (with respect to Section 162(m)
Awards, such review and approval shall be by the Compensation
Committee). In all cases, the extent to which Individual Goals were
achieved shall be determined only after a self-assessment has been
completed.
B. The final determination of the extent to which Corporate Goals were
achieved (in terms of % achievement, subject to a maximum percentage
established annually by the Compensation Committee, which in no event
shall be more than 150%) will be made by the Compensation Committee,
promptly following the availability of year-end financial and
technical results.
C. Subject to the limitation that the maximum amount payable under the
Plan to any employee during any calendar year may not exceed
$1,800,000 and subject to Sections IV.D., IV.E.4., VIII.B., VIII.C.
and VIII.D., dollar awards to Participants shall be computed according
to the formula established under Section IV.C., using, to the extent
applicable to such formula, the percent achievement determined in
accordance with subsection A. above and the percent achievement
determined in accordance with subsection B. above.
VIII. Payments, Termination of Employment and General Conditions
A. Subject to Section VIII.C. and VIII.D., payments to Participants who
have been determined to be entitled to an award will be made in cash
generally not later than the fifteenth day of the third month
following the close of the Company's Fiscal Year.
B. If a Participant dies or a Participant's employment is terminated for
any reason prior to the end of the Plan year, the payment of any award
(and in the case of death, the person or persons to whom such payment
shall be made) shall be determined at the sole discretion of the
Committee; provided, however, that a Participant who terminates
employment prior to the end of the Plan year may receive a Section
162(m) Award at the discretion of the Committee only if such
termination was due to death, disability or a change of ownership or
control of the Company, unless the performance goals applicable to
such Section 162(m) Award were attained prior to such termination.
C. While it is the intent of the Company to continue the Plan during any
year for which it is established and to make awards to Participants in
accordance with these policies and guidelines, the Company reserves
the right to amend, modify or terminate the Plan, any annual incentive
program under the Plan or any
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Participant's participation in the Plan at any time or on such
conditions as the Compensation Committee shall deem appropriate;
provided, however, that once the Compensation Committee has
established the performance goals underlying a Section 162(m) Award,
the Committee may not change either such performance goals or the
formula for computing whether such goals were met and the Committee
may not increase the amount of the targeted Section 162(m) Award (the
Compensation Committee may , however, decrease the amount of a
Participant's actual Section 162(m) Award). No Participant shall have
any right to any award under the Plan until such award and the amount
thereof has been finally approved by the Compensation Committee and
communicated to such Participant after the end of the year for which
the award is being made.
D. No awards shall be paid under the Plan unless and until the material
terms of the performance goals under which Section 162(m) Awards may
be paid have been approved by the Company's stockholders as required
by Section 162(m) of the Code. So long as the Plan shall not have
been previously terminated by the Company, the material terms of the
performance goals under which Section 162(m) Awards may be paid shall
be resubmitted for approval by the Company's stockholders in the fifth
year after the material terms of the performance goals under which
Section 162(m) Awards may be paid shall have first been approved by
the Company's stockholders and every fifth year thereafter. In
addition, the material terms of the performance goals under which
Section 162(m) Awards may be paid shall be resubmitted to the
Company's stockholders for approval if the Plan is amended in any way
which changes the employees eligible under the Plan, the business
criteria listed in Section V.B. above, the maximum amount of
compensation which may be paid to any Participant under the Plan in
any calendar year, or for purposes of Section 162(m), otherwise
changes the material terms of the performance goals under which
Section 162(m) Awards may be paid.
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