Page 29 - EndoProxy2012_final

endo | 100 Endo Boulevard | Chadds Ford, Pennsylvania 19317 23
• the expertise and competencies of the individual executive;
• the competitiveness of the market for the executive’s services;
• internal review of the executive’s compensation, both individually and relative to other NEOs;
• the recommendations of the President and Chief Executive Officer (except in the case of the President and Chief
Executive Officer’s own compensation); and
• individual performance of the NEO, which includes:
achievement of individual annual goals and objectives, the risks and challenges involved, and the impact of
the results;
performance of day-to-day responsibilities;
increases in competencies and skill development;
value of their contribution to function and company goal achievement; and
behaviors aligned with Endo core values.
Base salaries are generally reviewed annually. In reviewing salaries, the Compensation Committee adjusts salaries from
time to time to realign salaries with market levels, individual performance and incumbent experience. The Compensation
Committee also considers salaries relative to those of others within the Company and may, on occasion, make adjust-
ments to salaries or other elements of total compensation, such as incentive compensation and long-term incentive
opportunities, where such an adjustment would correct a compensation imbalance, as the Compensation Committee
deems appropriate.
2011 Decisions Regarding Base Salary. In December 2011, as part of the Compensation Committee’s annual review of compen-
sation, Hay Group provided the Compensation Committee with a market assessment of the competitive compensation
for the Company’s executive officers. This assessment included reviewing the Data Point Companies and:
• establishing a benchmark match for each of the positions;
• gathering and analyzing competitive compensation from relevant labor markets; and
• developing competitive market medians of compensation for the positions.
Based on the competitive market data referred to above, the Compensation Committee developed, with the assistance
of Hay Group, market medians of compensation for each of Endo’s compensation elements (base salary, target annual
incentive compensation, and expected value of long-term incentive compensation) and then compared each NEO’s cur-
rent compensation to the market median for each data sample. The market data and the performance of each of Endo’s
NEOs are reviewed each year, but there is no guarantee that any of their individual compensation packages will be aligned
with the market. Please reference “Individual Compensation Determination” section below for approved salary actions.
Performance-Based Annual Cash Incentive Compensation (IC)
Purpose. The compensation program provides for an annual cash incentive that re-
inforces the Company’s pay-for-performance approach. This incentive compen-
sation, or IC, program is a short-term performance-based incentive plan that re-
wards achievement of annual goals and objectives. The objective of the program
is to compensate individuals based on the achievement of specific goals that are
intended to correlate closely with shareholder value.
The respective annual cash IC target for each named executive officer related to
2011, to be paid in early 2012, is expressed in the graph to the right.
Considerations. The annual cash IC program includes relative incentive levels based
on the NEO’s accountabilities, performance objectives and impact on Company
operations, with target award opportunities established as a percentage of base
salary. Each NEO’s target IC bonus is established pursuant to their respective em-
ployment agreement, which is determined based on all factors that the Compen-
sation Committee deems relevant, including (but not limited to) a review of the Data Point Companies’ compensation.
The annual bonus process for our NEOs involves two basic steps:
• At the outset of the year:
Set overall Company performance goals using a disciplined scorecard process; and
Set individual objectives aligned with the business strategy and Company scorecard for the year.
• At the end of the year:
Measure actual performance (individual and Company-wide) against the predetermined Company perfor-
mance goals and individual performance measures to determine the appropriate award.
Alan G.Levin
60%
David P.Holveck
120%
55% 55% 55%
Julie H.McHughIvan P.Gergel, M.D.Caroline B.Manogue
% of Annual Base Salary