EPS Payout Factor Clause Samples
The EPS Payout Factor clause defines how the payout amount is determined based on the company's earnings per share (EPS) performance. Typically, this clause sets out a formula or scale that links the actual EPS achieved to the percentage of a bonus, incentive, or award that will be paid out, often within executive compensation or employee incentive plans. By establishing a clear and objective method for calculating payouts tied to financial performance, this clause ensures transparency and aligns employee or executive rewards with company profitability.
EPS Payout Factor. (a) The “EPS Payout Factor” shall be determined under the table below based on the Cumulative EPS (as defined below) achieved by the Company for the Award Period: If the Company’s Cumulative EPS is between any two data points set forth in the first column of the above table, the EPS Payout Factor shall be interpolated as follows. The excess of the Company’s Cumulative EPS over the Cumulative EPS of the lower data point shall be divided by the excess of the Cumulative EPS of the higher data point over the Cumulative EPS of the lower data point. The resulting fraction shall be multiplied by the difference between the EPS Payout Factors in the above table corresponding to the two data points. The product of that calculation shall be rounded to the nearest hundredth of a percentage point and then added to the EPS Payout Factor in the above table corresponding to the lower data point, and the resulting sum shall be the EPS Payout Factor.
(c) The Company’s “Cumulative EPS” for the Award Period shall equal the sum of the Company’s diluted earnings per share of common stock (“EPS”) for each of the three years in the Award Period. Subject to adjustment in accordance with Section 2.5 below, the Company’s diluted earnings per share of common stock for any year shall be as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that year. After giving effect to any adjustments required by Section 2.5, the EPS for each year shall be rounded to the nearest ▇▇▇▇▇.
EPS Payout Factor. 2.2.1 The “EPS Payout Factor” shall be equal to the average of the Annual EPS Payout Factors determined for each of the three fiscal years of the Performance Period. The “Annual EPS Payout Factor” for each applicable fiscal year shall be determined under the table below based on the Adjusted EPS of the Company for the fiscal year. If the Adjusted EPS for any fiscal year is between any two data points set forth in the applicable column of the above table for that fiscal year, the Annual EPS Payout Factor shall be determined by interpolation between the corresponding data points in the fourth column of the table as follows: the difference between the Adjusted EPS and the lower data point shall be divided by the difference between the higher data point and the lower data point, the resulting fraction shall be multiplied by the difference between the two corresponding data points in the fourth column of the table, and the resulting product shall be added to the lower corresponding data point in the fourth column of the table, with the resulting sum being the Annual EPS Payout Factor.
2.2.2 The Company’s “Adjusted EPS” for any fiscal year of the Performance Period shall mean the Company’s diluted earnings per share for that fiscal year, before extraordinary items and cumulative effects of changes in accounting principles, if any, as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, and as adjusted in accordance with Section 2.4 below.