COMPENSATION DISCUSSION AND ANALYSIS
Objectives and Elements of Our Compensation Program
Objectives and Elements of Our Compensation Program
Our executive compensation program is aligned with our business strategy
and culture to attract and retain top talent, reward business results and
individual performance, and most importantly, maximize shareholder returns.
Our total compensation program for the Named Executive Officers is
highly incentive-based and competitive in the marketplace, with Company
performance determining a significant portion of total compensation.
Our program consists of the following elements:
stock) accounted for 87% of the CEO’s target compensation, 85% of the
NIKE Brand President’s target compensation, and approximately 75% of
the other Named Executive Officers’ target compensation, as shown in
the following chart:
100%
• Base salary that reflects the executive’s accountabilities, skills, experience,
performance, and future potential
80%
• Annual performance-based incentive cash bonus based on Company
financial results under our Executive Performance Sharing Plan
60%
• A portfolio approach to long-term incentive compensation to provide a
balanced mix of equity and performance-based cash incentives, including:
40%
– Performance-based cash awards based on Company financial results
under the Long-Term Incentive Plan to encourage attainment of longterm financial objectives
20%
15%
CEO
Brand President
Base Salary
• Benefits
In determining the award levels for each of the elements in our total
compensation program, our philosophy is to “pay for performance.” As a
result, we place relatively greater emphasis on the incentive components of
compensation (Executive Performance Sharing Plan, Long-Term Incentive
Plan, and stock options) to align the interests of our executives with
shareholders, and motivate them to maximize shareholder returns. This is
balanced with retention incentives provided by base salary and restricted
stock awards. In fiscal 2011, incentive components (including restricted
13%
75%
0%
– Restricted stock awards to provide incentives consistent with shareholder
returns, and to supply a strong retention incentive
– Post-termination payments under non-competition or employment
agreements
85%
25%
– Stock options to align the interests of executives with those of shareholders
– Profit sharing contributions to defined contribution retirement plans
87%
*
Oher NEO’s
Incentive Components of Pay*
Includes Executive Performance Sharing Plan, Long-Term Incentive Plan, stock options,
and restricted stock
We look to the experience and judgment of the Committee to determine
what it believes to be the appropriate target compensation mix for each
Named Executive Officer. We do not apply fixed ratios or formulae, or rely
solely on market data or quantitative measures. In allocating compensation
among the various elements, the Committee considers market data,
Company performance and budget, the impact of the executive’s position
in the Company, individual past performance, expectations for future
performance, experience in the position, any anticipated increase in the
individual’s responsibilities, internal pay equity for comparable positions,
and retention incentives for succession planning.
Total Compensation Changes (fiscal 2011 versus fiscal 2010)
The total compensation for each of the Named Executive Officers is
shown in the Summary Compensation Table on page 19. The decrease
in total compensation from fiscal 2010 to fiscal 2011 is primarily due to
the following:
• Each of the Named Executive Officers earned an annual cash payment
under the Executive Performance Sharing Plan at 132% for fiscal 2011
versus 150% for fiscal 2010
• For fiscal 2011, there were no Long-term Incentive Plan payouts for any
of the Named Executive Officers compared to a 97% payout to each
of them in fiscal 2010
• The restricted stock grants in fiscal 2011 for Messrs. Blair, DeStefano,
and Edwards represent the first grants made under the new practice to
award restricted stock annually to all Named Executive Officers versus
the previous practice of making grants every three years
• The accounting fair value of stock options of $17.67 per share in
fiscal 2011 was lower than the accounting fair value of $23.40 per
share in fiscal 2010
Annual Cash Compensation
Base Salary
When making recommendations to the Committee concerning base
salary levels for our Named Executive Officers, our human resources
staff considers the market data described above to recommend base
salaries generally between the 50th and 75th percentiles of the salaries for
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NIKE, INC. - 2011 Notice of Annual Meeting
comparable positions reflected in the surveys and reports. Other factors
considered in setting annual salary levels include the individual’s
performance in the prior year, expectations regarding the individual’s
future performance, experience in the position, any anticipated increase