"the LTIP payouts are based on future performance, The initial bonus granted in April 2004 covers performance during the period from April 2004 through December 2005, while the grants given in January 2005 cover the 3 year program cycle from January 2005 through December 2007. As noted, the amounts can change based on actual future performance."
I think Ronnie has confirmed the $9.5M and $16M grant values for 2004 and 2005 respectively (not the expensed amount).
What does this part mean: "amounts can change based on actual future performance" - is this referring to e.g. if the stock value goes up during the vesting period, then the grant recipient recieves greater value than was originally granted?
Coneptually, it seems to me that the LTIP is a form of bonus for past performance. So, of course, the actual final value can be more or less, depending on the stock trend. However, for compensation purposes, it seems best to consider the value of the grant on the date of grant as compensation for past achievment?
If LTIP is a new form of bonus plan, then it should supercede the "regular" bonus plan, right? Otherwise, if the company is looking at the LTIP not as a performance bonus, but rather as a future retention and incentive plan, then IMO we don't need it at all.
MO,
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