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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) November 30, 2006
VARIAN MEDICAL SYSTEMS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 1-7598 94-2359345
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(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
3100 Hansen Way, Palo Alto, CA 94304-1030
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (650) 493-4000
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
[X] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
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Appointment of Certain Officers; Compensatory Arrangements of Certain
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Officers.
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Executive Compensation
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On November 30, 2006, the Compensation and Management Development Committee
of the Board of Directors (the "Board of Directors") of Varian Medical Systems,
Inc. (the "Company") set the performance goals for fiscal year 2007 under the
Company's Management Incentive Plan ("MIP") for the named executive officers and
certain other executives. In the case of Timothy E. Guertin, Elisha W. Finney
and John W. Kuo, payments under the MIP will be based 75% on a percentage growth
of earnings before interest and taxes ("EBIT") for the Company as a whole and
25% on growth in revenue for the Company as a whole. In the case of Dow R.
Wilson, payment under the MIP will be based 37.5% on the percentage growth in
EBIT for the Company as a whole, 12.5% on growth in revenue for the Company as a
whole, 37.5% on the percentage growth in EBIT for the Oncology Systems business
segment and 12.5% on growth in revenue for the Oncology Systems business
segment. In the case of Robert H. Kluge, payment under the MIP will be based
37.5% on the percentage growth in EBIT for the Company as a whole, 12.5% on
growth in revenue for the Company as a whole, 37.5% on the percentage growth in
EBIT for the X-ray Products business segment and 12.5% on growth in revenues for
the X-ray Products business segment. Payment under the MIP may vary from $0 to
200% of target based upon achievement under these performance goals.
Set forth below are the percentages of base salary each of these
individuals would receive if the target and maximum levels under the MIP are
achieved:
Target Maximum
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Timothy E. Guertin 100% 200%
Elisha W. Finney 80% 160%
Robert H. Kluge 60% 120%
John W. Kuo 60% 120%
Dow R. Wilson 80% 160%
Subject to stockholder approval at the 2007 Annual Meeting of Stockholders,
the Board of Directors has approved amendment of the MIP to add additional
performance metrics. Under the provisions of the Management Incentive Plan, as
so amended (the "Amended MIP"), in addition to the performance goals that were
previously included in the MIP, the Company may tie incentive compensation under
the Amended MIP to the following performance goals: (a) orders or net orders,
(b) expenses, (c) cost of goods sold, (d) profit/loss or profit margin, (e)
working capital, (f) operating income, (g) cash flow, (h) market share, (i)
return on equity, (j) economic value add, (k) stock price of the Company's
stock, (l) price/earning ratio, (m) debt or debt-to-equity ratio, (n) accounts
receivable, (o) cash, (p) write-off, (q) assets, (r) liquidity, (s) operations,
(t) intellectual property (e.g., patents), (u) product development, (v)
regulatory activities, (w) manufacturing, production or inventory, (x) mergers,
acquisitions or divestitures, (y) financings, (z) days sales outstanding, (aa)
backlog, (bb) deferred revenue, and (cc) employee headcount. If the amendment to
the MIP is not approved by the stockholders at the 2007 Annual Meeting of
Stockholders, the MIP will continue in its current form.
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On November 30, 2006, the Compensation and Management Development Committee
also approved performance goals that supercede those set forth above under the
Amended MIP if the amendment to the MIP is approved by stockholders at the 2007
Annual Meeting of Stockholders for the named executive officers and certain
other executives. In the case of Timothy E. Guertin, Elisha W. Finney and John
W. Kuo, payments under the Amended MIP will be based 60% on a percentage growth
of EBIT for the Company as a whole, 25% on growth in revenue for the Company as
a whole, and 15% on growth in net orders for the Company as a whole. In the case
of Dow R. Wilson, payment under the Amended MIP will be based 30% on the
percentage growth in EBIT for the Company as a whole, 12.5% on growth in revenue
for the Company as a whole, 7.5% on growth in net orders for the Company as a
whole, 30% on the percentage growth in EBIT for the Oncology Systems business
segment, 12.5% on growth in revenue for the Oncology Systems business segment
and 7.5% on growth in net orders for the Oncology Systems business segment. In
the case of Robert H. Kluge, payment under the Amended MIP will be based 30% on
the percentage growth in EBIT for the Company as a whole, 12.5% on growth in
revenue for the Company as a whole, 7.5% on growth in net orders for the Company
as a whole, 30% on the percentage growth in EBIT for the X-ray Products business
segment, 12.5% on growth in revenues for the X-ray Products business segment and
7.5% on growth in net orders for the X-ray Products business segment. Payment
under the Amended MIP may vary from $0 to 200% of target based upon achievement
under these performance goals.
Set forth below are the percentages of base salary each of these
individuals would receive if the target and maximum levels under the Amended MIP
are achieved:
Target Maximum
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Timothy E. Guertin 100% 200%
Elisha W. Finney 80% 160%
Robert H. Kluge 60% 120%
John W. Kuo 60% 120%
Dow R. Wilson 80% 160%
If the amendment to the MIP is not approved by the stockholders at the 2007
Annual Meeting of Stockholders, the performance goals set under the MIP will
remain in effect for fiscal year 2007 instead of those set forth above under the
Amended MIP.
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IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
This Form 8-K Current Report should not be considered a solicitation or
recommendation with respect to the proposal to amend the MIP to be submitted to
stockholders of the Company. Detailed information regarding the proposal to
amend the MIP, as well as information on other items to be considered at the
2007 Annual Meeting of Stockholders, will be included in the Company's proxy
statement for the 2007 Annual Meeting of Stockholders. The Company expects to
mail the proxy statement to those entitled to vote at the meeting at the end of
December 2006, and will file the proxy statement concurrently with the
Securities and Exchange Commission (the "SEC"). Stockholders are urged to read
the proxy statement carefully because it will contain important information
about the proposal to amend the MIP and all other proposals to be considered by
the stockholders at the 2007 Annual Meeting of Stockholders. The Company's
stockholders and other investors may obtain a free copy of the Company's proxy
statement when it becomes available, as well as other documents filed by the
Company with the SEC, at the SEC's web site at http://www.sec.gov. Stockholders
and investors also may obtain a free copy of the Company's proxy statement, when
it becomes available, by going to the Company's web site at www.varian.com or by
contacting: Investor Relations, Varian Medical Systems, Inc., 3100 Hansen Way,
Palo Alto, CA 94304.
The Company and its directors, executive officers and other employees may
be deemed to be participants in the solicitation of proxies in respect of the
proposals to be considered at the 2007 Annual Meeting of Stockholders. A
description of any interests that the Company's directors and named executive
officers have in connection with the proposals to be considered at the 2007
Annual Meeting of Stockholders is as set forth above or will otherwise be
provided in the proxy statement.
Item 8.01. Other Events.
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The disclosure set forth under Item 5.02 above is incorporated by reference
herein in its entirety.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Varian Medical Systems, Inc.
By: /s/ JOHN W. KUO
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Name: John W. Kuo
Title: Corporate Vice President,
General Counsel and
Corporate Secretary
Dated: December 1, 2006
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