Autodesk 2008 Annual Report Download - page 38

We believe that generally targeting the middle range of salary compensation of our peer group keeps our
salary compensation competitive and balanced, and provides the Compensation Committee the flexibility to
increase compensation in its discretion. Base salary compensation is a reliable source of income for our
executives and an important part of retaining our executives, and is not subject to the variability of the short-term
cash incentive and long term equity incentive components of our executive compensation programs.
Actual base salaries for executive officers are set annually by the Compensation Committee, typically at the
March meeting. Promotion or equity adjustments may be approved at other quarterly meetings.
In March 2007, the Compensation Committee considered the benchmark analysis of base salary of our peer
group, salary levels of comparable jobs in our peer group as well as our CEO’s assessment of each executive’s
experience, skills, and performance level. For the positions of CEO and Executive Chairman, the Compensation
Committee consulted the full Board of Directors to conduct a similar assessment of their experience, skills, and
performance.
Base salary increases for our Named Executive Officers for fiscal 2008 ranged from approximately 5
percent to 14 percent with the exception of Mr. Bado and Ms. Bartz. The approximately 5 percent to 14 percent
increases were intended to maintain such executives’ base salary at the middle range of comparable executives in
our peer group, in accordance with each executive’s experience, skills, and performance level, while
acknowledging overall performance. Mr. Bado’s target total compensation was increased by approximately 33
percent to reflect his promotion to Executive Vice President and to provide a market-based adjustment to
approximate the middle range of pay relative to comparable positions in our peer group. Ms. Bartz salary as
Executive Chairman was not adjusted since the Compensation Committee determined that her current salary is
within the middle range of comparable executives in our peer group.
Short-term Cash Incentives—Executive Incentive Plan (EIP)
Our EIP is an annual cash incentive plan intended to motivate and reward participants to ensure Autodesk
achieves its annual financial and non-financial objectives. This plan places compensation at-risk for employees
with awards dependent upon achievement of pre-established annual goals. We use the EIP to drive not only our
annual financial performance but also the superior achievement of operational objectives. We have structured our
EIP to qualify as deductible “performance-based” compensation within the meaning of Section 162(m) of the
Internal Revenue Code.
Elements of the EIP performance criteria may include corporate, business or functional unit and individual
management goals. For example, all participants share corporate financial goals focused on annual revenue
growth and profitability. In addition, participants responsible for a product division have annual financial goals
specific to their division. Finally, all participants also have annual non-financial goals that are specific to their
division or function. These goals vary and generally are related to the executive’s functional area of
responsibility and contributions to our overall fiscal year goals.
The Compensation Committee designates executives eligible to participate in the EIP each year. At the
beginning of each fiscal year, the Compensation Committee approves objectives for a mix of revenue growth and
non-GAAP operating margin for that year as well as target award amounts for each eligible participant. The
achievement of these financial goals determines overall plan funding and awards.
A participant may receive an actual bonus that is larger or smaller than the target award amount, or may
receive no bonus whatsoever. The actual award reflects a combination of the target award, our revenue growth
and non-GAAP operating margin performance, and an assessment of the individual’s performance during the
year. The non-GAAP operating margin for fiscal year 2008 excluded certain costs, expenses, gains and losses,
including equity based compensation expense, employee tax reimbursements related to our voluntary stock
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