Autodesk 2012 Annual Report Download - page 35

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Compensation Program Design and Practices
Base Salary
Each of our executive officers is assigned to an executive salary grade level and associated pay range based
on an internal assessment of each position’s impact and scope of responsibility. The midpoints of the salary
ranges are developed to reflect the increasing scope of responsibility at progressively higher executive levels and
to remain competitive within our peer group. The midpoint of each range generally falls in the middle range of
pay for similar jobs within our peer group. In general, an executive officer who is new or less experienced in his
or her role will be paid lower in the range than an executive officer who has demonstrated proven performance
in his or her role for many years, is highly proficient in the skills required for his or her role and applies those
skills to very high levels of achievement.
We believe that generally targeting the overall range of salary compensation of our peer group keeps our
salary component competitive and balanced, and provides the Compensation Committee the flexibility to
increase compensation in its discretion.
Base salaries for executive officers are set annually by the Compensation Committee, typically at its March
meeting. Promotion or any appropriate adjustments required during the year may be approved at other meetings.
In March 2011, the Compensation Committee considered the benchmark analysis of base salary of our peer
group, our CEO’s assessment of each executive officer’s experience, skills and performance level, the general
state of the economy and the Company’s performance. For the CEO, the Compensation Committee consulted the
full Board to conduct a similar assessment of his experience, skills and performance.
Based on those factors in aggregate, and the general state of the economy specifically, our executive
officers’ base salaries were increased, on average by 8% in fiscal 2012, which reflects the promotional increase
for one of our Named Executive Officers (Steven Blum), as well as increases to mitigate the prior two years of
salary freeze.
Short-term Cash Incentive Plan
The structure of our stockholder approved short-term cash incentive plan provides the Compensation
Committee with the authority to provide short-term cash incentives that qualify as deductible “performance-based”
compensation within the meaning of Section 162(m) of the Internal Revenue Code, provided that certain steps are
taken each year. If such steps are not taken by the Compensation Committee, our short-term cash incentive plan still
acts as a short-term cash incentive plan, but without qualifying as deductible “performance-based” compensation
within the meaning of Section 162(m) of the Internal Revenue Code. For fiscal 2012, the Compensation Committee
elected not to take steps under our short-term cash incentive plan to create qualifying deductible “performance-
based” compensation within the meaning of Section 162(m) of the Internal Revenue Code.
Funding of the short-term cash incentive plan was dependent on the achievement of certain revenue and
non-GAAP operating margin levels for fiscal 2012. Details of those amounts are provided below. Non-GAAP
operating margin for fiscal 2012 excluded certain costs and expenses, including stock-based compensation
expense, amortization of certain purchased intangibles, restructuring charges and goodwill impairment charges.
We believe that the use of a non-GAAP operating margin rather than a GAAP operating margin focuses our
executive officers on the on-going operations of our business and encourages long-term growth strategies such
as acquisitions and in-process research and development investments.
Elements of short-term cash incentive plan performance criteria include financial performance targets and
individual performance. All participants share the same financial performance goals, which are focused on
annual revenue growth and profitability, as described in greater detail below. All participants also have unique
annual non-financial individual performance goals that consist of specific business objectives and management
effectiveness goals. Although the financial performance targets are objective and quantitative, the individual
performance goals are subjective, qualitative and permit the Compensation Committee to use discretion in
determining the success of these criteria.
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