CompUSA 2008 Annual Report Download - page 21

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12
KL2 2600873.8
Base salary;
Cash bonuses;
Stock–based incentives (other than for the Chairman/CEO and the two Vice Chairme
n of the Company who are
considered majority stockholders of the Company); and
Benefits, perquisites and other compensation.
The Committee does not maintain formal policies for specifically allocating compensation among current and long-term
compensation or among cash and non-cash compensation elements. Instead, the Committee maintains flexibility and adjusts different
elements of compensation based upon its evaluation of the Company’ s key compensation goals set forth above. The Company does not
have a formal policy regarding internal pay equity.
Base Salary - Salary levels generally are determined based on individual and Company performance as well as a subjective
assessment of prevailing levels among the Company’ s competitors and an objective assessment (derived by management from widely
available published reports) of the average of prevailing salary levels for comparable companies (based on industry, revenues, number
of employees, location and similar factors).
Cash Bonuses - In establishing annual bonuses, the Compensation Committee considers generally the same factors it considers in
determining base salaries and assigns such weight to each such factor as the Compensation Committee, in its discretion, deems
appropriate. The Compensation Committee may also consider its assessment of each individual’ s contribution to the Company’ s
performance. In certain cases, threshold, target and maximum bonus awards based on achieving specific financial goals are
established.
Stock-Based Incentives - Stock-based incentives, at the present time consisting of (a) stock options granted at 100% of the stock’ s
fair market value on the grant date and/or (b) restricted stock units granted subject to certain conditions, constitute the long-term
portion of the Company’ s executive compensation package. Stock options provide an incentive for executives to manage the Company
with a view to achieving results which would increase the Company’ s stock price and, therefore, the return to the Company’ s
stockholders. The size of stock option and restricted stock unit grants are decided in part based on the Company’ s subjective
assessment of prevailing levels of similar compensation among the Company’ s competitors. Stock option and restricted stock unit
grants must be approved by the Compensation Committee, or, with respect to grantees who are not officers or directors, by the
Compensation Committee’ s designee. We do not use any specific allocation percentage or formula in determining the size of the cash
and equity based components of compensation in relation to each other.
Richard Leeds (Chairman and CEO), Bruce Leeds (Vice Chairman) and Robert Leeds (Vice Chairman) have not historically
received stock options or other stock-based incentives as part of their compensation since the Company’ s initial public offering. As
described below, Gilbert Fiorentino (Chief Executive - Technology Products Group) has received stock-based compensation in the
past; however, he did not receive new equity compensation grants in 2007 or 2008.
Benefits, Perquisites and Other Compensation - The Company provides various employee benefit programs to its executive
officers, including medical, dental and life insurance benefits and our 401(k) plan, which includes Company contributions. The
Company also provides Company-owned or leased cars or automobile allowances and gasoline cost reimbursement to certain executive
officers and other Company managers as well as other benefits generally available to all employees. Certain Company executives also
have or are entitled to receive severance payments, relocation allowances and/or change of control payments pursuant to negotiated
employment agreements they have with the Company (see below). The Company does not provide to executive officers any (a)
pension benefits or (b) deferred compensation under any defined contribution or other plan on a basis that is not tax-qualified.
The Systemax Executive Incentive Plan
The Systemax Executive Incentive Plan, approved by stockholders at the 2008 Annual Meeting, assists the Company in providing
competitive incentive opportunities to executive officers of the Company who can significantly influence the Company’ s performance
and improve its ability to attract and motivate its management team. Under the plan, executive officers of the Company are eligible to