Dell 2006 Annual Report Download - page 133

Table of Contents
Results — As noted above, in recent years the Leadership Development and Compensation Committee made a decision to
allocate more compensation to the performance-dependent elements of the total compensation package. As a result, in
Fiscal 2006 and Fiscal 2007, annual salary increases among executive officers generally were somewhat modest as more
focus was placed on the annual incentive bonus. The Named Executive Officer salaries are all below the median of the
market, and other than Mr. Dell, each Named Executive Officer received a modest raise for Fiscal 2007 designed to keep the
salary close to the market median. Mr. Dell did not receive a raise because the committee determined that the key
component of his compensation was performance-based bonus.
Annual Incentive Bonus
Design — The annual incentive bonus plan is designed to align executive officer pay with overall company financial
performance, as well as performance against strategic initiatives in the short-term. The plan provides a reward based on the
achievement of corporate, regional/business unit, and individual performance objectives.
Annual incentives for executive officers are subject to the Executive Annual Incentive Bonus Plan. This plan was designed to
qualify as tax-deductible under Section 162(m) of the Internal Revenue Code, and was approved by stockholders at the 2003
annual meeting.
The Leadership Development and Compensation Committee establishes a target incentive opportunity for each executive
officer expressed as a percent of base salary. As explained in the chart under "Elements of the Total Compensation
Package" above, the base salary and annual incentive bonus components of the pay mix are generally equal in amount,
each comprising approximately 10% of the pay mix. Therefore, most Named Executive Officers were granted a target
incentive opportunity equal to their base salary. Mr. Dell and Mr. Rollins, the individuals with the greatest overall
responsibility for company performance, were granted larger incentive opportunities in comparison to their base salaries in
order to weight their overall pay mix even more heavily towards performance-based compensation. For the Named Executive
Officers, the target annual incentives for Fiscal 2007 were as follows:
Target Incentive as a
Named Executive Officer % of Base Salary(a)
Mr. Dell 200%
Mr. Carty —%(b)
Mr. Bell 100%
Mr. Felice 100%
Mr. Rollins 300%
Mr. Schneider 100%
Mr. Parra 100%
(a) To qualify for tax deductibility under Section 162(m) of the Internal Revenue Code, the maximum payout was capped at 0.10% of consolidated
net income for each executive, with the exception of Mr. Dell and Mr. Rollins, whose payouts were capped at 0.20% of consolidated net income.
(b) Mr. Carty joined the company as an executive officer in January 2007 and was not eligible for an annual incentive bonus for Fiscal 2007.
To arrive at a payout number, the target percentage of salary for each executive officer is multiplied by a formula based on
corporate performance, regional or business unit performance, and the achievement of individual performance goals. The
formula is illustrated below.
Target Annual
Incentive
X
Corporate Performance
Modifier
(0%-300%)
X
Regional/Business
Unit Performance
Modifier
(50%-150%)
X
Individual
Performance
Modifier
(0%-150%)
Corporate Performance Target — At the end of the year, the Leadership Development and Compensation Committee
evaluates company performance against specific financial and strategic performance targets set at the beginning of the year
and modifies the bonus payout to 0% to 300% of the target. For Fiscal 2007,
130