Logitech 2012 Annual Report Download - page 134

grant- date award value. As a result, granting RSUs helps minimize the dilutive effects of our equity awards on
our shareholders and, in the Committee’s view, provides a more cost effective balance of incentive and risk than
standard stock options.
PPOs. In April 2012, the Compensation Committee made its first grant of premium-priced options, or PPOs.
PPOs are stock options that have an exercise price that is set higher than Logitech’s trading price on the date of
grant. The Committee believes PPOs create exceptional incentives for performance and further align the interests
of executives with those of shareholders because a PPO has no value until Logitech’s stock price performance has
been considerably increased. Because the value at grant of PPOs is significantly lower than that of RSUs, PSUs
or standard stock options, we need to grant a larger number of PPOs to deliver similar grant-date award value. As
a result, granting PPOs will more rapidly deplete our stock pool, but in the Committee’s view, this will be offset
by the increased incentive value and potential upside to our shareholders and to the grant recipients. PPOs were
granted to Mr. Darrell as part of his new hire equity package. In the case of Mr. Darrell, his PPO grants had exercise
prices between 175% and 250% of Logitech’s stock price on date of grant. The Committee plans to use PPOs in
fiscal year 2013 as part of the annual equity package provided to our executive officers to further motivate and
reward the team to drive Logitech’s performance in the coming years.
Long-term equity incentive awards granted in fiscal year 2012
During fiscal year 2012 the target value of long-term equity incentive awards granted to Logitech’s named
executive officers was determined by the Compensation Committee at the beginning of the fiscal year based
on our compensation peer group data provided by the Compensation Committee’s independent compensation
consultant and data from the Radford Global Technology Executive Compensation survey, recommendations
from the Committee’s independent compensation consultant and Logitech management with regard to grant
values, anticipated compensation expense and shareholder dilution, as well as the Compensation Committee’s
judgment on the relative impact of each executive officer’s position within Logitech and the performance of each
executive officer.
For fiscal year 2012, the Compensation Committee approved long-term incentive grant values for each named
executive officer that were approximately 10% below the 50th percentiles of grant values for comparable executives
at our compensation peer group companies. This was to reflect the Committee’s expectation that our executive
officers must build Logitech’s value at a rate greater than the overall market to receive equity values in line with
those of our compensation peer group companies. To earn market levels of equity, Logitech will have to outperform
the market in terms of stock price appreciation. Grants were made in particular as follows:
Grants to Mr. Quindlen. On April 11, 2011, as part of the annual executive compensation review, Mr. Quindlen
received a PSU grant for 124,000 shares, assuming 100% target performance, and an RSU grant of 83,000 shares, as
part of his fiscal year 2012 annual compensation as CEO. In the analysis provided by the Committee’s independent
compensation consultant, this grant was slightly below market median annual equity grant values for CEOs in our
compensation peer group.
Grant to Mr. De Luca. On April 11, 2011, as part of the annual executive compensation review, Mr. De Luca
received a PSU grant for 30,000 shares, assuming 100% target performance, as part of his fiscal year 2012
compensation as Chairman. Mr. De Luca did not receive any other equity incentive grants during fiscal
year 2012.
Grants to Other Named Executive Officers. The equity incentive award grants made to all Logitech named
executive officers during fiscal year 2012 are set out in the Grants of Plan-Based Awards in Fiscal Year 2012 table
on page 139.
The following table illustrates grant date fair values, which is the accounting cost to Logitech, of the equity
awards that each named executive officer received in fiscal year 2012 and 2011. The grant date fair values in fiscal
year 2012 decreased by approximately 50% from those in fiscal year 2011 due to:
• the decrease in the number of shares subject to equity grants made to the named executive officers in
fiscal year 2012 over those in 2011, for the reasons described above;
124