Logitech 2012 Annual Report Download - page 144

• Other than for the compensation of employees in the Company’s sales organization, the performance
measures under the Company’s short-term incentives in the form of cash bonuses, profit sharing, or
long-term equity incentive awards should be based on the performance of the entire Logitech group,
or the performance of the Logitech group plus the performance of the employee’s department or unit,
rather than on the performance of the individual employee. This is primarily to encourage collaboration
among the Company’s employees.
• For employees in the Company’s sales organization, compensation should include commissions based
on the employee’s sales performance against sales quotas or targets. Approximately 30% to 40% of a
salesperson’s total target compensation is based on commissions. The Company believes this direct
linking of salesperson compensation to individual performance helps drive sales performance and
reflects competitive market practice.
• Equity incentive compensation is an important component of employee compensation. This reflects
market practice, especially in California’s Silicon Valley, where the Company has a significant presence,
but the Company also believes that equity incentive compensation is a key differentiator in attracting
and retaining employees in employment markets outside of the United States where, historically, equity
incentive compensation was not or is not common.
Compensation for employees below the executive level is established based on guidelines developed by the
Company’s compensation & benefits department, market practices, and assessment of individual performance
and potential for future contribution to Logitech by the employee’s manager and the Company’s human resources
department. The Compensation Committee of the Board provides oversight of compensation below the executive
level, reviews the yearly short-term incentive program design and performance measures, reviews and approves
the yearly long-term equity incentive award budget, and reviews and approves all long-term equity incentive
award grants.
Compensation Risks Assessment
The Compensation Committee conducted a review, with the assistance of Radford, the Committee’s
independent compensation consultant, of Logitech’s compensation programs in April 2011 to assess the risks
associated with their design. The Committee reviewed in particular the following compensation programs and
associated practices:
• 2006 Stock Incentive Plan.
• Management Performance Bonus Plan.
• Profit Sharing Plan.
• Sales commissions plans.
• Change of Control Severance Agreements in place with executive officers.
The review included a consideration of compensation risk areas associated with Logitech’s current
compensation programs, and risk controls. Based on this review, we have concluded that our compensation
policies and practices do not create risks that are reasonably likely to have a material adverse effect on the
Company. The Compensation Committee conducted a similar risk assessment review in March 2012, and the
Compensation Committee does not believe that there have been any changes in our compensation programs that
would alter the risks involved.
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