Logitech 2013 Annual Report Download - page 21

No taxable income is recognized by a participant either at the time a right is granted to purchase shares under
the 1996 ESPP or at the time shares are purchased thereunder. If a participant does not dispose of shares acquired
under the 1996 ESPP before two years after the “date of grant” (the first date of the purchase period) or before one
year after the date of the purchase of the shares, upon such qualifying disposition the lesser of (a) the excess of the
amount realized on sale of the shares over the purchase price or (b) 15% of the market value of the shares on the
date of grant will be subject to federal income tax. Federal long-term capital gains tax will apply to the excess, if
any, of the sale’s proceeds on the date of disposition over the sum of the purchase price and the amount of ordinary
income recognized upon disposition. If the qualifying disposition produces a loss (the value of the shares on the
date of disposition is less than the purchase price), no ordinary income will be recognized and federal long-term
capital loss rules will apply, provided that the disposition involves certain unrelated parties.
If a participant disposes of the shares earlier than two years after the date of grant or earlier than one year
after the date of the purchase of the shares, upon such disqualifying disposition the difference between the purchase
price and the market value of the shares on the date of purchase (the last day of an offering period) will be taxed
to the participant as ordinary income and will be deductible by Logitech. The excess, if any, of the sale proceeds
over the market value of the shares on the date of purchase will be taxed as long-term or short-term capital gain,
depending on the holding period. Logitech is not entitled to a U.S. tax deduction for amounts taxed as ordinary
income or capital gains to a participant, except to the extent that ordinary income is recognized by a participant
upon a disposition of shares earlier than two years after the date of grant.
Voting Requirement to Approve Proposal
The affirmative “FOR” vote of a majority of the votes cast in person or by proxy at the Annual General
Meeting, not counting abstentions.
Recommendation of the Board
The Board of Directors recommends a vote “FOR” approval of the proposed amendments to and restatement
of the ESPPs, including an increase of eight million (8,000,000) shares to the number of shares available for
purchase under the ESPPs.
Proposal 5
Amendment and Restatement of the Logitech Management Performance Bonus Plan
Proposal
The Board proposes that shareholders approve amendments to and the restatement of the Logitech Management
Performance Bonus Plan (the “Bonus Plan”) to allow Logitech to retain the ability to grant awards to Logitech
executive officers that are fully deductible for U.S. federal income tax purposes.
Explanation
To preserve Logitech’s ability to deduct in full for U.S. federal income tax purposes compensation that certain
of our executive officers may recognize in connection with performance-based awards that may be granted in the
future under the Bonus Plan, shareholders are being asked to approve certain material terms of the Bonus Plan
related to such awards. Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
the material terms of the performance goals under which compensation may be paid must be disclosed to and
approved by the Company’s shareholders every five years. The Bonus Plan was last approved by shareholders at the
Company’s 2008 Annual General Meeting.
Code Section 162(m) generally denies a corporate tax deduction for annual compensation exceeding $1 million
paid to the chief executive officer or to any of the three other most highly compensated officers of a publicly-held
company other than the chief financial officer. Code Section 162(m), which applies to public companies, provides an
exemption from this limit for “qualified performance-based compensation” payable under a plan satisfying certain
PROX Y STATEMENT
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