Logitech 2013 Annual Report Download - page 52

COMPENSATION REPORT 2013
INTRODUCTION
This Compensation Report contains information on Logitech compensation philosophy and practices, the
background for decisions, and the results of decisions with respect to Logitech’s named executive officers and its
Board members.
This Compensation Report has been designed to comply with the proxy statement rules under U.S. securities
laws as well as Swiss regulations. This Report is an integrated part of our Annual Report, Invitation and Proxy
Statement for our 2013 Annual General Meeting.
Compensation Discussion and Analysis
EXECUTIVE SUMMARY
During fiscal year 2013, Logitech had a decline in sales and a significant operating loss. These weak results
reflected a number of significant challenges. We experienced the effects of a weak macro-economic environment
in Europe and in parts of Asia, along with a slow economic recovery in North America. Our performance also
reflected the accelerated transition of personal computing from PCs to mobile computing, and disappointing results
in our music product category. Lastly, a slowdown in the enterprise video conferencing market led to a non-cash
goodwill impairment charge of more than $200 million. This charge was the key factor in our operating loss for
the full year.
We took several steps during the year to position Logitech for a turnaround. We removed a layer of executive
management, and began to create a simpler, faster, more responsive organization. We incurred nearly $44M in
restructuring charges to reduce our cost structure and to build a new foundation for a return to profitability.
The following are key developments in fiscal year 2013 relating to compensation:
• Impact of Logitech’s Performance Against Expectations and Relative to Overall Market. When
making compensation decisions in fiscal year 2013, the Compensation Committee gave considerable
weight to Logitech’s continued challenges in executing against our stated financial plans as well as
Logitech’s performance relative to the overall market and our compensation peer group, as highlighted
in “Compensation Elements” and other parts of this discussion below.
• Base Salary Actions. Given Logitech’s financial performance in fiscal year 2013 and our executives’
salary positions versus the market, only one of our executive officers received a base salary increase in
fiscal year 2013 – our former Chief Financial Officer, Mr. Bardman.
• Increased Emphasis on Increasing Shareholder Value. In fiscal year 2013, the Compensation Committee
required Logitech’s stock price growth to be equal to or greater than that of the NASDAQ 100 Index
before any payout could be made under the annual cash incentive bonus plan. In addition, most of
the equity incentive awards that the Committee granted to our executive officers in fiscal year 2013
were performance-based stock options that have no value until there is significant growth in Logitech’s
stock price.
• No Bonus Plan Payouts. Based on Logitech’s failure to execute against our fiscal year 2013 plan, as well
as our disappointing performance relative to our overall industry, no bonus payouts for our executive
officers were earned under our annual cash incentive bonus plan.
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