Tech Data 2013 Annual Report Download - page 115

Table of Contents
second such subgroup consisted of 220 companies with publicly reported revenues between $1 billion and $5 billion, and median revenues of $1.56
billion. Information about the compensation practices for these subgroups was prepared by the Committee’s independent compensation consultant
and considered by management and the Committee. The Company and the Committee believe it is important to consider data from these industry
subgroups in addition to its Selected Companies Peer Group because it allows for the consideration of data from companies that may have
characteristics (such as higher profit margins) different from the Company but nonetheless compete with the Company for the same employee talent
pool.
Role of Management
- Typically, our CEO, CFO, and senior human resources officer analyze the information provided by the independent
compensation consultant in light of the Company’s financial and operational circumstances. We do not try to mirror any other particular company’s
compensation practices, and we generally do not directly target our overall compensation levels for a given position against the compensation
provided by any other particular member in our peer group for that same position. However, consideration is given to certain aspects of other
companies’ data, depending on which areas are pertinent to our position as a distributor with narrow margins and our geographic locations.
Similarly, for each executive position, market data is evaluated for relevant comparisons such as the importance of the role of each executive to the
Company’s business model, the expected contribution of the executive in light of the responsibilities inherent in his or her position, and the risks
inherent in our operating plan. In addition to market data, other factors are considered, such as the Company’s annual operating plan, targeted
earnings, internal pay equity, overall financial performance, the Company’s ability to absorb increases in compensation costs, and regional
performance. This analysis results in recommendations presented to and discussed with the Committee.
Role of Compensation Committee
- The Committee, comprised entirely of independent directors, reviews the market data provided by its
compensation consultant and evaluates management’s perspective and recommendations. The Committee makes compensation decisions,
determines the amount and terms and conditions of equity incentive awards (e.g., vesting schedule), and sets the bonus targets for the executive
officers. The compensation package for the CEO is recommended by the Committee to the Board. The key goals of the compensation program are
balanced with the market data, and the Company’
s financial planning and expectations, to determine the final compensation for each executive. The
Committee sets policies and gives direction to management on all aspects of the executive compensation program. Each year, the Committee
reviews succession planning for the Company’s executives to mitigate the risks of executive departure and to help ensure appropriate executive
development and bench-strength within the different tiers of Company leadership.
Philosophy and Practice
Total Compensation Relative to Market - The total compensation for our NEOs is designed to align with the Company’s strategic plans and
operating goals while providing competitive compensation relative to median compensation of the companies in our peer group. It is our practice to
set compensation that directly correlates with how the Company has performed compared to the peer group. Because the data available on the peer
group is reported for the prior year, the Committee uses an assumed market increase recommended by our independent compensation consultant in
evaluating that data and setting our compensation for the upcoming year.
Our compensation consultant, Exequity LLP, provided market data about industry competitors, using the peer group.
Consistent with our philosophy of setting targeted total direct compensation near the 50
th
percentile for our peer group, the Committee was
provided with a competitive pay analysis comparing our NEOs’ targeted total cash, equity and combined compensation in fiscal 2012 to the 50
th
percentile of our peer group companies.
Balance of Element
s - Overall, the compensation program balances incentives to perform and achieve value, with competitive pay taking into
account our low margin environment. The Committee considers all the elements of compensation in setting the total compensation opportunity for
each NEO. The Committee believes the balance between elements should vary for each NEO to emphasize the differences in their roles in the
Company, indicate performance versus goal, and should be a realistic reflection of the market while at the same time considering internal pay
equity. Each element has different goals associated with it that are all balanced in such a way as to enable achievement of all the goals of the
compensation program.
The base salary and bonus are considered together to set a fair cash compensation level for attracting and retaining quality leaders and driving
annual performance. The combination of salary and bonus is viewed as necessary to be competitive in the market and to bring targeted total cash
compensation to mid-market levels. The performance measures and the specific performance targets for the bonus are carefully chosen. These are
then balanced by the acceleration and deceleration table attributed to each measure. All performance measures are directly tied to our annual
operating plan, reflecting our pay-for-performance philosophy and cost-conscious approach. The performance measures for fiscal 2013 are
described below in "Determination of Compensation for Fiscal 2013, Weighting of Performance Measures".
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