Atari 2010 Annual Report Download - page 30

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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Nomination and Compensation Committee. Because of the turnaround of the Company, the change in its business
model, the size of the Company and the current economic environment, 3-year criteria as well as peer group criteria are
not relevant. As a result the Board of directors is reviewing performance criteria each year of the vesting period upon the
recommendation of the Nomination and Compensation Committee. For fiscal 2009-2010, the quantitative criteria listed
below weigh 60 percent and qualitative criteria weigh 40 percent. Quantitative criteria are current operating income (COI)
and free cash flow, in equal parts (with results for the year being measured against the budget submitted by
management to the board of directors). Qualitative criteria, which vary in weight depending on the positions held by the
executives concerned, are (i) the maximizing of asset disposals and licensing opportunities, (ii) compliance with the
publishing roadmap, on-schedule completion of projects, compliance with budgets and the quality of new releases, (iii)
the release of Champions Online, Star Trek Online and other games on schedule, on budget and in accordance with
quality standards, (iv) the planning and implementation of cost-saving measures (for Cryptic, Eden, administrative and
sales expenses, etc.) and appropriate cost controls, and (v) the implementation of strategic options approved by the
board of directors. As of June 30, 2010, the Board did not settled final stock option performance criteria for fiscal year
2010/2011.
Deferred compensation
The Company’s Board of directors has made certain commitments to Mr. Lapin concerning compensation that could be
paid to him if his appointment with the Company were to end, contingent on the fulfillment of certain performance criteria.
The amount of such compensation would be calculated taking into account (i) Mr. Lapin’s departure as a ‘good leaver”,
and (ii) the complete or partial fulfillment of the performance criteria applicable to Mr. Lapin’s variable compensation. Mr.
Lapin’s deferred compensation could therefore amount to twelve months of fixed and variable compensation, or a total of
€600,000.
- David Gardner and Phil Harrison, CEO until December 10, 2009 and COO until May 25, 2009,
respectively
Mr. Gardner resigned on December 10, 2009 from his position as Chief Executive Officer. With regards to Mr. Gardner’s
resignation, the Board of directors noted that the performance criteria applicable to his severance compensation had
been partially met. He received a severance and other payment of €280,000. David Gardner was also entitled to keep his
vested stock options, which totaled approximately 412,000.
Mr. Harrison resigned on May 25, 2009 from his position as Chief Operating Officer. With regards to Mr. Harrison’s
resignation, the Board of directors noted that the performance criteria applicable to his severance compensation had
been partially met. He received a severance and other payment of €96,875. In addition, an indemnity in the same
amount was paid to him to cover other fees, expenses and any prejudice suffered.
For fiscal year 2009/2010, the total compensation due for Mr. Gardner amounted to €647,700 and the total compensation
due for Mr. Harrison amounted to €427,900, including fixed compensation, variable compensation and severance
package and other payments. For more details, see Table 1 and Table 2 of AMF recommendations below.
Fixed and variable compensation of Mr. Gardner and Harrison prior to their resignations
Following proposals by the Nomination and Compensation Committee, the Board of directors, at its meetings of January
30, 2008 and March 2, 2008, decided that compensation paid to the Chief Executive Officer and the Chief Operating
Officer would consist of a fixed and a variable portion. The variable portion of their compensation depended on the
degree to which certain annual objectives, set by the Board of Directors based on proposals by the Nomination and
Compensation Committee, were fulfilled. These objectives were both quantitative and financial (change in the Group’s
Current operating income before share-based payments) or were qualitative, linked to the completion of specific projects.
The degree to which these objectives had been achieved and the amount of variable compensation were then
determined by the Board of Directors when it approved the financial statements for the year, based on proposals by the
Nomination and Compensation Committee.
Quantitative and financial objectives were used to determine 60% of variable compensation and qualitative objectives
serve as a basis for the other 40%.
As Mr. Gardner and Harrison left their operational functions during fiscal year 2009/2010, they are not eligible to this
fixed and variable compensations.
Grants of stock options prior to their resignation
At the time they joined the Group, the CEO and the COO became entitled to conditional and unconditional grants of
stock options. The Board of directors decided that, while they served in their respective positions, the CEO and the COO
would be required to hold on to at least 15% of shares for which such options were exercised.