Autodesk 2007 Annual Report Download - page 207

147
2007 Annual Report
• Corporate Income Tax Considerations
The EIP is intended to qualify as deductible “performance-based” compensation within the
meaning of Section 162(m) of the Internal Revenue Code and has been structured accordingly.
The structure of the plan separates the funding of the awards from the determination of the
actual awards, as described below.
• Maximum Funding of Pool for Awards
At the beginning of the award period, the Committee determines a payout funding formula
that provides for a maximum funding amount based on a minimum threshold of revenue growth
and a non-GAAP operating margin attainment. The non-GAAP operating margin for fiscal 2007
excluded certain costs, expenses, gains and losses, including stock based compensation expense,
amortization of purchased intangibles and litigation expenses. Below this threshold, there is no
EIP funding. The Committee sets these thresholds on a year-to-year basis. The minimum threshold
for fiscal 2007 revenue growth was 6 percent and the minimum threshold for non-GAAP operating
margin was 19.5 percent. If these two thresholds are achieved or exceeded, the maximum funding
pool for payouts is set at 190 percent of the sum of participants’ target awards.
• Actual Awards to Individuals
The Committee is not obligated to fully allocate the maximum funding amount. The Committee
determines the actual awards based on the Company’s financial results as compared to the
financial performance matrix and on an evaluation of an individual’s contributions relative to the
Company’s results. This matrix provides a guide to determining appropriate award levels based
on varying levels of achievement of revenue growth and non-GAAP operating margin, where
a 100 percent award generally equates to the Company’s achievement of its annual operating
plan. For fiscal 2007, a 100 percent award was associated with revenue growth of 21 percent and
non-GAAP operating margin attainment of 26.5 percent. A similar performance matrix is also
used across the Company for determining award funding under the Autodesk Incentive Plan (AIP)
as noted in the following section, thus providing alignment between the incentives for Named
Executive Officers and those for the broader employee population. For fiscal 2007, the Company’s
financial performance exceeded the minimum funding threshold and equated to an award on the
performance matrix of 98 percent of the target award amounts.
Awards are typically paid in cash within three months after the end of the fiscal year. For fiscal
2007, the Committee reviewed the Company’s results and the performance of the NEOs in March
2007. The Committee determined that Mr. Bado, Ms. Becker and Mr. Castino had fully met performance
expectations for the year and approved EIP payouts for them at 100% of target. The Committee reviewed
the performance of Mr. Bass with the full Board and determined that the CEO had significantly exceeded
performance expectations during his first year as CEO of the Company. The Committee approved an
EIP payout of $1,000,000 for Mr. Bass, which is 143% of his target EIP award. Approved awards are listed
below:
Executive Title
Target
Award
Approved
Award
Carl Bass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Executive Officer $700,000 $1,000,000
Al Castino . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chief Financial Officer $ 278,000 $ 278,000
George Bado . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EVP, Worldwide Sales $ 60,000 $ 60,000
Jan Becker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SVP, Human Resources $ 233,000 $ 233,000