Autodesk 2007 Annual Report Download - page 208

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• Cash Incentive Compensation—Autodesk Incentive Plan (AIP)
An executive not designated to participate in the company’s EIP is eligible to participate in the
Autodesk Incentive Plan (AIP), which is generally available to all non-sales employees. The AIP
consists of an overall corporate plan and several individual group plans covering Autodesk divisions,
functional groups, and business units. Participants are assigned to the appropriate AIP group plan
based on organization and role. For example, the AIP awards for most divisional staff are based 70
percent on the performance of the specific division and 30 percent on corporate performance.
• Target Awards and Target Funding
Each participant is assigned a target incentive payout, which is a percentage of the
participant’s base salary. Target AIP incentive payout levels are set for each pay grade based on
market competitive data and internal consistency. The target AIP funding pool is the sum of all
participants’ target incentive payout.
• Actual Awards to Participants
Actual awards are based on (1) the performance of the Company and the participant’s group,
as applicable, as compared to the financial performance matrix and (2) the evaluation of the
participant’s individual performance for the fiscal year by the participant’s manager.
• Performance of the Company and the Participant’s Group
If the revenue goals and non-GAAP operating margin or group contribution margin goals are
met exactly, actual total AIP funding is 100 percent of the sum of the participants’ target awards.
For the Company overall and for each group, a financial performance matrix defines award levels
as a percentage of target awards for various other combinations of achieved operating margin and
revenue growth as described above for the EIP. In addition, the CEO can adjust the AIP funding
amount derived from the financial results up or down by a maximum of 10 percent, based on the
CEO’s assessment of the achievement of nonfinancial goals for the Company or for a particular
group.
• Performance of the Participant
The actual award reflects a combination of the target award, AIP funding based on the
performance of the Company and the individual’s group, and manager assessment of the
individual’s performance during the year. As a result, an individual may receive an actual AIP
payout that is larger or smaller than the AIP amount based on the performance matrix and his or
her target award or may receive no AIP payout whatsoever.
• Cash Incentive Compensation—Autodesk Sales Compensation Plan
As the top sales executive, George Bado has a portion of his targeted cash compensation tied to
sales commissions based on achievement of specific revenue and contribution margin objectives.
Bado’s On-Target-Earnings (OTE) is the amount that he will receive if he achieves his annual financial
performance objectives, such as his annual quota. His OTE consists of two components: base salary
and target incentive. His commission-based cash incentive target is set at 50 percent of his base
salary. As described earlier, he has an additional cash incentive target of 16.7 percent of his base
salary as a participant in Autodesk’s EIP.
• Equity-Based Compensation
Equity awards provide employees and executives the perspective of an owner with a stake in
the success of Autodesk, thus increasing alignment with shareholder interests. Stock options are
currently the equity-based component of Autodesk’s compensation program. This component is
intended to direct executive attention to the importance of sustained, long-term revenue growth