Autodesk 2009 Annual Report Download - page 38

Elements of the EIP performance criteria may include corporate, business or functional unit and individual
management goals. For example, all participants share corporate financial goals focused on annual revenue
growth and profitability. In addition, participants responsible for a product division have annual financial goals
specific to their division. Finally, all participants also have annual non-financial goals that are specific to their
division or function. These goals vary and generally are related to the executive’s functional area of
responsibility and contributions to our overall fiscal year goals.
The Compensation Committee designates executives eligible to participate in the EIP each year and
approves objectives for a mix of revenue growth and non-GAAP operating margin for that year as well as target
award amounts for each eligible participant. The achievement of these financial goals determines overall plan
funding and awards.
A participant may receive an actual bonus that is larger or smaller than the target award amount, or may
receive no bonus whatsoever. The actual award reflects a combination of the target award, our revenue growth
and non-GAAP operating margin performance, and an assessment of the individual’s performance during the
year. The non-GAAP operating margin for fiscal 2009 excluded certain costs, expenses, gains and losses,
including equity based compensation expense, amortization of purchased intangibles, in-process research and
development expenses, restructuring charges and impairment of goodwill and intangibles charges. We believe
that the use of non-GAAP operating margin rather than GAAP operating margin focuses our executives on the
on-going operations of our business and encourages long term growth strategies such as acquisitions and
in-process research and development investments.
The structure of the EIP separates the funding of the awards from the determination of the actual awards, as
described below.
•Funding for Fiscal 2009 Awards
The minimum performance benchmarks for funding EIP awards for fiscal 2009 were revenue growth
of at least 6 percent and non-GAAP operating margin of at least 19.5 percent. For fiscal 2009, our financial
performance exceeded the minimum funding threshold, and pursuant to the terms of the plan, funding was
automatically set at 190 percent of the target award amounts. If this threshold was not met, there would not
have been any EIP funding. This full funding mechanism is a consequence of the structure our EIP, which is
intended to qualify as deductible “performance-based” compensation within the meaning of Section 162(m)
of the Internal Revenue Code.
After minimum thresholds are met and the EIP is funded at the maximum amount of 190 percent of the
target award amounts, the Compensation Committee uses discretion (sometimes referred to as “negative
discretion”) to determine appropriate award payouts based on actual achievements, rather than simply
funding such individual awards at the full 190 percent. An award payout of about 100 percent of target
would generally occur when our financial performance achieves our annual operating plan and division and
individual performance objectives have been achieved. For purposes of this discussion, the terms funded
and funding are used to indicate the amount that may be available in the aggregate under the EIP. The
amount that ultimately is paid is discussed below.
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