Autodesk 2009 Annual Report Download - page 40

specific revenue and contribution margin objectives. On-Target-Earnings (OTE) is the amount that he will
receive if he achieves his annual financial performance objectives, such as his annual quota. OTE consists of two
components: base salary and target incentive. For fiscal 2009, his commission-based cash incentive target was set
at 71 percent of his base salary. As described earlier, he has an additional cash incentive target of approximately
17 percent of his base salary as a participant in our EIP. Details of the amounts paid to Mr. Bado as sales
commissions can be found in the “Executive Compensation—Summary Compensation Table and Narrative
Disclosure” below.
Long-term Incentives—Equity-based Compensation
Equity awards provide employees and executives the opportunity to be rewarded for increases in our stock
price, which we believe aligns the interests of our employees and executives with those of our stockholders. In
fiscal 2009, executive officers were granted a mix of stock options and restricted stock units. Stock options
remain our primary equity vehicle and are intended to direct executive attention to the importance of sustained,
long-term revenue growth and profitability. Restricted stock units were granted as an additional retention tool to
provide compensation to our officers despite the volatility of our stock price. Both stock options and restricted
stock units are commonly used equity awards in the software and technology industry, and have become integral
components of competitive compensation in our industry. Vesting periods encourage employees and executives
to remain with the Company and focus on longer-term results.
In determining actual grants of stock options and restricted stock units to executives, the Compensation
Committee considers several factors including the unvested option and restricted stock unit position of each
executive, the value of those options and restricted stock units compared to other Company executives, the mix
of incentives between options and restricted stock units, competitive pay practices within our peer group and the
individual performance of the executive.
The Compensation Committee uses “new hire,” “promotion,” and “ongoing” stock grant guidelines in
determining the appropriate size of grants. The stock grant guidelines reflect the range of typical competitive
practices of our peer group. The Compensation Committee has authority to exceed these guidelines within the
limits prescribed under the stock plan approved by stockholders. The current plan limits any individual option
grant to 1,500,000 shares and any restricted stock grant (including restricted stock units) to 300,000 shares,
except grants to individuals in their first fiscal year of service. In that case, the limit is 3,000,000 shares for an
option grant, and 600,000 shares for a restricted stock grant (including restricted stock units). In addition, an
aggregate of no more than 2,500,000 shares under the current plan may be issued as restricted stock grants
(whether as restricted stock or restricted stock units).
At its March 2008 meeting, the Compensation Committee reviewed the factors discussed above and
awarded options to the Named Executive Officers based on individual performance and grant values of our peer
group for comparable executives. At its June 2008 meeting, the Compensation Committee granted restricted
stock units to our executive officers. Please see “Executive Compensation—Grants of Plan-Based Awards in
Fiscal 2009,” below for grants made to our Named Executive Officers during fiscal 2009.
Although long term incentives through equity awards represented a significant portion of most of our
Named Executive Officers’ total fiscal 2009 compensation, it represents a variable component of compensation
for which full value may not be realized due to stock market conditions, availability of trading windows, vesting
conditions, expiration of the awards and the like.
Please see further discussion on page 29 regarding our equity plans and practices.
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