Autodesk 2010 Annual Report Download - page 41

Base salaries for executive officers are set annually by the Compensation Committee, typically at its March
meeting. Promotion or any appropriate adjustments required during the year may be approved at other meetings.
In March 2009, the Compensation Committee considered the benchmark analysis of base salary of our peer
group, the salary levels of comparable jobs in our peer group, our CEO’s assessment of each executive officer’s
experience, skills and performance level, the general state of the economy and the Company’s performance. For
the CEO, the Compensation Committee consulted the full Board of Directors to conduct a similar assessment of
his experience, skills and performance.
Based on those factors in aggregate, our executive officers’ salaries were not increased in fiscal 2010.
Rather, starting in February 2009, the Company temporarily reduced each of our executive officers’ base salaries
by 10%, including all of our Named Executive Officers. This action was taken in light of the global economic
downturn and as a cost savings measure. This salary reduction was removed during December 2009, without
retroactive or catch-up compensation of such base salary reduction. The reduction was originally scheduled to
remain in effect for six months, but in light of the Company’s financial situation at that six-month mark, the
reduction was kept in place for another four months. After it became increasingly clear that the Company’s
business was stabilizing, the salary reduction was removed.
Mr. Hawkins was appointed Executive Vice President Finance and Chief Financial Officer in March 2009.
In consultation with Towers Watson and following review of the factors discussed above in aggregate, the
Compensation Committee set Mr. Hawkins’s initial base salary at $525,000.
Short-term Cash Incentives—EIP
Our EIP is an annual cash incentive plan intended to motivate and reward participants to ensure Autodesk
achieves its annual financial and non-financial objectives. We have structured our EIP to qualify as deductible
“performance-based” compensation within the meaning of Section 162(m) of the Internal Revenue Code,
provided that certain steps are taken each year, including the Compensation Committee approving a mix of
revenue growth and non-GAAP operating margin. If such steps are not taken by the Compensation Committee,
our EIP still acts as a bonus plan, but without qualifying as deductible “performance-based” compensation within
the meaning of Section 162(m) of the Internal Revenue Code.
Due to volatile and unpredictable global economic conditions at the beginning of fiscal 2010, the
Compensation Committee did not take steps under our EIP to create qualifying deductible “performance-based”
compensation within the meaning of Section 162(m) of the Internal Revenue Code. Consequently, bonuses paid
under our EIP would not have qualified as “performance-based” compensation within the meaning of
Section 162(m).
In order to provide some competitive short-term compensation for executive officers, in April 2009, the
Compensation Committee determined that executive officer EIP bonuses would be funded under a bonus
program generally available to our non-executive officer employees. This plan is known as the Autodesk
Incentive Plan, or AIP. Our AIP generally provides greater flexibility in setting financial targets for funding,
including setting financial targets during the fiscal year. The bonuses paid to our executive officers for fiscal
2010 were paid through our EIP, but funded based on targets established for our AIP. We adopted this structure
for fiscal 2010 in order to allow for appropriate short-term cash incentives in light of a volatile and unpredictable
global economic environment. This action also preserved the Company’s Equity Incentive Deferral Plan, which
is discussed on page 41 and is dependent on bonuses being paid through the Company’s EIP. Funding of the EIP,
was therefore dependent on the AIP and achievement of certain revenue and non-GAAP operating margin levels
for each of the first and second halves of fiscal 2010. Details of those amounts are provided below. The
Non-GAAP operating margin for fiscal 2010 excluded certain costs and expenses, including stock-based
compensation expense, amortization of certain purchased intangibles, restructuring charges and goodwill
33