Autodesk 2010 Annual Report Download - page 45

Long-term Incentives—Equity-based Compensation
Equity awards provide employees and executive officers the opportunity to be rewarded for increases in our
stock price, which we believe aligns the interests of our employees and executive officers with those of our
stockholders. In fiscal 2010, 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 executive 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 executive officers to remain with the Company and focus on longer-term results.
In determining actual grants of stock options and restricted stock units to executive officers, the
Compensation Committee considers several factors, including the unvested option and restricted stock unit
position of each executive officer, the value of those options and restricted stock units compared to other
Company executive officers, the mix of incentives between options and restricted stock units, competitive pay
practices within our peer group and the individual performance of the executive officer.
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 stock 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 awards (including restricted stock units).
At its March 2009 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 executive officers. At its December 2009 meeting, the Compensation Committee granted
restricted stock units to our executive officers. These grants were made in order to provide the long-term
incentives that are a critical element of the Company’s compensation mix and to provide a balance to the
Company’s use of stock options in a difficult economic and market climate. In addition, in connection with his
appointment as Executive Vice President and Chief Financial Officer and based on the factors discussed above,
Mr. Hawkins received an option award and a restricted stock unit award. Please see “Executive Compensation—
Grants of Plan-Based Awards in Fiscal 2010,” below for grants made to our Named Executive Officers during
fiscal 2010.
Although long-term incentives through equity awards represented a significant portion of most of our
Named Executive Officers’ total fiscal 2010 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 40 regarding our equity plans and practices.
Pay Mix
In order to focus our executive officers on achieving superior annual and long-term performance, we have
structured our executive officers’ compensation mix so that the majority of their compensation is contingent on
achieving or surpassing our annual goals and achieving superior returns for our stockholders.
Total Annual Cash Compensation
Total annual cash compensation is made up of a base salary and the short-term cash incentives described
above. The ratio of an executive’s base salary and short-term cash incentive target reflects the strong importance
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