CDW 2012 Annual Report Download - page 121

Table of Contents
Unit at the time of the B Unit grant. The B Units only share in equity appreciation above the participation threshold. This places the B Unit
grants in a secondary position to the A Units in that in any event in which the equity is valued and paid out, holders of the B Unit grants are paid
only if an amount at least equal to the participation threshold has first been allocated to the A Units. The A Units and the B Unit grants share
equally in valuation amounts, if any, above the participation threshold.
Based on an evaluation of Mr. Richards' successful performance since assuming the position of Chief Executive Officer, the fact that
Mr. Richards did not receive an additional long-term incentive award at the time he assumed the position of Chief Executive Officer and the
compensation market data discussed above under “Establishing and Evaluating Executive Compensation - Market Comparisons,” in 2012, the
Committee granted Mr. Richards 10,000 B Units. Other than the grant to Mr. Richards, the Committee did not authorize the grant of any
additional B Units to any of the other Named Executive Officers in 2012.
For additional information about the B Units granted to Mr. Richards in 2012, see the narrative accompanying the “Grants of Plan-
Based Awards Table,” the table entitled “2012 Outstanding Equity Awards at Fiscal Year-End” and the “2012 Units Vested Table” below.
RDU Plan
In 2010, the Board adopted the Restricted Debt Unit Plan (the “RDU Plan”) which was designed to retain key leaders and focus them
on driving the long-term success of the Company. The RDU Plan is an unfunded nonqualified deferred compensation plan. Participants in the
RDU Plan receive Restricted Debt Units (“RDUs”) that entitle the participant to a proportionate share of payments under the RDU Plan,
determined by dividing the number of RDUs held by the participant by 28,500, which is the total number of RDUs available under the RDU
Plan. Each RDU represents $1,000 of face value of the Senior Subordinated Notes.
The RDUs are designed to track two components of the Senior Subordinated Notes, a principal component and an interest component.
However, the participants have no rights to the underlying debt. The total amount of compensation available under the RDU Plan is based on
these two components. The principal component credits the RDU Plan with an amount equal to $28.5 million face value of the Senior
Subordinated Notes (the “debt pool”). Payment of the principal component under the RDU Plan will be made to participants on October 12,
2017, unless accelerated due to a sale of the Company. The interest component credits the RDU Plan with amounts equal to the interest that
would have been earned on the debt pool from March 10, 2010 (or, if later, the date of hire or the date of a subsequent RDU grant) through
maturity (October 12, 2017). These amounts are paid to participants on the interest payment dates, except that amounts for 2010 and 2011 were
deferred until 2012.
In 2012, Mr. Campbell and Ms. Corley each received 400 RDUs. The Committee set the size of Mr. Campbell and Ms. Corley's awards
at levels to increase the retentive element of each executive's compensation package and to bring the number of RDUs held by each executive in
line with the number of RDUs held by similarly situated executive officers of the Company. In 2012, other than the grants to Mr. Campbell and
Ms. Corley, the Committee did not authorize the grant of any additional RDUs to any of the Named Executive Officers.
For additional information regarding the operation of the RDU Plan and the RDUs granted to the Named Executive Officers, see the
narrative accompanying the “2012 Non-Qualified Deferred Compensation” table and the “2012 Potential Payments Upon Termination or
Change in Control” section.
Severance Benefits
The Company's employment arrangements with each of the Named Executive Officers provide for payments and other benefits in
connection with certain qualifying terminations of employment with the Company. The Committee believes that these severance benefits:
(i) help secure the continued employment and dedication of the Named Executive Officers; (ii) enhance the Company's value to a potential
acquirer because the Named Executive Officers have noncompetition, nonsolicitation and confidentiality provisions that apply after any
termination of employment, including after a change in control of the Company; and (iii) are important as a recruitment and retention device, as
many of the companies with which we compete for executive talent have similar agreements in place for their senior management.
Additional information regarding the employment arrangements with each of the Named Executive Officers, including a quantification
of benefits that would have been received by each Named Executive Officer had his or her employment terminated on December 31, 2012, is
provided under “2012 Potential Payments Upon Termination or Change in Control.”
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