CompUSA 2007 Annual Report Download - page 20

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15
KL2 2553275.3
Benefits, Perquisites and Other Compensation - The Company provides various employee benefit programs to its
executive officers, including medical, dental and life insurance benefits and our 401(k) plan, which includes
Company contributions. The Company also provides Company-owned or leased cars or automobile allowances and
gasoline cost reimbursement to certain executive officers and other Company managers as well as other benefits
generally available to all employees. Certain Company executives also have or are entitled to receive severance
payments, relocation allowances and/or change of control payments pursuant to negotiated employment agreements
they have with the Company (see below). The Company does not provide to executive officers any (a) pension
benefits or (b) deferred compensation under any defined contribution or other plan on a basis that is not tax-
qualified.
Role of the Compensation Committee
The Compensation Committee’s responsibility is to review and approve corporate goals relevant to the
compensation of the Chief Executive Officer and, after an evaluation of the Chief Executive Officer’s performance
in light of such goals, to set the compensation of the Chief Executive Officer. The Compensation Committee also
approves, upon the recommendation of the Chief Executive Officer, (a) the annual compensation of the other
executive officers of the Company, (b) the annual compensation of certain subsidiary managers, and (c) all
individual stock incentive grants to other executive officers. The Committee is also responsible for reviewing and
making periodic recommendations to the Board with respect to the general compensation, benefits and perquisite
policies and practices of the Company including the Company’s stock-incentive based compensation plans.
Stock Option Grant Practices
In order to avoid any impropriety or even the appearance of any impropriety with respect to the timing of equity
grants, the Compensation Committee adopted the following policies in 2007:
1. The Compensation Committee will not, except in unusual circumstances, delegate to the Company officers
the authority to grant options to employees. Instead, Company management will present to the
Compensation Committee in advance a list of prospective grantees with the specific number of option
shares proposed to be granted to each grantee. The Compensation Committee shall then consider and if
agreed, in its discretion, approve the list (with or without modification). The grant date of such options
shall be the date of the Committee approves the list and the exercise price of such options shall be the
NYSE closing price of the Company stock on the grant date.
2. The Compensation Committee will be cognizant of timing the grant of options in relation to the publication
of Company earnings releases and other public announcements so as to avoid any perception of “spring-
loading” or “bullet-dodging,” i.e. granting options just after the release of unfavorable news or before the
release of favorable news. Stock option grants will not be made, generally, until after the Company has
disclosed, and the market has had an opportunity to react to, material, potentially market-moving,
information concerning the Company.
3. In general, employee stock option grants will be made at fixed times each year.
Tax Deductibility Considerations
It is our policy generally to qualify compensation paid to executive officers for deductibility under section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Section 162(m) generally prohibits
deducting the compensation of executive officers that exceeds $1,000,000 unless that compensation is based on the
satisfaction of objective performance goals. Our stock incentive plans (the 1995 Long-term Stock Incentive Plan,
the 1999 Long-term Stock Incentive Plan, as amended, the 1995 Stock Option Plan for Non-Employee Directors and
the 2006 Stock Incentive Plan for Non-Employee Directors) are structured to permit awards under such plans to
qualify as performance-based compensation and to maximize the tax deductibility of such awards. However, we
reserve the discretion to pay compensation to our executive officers that may not be deductible.