CompUSA 2008 Annual Report Download - page 23

14
KL2 2600873.8
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 Compensati
on
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 that the Committee approves the list and the exercise price of such options shall be the N
YSE
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 mar
ket 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, the 2006 Stock Incentive Plan for Non-Employee Directors and the Systemax Executive Incentive Plan) 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, including under the Systemax
Executive Incentive Plan, that may not be deductible.
Compensation of Executive Officers in 2008
In determining the compensation of the Company’ s Chief Executive Officer for fiscal year 2008 and approving the compensation
of the Company’ s other named executive officers, the Committee considered, among other factors, the Company’ s 8% growth in
revenues from the prior year; its maintaining a 15.3% consolidated gross margin; its maintaining overall profitability; and its ending the
year with $116 million in cash and equivalents despite spending $37 million for a special dividend; $31 million for the acquisition of
CompUSA and in excess of $20 million to stock inventory in new stores, all in the most challenging economic environment in
generations. The Compensation Committee also considered the Company’ s improved controls over internal accounting and financial
reporting during 2008, as disclosed in the Company’ s Form 10-K for 2008 and as attested to by Ernst & Young LLP.
The compensation earned by the NEO’ s in 2008 was generally determined based on the various factors indicated above. However,
Gilbert Fiorentino’ s bonus for 2008 of $1.4 million was determined in accordance with a table which provided for a scale of bonus
amounts, ranging from $1.3 million to $10.0 million, depending upon the fiscal 2008 adjusted operating profit of the Company’ s
Technology Products Group. This bonus table was negotiated by Mr. Fiorentino and Messrs. Leeds and approved by the Compensation
Committee in the first quarter of 2008, and was tied to the performance of the Technology Products Group in order to most accurately
reflect Mr. Fiorentino’ s direct contribution to the Company and the sustained year over year growth of the business. See the Grants of
Plan-Based Awards table below for additional information with respect to awards payable to Mr. Fiorentino for 2008.
Mr. Reinhold was the only NEO to receive a grant of equity compensation in 2008, in the form of stock options. The decision by
the Compensation Committee to award Mr. Reinhold stock options was based on Mr. Reinhold’ s significant accomplishments in 2008
as well as a desire to further align his interests with those of the Company’ s stockholders.
The Compensation Committee determined that the Company and management had performed well, particularly given trends in the
general economic environment that had affected the Company’ s business in the second half of fiscal 2008, and that management had