CompUSA 2009 Annual Report Download - page 27

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Historically, different approaches were used to pay cash bonus compensation, as described below. The Company has recently
moved towards a more uniform and target driven incentive compensation structure for its executives; see the discussion below of our
2009 NEO Cash Bonus Plan and our 2010 NEO Cash Bonus Plan.
Stock-Based Incentives - Stock-based incentives, at the present time consisting of (a) stock options granted at 100% of the stock’ s
fair market value on the grant date (based on the NYSE closing price of the Company’ s common stock on that date) and/or (b)
restricted stock units granted subject to certain conditions, constitute the long-term portion of the Company’ s executive compensation
package. Stock based compensation provides an incentive for executives to manage the Company with a view to achieving results
which would increase the Company’ s stock price over the long term and, therefore, the return to the Company’ s stockholders. Stock
option, restricted stock and restricted stock unit grants must be approved by the Compensation Committee; however, the Compensation
Committee is permitted to delegate this authority to officers of the Company regarding awards to employees who are not officers or
directors of the Company and who are not, and are not expected to become, “covered employees” under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”). We do not use any specific allocation percentage or formula in determining the size
of the cash and equity based components of compensation in relation to each other.
The Compensation Committee is cognizant of the timing of the grant of stock based compensation in relation to the publication of
Company earnings releases and other public announcements. Stock based compensation 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.
Richard Leeds, Bruce Leeds and Robert Leeds have not historically received stock options or other stock-based incentives as part
of their compensation since the Company’ s initial public offering, and did not receive any such compensation in 2007, 2008 or 2009.
As described below, Gilbert Fiorentino has received stock-based compensation in the past; however, he did not receive new equity
compensation grants in 2007, 2008 or 2009.
Benefits, Perquisites and Other Compensation - The Company provides various employee benefit programs to its employees,
including NEO’ s. These benefits include medical, dental, life and disability insurance benefits and our 401(k) plan, which includes
Company contributions. The Company also provides Company-owned or leased cars or automobile allowances and related
reimbursements to certain NEO’ s and certain other Company managers which are not provided to all employees. Certain Company
executives also have or are entitled to receive severance payments, 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.
Tax Deductibility Considerations. It is our policy generally to qualify compensation paid to executive officers for deductibility
under section 162(m) of 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 long term 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 2010 Long Term Incentive Plan, if approved
by stockholders at the annual meeting) 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 that may not be deductible.
Role of the Compensation Committee and CEO in Compensation Decisions
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
(following consultation with the Chief Financial Officer and Chief Executive of the Technology Products Group), (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 Compensation 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. The Compensation Committee has the authority
to retain third party compensation consultants to provide assistance with respect to compensation strategies, market practices, market
research data and the Company’ s compensation goals.