CompUSA 2009 Annual Report Download - page 28

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Systemax Executive Incentive Plan
The Systemax Executive Incentive Plan was approved by the Company’ s stockholders at the Company’ s annual stockholder
meeting in 2008, and was first implemented in 2009. Under the plan, executive officers of the Company are eligible to receive an
annual cash bonus, based on the Company’ s achievement of certain performance-based goals established by the Compensation
Committee relating to Operational and Financial Performance, Strategic Accomplishments and Corporate Governance and Oversight.
The amount of any annual award will vary based on performance, and is determined for each participant as a multiple of the
participant’ s base salary for that year relating to achieving one or more performance goals, up to an annual aggregate bonus per
participant of $5 million. In the event that an award contains more than one performance goal, participants in the plan will be entitled
to receive the portion of the target percentage allocated to the performance goal achieved. In the event that the Company does not
achieve at least the minimum performance goals established, no award payment will be made.
Each year, our Compensation Committee adopts an incentive plan for our NEO’ s implementing the Systemax Executive Incentive
Plan. The performance goals may be based on the overall performance of the Company, and also may recognize business unit, team
and/or individual performance. The Compensation Committee has the discretion to reduce the amount payable to, or to determine that
no amount will be paid to, a participant. See the discussion below of our 2009 NEO Cash Bonus Plan (implemented under the
Systemax Executive Incentive Plan) and our 2010 NEO Cash Bonus Plan (being implemented under our 2010 Long Term Incentive
Plan, subject to shareholder approval.
Pursuant to SEC rules, the Company is not disclosing the specific performance targets and actual performance measures for the
goals used in its 2009 Bonus Plan and 2010 Bonus Plan because they represent confidential financial information that the Company
does not disclose to the public, and the Company believes that disclosure of this information would cause us competitive harm. The
Company believes that these performance goals were reasonably challenging to achieve. Targets are set such that only exceptional
performance will result in payouts above the target incentive and poor performance will result in no incentive payment. We set the
target performance goals at a level for which there is a reasonable chance of achievement based upon forecasted performance.
Scenarios were developed based upon a range of assumptions used to build our annual budget. We did not perform specific analysis
on the probability of the achievement of the target performance goals given that the market is difficult to predict. Rather, we relied
upon our experience in setting the goals guided by our objective of setting a reasonably attainable and motivationally meaningful goal.
2009 NEO Cash Bonus Plan
In March 2009, pursuant to the Systemax Executive Incentive Plan, our Compensation Committee, with input from our Chief
Executive Officer, established our 2009 NEO Cash Bonus Plan (the “2009 Bonus Plan”) providing for target cash bonuses for the
NEO’ s based on the achievement of certain performance-based criteria in 2009. The 2009 Bonus Plan implements for 2009 the
Executive Incentive Plan approved by stockholders in March 2008 and pertains specifically to the payment of non-equity compensation
to NEO’ s for 2009.
Awards for Messrs. Richard, Robert, and Bruce Leeds and Mr. Reinhold under the 2009 Bonus Plan had the following
components: 70% for short-term financial accomplishments (tied 60% to Company consolidated earnings performance and 10% to peer
group financial comparisons) and 30% for long-term strategic accomplishments (tied 20% to strategic goals, such as acquisitions and
process improvements, and 10% to governance and compliance matters). Those percentages reflect the desire to reward executives for
maximizing revenue while controlling costs in a difficult economic environment, while recognizing that a number of strategic
initiatives must be accomplished during 2009 to properly position the company for 2010 and beyond. The applicable base salary
multiples for calculating base cash bonus awards was 2 times annual salary for each of Messrs. Richard, Bruce and Robert Leeds and 1
times annual salary for Mr. Reinhold. In addition, each of these executive officers would receive a special bonus equal to 50% of their
respective base target bonus amount for successful implementation of certain management financial reporting technology
enhancements in 2009.
Achievement of the consolidated earnings , peer group and strategic goals was measured on a variable basis depending on the level
of accomplishment. Achievement of the governance and compliance and special financial reporting technology goals was measured on
the basis of whether or not the goals were effected in 2009.
For each of Messrs. Richard, Bruce, and Robert Leeds and Mr. Reinhold a specific target bonus payment (base case) was
established for the consolidated earnings goal as follows: reduced bonuses are payable on a pro rata basis starting at achievement in
excess of 70% of the financial target amount up to 100% of the financial target amount; 70% achievement of the financial target would
guarantee a bonus of 50% of the target bonus amount for this component; and no bonus is payable in respect of this component if