CompUSA 2010 Annual Report Download - page 29

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cash bonus awards from an executive if the Board determines that the executive engaged in
serious ethical misconduct.
• Management Processes. Board and management processes are in place to oversee risk associated
with the Company’ s operations. Our Board as a whole is responsible for overseeing the
Company’ s risk management process. The Board focuses on the Company’ s general risk
management strategy, the most significant risks facing the Company, and seeks to ensure that
appropriate risk mitigation strategies are implemented by management. The Company has
recently enhanced its risk management processes, and risk management will be a recurring Audit
Committee and Board quarterly agenda item, and is considered part of strategic planning. The
Board is also apprised of particular risk management matters in connection with its general
oversight and approval of corporate matters and receives information relating to material risks
affecting the Company from management and from our Legal, Risk Management/Insurance and
Internal Audit departments.
• Long Term Equity Compensation. A number of factors mitigate risks inherent in long-term equity
compensation, specifically the vesting period for stock options and restricted stock unit grants,
which we believe causes our executives to focus on long term achievements and on building
stockholder value.
We believe that our compensation policies for employees generally throughout our organization are not
reasonably likely to have a material adverse effect on our company. From time to time a limited number of key
managers are eligible to receive stock options and/or restricted stock units in varying amounts based on the
judgment of the Compensation Committee. However, all awards are subject to years long vesting periods.
Elements of Our Executive Compensation Programs
To promote the objectives described above, our executive compensation programs consist of the following
principal elements:
• Base salary;
• Non-equity incentive cash compensation, referred to for discussion purposes as bonuses;
• Stock–based incentives and
• Benefits, perquisites and other compensation.
The Committee does not maintain formal policies for specifically allocating compensation among current
and long-term compensation or among cash and non-cash compensation elements. Instead, the Committee
maintains flexibility and adjusts different elements of compensation based upon its evaluation of the Company’ s key
compensation goals set forth above. The Company does not have a formal policy regarding internal pay equity.
Base Salary - Salary levels are subjectively determined based on individual and Company performance as
well as an objective assessment of prevailing salary levels for comparable companies, derived from widely available
published reports of the average of prevailing salary levels for comparable companies (based on industry, revenues,
number of employees, location and similar factors) in the Company’ s geographic region. Such reports do not
identify the component companies. Each of Mr. Reinhold’ s and Mr. Fiorentino’ s minimum salary is set pursuant to
his respective employment agreement.
Cash Bonuses - Incentive cash compensation of the Company’ s NEO’ s under the 2010 NEO Cash Bonus
Plan described below (and implemented under our 2010 Long Term Incentive Plan, described below) is based
primarily upon an evaluation of Company performance as it relates to three general business areas:
• Operational and Financial Performance (utilizing standard metrics such as net sales, operating income,
consolidated net income, earnings before interest and taxes (“EBIT”), gross margin, operating margin,
earnings per share, working capital, return on invested capital, stockholder equity and peer group
comparisons);