CompUSA 2010 Annual Report Download - page 34

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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 contained more than one performance goal, participants in the plan were entitled
to receive the portion of the target percentage allocated to the performance goal achieved. In the event that the
Company did not achieve at least the minimum performance goals established, no award payment would be made.
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
performance goals were based on the overall performance of the Company, and recognized business unit, team
and/or individual performance. The Compensation Committee had the discretion to reduce the amount payable to,
or to determine that no amount will be paid to, a participant. The 2009 Bonus Plan implemented for 2009 the
Executive Incentive Plan.
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 achievement is 70% or less of the financial
target. Increased bonuses (up to 400% of target bonus amount for this component) are payable on a pro rata basis
for achieving a financial goal amount in excess of the financial target amount, up to 150% of the financial target
amount.
In this regard, for each of Messrs. Richard, Robert and Bruce Leeds and Mr. Reinhold, the Compensation
Committee set short term financial targets based on comparing the Company’ s performance in achieving organic
sales growth, operating margin growth and return on invested capital growth to the performance of a peer group
comprised of the following public companies, including competitors of the Company, based on publicly available
information: Insight Enterprises Inc., PC Connection Inc., PC Mall Inc., Best Buy Co., Inc., Amazon.com, Inc.,
hhgregg, MSC Industrial Direct Co., Inc. and W.W. Grainger, Inc. These companies were selected because they
have one or more of the following attributes: business operations in the industries and markets in which the
Company participates, similar revenue and market capitalization, global scope of operations and/or diversified
product lines. Bonuses in respect of the peer group companies were set on a variable basis ranging from 50% of the
targeted bonus for this component (for underperforming the peer group) to up to 200% of the targeted bonus for this
component (for significantly overperforming the peer group). However, the Company does not utilize
benchmarking to establish bonus payment amounts for the Company’ s NEO’ s.
The award for Mr. Fiorentino under the 2009 Bonus Plan was based on (i) the Company’ s Technology
Products Group achieving certain earnings targets; (ii) the Company successfully implementing technology
enhancements in certain retail stores; and (iii) the successful implementation of certain management financial
reporting technology enhancements in 2009. The portion of the bonus attributable to the earnings target was
measured on a variable basis depending on the level of accomplishment. The award tied to the Technology Products