Dell 2006 Annual Report Download - page 132

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Table of Contents
results. The peer group used to evaluate executive pay practices at the beginning of Fiscal 2007 consisted of the following
23 companies:
• Advanced Micro Devices, Inc.
• Apple Inc.
• Applied Materials Inc.
• Best Buy Co., Inc.
• CDW Corp.
• Cisco Systems Inc.
• Citigroup Inc.
• Computer Sciences Corp.
• Electronic Data Systems Corp.
• EMC Corp.
• General Electric Company
• Hewlett Packard Co.
• Home Depot Inc.
• Honeywell International Inc.
• Intel Corp.
• International Business Machines Corp.
• Johnson & Johnson
• Lexmark International Inc.
• Microsoft Corp.
• Oracle Corp.
• Procter & Gamble Co.
• Texas Instruments Inc.
• Wal Mart Stores Inc.
Because only four of the above comparable companies employ full-time, non-CEO, Chairman of the Board positions, the
Leadership Development and Compensation Committee included additional data from other large global general industry
companies to evaluate market pay practices for Mr. Dell, who held such a position at Dell for most of Fiscal 2007.
Specifically, the comparator group for the Chairman position consisted of 12 companies with annual revenues of at least
$10 billion, as follows:
• Anheuser-Busch Companies Inc.
• Best Buy Co., Inc.
• Citigroup Inc.
• Coca-Cola Company
• ConocoPhillips Company
• Costco Wholesale Corporation
• D R Horton, Inc.
• Kroger Co.
• Oracle Corp.
• Pulte Homes Inc.
• The Travelers Companies Inc.
• Texas Instruments Inc.
Market Positioning — The Leadership Development and Compensation Committee targets base salary and benefits at the
median of competitive market practices and variable compensation (annual incentives and the grant value of long-term
incentives) at the 75th percentile of the market for each component. The committee believes that above-average overall pay
positioning will allow us to attract and retain the appropriate level of executive talent while appropriately rewarding high
performance through stretch performance objectives. The actual target compensation for each individual executive may be
higher or lower than the targeted market position based on such factors as individual skills, experience, contribution and
performance, internal equity, or other factors that the committee may take into account that are relevant to the individual
executive. In addition, actual compensation results (e.g., amounts earned and paid each year) may be higher or lower than
target based on corporate, regional/business unit, and individual performance.
Individual Compensation Components
Base Salary
Design — Our philosophy is that base salaries should meet the objectives of attracting and retaining the executive officers
needed to run the business. The base salaries are targeted at market median levels, although each executive officer may
have a base salary above or below the median of the market. Actual individual salary amounts are not objectively
determined, but instead reflect the committee's judgment with respect to each executive officer's responsibility, performance,
experience, and other factors, including any retention concerns, the individual's historical compensation, and internal equity
considerations. During Fiscal 2007, the Leadership Development and Compensation Committee relied significantly on the
input and recommendations of Mr. Dell as Chairman and Mr. Rollins as Chief Executive Officer when evaluating factors
relative to the other executive officers in order to approve salary adjustments.
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