Logitech 2006 Annual Report Download - page 50

Short-Term Incentives
A significant portion of Logitech’s executive cash compensation is variable. The Chairman and the CEO are
eligible for annual bonus incentives based on the financial goals of the entire Company as established by the
Board. Executive Officers, other than the Chairman and the CEO, are eligible for semi-annual bonuses based on
achieving pre-determined financial goals of the Company and/or pre-determined financial goals of the division or
regional entity over which the Executive has responsibility. The bonus plans include a basic reward for achieving
minimum performance targets and an upside for performance exceeding target expectations. The Board of
Directors may authorize additional cash bonus payments based on outstanding performance. The Compensation
Committee reviews and recommends to the Board the bonus targets for each Executive Officer in advance of
each fiscal year.
Long-Term Incentives
Logitech provides for stock option grants as part of its executive compensation package. It does so because
it believes that a portion of executive compensation should be linked to increasing shareholder value. Stock
options have value for an employee only if the Company’s share price increases above the exercise price of the
option and the employee remains employed by the Company for the duration of the option vesting period. As
with base salary, the stock options granted to Executive Officers are reviewed and recommended to the Board by
the Compensation Committee based on grant levels for comparable positions in the industry, individual
performance and the anticipated value of the Executive Officer’s future contribution to the Company.
Executive Officers are also eligible to participate in the Company’s Employee Share Purchase Plan, under
which employees may purchase registered shares with up to 10% of their earnings at the lower of 85% of the fair
market value at the beginning or the end of each offering period. There are two offering periods, each consisting
of a six-month period during which payroll deductions of employee participants are accumulated under the share
purchase plan.
The Chief Executive Officer is not present at any deliberations or upon the vote of the Board to approve his
salary or equity compensation.
Non-Executive Director Compensation
The compensation of Logitech’s non-executive Directors is established by the Board Compensation
Committee (refer to section 3.5 above). The Board Compensation Committee reviews aggregate data on
non-executive Director compensation of comparable companies in setting compensation for Logitech’s
non-executive Directors.
Under the Company’s current policy, each non-executive Director receives options to purchase 30,000 of
the Company’s registered shares upon their election to the Board and options to purchase 15,000 registered
shares upon their re-election to the Board. These options are granted at the fair market value at the date of grant
and become exercisable over 3 years in equal annual increments. In addition, non-executive Directors are paid an
annual retainer of $25,000, or CHF 35,000 and receive $2,000, or CHF 2,500 for each board or committee
meeting attended and also for each day of travel to attend board or committee meetings. All Directors are
reimbursed for expenses in connection with attendance at Board and Committee meetings.
Executive Directors do not receive any compensation for their service on the Board of Directors.
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