Logitech 2007 Annual Report Download - page 41

Base Salary
The base salary for Executive Officers is determined on the basis of experience, individual performance, the
average salary levels considered appropriate for comparable positions in the industry and the anticipated value of
the executive’s future contribution to Logitech. The Compensation Committee reviews these factors in approving
and recommending to the Board for ratification the Executive Officer’s base salary for each fiscal year.
For newly hired personnel, the base salary of the individual at his or her prior employment is considered, as
well as any unique personal circumstances that motivated the executive to leave that prior position and join
Logitech. In addition, consideration is given to the competitive market for corresponding positions within
comparable geographic areas and industries.
In addition to a base salary, and other than one-time relocation costs or benefits, Executive Officers are
eligible for the same benefits offered by the Company to non-executive employees in their jurisdiction of
residence.
Short-Term Incentives
A significant portion of Logitech’s executive cash compensation is variable. The Chairman and the Chief
Executive Officer are eligible for annual bonus incentives based on Logitech’s financial goals for the fiscal year
as established by the Board at the beginning of the fiscal year. Executive Officers other than the Chairman and
the Chief Executive Officer are eligible for semi-annual bonuses based on achieving pre-determined financial
goals of Logitech 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 additional
reward for performance exceeding target expectations. The Compensation Committee reviews and recommends
to the Board the bonus targets for each Executive Officer at the beginning of each fiscal year.
If earned, the annual bonus is paid to the Chairman and the Chief Executive Officer in one installment after
the end of the fiscal year, and the semi-annual bonuses are generally paid to the other Executive Officers in
November and May for the two fiscal six-month performance periods.
From time to time, the Board of Directors may authorize a special cash bonus payment separate from the
bonus plans based on outstanding individual performance.
Long-Term Incentives
Stock Options. At present, our long-term compensation to Executive Officers consists solely of stock
options. Logitech provides stock option grants as part of its executive compensation package 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.
Options granted to Executive Officers and employees vest 25% per year over four years, with no vesting
from the date of grant until the first anniversary, and thereafter vesting ratably at the end of each grant
anniversary.
The stock options granted to Executive Officers are approved by the Compensation Committee and ratified
by the Board. The number of options granted to each Executive Officer is determined based on the anticipated
value of the Executive Officer’s future contribution to the Company, grant levels for comparable positions in the
industry, individual performance and the anticipated cost to the Company of the grant under U.S. generally
accepted accounting principles.
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