Logitech 2010 Annual Report Download - page 104

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OTHER COMPENSATION POLICIES
Derivatives
We do not permit any Company insiders, including officers and directors, to trade in puts, calls, warrants or
other derivative Logitech securities traded on an exchange or in any other organized securities market.
Recovery of compensation for restatements and misconduct
In June 2010 the Compensation Committee adopted a policy regarding the recovery of compensation paid to an
executive officer or the principal accounting officer of the Company. Under the terms of the policy we may recover
bonus amounts, equity awards or other incentive compensation awarded or paid within the prior three years to a
covered officer if the Compensation Committee determines the compensation was based on any performance goals
that were met or exceeded as a result, in whole or in part, of the officer’s fraud or misconduct, or the officer knew
at the time of the existence of fraud or misconduct that resulted in performance goals being met or exceeded, and a
lower amount would otherwise have been awarded or paid to the officer. In addition, under the policy Logitech may
recover gains realized on the exercise of stock options or on the sale of vested shares by an executive officer or the
principal accounting officer if, within three years after the date of the gains or sales, Logitech discloses the need for
a significant financial restatement, other than a financial restatement solely because of revisions to US GAAP, and
the Compensation Committee determines that the officer’s fraud or misconduct caused or partially caused the need
for the restatement, or the covered officer knew at the time of the existence of fraud or misconduct that resulted in
the need for such restatement.
In addition, our 2006 Stock Incentive Plan and our Management Performance Bonus Plan provide that awards
under the plans are suspended or forfeited if the plan participant, whether or not an executive officer:
• has committed an act of embezzlement, fraud or breach of fiduciary duty;
• makes an unauthorized disclosure of any Logitech trade secret or confidential information; or
• induces any customer to breach a contract with Logitech.
Any decision to suspend or cause a forfeiture of any award held by an executive officer under the 2006 Stock
Incentive Plan or the Management Performance Bonus Plan is subject to the approval of the Board of Directors.
Additional tax considerations
U.S. Tax Code Section 162(m)
We are limited by Section 162(m) of the U.S. Tax Code to a deduction for U.S. federal income tax purposes
of up to $1,000,000 of compensation paid to our CEO and any of our three most highly compensated executive
officers, other than our Chief Financial Officer, in a taxable year. Compensation above $1,000,000 may be
deducted if, by meeting certain technical requirements, it can be classified as “performance-based compensation.”
The Compensation Committee considers the implications of Section 162(m) of the U.S. Tax Code in setting and
determining executive officer long-term equity incentive award grants and in setting short-term cash incentive
award compensation.
The Logitech International S.A. 2006 Stock Incentive Plan approved by our shareholders in 2006 permits
certain grants of awards under that plan to qualify as “performance-based compensation.” Bonuses paid to executives
under the Logitech Management Performance Bonus Plan may similarly qualify under Section 162(m). However, the
bonuses earned in fiscal year 2010 did not qualify under Section 162(m) because the general economic uncertainty
led to a delay in setting performance targets. Although the Compensation Committee uses the requirements of
Section 162(m) as a guideline, deductibility is not the sole factor it considers in assessing the appropriate levels and
types of executive compensation and it will elect to forego deductibility when the Committee believes it to be in the
best interests of the Company and its shareholders.