Logitech 2011 Annual Report Download - page 117

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Severance and related benefits
All named executive officers are eligible to receive benefits under certain conditions in accordance with
Logitech’s Change of Control Severance Agreement (Change of Control Agreement), as described in the section
“Potential Payments Upon Termination or Change in Control.”
The purpose of the Change of Control Agreements is to support retention in the event of a prospective change
of control. Should a change of control occur, benefits will be paid after a “double trigger” event - meaning that there
has been both a change of control, and the executive is terminated without cause or resigns for good reason within
12 months thereafter - as described in “Potential Payments Upon Termination or Change in Control.” Other than in
the case of the Change of Control Agreement for Mr. Quindlen, benefits are capped at the amounts prescribed under
Sections 280G and 4999 of the U.S. Tax Code and Logitech does not provide payments to reimburse its executive
officers for additional taxes incurred (also known as “gross-ups”) in connection with a change of control.
The Change of Control Agreement with Mr. Quindlen, which was executed in 2008, provided a tax gross-up
to reimburse him for any additional taxes incurred under Section 280G of the U.S. Tax Code in connection with
a change of control. This additional benefit was provided to Mr. Quindlen to be competitive with terms for other
CEOs at the time the agreement was approved.
In addition, under Mr. Quindlen’s employment agreement and Mr. Heid’s offer letter, if their employment
is involuntarily terminated without cause they are entitled to their base salary and target bonus as described in
“Potential Payments Upon Termination or Change in Control.” The term in Mr. Quindlen’s agreement is intended
to provide consideration for his service to Logitech and the potential length of time until subsequent employment
is secured if he is involuntarily terminated without cause. The term in Mr. Heid’s offer letter was the result of
negotiations of the terms of his employment when he joined Logitech.
The PSU and RSU award agreements for named executive officers other than Guerrino De Luca provide for
the acceleration of vesting of the RSUs and PSUs subject to the award agreements under the same circumstances
and conditions as under the Change of Control Agreements; namely, if the named executive officer is subject to an
involuntary termination within 12 months after a change of control because his or her employment is terminated
without cause or the executive resigns for good reason. In the event of such an involuntary termination:
• AllsharessubjecttotheRSUswillvest.
• 100%ofthesharessubjecttothePSUswillvestifthechangeofcontroloccurredwithin1yearafter
the grant date of the PSUs. If the change of control occurred more than 1 year after the grant date of
the PSUs, the number of shares subject to the PSU that will vest will be determined by applying the
performance criteria under the PSUs as if the performance period had ended on the date of the change
of control.
To determine the level of benefits to be provided under each change of control agreement and other agreements,
the Committee considered the circumstances of each type of severance, the impact on shareholders, and market
practices.
Perquisites
Logitech’s executive officer benefit programs are substantially the same as for all other eligible employees
except as set out below.
Mr. Quindlen was provided with personal tax preparation services in fiscal year 2011. Expenses related to
these services were imputed as income to Mr. Quindlen and the additional tax liabilities were paid by Logitech as
a gross-up payment. In addition, Mr. Quindlen received the use of a car and the payment of travel costs generated
when he was working out of our California office. These benefits were provided in lieu of relocating Mr. Quindlen
from his current residence. Logitech did not provide any related tax gross-up for these car and travel benefits. The
aggregate amount of Mr. Quindlen’s benefits is reflected in the Summary Compensation Table below under the
heading “All Other Compensation.”