Logitech 2012 Annual Report Download - page 123

COMPENSATION REPORT 2012
INTRODUCTION
This Compensation Report contains information on Logitech compensation philosophy and practices, the
background for decisions, and the results of decisions with respect to Logitech’s named executive officers and its
Board members.
This Compensation Report has been designed to comply with the proxy statement rules under U.S. securities
laws as well as Swiss regulations and best corporate governance practices. This Report is an integrated part of our
Annual Report, Invitation and Proxy Statement for our 2012 Annual General Meeting.
Compensation Discussion and Analysis
EXECUTIVE SUMMARY
During Fiscal Year 2012, Logitech faced multiple challenges including lower demand and sales execution
issues in our EMEA region, much lower than expected demand for Logitech Revue with Google TV, and a product
portfolio that was weaker than anticipated. While we addressed these issues as we progressed through the year, they
were the primary drivers of our disappointing full fiscal year performance, with sales essentially flat and major
year-over-year declines in our operating income and share price.
The following are key developments in fiscal year 2012 relating to compensation:
• Impact of Logitech’s Performance Against Expectations and Relative to Overall Market. When making
compensation decisions in both fiscal year 2012 and at the start of fiscal year 2013, the Compensation
Committee gave considerable weight to Logitech’s continued challenges in executing against our stated
financial plans as well as Logitech’s performance relative to the overall market and our compensation
peer group, as highlighted in “Compensation Elements” and other parts of this discussion below.
• Base Salary Actions. Given Logitech’s financial performance exiting fiscal year 2011, only two of our
executive officers received base salary increases for fiscal year 2012 – Mr. Bardman and Mr. Sullivan.
Given Logitech’s relative market performance for the whole of fiscal year 2012 and our executives’
salary position versus the market, only one executive officer, Mr. Bardman, received a base salary
increase for fiscal year 2013.
• No Bonus Plan Payouts. Based on Logitech’s failure to execute against our fiscal year 2012 plan, as
well as our disappointing performance relative to our overall industry, the Compensation Committee
elected not to provide any payouts for executive officers under our annual cash incentive bonus plan, the
Logitech Management Performance Bonus Plan, including those who were eligible to receive a payment
under the Bonus Plan.
• Reduced Equity Grants. When determining the size of the annual equity grants provided in fiscal
year 2012, the Compensation Committee had the expectation that our executive officers must build
Logitech’s value at a rate greater than the overall market for these particular grants to deliver value in
line with those of our compensation peer group companies. To reflect this, all executive officers, with
the exception of our Chairman, received smaller equity grants in fiscal year 2012.
ENGLISH
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