Logitech 2012 Annual Report Download - page 143

In addition to considering the tax consequences, the Compensation Committee considers the accounting
consequences, including the impact of the Financial Accounting Standard Board’s Accounting Standards
Codification Section 718, on its decisions in determining the forms of different equity awards.
COMPENSATION BELOW THE EXECUTIVE LEVEL
Similar to Logitech’s executive compensation programs, Logitech’s compensation for its employees below the
level of executive officer have been designed to attract, retain and motivate the skilled employees that are essential
to Logitech’s success. However, one essential difference between compensation of executives and for employees
below the executive level is that, for employees below the executive level, short-term incentives in the form of cash
bonuses or profit sharing and long-term equity incentive awards comprise a smaller portion of the employee’s total
target compensation. This means there is less total compensation at risk for non-executive employees based on the
Company’s performance, while also meaning, similarly, that there is less potential for increased compensation from
superior Company performance.
Components – Non-Executive Compensation
The key components of Logitech’s compensation for employees below the executive level are as follows:
Base salary. Base salary is set to reward employees’ current contributions to Logitech and compensate
them for their expected day-to-day service.
Short-term cash incentives. Logitech has a bonus program for employees at the director level or above,
a profit-sharing program for employees below the director level, and, for sales personnel, sales commission plans.
All professional staff other than sales personnel participate in the bonus program or the profit sharing program.
The potential target compensation from the bonus and profit sharing programs is established as a percentage of the
employee’s annual base salary. The potential target compensation for sales personnel under sales commission plans
is set on the basis of their sales quotas.
Long-term equity incentive awards. Approximately one-third of the Company’s professional staff
receives long-term equity incentive awards, in the form of RSUs. Eligible employees at the level of Vice-President
or above also receive PSUs. In addition, full-time professional staff, in countries where Logitech is able to offer the
program, are eligible to participate in the Company’s employee share purchase plans, which allow eligible employees
to purchase Logitech shares at a 15% discount from the market price of Logitech’s shares at the beginning or end
of each six-month offering period.
Health and welfare, and other local benefits. Health and welfare and other local benefits are offered to
employees based on the market practices and local law requirements of the various jurisdictions in which employees
are based. In a limited number of jurisdictions we offer defined benefit or defined contribution pension plans or
required severance benefits for employees.
Compensation Philosophy – Non-Executive Compensation
The key features of Logitech’s compensation philosophy for employees below the executive level are
as follows:
• Base salary should be at approximately the median for comparable companies in the industry and in the
region where the employee is based.
• The total level of at-risk compensation should increase with the level of the employee, to reflect the
relative impact of the employee on the Company’s performance.
• High-performing employees should receive significantly higher potential compensation in the form of
equity incentive awards in order to help retain and motivate these employees.
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