Vistaprint 2009 Annual Report Download - page 126

PROPOSAL 4—APPROVAL OF OUR PERFORMANCE INCENTIVE PLAN FOR
COVERED EMPLOYEES
In the opinion of our Supervisory Board, our future success depends, in large part, on our ability to attract
and retain those members of the management team who contribute to our success. In September 2009, our
Supervisory Board adopted, subject to shareholder approval, the Vistaprint N.V. Performance Incentive Plan for
Covered Employees, or the Performance Incentive Plan. The purpose of the Performance Incentive Plan is to
promote the long-term interests of Vistaprint and its shareholders by providing additional incentive for
participants to contribute to improving our operating results. The Performance Incentive Plan is also intended to
reward outstanding performance on the part of those individuals whose decisions and actions most significantly
affect our long-term growth, profitability and efficient operation.
The Performance Incentive Plan seeks to align the interests of participants with the interests of our
shareholders by providing for the payment of bonuses based on specific performance criteria that are designed to
increase long-term shareholder value. We are asking for your approval of the Performance Incentive Plan,
including the performance criteria described in the Performance Incentive Plan, because shareholder approval
will allow Vistaprint to take a U.S. income tax deduction under Section 162(m) of the United States Internal
Revenue Code, or the Code, for amounts paid under the Performance Incentive Plan to our covered employees.
In addition, we expect that granting awards under this Performance Incentive Plan will allow us to reduce the
amount of equity compensation that we would otherwise grant to participants in this plan. The Supervisory Board
believes that the Performance Incentive Plan is in the best interest of Vistaprint and its shareholders and
recommends that shareholders vote for the proposal to approve the Performance Incentive Plan.
The Performance Incentive Plan authorizes our Compensation Committee to grant cash incentive awards to
“covered employees” within the meaning of Section 162(m) of the Code, which term includes our Chief
Executive Officer and our three other highest compensated executive officers. Although our Chief Financial
Officer is not considered a “covered employee” under the Code, the Performance Incentive Plan also authorizes
the Compensation Committee to grant cash incentive awards to the Chief Financial Officer and any other key
employees that the Compensation Committee may designate from time to time. Previously, we adopted annual
incentive plans that established the terms of annual cash bonuses paid to executive officers. The Performance
Incentive Plan will replace these annual incentive plans and will allow the Compensation Committee to grant
awards that would be based on one or more performance cycles. The Compensation Committee is currently
contemplating issuing two types of awards to eligible participants under the Performance Incentive Plan, with
one award providing for cash bonuses based on annual performance over a one-year period and a second award
providing for cash bonuses to be based on performance over a multiple-year period. Beginning in fiscal 2010, the
Compensation Committee plans to make incentive targets and bonus payments to such personnel in accordance
with the Performance Incentive Plan.
Tax Issues
Section 162(m) of the Code limits the deductibility of compensation of “covered employees” to $1 million
per year. However, the deduction limit does not apply to amounts paid under a “performance-based plan” that
complies with specific rules under Section 162(m) of the Code. In general, compensation qualifies as being made
from a performance-based plan only if it satisfies each of the following four requirements:
• the compensation is payable on the attainment of one or more pre-established, objective performance
criteria;
• the performance criteria are established by a committee comprising solely two or more outside directors;
• the material terms of the compensation and performance criteria are disclosed to and approved by
shareholders before payment; and
• the committee that established the performance criteria certifies that the performance criteria have been
satisfied before payment.
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