ADSK » Topics » Description of the Executive Incentive Plan

This excerpt taken from the ADSK DEF 14A filed May 16, 2005.

Description of the Executive Incentive Plan


The following paragraphs provide a summary of the principal features of the Incentive Plan. This summary does not purport to be complete and is subject to, and qualified in its entirety by, the provisions of the Incentive Plan, which is attached hereto as Appendix D. Capitalized terms used herein and not defined shall have the meanings set forth in the Incentive Plan.


Eligibility. Participants in the Incentive Plan are executive officers and key employees who are chosen solely at the discretion of the Compensation and Human Resources Committee. As of April 14, 2005, there were six persons chosen to participate for fiscal year 2006, all of whom are executive officers. Because our executive officers are eligible to receive awards under the Incentive Plan, our executive officers have an interest in this proposal. No person is automatically entitled to participate in the Incentive Plan in any Incentive Plan year. Autodesk may also pay discretionary bonuses, or other types of compensation, outside of the Incentive Plan.


Purposes. The purposes of the Incentive Plan are to motivate the participants to achieve goals relating to the performance of Autodesk or one of its business units or other objectively determinable goals and to reward them when those objectives are satisfied, thereby increasing stockholder value and the success of Autodesk by motivating executives to perform to the best of their abilities and to achieve Autodesk’s objectives. If certain requirements are satisfied, bonuses issued under the Plan may qualify as deductible “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).


Administration. The Incentive Plan will be administered by the Compensation and Human Resources Committee, consisting of no fewer than two members of the Board.


Determination of Awards. Under the Incentive Plan, participants will be eligible to receive awards based upon the attainment and certification of certain performance criteria established by the Compensation and Human Resources Committee. The performance criteria the Compensation and Human Resources Committee may choose from may include one or more of the following: annual revenue; cash position; earnings per share; net income; operating cash flow; operating margins; operating income; return on assets; return on equity; return on sales; total stockholder return; or other performance objectives.


The performance criteria may be based on absolute target numbers or growth in one or more such categories compared to a prior period, and may differ for each participant. The measures that constitute performance criteria may, at the discretion of the Compensation and Human Resources Committee, be based on pro forma numbers excluding extraordinary or one-time expenses or credits, such as restructuring expenses, extraordinary tax events, stock option expensing or the like. The performance measures may also, as the Committee specifies, either include or exclude the effect of payment of the bonuses under the Incentive Plan or any other bonus plan of the



Company. Performance criteria may apply to Autodesk or to one of our business units. Any other performance objectives must relate to an objective that is objectively determinable within the meaning of Code Section 162(m).


Our Compensation and Human Resources Committee may provide that attainment of a performance goal shall be measured by adjusting the evaluation of performance goal performance to exclude (i) any extraordinary non-recurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial conditions and results of operations appearing in our annual report to stockholders for the applicable year, or (ii) the effect of any changes in accounting principles affecting Autodesk’s or a business unit’s reported results.


Our Compensation and Human Resources Committee retains the discretion to reduce or eliminate any award that would otherwise be payable pursuant to the Incentive Plan.


For our 2006 fiscal year, the Compensation and Human Resources Committee granted target awards under the Incentive Plan to each executive officer, including the CEO, based on revenue growth and operating margin goals. These 2006 fiscal year bonuses are intended to qualify as deductible “performance-based” compensation under Code Section 162(m). However, if our stockholders do not approve the Incentive Plan at the Annual Meeting these bonuses will not be paid, even if the milestones are achieved, and the Incentive Plan will automatically expire.


Payment of Awards. All awards will be paid in cash as soon as is practicable following determination of the award, unless the Compensation and Human Resources Committee chooses to defer the payment of awards, as it determines, in its discretion, is necessary or desirable to preserve the deductibility of such awards under Code Section 162(m).


Maximum Award. The amounts that will be paid pursuant to the Incentive Plan are not currently determinable. The maximum bonus payment that any participant may receive under the Incentive Plan in any of our fiscal years is $4,000,000.


Amendment and Termination. The Compensation and Human Resources Committee may amend, modify, suspend or terminate the Incentive Plan, in whole or in part, at any time and in any respect, including the adoption of amendments deemed necessary or desirable to correct any defect or supply omitted data or to reconcile any inconsistency in the Incentive Plan or in any award granted thereunder. Any such amendment, modification, suspension or termination may be made without the consent of any affected participant. However, in no event may such amendment or modification result in an increase in the amount of compensation payable pursuant to any award under the Incentive Plan.


Indemnification. Our Board of Directors and Compensation and Human Resources Committee are generally indemnified by Autodesk for any liability arising from claims relating to the Incentive Plan.


Federal Income Tax Consequences. Under present federal income tax law, participants will recognize ordinary income equal to the amount of the award received in the year of receipt. That income will be subject to applicable income and employment tax withholding by Autodesk. If and to the extent that the Incentive Plan payments satisfy the requirements of Section 162(m) of the Code and otherwise satisfy the requirements for deductibility under federal income tax law, the Company will receive a deduction for the amount constituting ordinary income to the participant.


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