This excerpt taken from the HIBB DEF 14A filed May 2, 2007.
The Committee structured the total compensation program for executives to consist of the following components:
The Committee believes that a significant portion of the total compensation opportunity for executives should be allocated to cash bonuses and equity awards that are contingent on the achievement of pre-determined performance measures in order to align compensation with the interests of stockholders. Performance measures for management are based on company-wide targets as well as personal achievement, with a greater emphasis on company goals for more senior personnel.
Generally, our goal is to set executives salaries at a level that approximates the 25th percentile of comparable companies, but increase their contingent bonuses and equity awards so that the total compensation opportunity is at or above the 50th percentile. In some cases, an executives total compensation opportunity or the components of compensation may be above or below these target levels because of individual factors considered by the Committee.
Our long-term compensation for executives consists of equity awards such as options and restricted stock units. During fiscal 2007, the Committee generally allocated 70% of the long-term compensation for Vice Presidents and above to stock options and 30% to restricted stock units. This relatively high allocation to options reflects our historical equity award philosophy to emphasize leverage and alignment with the interests of our shareholders. For fiscal 2008, the Committee decided to award only restricted stock units in the annual employee award, which included executive officers. The restricted stock unit awards to executive officers contained performance criteria set by the Committee that must be achieved in fiscal 2008. The awards will cliff vest in five years. In addition, 50% of the award may accelerate to three year cliff vesting upon achievement of performance criteria set by the Committee. (See Future Planning on page 21.) The weighting between options and restricted stock units, as well as other elements of compensation, may be adjusted in the future as our compensation philosophy evolves.