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This excerpt taken from the LLTC DEF 14A filed Sep 23, 2008. Compensation Components The Company has a comprehensive compensation program, which consists of cash compensation, both fixed and variable, and equity-based compensation. The program has five principal and two additional components, which are intended to attract, retain, motivate and reward executive officers who are expected to manage both the short-term and long-term success of the Company. These components are:
15 Under the Compensation Committee’s supervision, the Company has selected these elements because each is considered useful and necessary to meet one or more of the principal objectives of the Company’s compensation policy. For instance, base salary is set with the goal of attracting talented and qualified people to be executive officers and adequately compensating and rewarding them on a day-to-day basis for the time spent, the services they perform and the skills and experience they bring to the Company. Equity incentives, on the other hand, are geared toward providing an incentive and reward for the achievement of long-term business objectives and thus toward retaining key talent. In setting compensation levels for a particular executive officer, the Company takes into consideration each element of the proposed compensation package, as well as the executive officer’s past and expected future contributions to the Company. The Company believes that these elements of compensation, when combined, are effective, and will continue to be effective, in achieving the objectives of its compensation program. However, the Company strongly believes in engaging and retaining the best talent in critical functions, and this may entail negotiations with individuals who have significant compensation packages with current or other potential employers. In order to enable the Company to hire and retain talented executive officers, the Compensation Committee may therefore determine that it is in the best interests of the Company to negotiate packages that may deviate from the Company’s standard practices when such deviation is required by competitive or other market forces. Base Salary - A competitive base salary is provided to each executive officer to recognize the skills and experience the individual brings to the Company and the day-to-day performance contributions he or she makes. Base salary is predicated on performance judgments as to the past and expected future contribution of the individual executive officer. In general, salary increases are made based on cost of living increases and, if appropriate, changes in responsibilities. Base salaries for each of the Named Executive Officers are reflected in the column labeled “Salary” of the Summary Compensation Table on page 20. Profit Sharing - Consistent strong profitability is a major objective of the Company. All employees affect the Company’s success in meeting this objective. To reinforce success, the Company funds a profit sharing program for eligible employees. Amounts paid under the profit sharing program are typically a meaningful portion of each eligible employee’s total compensation. Profit sharing payments are distributed semi-annually to all eligible employees, including executive officers, from a profit sharing pool. The amount of the pool is largely determined by the magnitudes of sales and operating income for the six-month period. This pool is distributed to all eligible employees based on the ratio of their individual salary to total salaries for all eligible employees. Executive officers participate in the same way as other employees. For all eligible U.S. employees, a portion of this profit sharing is paid directly into a 401(k) retirement plan. Bonuses - Employees with significant leadership roles or who are technically accomplished have a greater impact on the Company’s growth and profitability objectives. These employees participate in a discretionary key employee incentive pool, pursuant to which executive officers and a limited number of key employees may receive semi-annual cash bonuses. Targets for sales growth and operating income as a percentage of sales influence the size of the pool. Individual payments are made based on the Company’s achievement of these targets and upon the individual’s personal and departmental performance. Bonus amounts are very dependent on corporate performance and therefore can vary significantly year to year. For example, in fiscal year 2008 operating income as a percent of sales in excess of 48% and revenue growth of 8.5% had a positive impact on the pool. In 1996, the Company adopted the Senior Executive Bonus Plan to facilitate, under Section 162(m) of the Internal Revenue Code, the federal income tax deductibility of compensation paid to the Company’s most highly compensated executive officers. In each of 2000 and 2005, the Company’s stockholders approved the 16 continuance of the plan for an additional five years. In fiscal 2008, the participants included Messrs. Swanson, Maier, Coghlan, Dobkin and Paulus. In fiscal 2009, the plan will include the Executive Chairman, Chief Executive Officer and each of the Company’s three other most highly compensated executive officers. The maximum amount payable to any individual in any one year under the plan is $5 million. Stock Options - Stock options have historically been granted periodically to provide additional incentive to executive officers and other key employees to work to maximize long-term total return to stockholders. During fiscal years 2007 and 2008 the Company did not grant any stock options to executive officers. Historically, stock option grants generally vested over a five-year period to encourage option holders to continue in the employment of the Company. The size of stock option grants depended on position, experience, performance and the number of outstanding options already held by the individual. For executive officers, stock options were generally granted on a five quarter rotation. Therefore, an executive officer with longevity with the Company may have options vesting at four times during a given year. Whereas profit sharing and bonuses reward execution for annual performance with respect to corporate goals, stock options are designed to reward longer term objectives, such as the overall effectiveness of basic corporate strategy. If the Company were to grant stock options to executive officers in the future, the stock option grants would generally be approved at the Company’s quarterly Board of Director meetings. The pricing of the Company’s stock options would occur on the Thursday following the Board of Director’s quarterly meeting. The pricing of the Company stock options is determined by the Company’s fair market value of its common stock on the date of grant (which is equal to the closing price of the common stock on the date of grant, as determined by Nasdaq). Restricted Stock - During fiscal 2005, the Company implemented a restricted stock program. Under the terms of the program, the Company grants certain employees, including executive officers, restricted stock with a per share purchase price equal to the par value of the Company’s common stock, which is $0.001 per share. Upon grant, participants receive shares of restricted stock that are subject to a right of reacquisition in favor of the Company that lapses annually, currently over a five-year period from the date of grant. Participants are entitled to receive dividends on the shares of restricted stock during the vesting period. The restricted stock program was implemented to encourage employee retention. For executive officers, restricted stock is generally granted on a five quarter rotation. Currently, the Company believes that restricted stock awards are a better way to provide equity compensation to employees because currently restricted stock provides more predictable long-term rewards than stock options. The Company views equity awards as essential in hiring and retaining professional talent and in directing the efforts of these key employees to maximize long-term total return to stockholders. In granting stock-based awards going forward, the Company will attempt to attract and retain key employees, while being cognizant of the effects such grants will have on charges to its income statement. Depending on both the performance of the Company’s common stock and the hiring environment in the Company’s industry, the Company may grant stock options, restricted stock, restricted stock units, stock appreciation rights or other awards as deemed appropriate to meet its employment and financial performance objectives. In fiscal year 2008 the Company primarily granted restricted stock and restricted stock units. The Company generally grants stock four times a year at the Company’s quarterly Board of Director meetings. The pricing of the Company’s stock grants generally occurs on the Thursday following the Board of Director’s quarterly meeting. The pricing of the Company stock grants is determined by the Company’s fair market value of its common stock on the date of grant (which is equal to the closing price of the common stock on the date of grant, as determined by Nasdaq). 17 Health and Retirement Benefits - The Company’s executive officers are eligible to receive the same health benefits that are available to other employees and a contribution toward their benefits premium that is the same as provided to other employees. The Company maintains for its US-based employees a tax-qualified 401(k) plan, which provides for broad-based employee participation. As part of the Company’s profit sharing plan discussed above, a portion of the semi-annual profit sharing is paid directly into the 401(k) plan. The 401(k) plan contributions are included in the column labeled “All Other Compensation” in the Summary Compensation Table on page 20. Perquisites - While the Company seeks to offer a level of perquisites sufficient to recruit and retain key executive talent, the Company believes that setting appropriate levels of base and variable pay are of greater importance to motivating key talent and increasing stockholder return than any package of non-cash perquisites. The Company has a fractional ownership in two different aircrafts operated by NetJets, Inc. So long as Mr. Swanson is Executive Chairman of the Board, he is entitled to use the Company’s airplane for personal use for up to 35% of the available flight time in any year. To the extent use of the airplane results in imputed taxable income to Mr. Swanson, the Company makes additional payments to him, so that the net effect to Mr. Swanson is the same as if no income were imputed to him. The personal use of the airplane is included in the column labeled “All Other Compensation” in the Summary Compensation Table on page 20. There are no other significant recurring perquisites granted to any executive officers. This excerpt taken from the LLTC DEF 14A filed Sep 26, 2007. Compensation Components The Company has a comprehensive compensation program, which consists of cash compensation, both fixed and variable, and equity-based compensation. The program has five principal and two additional components, which are intended to attract, retain, motivate and reward executive officers who are expected to manage both the short-term and long-term success of the Company. These components are:
13 Under the Compensation Committee's supervision, the Company has selected these elements because each is considered useful and necessary to meet one or more of the principal objectives of the Company’s compensation policy. For instance, base salary is set with the goal of attracting executive officers and adequately compensating and rewarding them on a day-to-day basis for the time spent, the services they perform and the skills and experience they bring to the Company. Equity incentives, on the other hand, are geared toward providing an incentive and reward for the achievement of long-term business objectives and retaining key talent. In setting compensation levels for a particular executive officer, the Company takes into consideration each element of the proposed compensation package, as well as the executive officer's past and expected future contributions to the Company's business. The Company believes that these elements of compensation, when combined, are effective, and will continue to be effective, in achieving the objectives of its compensation program. However, the Company strongly believes in engaging and retaining the best talent in critical functions, and this may entail negotiations with individual executives who have significant compensation packages with current or other potential employers. In order to enable the Company to hire and retain talented executive officers, the Compensation Committee may therefore determine that it is in the best interests of the Company to negotiate packages that may deviate from the Company's standard practices when such deviation is required by competitive or other market forces. Base Salary - A competitive base salary is provided to each executive officer to recognize the skills and experience the individual brings to the Company and the performance contributions he or she makes. Base salary is predicated on performance judgments as to the past and expected future contribution of the individual executive officer. In general, salary increases are made based on cost of living increases and, if appropriate, changes in responsibilities. Base salaries for each of the Named Executive Officers are reflected in the column labeled "Salary" of the Summary Compensation Table on page 18. Profit Sharing - Consistent strong profitability is an objective of the Company. All employees affect the Company's success in this objective. To reinforce success, the Company funds a profit sharing program for employees generally. Amounts paid under the profit sharing program are typically a meaningful portion of each eligible employee's total compensation. Profit sharing payments are distributed semi-annually to all eligible employees, including executive officers, from a profit sharing pool. The amount of the pool is largely determined by the magnitude of sales and operating income for the six-month period. This pool is distributed to all eligible employees based on the ratio of their individual salary to total salaries for all eligible employees. Executive officers participate in the same way as other employees. For all eligible United States employees, a portion of this profit sharing is paid directly into a 401(k) retirement plan. Bonuses - Employees with significant leadership roles or who are technically accomplished have a greater impact on the Company's growth and profitability objectives. These employees participate in a discretionary key employee incentive pool, pursuant to which executive officers and a limited number of key employees may receive semi-annual cash bonuses. Targets for sales growth and operating income as a percentage of sales influence the size of the pool. Individual payments are made based on the Company's achievement of these targets and upon the individual's personal and departmental performance. Bonus amounts are very dependent on corporate performance and therefore can vary significantly year to year. For example, in fiscal 2007 operating income as a percent of sales in excess of 47% had a positive impact on the pool, whereas flat revenue growth for the same period had a negative impact. In 1996, the Company adopted the Senior Executive Bonus Plan to facilitate, under Section 162(m) of the Internal Revenue Code, the federal income tax deductibility of compensation paid to the Company's most highly compensated executive officers. In each of 2000 and 2005, the Company's stockholders approved the continuance of the plan for an additional five years. In fiscal 2007, the participants included Messrs. Swanson, Maier, Coghlan, Dobkin and Paulus. In fiscal 2008, the plan will include the Executive Chairman, Chief Executive Officer and each of the Company's three other most highly compensated executive officers. The maximum amount payable to any individual in any one year under the plan is $5 million. 14 Stock Options - Stock options are granted periodically to provide additional incentive to executive officers and other key employees to work to maximize long-term total return to stockholders. The options generally vest over a five-year period to encourage option holders to continue in the employment of the Company. The size of stock option grants depends on position, experience, performance and the number of outstanding options already held by the individual. For executive officers, stock options are generally granted on a five quarter rotation. Therefore, an executive officer with longevity with the Company may have options vesting at four times during a given year. Whereas profit sharing and bonuses reward execution for annual performance with respect to corporate goals, stock options are designed to reward longer term objectives, such as the overall effectiveness of basic corporate strategy. Restricted Stock - During fiscal 2005, the Company implemented a restricted stock program. Under the terms of the program, the Company grants certain employees, including executive officers, restricted stock with a per share purchase price equal to the par value of the Company's common stock, which is $0.001 per share. Upon grant, participants receive shares of restricted stock that are subject to a right of reacquisition in favor of the Company that lapses annually, currently over either a three- or five-year period from the date of grant. Participants are entitled to receive dividends on the shares of restricted stock during the vesting period. The restricted stock program was implemented to encourage employee retention. The Company views equity awards as essential in hiring and retaining professional talent and in directing the efforts of these key employees to maximize long-term total return to stockholders. In granting stock-based awards going forward, the Company will attempt to attract and retain key employees, while being cognizant of the effects such grants will have on charges to its income statement. Depending on both the performance of the Company's common stock and the hiring environment in the Company's industry, the Company may grant stock options, restricted stock, restricted stock units, stock appreciation rights or other awards as deemed appropriate to meet its employment and financial performance objectives. Accordingly, in recent quarters the Company has granted primarily restricted stock. Health and Retirement Benefits - In fiscal 2007, the Company’s executive officers were eligible to receive the same health benefits that are available to other employees and a contribution to their benefit premium that is the same as provided to other employees. The Company maintains for its US-based employees a tax-qualified 401(k) Plan, which provides for broad-based employee participation. As part of the Company's profit sharing plan discussed above, a portion of the semi-annual profit sharing is paid directly into the 401(k) retirement plan. The 401(k) contributions are included in the column labeled "All Other Compensation" in the Summary Compensation Table on page 18. Perquisites - While the Company seeks to offer a level of perquisites sufficient to recruit and retain key executive talent, the Company believes that setting appropriate levels of base and variable pay are of greater importance to motivating key talent and increasing stockholder return than any package of non-cash perquisites. The Company has a fractional ownership in two different aircraft operated by NetJets, Inc. So long as Mr. Swanson is Executive Chairman of the Board, he is entitled to use the Company's airplane for personal use for up to 35% of the available flight time in any year. To the extent use of the airplane results in imputed taxable income to Mr. Swanson, the Company makes additional payments to him, so that the net effect to Mr. Swanson is the same as if no income were imputed to him. The personal use of the airplane is included in the column labeled "All Other Compensation” in the Summary Compensation Table on page 18. There are no other significant recurring perquisites granted to the executive officers. 15 | EXCERPTS ON THIS PAGE:
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