PHTN » Topics » Who determines executive compensation? What is the role of management?

This excerpt taken from the PHTN DEF 14A filed Jan 28, 2008.
Who determines executive compensation? What is the role of management?
Our executive compensation program is overseen and administered by the Compensation Committee, which is comprised entirely of independent directors as determined in accordance with various NASDAQ, Securities and Exchange Commission and Internal Revenue Code rules. The Compensation Committee operates under a written charter adopted by our Board. In some cases, the Compensation Committee reviews specific aspects of our program and recommends action be taken by the full Board.
The Compensation Committee has the authority to engage its own outside advisors to assist in carrying out its responsibilities and has done so for fiscal 2008. During fiscal 2007, Meyercord and Associates was retained by Photon Dynamics as a compensation consultant to review the competitiveness of our compensation elements.
The Compensation Committee also works with members of management as it deems appropriate. For example, the Chief Executive Officer recommends payments to his direct reports as well as reports on their individual performance achievement, which the Committee feels is appropriate because the CEO has the most


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direct knowledge about these executives’ performance. However, the CEO and other members of management and HR recommend types of compensation, based on their interactions with employees, experience in the market and/or discussions with our consultant. The Compensation and Benefits Group in Photon Dynamics’ Human Resources Department supports the Compensation Committee in its work and in some cases acts at the direction of the Compensation Committee to fulfill various functions in administering Photon Dynamics’ compensation programs.
In summary, it is the opinion of the Compensation Committee that the executive compensation policies and plans adopted by Photon Dynamics provide a balanced and reasonable remuneration program that properly aligns our performance and the interest of our shareholders with competitive and equitable executive compensation over the short-term and long-term.
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