This excerpt taken from the TECD DEF 14A filed Apr 30, 2009.
The total cash incentive amounts achieved for fiscal 2009 are stated in the SUMMARY COMPENSATION TABLE. The achievement level was certified by the Compensation Committee in March 2009. The targets were achieved in a range of 58% to 97%.
Equity Incentive AwardsIn March 2008, the Compensation Committee decided to award equity incentives in the form of RSUs for fiscal 2009. RSUs were chosen due to certain attractive qualities: creating a less dilutive effect on the shareholders, providing a straightforward accounting treatment and being perceived as having a greater value to the employee when the Companys growth rate is maturing or the share values are volatile. The RSUs granted are time based with a four-year vesting schedule. The time element meets the Compensation Committees desire to enable the executives to focus on long-term goals and to address retention issues. It is felt that RSUs offer the incentive for the NEOs to act to maximize share value as the RSUs have better value as the stock price rises.
The size of each NEO grant was determined individually by the Compensation Committee, based upon the effectiveness of each NEOs performance in the prior year, as well as an analysis of total annual earnings compared to the competitive market. The market data provided indicated that a three-year vesting schedule was the most common. However, the Compensation Committee decided to issue the grant with a four-year vesting, as this is consistent with using the equity award to emphasize long-term performance and as the primary element for retention.
CEO CompensationCompensation of the CEO position is reviewed by the Compensation Committee and recommended to the independent members of the Board for approval in executive session outside of the presence of the CEO. In March 2008, Mr. Dutkowsky received an increase in base salary of 4%; however, no salary increase will be given to Mr. Dutkowsky in fiscal 2010. Beginning with the 2009 fiscal year, there were no terms of Mr. Dutkowskys Employment Agreement effective October 2, 2006 (Employment Agreement) applicable to the cash incentive determination or dictating the type and size of equity grants. Mr. Dutkowskys cash incentive performance criteria selection, weightings and deceleration/acceleration schedule were set in concert with the other NEOs and are summarized above in At-Risk Incentive Pay. The Compensation Committee also granted Mr. Dutkowsky the same type of equityRSUswith four-year vesting as was granted to the other NEOs.
For a more detailed description of Mr. Dutkowskys terms of employment, the full Employment Agreement is included as Exhibit 10-AAnn to our October 31, 2006 Form 10-Q filed on December 6, 2006.
Executive Choice Program and PerquisitesIn line with our cost-conscious philosophy for executive compensation, the Company provides minimal perquisites and considers this not a significant component of the compensation package. The majority of perquisites are covered by our Executive Choice Plan, which plan and participants are approved by the Compensation Committee annually. The plan is designed to give executives the opportunity to select from a list of those types of benefits that meet their individual needs, including supplemental insurance premiums, uninsured health care expenses, professional services such as tax, legal, financial and estate planning, club memberships and personal or professional development expenses. The participating executive officer is reimbursed for expenses related to these benefits. Under this plan, Mr. Dutkowsky, Mr. Howells, Mr. Cano and Mr. Lamneck could receive total reimbursement up to $20,000 each, and Mr. Osbourn could receive total reimbursement up to $15,000.
Severance PlanThe Severance Plan provides our NEOs with base salary and a pro rata portion of certain incentive compensation over a specified period if the Company terminates the NEOs employment without cause. The severance period is determined based upon the NEOs position held at termination and years of service to the Company. Based on their current positions and years of service, the Compensation Committee has set the continuation period for the receipt of base salary in the event of separation for Mr. Cano, Mr. Howells and Mr. Lamneck at 24 months. Mr. Dutkowskys Employment Agreement sets his severance benefit period for base salary at 24 months. Mr. Osbourns severance benefit period for base salary was amended to be 12 months, in consideration of allowing him flexibility in his working location. In addition, the Severance Plan provides that a participant who is involuntarily terminated for reasons other than gross misconduct will receive the portion of his or her annual cash incentive that is based on the Companys performance, prorated through the date of such participants separation, not to exceed the lesser of actual performance or 100%. Participants severed due to a reduction in force also receive the prorated portion of his or her annual cash incentive that is based on their individual performance. NEO cash incentives were all based on Company performance.