What We Did For Fiscal 2016
| | • | Pay for Performance Philosophy: We designed our Fiscal 2016 executive compensation programs to pay for performance and a significant portion of our executives’ compensation was not guaranteed. Target compensation was established for our executive officers at the beginning of Fiscal 2016 by our Compensation Committee and our named executive officers had an opportunity to earn actual compensation that varied from target, based on achievement against pre-established performance targets. The variable component of our compensation program was designed to reward performance and contribution to our corporate and financial objectives. |
| | • | Independent Executive Compensation Consultants: During Fiscal 2016, our Compensation Committee worked with Hodak Value Advisors (“Hodak”), its independent executive compensation consultant, and separate outside counsel, as it determined appropriate. |
| | • | Mitigation of Undue Risk: Our Fiscal 2016 compensation program had provisions to mitigate undue risk, including mechanisms that were designed to be partially subject to forfeiture (see “Clawback Policy,” “Malus Provision” and “Subsequent Events After Fiscal 2016 Year End” below) and related target performance for Fiscal 2016 to past performance. |
| | • | Clawback Policy: Our equity awards allow the Company to recover payouts in the event that recoupment is required by applicable law (including pursuant to Sarbanes-Oxley and the Dodd-Frank Wall Street Reform and Consumer Protection Act) or a participant receives for any reason any amount in excess of what should have been received (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error). |
| | • | Malus Provision: Our Fiscal 2016 annual bonus program provided for an automatic deferral of payouts in excess of two times the target bonus pool and deferred cash compensation from prior years was subject to reduction if the Company did not meet certain specified performance criteria in Fiscal 2016. For Fiscal 2016, the Company satisfied the applicable performance criteria and, as a result the Malus provisions of our 2016 annual bonus program were not applicable (see “How We Determine Each Element of Compensation” and “Subsequent Events After Fiscal 2016 Year End”). |
| | • | Negative Discretion and Other Reductions: Our Fiscal 2016 annual bonus program provided our Compensation Committee with the right to exercise negative discretion to reduce awards under the bonus plan. |
| | • | Award Caps: Amounts that could be earned under our Fiscal 2016 annual bonus program by any individual were capped at $20 million per year (“Award Cap”). |
| | • | Equity Retention: We maintain an equity retention policy for senior management, requiring each member of senior management to retain ownership of at least 25% of his or her covered shares, net of taxes and transaction costs, until the earlier of (i) the date of such senior management member’s termination of employment with the Company or (ii) the date such person is no longer a member of senior management. |
What We Did Not Do for Fiscal 2016
| | • | No 280G or Section 409A Excise Tax Gross-Ups: We do not provide “gross-ups” for any taxes imposed with respect to Section 280G (change of control) or Section 409A (nonqualified deferred compensation) of the Internal Revenue Code. |
| | • | No Pensions or Supplemental Pensions: Our named executive officers are not provided with pension or supplemental executive retirement plans. |
| | • | No Single-Trigger Equity Acceleration: In Fiscal 2016, we did not provide our named executive officers “single-trigger” equity vesting upon a change of control of the Company. |
| | • | No Repricing of Underwater Stock Options without Stockholder Approval: We do not lower the exercise price of any outstanding stock options, unless stockholders approve this. |
| | • | No Discounted Stock Options: The exercise price of our stock options is not less than 100% of the fair market value of our Common Stock on the date of grant. |
| | • | No Unauthorized Hedging or Pledging: Our Board has adopted a corporate governance policy prohibiting our directors and executive officers from (i) hedging the economic risk associated with the ownership of our Common Stock and (ii) pledging our Common Stock, unless, in each case, first pre-approved by our General Counsel. |
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