logitech_def14a.htm
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED
IN PROXY STATEMENT
SCHEDULE 14A
INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment
No. )
Filed by the Registrant
[x]
Filed by a Party other
than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy
Statement
[_] Soliciting Material Under
Rule
[_] Confidential,
For Use of
the
14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive
Additional Materials
Logitech International
S.A.
------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of Registrant as
Specified In Its Charter)
------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of Person(s)
Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee
(Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of
each class of securities to which transaction applies:
____________________________________________________________________________________
2) Aggregate number of securities to
which transaction applies:
3) Per unit price or
other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the
amount on
which the filing fee is
calculated and state how it was
determined):
4) Proposed maximum aggregate value of
transaction:
____________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary
materials:
[_] Check box if any part of the fee is offset
as provided by Exchange Act Rule
0-11(a)(2) and identify the
filing for which
the offsetting fee was paid
previously. Identify the previous
filing by registration statement number,
or the form
or
schedule and the date of its
filing.
____________________________________________________________________________________
1) Amount
previously paid:
____________________________________________________________________________________
2) Form,
Schedule or Registration Statement No.:
____________________________________________________________________________________
3) Filing
Party:
____________________________________________________________________________________
4) Date
Filed:
July 27,
2010
To our
shareholders:
You are cordially invited to attend
Logitech’s 2010 Annual General Meeting. The meeting will be held on Wednesday,
September 8, 2010 at 2:30 p.m. at the Palais De Beaulieu, Rome Room, in
Lausanne, Switzerland.
Enclosed is the Invitation and Proxy
Statement for the meeting, which includes an agenda and discussion of the items
to be voted on at the meeting, information on how you can exercise your voting
rights, information concerning Logitech’s compensation of its Board members and
executive officers and other relevant information.
Whether or not you plan to attend
the Annual General Meeting, your vote is important.
Thank you for your continued support
of Logitech.
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|
GUERRINO
DE LUCA Chairman of the
Board
|
41
LOGITECH INTERNATIONAL
S.A.
Invitation to the Annual General
Meeting
Wednesday, September 8, 2010
2:30 p.m. (registration starts at
1:30 p.m.)
Palais de Beaulieu – Lausanne, Switzerland
*****
AGENDA
A. |
Reports
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Report on Operations for the fiscal year ended March 31,
2010
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B.
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Proposals
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1. |
Approval of the Annual Report, the Compensation Report, the
consolidated financial statements and the statutory financial statements
of Logitech International S.A. for fiscal year 2010
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2. |
Advisory vote on compensation philosophy, policies and
practices
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3. |
Appropriation of retained earnings without payment of a
dividend
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4. |
Amendments to articles of incorporation to implement the Swiss Book
Entry Securities Act
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5. |
Release of the Board of Directors and Executive Officers for
activities during fiscal year 2010
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6. |
Elections to the Board of Directors
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6.1. |
Re-election of Mr. Daniel Borel
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6.2. |
Re-election of Ms. Sally Davis
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6.3. |
Re-election of Mr. Guerrino De Luca
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6.4. |
Election of Mr. Neil Hunt
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6.5. |
Re-election of Ms. Monika Ribar
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7. |
Re-election of PricewaterhouseCoopers S.A. as
auditors
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Apples,
Switzerland, July 27, 2010
43
QUESTIONS AND ANSWERS ABOUT THE
LOGITECH
2010 ANNUAL GENERAL MEETING
GENERAL INFORMATION FOR ALL
SHAREHOLDERS
Why am I receiving this “Invitation
and Proxy Statement”?
This document is designed to comply
with both Swiss corporate law and U.S. proxy statement rules. Outside of the
U.S. and Canada this Invitation and Proxy Statement will be delivered to
registered shareholders with certain portions translated into French and German.
We made copies of this Invitation and Proxy Statement available to shareholders
beginning on July 27, 2010.
Who is entitled to vote at the
meeting?
Shareholders registered in the Share
Register of Logitech International S.A. (including in the sub-register
maintained by Logitech’s U.S. transfer agent, The Bank of New York Mellon
Corporation) on Thursday, September 2, 2010 have the right to vote. No
shareholders will be entered in the Share Register between September 3, 2010 and
the day following the meeting. As of June 30, 2010 there were 86,137,698 shares
registered and entitled to vote out of a total of 175,691,987 Logitech shares
outstanding. The actual number of registered shares that will be entitled to
vote at the meeting will vary depending on how many more shares are registered,
or deregistered, between June 30, 2010 and September 2, 2010.
For information on the criteria for
the determination of the U.S. and Canadian “street name” beneficial owners who
may vote with respect to the meeting, please refer to “Further Information for
U.S. and Canadian “Street Name” Beneficial Owners”, below.
Who is a registered
shareholder?
If your shares are registered
directly in your name with us in the Share Register of Logitech International
S.A., or in our sub-register maintained by our U.S. transfer agent, The Bank of
New York Mellon Corporation, you are considered a registered shareholder, and
this Invitation and Proxy Statement and related materials are being sent to you
directly by Logitech.
Who is a beneficial owner with
shares registered in the name of a custodian, or “street name”
owner?
Shareholders that have not requested
registration on our Share Register directly, and hold shares through a broker,
trustee or nominee or other similar organization that is a registered
shareholder, are beneficial owners of shares registered in the name of a
custodian. If you hold your Logitech shares through a U.S. or Canadian broker,
trustee or nominee or other similar organization (also called holding in “street
name”), which is the typical practice of our shareholders in the U.S. and
Canada, the organization holding your account is considered the registered
shareholder for purposes of voting at the meeting, and this Invitation and Proxy
Statement and related materials are being sent or made available to you by them.
You have the right to direct that organization on how to vote the shares held in
your account.
Why is it important for me to
vote?
Logitech is a public company and key
decisions can only be made by shareholders. Whether or not you plan to attend,
your vote is important so that your shares are represented.
How many registered shares must be
present or represented to conduct business at the meeting?
There is no quorum requirement for
the meeting. Under Swiss law, public companies do not have specific quorum
requirements for shareholder meetings, and our Articles of Incorporation do not
otherwise provide for a quorum requirement.
44
Where are Logitech’s principal
executive offices?
Logitech’s principal executive
office in Switzerland is at Rue du Sablon 2-4, 1110 Morges, Switzerland, and our
principal executive office in the United States is at 6505 Kaiser Drive,
Fremont, California 94555. Logitech’s main telephone number in Switzerland is
+41-(0)21-863-5111 and our main telephone number in the United States is
+510-795-8500.
How can I obtain Logitech’s annual
report and other annual reporting materials?
A copy of our 2010 Annual Report to
Shareholders, this Invitation and Proxy Statement and our Annual Report on Form
10-K for fiscal year 2010 filed with the U.S. Securities and Exchange Commission
are available on our website at http://ir.logitech.com. Shareholders also may request free
copies of these materials at our principal executive offices in Switzerland or
the United States, at the addresses and phone numbers above.
Where can I find the voting results
of the meeting?
We intend to announce voting results
at the meeting and issue a press release promptly after the meeting. We will
also file the results on a Current Report on Form 8-K with the U.S. Securities
and Exchange Commission by Tuesday, September 14, 2010. A copy of the Form 8-K
will be available on our website at http://ir.logitech.com.
If I am not a registered
shareholder, can I attend and vote at the meeting?
You may not attend the meeting and
vote your shares in person at the meeting unless you either become a registered
shareholder by September 2, 2010 or you obtain a “legal proxy” from the broker,
trustee or nominee that holds your shares, giving you the right to vote the
shares at the meeting. If you hold your shares through a non-U.S. or
non-Canadian broker, trustee or nominee, you may become a registered shareholder
by contacting our Share Registrar at our principal executive offices in
Switzerland, at the above address, and following their registration instructions
or, in certain countries, by requesting registration through the bank or
brokerage through which you hold your shares. If you hold your shares through a
U.S. or Canadian broker, trustee or nominee, you may become a registered
shareholder by contacting your broker, trustee or nominee, and following their
registration instructions.
FURTHER INFORMATION FOR REGISTERED
SHAREHOLDERS
How can I vote if I do not plan to
attend the meeting?
If you do not plan to attend the
meeting you may mark the applicable box under Option 3 on the enclosed Response
Coupon to appoint either Logitech or the Independent Representative, Ms.
Béatrice Ehlers, to represent you at the meeting. Please provide your voting
instructions by marking the applicable boxes beside the agenda items on the
Response Coupon and sign, date and promptly mail your completed Response Coupon
using the appropriate enclosed postage paid envelope. If you sign and return the
Response Coupon but do not provide voting instructions for some or all agenda
items, your voting rights will be exercised in favor of the Proposals of the
Board of Directors (the “Board”). Please refer to the Response Coupon for more
instructions.
How can I attend the
meeting?
If you wish to attend the meeting,
please mark Option 1 on the Response Coupon, and send the completed, signed and
dated Response Coupon to Logitech using the enclosed postage paid envelope by
August 27, 2010. We will send you an admission card for the meeting. If an
admission card is not received by you prior to the meeting and you are a
registered shareholder as of September 2, 2010, you may attend the meeting by
presenting proof of identification at the meeting.
45
Can I have another person represent
me at the meeting?
Yes. If you would like someone other
than either Logitech or the Independent Representative to represent you at the
meeting, please mark Option 2 on the Response Coupon and provide the name and
address of the person you want to represent you. Please return the completed,
signed and dated Response Coupon to Logitech using the enclosed postage paid
envelope by August 27, 2010. We will send an admission card for the meeting to
your representative. If the name and address instructions you provide are not
clear Logitech will send the admission card to you, and you must forward it to
your representative.
Can I sell my shares before the
meeting if I have voted?
Logitech does not block the transfer
of shares before the meeting. However, if you sell your Logitech shares before
the meeting and Logitech’s Share Registrar is notified of the sale, your votes
with those shares will not be counted. Any person who purchases shares after the
Share Register closes on Thursday, September 2, 2010 will not be able to
register them until the day after the meeting and so will not be able to vote
the shares at the meeting.
If I vote by proxy using the
Response Coupon, can I change my vote after I have voted?
You may change your vote at any time
before the final vote at the meeting. You may revoke your vote by requesting a
new Response Coupon from us, and we will cancel your prior Response Coupon. If
you wish to vote again you may complete the new Response Coupon and return it to
us, or you may attend the meeting and vote in person. However, your attendance
at the meeting will not automatically revoke your Response Coupon unless you
vote again at the meeting or specifically request in writing that your prior
Response Coupon be revoked.
If I vote by proxy using the
Response Coupon, what happens if I do not give specific voting
instructions?
If you are a registered shareholder
and sign and return a Response Coupon without giving specific voting
instructions for some or all agenda items, your voting rights will be exercised
in favor of the Proposals of the Board of Directors. In addition, if you provide
discretionary voting instructions in the Response Coupon, and other matters are
properly presented for voting at the meeting, your voting rights will be
exercised in favor of the recommendations of the Board of Directors at the
meeting on such matters.
In addition, if your shares are
represented at the meeting by an institution subject to the Swiss Federal Law on
Banks and Savings Institutions, or by a professional asset manager subject to
Swiss jurisdiction, and if you do not provide the institution or asset manager
with general or specific voting instructions, the institution or asset manager
will be obliged under Swiss law to exercise the voting rights of your shares in
the manner recommended by the Board of Directors.
Who can I contact if I have
questions?
If you have any questions or need
assistance in voting your shares, please call us at +1-510-713-4220 or e-mail us
at LogitechIR@logitech.com.
FURTHER INFORMATION FOR U.S. OR
CANADIAN “STREET NAME” BENEFICIAL OWNERS
Why did I receive a one-page notice
in the mail regarding the Internet availability of proxy materials this year
instead of a full set of proxy materials?
We have provided access to our proxy
materials over the Internet to beneficial owners holding their shares in “street
name” through a U.S. or Canadian broker, trustee or nominee. Accordingly, such
brokers, trustees or nominees are forwarding a Notice of Internet Availability
of Proxy Materials (the “Notice”) to such beneficial owners. All such
shareholders will have the ability to access the proxy materials on a website
referred to in the Notice or request to receive a printed set of the proxy
materials. Instructions on how to access the proxy materials
46
over the
Internet or to request a printed copy may be found on the Notice. In addition,
beneficial owners holding their shares in street name through a U.S. or Canadian
broker, trustee or nominee may request to receive proxy materials in printed
form by mail or electronically by email on an ongoing basis.
How can I get electronic access to
the proxy materials?
The Notice will provide you with
instructions regarding how to:
- View our proxy materials
for the meeting on the Internet; and
- Instruct us to send our
future proxy materials to you electronically by email.
Choosing to receive your future
proxy materials by email will save us the cost of printing and mailing documents
to you and will reduce the impact of our annual shareholders’ meetings on the
environment. If you choose to receive future proxy materials by email, you will
receive an email next year with instructions containing a link to those
materials and a link to the proxy voting site. Your election to receive proxy
materials by email will remain in effect until you terminate it.
Who may provide voting instructions
for the meeting?
For purposes of U.S. or Canadian
beneficial shareholder voting, shareholders holding shares through a U.S. or
Canadian broker, trustee or nominee organization on July 16, 2010 may direct the
organization on how to vote. Logitech has made arrangements with a service
company to U.S. and Canadian brokers, trustees and nominee organizations for
that service company to provide a reconciliation of share positions of U.S. and
Canadian “street name” beneficial owners between July 16, 2010 and August 25,
2010, which Logitech determined is the last practicable date before the meeting
for such a reconciliation. These arrangements are intended to result in the
following adjustments: If a U.S. or Canadian “street name” beneficial owner as
of July 16, 2010 votes but subsequently sells their shares before August 25,
2010, their votes will be cancelled. A U.S. or Canadian “street name” beneficial
owner as of July 16, 2010 that has voted and subsequently increases or decreases
their shareholdings but remains a beneficial owner as of August 25, 2010 will
have their votes increased or decreased to reflect their shareholdings as of
August 25, 2010.
If you acquire Logitech shares in
“street name” after July 16, 2010 through a U.S. or Canadian broker, trustee or
nominee, and wish to vote at the meeting or provide voting instructions by
proxy, you must become a registered shareholder. You may become a registered
shareholder by contacting your broker, trustee or nominee, and following their
registration instructions. In order to allow adequate time for registration, for
proxy materials to be sent to you, and for your voting instructions to be
returned to us before the meeting, please begin the registration process as far
before September 2, 2010 as possible.
If I am a U.S. or Canadian “street
name” beneficial owner, how do I vote?
If you are a beneficial owner of
shares held in “street name” and you wish to vote in person at the meeting, you
must obtain a valid proxy from the organization that holds your
shares.
If you do not wish to vote in
person, you may vote by proxy. You may vote by proxy over the Internet, or if
you request printed copies of the proxy materials by mail, you can also vote by
mail or by telephone by following the instructions provided in the
Notice.
What happens if I do not give
specific voting instructions?
If you are a beneficial owner of
shares held in “street name” in the United States or Canada and do not provide
your broker, trustee or nominee with specific voting instructions, then under
the rules of various national and regional securities exchanges, your broker,
trustee or nominee may generally vote on routine matters but cannot vote on
non-routine matters. If the organization that holds your shares does not receive
instructions from you on how to vote your shares on a non-routine matter, your
shares will not be voted on such matter and will not be considered votes cast on
the applicable Proposal. We encourage you to provide voting instructions to the
organization that
47
holds your
shares by carefully following the instructions provided in the Notice. We
believe the following Proposals will be considered non-routine: Proposal 2
(Advisory vote on compensation philosophy, policies and practices), Proposal 3
(Appropriation of retained earnings without payment of a dividend), Proposal 4
(Amendments to articles of incorporation to implement the Swiss Book Entry
Securities Act) and Proposal 6 (Elections to the Board of Directors). All other
Proposals involve matters that we believe will be considered routine. Any
“broker non-votes” on any Proposals will not be considered votes cast on the
Proposal.
What is the deadline for delivering
my voting instructions?
If you hold your shares through a
U.S. or Canadian bank or brokerage or other custodian you have until 11:59 pm
(U.S. Eastern Daylight Time) on September 3, 2010 to deliver your voting
instructions.
Can I change my vote after I have
voted?
You may revoke your proxy and change
your vote at any time before the final vote at the meeting. You may vote again
on a later date on the Internet or by telephone (only your latest Internet or
telephone proxy submitted prior to the meeting will be counted), or by signing
and returning a new proxy card with a later date, or by attending the meeting
and voting in person, if you have a “legal proxy” that allows you to attend the
meeting and vote. However, your attendance at the Annual General Meeting will
not automatically revoke your proxy unless you vote again at the meeting or
specifically request in writing that your prior proxy be revoked.
FURTHER INFORMATION FOR SHAREHOLDERS
WITH SHARES REGISTERED THROUGH A BANK OR BROKERAGE AS CUSTODIAN (OUTSIDE THE
U.S. OR CANADA)
How do I vote by proxy if my shares
are registered through my bank or brokerage as custodian?
Your broker, trustee or nominee
should have enclosed or provided voting instructions for you to use in directing
the broker, trustee or nominee how to vote your shares. If you did not receive
such instructions you must contact your bank or brokerage for their voting
instructions.
What is the deadline for delivering
my voting instructions if my Logitech shares are registered through my bank or
brokerage as custodian?
Banks and brokerages typically set
deadlines for receiving instructions from their account holders. Outside of the
U.S. and Canada, this deadline is typically two to three days before the
deadline of the company holding the general meeting. This is so that the
custodians can collect the voting instructions and pass them onto the company
holding the meeting. If you hold Logitech shares through a bank or brokerage
outside the U.S. or Canada please check with your bank or brokerage for their
specific voting deadline and submit your voting instructions to them as far
before the meeting date as possible.
OTHER MEETING
INFORMATION
Further Information for Depositary
representatives
Institutions subject to the Swiss
Federal Law on Banks and Savings Banks, as well as professional asset managers,
are obliged to inform Logitech of the number and par value of the registered
shares they represent.
Meeting
Proposals
There are no other matters that the
Board intends to present, or has reason to believe others will present, at the
Annual General Meeting. If other matters are properly presented for voting at
the meeting, and you have provided discretionary voting instructions in the
Response Coupon or your voting instruction card, your shares will be voted in
accordance with the recommendations of the Board of Directors at the meeting on
such matters.
48
Proxy
Solicitation
We will bear the expense of
soliciting proxies, and we have retained Georgeson, Inc. to solicit proxies for
a fee of $15,000 plus a reasonable amount to cover expenses. Certain of our
directors, officers and other employees, without additional compensation, may
also solicit proxies personally or in writing, by telephone, e-mail or
otherwise, or we may ask our proxy solicitor to solicit votes and proxies on our
behalf by telephone for a fee of $5.00 per phone call, plus reasonable expenses.
In the United States we are required to request that brokers and nominees who
hold shares in their names furnish our proxy material to the beneficial owners
of the shares, and we must reimburse such brokers and nominees for the expenses
of doing so in accordance with certain U.S. statutory fee
schedules.
Tabulation of
Votes
Representatives of at least two
Swiss banks will serve as scrutineers of the vote tabulations at the meeting. As
is typical for Swiss companies, our Share Registrar will tabulate the voting
instructions of registered shareholders that are provided in advance of the
meeting.
Shareholder Proposals and
Nominees
Shareholder Proposals for 2010
Annual General Meeting
Under our Articles of Incorporation,
one or more registered shareholders who together represent shares representing
at least the lesser of (i) one percent of our issued share capital or (ii) an
aggregate par value of one million Swiss francs may demand that an item be
placed on the agenda of a meeting of shareholders. Any such proposal must be
included by the Board in our materials for the meeting. A request to place an
item on the meeting agenda must be in writing, describe the proposal and be
received by our Board of Directors at least 60 days prior to the date of the
meeting. The deadline to receive proposals for the agenda for the September 8,
2010 Annual General Meeting was July 9, 2010. However, under Swiss law
registered shareholders, or persons holding a valid proxy from a registered
shareholder, may propose alternatives to items on the 2010 Annual General
Meeting agenda before or at the meeting.
Shareholder Proposals for 2011
Annual General Meeting
A registered shareholder that
satisfies the minimum shareholding requirements in the Company’s Articles of
Incorporation may demand that an item be placed on the agenda for our 2011
meeting of shareholders by delivering a written request describing the proposal
to the Secretary of Logitech at our principal executive office in either
Switzerland or the United States no later than July 8, 2011. In addition, if you
are a registered shareholder and satisfy the shareholding requirements under
Rule 14a-8 of the U.S. Securities Exchange Act of 1934 (the “Exchange Act”), you
may submit a proposal for consideration by the Board of Directors for inclusion
in the 2011 Annual General Meeting agenda by delivering a request and a
description of the proposal to the Secretary of Logitech at our principal
executive office in either Switzerland or the United States no later than March
29, 2011. The proposal will need to comply with Rule 14a-8 of the Exchange Act,
which lists the requirements for the inclusion of shareholder proposals in
company-sponsored proxy materials under U.S. securities laws. Under the
Company’s Articles of Incorporation only registered shareholders are recognized
as Logitech shareholders. As a result, if you are not a registered shareholder
you may not make proposals for the 2011 Annual General Meeting.
Nominations of Director
Candidates
Nominations of director candidates
by registered shareholders must follow the rules for shareholder proposals
above.
Provisions of Articles of
Incorporation
The relevant provisions of our
Articles of Incorporation regarding the right of one or more registered
shareholders who together represent shares representing at least the lesser of
(i) one percent of our issued share capital or (ii) an aggregate par value of
one million Swiss francs to demand that an item be placed on the agenda of a
meeting of shareholders are available on our website at http://ir.logitech.com. You may also contact the Secretary
of Logitech at our principal executive office in either Switzerland or the
United States to request a copy of the relevant provisions of our Articles of
Incorporation.
49
AGENDA PROPOSALS AND
EXPLANATIONS
A. REPORTS
Report on Operations for the Fiscal Year Ended
March 31, 2010
Senior management of Logitech International
S.A. will provide the Annual General Meeting with a presentation and report on
operations of the Company for fiscal year 2010.
B. PROPOSALS
Proposal 1
Approval of the Annual Report, the
Compensation Report, the Consolidated Financial Statements and the
Statutory
Financial Statements of Logitech International S.A. for Fiscal Year
2010
Proposal
The Board of Directors proposes that the
Annual Report, the Compensation Report, the consolidated financial statements
and the statutory financial statements of Logitech International S.A. for fiscal
year 2010 be approved.
Explanation
The Logitech consolidated financial statements
and the statutory financial statements of Logitech International S.A. for fiscal
year 2010 are contained in Logitech’s Annual Report which was distributed to all
registered shareholders with this Invitation and Proxy Statement. The Annual
Report also contains the report of Logitech’s auditors, the report of the
statutory auditors and additional information on the Company’s business,
organization and strategy, and information relating to corporate governance as
required by the SIX Swiss Exchange directive on corporate governance. The
Compensation Report is included in this Invitation and Proxy Statement. Copies
of the Annual Report and the Invitation and Proxy Statement are available on the
Internet at ir.logitech.com.
Under Swiss law the annual report and
financial statements of Swiss companies must be submitted to shareholders for
approval or disapproval at each annual general meeting. The submission of the
compensation report to a vote of shareholders as part of the approval of the
annual report is a suggested best practice under applicable Swiss best corporate
governance principles published by economiesuisse, a leading Swiss business
organization. In the event of a negative vote on this proposal by shareholders
the Board of Directors will call an extraordinary general meeting of
shareholders for re-consideration of this proposal by shareholders. Approval of
this proposal does not constitute approval or disapproval of any of the
individual matters referred to in the Annual Report, the Compensation Report or
the consolidated or statutory financial statements for fiscal year
2010.
PricewaterhouseCoopers S.A., as Logitech
auditors, issued an unqualified recommendation to the Annual General Meeting
that the Logitech consolidated and Logitech International S.A. financial
statements be approved. PricewaterhouseCoopers S.A. express their opinion that
the “consolidated financial statements for the year ended March 31, 2010 present
fairly, in all material respects, the financial position, the results of
operations and the cash flows in accordance with accounting principles generally
accepted in the United States of America (US GAAP) and comply with Swiss law.”
They further express their opinion and confirm that the financial statements and
the proposed appropriation of available earnings comply with Swiss law and the
articles of incorporation of Logitech International S.A.
50
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions.
Recommendation
The Board of Directors recommends a vote “FOR”
approval of the Annual Report, the Compensation Report, the consolidated
financial statements and the statutory financial statements of Logitech
International S.A. for fiscal year 2010.
Proposal 2
Advisory vote on compensation philosophy,
policies and practices
Proposal
The Board of Directors proposes that
shareholders approve, on an advisory basis, Logitech’s compensation philosophy,
policies and practices as set out in the “Compensation Discussion and Analysis”
section of the Compensation Report for fiscal year 2010.
Explanation
At Logitech’s 2009 Annual General Meeting the
Logitech Board of Directors asked shareholders to approve Logitech’s
compensation philosophy, policies and practices, as a reflection of evolving
best practices in corporate governance in Switzerland and in the United States.
The shareholders approved the proposal in 2009, and the Board of Directors is
again asking shareholders for their advisory vote. This advisory vote is
non-binding; however, the Board and the Compensation Committee of the Board will
consider the voting results and seek to determine the causes of any significant
negative voting result.
As discussed in the Compensation Discussion
and Analysis section of Logitech’s 2010 Compensation Report, Logitech has
designed its compensation programs to attract, retain and motivate the high
caliber of executives, managers and staff that is critical to the long-term
success of its business. More specifically, Logitech’s executive compensation
programs have been designed to:
- be competitive with comparable
companies in the industry and in the region where the executive is
based to attract and retain top
talent;
- maintain a balance between fixed
and variable compensation and place a significant portion of total
compensation at risk based on
Logitech’s performance, while maintaining controls over inappropriate
risk-taking;
- align executive compensation with
shareholders’ interests by tying a significant portion of compensation
to increasing share
value;
- support a performance-oriented
environment that rewards superior performance; and
- reflect the Compensation
Committee’s assessment of an executive’s role and past performance
through base salary and
short-term incentives, and his or her potential for future contribution to
Logitech through long-term
equity incentive awards.
The Compensation Committee of the Board has
developed a compensation program that is described more fully in the
Compensation Report included in this Invitation and Proxy Statement. Logitech’s
compensation philosophy, compensation components for employees below the
executive level, compensation program risks and design, and compensation paid
during fiscal year 2010 are also set out in the Compensation
Report.
51
In recognition of the uncertain economic and
market conditions in fiscal year 2010, the base salaries of executives did not
increase in fiscal year 2010 over those of fiscal year 2009, and the design of
Logitech’s bonus program placed a greater importance on the generation and
retention of cash, market share, and profitability.
While compensation is a central part of
attracting, retaining and motivating the best executives and employees, we
believe it is not the sole or exclusive reason why exceptional executives or
employees choose to join and stay at Logitech, or why they work hard to achieve
results for shareholders. In this regard, both the Compensation Committee and
management believe that providing a working environment and opportunities in
which executives and employees can develop, express their individual potential,
and make a difference, are also a key part of Logitech’s success in attracting,
retaining and motivating executives and employees.
The Compensation Discussion and Analysis
section extends from the beginning of the Compensation Report until the
beginning of the section titled “Summary Compensation Table for Fiscal Year
2010.”
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions.
Recommendation
The Board of Directors recommends a vote “FOR”
approval, on an advisory basis, of Logitech’s compensation philosophy, policies
and practices as set out in the “Compensation Discussion and Analysis” section
of the Compensation Report for fiscal year 2010.
Proposal 3
Appropriation of Retained Earnings Without
Payment of a Dividend
Proposal
The Board of Directors proposes that no
dividend be distributed with respect to retained earnings for fiscal year 2010
and that CHF 349,312,000 (US $321,877,000 based on exchange rates on June 30,
2010) of retained earnings be carried forward.
(all
numbers in thousands) |
|
|
|
|
|
|
|
|
|
Retained earnings at beginning of fiscal
year 2010 |
|
CHF |
354,924 |
|
Appropriation of retained earnings resolved by |
|
|
|
|
the 2009 Annual General
Meeting-Dividend |
|
CHF |
— |
|
Attribution to reserve for treasury
shares |
|
CHF |
(30,122 |
) |
Net
income for fiscal year 2010 |
|
CHF |
24,510 |
|
|
|
|
|
|
Retained earnings at the disposal of the
Annual |
|
|
|
|
General Meeting at the end of fiscal year 2010 |
|
CHF |
349,312 |
|
|
|
|
|
|
Explanation
Under Swiss law the use of retained earnings
must be submitted to shareholders for approval or disapproval at each annual
general meeting. The retained earnings at the disposal of Logitech shareholders
at the 2010 Annual General Meeting are the earnings of Logitech International
S.A., the Logitech parent holding company.
52
The Board of Directors continues to believe
that it is in the best interests of Logitech and its shareholders to retain
Logitech’s earnings for future investment in the growth of Logitech’s business,
for share repurchases, and for the possible acquisition of other companies or
lines of business. Accordingly, the Board is proposing that no dividend be paid
to shareholders and all retained earnings at the disposal of the Annual General
Meeting be carried forward.
In the event of a negative vote on this
proposal by shareholders, the Board of Directors will take the vote of the
shareholders into consideration, and call an extraordinary general meeting of
shareholders for re-consideration by shareholders of this proposal or a revised
proposal.
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions.
Recommendation
The Board of Directors recommends a vote “FOR”
approval of the appropriation of retained earnings without the payment of a
dividend.
Proposal 4
Amendments to articles of incorporation to
implement the Swiss Book Entry Securities Act
Proposal
The Board of Directors proposes shareholders
approve an amendment to Article 4 of the Company’s Articles of Incorporation to
implement the Swiss Book Entry Securities Act.
Explanation
This proposal concerns a technical amendment
to our Articles of Incorporation. The Board of Directors proposes to adapt the
Articles of Incorporation to the Swiss Book Entry Securities Act, which came
into effect on January 1, 2010. Under the proposed amendment, shareholders will
no longer be entitled to require the Company to issue share certificates, but
the Company retains the right to do so. Registered shareholders may at any time
request the issue of a written statement of their shares. This proposed
amendment corresponds to current practice in Swiss public companies and reflects
that under the Swiss Book Entry Securities Act certificated securities no longer
have legal advantages, in some exceptional circumstances, over uncertificated
securities. The amendments will not restrict the transferability of Logitech’s
shares.
53
The Board of Directors proposes approval of
the following amendments (the French version of which is definitive) to the
Articles of Incorporation:
Current version
|
|
|
Proposed new
version
|
|
Article 4 The shares shall be registered. They
shall be numbered and shall bear the facsimile signatures of two members
of the Board of Directors.
|
|
Article 4 The shares shall be
registered.
|
|
|
|
The general
meeting of shareholders shall have the authority to convert the registered
shares into bearer shares by means of an amendment to the Articles of
Incorporation.
|
|
The general
meeting of shareholders shall have the authority to convert the registered
shares into bearer shares by means of an amendment to the Articles of
Incorporation.
|
|
|
|
The Company
shall have the authority to issue certificates representing blocks of
shares.
|
|
[deleted]
|
|
|
|
The Company may
forego the printing of registered shares and issuing of securities.
However, any shareholder may require that the Company print and issue
stock certificates at any time and free of charge. The Board of Directors
shall set forth in regulations the details and the requirements for the
execution thereof.
|
|
Subject to the
paragraph below, the registered shares of the Company will be
uncertificated securities (in terms of the Swiss Code of Obligations) and
book entry securities (in terms of the Swiss Book Entry Securities
Act).
A shareholder
registered in the Company’s shareholders’ register may request from the
Company a statement of the shareholder’s registered shares at any time.
Shareholders do not have a right to the printing and delivery of share
certificates. The Company may, however, print and deliver certificates for
shares at any time at its option. The Company may also, at its option,
withdraw uncertificated shares from the custodian system where they have
been registered and, with the consent of the shareholder, cancel issued
certificates that are returned to the
Company.
|
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes present in person or by proxy at the Annual General
Meeting.
Recommendation of the
Board
The Board of Directors recommends a vote “FOR”
approval to amend Article 4 of the Company’s Articles of Incorporation to
implement the Swiss Book Entry Securities Act.
Proposal 5
Release of the Board of Directors and
Executive Officers for Activities During Fiscal Year 2010
Proposal
The Board of Directors proposes that
shareholders release the members of the Board of Directors and Executive
Officers for liability for activities during fiscal year 2010.
54
Explanation
As is customary for Swiss corporations and in
accordance with Article 698, subsection 2, item 5 of the Swiss Code of
Obligations, shareholders are requested to release the members of the Board of
Directors and the Executive Officers from liability for their activities during
fiscal year 2010. This release excludes liability claims brought by the Company
or shareholders against the members of the Board of Directors or Executive
Officers for activities carried out during fiscal year 2010 relating to facts
that have been disclosed to shareholders, except that registered shareholders
that do not vote in favor of the proposal are not bound by the result for a
period ending six months after the vote.
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions and not counting the votes of any member of the Board of Directors,
any Logitech executive officers or any votes represented by
Logitech.
Recommendation
The Board of Directors recommends a vote “FOR”
the proposal to release the members of the Board of Directors and Executive
Officers for liability for activities during fiscal year 2010.
Proposal 6
Elections to the Board of
Directors
Our Board of Directors is presently composed
of ten members. Each director serves a three-year term, with the terms of the
directors staggered so that not all directors are up for election in any one
year. This is a recommended practice under the Swiss Code of Best Practice for
Corporate Governance, in order to help ensure continuity among the
Board.
At the recommendation of the Nominating
Committee, the Board has nominated the five individuals below to serve as
directors for the three-year term beginning as of the Annual General Meeting on
September 8, 2010. Four of the nominees currently serve as a member of the Board
of Directors. Their current terms expire on the date of the Annual General
Meeting on September 8, 2010.
There will be a separate vote on
each nominee.
If any director nominee is unable or unwilling
to serve as a nominee at the time of the Annual General Meeting, registered
shareholders at the meeting or represented at the meeting by the Independent
Representative or third parties may vote either for: (1) a substitute nominee
designated by the present Board to fill the vacancy; or (2) another substitute
nominee. Under Swiss law Board members may only be appointed by shareholders and
so if there is no substitute nominee and the individuals below are elected the
Board will consist of ten members. The Board has no reason to believe that any
of our nominees will be unwilling or unable to serve if elected as a
director.
For further information on the Board of
Directors, including the current members of the Board, the Committees of the
Board, the means by which the Board exercises supervision of Logitech’s
executive officers, and other information, please see “Corporate Governance and
Board of Directors Matters” below.
6.1 Re-election of Mr. Daniel
Borel
Proposal: The Board
of Directors proposes that Mr. Daniel Borel be re-elected to the Board for a
further three-year term.
Daniel Borel is a
Logitech founder and served from May 1988 until January 1, 2008 as the Chairman
of the Board. From July 1992 to February 1998, he also served as Chief Executive
Officer. He has held various other executive positions with Logitech. Mr. Borel
holds an MS degree in Computer Science from Stanford University in California
and a BE degree in Physics from the Ecole Polytechnique Fédérale, Lausanne,
Switzerland. He serves on the Board of Nestlé S.A. In addition, he serves on the
Board of Fondation Defitech, a Swiss foundation which contributes to research
and development projects aimed at assisting the disabled, is the Chairman of the
Board of SwissUp, a Swiss educational foundation promoting higher learning, and
serves as President of EPFL Plus, a Swiss foundation which raises and manages
funds for the Ecole Polytechnique Fédérale de Lausanne. He is 60 years old, and
is a Swiss citizen.
As a Logitech co-founder, and its former
Chairman and CEO, Mr. Borel brings deep knowledge of and a passion for Logitech,
its people and its products, as well as senior leadership, industry, technical,
and global experience. As a director for Nestlé, Mr. Borel also provides
cross-board experience.
6.2 Re-election of Ms. Sally
Davis
Proposal: The Board
of Directors proposes that Ms. Sally Davis be re-elected to the Board for a
further three-year term.
Sally Davis is the
chief executive of BT Wholesale, a position she has held since 2007. She was the
Chief Portfolio Officer of British Telecom from 2005 to 2007. She had previously
held senior executive roles within BT since joining the company in 1999,
including President, Global Products, Global Services from 2002 to 2005,
President, BT Ignite Applications Hosting from 2001 to 2002 and Director, Group
Internet and Multimedia from 1999 to 2001. Before joining BT, Ms. Davis held
leading roles in several major communications companies, including Bell Atlantic
in the United States and Mercury Communications in the United Kingdom. Ms. Davis
is a member of the Board of Directors of the Henderson Smaller Companies
Investment Trust plc, a U.K. managed investment trust. She holds a BA degree
from University College, London. She is 56 years old and is a United Kingdom
citizen.
Ms. Davis’s experience as a CEO of a leading
European telecommunications company, and her significant technology product
strategy and product portfolio knowledge, provides the Board with expertise in
senior leadership, technology, product strategy, and financial
management.
Ms. Davis currently serves on the Audit
Committee and the Nominating Committee of the Board. The Board of Directors has
determined that she is an independent Director.
6.3 Re-election of Mr. Guerrino De
Luca
Proposal: The Board
of Directors proposes that Mr. Guerrino De Luca be re-elected to the Board for a
further three-year term.
Guerrino De Luca has served as Chairman of the Logitech Board of Directors since January
2008. Previously, Mr. De Luca served as Logitech’s President and Chief Executive
Officer from February 1998, when he joined the Company, to January 2008. He has
been an executive member of the Board of Directors since June 1998. Prior to
joining Logitech, Mr. De Luca served as Executive Vice President of Worldwide
Marketing for Apple, Inc. from February 1997 to September 1997, and as President
of Claris Corporation, a U.S. personal computing software vendor, from May 1994
to February 1997. Prior to joining Claris, Mr. De Luca held various positions
with Apple in the United States and in Europe. Mr. De Luca holds a BS degree in
Electronic Engineering from the University of Rome, Italy. He is 57 years old
and is an Italian and U.S. citizen.
As Logitech’s Chairman and former CEO, Mr. De
Luca brings significant senior leadership, industry, strategy, marketing and
global experience to the Board and, like Mr. Borel, has a deep passion for and
commitment to Logitech, its people and its products.
56
In addition to serving as Chairman of the
Board of Directors, Mr. De Luca also serves as Chairman of the Nominating
Committee and of the Committee for Board Compensation.
6.4 Election of Mr. Neil
Hunt
Proposal: The Board
of Directors proposes that Mr. Neil Hunt be elected to the Board for a
three-year term.
Neil Hunt is the Chief Product Officer of Netflix, Inc.,
a California-based company offering the world’s largest subscription service
streaming movies and TV episodes over the Internet and sending DVDs by mail. He
has been with Netflix since 1999, and served as its Vice President, Internet
Engineering from 1999 until being promoted to his current position in 2002. From
1997 to 1999, Mr. Hunt was Director of Engineering for Rational Software, a
California-based maker of software development tools, and he served in
engineering roles at predecessor companies from 1991 to 1997. Mr. Hunt holds a
Doctorate in Computer Science from the University of Aberdeen, U.K. and a
Bachelors degree from the University of Durham, U.K. He is 48 years old and is a
U.K. and U.S. citizen.
Mr. Hunt’s significant expertise in
technology, product development leadership and strategy, and his experience as a
member of the senior leadership of a leading digital delivery company, provides
the Board with expertise in technology, product strategy, and senior
leadership.
The Board of Directors has
determined that Mr. Hunt would be an independent Director if
elected.
6.5 Re-election of Ms. Monika
Ribar
Proposal: The Board
of Directors proposes that Ms. Monika Ribar be re-elected to the Board for a
further three-year term.
Monika Ribar is the
President and Chief Executive Officer of the Panalpina Group, a Swiss freight
forwarding and logistics services provider. She has been a member of Panalpina’s
Executive Board since February 2000, and served as Panalpina’s Chief Financial
Officer from June 2005 to October 2006, and as its Chief Information Officer
from February 2000 to June 2005. From June 1995 to February 2000, she served as
Panalpina’s Corporate Controller, and from 1991 to 1995 served in project
management positions at Panalpina. Prior to joining Panalpina, Ms. Ribar worked
at Fides Group (now KPMG Switzerland), a professional services firm, serving as
Head of Strategic Planning, and was employed by the BASF Group, a German
chemical products company. Ms. Ribar holds a Masters degree in Economics and
Business Administration from the University of St. Gallen, Switzerland. Ms.
Ribar also served as a Director of Julius Baer Group Ltd., a Swiss private bank,
until May 2010. She is 50 years old and is a Swiss citizen.
Ms. Ribar has significant executive experience
with the strategic, financial, and operational requirements of companies with
global operations, and brings to our Board senior leadership, logistics
industry, global and financial experience. As a former director of a public
company board, Ms. Ribar also provides cross-board experience.
Ms. Ribar currently serves as Chairman of the
Audit Committee of the Board. The Board of Directors has determined that she is
an independent Director.
Voting Requirement to Approve
Proposals
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions.
Recommendation
The Board of Directors recommends a
vote “FOR” the election to the Board of each of the above nominees.
57
Proposal 7
Re-election of PricewaterhouseCoopers S.A. as
Auditors
Proposal
The Board of Directors proposes that
PricewaterhouseCoopers S.A. be re-elected as auditors of Logitech International
S.A. for a one-year term.
Explanation
PricewaterhouseCoopers S.A., upon
recommendation of the Audit Committee of the Board, is proposed for reelection
for a further year as auditors for Logitech International S.A.
PricewaterhouseCoopers S.A. assumed its first audit mandate for Logitech in
1988. Information on the fees paid by Logitech to PricewaterhouseCoopers S.A.,
as well as further information regarding PricewaterhouseCoopers S.A., is set out
below under the heading “Independent Public Accountants” and “Report of the
Audit Committee.”
A member of PricewaterhouseCoopers
S.A. will be present at the Annual General Meeting, will have the opportunity to
make a statement, and will be available to respond to appropriate questions you
may ask.
Voting Requirement to Approve
Proposal
The affirmative “FOR” vote of a majority of
the votes cast in person or by proxy at the Annual General Meeting, not counting
abstentions.
Recommendation
Our Board of Directors recommends a vote
“FOR” the re-election of PricewaterhouseCoopers S.A. as auditors of Logitech
International S.A. for the fiscal year ending March 31, 2011.
58
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
MATTERS
The Board of Directors is elected by the
shareholders and holds the ultimate decision-making authority within Logitech,
except for those matters reserved by law or by Logitech’s Articles of
Incorporation to its shareholders or those that are delegated to the executive
officers under the organizational regulations (also known as by-laws). The Board
makes resolutions through a majority vote of the members present at the
meetings. In the event of a tie, the vote of the Chairman decides.
Logitech’s Articles of Incorporation set the
minimum number of directors at three. We had ten members of the Board of
Directors as of June 30, 2010. If all nominees to the Board presented in
Proposal 6 are elected the size of the Board will remain at ten.
BOARD OF DIRECTORS
INDEPENDENCE
Each of our directors other than Daniel Borel,
Guerrino De Luca and Gerald Quindlen qualifies as independent in accordance with
the published listing requirements of Nasdaq and Swiss corporate governance best
practices guidelines. The Board of Directors has determined that the following
director nominees standing for election or reelection at the 2010 Annual General
Meeting qualifies as independent: Sally Davis, Neil Hunt and Monika Ribar. The
Nasdaq independence definition includes a series of objective tests, such as
that the director is not an employee of the company and has not engaged in
various types of business dealings with the company. In addition, as further
required by Nasdaq rules, the Board has made a subjective determination as to
each independent director that no relationships exist which, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. In making these determinations, the
directors reviewed and discussed information provided by the directors and the
Company with regard to each director’s business and personal activities as they
may relate to Logitech and Logitech’s management. In particular, the Board
considered the following information in regard to the following
directors:
Erh-Hsun Chang. Until April 2006 Mr. Chang served as
Logitech’s Senior Vice President, Worldwide Operations and General Manager, Far
East.
Richard Laube. Mr.
Laube is an executive officer of Nestlé S.A. Logitech Board member, co-founder
and former Chairman, Daniel Borel, serves as Chairman of the Compensation
Committee of Nestlé S.A.
Monika Ribar. Ms.
Ribar is the President and Chief Executive Officer of the Panalpina Group, a
Swiss freight forwarding and logistics services provider. In the ordinary course
of its business, Logitech utilized the customs brokerage services of Panalpina
in Logitech’s business in the Americas. Logitech paid Panalpina approximately
$450 thousand for these services in fiscal year 2010. The business was awarded
to Panalpina as the result of a competitive bidding process.
In each case, the Board determined that none
of these facts or relationships would interfere with the exercise by Mr. Chang,
Mr. Laube or Ms. Ribar of his or her independent judgment in carrying out the
responsibilities of a director.
59
MEMBERS OF THE BOARD OF
DIRECTORS
The current members of the Board of Directors,
including their principal occupation, business experience, and qualifications,
are set out below.
Daniel Borel 60 Years Old Director since
1988 Co-Founder and former CEO and Chairman, Logitech International
S.A. Swiss national
|
|
Daniel Borel is a Logitech founder and served from
May 1988 until January 1, 2008 as the Chairman of the Board. From July
1992 to February 1998, he also served as Chief Executive Officer. He has
held various other executive positions with Logitech. Mr. Borel holds an
MS degree in Computer Science from Stanford University in California and a
BE degree in Physics from the Ecole Polytechnique Fédérale, Lausanne,
Switzerland. He serves on the Board of Nestlé S.A. In addition, he serves
on the Board of Fondation Defitech, a Swiss foundation which contributes
to research and development projects aimed at assisting the disabled, is
the Chairman of the Board of SwissUp, a Swiss educational foundation
promoting higher learning, and serves as President of EPFL Plus, a Swiss
foundation which raises and manages funds for the Ecole Polytechnique
Fédérale de Lausanne.
As a Logitech co-founder, and its former
Chairman and CEO, Mr. Borel brings deep knowledge of and a passion for
Logitech, its people and its products, as well as senior leadership,
industry, technical, and global experience. As a director for Nestlé, Mr.
Borel also provides cross-board experience.
|
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|
Matthew Bousquette 51 Years Old Director since
2005 Chairman, Enesco LLC U.S. national
|
|
Matthew Bousquette is the Chairman of the Board of Enesco
LLC, a U.S.-based producer of giftware and home and garden décor products.
He is the former president of the Mattel Brands business unit of Mattel,
Inc. Mr. Bousquette joined Mattel as senior vice president of marketing in
December 1993, and was promoted to successively more senior positions at
Mattel, including general manager of Boys Toys in July 1995, executive
vice president of Boys Toys in May 1998, president of Boys/Entertainment
in March 1999, and president of Mattel Brands from February 2003 to
October 2005. Mr. Bousquette’s previous experience included various
positions at Lewis Galoob Toys, Teleflora and Procter & Gamble. Mr.
Bousquette earned a BBA degree from the University of
Michigan.
Mr. Bousquette
brings senior leadership, strategic, financial and marketing expertise to
the Board from his current position as chairman of a consumer products
company, and his prior work as a senior executive at
Mattel.
|
60
Erh-Hsun Chang 61 Years Old Director since
2006 Former Senior Vice President, Worldwide Operations
and General Manager, Far East, Logitech Taiwan
national
|
|
Erh-Hsun Chang has been a member of the Board of
Directors since June 2006. Until April 2006 Mr. Chang was the Company’s
Senior Vice President, Worldwide Operations and General Manager, Far East.
Mr. Chang first joined Logitech in 1986 to establish its operations in
Taiwan. After leaving the Company in 1988, he returned in 1995 as Vice
President, General Manager, Far Eastern Area and Worldwide Operations. In
April 1997, Mr. Chang was named Senior Vice President, General Manager,
Far Eastern Area and Worldwide Operations. Mr. Chang’s other business
experience includes tenure as Vice President, Manufacturing Consulting at
KPMG Peat Marwick, a global professional services firm, between 1991 and
1995, and as Vice President, Sales and Marketing, Power Supply Division,
of Taiwan Liton Electronics Ltd., a Taiwanese electronics company, in
1995. Mr. Chang holds a BS degree in Civil Engineering from Chung Yuang
University, Taiwan, an MBA degree in Operations Management from the
University of Dallas, and an MS degree in Industrial Engineering from
Texas A&M University. Mr. Chang is also Vice Chairman of the Company’s
subsidiary in Taiwan.
Having had an
extensive career in operations, manufacturing, and sales and marketing,
particularly in Taiwan and China, Mr. Chang brings senior leadership,
manufacturing and operations experience, and substantial expertise in
doing business in Taiwan and China.
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Kee-Lock Chua 49 Years Old Director since
2000 President and Chief Executive Officer, Vertex
Group Singapore national
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|
Kee-Lock Chua is president and chief executive
officer of the Vertex Group, a Singapore - headquartered venture capital
group. Prior to joining the Vertex Group, Mr. Chua was the president and
an executive director of Biosensors International Group, Ltd., a developer
and manufacturer of medical devices used in interventional cardiology and
critical care procedures. Previously, from 2003 to 2006, Mr. Chua was a
managing director of Walden International, a U.S.-headquartered venture
capital firm. From 2001 to 2003, Mr. Chua served as deputy president of
NatSteel Ltd., a Singapore industrial products company active in Asia
Pacific. From 2000 until 2001, Mr. Chua was the president and chief
executive officer of Intraco Ltd., a Singapore-listed trading and
distribution company. Prior to joining Intraco, Mr. Chua was the president
of MediaRing.com Ltd., a Singapore-listed company providing
voice-over-Internet services. Mr. Chua holds a BS degree in Mechanical
Engineering from the University of Wisconsin, and an MS degree in
Engineering from Stanford University in California. He also serves on the
Board of Biosensors, SHC Capital Ltd. and Yongmao Holdings Limited (where
he is lead independent director), all publicly traded companies in
Singapore, and on the board of directors of a number of private companies,
including as chairman of CrimsonLogic Pte. Ltd., a Singapore-based
e-government solution provider.
Mr. Chua has
extensive investment and senior leadership experience, as a venture
capitalist in Asia and the United States, and also as the former CEO of
publicly-traded companies in Asia. He brings to the Board senior
leadership, and financial and global expertise. As a director of public
companies in Asia, and of private companies, he also provides cross-board
experience.
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61
Sally Davis 56 Years Old Director since
2007 CEO, BT Wholesale British national
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|
Sally Davis is the chief executive of BT Wholesale,
a position she has held since 2007. She was the Chief Portfolio Officer of
British Telecom from 2005 to 2007. She had previously held senior
executive roles within BT since joining the company in 1999, including
President, Global Products, Global Services from 2002 to 2005, President,
BT Ignite Applications Hosting from 2001 to 2002 and Director, Group
Internet and Multimedia from 1999 to 2001. Before joining BT, Ms. Davis
held leading roles in several major communications companies, including
Bell Atlantic in the United States and Mercury Communications in the
United Kingdom. Ms. Davis is a member of the Board of Directors of the
Henderson Smaller Companies Investment Trust plc, a U.K. managed
investment trust. She holds a BA degree from University College,
London.
Ms. Davis’s experience as a CEO of a
leading European telecommunications company, and her significant
technology product strategy and product portfolio knowledge, provides the
Board with expertise in senior leadership, technology, product strategy,
and financial management.
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|
Guerrino De Luca 57 Years Old Director since
1998 Chairman of the Board of Directors of Logitech International
S.A. Italian and U.S.
national
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|
Guerrino De Luca has served as Chairman of the Logitech
Board of Directors since January 2008. He served from February 1998 to
January 2008 as Logitech’s President and Chief Executive Officer, and has
been a director since June 1998. Prior to joining Logitech, Mr. De Luca
served as Executive Vice President of Worldwide Marketing for Apple, Inc.
from February 1997 to September 1997, and as President of Claris
Corporation, a U.S. personal computing software vendor, from May 1994 to
February 1997. Prior to joining Claris, Mr. De Luca held various positions
with Apple in the United States and in Europe. Mr. De Luca holds a BS
degree in Electronic Engineering from the University of Rome,
Italy.
As Logitech’s Chairman and former CEO,
Mr. De Luca brings significant senior leadership, industry, strategy,
marketing and global experience to the Board, and, like Mr. Borel, a deep
passion for and commitment to Logitech, its people and its
products.
|
62
Richard Laube 54 Years Old Director since
2008 Executive Vice President, Nestlé S.A Swiss and U.S. national
|
|
Richard Laube is Executive Vice President of Nestlé
S.A., Chief Executive Officer of Nestlé Nutrition and a member of the
Nestlé Executive Board. He joined Nestlé in April 2005 as Deputy Executive
Vice President, Corporate Business Development, and was appointed Deputy
Executive Vice President, Chief Executive Officer of Nestlé Nutrition in
November 2005. He was appointed Executive Vice President in 2008. Prior to
joining Nestlé he served from 1999 to 2004 as President, Roche Consumer
Health, and served on the Roche Corporate Executive Committee from 2001 to
2004. Previously, he was employed by Procter & Gamble from 1980 to
1998, serving in successively more senior roles in Switzerland, the United
States, Japan, Germany and Brazil. Mr. Laube holds MA and BA degrees in
Organizational Development and Evaluation Research from Boston University.
Mr. Laube serves as Chairman of the Board of Directors of Life Ventures
S.A., Nutrition-Wellness Venture AG, The Gerber Life Insurance Company and
Jenny Craig Affiliated Companies, all of which are Nestlé
subsidiaries.
As a senior executive at one of the
world’s best-known consumer products companies, with significant
experience in business strategy and marketing, Mr. Laube brings senior
leadership, brand marketing and global experience to the
Board.
|
|
|
|
Robert Malcolm 58 Years Old Director since
2007 Former President, Global Marketing, Sales and
Innovation, Diageo plc U.S. national
|
|
Robert Malcolm is retired from Diageo plc, the global
premium drinks company, where he served until December 2008 as the
president of Global Marketing, Sales and Innovation. Reporting to the
chief executive officer and a member of the Diageo Executive Committee,
Mr. Malcolm had worldwide responsibility for the marketing, sales and
innovation function for Diageo and direct responsibility for strategy,
equity management, innovation and global orchestration for global priority
brands. Mr. Malcolm joined Diageo in 1999 and his previous appointments at
the company included Global Marketing director and Global Scotch Whiskey
director at UDV, a Diageo company. He was appointed president of Global
Marketing, Sales and Innovation in 2000. Previous to his employment at Diageo, Mr. Malcolm held various posts
at The Procter & Gamble Company from 1975 through 1999, including vice
president and general manager for Beverages for Europe, Middle East and
Africa; vice president and general manager Arabian Peninsula; and vice
president and general manager for Personal Cleaning Products USA. Mr.
Malcolm holds a BS degree and an MBA degree from the University of
Southern California.
Having an extensive career
in marketing at world-class consumer products companies, Mr. Malcolm
brings to the Board significant brand marketing, global and senior
leadership
experience.
|
63
Gerald Quindlen 51 Years Old Director since
2008 President and Chief Executive Officer, Logitech International
S.A. U.S.
national
|
|
Gerald Quindlen has served as Logitech’s President and
Chief Executive Officer since January 2008. He has been a member of the
Board of Directors since September 2008. Mr. Quindlen joined Logitech as
Senior Vice President, Worldwide Sales and Marketing in October 2005. From
August 1987 to September 2004, Mr. Quindlen worked for Eastman Kodak
Company where he was Vice President of Global Sales and Operations for the
Consumer and Professional Imaging Division, and previously held senior
sales or marketing management positions in the United States, Japan and
Asia Pacific. From September 2004 to September 2005, Mr. Quindlen was a
private consultant. Prior to his 17 year tenure at Eastman Kodak, he
worked for Mobil Oil Corporation in engineering. Mr. Quindlen holds a BS
degree in chemical engineering from Villanova University in Pennsylvania,
and an MBA degree in Finance from the University of Pennsylvania’s Wharton
School.
As our CEO and
a senior executive, Mr. Quindlen brings to the Board significant senior
leadership, sales and marketing, consumer products and global experience.
As CEO, Mr. Quindlen has
direct responsibility for Logitech’s strategy and
operations.
|
|
|
|
Monika Ribar 50 Years Old Director since
2004 President and CEO, Panalpina Group Swiss
national
|
|
Monika Ribar is the President and Chief Executive
Officer of the Panalpina Group, a Swiss freight forwarding and logistics
services provider. She has been a member of Panalpina’s Executive Board
since February 2000, and served as Panalpina’s Chief Financial Officer
from June 2005 to October 2006, and as its Chief Information Officer from
February 2000 to June 2005. From June 1995 to February 2000, she served as
Panalpina’s Corporate Controller, and from 1991 to 1995 served in project
management positions at Panalpina. Prior to joining Panalpina, Ms. Ribar
worked at Fides Group (now KPMG Switzerland), a professional services
firm, serving as Head of Strategic Planning, and was employed by the BASF
Group, a German chemical products company. Ms. Ribar holds a Masters
degree in Economics and Business Administration from the University of St.
Gallen, Switzerland. Ms. Ribar also served as a Director of Julius Baer
Group Ltd., a Swiss private bank, until May 2010.
Ms. Ribar has significant executive
experience with the strategic, financial, and operational requirements of
companies with global operations, and brings to our Board senior
leadership, logistics industry, global and financial experience. As a
former director of a public company board, Ms. Ribar also provides
cross-board experience.
|
Other than the current employment and
involvement noted above, no other Logitech Board member currently has material
supervisory, management, or advisory functions outside Logitech. None of the
Company’s directors holds any official functions or political
posts.
64
ELECTIONS TO THE BOARD OF
DIRECTORS
Directors are elected at the Annual General
Meeting of Shareholders, upon proposal of the Board of Directors. The proposals
of the Board of Directors are made following recommendations of the Nominating
Committee.
Shareholder Recommendations and
Nominees
Under our Articles of Incorporation, one or
more registered shareholders who together represent shares representing at least
the lesser of (i) one percent of our issued share capital or (ii) an aggregate
par value of one million Swiss francs may demand that an item be placed on the
agenda of a meeting of shareholders, including a nominee for election to the
Board of Directors. A request to place an item on the meeting agenda must be in
writing, describe the proposal and be received by our Board of Directors at
least 60 days prior to the date of the meeting. Demands by registered
shareholders to place an item on the agenda of a meeting of shareholders should
be sent to: Secretary to the Board of Directors, Logitech International S.A.,
Rue du Sablon 2-4, 1110 Morges, Switzerland, or c/o Logitech Inc., 6505 Kaiser
Drive, Fremont, CA 94555, USA.
Under the Company’s Articles of Incorporation
only registered shareholders are recognized as shareholders of the company. As a
result, beneficial shareholders do not have a right to place an item on the
agenda of a meeting, regardless of the number of shares they hold. For
information on how beneficial shareholders may become registered shareholders,
see “Questions and Answers about the Logitech 2010 Annual General Meeting - If I
am not a registered shareholder, can I attend and vote at the
meeting?”
If the agenda of a general meeting
of shareholders includes an item calling for the election of directors, any
registered shareholder may propose a candidate for election to the Board of
Directors before or at the meeting.
The Nominating Committee does not have a
policy on consideration of recommendations for candidates to the Board of
Directors from registered shareholders. The Nominating Committee considers it
appropriate not to have a formal policy for consideration of such
recommendations because the evaluation of potential members of the Board of
Directors is by its nature a case-by-case process, depending on the composition
of the Board at the time, the needs and status of the business of the Company,
and the experience and qualification of the individual. Accordingly, the
Nominating Committee would consider any such recommendations on a case-by-case
basis in their discretion, and, if accepted for consideration, would evaluate
any such properly submitted nominee in consideration of the membership criteria
set forth under “Director Qualifications” below. Shareholder recommendations to
the Board of Directors should be sent to the above address.
Board Composition
The Nominating Committee is responsible for
reviewing and assessing with the Board the appropriate skills, experience, and
background sought of Board members in the context of our business and the
then-current membership on the Board. The Nominating Committee has not formally
established any specific, minimum qualifications that must be met by each
candidate for the Board of Directors or specific qualities or skills that are
necessary for one or more of the members of the Board of Directors to possess.
Similarly, the Nominating Committee does not have a formal policy on considering
diversity in identifying candidates for election or re-election to the Board of
Directors. However, we do not expect or intend that each director will have the
same background, skills, and experience; we expect that Board members will have
a diverse portfolio of backgrounds, skills, and experiences. One goal of this
diversity is to assist the Board as a whole in its oversight and advice
concerning our business and operations.
The review and assessment of Board candidates
and the current membership of the Board by the Nominating Committee and the
Board includes numerous diverse factors, such as independence; understanding of
and experience in technology, finance, and marketing; international experience;
age; and gender and ethnic diversity. The priorities and emphasis of the
Nominating Committee and of the Board with regard to these factors change from
time to time to take into account changes in Logitech’s business and other
trends, as well as the portfolio of skills and experience of current and
prospective Board members.
65
Listed below are key skills and experience
that we currently consider important for our directors to have in light of our
current business and structure. We do not expect each director to possess every
attribute. The directors’ biographies note each director’s relevant experience,
qualifications, and skills relative to this list.
- Senior Leadership Experience.
Directors who have
served in senior leadership positions are important to Logitech, because they bring experience
and perspective in analyzing, shaping, and overseeing the execution of important operational and
policy issues at a senior level.
- Financial Expertise. Knowledge of financial markets, financing
and funding operations, and accounting and financial reporting processes is important because it assists our
directors in understanding, advising, and overseeing Logitech’s structure, financial reporting, and internal
control of such activities.
- Industry and Technical
Expertise. Because we
develop and manufacture hardware and software products, ship them worldwide, and sell to
both major computer manufacturers and consumer electronics distributors and retailers, expertise in
hardware and software, and experience in supply chain, manufacturing and consumer products is
useful in understanding the opportunities and challenges of our business and in providing insight and
oversight of management.
- Brand Marketing Expertise.
Because we are a
consumer products company, directors who have brand marketing experience can provide expertise
and guidance as we seek to maintain and expand brand and product awareness and a positive
reputation.
- Global Expertise. Because we are a global organization with
research and development, and sales and other offices in many countries, directors
with global expertise, particularly in Europe and Asia, can provide a useful business and cultural
perspective regarding many significant aspects of our business.
Identification and Evaluation of Nominees for
Directors
Our Nominating Committee uses a variety of
methods for identifying and evaluating nominees for director. Our Nominating
Committee regularly assesses the appropriate size and composition of the Board
of Directors, the needs of the Board of Directors and the respective committees
of the Board of Directors and the qualifications of candidates in light of these
needs. Candidates may come to the attention of the Nominating Committee through
shareholders, management, current members of the Board of Directors or search
firms. The evaluation of these candidates may be based solely upon information
provided to the committee or may also include discussions with persons familiar
with the candidate, an interview of the candidate or other actions the committee
deems appropriate, including the use of paid third parties to review candidates.
Neil Hunt, one of the nominees for election to the Board at the September 2010
Annual General Meeting, was identified as a potential nominee to the Board by a
third party executive search firm retained by the Company at the direction of
the Nominating Committee.
TERMS OF OFFICE OF
DIRECTORS
Each director is elected individually by a
separate vote of shareholders for a term of three years and is eligible for
re-election until their seventieth birthday. Directors may not seek re-election
after they have reached 70 years of age, unless the Board of Directors adopts a
resolution to the contrary. A member of the Board who reaches 70 years of age
during the term of his or her directorship may remain a director until the
expiration of the term. A director’s term of office as Chairman coincides with
their term of office as a director. A director may be indefinitely reelected as
Chairman, subject to the age limit mentioned above.
Although the Company’s Articles of
Incorporation and Organizational Regulations do not explicitly require this, the
terms of office of the directors are staggered. Consequently, all directors will
not run for re-election at a single annual general meeting.
66
The year of appointment and remaining term of
office as of March 31, 2010 for each Director are as follows:
Name |
|
Year First Appointed |
|
Year Current Term
Expires |
Daniel Borel(1)(3) |
|
1988 |
|
Annual General Meeting 2010 |
Matthew
Bousquette(1) |
|
2005 |
|
Annual General Meeting 2011 |
Erh-Hsun Chang(1) |
|
2006 |
|
Annual General Meeting 2012 |
Kee-Lock Chua(1) |
|
2000 |
|
Annual General Meeting 2012 |
Sally Davis(1)(3) |
|
2007 |
|
Annual General Meeting 2010 |
Guerrino De Luca(2)(3) |
|
1998 |
|
Annual General Meeting 2010 |
Richard Laube(1) |
|
2008 |
|
Annual General Meeting 2011 |
Robert
Malcolm(1)(3) |
|
2007 |
|
Annual General Meeting 2010 |
Gerald Quindlen(2) |
|
2008 |
|
Annual General Meeting 2011 |
Monika
Ribar(1)(3) |
|
2004 |
|
Annual General Meeting
2010 |
____________________
(1) |
|
Non-executive
member of the Board of Directors. |
|
(2) |
|
Executive member
of the Board of Directors. |
|
(3) |
|
The term of each
of Mr. Borel, Ms. Davis, Mr. De Luca and Ms. Ribar expires at the 2010
Annual General Meeting, and each is being presented for re-election to the
Board of Directors at that meeting. Mr. Malcolm’s term also expires at the
2010 Annual General Meeting and he will be retiring from the Board at that
meeting. |
BOARD RESPONSIBILITIES AND
STRUCTURE
The Board of Directors is responsible for
supervising the management of the business and affairs of the Company. In
addition to the non-transferable powers and duties of boards of directors under
Swiss law, the Logitech Board of Directors also has the following
responsibilities:
- the signatory power of its
members;
- the approval of the budget
submitted by the Chief Executive Officer;
- the approval of any type of
investment or acquisition not included in the approved
budgets;
- the approval of any expenditure of
more than $10 million not specifically identified in the approved budgets; and
- the approval of the sale or
acquisition, including related borrowings, of the Company’s real
estate.
The Board of Directors has delegated the
management of the Company to the Chief Executive Officer and the executive
officers, except where Swiss law or the Company’s Articles of Incorporation or
Organizational Regulations (By-Laws) provide differently.
Board Leadership Structure
The Board has since 1997 had a general
practice that the positions of Chairman of the Board and CEO should be held by
separate persons as an aid in the Board’s oversight of management. Since 1997,
the Chairman has been a former CEO of the Company and has served as a full-time
senior executive. Logitech believes that there are advantages to having a former
CEO as Chairman, for matters such as leadership continuity; day-to-day
assistance to and oversight of the CEO and other executive officers; and
facilitating communications and relations between the Board, the CEO, and other
senior management.
67
Mr. De Luca, the Company’s former
CEO and current Chairman, has served in that role since January 2008. The
Chairman of the Board is appointed on an annual basis, at the Board meeting
coinciding with the Annual General Meeting of Shareholders. The Secretary of the
Board of Directors is also appointed at the same meeting. As of June 30, 2010,
the Secretary was Ms. Catherine Valentine, the Company’s Vice President, Legal
and General Counsel.
Role of the Chairman and of the
Chief Executive Officer
Guerrino De Luca and Gerald
Quindlen, the Company’s President and Chief Executive Officer, are executive
members of the Board of Directors. Mr. De Luca assumes a leading role in mid-
and long-term strategic planning and the selection of top-level management, and
he supports major transaction initiatives of Logitech.
Mr. Quindlen manages the day-to-day
operations of Logitech, with the support of the other executive officers. The
Chief Executive Officer has, in particular, the following powers and
duties:
- defining and
implementing short and medium term strategies;
- preparing the budget,
which must be approved by the Board of Directors;
- reviewing and certifying
the Company’s annual report;
- appointing, dismissing
and promoting any employees of Logitech other than executive officers and
the head of the
internal audit function;
- taking immediate
measures to protect the interests of the Company where a breach of duty is
suspected from
executive officers until the Board has decided on the matter;
- carrying out Board
resolutions;
- reporting regularly to
the Chairman of the Board of Directors on the activities of the
business;
- preparing supporting
documents for resolutions that are to be passed by the Board of
Directors; and
- deciding on issues
brought to his attention by executive officers.
The detailed authorities and
responsibilities of the Board of Directors, the Chief Executive Officer and the
executive officers are set out in the Company’s Articles of Incorporation and
Organizational Regulations. Please refer to http://ir.logitech.com for copies of these
documents.
Lead Independent
Director
As appointed by the Board, Mr. Chua
serves as Lead Independent Director. The responsibilities of the Lead
Independent Director include chairing meetings of the non-executive directors
and serving as the presiding director in performing such other functions as the
Board may direct.
Means by Which the Board of
Directors Supervises Executive Officers
The Board of Directors is regularly
informed on developments and issues in Logitech’s business, and monitors the
activities and responsibilities of the executive officers in various
ways.
- At each regular Board
meeting the Chief Executive Officer reports to the Board of Directors
on developments and
important issues. The Chief Executive Officer also provides regular updates to
the Board members
regarding Logitech’s business between the dates of regular Board
meetings.
- The offices of Chairman
and Chief Executive Officer are separated, to help ensure balance
between leadership of
the Board and leadership of the day-to-day management of Logitech.
68
- Executive officers and
other members of senior management, at the invitation of the Board,
regularly attend
portions of meetings of the Board and its Committees to report on the
financial results of Logitech, its operations, performance and
outlook, and on areas of the business within their responsibility,
including risk management
and management information systems, as well as other business matters.
For further
information on participation by executive officers and other members of senior
management in Board
and Committee meetings please refer to “Board Committees”
above.
- There are regular
quarterly closed sessions of the non-executive, independent members of the
Board of Directors,
led by the Lead Independent Director, where Logitech issues are discussed
without the presence
of executive or non-independent members of the Board or executive
officers.
- The Board holds
quarterly closed sessions, where all Board members meet without the presence
of non- Board
members, to discuss matters appropriate to such sessions, including
organizational structure and the hiring and mandates of executive officers.
- There are regularly
scheduled reviews at Board meetings of Logitech strategic and operational
issues, including
discussions of issues placed on the agenda by the non-executive members of the
Board of Directors.
- The Board reviews and
approves significant changes in Logitech’s structure and organization,
and is actively involved in
significant transactions, including acquisitions, divestitures and
major investments.
- All non-executive Board
members have access, at their request, to all internal Logitech
information.
- The head of the Internal
Audit function reports to the Audit Committee.
The Board’s Role in Risk
Oversight
One of the Board’s functions is
oversight of risk management at Logitech. “Risk” is inherent in business, and
the Board seeks to understand and advise on risk in conjunction with the
activities of the Board and the Board’s committees.
The largest risk in any business
typically is that the products and services it offers will not be met by
customer demand, because of poor strategy, poor execution, lack of
competitiveness, or some combination of these or other factors. The Board
implements its risk oversight responsibilities, at the highest level, through
regular reviews of the Company’s business, product strategy and competitive
position, and through management and organizational reviews, evaluations and
succession planning.
Within the broad strategic framework
established by the Board, management is responsible for identifying risk and
risk controls related to significant business activities; mapping the risks to
company strategy; and developing programs and recommendations to determine the
sufficiency of risk identification, the balance of potential risk to potential
reward and the appropriate manner in which to control risk.
The Board’s risk oversight role is
implemented at the full Board level, and also in individual Board Committees.
The full Board receives specific reports on enterprise risk management, in which
the identification and control of risk are the primary topics of the discussion.
Presentations and other information for the Board and Board committees generally
identify and discuss relevant risk and risk control; and the Board members
assess and oversee the risks as a part of their review of the related business,
financial, or other activity of the Company. The Compensation Committee oversees
issues related to the design and risk controls of compensation programs. The
Audit Committee oversees issues related to internal control over financial
reporting and Logitech’s risk tolerance in cash-management
investments.
Board Meetings
The Chairman sets the agenda for
Board meetings, in coordination with the CEO. Any member of the Board of
Directors may request that a meeting of the Board be convened. The directors
receive materials in advance of Board meetings allowing them to prepare for the
handling of the items on the agenda.
69
The Chairman and Chief Executive
Officer recommend executive officers or other members of senior management who,
at the invitation of the Board, attend portions of each quarterly Board meeting
to report on areas of the business within their responsibility. Infrequently,
the Board may also receive reports from external consultants such as executive
search or succession experts or outside legal experts to assist the Board on
matters it is considering.
Each regularly scheduled quarterly
Board meeting lasts a full day to a day and a half and all directors participate
in person except in special individual circumstances. Special meetings of the
Board may be held by telephone or video-conference and the duration of such
meetings varies depending on the subject matters considered.
Emergency
Resolutions
In case of emergency, the Chairman
of the Board may have the power to pass resolutions which would otherwise be the
responsibility of the Board. Decisions by the Chairman of the Board made in this
manner are subject to ratification by the Board of Directors at its next meeting
or by way of written consent. No such emergency resolutions were passed during
fiscal year 2010.
Independent Director
Sessions
The Board of Directors has adopted a
policy of regularly scheduled sessions of Board meetings where the independent
directors meet to consider matters without management or non-independent
directors present. During fiscal year 2010, separate sessions of the independent
directors were held five times.
Board
Effectiveness
Our Board of Directors performs an
annual self-assessment to evaluate its effectiveness in fulfilling its
obligations.
BOARD COMMITTEES
The Board has standing Audit,
Compensation, and Nominating Committees and a Committee for Board Compensation
to assist the Board in carrying out its duties. At each quarterly Board meeting
each applicable Board Committee reports to the full Board on the substance of
the Committee’s meetings, if any, during the quarter.
Each Committee has a written charter
approved by the Board. The chair of each Committee determine the Committee’s
meeting agenda. The Board Committee members receive materials in advance of
Committee meetings allowing them to prepare for the meeting. The Charters of
each Board Committee are available on Logitech’s Investor Relations website at
http://ir.logitech.com. Each of the Audit, Compensation and
Nominating Committees has the authority to engage outside experts, advisors and
counsel to the extent it considers appropriate to assist the committee in its
work. The current members of the committees are identified in the following
table.
|
|
|
|
|
|
|
Board |
Director |
|
Audit |
|
Compensation |
|
Nominating |
|
Compensation |
Daniel Borel |
|
|
|
|
|
|
|
Matthew Bousquette |
X |
|
Chair |
|
|
|
|
Erh-Hsun Chang |
X |
|
|
|
|
|
|
Kee-Lock Chua |
|
|
X |
|
X |
|
|
Sally Davis |
X |
|
|
|
X |
|
|
Guerrino De Luca |
|
|
|
|
Chair |
|
Chair |
Richard Laube |
|
|
X |
|
|
|
|
Robert Malcolm |
|
|
X |
|
|
|
|
Gerald Quindlen |
|
|
|
|
|
|
X |
Monika Ribar |
Chair |
|
|
|
|
|
|
70
Attendance at Board, Committee and
Annual Shareholders’ Meetings
In fiscal year 2010 the Board met
seven times, five of which were regularly scheduled quarterly meetings and two
of which were special meetings. In addition, the Audit Committee met ten times,
the Compensation Committee met six times, the Nominating Committee met two times
and the Committee for Board Compensation met once. We expect each director to
attend each meeting of the Board and the committees on which he or she serves,
and also expect them to attend the Annual General Meeting of shareholders. Each
director attended the 2009 Annual General Meeting. All directors attended at
least 75% of the meetings of the Board and the Committees on which he or she
served. Detailed attendance information for Board and Board Committee meetings
during fiscal year 2010 is as follows:
|
|
|
|
|
|
|
|
|
|
Committee |
|
Board of |
|
Audit |
|
Compensation |
|
Nominating |
|
For Board |
|
Directors |
|
Committee |
|
Committee |
|
Committee |
|
Compensation |
Number of meetings
held |
7 |
|
10 |
|
|
6 |
|
2 |
|
1 |
Daniel Borel |
7 |
|
n/a |
|
|
n/a |
|
n/a |
|
n/a |
Matthew Bousquette |
7 |
|
10 |
|
|
6 |
|
n/a |
|
n/a |
Erh-Hsun Chang |
6 |
|
4 |
(1) |
|
n/a |
|
n/a |
|
n/a |
Kee-Lock Chua |
7 |
|
n/a |
|
|
6 |
|
2 |
|
n/a |
Sally Davis |
7 |
|
10 |
|
|
n/a |
|
2 |
|
n/a |
Guerrino De Luca |
7 |
|
n/a |
|
|
n/a |
|
2 |
|
1 |
Richard Laube |
7 |
|
n/a |
|
|
6 |
|
n/a |
|
n/a |
Robert Malcom |
7 |
|
n/a |
|
|
6 |
|
n/a |
|
n/a |
Gerald Quindlen |
7 |
|
n/a |
|
|
n/a |
|
n/a |
|
1 |
Monika Ribar |
7 |
|
10 |
|
|
n/a |
|
n/a |
|
n/a |
____________________
(1) Member after September 1,
2009
Audit Committee
The Audit Committee is appointed by
the Board to assist the Board in monitoring the Company’s financial accounting,
controls, planning and reporting. It is composed of only non-executive,
independent Board members. Among its duties, the Audit Committee:
- reviews the adequacy of
the Company’s internal controls;
- reviews the
independence, fee arrangements, audit scope, and performance of the Company’s
independent auditors,
and recommends the appointment or replacement of independent auditors to the
Board of Directors;
- reviews and approves all
non-audit work to be performed by the independent auditors;
- reviews the scope of
Logitech’s internal auditing and the adequacy of the organizational structure
and qualifications of
the internal auditing staff;
- reviews, before release,
the quarterly results and interim financial data; and
- reviews, before release,
the audited financial statements and “Management’s Discussion and
Analysis of Financial
Condition and Results of Operations” contained in the Company’s annual
reporting, and recommends that the Board of Directors submit these items to the
shareholders’ meeting for approval.
71
The Audit Committee currently
consists of Ms. Ribar (Chair), Mr. Bousquette, Mr. Chang and Ms. Davis. The
Board of Directors has determined that each member of the Audit Committee meets
the independence requirements of the Nasdaq Stock Market listing standards and
the applicable rules and regulations of the SEC. In addition, the Board has
determined that Ms. Ribar and Mr. Bousquette are audit committee financial
experts as defined by the applicable rules and regulations of the
SEC.
The Audit Committee met ten times in
fiscal year 2010. Four meetings were held in person on the day prior to the
regularly scheduled quarterly Board meeting, for two to three hours, and six
were held by telephone, for approximately an hour. The Committee received
reports and presentations before the meetings in order to allow them time to
prepare adequately. At the Committee’s invitation, the Company’s Chief Financial
Officer or Acting Chief Financial Officer, Corporate Controller, Vice President
of Internal Audit and General Counsel or Associate General Counsel attended each
meeting, and representatives from the Company’s independent auditors,
PricewaterhouseCoopers, also attended each meeting. Other members of management
also participated in certain meetings. Four meetings also included separate
sessions with representatives of the independent auditors, and two meetings
included a separate session with the Vice President of Internal
Audit.
Compensation
Committee
The Compensation Committee reviews
and approves, or recommends to the Board for approval, the compensation of
executive officers and Logitech’s compensation policies and programs, including
share-based compensation programs and other incentive-based compensation. Within
the guidelines established by the Board and the limits set forth in the
Company’s employee equity incentive plans, the Compensation Committee also has
the authority to grant equity incentive awards to employees without further
Board approval. The Committee is composed of only non-executive, independent
Board members.
The Compensation Committee currently
consists of Mr. Bousquette, Chairman, Mr. Chua, Mr. Laube and Mr. Malcolm. The
Board of Directors has determined that each member of the Committee meets the
independence requirements of the Nasdaq Stock Market listing
standards.
The Compensation Committee met six
times in fiscal year 2010. At the Committee’s invitation, the Company’s Vice
President of Worldwide Human Resources attended each meeting, and the Senior
Director of Worldwide Compensation & Benefits attended four meetings. The
Company’s General Counsel attended two meetings. Four meetings were held in
person and two by teleconference and each meeting lasted approximately one hour
and a half. In addition to its meetings, the Committee took three actions for
approval by consent during fiscal year 2010.
Please refer to the Company’s
Compensation Report for further information on the Compensation Committee’s
criteria and process for evaluating executive compensation.
Committee for Board
Compensation
The Committee for Board Compensation
establishes the compensation of the non-executive directors. This Committee
currently consists of Mr. De Luca and Mr. Quindlen. The Committee for Board
Compensation met once in fiscal year 2010. The meeting was held in person and
lasted approximately one hour. At the Committee’s invitation, the Company’s
Senior Director of Worldwide Compensation and Benefits attended the
meeting.
Nominating
Committee
The Nominating Committee is composed
of at least three members, with the Chairman of the Board acting as chair for
this Committee and the other two members being non-executive, independent
directors. Among its duties, the Nominating Committee:
- evaluates the
composition of the Board of Directors and its Committees, determines future
requirements and
makes recommendations to the Board of Directors for approval;
- determines on an annual
basis the desired Board qualifications and expertise and conducts searches
for potential
directors with these attributes;
72
- evaluates and makes
recommendations of nominees for election to the Board of Directors;
and
- evaluates and makes
recommendations to the Board concerning the appointment of directors to
Board Committees and
the selection of Board Committee chairs.
The Nominating Committee may and
typically does retain an executive search firm to assist with the identification
and evaluation of prospective Board nominees based on criteria established by
the Committee. For information on the Nominating Committee’s policies with
respect to director nominations please see “Elections to the Board of Directors”
above.
The Nominating Committee currently
consists of Mr. De Luca, Chairman, Mr. Chua and Ms. Davis. Mr. De Luca is not an
independent director under applicable Nasdaq rules. The Board of Directors has
determined that Mr. Chua and Ms. Davis meet the independence requirements of the
Nasdaq Stock Market listing standards. Upon the Committee’s recommendation of
nominees for election to the Board of Directors, the nominees are presented to
the full Board. Nominees are then selected by a majority of the independent
members of the Board. The Nominating Committee met twice in fiscal year 2010.
Both meetings were held in person and each meeting lasted approximately one
hour.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
None of the members of the
Compensation Committee has been an officer or employee of Logitech. None of our
executive officers serves on the board of directors or compensation committee of
a company that has an executive officer that serves on our Board of
Directors.
COMMUNICATIONS WITH THE BOARD OF
DIRECTORS
Shareholders may contact the Board
of Directors about bona fide issues or questions about Logitech by sending an
email to generalcounsel@logitech.com or by writing the Corporate
Secretary at the following address:
Logitech
International S.A.
Attn: Corporate Secretary
Rue du Sablon 2-4
1110 Morges,
Switzerland
73
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
AS OF JUNE 30, 2010
In accordance with the proxy
statement rules under U.S. securities laws, the following table shows the number
of our shares beneficially owned as of June 30, 2010 by:
- each person or group
known by Logitech, based on filings pursuant to Section 13(d) or (g) under
the U.S. Securities
Exchange Act of 1934 or notifications to the Company under applicable Swiss
laws, to own
beneficially more than 5% of our outstanding shares as of June 30,
2010;
- each director and each
nominee for director;
- the persons named in the
Summary Compensation Table in the Compensation Report (the “named executive officers”);
and
- all directors and
current executive officers as a group.
|
|
|
|
|
|
|
|
Total as a |
|
|
Number |
|
Shares that
May |
|
Total |
|
Percentage |
|
|
of Shares |
|
be Acquired |
|
Beneficial |
|
of Shares |
Beneficial
Owner |
|
Owned(1) |
|
Within 60 Days(2) |
|
Ownership |
|
Outstanding(3) |
5%
Shareholders: |
|
|
|
|
|
|
|
|
Entities affiliated with
Fidelity(4) |
|
10,568,978 |
|
— |
|
10,568,978 |
|
6.0% |
Thornburg Investment
Management(5) |
|
11,922,284 |
|
— |
|
11,922,284 |
|
6.8% |
|
|
|
|
|
|
|
|
|
Directors/Nominees, not
including the |
|
|
|
|
|
|
|
|
Chairman or the
CEO: |
|
|
|
|
|
|
|
|
Daniel Borel |
|
11,203,158 |
|
— |
|
11,203,158 |
|
6.4% |
Matthew Bousquette |
|
10,000 |
|
65,000 |
|
75,000 |
|
* |
Erh-Hsun Chang |
|
148,000 |
|
330,000 |
|
478,000 |
|
* |
Kee-Lock Chua |
|
18,484 |
|
55,000 |
|
73,484 |
|
* |
Sally Davis |
|
7,202 |
|
30,000 |
|
37,202 |
|
* |
Richard Laube |
|
57,490 |
|
10,000 |
|
67,490 |
|
* |
Robert Malcolm |
|
8,460 |
|
30,000 |
|
38,460 |
|
* |
Neil Hunt |
|
— |
|
— |
|
— |
|
— |
Monika Ribar |
|
5,000 |
|
95,000 |
|
100,000 |
|
* |
|
|
|
|
|
|
|
|
|
Named Executive
Officers: |
|
|
|
|
|
|
|
|
Guerrino De Luca |
|
164,018 |
|
1,019,288 |
|
1,183,306 |
|
0.7% |
Gerald Quindlen |
|
2,803 |
|
545,000 |
|
547,803 |
|
* |
Erik Bardman |
|
— |
|
— |
|
— |
|
— |
Tom Fergoda |
|
158 |
|
47,500 |
|
47,658 |
|
* |
Mark J. Hawkins |
|
— |
|
— |
|
— |
|
— |
Werner Heid |
|
6,056 |
|
53,750 |
|
59,806 |
|
* |
David Henry |
|
12,555 |
|
483,750 |
|
496,305 |
|
* |
Junien Labrousse |
|
27,383 |
|
583,750 |
|
611,133 |
|
* |
Current Directors and
Executive Officers, |
|
|
|
|
|
|
|
|
as a Group(15) |
|
11,677,111 |
|
3,431,788 |
|
15,108,899 |
|
8.6% |
____________________
* |
Less
than 1%
|
|
|
(1) |
Each
director or executive officer has sole voting and investment power over
the shares reported in accordance with SEC rules, subject to community
property laws where applicable.
|
74
(2) |
Includes shares represented by vested, unexercised options as of
June 30, 2010 and options and restricted stock units that are expected to
vest within 60 days after June 30, 2010. These shares are deemed to be
outstanding for the purpose of computing the percentage ownership of the
person holding the options or restricted stock units, but are not treated
as outstanding for the purpose of computing the percentage ownership of
any other person. |
|
(3) |
Based
on 175,691,987 shares outstanding on June 30, 2010. |
|
(4) |
Based
on information set forth in a Schedule 13G filed with the SEC on February
16, 2010 by FMR LLC reporting ownership of Logitech’s shares as of
December 31, 2009. According to the notification direct and indirect
subsidiaries of FMR LLC hold 10,568,978 shares as of such date on behalf
of funds managed by and clients of direct and indirect subsidiaries of FMR
LLC. FMR LLC is the parent holding company of Fidelity Management &
Research Company, investment manager for US mutual funds, and Fidelity
Management & Trust Company, a US state chartered bank which acts as a
trustee or investment manager of various pension and trust accounts. The
address of the entities affiliated with Fidelity is 82 Devonshire Street,
Boston, Massachusetts 02109. |
|
(5) |
Based
solely on information supplied by Thornburg Investment Management in a
notification to the Company on May 22, 2008 provided under Swiss law
reporting ownership of Logitech’s shares as of April 25, 2008. According
to the notification Thornburg Investment Management holds 11,922,284
shares as of such date as an investment manager on behalf of its
investment clients. The address of Thornburg is 119 East Marcy Street,
Santa Fe, New Mexico 87501. |
SHARE OWNERSHIP
GUIDELINES
Members of the Board of Directors
and executive officers and other officers who report directly to the CEO are
subject to share ownership guidelines.
Directors are required to own at
least 5,000 Logitech shares under guidelines adopted by the Board in June 2006.
Directors are required to achieve this ownership within three years of joining
the Board, or, in the case of directors serving at the time the guidelines were
adopted, within three years of the effective date of adoption of the guidelines.
The guidelines will be adjusted to reflect any share splits or other capital
adjustments, and will be re-evaluated by the Board from time to time. As of June
30, 2010, each director had either satisfied these ownership guidelines or had
time remaining to do so.
The Compensation Committee adopted
share ownership guidelines for executive officers and other officers who report
directly to the CEO effective September 2008. These guidelines require the CEO
to hold a number of Logitech shares with a market value equal to 3 times his
annual base salary. Officers who report to the CEO must hold a number of
Logitech shares with a market value equal to 2 times annual base salary.
Officers subject to the guidelines are required to achieve the guideline within
three years of being appointed to the position making them subject to the
guideline, or, in the case of such officers serving at the time the guidelines
were adopted, within three years of the effective date of adoption of the
guidelines. The guidelines will be adjusted to reflect any share splits or other
capital adjustments, and will be re-evaluated by the Compensation Committee from
time to time. Up to 50% of the guideline may be met through the net value of
vested, unexercised stock options. If the guideline is not met within 3 years,
the CEO must hold 100% of his after – tax shares resulting from option exercises
or other equity incentive awards until the guideline is reached, and all other
CEO direct reports must hold at least 50% of the net shares resulting from
option exercises or other equity incentive awards until the guideline is
reached. As of June 30, 2010, each applicable officer had either satisfied these
ownership guidelines or had time remaining to do so.
75
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
OUR POLICIES
It is our policy that all employees
must not engage in any activities which could conflict with Logitech’s business
interests, which could adversely affect its reputation or which could interfere
with the fulfillment of the responsibilities of the employee’s job, which at all
times must be performed in the best interests of Logitech. In addition, Logitech
employees may not use their position with Logitech, or Logitech’s information or
assets, for their personal gain or for the improper benefit of others. These
policies are included in our Conflict of Interest and Business Ethics Policy,
which covers our directors, executive officers and other employees. If in a
particular circumstance the Board concludes that there is or may be a perceived
conflict of interest, the Board will instruct our Legal department to work with
our relevant business units to determine if there is a conflict of interest. Any
waivers to these conflict rules with regard to a director or executive officer
require the prior approval of the Audit Committee.
NASDAQ RULES AND SWISS BEST
CORPORATE GOVERNANCE PRACTICES
Nasdaq rules defining “independent”
director status also govern conflict of interest situations, as do Swiss best
corporate governance principles published by economiesuisse, a leading Swiss
business organization. As discussed above, the Board of Directors has determined
that each of our directors other than Mr. Borel, Mr. De Luca and Mr. Quindlen
qualifies as “independent” in accordance with the Nasdaq rules. The Nasdaq rules
include a series of objective tests that would not allow a director to be
considered independent if the director has or has had certain employment,
business or family relationships with the company. The Nasdaq independence
definition also includes a requirement that the Board review the relations
between each independent director and the company on a subjective basis. In
accordance with that review, the Board has made a subjective determination as to
each independent director that no relationships exist that, in the opinion of
the Board, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director.
SEC RULES
In addition to the Logitech and
Nasdaq policies and rules described above, the SEC has specific disclosure
requirements covering certain types of transactions involving Logitech and a
director or executive officer or persons and entities affiliated with them.
There were no such transactions in fiscal year 2010 that require disclosure.
Since April 1, 2009, we have not been a party to, and we have no plans to be a
party to, any transaction or series of similar transactions in which the amount
involved exceeded or will exceed $120,000 and in which any current director,
executive officer, holder of more than 5% of our shares, or any member of the
immediate family of any of the foregoing, had or will have a direct or indirect
material interest other than in connection with the following transactions: We
have entered into an indemnification agreement with each of our directors and
executive officers. The indemnification agreements require us to indemnify our
directors and officers to the fullest extent permitted by Swiss and California
law.
None of the following persons has
been indebted to Logitech or its subsidiaries at any time since the beginning of
fiscal year 2010: any of our directors or executive officers; any nominee for
election as a director; any member of the immediate family of any of our
directors, executive officers or nominees for director; any corporation or
organization of which any of our directors, executive officers or nominees is an
executive officer or partner or is, directly or indirectly, the beneficial owner
of 10% or more of any class of equity securities (except trade debt entered into
in the ordinary course of business); and any trust or other estate in which any
of the directors, executive officers or nominees for director has a substantial
beneficial interest or for which such person serves as a trustee or in a similar
capacity.
76
INDEPENDENT AUDITORS
Under Logitech’s Articles of Incorporation the
shareholders elect or re-elect the Company’s independent auditors each year at
the Annual General Meeting.
Logitech’s independent auditors are currently
PricewaterhouseCoopers S.A., Lausanne, Switzerland. PricewaterhouseCoopers S.A.
assumed its first audit mandate for Logitech in 1988. They were re-elected by
the shareholders as Logitech’s auditors at the Annual General Meeting in
September 2009. For purposes of U.S. securities law reporting,
PricewaterhouseCoopers LLP, San Jose, California, serves as the Company’s
independent registered public accounting firm. Together, PricewaterhouseCoopers
S.A. and PricewaterhouseCoopers LLP are referred to as “PwC.”
As appointed by the Board, the Audit
Committee is responsible for supervising the performance of the Company’s
independent auditors, and recommends the election or replacement of the
independent auditors to the Board of Directors.
Representatives of PwC are invited to attend
all regular meetings of the Audit Committee. During fiscal year 2010, PwC
representatives attended all ten Audit Committee meetings. The Committee met
separately four times with representatives of PwC in closed sessions of
Committee meetings.
On a quarterly basis, PwC reports on the
findings of their audit and/or review work including their audit of Logitech’s
internal control over financial reporting. These reports include their
assessment of critical accounting policies and practices used, alternative
treatments of financial information discussed with management, and other
material written communication between PwC and management. At each quarterly
Board meeting the Audit Committee reports to the full Board on the substance of
the Committee meetings during the quarter. On an annual basis, the Audit
Committee approves PwC’s audit plan and evaluates the performance of PwC and its
senior representatives in fulfilling its responsibilities. Moreover, the Audit
Committee recommends to the Board the appointment or replacement of the
independent auditors, subject to shareholder approval. The Audit Committee
reviews the annual report provided by PwC as to its independence.
AUDIT AND NON-AUDIT FEES
In addition to the audit services PwC provides
with respect to Logitech’s annual audited consolidated financial statements and
other filings with the Securities and Exchange Commission, PwC has provided
non-audit services to Logitech in the past and may provide them in the future.
Non-audit services are services other than those provided in connection with an
audit or a review of Logitech’s financial statements. The Audit Committee of the
Board of Directors determined that the rendering of non-audit services by PwC
was compatible with maintaining their independence.
The following table sets forth the aggregate
fees billed to us for the audit and other services provided by PwC during the
fiscal years ended March 31, 2010 and 2009 (in thousands):
|
|
2010 |
|
2009 |
Audit fees(1) |
|
$ |
2,795 |
|
$ |
2,655 |
Audit-related fees(2) |
|
|
406 |
|
|
109 |
Tax fees(3) |
|
|
617 |
|
|
420 |
All other fees(4) |
|
|
7 |
|
|
8 |
Total |
|
$ |
3,825 |
|
$ |
3,192 |
____________________
(1) |
|
Audit fees. This category represent fees for
professional services provided in connection with the audit of our
financial statements, the audit of our internal control over financial
reporting, and review of our quarterly financial statements and audit
services provided in connection with other statutory or regulatory
filings. |
77
(2) |
|
Audit-related fees. This category represents consultation
on issues such as acquisition accounting, due diligence services in
connection with acquisitions, review and testing of the impact of new
accounting pronouncements, and other topics. |
|
(3) |
|
Tax fees. This category represents fees for tax
compliance, assistance with tax audits, tax advice and tax
planning. |
|
(4) |
|
All other fees. This category primarily represents
fees for government grant audits and database
licenses. |
PRE-APPROVAL PROCEDURES AND
POLICIES
The Audit Committee pre-approves all audit and
non-audit services provided by PwC. This pre-approval must occur before the
auditor is engaged. The Audit Committee pre-approves categories of non-audit
services and a target fee associated with each category. Usage of PwC fees
against the target is presented to the Audit Committee at each in-person
quarterly meeting, with additional amounts requested as needed. Services that
last longer than a year must be re-approved by the Audit Committee.
The Audit Committee can delegate the
pre-approval ability to a single independent member of the Audit Committee. The
delegate must communicate all services approved at the next scheduled Audit
Committee meeting. The Audit Committee or its delegate can pre-approve types of
services to be performed by PwC with a set dollar limit per type of service. The
Vice President, Corporate Controller is responsible for ensuring that the work
performed is within the scope and dollar limit as approved by the Audit
Committee. Management must report to the Audit Committee the status of each
project or service provided by PwC.
78
REPORT OF THE AUDIT
COMMITTEE
The Audit Committee is responsible for
overseeing Logitech’s accounting and financial reporting processes and audits of
Logitech’s financial statements. The Audit Committee acts only in an oversight
capacity and relies on the work and assurances of management, which has primary
responsibility for Logitech’s financial statements and reports, Logitech’s
internal auditors, as well as PwC, Logitech’s independent auditors, including
Pricewaterhouse Coopers LLP, San Jose, California, its independent registered
public accounting firm for purposes of U.S. securities law reporting, which is
responsible for expressing an opinion on the conformity of Logitech’s audited
financial statements to generally accepted accounting principles and attesting
to the effectiveness of Logitech’s internal control over financial
reporting.
The Board of Directors has adopted a written
charter for the Audit Committee. A copy of the Charter can be found on our
website at http://ir.logitech.com. To view the charter, select “Audit Committee
Charter” under “Corporate Governance.”
The Audit Committee has discussed
with the independent auditors the matters required to be discussed by the
Statement of Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. AU Section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
The Audit Committee has received the written
disclosures and the letter from the independent accountant required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the Audit Committee
concerning independence, and has discussed with the independent accountant the
independent accountant’s independence.
Based on the reviews and discussions referred
to above, the Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in Logitech’s Annual Report on
Form 10-K for the fiscal year ended March 31, 2010.
Submitted by the
Audit Committee of the Board
Monika Ribar,
Chairman
Matthew Bousquette
Erh-Hsun Chang
Sally Davis
79
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16 of the Exchange Act requires
Logitech’s directors, executive officers and any persons who own more than 10%
of Logitech’s shares, to file initial reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulation
to furnish Logitech with copies of all Section 16(a) forms that they file. As a
matter of practice, our administrative staff assists our executive officers and
directors in preparing initial ownership reports and reporting ownership
changes, and typically files these reports on their behalf.
Based on our review of the copies of such
reports furnished to us and written representations from the directors and
executive officers, we believe that all Section 16(a) filing requirements were
met in fiscal year 2010.
80
COMPENSATION REPORT 2010
INTRODUCTION
This Compensation Report contains information
on Logitech compensation philosophy and practices, the background for decisions,
and the results of decisions with respect to Logitech’s named executive officers
and its Board members.
This Compensation Report has been designed to
comply with the proxy statement rules under U.S. securities laws as well as
Swiss regulations and best corporate governance practices. This Report is an
integrated part of our Invitation and Proxy Statement for our 2010 Annual
General Meeting.
Compensation Discussion and
Analysis
EXECUTIVE COMPENSATION OBJECTIVES AND
PHILOSOPHY
Logitech’s executive compensation
programs have been designed to:
- be competitive with comparable
companies in the industry and in the region where the executive is
based;
- maintain a balance between fixed
and variable compensation and place a significant portion of total
compensation at risk based on the Company’s performance, while maintaining
controls over inappropriate risk-taking;
- align executive compensation with
shareholders’ interests by tying a significant portion of compensation to
increasing share value;
- support a performance-oriented
environment that rewards superior performance; and
- reflect the Compensation
Committee’s assessment of an executive’s role and past performance through
base salary and short-term cash incentives, and his or her potential for
future contribution to Logitech through long-term equity incentive
awards.
An important component of Logitech’s executive
compensation philosophy is to pay executives at or near the median of other
companies that compete for similar executive talent, and that individual
performance and importance to Logitech should be reflected in the compensation
of individual executives. However, while compensation is a central part of
attracting, retaining and motivating the best executives and employees, we
believe it is not the sole or exclusive reason why exceptional executives or
employees choose to join and stay at Logitech, or why they work hard to achieve
results for shareholders. In this regard, both the Compensation Committee and
management believe that providing a working environment and opportunities in
which executives and employees can develop, express their individual potential,
and make a difference, are also a key part of Logitech’s success in attracting,
retaining and motivating executives and employees.
TERM USED IN THIS COMPENSATION
REPORT
In this Compensation Report, we refer to our
“named executive officers” in many places. This term includes the following
individuals:
- Gerald Quindlen, our Chief
Executive Officer.
- Erik Bardman, our Chief Financial
Officer starting October 2009.
81
- Guerrino De Luca, our
Chairman.
- Tom Fergoda, our acting Principal
Financial Officer from April 2009 to October 2009. Mr. Fergoda is not
otherwise considered a Logitech executive officer.
- Mark J. Hawkins, our Chief
Financial Officer during part of April 2009.
- The three other most highly
compensated individuals who were serving as executive officers of Logitech at
the end of fiscal year 2010.
DETERMINING TOTAL EXECUTIVE
COMPENSATION
Role of the Compensation
Committee
The Compensation Committee reviews and
approves our compensation programs, including the specific compensation of our
Chairman, our President and Chief Executive Officer, and our other executive
officers.
Under the Compensation Committee’s charter,
the Committee has the authority to engage its own advisors (including
compensation consultants) to assist it in carrying out its responsibilities. In
February 2008 the Committee retained Frederic W. Cook & Co., Inc. (Fred
Cook) to provide analysis, advice and guidance with respect to executive
compensation. Fred Cook only provides services to the Compensation Committee,
and has not provided and is not providing other services to the Company or its
management. The Committee consulted Fred Cook with respect to general executive
compensation issues in fiscal year 2010. The Committee has determined it will
engage Fred Cook every two years to develop specific executive compensation
analyses and recommendations. In the other years the Committee will review
analyses and recommendations prepared by management using the same survey data
for Logitech’s peer group as used by Fred Cook.
Role of Executive Officers in Compensation
Decisions
While the Compensation Committee sets the
compensation of our CEO and other executive officers, it looks to management to
make recommendations to the Committee with respect to both overall guidelines
and specific compensation decisions.
Management’s fiscal year 2010 executive
officer compensation proposals to the Compensation Committee were primarily
developed by Logitech’s Vice President of Worldwide Human Resources and its
compensation department, in consultation with Guerrino De Luca, Logitech’s
Chairman and Gerald Quindlen, Logitech’s President and Chief Executive Officer
(other than with respect to their own proposed compensation). The proposed base
salary, bonus targets and equity incentive award recommendation for Mr. De Luca
for fiscal year 2010 were developed by Logitech’s Vice President of Worldwide
Human Resources and its compensation department, in consultation with Gerald
Quindlen. The proposed base salary, bonus targets and equity incentive award
recommendation for Mr. Quindlen for fiscal year 2010 were developed by
Logitech’s Vice President of Worldwide Human Resources and its compensation
department, in consultation with Guerrino De Luca. As part of the annual
personnel review and succession planning process, Mr. Quindlen also provides the
Board and the Compensation Committee with his perspective on the performance of
Logitech’s executive officers, and Mr. De Luca provides the Board with his
perspective on the performance of Mr. Quindlen.
Once the Compensation Committee received the
analysis and recommendations from management, it made all decisions regarding
executive officer fiscal year 2010 compensation without Mr. De Luca, Mr.
Quindlen or any executive officer present. The Committee considered, but was not
in any way bound by, the recommendations made by management.
Overview of Factors Considered by
Committee
The Compensation Committee considers a variety
of factors when determining total executive compensation,
including:
- Competitive considerations.
82
- Subjective elements, such as the
scope of the executive’s role, experience and skills, the individual’s
performance during the fiscal year and potential for future contribution to
Logitech.
- The performance of
Logitech.
- Accrued and realized gains from
past equity incentive awards.
Competitive considerations
We attempt to compensate our executive
officers competitively relative to industry peers. Both peer group and broader
industry compensation survey data is used by our Compensation Committee to
develop Logitech’s executive compensation, as well as to assist the Compensation
Committee in the evaluation of the design of bonus plan and equity compensation
programs.
The companies in Logitech’s peer group were
selected in March 2008 based on (i) involvement in the PC-based consumer
electronics industry, or (ii) revenues approximately equal to Logitech’s and a
presence near Silicon Valley in the San Francisco Bay Area. Based on the most
recent completed four fiscal quarters as of March 2010, Logitech ranked at
approximately the 25th percentile among the
peer group for revenues, operating income and market
capitalization.
Fred Cook reviewed the peer group composition
in March 2010 and recommended, and the Committee determined, that it remains
appropriate for Logitech.
The peer group consists of the following
companies:
3Com Corporation |
Cypress Semiconductor |
NVIDIA Corporation |
Activision Blizzard, Inc. |
Corporation |
Polycom, Inc. |
Agilent Technologies, Inc. |
Electronic Arts, Inc. |
SanDisk Corporation |
Advanced Micro Devices, Inc. |
Intuit Inc. |
Sybase, Inc. |
Autodesk, Inc. |
Lexmark International, Inc. |
Symantec Corporation |
BMC Software, Inc. |
McAfee, Inc. |
Teradata Corporation |
Brocade Communications Systems, Inc. |
NCR Corporation |
Verisign, Inc. |
Cadence Design Systems, Inc. |
NetApp, Inc. |
Western Digital Corporation |
|
Novell, Inc. |
|
Although Logitech is a Swiss company, Logitech
primarily competes for executive management talent with technology companies in
the United States, and particularly in the high-technology area of Silicon
Valley. As a result, the peer group consists primarily of U.S. public technology
companies.
In addition, to assist the Committee in its
review of executive compensation, Logitech’s compensation department provides
compensation data compiled from widely recognized high-technology executive
compensation surveys.
We generally seek to be at the median for
total compensation, and for each of the elements of compensation, for our
executives against the companies with whom we compete for executive talent,
based on peer group and survey data.
Effect of individual
performance
The differences in compensation among the
individual named executive officers, as disclosed in the Summary Compensation
Table below, were primarily related to market compensation in each position,
based on peer group and survey data reviewed in prior fiscal years, a subjective
assessment of the executive’s impact on the Company’s past and future
performance, succession planning and retention. The Compensation Committee does
not review executive officers’ individual performance against pre-established
individual performance metrics devised by the Compensation Committee, between
the Compensation Committee and the respective executive, or
otherwise.
83
Effect of realized compensation on future pay
decisions
The Compensation Committee considers actual
realized compensation received in determining if our compensation programs are
meeting their objectives of pay-for-performance and retention. The Compensation
Committee generally does not reduce compensation plan targets based on realized
compensation, as we do not want to create a disincentive for exceptional
performance. However, the possible cash compensation increases and the amount of
equity incentive awards may be adjusted based on actual realized
compensation.
Other factors
For newly hired executives, in addition to
market compensation for the position, consideration is given to the base salary
of the individual at his or her prior employment and any unique personal
circumstances that motivated the executive to leave that prior position and join
Logitech.
In determining Mr. De Luca’s and Mr.
Quindlen’s 2010 compensation the Compensation Committee reviewed and considered
the same data as for other named executive officers, as discussed above, but
also considered the following:
- Mr. De Luca’s and Mr. Quindlen’s
fiscal year 2009 base salary, target bonus and equity incentive compensation;
and
- Mr. De Luca’s and Mr. Quindlen’s
total equity incentive position and the total intrinsic value of vested and
unvested equity incentives held by them.
Timing of compensation
decisions
Executive cash compensation (base salary plus
target bonus) is typically reviewed at the Compensation Committee’s March
meeting in an effort to align cash compensation changes to the fiscal year,
which begins in April. Compensation increases are not automatic each year and
typically are largely dependent upon relative pay rates for the industry and
Company and individual performance. However, in fiscal year 2010 base salary and
target bonus opportunities for named executive officers were frozen over those
in fiscal year 2009 due to economic and market conditions. At the March meeting
the Committee typically considers the equity incentive award grant for the
Chairman and the CEO, although the Committee has recently determined that, for
fiscal year 2011, the Committee will consider equity incentive awards for the
Chairman and the CEO at the same time as those for other executive officers, as
part of the Company’s annual employee equity incentive grant cycle. However, the
Committee may also make executive compensation decisions at other times during
the fiscal year in the event of an executive new hire or promotion or other
reasons.
ELEMENTS OF COMPENSATION / EXECUTIVE
COMPENSATION PRACTICES
The principal components of our
executive compensation programs are:
- Base salary.
- Short-term cash incentive
awards.
- Long-term equity incentive
awards.
Our executive officers are also eligible to
participate in our health and benefits plans, retirement savings plans, and our
employee share purchase plans, which are generally available to our employees.
We also provide limited perquisites, as described below.
84
The following table outlines our
objectives for each of the principal components of executive
compensation.
Element of Compensation |
|
Objective |
Base salary |
|
- Reward individuals’ current
contributions to the company
- Compensate individuals for
their expected day-to-day
performance
|
|
|
Short-term cash incentive
awards
|
|
- Align executive compensation
with annual and semi-annual
performance
- Make a significant portion
of the executive’s yearly cash
compensation variable and subject to
the achievement of company business goals.
- Motivate and reward the
executive for above-target performance
|
|
|
|
|
|
Long-term equity incentive
awards |
|
- Support retention of the
executive
- Directly align executive and
shareholder interests
- Provide a direct incentive
for future performance
|
|
|
Pay Mix
In determining how we allocate an executive’s
total compensation package among base salary, short-term cash incentives and
long-term equity incentives, we emphasize compensation elements that reward
performance against measures that correlate closely with increases in
shareholder value. Accordingly, a significant portion of our executive
compensation is at-risk, including the short-term cash incentive awards and the
majority of our long-term equity incentive awards. Our CEO and other executive
officers have a higher percentage of at-risk compensation (and thus greater
upside potential and downside risk) relative to Logitech’s other employees. We
believe this is appropriate because our executive officers have the greatest
influence on Logitech’s performance.
The charts below indicate the percentage of
total compensation costs in fiscal year 2010 represented by base salary,
short-term cash incentives (bonus payments), and long-term equity incentive
awards for Guerrino De Luca, Gerald Quindlen and all other named executive
officers. All underlying amounts are taken from the Summary Compensation
Table.
Base salary
Base salary is the fixed portion of executive
pay and is set to reward individuals’ current contributions to Logitech and
compensate them for their expected day-to-day performance.
85
In setting base salary levels for fiscal year
2010, the Compensation Committee primarily considered the uncertain economic and
market conditions, particularly at the beginning of the fiscal year, and the
executive’s fiscal year 2009 base salary, in leaving base salaries for named
executive officers unchanged over those in fiscal year 2009.
In aggregate, base salaries for the named
executive officers for fiscal year 2010 are at or above the median of the peer
group, based on peer group data available in March 2010. However, the base
salaries for Mr. Quindlen and Mr. Bardman are below the median.
Short-term cash incentive
awards
Short-term cash incentive awards link cash
incentives to Logitech’s annual and semi-annual performance, make a significant
portion of the executive’s yearly cash compensation variable and subject to the
achievement of Logitech business goals, and motivate and reward executives for
above-target performance. In fiscal year 2010 Logitech named executive officers
were eligible for short-term cash incentive awards under a program established
under the Logitech Management Performance Bonus Plan (the “Bonus
Plan”).
Under the Bonus Plan named executive officers
and others selected for participation were eligible to receive cash bonuses
based on the performance of the Company or the participants’ business or
functional unit, or both, against fiscal year 2010 target performance
measures.
Performance measures for fiscal year 2010 bonus
program
In fiscal year 2010 the bonus
program was based on the following performance measures:
Performance Measure |
|
Why It is Used |
|
Measurement Basis |
Operating Income |
|
Generating an increase in per-share
value for investors is a priority, as operating profit allows
Logitech to re-invest in R&D, operations and people for future
success.
|
|
Generally Accepted Accounting Principles
(GAAP), excluding restructuring expenses.
|
|
|
|
|
|
Cash Flow from
Operations |
|
Strong cash flow provides more
financial flexibility, particularly in periods of economic
uncertainty.
|
|
Generally Accepted Accounting Principles
(GAAP), excluding any foreign currency exchange gains or
losses.
|
|
|
|
|
|
Market Share |
|
To prioritize progress against
competitors, particularly amidst economic uncertainty. Market share
increases demonstrate continued appeal of products to consumers, and
positions for continued growth once economic uncertainty passes. Also used
because net sales, as a practical matter, were difficult to project beyond
the very short term at the beginning of the fiscal year, when the bonus
program design was approved.
|
|
Weighted sales in Logitech product categories in eight key countries, based on available sales data, based on a 12-month trailing average.
|
The Compensation Committee’s adoption of cash
flow and market share performance measures, in addition to operating income, was
a change from prior fiscal years, in which net sales and operating income were
the performance measures. The changes to the performance measures were primarily
driven by economic and market conditions at the beginning of the fiscal year,
when the program was designed and approved by the Compensation
Committee.
86
The bonus program in fiscal year 2010 for
named executive officers was measured on a semi-annual basis, although for the
Chairman and the CEO the payout under the program was on an annual, and not
semi-annual, basis. For all named executive officers the operating income and
cash flow from operations goals in the 2010 bonus program were set equal to
Logitech’s semi-annual business plans for fiscal year 2010 as approved by the
Board in May and October, 2009, except that part of the goals for Junien
Labrousse were based on the performance of the product group and part of the
goals for Werner Heid were based on the performance of the sales and marketing
function. The market share goal was determined by the Committee in May 2009
based on a review of historical market share data and expected product
performance and introductions. Please see further details below under the
heading “Bonus Plan performance targets and results for fiscal year
2010.”
Timing of bonus payments
If earned, the bonus is paid to the Chairman
and the Chief Executive Officer in one installment in May for the fiscal year
ended March 31, and the semi-annual bonuses are generally paid to the other
named executive officers in November and May for the two fiscal six-month
performance periods. Bonus amounts were earned and paid to the named executive
officers as set out in the Summary Compensation Table and the Grants of
Plan-Based Awards Table below.
Formula used
The formula for determining the
bonus awards in fiscal year 2010 was as follows:
Executive’s eligible |
X |
Executive’s target |
X |
Bonus Plan funding |
= |
Annual or semi-annual |
wages |
bonus percentage(1) |
percentage(2) |
bonus
award |
____________________
(1) |
|
Expressed as a
percentage of base salary. |
|
(2) |
|
Based on
achievement against target performance
measures. |
The target performance measures under the
Bonus Plans for fiscal year 2010 are disclosed in the table below under the
heading “Bonus Plans performance targets and results for fiscal year
2010.”
Named executive officer bonus targets
Each of Guerrino De Luca, our Chairman, and
Gerald Quindlen, our CEO, was eligible for an annual target bonus of 100% of his
base salary under the fiscal year 2010 bonus program. The maximum possible bonus
for both Mr. De Luca and Mr. Quindlen was 269% of base salary.
All of Logitech’s other named executive
officers were eligible for annual target bonuses ranging from 40% to 75% of
their base salaries, depending on their positions, with a maximum possible bonus
of 300% of their base salaries in the first performance period and 238% in the
second performance period. In each case, the annual target bonus was divided
into semi-annual bonus targets.
The minimum performance required before any
bonus payment is made under the fiscal year 2010 bonus program was generally 80%
of the target performance, except that the minimum performance for Logitech
operating income in the first half of fiscal year 2010 was 85% of the target
performance, and the minimum performance for Logitech market share in fiscal
year 2010 was 97% of the target performance. In addition, it was a minimum
performance condition for the payout of any bonus to Mr. De Luca or Mr. Quindlen
that Logitech have positive operating income in at least two of the four fiscal
quarters during fiscal year 2010. For all other named executive officers, it was
a minimum performance condition for the payout of any bonus in respect of a
six-month performance period that Logitech have positive operating income in one
of the two fiscal quarters during the performance period.
The target bonus opportunities for named
executive officers in fiscal year 2010 are in aggregate below the median of the
peer group, based on peer group data available in March 2010.
87
Bonus Plan performance targets and results for fiscal year
2010
The performance targets and actual
results from the Bonus Plan in fiscal year 2010 for our named executive officers
are set out in the following table:
|
|
|
|
|
|
Minimum |
|
|
|
|
|
Maximum |
|
|
|
|
|
|
|
|
|
|
FY10 |
|
|
|
Performance |
|
Performance |
|
Performance |
|
Actual |
|
|
|
|
|
|
Measurement |
|
|
|
Target |
|
Target |
|
Target |
|
Achievement |
|
Performance/ |
Participant |
|
Period |
|
Performance Measure(1) |
|
($s in millions) |
|
($s in millions) |
|
($s in millions) |
|
($s in millions) |
|
Funding |
Guerrino De Luca, |
|
1st half |
|
Operating |
|
(29.6 |
) |
|
|
(25.2 |
) |
|
|
(11.4 |
) |
|
|
(7.8 |
) |
|
|
188.0 |
% |
|
Gerald Quindlen |
|
FY 2010 |
|
Income (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (25%) |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
44.3 |
% |
|
|
88.2 |
% |
|
|
|
|
|
Cash Flow (37.5%) |
|
20.0 |
|
|
|
25.0 |
|
|
|
50.0 |
|
|
|
129.1 |
|
|
|
300.0 |
% |
|
|
|
2nd half |
|
Operating |
|
59.8 |
|
|
|
74.8 |
|
|
|
134.6 |
|
|
|
86.4 |
|
|
|
119.0 |
% |
|
|
|
FY 2010 |
|
Income (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (37.5%) |
|
43.7 |
% |
|
|
45.0 |
% |
|
|
46.8 |
% |
|
|
43.8 |
% |
|
|
80.0 |
% |
|
|
|
|
|
Cash Flow (25%) |
|
51.7 |
|
|
|
64.6 |
|
|
|
129.2 |
|
|
|
232.4 |
|
|
|
200.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
164.8 |
% |
|
Erik Bardman |
|
2nd half |
|
Operating |
|
58.1 |
|
|
|
72.6 |
|
|
|
130.6 |
|
|
|
86.4 |
|
|
|
119.0 |
% |
|
|
|
FY 2010 |
|
Income (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (37.5%) |
|
43.7 |
% |
|
|
45.0 |
% |
|
|
46.8 |
% |
|
|
43.8 |
% |
|
|
80.0 |
% |
|
|
|
|
|
Cash Flow (25%) |
|
51.7 |
|
|
|
64.6 |
|
|
|
129.2 |
|
|
|
232.4 |
|
|
|
200.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124.6 |
% |
|
Tom Fergoda, |
|
1st half |
|
Operating |
|
(29.6 |
) |
|
|
(25.2 |
) |
|
|
(11.4 |
) |
|
|
(7.8 |
) |
|
|
188.0 |
% |
|
David Henry |
|
FY 2010 |
|
Income (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (25%) |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
44.3 |
% |
|
|
88.2 |
% |
|
|
|
|
|
Cash Flow (37.5%) |
|
20.0 |
|
|
|
25.0 |
|
|
|
50.0 |
|
|
|
129.1 |
|
|
|
300.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205.1 |
% |
|
|
|
2nd half |
|
Operating |
|
58.1 |
|
|
|
72.6 |
|
|
|
130.6 |
|
|
|
86.4 |
|
|
|
119.0 |
% |
|
|
|
FY 2010 |
|
Income (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (37.5%) |
|
43.7 |
% |
|
|
45.0 |
% |
|
|
46.8 |
% |
|
|
43.8 |
% |
|
|
80.0 |
% |
|
|
|
|
|
Cash Flow (25%) |
|
51.7 |
|
|
|
64.6 |
|
|
|
129.2 |
|
|
|
232.4 |
|
|
|
200.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124.6 |
% |
|
Werner Heid |
|
1st half |
|
Operating |
|
(29.6 |
) |
|
|
(25.2 |
) |
|
|
(11.4 |
) |
|
|
(7.8 |
) |
|
|
188.0 |
% |
|
|
|
FY 2010 |
|
Income (20%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (35%) |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
44.3 |
% |
|
|
88.2 |
% |
|
|
|
|
|
Cash Flow (20%) |
|
20.0 |
|
|
|
25.0 |
|
|
|
50.0 |
|
|
|
129.1 |
|
|
|
300.0 |
% |
|
|
|
|
|
Sales Contribution |
|
105.8 |
|
|
|
132.3 |
|
|
|
264.6 |
|
|
|
153.3 |
|
|
|
116.0 |
% |
|
|
|
|
|
Margin (25%)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157.5 |
% |
|
|
|
2nd half |
|
Market Share (37.5%) |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
43.8 |
% |
|
|
80.0 |
% |
|
|
|
FY 2010 |
|
Cash Flow (25%) |
|
51.7 |
|
|
|
64.6 |
|
|
|
129.2 |
|
|
|
232.4 |
|
|
|
200.0 |
% |
|
|
|
|
|
Sales Contribution |
|
189.5 |
|
|
|
236.9 |
|
|
|
308.0 |
|
|
|
284.3 |
|
|
|
150.0 |
% |
|
|
|
|
|
Margin (37.5%)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136.3 |
% |
|
Junien Labrousse |
|
1st half |
|
Operating |
|
(29.6 |
) |
|
|
(25.2 |
) |
|
|
(11.4 |
) |
|
|
(7.8 |
) |
|
|
188.0 |
% |
|
|
|
FY 2010 |
|
Income (20%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Share (35%) |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
44.3 |
% |
|
|
88.2 |
% |
|
|
|
|
|
Cash Flow (20%) |
|
20.0 |
|
|
|
25.0 |
|
|
|
50.0 |
|
|
|
129.1 |
|
|
|
300.0 |
% |
|
|
|
|
|
PG Contribution |
|
103.9 |
|
|
|
129.9 |
|
|
|
259.7 |
|
|
|
149.5 |
|
|
|
115.1 |
% |
|
|
|
|
|
Margin (25%)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157.3 |
% |
|
|
|
2nd half |
|
Market |
|
43.7 |
% |
|
|
45.1 |
% |
|
|
46.9 |
% |
|
|
43.8 |
% |
|
|
80.0 |
% |
|
|
|
FY 2010 |
|
Share (37.5%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow (25%) |
|
51.7 |
|
|
|
64.6 |
|
|
|
129.2 |
|
|
|
232.4 |
|
|
|
200.0 |
% |
|
|
|
|
|
PG Contribution |
|
193.8 |
|
|
|
242.2 |
|
|
|
314.9 |
|
|
|
295.4 |
|
|
|
162.0 |
% |
|
|
|
|
|
Margin (37.5%)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140.8 |
% |
|
88
____________________
(1) |
|
Operating income excludes restructuring expense. |
|
(2) |
|
Sales
Group Contribution Margin consists of Logitech gross profit less sales
operating expenses and a capital charge. |
|
(3) |
|
Product Group Contribution Margin, which consists of Logitech gross
profit less Product Group operating expenses.
|
The cash bonus awards earned and paid in
respect of fiscal year 2010 were based solely on the formula funding results
prescribed by the above measures.
Long-term equity incentive
awards
During fiscal year 2010 the Compensation
Committee granted our named executive officers long-term equity incentive awards
in the form of stock options, performance-based restricted stock units, or
PRSUs, and, for the first time, time-based restricted stock units, or RSUs, in
order to align their incentives with the long-term interests of our
shareholders, to support retention of the executives, to provide competitive
total compensation packages, and to provide a direct incentive for future
performance.
Stock Options. Stock options provide the opportunity to purchase shares at a fixed
exercise price, allowing the recipient to benefit from increases in share price
from the date of grant. The options have a four-year vesting period, with the
options vesting in four equal annual increments, to encourage a long-term
perspective and to encourage key employees to remain at Logitech. All options
granted to named executive officers to date have an exercise price equal to the
fair market value of Logitech’s shares on the effective grant date.
PRSUs. The
performance-based restricted stock units, or PRSUs, provide the executive
officer the opportunity, if the minimum performance threshold is met, to receive
Logitech shares based on the relative total shareholder return, or TSR, of
Logitech shares against the Nasdaq 100 index over the two-year performance
period. If threshold performance is achieved, the number of shares awarded is
pro-rated according to performance (see “Structure of the PRSUs”).
The Compensation Committee adopted the use of
PRSUs for executive officers during fiscal year 2009 in part to align Logitech’s
equity compensation for executives more closely with the peer group, and also to
supplement the use of option grants and to further align the interests of
executive officers with shareholders. The PRSUs are intended to:
- Link compensation to key financial
metrics of growth and profitability.
- Support pay-for-performance
philosophy and retention efforts.
- Be less dilutive to shareholders
than stock options.
The Compensation Committee has determined that
PRSUs granted in the future will vest over a three-year period.
RSUs. Time-based
restricted stock units, or RSUs, provide for the issuance of shares at a future
date upon vesting of the RSUs. RSUs issued to executive officers and other
employees have a four-year vesting period, with the RSUs vesting in four equal
annual increments. The Committee adopted the use of RSUs to increase the
retention value of Logitech’s equity incentives, to remain competitive, as RSUs
are increasingly used by other high-technology companies, and to be less
dilutive to shareholders than stock options.
The Committee anticipates that
performance-based awards such as stock options and PRSUs will represent the
majority of equity incentive awards granted to executive officers in the future,
with RSUs being a smaller portion, in order to prioritize pay-for-performance
over retention.
89
Determination of long-term equity incentive
awards
The Compensation Committee is responsible for
approving who should receive equity incentive awards, when the awards should be
made, the exercise price per share and the number of shares or other rights to
be granted. Long-term equity incentive awards may be granted only by the
Compensation Committee or the full Board of Directors. The Compensation
Committee regularly reports its activity, including approvals of grants, to the
Board. We do not have any program, plan, or practice to select equity
compensation (including stock option) grant dates in coordination with the
release of material non-public information, nor do we time the release of
information for the purpose of affecting value. We do not backdate options or
grant options retroactively.
Long-term equity incentive awards granted in fiscal year
2010
During fiscal year 2010 the number of shares
subject to equity incentive awards granted to Logitech’s named executive
officers was determined by the Compensation Committee based on the accrued and
unrealized gains from past equity incentive grants, prior grant practices, peer
group and broader industry survey data on annual and cumulative delivered value
of grants to executive officers, anticipated compensation expense and
shareholder dilution, and review of trends in equity incentive compensation
design and practices among high technology companies. The Committee considered
trends data as well as the relatively low accrued value of past grants in
particular in adopting the use of RSUs for executive officers, including the
named executive officers, in fiscal year 2010.
Grants to Mr. Quindlen. Mr. Quindlen received a stock option grant for 100,000 shares on April 1,
2009 as part of his fiscal year 2010 annual compensation as CEO. Mr. Quindlen
received a performance restricted stock unit grant for 40,000 shares, assuming
100% target performance, and a restricted stock unit grant for 20,000 shares, on
June 29, 2009, as part of the annual stock focal process. Slightly less than
half of Mr. Quindlen’s total target compensation in fiscal year 2010 was
provided through long-term equity incentive awards. The total number of equity
incentives granted to Mr. Quindlen was based upon the mix of compensation
components, the Compensation Committee’s consideration of the accrued value of
past grants to Mr. Quindlen, as well as the Compensation Committee’s estimate of
Mr. Quindlen’s potential for future contributions to Logitech’s
success.
Grant to Mr. De Luca. Mr. De Luca received a stock option grant for 30,000 shares on April 1,
2009 as part of his fiscal year 2010 compensation as Chairman. Mr. De Luca did
not receive a grant of PRSUs, RSUs or any other equity incentive grants during
fiscal year 2010.
Grants to Other Named Executive Officers. The equity incentive award grants made to all
Logitech named executive officers during fiscal year 2010 are set out in the
Grants of Plan-Based Awards in Fiscal Year 2010 table below. The value of
long-term equity incentive awards in the form of stock options, PRSUs and RSUs
granted during fiscal year 2010 was in aggregate below the peer group, based on
March 2010 compensation review data.
Timing of grants
Long-term equity incentive award grants to
executive officers are typically and predominantly made at regularly scheduled,
predetermined meetings of the Compensation Committee. These meeting are
scheduled up to 18 months in advance and take place before the regularly
scheduled, predetermined meetings of the full Board. On limited occasions,
grants may be made at an interim meeting of the Compensation Committee or by
consent, for the purpose of approving the hiring and compensation package for
newly hired or promoted executives. The Committee approved a new hire grant to
Erik Bardman, the Company’s Chief Financial Officer, by consent in October 2009.
The timing of interim meetings or consents, if they occur, is based on the
activity which generated the need for the meeting or the consent, not Logitech’s
share price. In fiscal year 2010 grants were made to new hires and promoted
employees below the executive officer level at regularly scheduled meetings of
the Compensation Committee, by consent in October 2009, and by consent in
December 2009, in connection with our acquisition of LifeSize.
90
Stock option exercise price
The exercise price of a newly granted option
(i.e., not an option assumed or granted in relation to an acquisition) is
Logitech’s closing share price on Nasdaq on the date of grant, for options
denominated in U.S. dollars, or the closing share price on the SIX Swiss
Exchange on the date of grant, for options denominated in Swiss francs. Options
granted to executive officers are typically denominated in U.S. dollars. The
grant date may be the day of the Compensation Committee meeting or consent, or a
subsequent date shortly after the date of the meeting or consent, but not a date
prior to the date of the meeting or consent. The grant date is specified by the
Compensation Committee at the time of its approval.
Stock option vesting
Options granted to executive officers and
employees vest 25% per year over four years, in equal increments on each annual
anniversary of the original grant date or, in the case of grants made to
newly-hired employees in connection with their hiring, the grants vest on each
annual anniversary of the employee hire date.
Restricted stock unit vesting
RSUs issued to executive officers and other
employees have a four-year vesting period, with the RSUs vesting in four equal
annual increments.
PRSU Performance Measure
The performance measure for the
performance-based restricted stock units granted in fiscal year 2009 and 2010 is
the relative total shareholder return (“TSR”), expressed as a percentile rank,
of Logitech shares against the TSR of companies included in the Nasdaq 100
Index. The Compensation Committee believes this measure is a key reflection of
Logitech’s operational and financial performance, because it focuses on relative
performance against other mid- to large-size technology companies.
For purposes of the PRSUs, relative TSR
reflects (i) the aggregate change in the 30-day average closing price of
Logitech shares against the companies in the Nasdaq 100 Index, and (ii) the
value (if any) returned to shareholders in the form of dividends or similar
distributions, assumed to be reinvested in shares when paid, each at the
beginning and the end of a two-year performance period.
Structure of the PRSUs
The structure of the PRSUs is
summarized in the table below:
|
|
Vested |
|
|
percentage of |
|
|
shares subject to |
Percentile Rank of Logitech TSR against
Nasdaq 100 Index TSR |
|
PRSU |
Below 40th Percentile Rank (threshold) |
|
0 |
% |
|
40th Percentile Rank |
|
50 |
% |
|
60th Percentile Rank (target) |
|
100 |
% |
|
75th Percentile Rank and Above |
|
200 |
% |
|
If the minimum performance threshold of a
40th percentile rank of Logitech TSR against the
Nasdaq 100 Index TSR over the two-year performance period is not met, no shares
subject to the PRSUs will vest. For a percentile rank between the 40th and 60th percentiles, or between the 60th and 75th percentiles, the percent of shares subject to
the PRSU that will vest will be determined by straight-line
interpolation.
The Compensation Committee set the minimum
performance threshold, and the vested percentages against the corresponding TSR
percentile ranks, based on the historical TSR of Logitech shares against the
Nasdaq 100 Index.
91
OTHER COMPENSATION
ELEMENTS
Other cash compensation
The Compensation Committee may award
discretionary bonuses in order to recognize outstanding individual performance,
to assist in the retention of key talent, or for other reasons. Werner Heid, the
Company’s Senior Vice President, Sales and Marketing, was awarded a
discretionary award of $40,467 in fiscal year 2010 to enable him to purchase a
value of Logitech shares equal to what he would have purchased under the
Logitech Employee Share Purchase Plan for the February 1 - July 31, 2009
offering period but for his employment start date being after the offering start
date.
Deferred compensation plan
Executive officers based in the United States
are also eligible to participate in the Logitech Inc. Deferred Compensation Plan
and a predecessor plan, which is an unfunded and unsecured plan that allows
employees of Logitech Inc., the Logitech subsidiary in the United States, who
earn more than a threshold amount the opportunity to defer U.S. taxes on up to
80% of their base salary and up to 90% of their bonus or commission
compensation. Under the plan, compensation may be deferred until termination or
other specified dates chosen by the participants, and deferred amounts are
credited with earnings based on investment benchmarks chosen by the
participants. The earnings credited to the participants are intended to be
funded solely by the plan investments. Logitech does not make contributions to
this plan. Information regarding named executive officer participation in the
Deferred Compensation Plan can be found in the Non-Qualified Deferred
Compensation for Fiscal Year 2010 table and the accompanying
narrative.
Because the listed officers do not receive
preferential or above-market rates of return under the deferred compensation
plan, earnings under the plan are not included in the Summary Compensation
table, but are included in the Non-Qualified Deferred Compensation
table.
Severance and related
benefits
All executive officers are eligible to receive
benefits under certain conditions in accordance with Logitech’s Change of
Control Severance Agreement (the “Change of Control Agreement”), as described in
the section “Potential Payments Upon Termination or Change in Control.”
The purpose of the Change of Control
Agreements is to support retention in the event of a prospective change of
control. Should a change of control occur, benefits will be paid after a “double
trigger” event - meaning that there has been both a change of control, and the
executive is terminated without cause or resigns for good reason within 12
months thereafter - as described in “Potential Payments Upon Termination or
Change in Control.” Other than in the case of the Change of Control Agreement
for Mr. Quindlen, benefits are capped at the amounts prescribed under Sections
280G and 4999 of the U.S. Tax Code and Logitech does not provide payments to
reimburse its executive officers for additional taxes incurred (also known as
“gross-ups”) in connection with a change of control.
The Change of Control Agreement with Mr.
Quindlen provides a tax gross-up to reimburse him for any additional taxes
incurred under Section 280G of the U.S. Tax Code in connection with a change of
control. This additional benefit was provided to Mr. Quindlen to be competitive
with terms for other CEOs at the time the agreement was approved.
In addition, under Mr. Quindlen’s employment
agreement and Mr. Heid’s offer letter, if their employment is involuntarily
terminated without cause they are entitled to their base salary and target bonus
as described in “Potential Payments Upon Termination or Change in Control.” The
term in Mr. Quindlen’s agreement is intended to provide consideration for his
service to Logitech and the potential length of time until subsequent employment
is secured if he is involuntarily terminated without cause. The term in Mr.
Heid’s offer letter was the result of negotiations of the terms of his
employment when he joined Logitech.
92
The PRSU and RSU award agreements for named
executive officers other than Tom Fergoda provide for the acceleration of
vesting of the RSUs and PRSUs subject to the award agreements under the same
circumstances and conditions as under the Change of Control Agreements; namely,
if the named executive officer is subject to an involuntary termination within
12 months after a change of control because his or her employment is terminated
without cause or the executive resigns for good reason. In the event of such an
involuntary termination:
- All shares subject to the
RSUs will vest.
- 100% of the shares subject to the
PRSUs will vest if the change of control occurs within 1 year after the grant
date of the PRSUs. If the change of control occurs more than 1 year after the
grant date of the PRSUs, the number of shares subject to the PRSU that will
vest will be determined by applying the performance criteria under the PRSUs
as if the performance period had ended on the date of the change of
control.
To determine the level of benefits to be
provided under each change of control agreement and other agreements, the
Committee considered the circumstances of each type of severance, the impact on
shareholders, and market practices.
On June 8, 2010, after the end of fiscal year
2010, we entered into a resignation and severance agreement with David Henry in
connection with his resignation from the Company, which is expected to be
effective October 1, 2010 or within 60 days thereafter. Under the agreement,
subject to Mr. Henry’s execution of a general release of claims, and that
release becoming irrevocable, Mr. Henry will be entitled to receive on his
resignation a lump-sum payment of $460,000, a pro-rated half-year bonus up to
$149,500, outplacement services in an amount of up to $15,000, health insurance
coverage premium payments for a period of up to one year, and, if the effective
date of his resignation is October 1, 2010 or later, he will be entitled to
receive an additional lump-sum payment of $508,000, in all cases less applicable
withholdings.
The terms of the agreement with Mr. Henry are
a result of individual negotiations with him in consideration for his service to
Logitech, to incent him to remain with Logitech to lead the marketing department
for a reasonable period until his successor is found, and as consideration for
the potential length of time until subsequent employment is secured. No amounts
are payable to Mr. Henry if he is terminated for cause.
After the end of fiscal year 2010, we entered
into a severance agreement effective July 1, 2010 with Tom Fergoda in connection
with his resignation from the Company. Under the agreement, subject to Mr.
Fergoda’s execution of a general release of claims, and that release becoming
irrevocable, Mr. Fergoda will be entitled to receive the equivalent of two
months’ of his fiscal year 2010 salary in a lump sum, and continuation of health
insurance coverage premiums for two months.
Perquisites
Logitech’s executive officer benefit programs
are substantially the same as for all other eligible employees. Mr. Quindlen was
provided with personal tax preparation services in fiscal year 2010. Expenses
related to these services are imputed as income to Mr. Quindlen and the
additional tax liabilities are paid by Logitech as a gross-up payment. The
aggregate amounts of these services plus the gross-up payment are reflected in
the Summary Compensation Table below under the heading “All Other
Compensation.”
Other Benefits
Logitech’s executive officers are eligible to
receive the same benefits as all other employees, including the
following:
- Company contributions to defined
contribution retirement programs, such as the Logitech Inc.
401(k).
- Health, welfare and life insurance
benefits.
- Opportunity for participation in
the Logitech Employee Share Purchase Plans.
93
OTHER COMPENSATION
POLICIES
Derivatives
We do not permit any Company insiders,
including officers and directors, to trade in puts, calls, warrants or other
derivative Logitech securities traded on an exchange or in any other organized
securities market.
Recovery of compensation for restatements and
misconduct
In June 2010 the Compensation
Committee adopted a policy regarding the recovery of
compensation paid to an executive officer or the principal accounting officer of
the Company. Under the terms of the policy we may recover bonus amounts, equity
awards or other incentive compensation awarded or paid within the prior three
years to a covered officer if the Compensation Committee determines the
compensation was based on any performance goals that were met or exceeded as a
result, in whole or in part, of the officer’s fraud or misconduct, or the
officer knew at the time of the existence of fraud or misconduct that resulted
in performance goals being met or exceeded, and a lower amount would otherwise
have been awarded or paid to the officer. In addition, under the policy Logitech
may recover gains realized on the exercise of stock options or on the sale of
vested shares by an executive officer or the principal accounting officer if,
within three years after the date of the gains or sales, Logitech discloses the
need for a significant financial restatement, other than a financial restatement
solely because of revisions to US GAAP, and the Compensation Committee
determines that the officer’s fraud or misconduct caused or partially caused the
need for the restatement, or the covered officer knew at the time of the
existence of fraud or misconduct that resulted in the need for such
restatement.
In addition, our 2006 Stock Incentive Plan and
our Management Performance Bonus Plan provide that awards under the plans are
suspended or forfeited if the plan participant, whether or not an executive
officer:
- has committed an act of
embezzlement, fraud or breach of fiduciary duty;
- makes an unauthorized disclosure
of any Logitech trade secret or confidential information; or
- induces any customer to breach a
contract with Logitech.
Any decision to suspend or cause a forfeiture
of any award held by an executive officer under the 2006 Stock Incentive Plan or
the Management Performance Bonus Plan is subject to the approval of the Board of
Directors.
Additional tax
considerations
U.S. Tax Code Section 162(m)
We are limited by Section 162(m) of the U.S.
Tax Code to a deduction for U.S. federal income tax purposes of up to $1,000,000
of compensation paid to our CEO and any of our three most highly compensated
executive officers, other than our Chief Financial Officer, in a taxable year.
Compensation above $1,000,000 may be deducted if, by meeting certain technical
requirements, it can be classified as “performance-based compensation.” The
Compensation Committee considers the implications of Section 162(m) of the U.S.
Tax Code in setting and determining executive officer long-term equity incentive
award grants and in setting short-term cash incentive award
compensation.
The Logitech International S.A. 2006 Stock
Incentive Plan approved by our shareholders in 2006 permits certain grants of
awards under that plan to qualify as “performance-based compensation.” Bonuses
paid to executives under the Logitech Management Performance Bonus Plan may
similarly qualify under Section 162(m). However, the bonuses earned in fiscal
year 2010 did not qualify under Section 162(m) because the general economic
uncertainty led to a delay in setting performance targets. Although the
Compensation Committee uses the requirements of Section 162(m) as a guideline,
deductibility is not the sole factor it considers in assessing the appropriate
levels and types of executive compensation and it will elect to forego
deductibility when the Committee believes it to be in the best interests of the
Company and its shareholders.
94
In addition to considering the tax
consequences, the Compensation Committee considers the accounting consequences,
including the impact of the Financial Accounting Standard Board’s Accounting
Standards Codification Section 718, on its decisions in determining the forms of
different equity awards.
COMPENSATION BELOW THE EXECUTIVE
LEVEL
Similar to Logitech’s executive compensation
programs, Logitech’s compensation for its employees below the level of executive
officer have been designed to attract, retain and motivate the skilled employees
that are essential to Logitech’s success. However, one essential difference
between compensation of executives and for employees below the executive level
is that, for employees below the executive level, short-term incentives in the
form of cash bonuses or profit sharing and long-term equity incentive awards
comprise a smaller portion of the employee’s total target compensation. This
means there is less total compensation at risk for non-executive employees based
on the Company’s performance, while also meaning, similarly, that there is less
potential for increased compensation from superior Company
performance.
Components – Non-Executive
Compensation
The key components of Logitech’s compensation
for employees below the executive level are as follows:
Base salary. Base
salary is set to reward employees’ current contributions to Logitech and
compensate them for their expected day-to-day performance.
Short-term cash incentives. Logitech has a bonus program for employees at the director level or
above, a profit-sharing program for employees below the director level, and, for
sales personnel, sales commission plans. All professional staff other than sales
personnel participate in the bonus program or the profit sharing program. The
potential target compensation from the bonus and profit sharing programs is
established as a percentage of the employee’s annual base salary. The potential
target compensation for sales personnel under sales commission plans is set on
the basis of their sales quotas.
Long-term equity incentive awards. Approximately one-third of the Company’s
professional staff receive long-term equity incentive awards, in the form of
stock options and, more recently for eligible employees at the level of director
or above, restricted stock units, which represent the right to receive Logitech
shares upon the vesting of the units. In addition, all full-time professional
staff are eligible to participate in the Company’s employee share purchase
plans, which allow eligible employees to purchase Logitech shares at a 15%
discount from the market price of Logitech’s shares at the beginning or end of
each six-month offering period.
Health and welfare, and other local benefits. Health and welfare and other local benefits
are offered to employees based on the market practices and local law
requirements of the various jurisdictions in which employees are based. In a
limited number of jurisdictions we offer defined benefit or defined contribution
pension plans or required severance benefits for employees.
Compensation Philosophy – Non-Executive
Compensation
The key features of Logitech’s compensation
philosophy for employees below the executive level are as follows:
- Base salary should be at
approximately the median for comparable companies in the industry and in
the region where the employee
is based.
- The total level of compensation at
risk for employees below the executive level should increase with the
level of the employee, to reflect the
relative impact of the employee on the Company’s performance.
- High-performing employees should
receive significantly higher potential compensation in the form of
equity incentive awards in order to
help retain and motivate these employees.
95
- Other than for the compensation of
employees in the Company’s sales organization, the performance measures under the Company’s short-term
incentives in the form of cash bonuses, profit sharing, or long-term equity incentive awards, should be
based on the performance of the entire Logitech group, or the performance of the Logitech group
plus the performance of the employee’s department or unit, rather than on the performance of the
individual employee. This is primarily to encourage collaboration among the Company’s
employees.
- For employees in the Company’s
sales organization, compensation should include commissions based on the employee’s sales performance against
sales quotas or targets. Approximately 30% to 40% of a salesperson’s total target compensation is
based on commissions. The Company believes this direct linking of salesperson compensation to
individual performance helps drive sales performance and reflects competitive market
practice.
- Equity incentive compensation is
an important component of employee compensation. This reflects market practice, especially in California’s
Silicon Valley, where the Company has a significant presence, but the Company also believes that equity
incentive compensation is a key differentiator in attracting and retaining employees in employment
markets outside of the United States where, historically, equity incentive compensation was not or is not
common.
Compensation for employees below the executive
level is established based on guidelines developed by the Company’s compensation
& benefits department, market practices, and assessment of individual
performance and potential for future contribution to Logitech by the employee’s
manager and the Company’s human resources department. The Compensation Committee
of the Board provides oversight of compensation below the executive level,
reviews and approves the yearly short-term incentive program design and
performance measures, reviews and approves the yearly long-term equity incentive
award budget, and reviews and approves individual long-term equity incentive
award grants.
Compensation Risks
Assessment
The Compensation Committee conducted a review,
with the assistance of Fred W. Cook & Co., Inc., the Committee’s independent
compensation consultant, of Logitech’s compensation programs in March 2010 to
assess the risks associated with their design. The Committee reviewed in
particular the following compensation programs and associated
practices:
- 2006 Stock Incentive
Plan.
- Management Performance Bonus
Plan.
- Profit Sharing
Plan.
- Sales commissions
plans.
- Change of Control Severance
Agreements in place with executive officers.
The review included a consideration of
Logitech’s enterprise risk areas developed as part of its enterprise risk
management process, compensation risk areas associated with Logitech’s current
compensation programs, and risk controls. Based on this review, we have
concluded that our compensation policies and practices do not create risks that
are reasonably likely to have a material adverse effect on the
Company.
96
REPORT OF THE COMPENSATION
COMMITTEE
The Logitech Compensation Committee, which is
composed solely of independent members of the Logitech Board of Directors,
assists the Board in fulfilling its responsibilities with regard to compensation
matters. The Compensation Committee has reviewed and discussed the “Compensation
Discussion and Analysis” section of this Compensation Report with management.
Based on this review and discussion, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included
in Logitech’s 2010 Invitation and Proxy Statement and Annual
Report.
Compensation Committee
MATTHEW BOUSQUETTE, Chairman
KEE-LOCK CHUA
RICHARD LAUBE
ROBERT MALCOLM
SUMMARY COMPENSATION TABLE
The following table provides information
regarding the compensation and benefits earned during fiscal years 2010, 2009
and 2008 by our named executive officers. For more information, please refer to
“Compensation Disclosure and Analysis,” as well as “Narrative Disclosure to
Summary Compensation Table and Grants of Plan-Based Awards Table.”
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Changes in |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity |
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
Deferred |
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Compensation |
|
Compensation |
|
Compensation |
|
|
Name and Principal
Position |
|
Year |
|
Salary ($) |
|
Bonus ($) |
|
Awards($)(1) |
|
Awards ($)(1) |
|
($)(2) |
|
Earnings($) |
|
($)(3) |
|
Total ($) |
Gerald Quindlen |
|
FY10 |
|
787,500 |
|
|
|
|
1,007,600 |
|
394,000 |
|
|
1,299,000 |
|
|
— |
|
26,498 |
|
|
3,514,598 |
President and Chief |
|
FY09 |
|
787,500 |
|
— |
|
|
697,500 |
|
1,151,000 |
|
|
— |
|
|
— |
|
9,626 |
|
|
2,645,626 |
Executive Officer |
|
FY08 |
|
516,154 |
|
— |
|
|
— |
|
3,999,000 |
|
|
518,215 |
|
|
— |
|
8,697 |
|
|
5,042,066 |
Erik
Bardman |
|
FY10 |
|
184,615 |
|
— |
|
|
— |
|
620,000 |
|
|
162,000 |
|
|
— |
|
3,257 |
|
|
969,872 |
Sr. Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guerrino De Luca |
|
FY10 |
|
550,000 |
|
— |
|
|
— |
|
118,200 |
|
|
907,000 |
|
|
— |
|
12,168 |
|
|
1,587,368 |
Chairman of |
|
FY09 |
|
550,000 |
|
— |
|
|
— |
|
223,200 |
|
|
— |
|
|
— |
|
18,128 |
|
|
791,328 |
the
Board |
|
FY08 |
|
719,231 |
|
— |
|
|
— |
|
950,000 |
|
|
754,074 |
|
|
— |
|
42,178 |
|
|
2,465,483 |
Tom
Fergoda |
|
FY10 |
|
224,425 |
|
10,000 |
|
|
14,020 |
|
109,200 |
|
|
148,343 |
|
|
— |
|
10,328 |
|
|
516,316 |
Former Controller, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acting Principal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark J. Hawkins |
|
FY10 |
|
44,231 |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
481 |
|
|
44,712 |
Former Sr. Vice |
|
FY09 |
|
460,000 |
|
— |
|
|
279,000 |
|
272,400 |
|
|
145,314 |
|
|
— |
|
8,559 |
|
|
1,165,273 |
President, Finance |
|
FY08 |
|
430,000 |
|
150,000 |
|
|
— |
|
541,800 |
|
|
311,552 |
|
|
— |
|
8,346 |
|
|
1,441,698 |
and
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology, and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner
Heid |
|
FY10 |
|
550,000 |
|
40,467 |
(4) |
|
362,520 |
|
450,450 |
|
|
607,000 |
|
|
— |
|
9,648 |
|
|
2,020,085 |
Sr. Vice President, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and Marketing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Henry |
|
FY10 |
|
460,000 |
|
— |
|
|
362,520 |
|
354,900 |
|
|
494,000 |
|
|
— |
|
9,151 |
|
|
1,680,571 |
Sr.
Vice President, |
|
FY09 |
|
460,000 |
|
— |
|
|
348,750 |
|
503,300 |
|
|
134,136 |
|
|
— |
|
9,201 |
|
|
1,455,387 |
Customer Experience |
|
FY08 |
|
440,000 |
|
— |
|
|
— |
|
926,500 |
|
|
294,275 |
|
|
— |
|
9,595 |
|
|
1,670,370 |
and
Chief Marketing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junien
Labrousse |
|
FY10 |
|
680,000 |
|
— |
|
|
545,860 |
|
491,400 |
|
|
680,000 |
|
|
— |
|
12,271 |
|
|
2,409,532 |
Executive Vice- |
|
FY09 |
|
680,000 |
|
— |
|
|
523,125 |
|
754,950 |
|
|
222,333 |
|
|
— |
|
10,415 |
|
|
2,190,823 |
President, Products |
|
FY08 |
|
660,000 |
|
— |
|
|
— |
|
1,781,500 |
|
|
469,534 |
|
|
— |
|
11,048 |
|
|
2,922,082 |
98
____________________
(1) |
|
Under SEC rules,
the values reported in the “Stock Awards” and “Option Awards” columns
reflected the aggregate grant date fair value of grants of stock options
and stock awards to each of the listed officers in the fiscal years shown.
The key assumptions and methodology of valuation of stock options and
stock awards are presented in Note 13 to the Consolidated Financial
Statements included in Logitech’s Annual Report to Shareholders and Annual
Report on Form 10-K for fiscal year 2010 filed with the SEC on May 27,
2010. |
|
|
|
For FY10:
Assuming the highest level of performance is achieved under the applicable
performance criteria, the maximum possible value of the performance-based
restricted stock unit awards allocated to our named executive officers in
FY10, using the market value of our shares on the date of grant of the
PRSUs, is: (a) in the case of Mr. Quindlen; $1,121,600; (b) in the case of
Mr. Heid, $364,520; (c) in the case of Mr. Henry, $364,520; and (d) in the
case of Mr. Labrousse, $560,800. |
|
|
|
For FY09:
Assuming the highest level of performance is achieved under the applicable
performance criteria, the maximum possible value of the performance-based
restricted stock unit awards allocated to our named executive officers in
FY09, using the market value of our shares on the date of grant of the
PRSUs, is: (a) in the case of Mr. Quindlen; $1,129,500; (b) in the case of
Mr. Henry, $564,750; and (c) in the case of Mr. Labrousse,
$847,125. |
|
(2) |
|
Reflects amounts
earned under the Logitech Management Performance Bonus Plan, and a
predecessor plan. In Fiscal Year 2009 Mr. De Luca and Mr. Quindlen
declined bonus payments of $222,750 and $318,937, respectively, they each
had otherwise earned and were entitled to under the terms of their fiscal
year 2009 bonus program. |
|
(3) |
|
Details regarding
the various amounts included in this column are provided in the following
table entitled “All Other Compensation.” |
|
(4) |
|
The Compensation
Committee approved the payment of this bonus to Mr. Heid to enable him to
purchase a value of Logitech shares equal to what he would have purchased
under the Logitech Employee Share Purchase Plan for the February 1 - July
31, 2009 offering period but for his employment start date being after the
offering start date. |
99
All Other Compensation
Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium for |
|
|
|
|
|
|
|
|
Tax |
|
|
|
|
Group |
|
Deferred |
|
|
|
|
|
|
Car and |
|
Preparation |
|
|
|
|
Term Life |
|
Compensation |
|
|
|
|
|
|
Driver |
|
Services |
|
401(k) Plan |
|
Insurance |
|
Insurance |
|
|
Name |
|
Year |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($) |
|
($)(4) |
|
Total ($) |
Gerald Quindlen |
|
FY10 |
|
— |
|
19,563 |
|
|
2,726 |
|
|
4,209 |
|
|
— |
|
|
26,498 |
|
|
FY09 |
|
— |
|
3,954 |
|
|
2,594 |
|
|
3,078 |
|
|
— |
|
|
9,626 |
|
|
FY08 |
|
— |
|
— |
|
|
6,929 |
|
|
1,768 |
|
|
— |
|
|
8,697 |
Erik
Bardman |
|
FY10 |
|
|
|
|
|
|
2,841 |
|
|
415 |
|
|
— |
|
|
3,257 |
Guerrino De Luca |
|
FY10 |
|
— |
|
— |
|
|
6,750 |
|
|
5,418 |
|
|
— |
|
|
12,168 |
|
|
FY09 |
|
5,906 |
|
— |
|
|
6,804 |
|
|
5,418 |
|
|
— |
|
|
18,128 |
|
|
FY08 |
|
28,348 |
|
— |
|
|
6,665 |
|
|
7,165 |
|
|
— |
|
|
42,178 |
Tom
Fergoda |
|
FY10 |
|
— |
|
— |
|
|
6,496 |
|
|
3,832 |
|
|
— |
|
|
10,328 |
Mark J. Hawkins |
|
FY10 |
|
— |
|
— |
|
|
250 |
|
|
231 |
|
|
— |
|
|
481 |
|
|
FY09 |
|
— |
|
— |
|
|
6,804 |
|
|
1,755 |
|
|
— |
|
|
8,559 |
|
|
FY08 |
|
— |
|
— |
|
|
6,888 |
|
|
1,458 |
|
|
— |
|
|
8,346 |
Werner
Heid |
|
FY10 |
|
— |
|
— |
|
|
6,750 |
|
|
2,898 |
|
|
— |
|
|
9,648 |
David Henry |
|
FY10 |
|
— |
|
— |
|
|
6,750 |
|
|
2,401 |
|
|
— |
|
|
9,151 |
|
|
FY09 |
|
— |
|
— |
|
|
6,804 |
|
|
2,397 |
|
|
— |
|
|
9,201 |
|
|
FY08 |
|
— |
|
— |
|
|
7,304 |
|
|
2,291 |
|
|
— |
|
|
9,595 |
Junien
Labrousse |
|
FY10 |
|
— |
|
— |
|
|
6,750 |
|
|
3,616 |
|
|
1,906 |
|
|
12,271 |
|
|
FY09 |
|
— |
|
— |
|
|
6,804 |
|
|
3,611 |
|
|
— |
|
|
10,415 |
|
|
FY08 |
|
— |
|
— |
|
|
8,481 |
|
|
2,567 |
|
|
— |
|
|
11,048 |
____________________
(1) |
|
Represents the
cost to Logitech of $3,795 and $15,224 in fiscal years 2009 and 2008,
respectively, related to Mr. De Luca’s occasional use of a company car and
driver to and from work, and tax gross-up payments of $2,111 and $12,824,
respectively, relating to the income imputed to Mr. De Luca as a
result. |
|
(2) |
|
Represents the
cost to Logitech of $12,925 and $2,625 in fiscal years 2010 and 2009,
respectively, related to these services, and tax gross-up payments, of
$6,638 and $1,329, respectively, relating to the income imputed to Mr.
Quindlen as a result. |
|
(3) |
|
Represents 401(k)
savings plan matching contributions, which are available to all of our
regular employees who are on our U.S. payroll. |
|
(4) |
|
Represents
imputed income to Mr. Labrousse from an insurance policy held to fund, in
part, the Logitech Inc. Deferred Compensation
Plan. |
100
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR
2010
The following table sets forth certain
information regarding grants of plan-based awards to each of our named executive
officers during fiscal year 2010. For more information, please refer to
“Compensation Disclosure and Analysis.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Possible
Payouts |
|
|
|
Estimated Future
Payouts |
|
|
Number |
|
Number of |
|
Exercise |
|
Grant |
|
|
|
|
|
|
|
|
|
Under Non-Equity
Incentive |
|
|
|
Under Equity Incentive |
|
|
of
Shares |
|
Securities |
|
Price
of |
|
Date |
|
|
|
|
|
|
|
|
|
Plan Awards(1) |
|
|
|
Plan Awards(3) |
|
|
of
Stock |
|
Underlying |
|
Option |
|
Fair |
|
|
|
|
Grant Date |
|
Approval
|
|
Threshold
|
|
Target |
|
Maximum |
|
Actual |
|
Threshold |
|
Target |
|
Maximum
|
|
or Units(4) |
|
Options |
|
Awards |
|
Value |
Name |
|
Type |
|
(MM/DD/YY) |
|
Date |
|
($) |
|
($) |
|
($) |
|
($)(2) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
(#)(5) |
|
($/Share) |
|
($)(6) |
Gerald Quindlen |
|
Option |
|
04/01/09 |
|
|
03/31/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
100,000 |
|
|
10.64 |
|
|
394,000 |
|
|
PRSU |
|
06/29/09 |
|
|
06/23/09 |
|
— |
|
— |
|
— |
|
— |
|
20,000 |
|
|
40,000 |
|
80,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
727,200 |
|
|
RSU |
|
06/29/09 |
|
|
06/23/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
20,000 |
|
|
— |
|
|
— |
|
|
280,400 |
|
|
FY 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
N/A |
|
|
N/A |
|
430,664 |
|
787,500 |
|
2,116,406 |
|
1,299,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik
Bardman |
|
Option |
|
10/23/09 |
|
|
10/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
100,000 |
|
|
18.76 |
|
|
620,000 |
|
|
2H Bonus |
|
N/A |
|
|
N/A |
|
73,500 |
|
120,000 |
|
285,000 |
|
162,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Guerrino De Luca |
|
Option |
|
04/01/09 |
|
|
03/31/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
30,000 |
|
|
10.64 |
|
|
118,200 |
|
|
FY 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
N/A |
|
|
N/A |
|
300,781 |
|
550,000 |
|
1,478,125 |
|
907,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tom
Fergoda |
|
Option |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
14.02 |
|
|
109,200 |
|
|
RSU |
|
06/29/09 |
|
|
06/23/09 |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
1,000 |
|
|
— |
|
|
— |
|
|
14,020 |
|
|
1H Bonus |
|
N/A |
|
|
N/A |
|
21,601 |
|
44,885 |
|
134,655 |
|
92,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2H Bonus |
|
N/A |
|
|
N/A |
|
27,492 |
|
44,885 |
|
106,602 |
|
56,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark J. Hawkins |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Werner
Heid |
|
Option |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
65,000 |
|
|
14.02 |
|
|
354,900 |
|
|
PRSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
6,500 |
|
|
13,000 |
|
26,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
236,340 |
|
|
RSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
9,000 |
|
|
— |
|
|
— |
|
|
126,180 |
|
|
Option |
|
09/01/09 |
|
|
09/01/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
17,500 |
|
|
17.44 |
|
|
95,550 |
|
|
1H Bonus |
|
N/A |
|
|
N/A |
|
129,938 |
|
206,250 |
|
618,750 |
|
325,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2H Bonus |
|
N/A |
|
|
N/A |
|
145,664 |
|
206,250 |
|
489,844 |
|
282,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Henry |
|
Option |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
65,000 |
|
|
14.02 |
|
|
354,900 |
|
|
PRSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
6,500 |
|
|
13,000 |
|
26,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
236,340 |
|
|
RSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
9,000 |
|
|
— |
|
|
— |
|
|
126,180 |
|
|
1H Bonus |
|
N/A |
|
|
N/A |
|
71,947 |
|
149,500 |
|
448,500 |
|
307,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2H Bonus |
|
N/A |
|
|
N/A |
|
91,569 |
|
149,500 |
|
355,063 |
|
187,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junien
Labrousse |
|
Option |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
90,000 |
|
|
14.02 |
|
|
491,400 |
|
|
PRSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
10,000 |
|
|
20,000 |
|
40,000 |
|
|
— |
|
|
— |
|
|
— |
|
|
363,600 |
|
|
RSU |
|
06/29/09 |
|
|
06/22/09 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
|
13,000 |
|
|
— |
|
|
— |
|
|
182,260 |
|
|
1H Bonus |
|
N/A |
|
|
N/A |
|
143,514 |
|
227,800 |
|
683,400 |
|
359,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2H Bonus |
|
N/A |
|
|
N/A |
|
160,884 |
|
227,800 |
|
541,025 |
|
321,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
(1) |
|
The amounts in
these columns reflect possible payouts with respect to each applicable
performance period under the fiscal year 2010 bonus programs under the
Bonus Plan. |
101
(2) |
|
The amounts in
this column reflect actual payouts with respect to each applicable
performance period under the fiscal year 2010 bonus programs under the
Bonus Plan. The actual payout amounts are reflected in the Non-Equity
Incentive Plan Compensation column of the Summary Compensation Table for
fiscal year 2010. |
|
(3) |
|
Represents
performance-based restricted stock units. All shares subject to the PRSUs
are unvested. The actual amount, if any, of shares that will vest under
the PRSUs will not be known until the end of the two-year performance
period on June 29, 2011. |
|
(4) |
|
Represents
time-based restricted stock units that vest at a rate of 25% per year over
four years, on each yearly anniversary of the grant date. |
|
(5) |
|
Represents stock
options with an exercise price equal to the fair market value of Logitech
shares on the grant date. These options vest and become exercisable at a
rate of 25% per year over four years, on each yearly anniversary of the
grant date. |
|
(6) |
|
Amounts in this
column represent the grant date fair value of stock options,
performance-based restricted stock units and time-based restricted stock
units calculated in accordance with FASB ASC Topic 718 but does not
include a reduction for forfeitures. For option awards, that number is
calculated by multiplying the Black-Scholes value by the number of options
awarded. For performance-based restricted stock units, that number is
calculated by multiplying the value determined using the Monte Carlo
method by the target number of units awarded. For time-based restricted
stock units, that number is equal to the closing price of Logitech shares
on the grant date multiplied by the number of units awarded. The key
assumptions for the valuation of the options and performance restricted
stock units are presented in Note 13 to the Consolidated Financial
Statements included in Logitech’s Annual Report to Shareholders and Annual
Report on Form 10-K for fiscal year 2010 filed with the SEC on May 27,
2010. |
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION
TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
Employment Agreements and Offer
Letters
We have entered into employment agreements or
offer letters with each of our named executive officers other than Tom Fergoda.
The employment agreements and offer letters generally provide that the
compensation of the named executive officer is subject to the sole discretion of
the Compensation Committee or the Board of Directors. The compensation earned by
the named executive officers in fiscal year 2010 was not the result of any terms
of their employment agreements or offer letters, except that Werner Heid
received an additional option grant for 17,500 options for Logitech shares on
September 1, 2009 as a negotiated term of his offer letter when he joined
Logitech.
Performance-Based Vesting
Conditions
Please refer to “Compensation Disclosure and
Analysis—Elements of Compensation / Executive Compensation Practices—Short-term
cash incentive awards” for a discussion of the performance measures applicable
to the Bonus Plan during fiscal year 2010. In addition, please refer to
“Compensation Disclosure and Analysis—Elements of Compensation / Executive
Compensation Practices—Long-term equity incentive awards—Structure of the PRSUs”
for a discussion of performance measures under the performance-based restricted
stock units granted to named executive officers during fiscal year
2010.
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
The following table sets forth certain
information regarding outstanding equity awards for each of our named executive
officers as of March 31, 2010. This table includes unexercised and unvested
stock options and unvested performance-based restricted stock
units.
102
Certain of the options as granted to Mr. De
Luca have exercise prices denominated in Swiss Francs. The U.S. Dollar exercise
prices shown in the table below for such options are based on the closing Swiss
Franc to U.S. Dollar conversion rate on the trading day immediately preceding
the grant date. The U.S. Dollar exercise price for such options as of March 31,
2010, the last day of Logitech’s fiscal year 2010, are presented in the
footnotes to the table based on a Swiss Franc to U.S. Dollar exchange rate on
March 31, 2010 of 1.0642 to 1.
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
Shares or |
|
|
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
Units of |
|
Market Value of |
|
|
|
|
|
Unexercised |
|
Unexercised |
|
|
|
|
Option |
|
Stock That |
|
Shares or Units of |
|
|
Grant Date |
|
Options |
|
Options |
|
Option Exercise |
|
Expiration Date |
|
Have Not |
|
Stock That Have |
Name |
|
(MM/DD/YY) |
|
Exercisable (#) |
|
Unexercisable(#)(1) |
|
Price/Share ($) |
|
(MM/DD/YY) |
|
Vested (#) |
|
Not Vested ($)(2) |
Gerald Quindlen |
|
11/02/05 |
|
|
200,000 |
|
|
— |
|
|
20.25 |
|
|
10/17/15 |
|
|
— |
|
|
— |
|
|
|
10/02/06 |
|
|
45,000 |
|
|
15,000 |
|
|
21.61 |
|
|
10/02/16 |
|
|
— |
|
|
— |
|
|
|
10/02/07 |
|
|
50,000 |
|
|
50,000 |
|
|
30.09 |
|
|
10/02/17 |
|
|
— |
|
|
— |
|
|
|
10/19/07 |
|
|
150,000 |
|
|
150,000 |
|
|
34.39 |
|
|
10/19/17 |
|
|
— |
|
|
— |
|
|
|
04/01/08 |
|
|
25,000 |
|
|
75,000 |
|
|
26.67 |
|
|
04/01/18 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,000 |
(3) |
|
408,500 |
|
|
|
12/12/08 |
|
|
25,000 |
|
|
75,000 |
|
|
13.48 |
|
|
12/12/18 |
|
|
— |
|
|
— |
|
|
|
04/01/09 |
|
|
— |
|
|
100,000 |
|
|
10.64 |
|
|
04/01/19 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
20,000 |
(4) |
|
326,800 |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
40,000 |
(5) |
|
653,600 |
|
|
|
Total |
|
|
495,000 |
|
|
465,000 |
|
|
|
|
|
|
|
|
85,000 |
|
|
1,388,900 |
|
Erik
Bardman |
|
10/23/09 |
|
|
— |
|
|
100,000 |
|
|
18.76 |
|
|
10/23/19 |
|
|
— |
|
|
— |
|
|
|
Total |
|
|
— |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Guerrino De Luca |
|
10/18/00 |
|
|
133,524 |
|
|
— |
|
|
5.94 |
(6) |
|
10/18/10 |
|
|
— |
|
|
— |
|
|
|
09/24/01 |
|
|
70,538 |
|
|
— |
|
|
5.11 |
(7) |
|
04/01/12 |
|
|
— |
|
|
— |
|
|
|
10/16/02 |
|
|
400,000 |
|
|
— |
|
|
6.84 |
(8) |
|
04/16/13 |
|
|
— |
|
|
— |
|
|
|
04/08/04 |
|
|
200,000 |
|
|
— |
|
|
11.91 |
(9) |
|
04/08/14 |
|
|
— |
|
|
— |
|
|
|
04/01/05 |
|
|
200,000 |
|
|
— |
|
|
15.51 |
(10) |
|
04/01/15 |
|
|
— |
|
|
— |
|
|
|
04/01/06 |
|
|
75,000 |
|
|
25,000 |
|
|
20.05 |
|
|
04/01/16 |
|
|
— |
|
|
— |
|
|
|
04/02/07 |
|
|
25,000 |
|
|
25,000 |
|
|
27.95 |
|
|
04/02/17 |
|
|
— |
|
|
— |
|
|
|
04/01/08 |
|
|
3,750 |
|
|
11,250 |
|
|
26.67 |
|
|
04/01/18 |
|
|
— |
|
|
— |
|
|
|
04/01/09 |
|
|
— |
|
|
15,000 |
|
|
10.64 |
|
|
04/01/19 |
|
|
— |
|
|
— |
|
|
|
Total |
|
|
1,107,812 |
|
|
76,250 |
|
|
|
|
|
|
|
|
— |
|
|
— |
|
Tom
Fergoda |
|
06/15/06 |
|
|
22,500 |
|
|
7,500 |
|
|
19.30 |
|
|
06/15/16 |
|
|
— |
|
|
— |
|
|
|
10/02/07 |
|
|
7,500 |
|
|
7,500 |
|
|
30.09 |
|
|
10/02/17 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
5,000 |
|
|
15,000 |
|
|
22.59 |
|
|
10/01/18 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
20,000 |
|
|
14.02 |
|
|
06/29/19 |
|
|
|
|
|
|
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,000 |
(4) |
|
16,340 |
|
|
|
Total |
|
|
35,000 |
|
|
50,000 |
|
|
|
|
|
|
|
|
1,000 |
|
|
16,340 |
|
Mark Hawkins |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Werner
Heid |
|
03/06/09 |
|
|
37,500 |
|
|
112,500 |
|
|
8.01 |
|
|
03/06/19 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
65,000 |
|
|
14.02 |
|
|
06/29/19 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,000 |
(4) |
|
147,060 |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,000 |
(5) |
|
212,420 |
|
|
|
09/01/09 |
|
|
— |
|
|
17,500 |
|
|
17.44 |
|
|
09/01/19 |
|
|
— |
|
|
— |
|
|
|
Total |
|
|
37,500 |
|
|
195,000 |
|
|
|
|
|
|
|
|
22,000 |
|
|
359,480 |
|
103
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
Shares or |
|
|
|
|
|
|
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
Units of |
|
Market Value of |
|
|
|
|
|
Unexercised |
|
Unexercised |
|
|
|
|
Option |
|
Stock That |
|
Shares or Units of |
|
|
Grant Date |
|
Options |
|
Options |
|
Option Exercise |
|
Expiration Date |
|
Have Not |
|
Stock That Have |
Name |
|
(MM/DD/YY) |
|
Exercisable (#) |
|
Unexercisable(#)(1) |
|
Price/Share ($) |
|
(MM/DD/YY) |
|
Vested (#) |
|
Not Vested ($)(2) |
David Henry |
|
09/12/03 |
|
|
85,000 |
|
|
— |
|
|
7.76 |
|
|
04/01/14 |
|
|
— |
|
|
— |
|
|
|
07/12/04 |
|
|
160,000 |
|
|
— |
|
|
11.44 |
|
|
07/12/14 |
|
|
— |
|
|
— |
|
|
|
09/26/05 |
|
|
100,000 |
|
|
— |
|
|
20.25 |
|
|
09/26/15 |
|
|
— |
|
|
— |
|
|
|
10/02/06 |
|
|
37,500 |
|
|
12,500 |
|
|
21.61 |
|
|
10/02/16 |
|
|
— |
|
|
— |
|
|
|
04/02/07 |
|
|
25,000 |
|
|
25,000 |
|
|
27.95 |
|
|
04/02/17 |
|
|
— |
|
|
— |
|
|
|
10/02/07 |
|
|
25,000 |
|
|
25,000 |
|
|
30.09 |
|
|
10/02/17 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
12,500 |
|
|
37,500 |
|
|
22.59 |
|
|
10/01/18 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
12,500 |
(3) |
|
204,250 |
|
|
|
12/12/08 |
|
|
10,000 |
|
|
30,000 |
|
|
13.48 |
|
|
12/12/18 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
65,000 |
|
|
14.02 |
|
|
06/29/19 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,000 |
(4) |
|
147,060 |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,000 |
(5) |
|
212,420 |
|
|
|
Total |
|
|
455,000 |
|
|
195,000 |
|
|
|
|
|
|
|
|
34,500 |
|
|
563,730 |
|
Junien
Labrousse |
|
09/12/03 |
|
|
100,000 |
|
|
— |
|
|
7.76 |
|
|
04/01/14 |
|
|
— |
|
|
— |
|
|
|
07/12/04 |
|
|
160,000 |
|
|
— |
|
|
11.44 |
|
|
07/12/14 |
|
|
— |
|
|
— |
|
|
|
09/26/05 |
|
|
100,000 |
|
|
— |
|
|
20.25 |
|
|
09/26/15 |
|
|
— |
|
|
— |
|
|
|
10/02/06 |
|
|
37,500 |
|
|
12,500 |
|
|
21.61 |
|
|
10/02/16 |
|
|
— |
|
|
— |
|
|
|
04/02/07 |
|
|
70,000 |
|
|
70,000 |
|
|
27.95 |
|
|
04/02/17 |
|
|
— |
|
|
— |
|
|
|
10/02/07 |
|
|
25,000 |
|
|
25,000 |
|
|
30.09 |
|
|
10/02/17 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
18,750 |
|
|
56,250 |
|
|
22.59 |
|
|
10/01/18 |
|
|
— |
|
|
— |
|
|
|
10/01/08 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18,750 |
(3) |
|
306,375 |
|
|
|
12/12/08 |
|
|
15,000 |
|
|
45,000 |
|
|
13.48 |
|
|
12/12/18 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
90,000 |
|
|
14.02 |
|
|
06/29/19 |
|
|
— |
|
|
— |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,000 |
(4) |
|
212,420 |
|
|
|
06/29/09 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
20,000 |
(5) |
|
326,800 |
|
|
|
Total |
|
|
526,250 |
|
|
298,750 |
|
|
|
|
|
|
|
|
51,750 |
|
|
845,595 |
|
____________________
(1) |
|
Unless otherwise
indicated, the remaining shares subject to these options vest and become
exercisable at a rate of 25% per year over four years from the grant date,
on each yearly anniversary of the grant date. |
|
(2) |
|
The market value
of unvested RSUs and PRSUs is calculated by multiplying the number of
unvested RSUs and PRSUs held by the applicable named executive officer by
the closing price of our shares on March 31, 2010, which was $16.34. PRSUs
are shown at their target amount. The actual conversion of PRSUs into
Logitech shares following the conclusion of the performance period (24
months following the grant date) will range between 50% and 200% of that
target amount, depending upon Logitech’s TSR performance versus the TSR
benchmark over the applicable two-year performance period. |
|
(3) |
|
These are
performance-based restricted stock units. All shares subject to the PRSUs
are unvested. The actual amount, if any, of shares that will vest under
the PRSUs will not be known until the end of the two-year performance
period on September 30, 2010. Amounts in the table assume the shares will
vest at 100% of the target. |
|
(4) |
|
These are
time-based restricted stock units. The remaining shares subject to these
RSU vest at a rate of 25% per year over four years from the grant date, on
each yearly anniversary of the grant
date. |
104
(5) |
These
are performance-based restricted stock units. All shares subject to the
PRSUs are unvested. The actual amount, if any, of shares that will vest
under the PRSUs will not be known until the end of the two-year
performance period on June 29, 2011. Amounts in the table assume the
shares will vest at 100% of the target. |
|
(6) |
The
exercise price of the option as granted (as split-adjusted) is 10.50 Swiss
Francs per share. The U.S. Dollar exercise price as of March 31, 2010 is
$9.87 per share. |
|
(7) |
The
exercise price of the option as granted (as split-adjusted) is 8.15 Swiss
Francs per share. The U.S. Dollar exercise price as of March 31, 2010 is
$7.66 per share. |
|
(8) |
The
exercise price of the option as granted (as split-adjusted) is 10.25 Swiss
Francs per share. The U.S. Dollar exercise price as of March 31, 2010 is
$9.63 per share. |
|
(9) |
The
exercise price of the option as granted (as split-adjusted) is 15.21 Swiss
Francs per share. The U.S. Dollar exercise price as of March 31, 2010 is
$14.29 per share. |
|
(10) |
The
exercise price of the option as granted (as split-adjusted) is 18.55 Swiss
Francs per share. The U.S. Dollar exercise price as of March 31, 2010 is
$17.43 per share. |
OPTION EXERCISES AND STOCK VESTED
FOR FISCAL YEAR 2010
The following table sets forth the
number of shares acquired and the value realized upon exercise of stock options
during fiscal year 2010 by each of our named executive officers. No
performance-based or time-based restricted stock units vested during fiscal year
2010.
|
|
Option Awards |
|
Stock
Awards |
|
|
Number of
Shares |
|
|
|
Number of
Shares |
|
|
|
|
Acquired on |
|
Value Realized
on |
|
Acquired on |
|
Value Realized
on |
Name |
|
Exercise (#) |
|
Exercise ($)(1) |
|
Vesting (#) |
|
Vesting
($) |
Gerald Quindlen |
|
— |
|
— |
|
— |
|
— |
Erik Bardman |
|
— |
|
— |
|
— |
|
— |
Guerrino De Luca |
|
250,000 |
|
1,711,453 |
|
— |
|
— |
Tom Fergoda |
|
— |
|
— |
|
— |
|
— |
Mark J. Hawkins |
|
— |
|
— |
|
— |
|
— |
Werner Heid |
|
— |
|
— |
|
— |
|
— |
David Henry |
|
104,548 |
|
931,440 |
|
— |
|
— |
Junien Labrousse |
|
— |
|
— |
|
— |
|
— |
____________________
(1) |
The
value realized equals the difference between the option exercise price and
the fair market value of Logitech shares on the date of exercise,
multiplied by the number of shares for which the option was
exercised. |
Pension Benefits for Fiscal Year
2010
None of our executive officers are
beneficiaries under any retirement plan benefits maintained by Logitech. For
additional information regarding other benefits provided upon retirement of
Logitech executive officers, please refer to “Potential Payments Upon
Termination or Change in Control.”
105
NON-QUALIFIED DEFERRED COMPENSATION
FOR FISCAL YEAR 2010
The following table sets forth
information regarding the participation by our named executive officers in the
Logitech Inc. Deferred Compensation Plan during fiscal year 2010 and at fiscal
year-end.
|
|
Executive |
|
Logitech |
|
Aggregate |
|
Aggregate |
|
Aggregate |
|
|
Contributions
in |
|
Contributions
in |
|
Earnings in |
|
Withdrawals/ |
|
Balance at
Last |
|
|
Last Fiscal
Year |
|
Last Fiscal
Year |
|
Last Fiscal |
|
Distributions |
|
Fiscal Year
End |
Name |
|
($)(1) |
|
($) |
|
Year ($)(2) |
|
($) |
|
($) |
Gerald Quindlen |
|
— |
|
— |
|
— |
|
— |
|
— |
Erik Bardman |
|
— |
|
— |
|
— |
|
— |
|
— |
Guerrino De Luca |
|
— |
|
— |
|
— |
|
— |
|
— |
Tom Fergoda |
|
— |
|
— |
|
— |
|
— |
|
— |
Mark J. Hawkins |
|
— |
|
— |
|
21,431 |
|
79,371 |
|
— |
David Henry |
|
— |
|
— |
|
— |
|
— |
|
— |
Junien Labrousse |
|
439,250 |
|
— |
|
488,820 |
|
— |
|
1,787,840 |
____________________
(1) |
Amounts
included in the Summary Compensation table in the “Salary” and “Non-Equity
Incentive Plan Compensation” columns. All contributions were made under
the Logitech Inc. Deferred Compensation Plan. |
|
(2) |
These
amounts are not included in the Summary Compensation Table because plan
earnings were not preferential or above
market. |
NARRATIVE DISCLOSURE TO
NON-QUALIFIED DEFERRED COMPENSATION TABLE
The Logitech Inc. Deferred
Compensation Plan effective January 1, 2009 allows the participating executive
officers and other eligible employees to defer up to 80% of their annual base
salary and up to 90% of annual cash bonuses or commissions.
Upon enrollment, participants select
from a number of investment benchmarks selected by Logitech Inc.’s Deferred
Compensation Committee for this purpose, and the participant’s account is
periodically credited with an amount equal to the investment performance of the
benchmark. Investment benchmarks may be changed by a participant no more than
once each month.
Participants can elect upon
enrollment to receive one lump-sum distribution per year beginning in the third
year of plan participation. Although pre-retirement distributions can
subsequently be postponed (subject to conditions) or canceled, participants
cannot elect any additional pre-retirement distributions after initial
enrollment, except in limited circumstances.
Distributions are generally payable
to participants upon termination of employment in a lump sum or, in the case of
retirement, disability or death, in a series of annual payments of up to 10
years, as elected by the participants, subject to any requirements of Section
409A of the U.S. Tax Code.
The Deferred Compensation Plan is
the successor to an earlier plan that provided substantially similar
benefits.
PAYMENTS UPON TERMINATION OR CHANGE
IN CONTROL
We have entered into agreements that
provide for payments under certain circumstances in the event of termination of
employment of our executive officers. These agreements include:
- Change of control
severance agreements, under which the executive officers may receive certain
benefits if they are
subject to an involuntary termination within 12 months after a “change of
control” because his
or her employment is terminated without cause or the executive resigns for
good reason.
- PRSU and RSU award
agreements, that provide for the accelerated vesting of the shares subject to
the award agreements
under the same circumstances as under the change of control agreements.
106
- An employment agreement
with Gerald Quindlen and an offer letter with Werner Heid, under which
each is entitled to
severance benefits if we terminate his employment without
cause.
- A resignation and
severance agreement with David Henry and a severance agreement with
Tom Fergoda.
These agreements are described in
more detail below.
Other than the agreements above,
there are no agreements or arrangements for the payment of severance to a named
executive officer in the event of his involuntary termination with or without
cause.
There are no agreements providing
for payment of any consideration to any non-executive member of the Board of
Directors upon termination of his or her services with the Company.
Change of Control Severance
Agreements
Each of our named executive officers
has executed a change of control severance agreement with Logitech, with the
exception of Tom Fergoda. The change of control agreements with each of Mr.
Quindlen and Mr. De Luca are slightly different than those of the other
executive officers. The purpose of the change of control agreements is to
support retention in the event of a prospective change of control.
Under the change of control
agreement, each executive officer is eligible to receive the following benefits,
should the executive officer be subject to an involuntary termination within 12
months after a “change of control” because his or her employment is terminated
without cause or the executive resigns for good reason:
- The continuation of the
executive’s “current compensation” for 12 months;
- Continuation of health
insurance benefits for up to 12 months;
- Acceleration of vesting
for all stock options held by the executive;
- Acceleration of other
employee equity incentives held by the executive if provided for under the
terms of the grant
agreement for the equity incentive; and
- Executive – level
outplacement services of a value of up to $5,000.
The term “current compensation”
includes:
- The greater of (i) the
executive’s annual base salary in effect immediately prior to the
executive’s termination and (ii) the executive’s annual base salary in effect on
the date of the Change of Control Agreement; plus
- The amount of the
executive’s annual and quarterly bonuses for the fiscal year preceding the
fiscal year in which
severance benefits become payable to the executive.
The change of control agreement
defines the term “change of control” to mean:
- A merger or
consolidation of Logitech with another corporation resulting in a greater than
50% change in the
total voting power of Logitech or the surviving company immediately following
the transaction;
- The complete liquidation
of Logitech;
- The sale or other
disposition of all or substantially all of Logitech’s assets;
or
- The acquisition by any
person of securities of Logitech representing 50% or more of the total
voting power of
Logitech’s outstanding shares.
The change of control agreement with
Mr. Quindlen is the same as for the other executive officers, except that Mr.
Quindlen’s agreement provides for a tax gross-up to reimburse him for any
additional taxes incurred under Section 280G of the U.S. Tax Code in connection
with a change of control.
107
The change of control agreement with
Mr. De Luca is the same as for the other executive officers, except that only
those stock options granted by the Company to him before January 28, 2008, while
he was serving as CEO, are subject to acceleration under the agreement. Options
granted to him after January 28, 2008 are not subject to
acceleration.
PRSU and RSU Award
Agreements
The PRSU and RSU award agreements
for named executive officers other than Tom Fergoda provide for the acceleration
of vesting of the RSUs and PRSUs subject to the award agreements under the same
circumstances and conditions as under the change of control agreements; namely,
if the named executive officer is subject to an involuntary termination within
12 months after a change of control because his or her employment is terminated
without cause or the executive resigns for good reason. In the event of such an
involuntary termination:
- All shares subject to
the RSUs will vest.
- 100% of the shares
subject to the PRSUs will vest if the change of control occurs within one year
after the grant date
of the PRSUs. If the change of control occurs more than one year after the
grant date of the
PRSUs, the number of shares subject to the PRSU that will vest will be
determined by applying the performance criteria under the PRSUs as if the performance period had
ended on the date of the change of control.
Gerald Quindlen Employment
Agreement
Mr. Quindlen is subject to an
employment agreement effective December 3, 2008. Under his employment agreement,
in the event he is terminated without “cause” other than after a change of
control he is entitled to:
- an amount equal to his
current annual base salary; plus
- his current annual
targeted bonus amount.
“Cause” in Mr. Quindlen’s employment
agreement is defined as (i) theft, dishonesty, misconduct or falsification of
any employment or Company records; (ii) improper disclosure of the Company’s
confidential or proprietary information; (iii) any action which has a material
detrimental effect on the Company’s reputation or business; (iv) failure or
inability to perform any assigned duties after written notice from the Company,
and a reasonable opportunity to cure such failure or inability; (v) the
conviction (including any plea of guilty or no contest) of a felony, or of any
other criminal act if that act impairs the ability to perform duties or (vi) the
failure to cooperate in good faith with a governmental or internal investigation
of the Company or its directors, officers or employees, if the Company has
requested cooperation.
If any amounts become payable to Mr.
Quindlen under his change of control agreement, or any successor agreement, the
aggregate amount of any amounts payable to Mr. Quindlen under his employment
agreement will be reduced to the extent necessary so as to prevent the
duplication of severance payments to him.
Werner Heid Offer
Letter
We entered into an offer letter with
Werner Heid dated December 24, 2008. Under his offer letter, in the event he is
terminated without “cause” other than after a change of control he is entitled
to:
- an amount equal to 75%
of his current annual base salary; plus
- an amount equal to 75%
of his current annual targeted bonus amount.
108
“Cause” in Mr. Heid’s offer letter
is defined substantially the same as in Mr. Quindlen’s employment agreement,
described above. If any amounts become payable to Mr. Heid under his change of
control agreement, or any successor agreement, the aggregate amount of any
amounts payable to Mr. Heid under his offer letter will be reduced to the extent
necessary so as to prevent the duplication of severance payments to
him.
Other Severance
Arrangements
Please refer to “Compensation
Disclosure and Analysis—Other Compensation Elements / Severance and related
benefits” for a discussion of the severance agreement with Tom Fergoda and the
resignation and severance agreement with David Henry, both of which were entered
into after the end of fiscal year 2010.
Tables of Potential Payments Upon
Termination or Change in Control
The table below estimates the amount
of compensation that would be paid in the event of an involuntary termination of
a listed named executive officer without cause after a change in control,
assuming that each of the terminations was effective as of March 31, 2010,
subject to the terms of the change of control agreement and the terms of the
PRSU and RSU award agreements with each of the listed named executive
officers.
For Mr. Quindlen and Mr. Heid, the
additional table below estimates the amount of compensation that would be paid
in the event of an involuntary termination without cause, assuming that each of
the terminations was effective as of March 31, 2010, subject to the terms of the
agreements with them. As of March 31, 2010, no compensation amounts were payable
to any named executive officer in the event of a mutual agreement to terminate
employment, whether upon retirement or otherwise.
The amounts payable to Mr. Henry
under his resignation and severance agreement are described above under the
heading “Compensation Disclosure and Analysis—Other Compensation Elements /
Severance and related benefits.” Because the agreement was entered into after
March 31, 2010, the amounts are not reflected in the tables below.
Mr. Fergoda is not included in the
tables because as of March 31, 2010 he was not entitled to severance or other
benefits in the event of his termination of employment. Mr. Hawkins is not
included in the tables because he was not serving as a named executive officer
at the end of fiscal year 2010.
The price used for determining the
value of accelerated equity in the tables below was the closing price of
Logitech’s shares on Nasdaq on March 31, 2010, the last business day of the
fiscal year, of $16.34. For those unvested options held by Mr. De Luca that have
exercise prices denominated in Swiss Francs, the U.S. Dollar equivalent of such
exercise prices as of March 31, 2010 were calculated based on a Swiss Franc to
U.S. Dollar exchange rate on March 31, 2010 of 1.0642 to 1.
Involuntary Termination After Change
in Control
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
|
|
|
|
|
Other |
|
Equity |
|
280G cut-back |
|
|
Name |
|
Base Salary(1) |
|
Bonus(2) |
|
Benefits(3) |
|
Awards(4) |
|
/gross-up(5) |
|
Total |
Gerald Quindlen |
|
$787,500 |
|
$1,299,000 |
|
$56,195 |
|
$1,764,900 |
|
$1,273,711 |
|
$5,181,306 |
Erik Bardman |
|
400,000 |
|
162,000 |
|
24,542 |
|
— |
|
— |
|
586,542 |
Guerrino De Luca |
|
550,000 |
|
907,000 |
|
33,629 |
|
85,500 |
|
— |
|
1,576,129 |
Werner Heid |
|
550,000 |
|
607,000 |
|
59,079 |
|
1,447,405 |
|
— |
|
2,663,484 |
David Henry |
|
460,000 |
|
494,000 |
|
54,387 |
|
596,080 |
|
— |
|
1,604,467 |
Junien Labrousse |
|
680,000 |
|
680,000 |
|
55,602 |
|
876,720 |
|
— |
|
2,292,322 |
____________________
(1) Represents fiscal year 2010
annual base salary in effect March 31, 2010.
109
(2) |
Represents aggregate actual bonus earned or paid in fiscal year
2010. |
|
(3) |
Represents the estimated cost of medical and other health insurance
premiums (COBRA) for one year after termination and $5,000 in outplacement
services. |
|
(4) |
Represents, as of March 31, 2010, the aggregate intrinsic value
(market value less exercise price) of unvested options, the aggregate
market value of shares underlying all unvested RSUs, and 100% of the
shares subject to PRSUs granted June 29, 2009, in each case held by the
named executive officer as of March 31, 2010. The minimum performance
condition under the terms of the PRSUs granted October 1, 2008 was not met
as of March 31, 2010, and so no value is attributed to the shares subject
to such PRSUs. |
|
(5) |
Under
the Change of Control agreements for all executive officers other than
Gerald Quindlen there is a “280G cut-back” so that, in effect, the maximum
value of the cash payments plus accelerated equity awards to which an
executive is entitled under the agreement is just under 3 times the
average annual taxable compensation paid by Logitech to the executive in
the prior five taxable years, calculated in accordance with the U.S. Tax
Code. The 280G cut-back in the Change of Control agreements for named
executive officers other than Mr. Quindlen is not applicable based on the
assumptions in the table. Mr. Quindlen’s Change of Control agreement
contains a “280G tax gross-up”, so that if Mr. Quindlen is subject to the
280G excise tax in the event of a change of control, Logitech will pay Mr.
Quindlen an extra amount to fully compensate him for the extra taxes
incurred by him as a result of the excise tax. The amount disclosed for
Mr. Quindlen reflects the cost to Logitech of this tax gross-up, based on
the assumptions in the table. |
Involuntary
Termination |
|
|
|
|
|
|
|
|
|
Name |
|
Base Salary(1) |
|
Bonus(2) |
|
Other Benefits(3) |
|
Total |
Gerald Quindlen |
|
$787,500 |
|
$787,500 |
|
$46,986 |
|
$1,621,986 |
Werner Heid |
|
412,500 |
|
309,375 |
|
— |
|
721,875 |
____________________
(1) |
For Mr.
Quindlen, represents 100% and, for Mr. Heid, 75%, of his fiscal year 2010
annual base salary in effect March 31, 2010. |
|
(2) |
For Mr.
Quindlen, represents 100% and, for Mr. Heid, 75%, of his fiscal year 2010
target bonus in effect March 31, 2010. |
|
(3) |
Represents the estimated cost of medical and other health insurance
premiums (COBRA) for one year after
termination. |
110
COMPENSATION OF
DIRECTORS
The compensation of the members of
the Board of Directors that are not Logitech employees is established by the
Committee for Board Compensation, which consists of Guerrino De Luca, our
Chairman, and Gerald Quindlen, our Chief Executive Officer. The Committee for
Board Compensation reviews aggregate data on non-executive director compensation
of comparable companies in setting compensation for Logitech’s non-executive
directors.
Directors who are Logitech employees
do not receive any compensation for their service on the Board of Directors.
Non-executive director compensation consists of the following
elements:
- An annual retainer of
CHF 40,000.
- A meeting attendance fee
of CHF 2,500 for each Board and Board committee meeting
attended.
- Compensation for the
number of travel days, or part of a travel day, spent traveling to attend
Board and committee
meetings, at the rate of CHF 2,500 per day or part of a day of
travel.
- An additional annual
retainer of CHF 15,000 for the chair of the audit committee.
- An additional annual
retainer of CHF 15,000 for the lead independent director.
- An additional annual
retainer of CHF 10,000 for the chair of the compensation
committee.
- A grant of 6,000 RSUs,
vesting in one increment on the one-year anniversary of the date of
grant.
- Reimbursement of
reasonable expenses for non-local travel (business class).
- Non-executive Board
members may elect to receive their Board fees in shares, net of withholdings.
Any such shares are
to be issued under the 2006 Stock Incentive Plan.
Annual service is measured between
the dates of the Company’s Annual General Meetings.
The following table summarizes the
total compensation earned or paid by Logitech during fiscal year 2010 to
continuing members of the Board of Directors who were not executive officers as
of March 31, 2010. The compensation paid to Guerrino De Luca and Gerald
Quindlen, the members of the Board of Directors that are Logitech executive
officers as of March 31, 2010, is presented in the Summary Compensation
Table.
Non-Executive Director Summary
Compensation for Fiscal Year 2010
|
|
Fees Earned
In |
|
Stock Awards |
|
|
Name |
|
Cash ($) |
|
($)(1) |
|
Total ($) |
Daniel Borel |
|
72,974 |
|
110,580 |
|
183,554 |
Matthew Bousquette |
|
124,762 |
|
109,680 |
|
234,442 |
Erh-Hsun Chang |
|
87,098 |
|
127,960 |
|
215,058 |
Kee-Lock Chua |
|
108,284 |
|
127,960 |
|
236,244 |
Sally Davis |
|
101,222 |
|
110,580 |
|
211,802 |
Richard Laube |
|
87,098 |
|
110,580 |
|
197,678 |
Robert Malcolm |
|
87,098 |
|
109,680 |
|
196,778 |
Monika Ribar |
|
110,638 |
|
110,580 |
|
221,218 |
____________________
(1) |
Under
SEC rules, the values reported reflect the grant date fair value of 7,000
RSUs granted to each of Mr. Chang and Mr. Chua, and 6,000 RSUs granted to
each other non-executive director, on August 31, 2009. The slight
differences in values reported for those directors granted 6,000 RSUs
reflect differences in the closing price of Logitech shares between the
SIX Swiss Exchange and Nasdaq on the grant date, as stock awards are
granted and valued using either price depending on the principal residence
of the director. The methodology of the valuation of RSUs is presented in
Note 13 to the Consolidated Financial Statements included in Logitech’s
Annual Report to Shareholders and Annual Report on Form 10-K for fiscal
year 2010 filed with the SEC on May 27,
2010. |
111
The following table presents
additional information with respect to the option and stock awards held as of
March 31, 2010 by members of the Board of Directors who were not executive
officers as of fiscal year-end.
In 2010, Logitech began granting
RSUs instead of stock options to continuing non-employee directors. The RSUs
granted in fiscal year 2010 vest in one equal increment on the one-year grant
date anniversary.
Information regarding the option and
stock awards held as of March 31, 2010 by Guerrino De Luca and Gerald Quindlen,
the only members of the Board of Directors that are Logitech executive officers
as of such date, is presented in the Outstanding Equity Awards at Fiscal
Year-End table.
Certain of the options as granted
have exercise prices denominated in Swiss Francs. The U.S. dollar exercise price
in the table below for such options are based on the Swiss Franc to U.S. Dollar
exchange rate on the trading day immediately preceding the grant date. The U.S.
Dollar exercise price as of March 31, 2010, the last day of Logitech’s fiscal
year 2010, for such options are presented in the footnotes to the table based on
a Swiss Franc to U.S. Dollar exchange rate on March 31, 2010 of 1.0642 to
1.
Outstanding Equity Awards for
Non-Executive Directors at Fiscal 2010 Year-End
|
|
|
|
Option Awards |
|
Stock
Awards |
|
|
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
Shares or |
|
|
|
|
|
|
|
|
Underlying |
|
Underlying |
|
Option |
|
Option |
|
Units of |
|
Market Value
of |
|
|
|
|
Unexercised |
|
Unexercised |
|
Exercise |
|
Expiration |
|
Stock
That |
|
Shares or Units
of |
|
|
Grant Date |
|
Options |
|
Options |
|
Price / |
|
Date |
|
Have Not |
|
Stock That
Have |
Name |
|
(MM/DD/YY) |
|
Exercisable
(#) |
|
Unexercisable (#)(1) |
|
Share ($) |
|
(MM/DD/YY) |
|
Vested (#) |
|
Not Vested ($)(2) |
Daniel Borel |
|
08/31/09 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
6,000 |
|
|
|
98,040 |
|
|
|
Total |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
98,040 |
|
Matthew Bousquette |
|
06/16/05 |
|
|
60,000 |
|
|
|
— |
|
|
|
15.41 |
|
|
06/16/15 |
|
|
— |
|
|
|
— |
|
|
|
09/10/08 |
|
|
5,000 |
|
|
|
10,000 |
|
|
|
23.29 |
|
|
09/10/18 |
|
|
— |
|
|
|
— |
|
|
|
08/31/09 |
|
|
— |
|
|
|
— |
|
|
|