Symantec 2008 Annual Report Download - page 61

reported increases in non-GAAP revenue and non-GAAP EPS of approximately 13% and 26%, respectively, from
fiscal 2007 to fiscal 2008. As business cycles shifted during fiscal 2008, business unit performance experienced more
volatility in contribution margin results compared to targeted levels. The Company does not intend to disclose the
specific targets for the business unit contribution margin, as its segment-level business plan is highly confidential.
Disclosing specific business unit-level objectives would provide competitors and third parties with insights into the
Company’s internal planning processes which might allow our competitors to predict certain business strategies and
cause us competitive harm. The amounts paid out with respect to the business unit metrics, as a percentage of the target
payout amounts, were as follows: Consumer Products segment, 45%; Data Center Management segment, 200%;
Security and Compliance segment, 80%; Altiris segment, 95%; and Services segment, 200%. The Committee believed
when it established these business unit performance metrics under the fiscal 2008 Annual Incentive Plans that while
actual results were uncertain it was reasonably likely that the Company would achieve at or close to the target goals.
For our CEO, CFO and COO, the metric achievements for FY08 described above resulted in a payout of 115%
of the officer’s respective target bonus amount; and for Mr. Hughes, Ms. Chaffin, Mr. Butterfield and Mr. Kendra,
this achievement resulted in a 134%, 94%, 95% and 105% payout against target bonus amount, respectively (in each
case, amounts paid are reflected in the Summary Compensation Table beginning on page 54).
Long Term Incentive Plans (LTIP)
In May 2007, the Committee approved our FY08 LTIP, which became effective on April 1, 2007. Under the
terms of the FY08 LTIP, executives are eligible to receive performance-based compensation based upon the level of
attainment of target operating cash flow through the Company’s fiscal year ending March 31, 2008. The FY08 LTIP
was adopted pursuant to the SEIP approved by our stockholders in 2003. We are seeking stockholder approval of
certain material terms of the SEIP as required under applicable tax rules so that amounts paid under future SEIP
awards may be fully deductible (see Proposal No. 4).
As we currently operate the SEIP, the long-term incentive metric is measured at the end of the performance
period (i.e., the end of fiscal 2008) and, subject to satisfaction of continuing service requirements, will be paid
following the last day of the second fiscal year following the end of the performance period (i.e., the end of fiscal
2010). By basing the LTIP payout on operating cash flow, the plan focuses on a specific, measurable corporate goal
that is aligned with generating stockholder value, and provides performance-based compensation based upon the
actual achievement of the goal. We believe that the exclusive metric of operating cash flow, as opposed to revenue or
EPS, will appropriately focus our executives on tangible cost reduction opportunities that are not subject to some of
the timing issues associated with the accounting rules relating to revenues and net income, which can lead to
fluctuations in results that are not necessarily directly tied to our business success. Our CEO declined participation
in the FY08 LTIP. For our continuing named executive officers who participated in the FY08 LTIP, the target LTIP
awards represented the following percentages of then-current base salary: Messrs. Salem and Hughes, 95%;
Mr. Beer, 68%; and Ms. Chaffin, 100%. A participant is eligible for 25% of the target LTIP award if at least 85% of
budgeted operating cash flow is attained with respect to the performance period and for up to 200% of the target
LTIP award if at least 120% of budgeted operating cash flow is attained with respect to the performance period. A
participant must be an employee of the Company on the payment date to receive the payment. Subject to certain
exceptions, a participant who terminates his or her employment with the Company before the payment date will not
be eligible to receive the payment or any prorated portion thereof. The Committee implemented the FY08 LTIP in
order to provide an ongoing retention and performance incentive by balancing option and RSU vesting periods (four
and two years respectively) with another component which will enhance retention of senior managers.
For FY08, our operating cash flow target was $1.789 billion and we achieved 102.4% of our target
($1.832 billion), resulting in payouts of 105% of target bonus amounts for our continuing named executive
officers who remain our employees as of the end of fiscal 2010. Accordingly, Messrs. Salem, Beer and Hughes and
Ms. Chaffin will each receive a payout of $472,500 if they remain employed by us on such date. This level of
achievement against target compares to our reported increase in cash flow from operations of approximately 9%
from fiscal 2007 to fiscal 2008. Messrs. Kendra and Butterfield will not receive any payouts under the FY08 LTIP
because they will not be employees of Symantec on the payout date.
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