Symantec 2014 Annual Report Download - page 41

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(1) Consistent with the presentation in our quarterly earnings releases and supplemental materials, under our
executive compensation programs, we define (i) non-GAAP operating income as gross profits less operating
expenses before interest and taxes, adjusted to exclude stock-based compensation expense, restructuring and
transition charges, charges related to the amortization of intangible assets, and the related tax impact of these
adjustments; and (ii) non-GAAP EPS as diluted net income per share as adjusted to exclude the items
described above, as well as non-cash interest expense, value-added tax refunds a tax from the China tax
bureau, certain other tax benefits, and the related tax impact of these adjustments.
NEO Compensation
Our named executive officers were compensated in a manner consistent with our core pay-for-performance
compensation philosophy. The following are some important elements of our named executive officers’ compen-
sation for fiscal 2014:
‰Majority of pay mix at risk. For fiscal 2014, approximately 91% of our former CEO’s target total
direct compensation was at risk and approximately 84% of the target total direct compensation for our
other named executive officers (other than our interim CEO, CFO, former acting CFO and former interim
CFO), on average, was at risk.
‰Long-term incentive compensation linked exclusively to share price for former CEO. For fiscal
2014, the long-term incentive compensation component of our former CEO’s compensation package was
comprised exclusively of a PCSU grant that was directly tied to increasing our stock price, and thus was
designed to reward our CEO for providing tangible value to our stockholders.
‰Short-term incentive compensation linked exclusively to Company financial results. Our executive
annual incentive bonus was structured to emphasize performance. Under the FY14 Executive Annual
Incentive Plans, the named executive officers were eligible to receive performance-based incentive
bonuses based on our company’s achievement of targeted non-GAAP operating income for fiscal 2014, as
modified by our company’s achievement of targeted revenue during fiscal 2014.
‰Long-term incentive compensation is 100% equity-based. We discontinued using a long-term cash
incentive award as a component of our long-term executive compensation program. For fiscal 2014, the
long-term compensation component of our named executive officers’ compensation packages consisted
entirely of long-term equity incentive awards.
‰Peer group aligned with competitors for talent and similar business models. Based in part on feed-
back obtained from our ongoing engagement with stockholders and their advisers, the Compensation and
Leadership Development Committee of the Board (the “Compensation Committee”) adjusted our peer
group to include companies that are more similar to us in terms of complexity, global reach and revenue
and market capitalization. They primarily selected businesses with a focus on software development or
software and engineering-driven companies that compete with us for executive and broader talent.
‰Performance measures are non-duplicative. We eliminated the duplication of the non-GAAP EPS
metric in both the cash annual incentive plan and the PRU equity incentive plan. In fiscal 2014, the cash
annual incentive plan metric was non-GAAP operating income, which we believe our executives have a
more direct ability to affect.
‰Increased stock ownership guidelines. To enhance the alignment between our executive officers and
stockholder interests, in July 2013 we increased the level of our stock ownership guidelines for our Chief
Operating Officer and President, Products and Services so that they have a minimum holding requirement
of 3x their base salaries.
‰Severance of former CEO per employment and equity agreements. As stated above, our former
CEO was terminated effective March 19, 2014. In accordance with his employment agreement, he
received a cash severance payment equal to 1.5 times his annual base salary and target bonus, an accel-
eration of restricted stock units (“RSUs”) and reimbursement of COBRA premiums for eighteen months.
He also received acceleration of PCSUs and PRUs in accordance with the terms in his PCSU agreement
and PRU agreement, respectively.
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