Our officers and executive officers, including our Named Executive Officers, receive annual cash compensation
in the form of base salary, annual incentive bonuses and profit sharing which collectively constitute the executives total annual cash compensation. The levels of total annual cash compensation are established annually under a program intended
to maintain parity with the competitive market for executives in comparable positions. Total annual cash compensation for each position is targeted at the market value for that position as measured by our annual benchmark review
We maintain base salaries, which
are the fixed component of annual cash compensation, below market value, thereby putting a larger portion of the executives total annual cash compensation at risk. Annual incentive awards (the annual incentive bonus and profit sharing) are
targeted at a level that, when combined with base salaries, should yield total annual cash compensation that approximates market value when the Company, operating units and individuals meet performance goals. Accordingly, when our financial
performance exceeds our applicable annual targets and individual performance contributes to meeting our objectives, total annual cash compensation for a position generally should exceed the positions market value. Conversely, when our
financial performance does not meet targets and/or individual performance does not have a favorable impact on our objectives, total annual cash compensation generally should be below market levels.
Base Salary. Base salary for officers
and executive officers, including Named Executive Officers, is established based on the individuals scope of responsibilities, taking into account competitive market compensation paid by other companies to executives in similar positions. We
believe that executive base salaries should be targeted around the 90th percentile of the median range of salaries paid to executives with similar responsibilities and in similar positions with comparable companies, as measured by our annual benchmark review described above.
The base salaries for our Named Executive Officers are at the following percentiles: Thomas Wroe, 72%; Jeffrey Cote, 93%; Martha Sullivan, 86%; Martin Carter, 93% (hired December 2009); Steve Major, 74%; and Richard Dane, 86%. Those below 90%
reflect our strategy of moving their base salary over time. This strategy was adopted after our divestiture from Texas Instruments to align the new positions of our Named Executive Officers with base salaries of a stand-alone company and will be
completed in 2010. Mr. Cote was hired by the Company in early 2007 and Mr. Martin was hired by the Company in late 2009 and their base salaries are in line with our strategy to pay newly hired executives around the 90th percentile of the median range of salaries. Base salaries are
reviewed annually taking into account each individuals responsibilities and their alignment with competitive market position and the base salaries paid by other comparable companies to executives in similar positions.
Annual adjustments to an executive base salary take into
individual performance (based on achievement of pre-determined goals and objectives);
market position versus the 90th percentile of the market median;
our ability to pay increases; and
In 2008, in keeping with our strategy, we paid base salaries for our officers and executive officers, including our Named Executive
Officers, below the median level of salaries for executives in similar positions in comparable companies. The base increases received in 2008 were: Thomas Wroe, 15%; Jeffrey Cote, 6.3%; Martha Sullivan, 9.1%; Steve Major, 8.7%; and Richard
Dane, 9%. All of these increases were determined based on their individual performance and market position. Individual performance is assessed annually by the Chief Executive Officer, the board of directors and the compensation committee.