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COMPENSATION DISCUSSION AND ANALYSIS
This section contains a discussion of the material elements of compensation awarded to, earned by or paid to
our Chief Executive Officer ("CEO"), our Chief Financial Officer and our three other most highly compensated
executive officers who were serving as executive officers as of December 31, 2011. These individuals are
referred to as the "Named Executive Officers" in this proxy statement.
Executive Summary
Our goal for our executive compensation program is to attract, motivate and retain executive officers, while
aligning the interests of our executives with the interests of our stockholders. Compensation for our Named
Executive Officers is comprised of a mix of base salary, annual cash incentive awards and long-term equity
incentive awards. A substantial amount of each Named Executive Officer's total compensation is
performance-based and linked to our operating performance.
For fiscal 2011, Mr. Kartsotis, our CEO, continued to refuse all forms of compensation, expressing his
belief that, given his level of stock ownership, his primary compensation is met by continuing to drive stock price
growth, thereby aligning his interests with stockholders' interests. As a result, the following references to Named
Executive Officers in this Compensation Discussion and Analysis do not include Mr. Kartsotis.
In June 2011, we hired Darren E. Hart as our new Executive Vice President, HR. We describe Mr. Hart's
fiscal 2011 compensation in a separate section of this Compensation Discussion and Analysis entitled "Hiring of
New Executive Vice President, HR." As a result, unless otherwise indicated, the following references to Named
Executive Officers in this Compensation Discussion and Analysis do not include Mr. Hart.
In setting fiscal 2011 base salary and equity awards for the Named Executive Officers, our Compensation
Committee considered our overall fiscal 2010 financial performance, the individual contributions of the Named
Executive Officers to our overall fiscal 2010 financial performance, individual performance appraisals of the
Named Executive Officers for fiscal 2010 and benchmarking data of our industry peer group. In addition, cash
bonus amounts for our Named Executive Officers were based on our fiscal 2011 financial performance and
individual performance appraisals of the Named Executive Officers for fiscal 2011.
Our financial performance for fiscal 2010 was outstanding. We reported record levels of operating income
for fiscal 2010, driven by double-digit sales growth across all of our geographic markets. Our record results were
achieved despite the continuing challenges in the global economy and significant product cost pressure. Financial
highlights as reported for fiscal 2010 included:
net sales increased 31.2% to $2.03 billion, compared to $1.55 billion in fiscal 2009;
gross profit increased 36.7% to $1.16 billion, compared to $0.84 billion in fiscal 2009;
operating income increased 77.9% to $376.4 million, compared to $211.6 million in fiscal 2009;
net income increased 83.4% to $255.2 million, compared to $139.2 million in fiscal 2009; and
diluted earnings per share increased 82.1% to $3.77 per diluted share on 67.7 million shares, compared to
$2.07 per diluted share on 67.2 million shares.
The Compensation Committee's fiscal 2011 compensation decisions reflected our strong performance for
fiscal 2010. As a result, in fiscal 2011, the Compensation Committee approved:
base pay increases ranging from approximately 4.2% to 11.3% for our Named Executive Officers based on
an analysis of peer group companies and comparative, competitive compensation packages; and
grants of restricted stock units and stock appreciation rights, each with a cash value on the date of grant
between 35% and 50% of the Named Executive Officer's total cash compensation, consistent with our
pay-for-performance compensation philosophy.
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