DELL Topics Executive Officer Compensation

This excerpt taken from the DELL DEF 14A filed Jun 1, 2009.

Executive Officer Compensation

Process for Evaluating Chairman and Chief Executive Officer Performance

The Committee discusses and makes all recommendations relating to the compensation of the Chairman and Chief Executive Officer in regular session, without the Chairman and Chief Executive Officer present. In reviewing the compensation of the Chairman and Chief Executive Officer, the Committee considers the performance of the company and his contribution to that performance. This assessment includes a holistic review of financial metrics such as revenue, operating income, and cash flow as well as progress against strategic initiatives such as customer service, share growth, and employee engagement. Based on this review, the Committee makes base salary, bonus, and long-term incentive recommendations subject to approval of the full Board.

Process and Results for Executive Officer Compensation

Process – When making individual compensation decisions for executive officers, the Committee takes many factors into account, including the performance of the company; the recommendation of the Chairman and Chief Executive Officer (except for decisions relating to his own compensation); the individual’s performance and experience; the individual’s historical compensation; comparisons to other executive officers (both those of the company and those of Dell’s peer group); and any retention concerns if relevant.

Compensation Consultants – The charter of the Committee authorizes the Committee to engage independent consultants at any time at the expense of the company. The Committee did not engage independent consultants in Fiscal 2009. The Committee periodically evaluates the need to engage independent consultants.

Elements of the Total Compensation Package – The key elements of the compensation program for the executive officers are base salary, annual incentive bonus, long-term incentives, benefits and perquisites.

The chart below is representative of the target overall pay mix for our Named Executive Officers, excluding Mr. Dell, who has not received any long-term incentives since Fiscal 2005, both at his request and because the Committee agrees that his extensive current stock holdings strongly align him with other stockholders and provide him sufficient motivation to drive long-term company stock price performance. The Committee takes a holistic approach to executive compensation and balances the individual compensation elements for each executive officer. A representative comparison of the Fiscal 2009 target value of each element to the whole for the Named Executive Officer population is illustrated in the following graphic.

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Pay Mix – Because executive officers are in a position to directly influence the overall performance of the company, and in alignment with a highly-leveraged pay-for-performance philosophy, a significant portion of their compensation is delivered in the form of performance-dependent, short- and long-term incentive programs. The level of performance-dependent pay varies for each executive based on level of responsibility, market practices, and internal equity considerations. Dell does not target a fixed mix of pay for individual executive positions, but instead strives to maintain the desired competitive position for each element of pay as described in the “Market Positioning” section below. Actual pay mix may vary dramatically from the chart above based on level of achievement of bonus and long-term incentive award objectives as well as company stock price performance.

The peer group for evaluating pay for the executive officers is based on those companies with which Dell competes for talent. The Committee reviews and approves the peer group annually using an assessment of sales volumes, market capitalization, number of employees, product mix and business results. The peer group used to evaluate executive pay practices at the beginning of Fiscal 2009 consisted of the following 24 companies: