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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Dell Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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1) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (04-05) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
NOTICE OF ANNUAL
MEETING
AND
PROXY STATEMENT
2007
October 31, 2007
Dear Fellow Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite
you to Dells 2007 Annual Meeting of Stockholders. The
meeting will be held on Tuesday, December 4, 2007, at
8:00 a.m. Central Time, at our Round Rock Campus,
Building One, at 401 Dell Way, Round Rock, Texas 78682. For your
convenience, we are also offering a Webcast of the meeting. If
you choose to view the Webcast, go to www.dell.com/investor
shortly before the meeting time and follow the instructions
provided. If you miss the meeting, you can view a replay of the
Webcast on that site.
You will find information regarding the matters to be voted on
in the attached Notice of Annual Meeting of Stockholders and
Proxy Statement. A copy of our Annual Report on
Form 10-K
for Fiscal 2007 is enclosed with these materials. You may visit
www.dell.com/investor to access an interactive Fiscal
2007 Year-in-
Review, as well as various Web-based reports, executive
messages, and timely information on Dells global business.
This meeting is for Dell stockholders. If you attend the meeting
in person, you will need the admission ticket found on the back
page of this proxy statement or an account statement showing
your ownership of Dell stock and proper photo identification for
entry into the meeting. If you have received your materials
electronically, you may print the ticket on the last page.
Whether or not you plan to attend the meeting in person, please
submit your vote using one of the voting methods described in
the attached materials. Submitting your vote by any of these
methods will not affect your right to attend the meeting and
vote in person should you so choose, although if you are a
beneficial stockholder, you must obtain a legal proxy from the
record holder.
If you have any questions concerning the meeting, please contact
our Investor Relations Department at
512-728-7800
or Investor_Relations@dell.com. For questions regarding your
stock ownership, you may contact our transfer agent, American
Stock Transfer & Trust Company, at
800-937-5449
or www.amstock.com.
Sincerely,
Michael S. Dell
Chairman of the Board and Chief Executive Officer
TABLE OF
CONTENTS
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A-1
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DELL INC.
One Dell
Way
Round Rock, Texas 78682
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
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Date |
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Tuesday, December 4, 2007 |
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8:00 a.m., Central Time |
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Dell Headquarters
Building One
401 Dell Way
Round Rock, Texas 78682 |
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Webcast |
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www.dell.com/investor |
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Proposals |
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Proposal 1 Election of Directors
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Proposal 2 Ratification of Independent Auditor
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Proposal 3 Approval of the Amended and Restated
2002 Long-Term Incentive Plan
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Stockholder Proposal 1 Executive Stock
Ownership Guidelines
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Stockholder Proposal 2 Declaration of Dividend
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Record Date |
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October 26, 2007 |
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Voting Methods |
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Internet Go to www.proxyvote.com
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Telephone Use the toll-free number shown on the
proxy or voting instruction card
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Written ballot Complete and return a proxy or voting
instruction card
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In person Attend and vote at the meeting
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Stockholders will also transact any other business properly
brought before the meeting. At this time, the Board of Directors
knows of no other proposals or matters to be presented.
This Notice of Annual Meeting and Proxy Statement is accompanied
by a copy of the Annual Report on
Form 10-K
for Fiscal 2007.
On behalf of the Board of Directors:
Lawrence P. Tu, Secretary
October 31, 2007
www.dell.com/investor
Webcast
of Annual Meeting
We are pleased to offer a Webcast of our 2007 annual meeting,
and viewers, like attendees, will have the ability to ask
questions online during the question and answer session. If you
choose to view the Webcast, go to www.dell.com/investor shortly
before the meeting time and follow the instructions provided. If
you miss the meeting, you can view a replay of the Webcast on
that site.
Please note that you will not be able to vote your shares via
the Webcast. If you plan to view the Webcast, please submit your
vote using one of the methods described in these materials by
11:59 pm, Eastern Time, on December 3, 2007.
www.dell.com/investor
ii
This Proxy Statement is furnished in connection with the
solicitation of proxies by Dell Inc., on behalf of the Board of
Directors, for the 2007 Annual Meeting of Stockholders. This
Proxy Statement and the related proxy form are being distributed
on or about November 5, 2007.
You can vote your shares using one of the following methods:
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Vote through the Internet at www.proxyvote.com using the
instructions on the proxy or voting instruction card
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Vote by telephone using the toll-free number shown on the proxy
or voting instruction card
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Complete and return a written proxy or voting instruction card
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Attend and vote at the meeting (See Additional
Information Voting by Street Name Holders)
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Internet and telephone voting are available 24 hours a day,
and if you use one of those methods, you do not need to return a
proxy or voting instruction card. Unless you are planning to
vote at the meeting, your vote must be received by
11:59 p.m., Eastern Time, on December 3, 2007.
Even if you submit your vote by one of the first three methods
mentioned above, you may still vote at the meeting if you are
the record holder of your shares or hold a legal proxy from the
record holder. See Additional Information
Voting by Street Name Holders. Your vote at the meeting
will constitute a revocation of your earlier voting instructions.
Stockholders are being asked to consider five proposals at the
meeting. The following is a summary of the proposals and the
voting recommendations of the Board of Directors:
SUMMARY OF
PROPOSALS
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Board
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Proposal
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Recommendation
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1 Election of Directors
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FOR
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2 Ratification of Independent Auditor
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FOR
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3 Approval of the Amended and Restated 2002
Long-Term Incentive Plan
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FOR
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Stockholder Proposal 1 Executive Stock
Ownership Guidelines
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AGAINST
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Stockholder Proposal 2 Declaration of Dividend
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AGAINST
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The details of each proposal are set forth below.
www.dell.com/investor
1
Proposal 1 Election
of Directors
The first proposal to be voted on at the meeting is the election
of directors. The directors elected at this meeting will serve
until next years annual meeting. The Board of Directors
has nominated all of the current directors for re-election to
the Board. Those nominees are:
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Donald J. Carty
William H. Gray, III
Alan (A.G.) Lafley
Thomas W. Luce, III
Alex J. Mandl
Sam Nunn
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Michael S. Dell
Sallie L. Krawcheck
Judy C. Lewent
Klaus S. Luft
Michael A. Miles
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Biographical information about each of the nominees is included
under Director Information below.
The Board of Directors recommends a vote FOR all
nominees.
If a nominee becomes unable or unwilling to accept nomination or
election, the Board will either select a substitute nominee or
reduce the size of the Board. If you have submitted a proxy and
a substitute nominee is selected, your shares will be voted for
the election of the substitute nominee.
The Board has no reason to believe that any nominee would be
unable or unwilling to serve if elected.
According to the Bylaws, each of the above-named nominees will
be elected to the Board if he or she receives affirmative
(FOR) votes from the holders of a majority of the
shares of common stock represented at the meeting and entitled
to vote. Under our Corporate Governance Principles, if a nominee
fails to receive the requisite majority vote, he or she will be
required to submit his or her resignation. Any tendered
resignation will be evaluated by the remaining independent
directors. In determining whether to accept or reject the
resignation, or take other action, the Board may consider all
factors it deems relevant. The Board will act on the tendered
resignation, and will publicly disclose its decision and
rationale, within 90 days following certification of the
stockholder vote.
Set forth below is biographical and other information about the
persons who will make up the Board following the meeting,
assuming election of the nominees named above.
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Donald J. Carty
Age: 61
Director since December 1992
No Board Committees
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Mr. Carty joined us as Vice Chairman and Chief Financial
Officer in January 2007. In that role, he is responsible for all
finance functions, including controller, corporate planning,
tax, treasury operations, investor relations, corporate
development, real estate, risk management, and internal audit.
Mr. Carty was the Chairman and Chief Executive Officer of
AMR Corporation and American Airlines from 1998 until his
retirement in 2003. Prior to that he served in a variety of
executive positions with AMR Airline Group and American Airlines
from 1978 to 1985 and from 1987 to 1999. Mr. Carty was
President and Chief Executive Officer of CP Air in Canada from
1985 to 1987. After his retirement from AMR and American in
2003, Mr. Carty engaged in |
www.dell.com/investor
2
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numerous business and private investment activities with a
variety of companies. Mr. Carty is a graduate of
Queens University in Kingston, Ontario and of the Harvard
Graduate School of Business Administration. He is also a
director CHC Helicopter Corp. and Barrick Gold Corporation and
serves as Chairman of the Board of Virgin America Airlines. |
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Michael S. Dell
Age: 42
Director since May 1984
No Board committees
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Mr. Dell currently serves as Chairman of the Board of
Directors and Chief Executive Officer. He has held the title of
Chairman of the Board since he founded the company in 1984.
Mr. Dell served as Chief Executive Officer of Dell from
1984 until July 2004 and resumed that role in January 2007. He
serves on the Foundation Board of the World Economic Forum,
serves on the executive committee of the International Business
Council, and is a member of the U.S. Business Council. He also
serves on the U.S. Presidents Council of Advisors on
Science and Technology and sits on the governing board of the
Indian School of Business in Hyderabad, India. |
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William H. Gray, III
Age: 66
Director since November 2000
Board committees: Audit, Governance
and Nominating
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Mr. Gray is Chairman of the Amani Group (a consulting and
advisory firm), a position he has held since August 2004.
Mr. Gray was President and Chief Executive Officer of The
College Fund/UNCF (educational assistance) from 1991 until he
retired in June 2004. He was a member of the United States House
of Representatives from 1979 to 1991. During his tenure, he was
Chairman of the House Budget Committee, a member of the
Appropriations Committee, Chairman of the House Democratic
Caucus and Majority Whip. He is an ordained Baptist Minister and
last pastored at Bright Hope Baptist Church of Philadelphia from
1972 until 2007. Mr. Gray is also a director of
J.P. Morgan Chase & Co., Prudential Financial
Inc., Visteon Corporation, and Pfizer Inc. |
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Sallie L. Krawcheck
Age: 42
Director since July 2006
Board committees: Finance
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Ms. Krawcheck is the Chairman and Chief Executive Officer,
Citi Global Wealth Management. Until March 2007,
Ms. Krawcheck served as Chief Financial Officer and Head of
Strategy for Citigroup Inc. She is also a member of the Citi
Management, Operating and Business Heads Committees, as well as
the Citi Foundation Board and the Citi Business Practices
Committee. Ms. Krawcheck joined Citi in October 2002 as
Chairman and Chief Executive Officer of Smith Barney. Prior to
joining Citi, Ms. Krawcheck was Chairman and Chief
Executive Officer of Sanford C. Bernstein & Company.
She also served as an Executive Vice President of
Bernsteins parent company, Alliance Capital Management,
from 1999 to 2001. Ms. Krawcheck is a member of the Board
of Directors of the University of North Carolina at Chapel Hill
Foundations, Inc., the Board of Directors of Carnegie Hall, the
Board of Overseers of Columbia Business School, and the Board of
Trustees for the Economic Club of New York. |
www.dell.com/investor
3
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Alan (A.G.) Lafley
Age: 60
Director since July 2006
Board committees: Finance, Leadership Development
and Compensation
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Mr. Lafley is the Chairman of the Board and Chief Executive
Officer of The Procter & Gamble Company.
Mr. Lafley joined Procter & Gamble in 1977, and
has served in a variety of executive level positions since 1992.
He was named President and Chief Executive in 2000 and Chairman
of the Board in 2002. Mr. Lafley also serves on the board
of General Electric Company, and on the board of the Cincinnati
Center City Development Corporation. He is a Trustee of Hamilton
College and is a member of the Business Roundtable and the
Business Council. |
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Judy C. Lewent
Age: 58
Director since May 2001
Board committees: Finance (Chair),
Leadership Development and Compensation
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Until her retirement in September 2007, Ms. Lewent served
as the Executive Vice President, Chief Financial Officer of
Merck & Co., Inc. She served as Chief Financial
Officer of Merck starting in 1990 and also held various other
financial and management positions since joining Merck in 1980.
Ms. Lewent is also a director of Motorola, Inc.
Ms. Lewent is a trustee of the Rockefeller Family Trust, a
life member of the Massachusetts Institute of Technology
Corporation, and a member of the American Academy of Arts and
Sciences. |
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Thomas W. Luce, III
Age: 67
Director from November 1991 September
2005 and September 2006 present
Board committees: Audit (Chair)
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Mr. Luce currently serves as President, Chief Executive
Officer, and Director of the National Math and Science
Initiative Inc., a not-for-profit organization dedicated to
expanding programs that have a proven impact on math and
science. He served as United States Assistant Secretary of
Education for Planning, Evaluation and Policy Development from
July 1, 2005 until his resignation September 1, 2006.
From 1997 until 2005, Mr. Luce was a partner of the
business advisory firm Luce &
Williams, Ltd. Before then, Mr. Luce was a founding partner
and managing partner of the law firm of Hughes & Luce,
LLP from 1973 until his retirement from the firm in 1997, and
was Of Counsel with that law firm until December 2003. |
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Klaus S. Luft
Age: 65
Director since March 1995
Board committees: Leadership Development
and Compensation
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Mr. Luft is the founder and Chairman of the Supervisory
Board of Artedona AG, a privately held mail order
e-commerce
company established in 1999 and headquartered in Munich,
Germany. He is also owner and President of Munich-based
MATCH Market Access Services GmbH & Co.,
KG. Since August 1990, Mr. Luft has served and continues to
serve as Vice Chairman and International Advisor to Goldman
Sachs Europe Limited. From March 1986 to November 1989, he was
Chief Executive Officer of Nixdorf Computer AG, where he served
for more than 17 years in a variety of executive positions
in marketing, manufacturing, and finance. Mr. Luft is the
Honorary Consul of the Republic of
Estonia in the State of Bavaria. |
www.dell.com/investor
4
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Alex J. Mandl
Age: 63
Director since November 1997
Board committees: Audit
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In June 2006, Mr. Mandl became Executive Chairman of
Gemalto, a company resulting from the merger of Axalto Holding
N.V. and Gemplus International S.A. Before June 2006,
Mr. Mandl was President and Chief Executive Officer and a
member of the Board of Directors of Gemplus, positions he held
since August 2002. He has served as Principal of ASM
Investments, a company focusing on early stage funding in the
technology sector since April 2001. From 1996 to March 2001,
Mr. Mandl was Chairman and CEO of Teligent, Inc., which
offered business customers an alternative to the Bell Companies
for local, long distance and data communication services.
Mr. Mandl was AT&Ts President and Chief
Operating Officer from 1994 to 1996, and its Executive Vice
President and Chief Financial Officer from 1991 to 1993. From
1988 to 1991, Mr. Mandl was Chairman of the Board and Chief
Executive Officer of
Sea-Land
Services Inc. Mr. Mandl is also a board member of Hewitt
Associates, Inc., Horizon Lines, Inc., and Willamette University. |
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Michael A. Miles
Age: 68
Director since February 1995
Board committees: Leadership Development and
Compensation (Chair), Governance
and Nominating
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Mr. Miles is a special limited partner and a member of the
Advisory Board of the investment firm Forstmann Little and Co.
He is the former Chairman of the Board and Chief Executive
Officer of Philip Morris Companies Inc., having served in those
positions from September 1991 to July 1994. Prior to September
1991, Mr. Miles was Vice Chairman and a member of the board
of directors of Philip Morris Companies Inc. Mr. Miles is
also a director of Time Warner Inc., AMR Corporation, and
Citadel Broadcasting Corp. and a trustee of Northwestern
University. |
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Sam Nunn
(Presiding Director)
Age: 69
Director since December 1999
Board committees: Audit,
Governance and Nominating (Chair)
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Mr. Nunn is Co-Chairman and Chief Executive Officer of the
Nuclear Threat Initiative (NTI), a charitable organization
working to reduce the global threats from nuclear, biological,
and chemical weapons. He was a Senior Partner at the law firm of
King & Spalding, Atlanta, Georgia, from 1997 until
2003. From 1972 through 1996, he served as a United States
Senator from Georgia. During his tenure as Senator, he served as
Chairman of the Senate Armed Services Committee and the
Permanent Subcommittee on Investigations. He also served on the
Intelligence and Small Business Committees. Mr. Nunn also
serves as a director of Chevron Corporation, The
Coca-Cola
Company, and General Electric Company. |
Corporate Governance Principles The Board of
Directors believes that adherence to sound corporate governance
policies and practices is important in ensuring that our company
is governed and managed with the highest standards of
responsibility, ethics, and integrity and in the best interests
of the stockholders. The Board maintains a set of Corporate
Governance Principles intended to reflect a set of core values
that
www.dell.com/investor
5
provide the foundation for our governance and management systems
and our interactions with others. A copy of those principles can
be found on our website at www.dell.com/corporategovernance.
Director Independence The
Board of Directors believes that the interests of the
stockholders are best served by having a substantial number of
objective, independent representatives on the Board. For this
purpose, a director will be considered to be
independent only if the Board affirmatively
determines that the director does not have any direct or
indirect material relationship with Dell that may impair, or
appear to impair, the directors ability to make
independent judgments.
The Board has recently evaluated all relationships between each
director and Dell and has made the following determinations with
respect to each directors independence:
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Director
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Statusa
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Mr. Carty
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Not
Independentb
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Mr. Dell
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Not
independentc
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Mr. Gray
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Independent
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Ms. Krawcheck
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Independentd
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Mr. Lafley
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Independente
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Ms. Lewent
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Independentf
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Mr. Luce
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Independentg
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Mr. Luft
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Independenth
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Mr. Mandl
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Independenti
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Mr. Miles
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Independent
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Mr. Nunn
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Independent
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Unless otherwise noted, the Boards determination that a
director is independent was made on the basis of the standards
set forth in the Corporate Governance Principles, which is
located at on our website at www.dell.com/corporategovernance.
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b
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Mr. Carty is the Vice Chairman and Chief Financial Officer
of Dell and, therefore, is not independent in accordance with
the standards set forth in the Corporate Governance Principles.
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c
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Mr. Dell is the Chairman of the Board and Chief Executive
Officer of Dell and, therefore, is not independent in accordance
with the standards set forth in the Corporate Governance
Principles.
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d
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Ms. Krawcheck serves as Chairman and Chief Executive
Officer of Citi Global Wealth Management, and during Fiscal 2007
served as Chief Financial Officer and Head of Strategy for
Citigroup Inc. During Fiscal 2007, Dell was both a customer of
and a supplier to Citigroup, and the Board considered those
relationships in assessing Ms. Krawchecks
independence.
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Mr. Lafley serves as Chairman and Chief Executive Officer
of The Procter & Gamble Co., and during Fiscal 2007,
Dell was a supplier to Procter & Gamble. In addition,
Mr. Lafley is a director of the United Negro College Fund,
and Dell made contributions to the UNCF during Fiscal 2007. The
Board considered those relationships in assessing
Mr. Lafleys independence.
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f |
Until September 2007, Ms. Lewent served as Executive Vice
President and Chief Financial Officer of Merck & Co.,
Inc. During Fiscal 2007, Dell was a supplier to Merck. The Board
considered this relationship in assessing Ms. Lewents
independence.
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g
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Mr. Luce serves as the President and Chief Executive
Officer and a director of the National Math and Science
Initiative, Inc. (NMSI), a not-for-profit
organization dedicated to expanding programs that have a proven
impact on math and science. The Michael and Susan Dell
Foundation has pledged a contribution to NMSI in the amount of
$5,000,000 over three years. It is estimated that this
contribution will constitute approximately 3.5% of NMSIs
known funding commitments. After considering all the surrounding
facts and circumstances, the Board concluded that this
relationship is not material and does not otherwise impair, or
appear to impair, Mr. Luces ability to make
independent judgments and, therefore, does not prevent
Mr. Luce from being considered an independent
director. In addition to the small size of the contribution in
relation to NMSIs total expected funding, the Board
considered the following facts: (a) NMSIs charitable
purposes are squarely within the historical philanthropic focus
of The Michael and Susan Dell Foundation; and
(b) Mr. Luce is not compensated by NMSI and, thus,
derives no financial benefit from the contribution.
|
|
h
|
Mr. Luft serves as Vice Chairman and International Advisor
to Goldman Sachs Europe Limited. During Fiscal 2007, Dell was a
supplier to Goldman Sachs. The Board considered this
relationship in assessing Mr. Lufts independence.
|
www.dell.com/investor
6
|
|
i |
Mr. Mandl is Executive Chairman of Gemalto. During Fiscal
2007, Dell was a supplier to Gemalto. The Board considered this
relationship in assessing Mr. Mandls independence.
|
The Board will continue to monitor the standards for director
independence established under applicable law or NASDAQ listing
requirements and will ensure that our Corporate Governance
Principles continue to be consistent with those standards.
Board
Committees The Board maintains the following
committees to assist it in discharging its oversight
responsibilities. The current membership of each committee is
indicated above with their biographical information.
|
|
|
|
|
Audit Committee The Audit Committee assists
the Board in fulfilling its responsibility to provide oversight
with respect to our financial statements and reports and other
disclosures provided to stockholders, the system of internal
controls, the audit process, and legal and ethical compliance.
Its primary duties include reviewing the scope and adequacy of
our internal and financial controls; reviewing the scope and
results of the audit plans of our independent and internal
auditors; reviewing the objectivity, effectiveness, and
resources of the internal audit function; appraising our
financial reporting activities and the accounting standards and
principles followed; and reviewing and approving ethics and
compliance policies. The Audit Committee also selects, engages,
compensates, and oversees our independent auditor and
pre-approves all services to be performed by that firm.
|
The Audit Committee is comprised entirely of directors who
satisfy the standards of independence established under our
Corporate Governance Principles, as well as additional or
supplemental independence standards applicable to audit
committee members established under applicable law and NASDAQ
listing requirements. The Board has determined that each Audit
Committee member meets the NASDAQ financial literacy
requirement and that Mr. Mandl is a financial
expert within the meaning of the current rules of the
Securities and Exchange Commission.
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|
|
|
|
Leadership Development and Compensation Committee
The Leadership Development and Compensation Committee
reviews and approves, on behalf of the Board, the amounts and
types of compensation to be paid to our executive officers and
the non-employee directors; reviews and approves, on behalf of
the Board, all bonus and equity compensation to be paid to our
other employees; and administers our stock-based compensation
plans. The Leadership Development and Compensation Committee is
comprised entirely of directors who satisfy the standards of
independence established in our Corporate Governance Principles,
as well as additional or supplemental independence standards
applicable to compensation committee members established under
applicable law and NASDAQ listing requirements.
|
|
|
|
Governance and Nominating Committee The
Governance and Nominating Committee oversees all matters of
corporate governance, including formulating and recommending to
the full Board governance policies and processes and monitoring
and safeguarding the independence of the Board, and selects,
evaluates, and recommends to the full Board qualified candidates
for election or appointment to the Board. This committee also
recommends the structure and membership of the Board committees
and administers an annual self-evaluation of Board performance.
This committee is also responsible for monitoring, on behalf of
the Board, our sustainability and corporate responsibility
activities and initiatives. The Governance and Nominating
Committee is comprised entirely of directors who satisfy the
standards of independence established in our Corporate
Governance Principles, as well as additional or supplemental
independence standards applicable to nominating committee
members established under applicable law and NASDAQ listing
requirements.
|
The Governance and Nominating Committees policies and
processes for identifying, evaluating, and selecting director
candidates, including candidates recommended by stockholders are
set forth in Additional Information Director
Nomination Process below.
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|
|
|
|
Finance Committee The Finance Committee
oversees all areas of corporate finance, including capital
structure, equity and debt financings, capital expenditures,
merger and acquisition activity, cash management, banking
activities and relationships, investments, foreign exchange
activities, and share repurchase activities. A majority of the
members of the Finance Committee is comprised
|
www.dell.com/investor
7
|
|
|
|
|
of directors who satisfy the standards of independence
established in our Corporate Governance Principles.
|
Each committee is governed by a written charter approved by the
full Board. These charters form an integral part of the
Corporate Governance Principles, and a copy of each charter can
be found on our website at www.dell.com/corporategovernance.
Meetings and Attendance
During Fiscal 2007, the full Board held 9 meetings, the Audit
Committee met 28 times, the Leadership Development and
Compensation Committee met 6 times, the Governance and
Nominating Committee met 4 times, and the Finance Committee met
4 times. All directors attended at least 75% of the meetings of
the full Board and the meetings of the committees on which they
served.
It is our policy that each director is expected to attend the
annual meeting of stockholders, and that policy has been
incorporated into our Corporate Governance Principles. All
directors attended last years annual meeting with the
exception of Ms. Lewent.
Communicating with
Directors Stockholders may send communications
to the Board of Directors as a whole, the independent directors
as a group, any Board committee, the Presiding Director, or any
other individual member of the Board. Any stockholder who wishes
to send such a communication may obtain the appropriate contact
information at www.dell.com/boardofdirectors. The Board has
implemented procedures for processing stockholder
communications, and a description of those procedures can also
be found at www.dell.com/boardofdirectors.
Mr. Dell and Mr. Carty are currently the only members
of the board who are also Dell employees, and they do not
receive any additional compensation for serving on the Board.
Kevin B. Rollins, the companys former President and Chief
Executive Officer, served as a member of the Board during Fiscal
2007 but received no additional compensation for such service.
This section describes the compensation earned by Mr. Carty
during Fiscal 2007 in his capacity as a director and prior to
his becoming an executive officer. Details regarding
Mr. Cartys compensation as an executive officer can
be found under Executive Compensation below.
Annual Retainer Fee Each non-employee
director receives an annual retainer fee, which was $75,000
during Fiscal 2007. In addition, the chair of the Audit
Committee receives an additional annual retainer of $20,000; the
chair of each of the other Board committees receives an
additional annual retainer of $15,000; and the Presiding
Director receives an additional annual retainer of $15,000 if he
or she is not the chair of a Board committee. Each director can
receive the retainer in cash, defer all or a portion into a
deferred compensation plan, or receive fair market value stock
options or restricted stock in lieu of cash. Amounts deferred
into the deferred compensation plan are payable in a lump sum or
in installments beginning upon termination of service as a
director. The number of options or shares of restricted stock
received in lieu of the annual retainer fee (or the method of
computing the number) and the terms and conditions of those
awards are determined from time to time by the Leadership
Development and Compensation Committee. The annual retainers are
payable at the first Board meeting after the annual
stockholders meeting for all members elected by the
stockholders. For new members appointed by the Board, the
retainer is payable at the first Board meeting attended by the
new director.
Option and Stock Awards The non-employee
directors are also eligible for stock option and restricted
stock awards. The number of options and shares awarded, as well
as the other terms and conditions of the awards (such as vesting
and exercisability schedules and termination provisions), are
generally within the discretion of the Leadership Development
and Compensation Committee, except that (a) no non-employee
director may receive awards (not including awards in lieu of
annual cash retainer) covering more than 50,000 shares of
common stock in any year (other than the year the director joins
the Board, when the limit is two times the normal annual limit),
(b) no more than 20% of the awards granted to a
non-employee director during a year (not including awards in
lieu of annual cash retainer) may consist of restricted stock,
(c) the exercise price of any option cannot be less than
the fair market value of the common stock on the date of grant,
and (d) no option can become exercisable, and no share of
restricted
www.dell.com/investor
8
stock can become transferable, earlier than six months from the
date of grant. If Proposal 3 is approved by the
stockholders, the restriction described in clause (b) above
will be removed, giving the Leadership Development and
Compensation Committee authority to approve any mix of
restricted stock and stock options, subject to the other
conditions.
Option and restricted stock awards are granted at the first
Board meeting after the annual stockholders meeting for
all members elected by the stockholders. For new members
appointed by the Board, option and restricted stock awards are
granted on the date of the first Board meeting attended by the
new director.
Other Benefits We reimburse directors for
their reasonable expenses associated with attending Board
meetings and provide them with liability insurance coverage for
their activities as directors.
Under our Certificate of Incorporation and Bylaws, the directors
are entitled to indemnification from Dell to the fullest extent
permitted by Delaware corporate law. We have also entered into
indemnification agreements with each of the non-employee
directors. Those agreements do not increase the extent or scope
of the indemnification provided, but were entered into to
establish processes and procedures for indemnification claims.
Director Compensation During Fiscal 2007 The
following table sets forth the compensation paid to the
non-employee directors for Fiscal 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
or
|
|
|
Equity
Awardsa
|
|
|
|
|
Name
|
|
Paid
in Cash
|
|
|
Stock
|
|
|
Options
|
|
|
Total
|
|
|
|
|
Mr.
Cartyb
|
|
$
|
20,000
|
|
|
$
|
112,597
|
|
|
$
|
122,728
|
|
|
$
|
255,325
|
|
Mr. Gray
|
|
|
37,500
|
|
|
|
75,100
|
|
|
|
122,728
|
|
|
|
235,328
|
|
Ms. Krawcheck
|
|
|
75,000
|
|
|
|
26,336
|
|
|
|
27,161
|
|
|
|
128,497
|
|
Mr. Lafley
|
|
|
75,000
|
|
|
|
26,336
|
|
|
|
27,161
|
|
|
|
128,497
|
|
Ms. Lewent
|
|
|
15,000
|
|
|
|
112,597
|
|
|
|
210,298
|
|
|
|
337,895
|
|
Mr. Luce
|
|
|
95,000
|
|
|
|
4,887
|
|
|
|
23,003
|
|
|
|
122,890
|
|
Mr. Luft
|
|
|
|
|
|
|
112,597
|
c
|
|
|
138,343
|
|
|
|
250,940
|
|
Mr. Mandl
|
|
|
75,000
|
|
|
|
37,603
|
|
|
|
128,798
|
|
|
|
241,401
|
|
Mr. Miles
|
|
|
90,000
|
|
|
|
37,603
|
|
|
|
135,450
|
|
|
|
263,053
|
|
Mr. Nunn
|
|
|
15,000
|
|
|
|
112,597
|
|
|
|
141,519
|
|
|
|
269,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a |
Represents the dollar amount of equity compensation cost
recognized for financial statement reporting purposes with
respect to Fiscal 2007, computed in accordance with
SFAS 123(R), excluding the impact of estimated forfeitures
for service-based vesting conditions. See Note 6 of Notes
to Consolidated Financial Statements included in
Part II Item 8 Financial
Statements and Supplementary Data of our Annual Report on
Form 10-K
for Fiscal 2007 for a description of the assumptions used in
that computation. The actual value realized by the director with
respect to stock awards will depend on the market value of Dell
common stock on the date the stock is sold, and the actual value
realized by the director with respect to option awards will
depend on the difference between the market value of Dell common
stock on the date the option is exercised and the exercise price.
|
www.dell.com/investor
9
The following table sets forth the number of shares covered by
awards made in Fiscal 2007. All of these awards, other than
those made to Mr. Luce, were made on July 21, 2006,
the date of the first Board meeting following last years
annual meeting of stockholders. The awards to Mr. Luce were
made on December 7, 2006, the date of the first Board
meeting Mr. Luce attended after his reappointment to the
Board in September 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Annual
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Stock
|
|
|
Restricted
|
|
|
New Director
|
|
|
New Director
|
|
|
|
Stock
|
|
|
Option
|
|
|
Stock in Lieu
|
|
|
Restricted
|
|
|
Stock Option
|
|
Name
|
|
Award
|
|
|
Award
|
|
|
of
Retainer
|
|
|
Stock
Award
|
|
|
Award
|
|
|
Mr. Carty
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
Mr. Gray
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
1,918
|
|
|
|
|
|
|
|
|
|
Ms. Krawcheck
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
|
|
|
|
7,888
|
|
|
|
31,550
|
|
Mr. Lafley
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
|
|
|
|
7,888
|
|
|
|
31,550
|
|
Ms. Lewent
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
Mr. Luce
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,850
|
|
|
|
23,399
|
|
Mr. Luft
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
Mr. Mandl
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Miles
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Nunn
|
|
|
3,944
|
|
|
|
15,775
|
|
|
|
3,836
|
|
|
|
|
|
|
|
|
|
The restricted stock included in the Annual Restricted Stock
Award column and the New Director Restricted Stock Award column
vests ratably over five years (20% per year), so long as the
director remains a member of the Board. The portion that is
unvested at the time the director ceases to be a member of the
Board (other than by reason of death or permanent disability) is
forfeited. All unvested restricted stock vests immediately upon
death or permanent disability. The grant date fair value for
these awards, computed in accordance with SFAS 123(R), was
$77,105 for each of the Annual Restricted Stock Awards; $154,211
for each of the New Director Restricted Stock Awards granted to
Ms. Krawcheck and Mr. Lafley; and $154,206 for the New
Director Restricted Stock Award granted to Mr. Luce.
The stock options included in the Annual Stock Option Award
column and the New Director Stock Option Award column vest
ratably over five years (20% per year), so long as the director
remains a member of the Board. The portion that is unvested at
the time the director ceases to be a member of the Board (other
than by reason of death or permanent disability) terminates. All
unvested options vest immediately upon death or permanent
disability. The options terminate ten years from the date of
grant unless terminated earlier as follows: all options (vested
and unvested) terminate immediately if the director resigns at
the request or demand of the Board or is otherwise removed from
the Board; if the director ceases to be a member of the Board by
reason of death, permanent disability, or retirement after
attaining the age of 72, vested options remain exercisable for
one year; if the director resigns for any other reason, vested
options remain exercisable for 90 days. The options are
transferable to family members under specified conditions. The
exercise price of the options is the fair market value of Dell
common stock on the date of grant ($26.36 for the award to
Mr. Luce on December 7, 2006, and $19.55 for the
awards to the other non-employee directors on July 21,
2006). The grant date fair value for these awards, computed in
accordance with SFAS 123(R), was $104,367 for each of the
Annual Stock Option Awards; $208,735 for each of the New
Director Stock Option Awards granted to Ms. Krawcheck and
Mr. Lafley; and $174,884 for the New Director Stock Option
Award granted to Mr. Luce.
The restricted stock included in the Restricted Stock in Lieu of
Retainer column was granted pursuant to the directors
election to receive restricted stock in lieu of some or all of
the $75,000 annual cash retainer. This stock was fully vested at
grant, but may not be sold or transferred for six months
following the grant. The number of shares was determined by
dividing the foregone retainer amount by the fair market value
of Dell common stock on the date of grant ($19.55). The grant
date fair value for these awards, computed in accordance with
SFAS 123(R), was equal to the amount of the foregone
retainer ($37,500 in the case of Mr. Gray and $75,000 in
the case of each other director who elected this option).
www.dell.com/investor
10
The following table sets forth the number of shares of
restricted stock and the number of shares underlying stock
options held by each of the non-employee directors as of the end
of Fiscal 2007:
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Stock
|
|
Name
|
|
Stock
|
|
|
Options
|
|
|
Mr. Carty
|
|
|
6,576
|
|
|
|
342,376
|
|
Mr. Gray
|
|
|
6,576
|
|
|
|
83,375
|
|
Ms. Krawcheck
|
|
|
11,832
|
|
|
|
47,325
|
|
Mr. Lafley
|
|
|
11,832
|
|
|
|
47,325
|
|
Ms. Lewent
|
|
|
6,576
|
|
|
|
157,669
|
|
Mr. Luce
|
|
|
5,850
|
|
|
|
37,208
|
|
Mr. Luft
|
|
|
6,576
|
|
|
|
165,091
|
|
Mr. Mandl
|
|
|
6,576
|
|
|
|
167,704
|
|
Mr. Miles
|
|
|
6,576
|
|
|
|
361,402
|
|
Mr. Nunn
|
|
|
6,576
|
|
|
|
182,549
|
|
The information for Mr. Carty reflects awards he received
in his capacity as a director, prior to becoming an executive
officer. For information regarding awards he received as an
executive officer, see Executive Compensation below.
|
|
b
|
These awards were made to Mr. Carty as a member of the
Board prior to his becoming an executive officer. As an
executive officer, he is no longer eligible for additional
compensation for service on the Board. For a description of
Mr. Cartys compensation as an executive officer, see
Executive Compensation below.
|
|
c
|
To afford Mr. Luft, a resident of Germany, a comparable
compensation benefit under local law, all awards designated as
restricted stock awards were made in the form of restricted
stock units with the same vesting and expiration provisions as
the restricted stock.
|
Proposal 2 Ratification
of Independent Auditor
The Audit Committee has selected PricewaterhouseCoopers LLP as
our independent auditor for Fiscal 2008, and the Board is asking
stockholders to ratify that selection. Although current law,
rules, and regulations, as well as the Charter of the Audit
Committee, require our independent auditor to be engaged,
retained, and supervised by the Audit Committee, the Board
considers the selection of an independent auditor to be an
important matter of stockholder concern and considers a proposal
for stockholders to ratify such selection to be an important
opportunity for stockholders to provide direct feedback to the
Board on an important issue of corporate governance.
The Board of Directors recommends a vote FOR the
ratification of PricewaterhouseCoopers LLP as Dells
independent auditor for Fiscal 2008.
In accordance with our Bylaws, approval of this proposal
requires the affirmative vote of a majority of the shares of
common stock represented at the meeting and entitled to vote.
PricewaterhouseCoopers LLP is a registered public accounting
firm and has been our independent auditor since 1986. In
addition to retaining PricewaterhouseCoopers LLP to audit our
financial statements, we engage the firm from time to time to
perform other services. The following table sets forth all fees
we incurred in connection with professional services rendered by
PricewaterhouseCoopers LLP during each of the last two fiscal
years (in millions).
|
|
|
|
|
|
|
|
|
|
|
Fee
Type
|
|
Fiscal
2007
|
|
|
Fiscal
2006
|
|
|
|
|
Audit
Feesa
|
|
$
|
11.9
|
|
|
$
|
8.7
|
|
Audit Related
Feesb
|
|
|
0.6
|
|
|
|
0.8
|
|
Tax
Feesc
|
|
|
1.9
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14.4
|
|
|
$
|
11.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a |
This category includes fees incurred for professional services
rendered in connection with the audit of the annual financial
statements, for the audit of internal controls under
Section 404 of the Sarbanes-Oxley Act, for the review
|
www.dell.com/investor
11
|
|
|
of the quarterly financial
statements, and for the statutory audits of international
subsidiaries. Also includes fees incurred for professional
services rendered in connection with the Audit Committee and SEC
investigations.
|
|
|
b
|
This category includes fees incurred for professional services
rendered in connection with assurance and other activities not
explicitly related to the audit of our financial statements,
including the audits of our employee benefit plans, contract
compliance reviews, and accounting research.
|
|
c
|
This category includes fees incurred for domestic and
international income tax compliance and tax audit assistance,
corporate-wide tax planning, and executive tax consulting and
return preparation.
|
The Audit Committee has determined that the provision of the
non-audit services described in note (c) above was
compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
All Fiscal 2007 and Fiscal 2006 services were pre-approved by
the Audit Committee. The Audit Committee has adopted a policy
requiring pre-approval by the committee of all services (audit
and non-audit) to be provided by our independent auditor. In
accordance with that policy, the Audit Committee has given its
approval for the provision of audit services by
PricewaterhouseCoopers LLP for Fiscal 2008 and has also given
its approval for up to a year in advance for the provision by
PricewaterhouseCoopers LLP of particular categories or types of
audit-related, tax, and permitted non-audit services. In cases
where the Audit Committees pre-approval is not covered by
one of those approvals, a designated member of the Audit
Committee has the delegated authority to pre-approve the
provision of services, and such pre-approvals are then
communicated to the full Audit Committee.
Representatives of PricewaterhouseCoopers LLP will be present at
the meeting to respond to appropriate questions, and they will
have an opportunity to make a statement if they desire to do so.
Proposal 3 Approval
of the Amended and Restated 2002 Long-Term Incentive
Plan
Stockholders approved the 2002 Long-Term Incentive Plan in July
2002. Under that plan, the Leadership Development and
Compensation Committee has authority to choose performance goals
for use in connection with each annual award from among a
selection of goals set forth in the plan. Section 162(m) of
the Internal Revenue Code requires that the material terms of
the performance goals be disclosed to and reapproved by
stockholders every five years. Consequently, we need to again
obtain stockholder approval of the performance measures in order
for the plan to continue to qualify as
performance-based for purposes of
Section 162(m). Section 162(m) limits the federal
income tax deduction a company may take for compensation paid to
certain executive officers to $1 million per year unless
the compensation is paid pursuant to a
performance-based plan. Reapproval of the plan will
enable us to claim a federal income tax deduction for the
compensation paid to our executives.
The Leadership Development and Compensation Committee has also
approved certain amendments to the plan and has directed that
those amendments be submitted to the stockholders for approval.
Those proposed amendments are outlined below and are reflected
in the Amended and Restated 2002 Long-Term Incentive Plan
included as Appendix A.
Consequently, in order to approve the performance measures
reflected in the plan and to approve the proposed amendments,
stockholders are being requested to approve the Amended and
Restated 2002 Long-Term Incentive Plan (the Amended and
Restated Plan). The Amended and Restated Plan will become
effective when it is approved by stockholders. If it is not
approved by stockholders, the original terms of the plan will
continue to apply and we will continue to issue awards under the
original plan.
The Board of Directors recommends a vote FOR the
approval of the Amended and Restated 2002 Long-Term Incentive
Plan.
Approval of the Amended and Restated Plan will (a) renew
our ability to grant performance-based compensation awards that
comply with the requirements of Section 162(m) of the
Internal Revenue Code, thereby preserving our ability to receive
tax deductions for these awards, and (b) effect the
amendments to the plan described below.
www.dell.com/investor
12
Approval of the Amended and Restated 2002 Plan requires the
affirmative vote of a majority of the shares represented at the
meeting and entitled to vote.
The Leadership Development and Compensation Committee has
recommended the following amendments to the original 2002 plan.
Each of these proposed amendments has been incorporated into the
Amended and Restated Plan.
Prohibition on Reload Provisions No
stock option awards granted under the Amended and Restated Plan
shall contain any reload provision. See
Section 4.8 of the Amended and Restated Plan. This
amendment is intended to better align the interests of
participants with those of other stockholders by encouraging
participants to retain their stock options.
Non-employee Director Awards The
original 2002 plan contains a restriction that limits restricted
awards to a non-employee director to no more than 20% of the
total number of shares awarded to the non-employee director each
year. This limitation is removed in the Amended and Restated
Plan. See Section 4.11 of the Amended and Restated Plan.
With the removal of this restriction, the Leadership Development
and Compensation Committee is afforded the flexibility to design
compensation packages (including the mix of restricted stock vs.
stock options) for non-employee directors that are more
comparable to other companies, thereby enhancing the
committees ability to retain and attract qualified Board
members.
Performance Measures The Amended and
Restated Plan adds cash flow to the list of
performance measures for incentive-based awards. See
Section 5.1 of the Amended and Restated Plan. This addition
provides the Leadership Development and Compensation Committee
with additional flexibility to tailor performance measures that
encourage executives and other participants to achieve cash flow
objectives in support of our strategic corporate priorities.
Discounted Options The terms of the
original 2002 plan permit the issuance in certain cases of
discounted stock options (i.e., options with an
exercise price that is less than the fair market value of the
common stock on the date of grant). The Amended and Restated
Plan removes the ability to grant discounted stock options
unless the amount of the discount is no more than 15% and the
recipient pays or otherwise forgoes value to the company in an
amount at least equal to the discount. See Section 4.2 of
the Amended and Restated Plan. The Leadership Development and
Compensation Committee believes that this better aligns the
interests of participants with those of other stockholders.
Calculation of the 5% Unrestricted
Pool Under the terms of the original
2002 plan, most stock awards have to be subject to a vesting
period of at least three years or subject to performance-based
vesting over a period of at least one year. However, the plan
permitted a certain number of awards (called the
Unrestricted Pool) to be issued without these
minimum conditions. The terms of the original 2002 plan
calculated the Unrestricted Pool each year as 5% of the total
number of stock awards made during that year. Under the terms of
Amended and Restated Plan, the Unrestricted Pool would be
calculated as 5% of the total remaining shares to be issued
under the 2002 Plan. See Section 3.7 of the Amended and
Restated Plan. Changing from an annual calculation to an
aggregate calculation will provide the Leadership Development
and Compensation Committee flexibility in structuring awards, as
well as the ability to compute the number of unrestricted shares
with certainty.
It is important to note that the Amended and Restated Plan does
not increase the number of shares authorized for issuance under
the plan.
www.dell.com/investor
13
Summary
Description of the Amended and Restated Plan
The following is a brief summary of the material features of the
2002 Long-Term Incentive Plan, as amended by the Amended and
Restated Plan. The full text of the plan document is included as
Appendix A, and the cross-references below refer to the
sections of the plan document.
Purpose
The purpose of the plan is to align the interests of executives
and other participants with those of other Dell stockholders
through equity-based compensation alternatives, thereby
promoting our long-term financial interests and enhancing
long-term stockholder value. The plan will also facilitate our
efforts to effectively recruit, motivate, and retain the caliber
of executives and other employees essential for our success and
provide them with competitive incentive compensation
opportunities. (Section 1.1)
Administration and Operation
The plan is administered by the Leadership Development and
Compensation Committee, which has complete and absolute
authority to make any and all decisions regarding the
administration of the Plan, including the authority to construe
and interpret the plan and awards under the plan; establish
administrative rules and procedures; select award recipients;
determine the type of awards; establish the terms, conditions,
and other provisions of awards; and amend, modify, or suspend
awards. (Section 2.1) The committee may delegate any of its
authority and responsibility to management, except for
determinations and decisions regarding awards made to executive
officers. (Section 2.1(c))
Eligibility
The persons eligible to receive awards under the plan include
all of our employees, the non-employee directors, and those
consultants and advisors to the company whom the committee
identifies as having a direct and significant effect on company
performance. (Section 2.2(a)) As of the end of Fiscal 2007,
we had approximately 82,200 regular employees and nine
non-employee
directors.
Shares Available for Issuance
At August 3, 2007, there were approximately
251 million shares of common stock available for issuance
pursuant to awards made under the plan. (Section 3.1) If
the shares of stock that are subject to an award are not issued
or cease to be issuable because the award is terminated,
forfeited, or cancelled, those shares will then become available
for additional awards. (Section 3.3) The number of shares
authorized and available for issuance under the plan will be
automatically adjusted in the event of a stock split, stock
dividend, recapitalization, spin-off, or similar action.
(Section 3.4) On October 30, 2007, the closing sale
price of our common stock, as quoted on The NASDAQ Stock Market,
was $29.80 per share.
Types and Terms of Awards
Awards under the plan may take the form of stock options (either
incentive stock options or non-qualified options), stock
appreciation rights, stock bonuses, restricted stock, restricted
stock units, performance units, or performance shares.
(Section 4.1) Subject to certain restrictions that are set
forth in the plan, the Leadership Development and Compensation
Committee has complete and absolute authority to set the terms,
conditions, and provisions of each award, including the size of
the award, the exercise or base price, the vesting and
exercisability schedule (including provisions regarding
acceleration of vesting and exercisability), and termination,
cancellation, and forfeiture provisions. (Section 4.2(a))
The Leadership Development and Compensation Committee is subject
to the following specific restrictions regarding the types and
terms of awards:
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No more than a specified number of the shares may be issued
pursuant to Stock Awards (that is, restricted stock,
restricted stock units, performance shares, or stock bonuses).
As of August 3, 2007, approximately 158 million shares
were available for issuance pursuant to Stock Awards.
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www.dell.com/investor
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Stock Awards generally must either be subject to a vesting
period of at least three years or subject to performance-based
vesting over a period of at least one year, except that up to 5%
of the total awards available for issuance under the plan as of
the effective date of the Amended and Restated Plan may be
issued without this limitation. (Section 3.7(b))
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No participant may receive in any fiscal year (a) stock
options covering more than ten million shares or (b) awards
other than stock options covering more than three million
shares. (Section 3.7(c))
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No participant may receive in any year cash in payment for or
settlement of a performance unit in excess of 0.5% of aggregate
consolidated operating income over the vesting period of the
award. (Section 3.7(d))
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The exercise price for a stock option and the base price for a
stock appreciation right may not be less than 100% of the fair
market value of the stock on the date of grant, unless the
recipient pays or otherwise foregoes value in an amount equal to
the discount. (Section 4.2(b)(1), (2) and (3))
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Generally, no award may expire more than ten years after the
date of grant, except that the committee may extend the
expiration date to up to fifteen years after the date of grant
if necessary or desirable under the particular rules applicable
in foreign jurisdictions. (Section 4.2(b)(4))
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Notwithstanding any other provision of the plan, no stock option
can be repriced if the effect would be to reduce the
exercise price per share. For this purpose,
repricing includes a tandem cancellation and regrant
or any other amendment or action that would have substantially
the same effect as decreasing the exercise price.
(Section 4.6) In addition, Dell may not make loans to
participants for the purpose of paying exercise prices or
related taxes. (Section 4.7) No stock option award shall
contain any reload provision entitling the
participant to the automatic grant of additional stock options
in connection with any exercise of the original stock option.
(Section 4.8)
The Leadership Development and Compensation Committee may
designate any award as performance-based
compensation for purposes of Section 162(m) of the
Internal Revenue Code, in which case the award must be
conditioned on the achievement of one or more of the following
Performance Measures: total stockholder return
(stock price appreciation plus dividends), net income, earnings
per share, return on sales, return on equity, return on assets,
return on invested capital, increase in the market price of the
common stock or other securities, revenues, operating income,
operating margin (operating income divided by revenues), cash
flow, and Dells performance in any of the above measures
in comparison to the average performance of the companies
included in the Dow Jones Computer Index or successor index or
the average performance of the companies used in a
self-constructed peer group. (Section 4.4)
Awards to Non-Employee Directors
The non-employee directors are eligible for stock option and
restricted stock awards under the plan. The number of options
and shares to be awarded is within the discretion of the
Leadership Development and Compensation Committee, except that
no non-employee director may receive awards covering more than
50,000 shares of stock in any year (other than the year the
director joins the Board, when the limit is two times the normal
annual limit). (Section 4.11(a))
The Leadership Development and Compensation Committee also has
the discretion to permit a non-employee director to elect to
receive stock options in lieu of the annual cash retainer fee.
The number of options received in lieu of the annual retainer
fee (or the method of computing the number) shall be set by the
committee. (Section 4.11(b))
The Leadership Development and Compensation Committee has the
discretion to establish the terms and conditions of awards to
the non-employee directors, including vesting and exercisability
schedules and termination provisions, subject to the following
limitations (Section 4.11(c)):
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The exercise price of any option cannot be less 100% of than the
fair market value of the stock on the date of grant.
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No option can be exercisable, and no share of restricted stock
can become transferable, earlier than six months from the date
of grant.
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15
Other Provisions
Change in Control The committee has the
express authority to include in any award terms that provide for
the acceleration of vesting and lapse of restrictions, as
applicable, upon or following a Change in Control of
the company. (Section 4.2(a)) Change in Control
may be defined by the committee from time to time.
(Section 5.1(a))
Amendments and Termination The Board or the
Leadership Development and Compensation Committee, without the
consent or approval of any plan participant, may amend, suspend,
or terminate the plan or any award granted under the plan, so
long as that action does not materially impair any award then
outstanding. Without the approval of stockholders, however, the
Board or the Leadership Development and Compensation Committee
may not amend the plan to increase the number of shares
available for issuance or to modify any of the limitations
described in the plan in such a manner as to materially reduce
the limitation. (Section 5.2)
The Board can terminate the plan at any time. No Awards will be
granted under the plan after the tenth anniversary of its
effective date. (Section 1.2)
Foreign Jurisdictions If the Leadership
Development and Compensation Committee determines that the terms
of the plan preclude the achievement of the material purposes of
the plan in foreign jurisdictions because of differences in
local law, policy, or custom, the committee may modify the terms
of the plan, or provide additional terms, to the extent
necessary to accommodate those differences. These modifications
or additional terms may be reflected in sub-plans, supplements,
or alternative versions of the plan. (Section 5.8)
Federal Income Tax Consequences
The following is a brief description of the material
U.S. federal income tax consequences associated with awards
under the Amended and Restated Plan. It is based on existing
U.S. laws and regulations, and there can be no assurance
that those laws and regulations will not change in the future.
Tax consequences in other countries may vary.
Stock Options There are no federal income tax
consequences to either the company or the participant upon the
grant of a stock option. If the option is a non-qualified stock
option, the participant will realize ordinary income at exercise
equal to the excess of the fair market value of the stock
acquired over the exercise price and the company will receive a
corresponding federal income tax deduction. Any gain or loss
realized upon a subsequent disposition of the stock will
generally constitute capital gain.
Incentive stock options provide potentially more favorable tax
consequences to the participant, but we have never issued
incentive stock options under the plan.
Restricted Stock Generally, restricted stock
is not taxable to a participant at the time of grant, but
instead is included in ordinary income (at its then fair market
value) when the restrictions lapse. A participant may elect to
recognize income at the time of grant, in which case the fair
market value of the stock at the time of grant is included in
ordinary income and there is no further income recognition when
the restrictions lapse. The company is generally entitled to a
tax deduction in an amount equal to the ordinary income
recognized by the participant.
Other Awards In the case of other awards, the
participant will generally recognize ordinary income in an
amount equal to any cash received and the fair market value of
any shares received on the date of payment or the date of
delivery of the underlying shares, and the company will
generally be entitled to a corresponding tax deduction.
Section 162(m) Limitation Under
Section 162(m) of the Internal Revenue Code, we may not
take a tax deduction for compensation to certain executive
officers in excess of $1 million per year, unless the
compensation is performance-based compensation or
qualifies under certain other exceptions. The Amended and
Restated Plan contains a number of Performance
Measures that will be approved by the stockholders upon
approval of the plan. See Types and Terms of Awards
above. To the extent that awards under the plan incorporate one
or more of these Performance Measures, the awards should qualify
as performance-based compensation for purposes of
Section 162(m).
www.dell.com/investor
16
New Plan
Benefits
The awards that will be granted in the future to eligible
participants under the Amended and Restated Plan are subject to
the discretion of the Leadership Development and Compensation
Committee and, therefore, are not determinable at this time. As
noted above, the Amended and Restated Plan, if approved by
stockholders, will effect certain amendments to the terms of the
original plan. The original plan was effective for Fiscal 2007,
and the following table sets forth information regarding awards
that were made during Fiscal 2007 under the original plan.
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Number of
Shares
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Name
and Position
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Subject
to Awards
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Mr. Dell
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Mr. Carty
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240,000
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Mr. Bell
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310,000
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Mr. Felice
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355,000
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Mr. Rollins
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750,000
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Mr. Schneider
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355,000
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Mr. Parra
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355,000
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Executive Officer Group
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3,994,030
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Non-Executive Director Group
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303,458
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Non-Executive Officer Employee Group
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23,547,163
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With the exception of the awards to the non-employee directors
(as reflected in the table under Non-Executive Director
Group), none of the awards made during Fiscal 2007 would
have been different had the Amended and Restated Plan been in
effect. As discussed under Proposed Amendments
Non-employee Director Awards above, the Amended and
Restated Plan gives the Leadership Development and Compensation
Committee more flexibility in selecting the mix of restricted
stock vs. stock options for non-employee directors.
Consequently, had the Amended and Restated Plan been in effect
during Fiscal 2007, the awards granted to the non-employee
directors may have been different than those shown in the table
above.
Stockholder
Proposal 1 Executive Stock Ownership
Guidelines
The American Federation of State, County and Municipal Employees
Pension Plan (the AFSCME Pension Plan), which at
November 1, 2006, beneficially owned 14,833 shares of
Dell common stock, has requested that a proposal regarding
adoption of a stock ownership requirement for executive officers
be presented for stockholder vote at the annual meeting. The
proposal, along with the AFSCME Pension Plans supporting
statement, is included verbatim below. The AFSCME Pension
Plans request was submitted by Gerald W. McEntee, Chairman
of the AFSCME Pension Plan, 1625 L Street, N.W.,
Washington, DC 20036.
For the reasons set forth following the proposal and supporting
statement, management disagrees with the AFSCME Pension
Plans proposal and supporting statement.
The Board of
Directors recommends a vote AGAINST the AFSCME
Pension Plans proposal.
Approval of the AFSCME Pension Plans proposal requires the
affirmative vote of a majority of the shares of common stock
represented at the meeting and entitled to vote.
www.dell.com/investor
17
The AFSCME
Pension Plan Proposal and Supporting Statement
Resolved, that stockholders of Dell Inc. (Dell) urge
the Executive Compensation Committee of the Board of Directors
(the Committee) to adopt a policy requiring that
senior executives retain a significant percentage of shares
acquired through equity compensation programs during their
employment, and to report to stockholders regarding the policy
before Dells 2008 annual meeting of stockholders. The
Committee should define significant (and provide for
exception in extraordinary circumstances) by taking into account
the needs and constraints of Dell and its senior executives;
however, the stockholders recommend that the Committee not adopt
a percentage lower than 75% of net after tax shares. The policy
should address the permissibility of transactions such as
hedging transactions which are not sales but reduce the risk of
loss to the executive.
Supporting
Statement
Equity-based compensation makes up a substantial portion of
senior executive compensation at Dell. In fiscal years 2003
through 2005, President and CEO Kevin Rollins were granted
2,650,000 stock options with a grant-date estimated value of
$28,982,000. During the same time, Senior Vice President Rosendo
Parra was granted 800,000 stock options with a grant-date
estimated value of $8,232,000.
Dell claims that its compensation program promotes alignment
between executive and stockholder long-term interests.
Unfortunately, Dells generous equity compensation programs
have yet to translate into meaningful levels of stock ownership.
Despite exercising 2,163,000 options in fiscal years 2003
through 2005 and realizing over $72 million in profits,
Dells most recent proxy statement disclosed that
Mr. Rollins owns 18,465 shares outright, less than one
percent of the total he has exercised. Over the same time,
Mr. Parra has exercised 1,424,892 options, realizing over
$14.8 million in profits, and yet he owns
18,972 shares outright. We believe that the alignment
benefits touted by Dell are not being fully realized.
Requiring senior executives to hold a significant portion of
shares obtained through compensation plans would focus them on
Dells long-term success and would help align their
interests with those of Dells stockholders. The recent
backdating scandal has, we think, reminded investors of the
dangers of a short-term mentality in which executives extract
value through equity-based compensation, and then cash out
before the effects of their mismanagement becomes apparent to
other shareholders.
Dell has adopted a stock ownership requirement for directors and
executive officers that requires them to own an amount of stock
equal to a multiple of their base salary or annual retainer
(500% in the case of the CEO). We believe that a retention ratio
such as the one suggested in this proposal is superior to an
ownership requirement for two reasons. First, a retention
requirement ensures that equity compensation translates into
equity ownership regardless of how much stock an executive owns.
Second, a retention ratio is more flexible and does not require
catch-up
purchases in the event the companys stock price falls and
causes the executive to be out of compliance with the ownership
requirement.
We urge stockholders to vote for this proposal.
Our
Statement in Opposition
The Board of Directors is committed to designing, implementing,
and administering a compensation program for executive officers
that aligns with and supports our business strategy while
ensuring an appropriate link between pay, company performance,
and results for stockholders.
More specifically, the Board seeks to attract and retain the
best executive talent by rewarding performance with
cost-effective compensation. The Board agrees with the AFSCME
Pension Plan that equity ownership by executive officers serves
to align the long-term interests of senior executives and
stockholders, and also sends a positive message to the
investment community about the directors and executive
officers commitment to adding stockholder value. In
addition, the Board realizes that equity awards are an
www.dell.com/investor
18
effective tool for compensation and recruitment of top
management talent. In setting stock ownership guidelines,
however, the Board must strike an appropriate balance between
ensuring that our directors and executive officers have a
significant equity stake in the future of the company, while
also allowing them to prudently manage their personal financial
affairs. Because the executive officers are in a position to
directly influence the overall performance of the company, and
in alignment with the companys highly-leveraged
pay-for-performance
philosophy, a significant portion of their compensation, whether
cash or equity, is at risk through short-term and long-term
incentive programs. The level of pay at-risk varies for each
executive based on level of responsibility, market practices,
and internal equity considerations, as well as total share
ownership (in the case of Mr. Dell). Adopting the AFSCME
Pension Plans proposal would limit our ability to offer a
significant at-risk cash compensation component because, under
the AFSCME Pension Plans proposal, most of the equity
component would not be available to the executive officers while
they remain employed by the company. As a result, we would face
the choice of either reducing the equity component awarded to
executive officers in favor of cash compensation, or reducing
the at-risk portion of cash compensation in favor of increasing
salary. Neither alternative would better focus executive
officers on our long-term success, nor align their interests
with those of the other stockholders. Instead, adopting the
AFSCME Pension Plans proposal would hinder our flexibility
in appropriately linking pay, company performance, and results
for stockholders.
The Board implemented stock ownership guidelines for themselves
and our executive officers that they feel are appropriate for
Dell and its stockholders. Under those guidelines, each director
and executive officer must maintain the following minimum
investment position in Dell stock:
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Non-employee directors 300% of annual retainer
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Chairman and Chief Executive Officer 500% of base
salary
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Other executive officers 400% of base salary
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Persons assuming one of these roles have three years after
assuming their position to attain the specified minimum
investment position. Unexercised stock options may not be used
to satisfy these minimum ownership requirements, but unvested
restricted stock or stock units can. As of May 2007, each
director and executive officer has met their required stock
ownership amount.
We believe that our stock ownership guidelines provide a more
balanced approach to aligning the long-term interests of
directors and executive officers and the other stockholders by
requiring directors and executive officers to own meaningful
levels of stock based on their retainer or salary, while giving
them the ability to manage their personal financial affairs. The
AFSCME Pension Plans proposal prescribes ownership solely
through the retention of stock acquired through our equity
compensation plans, and prohibits them from selling a
substantial portion until they leave the company. This approach
limits the compensatory effect of equity compensation plans, and
eventually could incent a person to leave the company in order
to sell their shares. In addition, the AFSCME Pension
Plans proposal provides no guarantee of stock ownership by
directors or executive officers until their restricted stock
vests or they exercise options. Our stock ownership guidelines,
by contrast, require ownership of Dell common stock, which may
be acquired through a variety of means, including open market
purchases, and set clear and reasonable standards for the amount
of stock to be owned by directors and executive officers. In
addition, our stock ownership guidelines allow for a significant
at risk cash compensation component as part of the total
compensation mix.
The Board believes that our compensation policies for executive
officers and directors have been responsibly implemented, and
that the stock ownership guidelines align the interests of
directors and executive officers with the long-term interests of
stockholders, while still permitting the Board to use equity
incentives as part of a balanced approach to compensation that
supports the recruitment and retention of top talent.
For these reasons, the Board strongly urges Dell stockholders to
vote AGAINST the AFSCME Pension Plans proposal
regarding adoption of a stock ownership requirement for
executive officers.
www.dell.com/investor
19
Stockholder
Proposal 2 Declaration of Dividend
Mrs. Linda Bush, 7927 Escala Drive, Austin, Texas 78735, a
Dell stockholder, has requested that a proposal regarding the
declaration of a dividend be presented for stockholder vote at
the annual meeting. The proposal, along with
Mrs. Bushs supporting statement, is included verbatim
below. The number of shares of Dell stock held by Mrs. Bush
will be supplied upon oral or written request to Dell.
For the reasons set forth following the proposal and supporting
statement, management disagrees with Mrs. Bushs
proposal and supporting statement.
The Board of
Directors recommends a vote AGAINST
Mrs. Bushs proposal.
Approval of Mrs. Bushs proposal requires the
affirmative vote of a majority of the shares of common stock
represented at the meeting and entitled to vote.
Mrs. Bushs
Proposal and Supporting Statement
Shareholder
Resolution
That the Board of Directors declare a quarterly dividend.
Supporting
Statement
The well respected Wharton economist Jeremy Siegel explained
that paying dividends is the old-fashioned, time-tested way
companies show investors their earnings are real and their
bottom line is strong. Dividends provide certainty about the
companys financial wellbeing and they are also an
attractive tool for investors looking to secure current income.
More recently companies without a dividend history are generally
received favorably when they declare new dividends. In addition,
the percentage of large companies establishing dividends for the
first time is significantly higher now that it has been in the
past. The majority of Dells competitors all pay dividends.
Dividends in mature companies that are no longer growing as
rapidly as in the past have been a major component of growth in
an investors return once the rapid appreciation phase is
over. At one point in time, Dell was better served by the
current policies of reinvestment in growth and returning capital
to stockholders and managing dilution through stock repurchase
programs. Now as a more mature value company with significant
cash reserves the time is right to declare a quarterly dividend.
I urge your support for this issue.
Our
Statement in Opposition
Enhancing the return on investment for Dell stockholders is of
the utmost importance to our Board and management. The Board
believes that, at the current time, return on investment can
best be enhanced by using the companys cash flow to
reinvest in growth and to return capital to stockholders and
manage dilution through a stock repurchase program. The Board
also believes that maintaining a strong liquidity position is in
the stockholders best interests and continually strives to
balance the companys liquidity needs with the desire to
return capital to stockholders.
Reinvestment in Growth During Fiscal 2007, we
spent $895 million on property, plant, and equipment to
support global expansion efforts and to fund infrastructure
investments to support future growth. During Fiscal 2007, we
expanded our global operations with additional customer contact
centers in the Philippines, Malaysia, India, and Canada. In
addition, a new manufacturing facility in Hortolandia, Brazil
www.dell.com/investor
20
that was under construction during much of Fiscal 2007 commenced
operations in March 2007, and manufacturing facilities in
Chennai, India and Lodz, Poland began or will start operating
later in Fiscal 2008. During Fiscal 2008, business centers
located in Quezon City, Philippines and Malaysia opened or will
open, and a second building in Ottawa, Canada will begin
operations. A new business center has recently begun operations
in Kuala Lumpur. Additionally, expansion of the design centers
in China, India, and Taiwan is currently in process. We have
been able to fund these capital projects out of operating cash
flows, and the Board wants to maintain flexibility in the way
the company deploys its available cash.
Return of Capital and Management of Dilution
Since 1996, we have had an active stock repurchase program, the
objectives of which have been to distribute cash to stockholders
and to manage dilution resulting from shares issued under equity
compensation plans. As of the end of Fiscal 2007, we had
cumulatively repurchased 1.5 billion shares of common stock
for an aggregate cost of $28.6 billion. The program as
currently approved by the Board authorizes the expenditure of up
to an additional $1.4 billion on share repurchases.
The Board believes that our stock repurchase program is a highly
effective way of returning cash to stockholders and offers
several distinct advantages over the payment of dividends,
including the following:
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Share repurchases enable the reduction or elimination of
dilution, whereas dividends have no affect on the number of
shares outstanding. Since Fiscal 2001, our share repurchases
have resulted in a 19.1% reduction in weighted average shares
outstanding, with a corresponding increase in earnings per share.
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With a stock repurchase program, the Board retains more
flexibility to balance the return of capital to stockholders
with other business objectives and needs by constantly adjusting
the amount of repurchases to respond to liquidity needs and the
economic environment in general. Dividends tend to become fixed
expectations, giving the Board little practical ability to
respond to differing environments.
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A stock repurchase program gives stockholders the flexibility to
determine when they want to convert all or a portion of their
investment to cash. With dividends, which are paid to all
stockholders, the amount and timing of the dividend is specified
by the board.
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For these reasons, our Board and management believe that the
company should continue to return capital to the stockholders
through share repurchases rather than dividends.
Dividend Consideration Under Delaware law,
the declaration and payment of dividends is within the
discretion of the Board, whose members are elected by the
stockholders to exercise sound business judgment in deciding
such matters. As a part of its fiduciary duties, the Board
regularly evaluates whether we should pay a dividend. In making
that decision, the Board has considered, and will continue to
consider, a variety of factors in an effort to balance the
anticipated needs of the company for liquidity, the ability of
the company to generate earnings and cash flow, and the most
effective means to enhance stockholder value.
The Board has determined that, at present, it is in the best
interests of the company and the stockholders to continue to use
our cash flow to reinvest in growth and to return capital to
stockholders and manage dilution through the stock repurchase
program. The Board continues, however, to actively review how we
deploy our available cash, including the possibility of paying
cash dividends in the future.
Mrs. Bush submitted the same proposal for stockholder vote
in July 2006. Less than 6% of the votes received were in favor
of the proposal.
For these reasons, the Board strongly urges Dell stockholders to
vote AGAINST Mrs. Bushs proposal
regarding the declaration of a dividend.
www.dell.com/investor
21
The following table sets forth the name, age, and position of
each of the persons who were serving as our executive officers
as of October 15, 2007.
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Name
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Age
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Title
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Michael S. Dell
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42
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Chairman of the Board and Chief Executive Officer
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Donald J. Carty
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61
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Vice Chairman and Chief Financial Officer
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Bradley R. Anderson
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48
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Senior Vice President, Business Product Group
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Paul D. Bell
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47
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Senior Vice President and President, Americas
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Michael R. Cannon
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54
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President, Global Operations
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Jeffrey W. Clarke
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44
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Senior Vice President, Business Product Group
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Andrew C. Esparza
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49
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Senior Vice President, Human Resources
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Stephen J. Felice
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50
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Senior Vice President and President, Asia Pacific-Japan
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Ronald G. Garriques
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43
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President, Global Consumer Group
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Mark Jarvis
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44
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Senior Vice President, Chief Marketing Officer
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David A. Marmonti
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48
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Senior Vice President and President, Europe, Middle East, and
Africa
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Stephen F. Schuckenbrock
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47
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Senior Vice President and President, Global Services and Chief
Information Officer
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Lawrence P. Tu
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53
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Senior Vice President, General Counsel and Secretary
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Set forth above is biographical information about each of our
executive officers, except for Mr. Dell and Mr. Carty,
whose biographical information is included under
Proposal 1 Director Information
above.
Bradley R. Anderson Mr. Anderson joined
us in July 2005 and serves as Senior Vice President, Business
Product Group. In this role, he is responsible for worldwide
engineering, design, development, and marketing of our
enterprise products, including servers, networking, and storage
systems. Prior to joining Dell, Mr. Anderson was Senior
Vice President and General Manager of the Industry Standard
Servers business at Hewlett-Packard Company (HP),
where he was responsible for HPs server solutions.
Previously, he was Vice President of Server, Storage and
Infrastructure for HP, where he led the team responsible for
server, storage, peripheral, and infrastructure products. Before
joining HP in 1996, Mr. Anderson held top management
positions at Cray Research in executive staff, field marketing,
sales, finance, and corporate marketing. Mr. Anderson
earned a bachelor of science in Petroleum Engineering from Texas
A&M University and a Master of Business Administration from
Harvard University. He serves on the Texas A&M Look College
of Engineering Advisory Council.
Paul D. Bell Mr. Bell has been with us
since 1996 and has served as Senior Vice President and
President, Americas since March 2007. In this role,
Mr. Bell is responsible for all sales, and customer support
operations across the Americas region (other than our consumer
business). From February 2000 until March 2007, Mr. Bell
served as Senior Vice President and President, Europe, Middle
East, and Africa. Prior to this, Mr. Bell served as Senior
Vice President, Home and Small Business. Prior to joining Dell
in July 1996, Mr. Bell was a management consultant with
Bain & Company for six years, including two years as a
consultant on our account. Mr. Bell received
bachelors degrees in Fine Arts and Business Administration
from Pennsylvania State University and a Master of Business
Administration degree from the Yale School of Organization and
Management.
Michael R. Cannon Mr. Cannon joined us
in February 2007 as President, Global Operations. In this role,
he is responsible for our manufacturing, procurement, and supply
chain activities worldwide. Prior to joining Dell,
Mr. Cannon was President, Chief Executive Officer, and a
director of Solectron Corporation from January 2003 to February
2007, and President, Chief Executive Officer, and a director of
Maxtor Corporation (now a part of Seagate Technology) from July
1996 to January 2003. Mr. Cannon has also worked at
IBMs Storage Systems Division. He began his career in
engineering at The Boeing Company, where he held a management
position with the Manufacturing Research and Development
organization.
www.dell.com/investor
22
Mr. Cannon studied mechanical engineering at Michigan State
University and completed Harvard Business Schools Advanced
Management Program. He currently serves on the board of Adobe
Systems.
Jeffrey W. Clarke Mr. Clarke has served
as Senior Vice President, Business Product Group since January
2003. In this role, he is responsible for worldwide engineering,
design, development, and marketing of our business client
products, including Dell
OptiPlextm
Desktops,
Latitudetm
Notebooks,
Precisiontm
Workstations, and
Vostrotm
desktops and notebooks. Mr. Clarke joined Dell in 1987 as a
quality engineer and has served in a variety of engineering and
management roles. In 1995 Mr. Clarke became the director of
desktop development, and from November 2001 to January 2003 he
served as Vice President and General Manager, Relationship
Product Group. Mr. Clarke received a bachelors degree
in Electrical Engineering from the University of Texas at
San Antonio.
Andrew C. Esparza Mr. Esparza joined us
in 1997 as a director of Human Resources in the Product Group.
He was named Senior Vice President, Human Resources in March
2007 and was named an executive officer in September 2007. In
this role, he is responsible for driving the strategy and
supporting initiatives to attract, motivate, develop, and retain
world-class talent in support of our business goals and
objectives. He also has responsibility for corporate security on
a worldwide basis. He currently sits on the board of directors
for aDellante, our internal networking group responsible for the
development of Hispanic employees within the company. Prior to
joining Dell, he held human resource positions with NCR
Corporation from 1985 until 1997 and Bechtel Power Corporation
from 1981 until 1985. Mr. Esparza earned a bachelors
degree in business administration with a concentration in human
resource management from San Diego State University.
Stephen J. Felice Mr. Felice serves
as Senior Vice President and President, Asia Pacific-Japan. He
was named Senior Vice President in March 2007, after having
served as Vice President, Asia Pacific-Japan since August 2005.
Mr. Felice leads our operations throughout the APJ region,
including sales and customer service centers in Penang,
Malaysia, and Xiamen, China. Mr. Felice joined us in
February 1999 and has held various executive roles in our sales
and consulting services organizations. From February 2002 until
July 2005, Mr. Felice was Vice President, Corporate
Business Group, Dell Americas. Prior to joining Dell,
Mr. Felice served as Chief Executive Officer and President
of DecisionOne Corp. Mr. Felice also served as Vice
President, Planning and Development, with Bell Atlantic Customer
Services. He spent five years with Shell Oil in Houston.
Mr. Felice holds a bachelors degree in business
administration from the University of Iowa and a Master of
Business Administration degree from the University of Houston.
Ronald G. Garriques Mr. Garriques
joined us in February 2007 as President, Global Consumer Group.
In this role he is responsible for all aspects of our consumer
business, including sales, marketing, and product design. Before
joining Dell, Mr. Garriques served in various leadership
roles at Motorola from February 2001 to February 2007, where he
was most recently Executive Vice President and President,
responsible for the Mobile Devices division. He also was Senior
Vice President and General Manager of the Europe, Middle East,
and Africa region for the Personal Communications Services
division, as well as Senior Vice President and General Manager
of Worldwide Products Line Management for the Personal
Communications Services division. Prior to joining Motorola,
Mr. Garriques held management positions at AT&T
Network Systems, Lucent Technologies, and Philips Consumer
Communications. Mr. Garriques holds a masters degree
in business administration from The Wharton School at the
University of Pennsylvania, a masters degree in mechanical
engineering from Stanford University, and a bachelors
degree in mechanical engineering from Boston University.
Mark Jarvis Mr. Jarvis joined us in
October 2007 as Senior Vice President, Chief Marketing Officer.
In this role he is responsible for the companys global
marketing effort, spanning consumer and commercial businesses,
including global brand, online, and communications. From April
2007 until October 2007, Mr. Jarvis served as a consultant
to Dell in the Chief Marketing Officer role. From 2003 until
2007, Mr. Jarvis served as a marketing consultant to
numerous Bay Area startups. From 1989 until 2003,
Mr. Jarvis held various roles at Oracle, last serving as
Chief Marketing Officer.
David A. Marmonti Mr. Marmonti
serves as Senior Vice President and President, Europe, Middle
East, and Africa, having been appointed to that position in
March 2007. In this role he is responsible for all business
operations across the EMEA region, including sales and customer
call centers in the region. Mr. Marmonti joined us in 1998
and has held a variety of roles, including Vice President and
General Manager of our Public Business Group; Vice President and
General Manger of our Mid-Markets and
www.dell.com/investor
23
Preferred Corporate Accounts segments; Vice President and
General Manager of our EMEA Home and Small Business division;
Vice President of Marketing &
e-business
for the U.S. Consumer segment; and Director and General
Manger of the U.S. Asset Recovery Business. Prior to
joining Dell, Mr. Marmonti spent 16 years at AT&T
in a variety of senior roles, including executive positions in
sales and marketing, serving corporate customers.
Mr. Marmonti holds a bachelors degree in business
administration and marketing from the University of Missouri at
St. Louis.
Stephen F.
Schuckenbrock Mr. Schuckenbrock joined
us in January 2007 as Senior Vice President and President,
Global Services. In September 2007, he assumed the additional
role of Chief Information Officer. He is responsible for all
aspects of our services business, with worldwide responsibility
for Dell enterprise service offerings, and is also responsible
for our global information systems and technology structure.
Prior to joining us, Mr. Schuckenbrock served as Co-Chief
Operating Officer and Executive Vice President of Global Sales
and Services for Electronic Data Systems Corporation. Before
joining EDS in 2003, he was Chief Operating Officer of The Feld
Group, an information technology consulting organization.
Mr. Schuckenbrock served as Global Chief Information
Officer for PepsiCo from 1998 to 2000. Mr. Schuckenbrock
earned a bachelors degree in business administration from
Elon University.
Lawrence P. Tu Mr. Tu joined us as
Senior Vice President, General Counsel and Secretary in July
2004, and is responsible for overseeing Dells global legal
department and governmental affairs. Before joining Dell,
Mr. Tu served as Executive Vice President and General
Counsel at NBC Universal for three years. Prior to his position
at NBC, he was a partner with the law firm of
OMelveny & Myers LLP, where he focused on high
technology, Internet, and media related transactions. He also
served five years as managing partner of the firms Hong
Kong office. Mr. Tus prior experience also includes
serving as General Counsel Asia-Pacific for Goldman Sachs,
attorney for the U.S. State Department, and law clerk for
U.S. Supreme Court Justice Thurgood Marshall. Mr. Tu
holds Juris Doctor and bachelor of arts degrees from Harvard
University, as well as a masters degree from Oxford
University, where he was a Rhodes Scholar.
Compensation
Discussion and Analysis
Introduction
This Compensation Discussion and Analysis is designed to provide
stockholders with an understanding of our compensation
philosophy, core principles, and decision making process. It
discusses the Leadership Development and Compensation
Committees determinations of how and why, in addition to
what, compensation actions were taken for the executive officers
who are identified in the Summary Compensation Table below (the
Named Executive Officers).
Specifically, the Leadership Development and Compensation
Committee has the responsibilities listed below. For more
information about the committees role, see the
committees charter, which can be found on our website at
www.dell.com/corporategovernance.
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Reviewing with management and approving the compensation
philosophy and core objectives for executive officers;
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Evaluating the performance of the Chairman and Chief Executive
Officer in light of the current business environment and our
strategic objectives;
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Reviewing with management and approving all forms of
compensation to be provided to the executive officers, including
establishing target opportunity levels, setting performance
goals, and determining results;
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www.dell.com/investor
24
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Acting as administrator of our compensation plans, including
granting awards to executive officers; and
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Evaluating the need for, and provisions of, employment contracts
or severance arrangements for the executive officers.
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The Leadership Development and Compensation Committee has
delegated its authority with respect to compensation decisions
for non-executive officer employees to the Chairman and Chief
Executive Officer, subject to periodic review by the committee.
The sections presented will follow in the order of the duties
listed above.
Executive
Compensation Philosophy and Core Objectives
We seek profitable revenue growth in a highly competitive
industry that includes several other large branded competitors
as well as a number of smaller branded and generic competitors.
Our business strategy is evolving as we combine our direct
customer model with relevant technologies and solutions, highly
efficient manufacturing and logistics, and new distribution
channels to reach commercial customers and individual consumers
around the world. Accordingly, the Board and the Chief Executive
Officer have defined the following four multi-year strategic
corporate priorities:
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Globalization Focus on accelerating
profitable revenue growth in developing areas of the world;
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Product Leadership Design and innovate around
non-proprietary standards-based technologies to offer customers
what they want, when they want it, and at a level of value they
consider to be unparalleled;
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Customer Experience Focus on product quality
and customer service to instill customer satisfaction, trust,
and loyalty; and
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Winning Culture Recruit and develop a diverse
workforce globally and provide a positive work environment,
including recognition based on merit, a focus on customer
commitment, the highest standards of integrity and ethical
behavior, and community leadership.
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The Leadership Development and Compensation Committee is
committed to and responsible for designing, implementing, and
administering a compensation program for executive officers that
ensures appropriate linkage between pay, company performance,
and results for shareholders. The committee seeks to increase
shareholder value by rewarding performance with cost-effective
compensation and ensuring that we can attract and retain the
best executive talent through adherence to the following core
compensation objectives:
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Providing compensation commensurate with the level of success
achieved, ranging from above-average overall rewards for
performance that exceeds that of our peers to below-average
compensation for below-average performance;
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Providing a total compensation opportunity that is competitive
with similar high-tech and other large global general industry
companies that we compete with for talent;
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Managing fixed costs by combining a conservative approach to
base salaries and benefits, with more aggressive
performance-dependent short- and long-term incentives;
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Recognizing and rewarding the achievement of corporate,
regional/business unit and individual performance goals; and
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Heavily weighting the compensation package towards long-term,
performance-dependent incentives to better align the interests
of executives with shareholders.
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Our compensation programs are designed to reward achievement of
corporate priorities, and these programs will change from time
to time as necessary to support the corporate priorities and as
those priorities change. The specific principles, components,
and decisions used in Fiscal 2007 to manage the compensation of
executive officers are discussed in more detail below.
www.dell.com/investor
25
Evaluating
Chairman and CEO Performance
Process
All decisions relating to the compensation of the Chairman and
the Chief Executive Officer are made by the Leadership
Development and Compensation Committee in executive session,
without management present. In assessing the compensation of the
Chairman and Chief Executive Officer, the committee considers
the performance of the company, the executives
contribution to that performance, and other factors (including
tenure and experience, retention concerns, and historical
compensation) in the same manner as for any other executive
officer.
Results
Fiscal 2007 was a challenging year for us in many ways.
Increased pressure from competitors combined with poor execution
led to an erosion of market share and ultimately culminated in a
change of leadership. A number of long-term strategic
initiatives, aimed at driving long-term sustainable performance
and improving areas such as customer satisfaction, began to show
positive results during the year; however, these positive
results were overshadowed by our relatively weak financial
performance. The compensation actions taken for the Chairman and
the Chief Executive Officer and the other Named Executive
Officers based on these results are discussed in the next
section.
Executive Officer
Compensation
The Total
Compensation Package
Process When making individual compensation
decisions for executive officers, the committee takes many
factors into account, including the individuals
performance, tenure, and experience; the performance of the
company overall; any retention concerns; the recommendations of
management; the individuals historical compensation; and
comparisons to other executive officers (both those of the
company and those of our peer group).
Elements of the Total Compensation Package
The key elements of the compensation program for our
executive officers are base salary, annual incentive bonus,
long-term incentives, and benefits and perquisites.
The chart below is representative of the overall pay mix for our
Named Executive Officers. The committee takes a holistic
approach to executive compensation and balances the individual
compensation elements for each executive officer individually.
For example, because he is the companys largest
stockholder, Mr. Dell does not receive any long-term
incentive compensation.
Pay Mix for Named
Executive Officers
Pay Mix Because executive officers are in a
position to directly influence the overall performance of the
company, and in alignment with our 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, as well as total share ownership.
www.dell.com/investor
26
Competitive Market Assessment The Leadership
Development and Compensation Committee annually reviews market
compensation levels for executive officers at similar high-tech
and other large global general industry companies to determine
whether the compensation components for our executive officers
remain in the targeted ranges described below under Market
Positioning. With the assistance of the human resources
department, management collects and presents to the Leadership
Development and Compensation Committee compensation data for the
top five most highly-paid executive officers from a list of
targeted comparator companies as well as data for all executive
officers from published compensation surveys. These compensation
surveys include data on high-tech and general industry pay
practices for each executive position at companies similar in
size and complexity to Dell. The compensation assessment
includes an evaluation of base salary, target annual incentive
opportunities, long-term incentive grant values, and benefits
for each of our executive officers relative to similar positions
in the market.
Each year, management develops the peer group for evaluating pay
for the executive officers (excluding, in Fiscal 2007,
Mr. Dell, who served as executive Chairman of the Board)
based on those companies with which we compete for talent. The
committee reviews and approves the peer group annually using an
assessment of sales volumes, market capitalization, employment
levels, product mix, and business results. The peer group used
to evaluate executive pay practices at the beginning of Fiscal
2007 consisted of the following 23 companies:
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Advanced Micro Devices, Inc.
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Home Depot Inc.
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Apple Inc.
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Honeywell International Inc.
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Applied Materials Inc.
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Intel Corp.
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Best Buy Co., Inc.
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International Business Machines Corp.
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CDW Corp.
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Johnson & Johnson
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Cisco Systems Inc.
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Lexmark International Inc.
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Citigroup Inc.
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Microsoft Corp.
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Computer Sciences Corp.
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Oracle Corp.
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Electronic Data Systems Corp.
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Procter & Gamble Co.
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EMC Corp.
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Texas Instruments Inc.
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General Electric Company
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Wal Mart Stores Inc.
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Hewlett Packard Co.
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Because only four of the above comparable companies employ
full-time, non-CEO, Chairman of the Board positions, the
Leadership Development and Compensation Committee included
additional data from other large global general industry
companies to evaluate market pay practices for Mr. Dell,
who held such a position at Dell for most of Fiscal 2007.
Specifically, the comparator group for the Chairman position
consisted of 12 companies with annual revenues of at least
$10 billion, as follows:
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Anheuser-Busch Companies Inc.
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D R Horton, Inc.
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Best Buy Co., Inc.
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Kroger Co.
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Citigroup Inc.
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Oracle Corp.
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Coca-Cola
Company
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Pulte Homes Inc.
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ConocoPhillips Company
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The Travelers Companies Inc.
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Costco Wholesale Corporation
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Texas Instruments Inc.
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Market Positioning The Leadership Development
and Compensation Committee targets base salary and benefits at
the median of competitive market practices and variable
compensation (annual incentives and the grant value of long-term
incentives) at the 75th percentile of the market for each
component. The committee believes that above-average overall pay
positioning will allow us to attract and retain the appropriate
level of executive talent while appropriately rewarding high
performance through stretch performance objectives. The actual
target compensation for each individual executive may be higher
or lower than the targeted market position based on such factors
as individual skills, experience, contribution and performance,
internal equity, or other factors that the committee may take
into account that are relevant to the individual executive. In
addition, actual compensation results (e.g., amounts earned and
paid each year) may be higher or lower than target based on
corporate, regional/business unit, and individual performance.
www.dell.com/investor
27
Individual
Compensation Components
Base
Salary
Design Our philosophy is that base salaries
should meet the objectives of attracting and retaining the
executive officers needed to run the business. The base salaries
are targeted at market median levels, although each executive
officer may have a base salary above or below the median of the
market. Actual individual salary amounts are not objectively
determined, but instead reflect the committees judgment
with respect to each executive officers responsibility,
performance, experience, and other factors, including any
retention concerns, the individuals historical
compensation, and internal equity considerations. During Fiscal
2007, the Leadership Development and Compensation Committee
relied significantly on the input and recommendations of
Mr. Dell as Chairman and Mr. Rollins as Chief
Executive Officer when evaluating factors relative to the other
executive officers in order to approve salary adjustments.
Results As noted above, in recent years the
Leadership Development and Compensation Committee made a
decision to allocate more compensation to the
performance-dependent elements of the total compensation
package. As a result, in Fiscal 2006 and Fiscal 2007, annual
salary increases among executive officers generally were
somewhat modest as more focus was placed on the annual incentive
bonus. The Named Executive Officer salaries are all below the
median of the market, and other than Mr. Dell, each Named
Executive Officer received a modest raise for Fiscal 2007
designed to keep the salary close to the market median.
Mr. Dell did not receive a raise because the committee
determined that the key component of his compensation was
performance-based bonus.
Annual Incentive
Bonus
Design The annual incentive bonus plan is
designed to align executive officer pay with overall company
financial performance, as well as performance against strategic
initiatives in the short-term. The plan provides a reward based
on the achievement of corporate, regional/business unit, and
individual performance objectives.
Annual incentives for executive officers are subject to the
Executive Annual Incentive Bonus Plan. This plan was designed to
qualify as tax-deductible under Section 162(m) of the
Internal Revenue Code, and was approved by stockholders at the
2003 annual meeting.
The Leadership Development and Compensation Committee
establishes a target incentive opportunity for each executive
officer expressed as a percent of base salary. As explained in
the chart under Elements of the Total Compensation
Package above, the base salary and annual incentive bonus
components of the pay mix are generally equal in amount, each
comprising approximately 10% of the pay mix. Therefore, most
Named Executive Officers were granted a target incentive
opportunity equal to their base salary. Mr. Dell and
Mr. Rollins, the individuals with the greatest overall
responsibility for company performance, were granted larger
incentive opportunities in comparison to their base salaries in
order to weight their overall pay mix even more heavily towards
performance-based compensation. For the Named Executive
Officers, the target annual incentives for Fiscal 2007 were as
follows:
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Target Incentive
as a
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Named
Executive Officer
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%
of Base
Salarya
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Mr. Dell
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200%
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Mr. Carty
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%
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b
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Mr. Bell
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100%
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Mr. Felice
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100%
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Mr. Rollins
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300%
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Mr. Schneider
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100%
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Mr. Parra
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100%
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a
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To qualify for tax deductibility under Section 162(m) of
the Internal Revenue Code, the maximum payout was capped at
0.10% of consolidated net income for each executive, with the
exception of Mr. Dell and Mr. Rollins, whose payouts
were capped at 0.20% of consolidated net income.
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b
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Mr. Carty joined the company as an executive officer in
January 2007 and was not eligible for an annual incentive bonus
for Fiscal 2007.
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www.dell.com/investor
28
To arrive at a payout number, the target percentage of salary
for each executive officer is multiplied by a formula based on
corporate performance, regional or business unit performance,
and the achievement of individual performance goals. The formula
is illustrated below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Annual
Incentive
|
|
|
X
|
|
Corporate Performance
Modifier
(0%-300%)
|
|
|
X
|
|
Regional/Business
Unit Performance
Modifier
(50%-150%)
|
|
|
X
|
|
Individual
Performance
Modifier
(0%-150%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Performance Target At the end of
the year, the Leadership Development and Compensation Committee
evaluates company performance against specific financial and
strategic performance targets set at the beginning of the year
and modifies the bonus payout to 0% to 300% of the target. For
Fiscal 2007, the financial performance objectives were revenue
growth and operating income margin objectives, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
Revenue Growth
|
|
|
5.0
|
%
|
|
|
10.0
|
%
|
|
|
20.0
|
%
|
Operating Income Margin
|
|
|
7.0
|
%
|
|
|
7.8
|
%
|
|
|
8.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results For Fiscal 2007, we did not achieve
either revenue growth or operating income margin at the
threshold level. Consequently, the committee set the corporate
performance modifier at 0%, the other modifiers were not
applied, and the formulaic payout results were zero.
Regional/Business Unit and Individual
Performance After the corporate performance
modifier is set, the following additional modifiers are applied
to determine individual payout amounts:
|
|
|
|
|
Performance of the executives regional/business unit; and
|
|
|
|
A subjective evaluation of each executives individual
performance and contribution during the year.
|
Each of these factors can result in further modification of the
executives payout as indicated. Upward adjustments must be
offset by downward adjustments for other executives, as the
aggregate payouts cannot exceed the total amount funded and
approved by the Leadership Development and Compensation
Committee based on corporate performance. As mentioned above,
the regional/business unit and individual performance modifiers
were not applied for Fiscal 2007 as we did not meet the
corporate performance thresholds.
Strategic Priorities Targets The Leadership
Development and Compensation Committee has the discretion to
adjust the formulaic payout results based on company performance
against specific strategic priorities established for the year.
For Fiscal 2007, these included objectives in the areas of
Customer Experience, Winning Culture and Global Growth.
|
|
|
|
|
|
Fiscal
2007 Strategic
Initiativesa
|
|
Fiscal
2007 Goal
|
|
Fiscal
2007 Results
|
|
|
Customer Experience
|
|
|
|
|
Customer Satisfaction score
|
|
90% Positive
|
|
75% Positive
|
Online Customer Satisfaction score
|
|
90% Positive
|
|
<90% Positive
|
Winning Culture
All Tell Dell Metrics
|
|
>75% Positive
|
|
76% Positive
|
Leadership Imperative Participation
|
|
100%
|
|
88%
|
Global
Growthb
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
The committee believes that the performance objectives
established for each of these strategic initiatives represent
meaningful improvements for the organization and, therefore, are
reasonably difficult to attain.
|
|
b
|
Management believes, and the committee concurs, that the
specific strategic initiatives and performance goals established
for the Global Growth strategic priority during
Fiscal 2007 represent confidential business information, the
disclosure of which would result in meaningful competitive harm.
|
Based on the results described above, the Leadership Development
and Compensation Committee did not adjust the formulaic payout
results, and no annual incentive payments were made to the
executive officers.
www.dell.com/investor
29
Long-Term Incentives
Design Long-term incentives are the most
significant element of total executive officer compensation.
Performance-dependent components of compensation comprise much
of this element, consistent with our philosophy of driving
performance and thereby aligning the interests of executives
with other stockholders. These incentives are designed to
motivate executive officers to improve financial performance and
stockholder value, as well as encouraging the long-term
employment of the executive officers. These incentives include a
variety of stock and cash vehicles, such as:
|
|
|
|
|
Stock options
|
|
|
|
Restricted stock units (RSUs)
|
|
|
|
Performance-based restricted stock units (PBUs)
|
|
|
|
Long-term cash awards
|
Historically, we relied primarily on stock option awards in
granting long-term incentives. However, in Fiscal 2007 the
Leadership Development and Compensation Committee redesigned the
long-term incentives for the executive officers. In addition to
using stock options, the committee introduced PBUs that reward
the achievement of specific business objectives as well as stock
appreciation, and approved new long-term cash engagement awards
to introduce an additional incentive for executive officers to
remain with the company over the next four years.
The specific mix of options and PBUs as a percent of total
long-term incentives varied for each executive officer based on
the Chairmans and the Chief Executive Officers
assessments of the perceived value of each vehicle for each
executive officer.
In awarding new long-term incentives, the Leadership Development
and Compensation Committee also considers level of
responsibility, prior experience, and individual performance
criteria, as well as the compensation practices of the peer
group of companies used to evaluate total compensation. The
objective is to provide executive officers with above-average
long-term incentive award opportunities targeted at the
75th percentile of peer practices for on-going, annual
awards, while also offering additional cash retention incentives
to executive officers other than the Chairman and the Chief
Executive Officer. The long-term incentive program is designed
to be highly leveraged, ensuring that if our stockholder returns
exceed industry norms, actual gains will exceed industry norms,
while also meeting our need to retain executive talent in a
highly competitive market.
We do not backdate options or grant options or other equity
awards retroactively. In addition, we do not purposely schedule
option awards or other equity grants prior to the disclosure of
favorable information or after the announcement of unfavorable
information. Options are generally granted at fair market value
on a fixed or predetermined date. All equity grants to executive
officers require the approval of the Leadership Development and
Compensation Committee. In general, awards under our annual
long-term incentive grant process are made on predetermined
Board meeting dates.
Fiscal 2007 Equity Opportunities In Fiscal
2007 the Leadership Development and Compensation Committee
established the following target long-term equity incentive
opportunities (estimated value at grant and granted in the
indicated combination of stock options and PBUs) for each Named
Executive Officer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Fiscal
2007
|
|
|
Award
Mix
|
|
Named
Executive Officer
|
|
Grant
Value
|
|
|
Options
|
|
|
PBUs
|
|
|
|
|
Mr. Dell
|
|
|
a
|
|
|
|
|
|
|
|
|
|
Mr. Carty
|
|
|
b
|
|
|
|
|
|
|
|
|
|
Mr. Bell
|
|
$
|
4,500,000
|
|
|
|
40
|
%
|
|
|
60
|
%
|
Mr. Felice
|
|
|
4,500,000
|
|
|
|
51
|
%
|
|
|
49
|
%
|
Mr. Rollins
|
|
|
9,360,000
|
|
|
|
52
|
%
|
|
|
48
|
%
|
Mr. Schneider
|
|
|
4,500,000
|
|
|
|
51
|
%
|
|
|
49
|
%
|
Mr. Parra
|
|
|
4,500,000
|
|
|
|
51
|
%
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a |
As Dells founder and largest individual stockholder,
Mr. Dell does not receive any long-term incentive
compensation.
|
www.dell.com/investor
30
|
|
b |
Mr. Carty joined the company as an executive officer in
January 2007 and was not eligible for long-term awards as part
of the annual grant for Fiscal 2007. He did receive stock option
and RSU awards as part of his new hire compensation package. See
Summary Compensation Table below.
|
|
|
|
|
|
Stock Options Stock options are designed to
reward executive officers for the increase in Dells stock
price over time. Options represent the high-risk and potential
high-return component of our total long-term incentive program,
as the realizable value of each option can fall to zero if the
stock price is lower than the exercise price established on the
date of grant.
|
The size of stock option grants for executive officers is based
primarily on the target dollar value of the award translated
into a number of option shares based on the estimated economic
value on the date of grant, as determined using the
Black-Scholes option pricing formula. As a result, the number of
shares underlying stock option awards will typically vary from
year to year, as it is dependent on the price of Dell common
stock on the date of grant. In addition, the size of the award
will vary based on the target mix of options and PBUs, which
varies for each executive officer.
In March 2006, the Leadership Development and Compensation
Committee approved grants of stock options to each of the
executive officers (other than Mr. Dell) as part of our
annual stock option grants. These options had an exercise price
equal to the fair market value of Dell common stock on the date
of grant (determined as the average of the high and low stock
price on The NASDAQ Stock Market on the date of grant) and vest
ratably over five years (20% per year) beginning on the first
anniversary of the date of grant. Because the exercise price of
these options is equal to the fair market value of Dells
common stock on the date of grant, these stock options will
deliver a reward only if the stock price appreciates from the
price on the date the stock options were granted. This design is
intended to focus the executive officers on the long-term
enhancement of stockholder value.
After we delayed filing our Annual Report on
Form 10-K
for Fiscal 2007, we suspended the exercise of employee stock
options. As a result, some stock options expired while the
holders had no ability to exercise them or otherwise prevent
their expiration. The Leadership Development and Compensation
Committee determined that we should nevertheless provide certain
of the affected individuals with the value that they would have
received had they been permitted to exercise the options.
Therefore, we agreed to pay those individuals cash payments
generally equal to the in-the-money value of the options at
expiration. We will make those payments within 45 days
after we file our Annual Report on
Form 10-K
for Fiscal 2007. The group of affected individuals included
current and former executive officers. Because these payments
are intended to compensate the affected individuals for the
value they would have received had their options been
exercisable, the payments were not considered in making other
compensation decisions.
|
|
|
|
|
RSUs Like stock options, RSUs are designed to
reward executives for increases in our stock price over time.
RSUs also provide a deferral of vesting and payout to help
retain executive officers. RSUs are denominated in full shares
of the companys common stock and, therefore, have a more
stable value over time as the stock price goes up or down (as
compared to options, which only have value if the stock price
increases).
|
|
|
|
PBUs PBUs are designed to reward participants
for the achievement of near-term financial objectives, while
also providing a deferral of vesting and payout to help retain
executive officers. Like RSUs, PBUs are denominated in full
shares of the companys common stock and, therefore, have a
more stable value over time as the stock price goes up or down.
|
The size of PBU grants is based on a target dollar value of the
award divided by the stock price on the date of grant. The
actual number of shares earned is determined based on company
performance measured over a one-year period against
predetermined performance goals. Shares granted in Fiscal 2007
vest ratably over a five-year period beginning on the date of
grant.
For Fiscal 2007, the following revenue growth and minimum
operating margin goals were used as performance measures. Even
if the revenue growth goal is achieved, the minimum operating
margin goal must also be achieved at or above threshold for any
shares to be earned. The table below provides the threshold,
target, and maximum performance levels and the percentage of
shares
www.dell.com/investor
31
earned at these levels. The percentage of shares earned is
prorated within the ranges below based on the performance level.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Goals
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
Revenue (in billions)
|
|
$
|
57.6
|
|
|
$
|
61.5
|
|
|
$
|
64.3
|
|
(Year-over-Year Revenue Growth)
|
|
|
3%
|
|
|
|
10%
|
|
|
|
15%
|
|
Minimum operating margin
|
|
|
6%
|
|
|
|
6%
|
|
|
|
6%
|
|
Shares Earned (Percent of Initial Shares Granted)
|
|
|
0%
|
|
|
|
100%
|
|
|
|
120%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since none of the performance goals were achieved during Fiscal
2007, no PBU shares were earned by any of the executive officers.
|
|
|
|
|
2003 and 2006 Long-Term Cash Incentive Bonus Awards
The Named Executive Officers, other than
Mr. Dell, Mr. Carty, and Mr. Rollins, are
eligible for payments under these previously approved programs.
Because we did not achieve the threshold targets for corporate
performance specified in the programs, no amounts were earned
under either program for Fiscal 2007. Amounts earned under these
programs for prior years will be paid in Fiscal 2008 or Fiscal
2009.
|
|
|
|
2007 Long-Term Cash Incentive Awards In March
2006, the Leadership Development and Compensation Committee
implemented the 2007 Long-Term Cash Award Program. All executive
officers employed at that time other than Mr. Dell and
Mr. Rollins were eligible for cash engagement awards under
this program. As Dell has become recognized for our high-quality
leaders, our executives have increasingly become targets for
recruitment to key positions in other organizations. This
program is intended to better balance our existing long-term
compensation programs between cash and equity awards, and to
enhance the overall holding power of our compensation package.
|
These cash awards vest and will be paid out in increments over a
four-year period and represent compensation in addition to
targeted market pay positioning for each executive officer.
These awards are contingent only upon continued employment
through the annual vesting period which ends in March of each
fiscal year. If the executive officers employment
terminates, other than due to death or permanent disability, the
executive forfeits all subsequent payouts. The value of the
award for each executive officer was determined at the
recommendation of the Chairman and the Chief Executive Officer
based on an assessment of the holding power of current long-term
incentives for each executive officer, retention risk, and each
individuals impact on the organization.
The following table sets forth the awards and vesting periods
for each of the Named Executive Officers under this program.
Neither Mr. Dell nor Mr. Rollins was eligible for
these cash awards. Mr. Carty joined the company as an
executive in January 2007 and thus did not receive an award
under this program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2008
|
|
|
Fiscal 2009
|
|
|
Fiscal 2010
|
|
|
Fiscal 2011
|
|
Named Executive
Officer
|
|
Total
Grant
|
|
|
Vesting
|
|
|
Vesting
|
|
|
Vesting
|
|
|
Vesting
|
|
|
|
|
Mr. Bell
|
|
$
|
4,000,000
|
|
|
|
|
|
|
$
|
1,200,000
|
|
|
$
|
1,300,000
|
|
|
$
|
1,500,000
|
|
Mr. Felice
|
|
|
5,000,000
|
|
|
$
|
800,000
|
|
|
|
1,000,000
|
|
|
|
1,400,000
|
|
|
|
1,800,000
|
|
Mr.
Schneidera
|
|
|
8,000,000
|
|
|
|
|
|
|
|
2,666,667
|
|
|
|
2,666,667
|
|
|
|
2,666,667
|
|
Mr.
Parraa
|
|
|
4,000,000
|
|
|
|
|
|
|
|
1,200,000
|
|
|
|
1,300,000
|
|
|
|
1,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Both Mr. Schneider and Mr. Parra resigned from the
company before the first vesting date and, therefore, forfeited
these amounts.
|
Benefits and Perquisites
Our policy is to provide limited benefits and perquisites for
executive officers. While perquisites do not constitute a
significant part of executive officer compensation, the
Leadership Development and Compensation Committee believes that
limited benefits and perquisites are generally a typical
component of total remuneration for executives in industries
similar to ours and that providing such benefits is important to
delivering a competitive package to retain executive officers.
Specific perquisites and benefits include:
Deferred Compensation Plan We maintain a
nonqualified deferred compensation plan that is available to all
Dell executives. For a description of the terms of this plan, as
well as information about the account
www.dell.com/investor
32
balances held by each of the Named Executive Officers, see
Other Benefit Plans Deferred Compensation
Plan below.
Financial counseling and tax preparation
services Each executive officer is entitled to
reimbursement, up to $12,500 annually, for financial counseling
services (including tax preparation). Actual costs are
reimbursed, and the income is imputed to the executive officer
for federal income tax purposes.
Annual physical We pay for a comprehensive
annual physical for each executive officer and his or her spouse
and reimburse for associated travel and lodging, all subject an
annual maximum of $5,000 per person.
Technical Support We provide our executive
officers with technical support (personal and business) and, in
come cases, certain home network equipment. The incremental cost
of providing these services is limited to the cost of hardware
provided and is insignificant.
Other The executive officers participate in
our other benefit plans on the same terms as other employees.
These plans include medical, dental and life insurance benefits;
our 401(k) retirement savings plan; and our employee stock
purchase plan. See Other Benefit Plans below.
Stock Ownership
Guidelines
The Board has established stock ownership guidelines for
themselves and our executive officers to more closely link their
interests with those of other Dell stockholders. Under those
guidelines, non-employee directors must maintain ownership of
Dell common stock having an aggregate value equal to at least
300% of their annual retainer, the Chairman and Chief Executive
Officer must maintain ownership of stock having an aggregate
value equal to at least 500% of base salary, and all other
executive officers must maintain ownership of stock having an
aggregate value equal to at least 400% of base salary. A person
has three years after becoming subject to the guidelines to
attain the specified minimum ownership position. Unvested
restricted stock or stock units may be used to satisfy these
minimum ownership requirements, but unexercised stock options
may not. We believe these ownership guidelines to be in line
with the prevalent ownership guidelines among our recognized
peer companies.
Compliance with these guidelines is evaluated once each year
using the average closing price of Dell common stock during the
previous fiscal year. As of the last evaluation in May 2007, all
directors and executive officers met their ownership
requirements.
Administration of
Compensation Plans
The Leadership Development and Compensation Committee approves
every compensation action for executive officers, including
equity awards, which are effective on the day of approval. In
addition, the committee annually conducts a comprehensive review
of all compensation and benefit plans for the company, with a
view to ensuring compliance, fairness, cost competitiveness, and
adherence to our pay-for-performance philosophy. While the
committee was expecting better company performance in the past
year, it is confident that the executive officers reaped rewards
commensurate with their individual and Dells overall
performance.
Employment
Agreements, Severance, and
Change-in-Control
Arrangements
Substantially all of Dells employees enter into a standard
employment agreement upon commencement of their employment. The
standard employment agreement primarily addresses intellectual
property and confidential and proprietary information matters
and does not contain provisions regarding compensation or
continued employment.
We did not have any special employment agreement with any of our
executive officers, nor did we provide them with any kind of
contractual severance or
change-in-control
benefits, during Fiscal 2007. We have recently begun to
implement special employment agreements with our executive
officers that contain non-solicitation and non-competition
agreements and also provide for the payment of specified
severance upon termination of employment. On September 6,
2007, the Leadership Development and Compensation Committee
approved new severance arrangements for the executive officers
other than Mr. Dell. Under the new agreements, if an
executive officers employment is terminated without cause,
the executive will receive a severance payment equal to
12 months base salary and target bonus. The
agreements also
www.dell.com/investor
33
obligate each executive officer to comply with certain
noncompetition and nonsolicitation obligations for a period of
12 months following termination of employment. We
previously entered into separate severance arrangements with
Michael R. Cannon and Ronald G. Garriques upon commencement of
their employment in February 2007. The new severance
arrangements will not be applicable to either Mr. Cannon or
Mr. Garriques until the expiration of their current
arrangements. No executive officer severance payments would have
been required as of the last business day of Fiscal 2007.
All of our equity awards contain provisions that accelerate the
vesting of the awards upon the death or permanent disability of
the holder. These provisions are generally applicable to all
Dell employees, including the executive officers. In addition,
the Leadership Development and Compensation Committee has
authority under our stock plans to issue awards with provisions
that accelerate vesting and exercisability in the event of a
change-in-control
and to amend existing awards to provide for such acceleration.
To date, the committee has not elected to include
change-in-control
acceleration provisions in any awards.
Other Factors
Affecting Compensation
In establishing total compensation for the executive officers,
the Leadership Development and Compensation Committee considered
the effect of Section 162(m) of the Internal Revenue Code,
which limits the deductibility of compensation paid to each
covered employee (generally, the chief executive
officer and the three other highest paid officers other than the
chief financial officer) to $1 million, unless it is
performance based. To the extent practical, the committee
intends to preserve deductibility, but may choose to provide
compensation that is not deductible if necessary to attract,
retain and reward high-performing executives.
Compensation
Committee Report
The Leadership Development and Compensation Committee has
reviewed and discussed the foregoing Compensation Discussion and
Analysis with management. Based on that review and those
discussions, the committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in
Dells Annual Report on
Form 10-K
for the Fiscal year ended February 2, 2007, and Dells
2007 proxy statement. This report is provided by the following
independent directors, who comprise the committee.
THE LEADERSHIP DEVELOPMENT AND
COMPENSATION COMMITTEE
Michael A. Miles,
Chair
Alan (A.G.) Lafley
Judy C. Lewent
Klaus S. Luft
www.dell.com/investor
34
Summary
Compensation Table
The following table summarizes the total compensation for Fiscal
2007 for the following persons: Michael S. Dell (who served as
Chairman of the Board and, beginning January 31, 2007,
principal executive officer), Kevin B. Rollins (who served as
principal executive officer until January 31, 2007), Donald
J. Carty and James M. Schneider (each of whom served as
principal financial officer during a portion of the year), and
Paul D. Bell, Stephen J. Felice, and Rosendo G. Parra (the three
other most highly compensated individuals who were serving as
executive officers at the end of Fiscal 2007). These persons are
referred to as the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2007 Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
Name and
|
|
Fiscal
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awardsa
|
|
|
Awardsa
|
|
|
Compensationb
|
|
|
Compensationc
|
|
|
Total
|
|
|
|
|
Michael S. Dell
|
|
|
2007
|
|
|
$
|
950,000
|
|
|
|
|
|
|
|
|
|
|
$
|
2,485,008
|
|
|
|
|
|
|
$
|
1,060,881
|
|
|
$
|
4,495,889
|
|
Chairman and Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald J.
Cartyd
|
|
|
2007
|
|
|
|
51,154
|
|
|
|
|
|
|
$
|
133,655
|
|
|
|
146,320
|
|
|
|
|
|
|
|
20,000
|
|
|
|
351,129
|
|
Vice Chairman and
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul D. Bell
|
|
|
2007
|
|
|
|
594,231
|
|
|
|
|
|
|
|
|
|
|
|
2,815,494
|
|
|
|
|
|
|
|
5,414,916
|
|
|
|
8,824,641
|
|
Senior Vice President and President, Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Felice
|
|
|
2007
|
|
|
|
491,346
|
|
|
|
|
|
|
|
113,264
|
|
|
|
1,043,080
|
|
|
|
|
|
|
|
5,559,474
|
|
|
|
7,207,164
|
|
Senior Vice President and, President, Asia-Pacific/Japan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Rollins
|
|
|
2007
|
|
|
|
950,000
|
|
|
|
|
|
|
|
|
|
|
|
7,574,388
|
|
|
|
|
|
|
|
23,950
|
|
|
|
8,548,338
|
|
Former President and
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. Schneider
|
|
|
2007
|
|
|
|
614,231
|
|
|
|
|
|
|
|
|
|
|
|
2,652,274
|
|
|
|
|
|
|
|
8,025,211
|
e
|
|
|
11,291,716
|
|
Former Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rosendo G. Parra
|
|
|
2007
|
|
|
|
594,231
|
|
|
|
|
|
|
|
|
|
|
|
1,651,650
|
|
|
|
|
|
|
|
4,018205e
|
|
|
|
6,264,085
|
|
Former Senior Vice
President, Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a |
Represents the dollar amount of equity compensation cost
recognized for financial reporting purposes with respect to
Fiscal 2007, computed in accordance with SFAS 123(R),
excluding the impact of estimated forfeitures for service-based
vesting conditions. See Note 6 of Notes to Consolidated
Financial Statements included in Part II
Item 8 Financial Statements and Supplemental
Data of our Annual Report on
Form 10-K
for Fiscal 2007 for a description of the assumptions used in
that computation. The actual value realized by the Named
Executive Officer with respect to stock awards will depend on
the market value of Dell common stock on the date the stock is
sold, and with respect to option awards, will depend on the
difference between the market value of Dell common stock on the
date the option is exercised and the exercise price. The terms
of these awards are described in footnote g to the Grants
of Plan Based Awards table below
|
|
|
b
|
Represents amounts earned under the Executive Annual Incentive
Bonus Plan, the 2006 Long-Term Cash Incentive Bonus Program, and
the 2003 Long-Term Cash Incentive Bonus Program. Because we did
not achieve the threshold targets for corporate performance
specified in the plans, no amounts were earned under these plans
in Fiscal 2007.
|
|
c
|
Includes cash engagement awards. See Compensation
Discussion and Analysis Long-Term
Incentives 2007 Long-Term Cash Incentive
Awards. Payouts of these awards are contingent upon
continued employment through the vesting and payout date.
|
Also includes the cost of providing various perquisites and
personal benefits, as well the value of our contributions to the
company-sponsored 401(k) plan and deferred compensation plan,
and the amount we paid for term life insurance coverage under
health and welfare plans. See Compensation Discussion and
Analysis Benefits and Perquisites. In
addition, during Fiscal 2007, Mr. Bell and Mr. Felice
received payments in connection with their expatriate
assignments to cover housing, automobile and other expenses, as
well as tax equalization.
www.dell.com/investor
35
The following table provides detail for the aggregate All
other Compensation for each of the Named Executive
Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Dell
|
|
|
Mr.
Carty
|
|
|
Mr.
Bell
|
|
|
Mr.
Felice
|
|
|
Mr.
Rollins
|
|
|
Mr.
Schneider
|
|
|
Mr.
Parra
|
|
|
Engagement Awards
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,000,000
|
|
|
$
|
5,000,000
|
|
|
$
|
|
|
|
$
|
8,000,000
|
|
|
$
|
4,000,000
|
|
401(k) matching contributions
|
|
|
8,800
|
|
|
|
|
|
|
|
8,800
|
|
|
|
8,800
|
|
|
|
8,800
|
|
|
|
8,800
|
|
|
|
8,800
|
|
Term life insurance
|
|
|
1,081
|
|
|
|
|
|
|
|
|
|
|
|
828
|
|
|
|
2,650
|
|
|
|
1,663
|
|
|
|
980
|
|
Financial counseling/tax prep
|
|
|
|
|
|
|
|
|
|
|
2,350
|
|
|
|
4,400
|
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
|
|
Annual physical exam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,248
|
|
|
|
1,794
|
|
Security
|
|
|
1,051,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales award trip
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,631
|
|
Director retainer
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expat expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile expenses
|
|
|
|
|
|
|
|
|
|
|
77,370
|
|
|
|
44,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Housing and furnishings
|
|
|
|
|
|
|
|
|
|
|
300,075
|
|
|
|
195,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
|
|
|
|
|
40,216
|
|
|
|
50,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes
|
|
|
|
|
|
|
|
|
|
|
104,893
|
|
|
|
115,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax gross up
|
|
|
|
|
|
|
|
|
|
|
150,340
|
|
|
|
140,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UK National Insurance
|
|
|
|
|
|
|
|
|
|
|
730,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The amount shown for Mr. Dells security costs
represents the amount of company-paid expenses relating to
personal and residential security. This security is provided to
Mr. Dell pursuant to a Board-authorized security program.
The Board believes that Mr. Dells personal safety and
security are of vital importance to the companys business
and prospects and, therefore, that these costs are appropriate
corporate business expenses. Nevertheless, because these costs
can be viewed as conveying personal benefits to Mr. Dell,
they are reported as perquisites in this column. In conjunction
with our security operations, we also provide certain security
services to members of Mr. Dells immediate family and
at locations other than Mr. Dells principal
residence. Mr. Dell fully reimburses the company for the
incremental costs attributable to such services.
|
|
d
|
Mr. Carty joined the company as Vice Chairman and Chief
Financial Officer in January 2007, and is no longer eligible for
any additional compensation for his Board service. Amounts in
this table reflect his director compensation earned for Fiscal
2007. The amount shown in the Stock Awards column represents
$112,597 for his director grants and $21,058 for his employee
grants, and the amount under Options Awards represents $122,728
for his director grants and $23,592 for his employee grants.
Mr. Cartys $20,000 director retainer fee for
Fiscal 2007 is reflected under All Other
Compensation.
|
|
e
|
Mr. Schneider and Mr. Parra both resigned from the
company before the first vesting date and, therefore, forfeited
their cash engagement awards. Mr. Schneider actually only
received $25,211 and Mr. Parra actually only received
$18,205 of All Other Compensation.
|
www.dell.com/investor
36
Incentive
Plan Based Awards
The following table sets forth certain information about plan
based awards that were made to the Named Executive Officers
during Fiscal 2007. For more information about the plan under
which these awards were granted, see the Compensation
Discussion and Analysis above.
Grants
of Plan-Based Awards in Fiscal 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Number of
|
|
|
Exercise or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Securities
|
|
|
Base Price
|
|
|
|
|
|
|
Grant
|
|
Estimated Future
Payouts Under Non-equity Incentive Plan
Awardsa
|
|
|
Estimated Future
Payouts Under Equity Incentive Plan Awards
|
|
|
Shares of
|
|
|
Underlying
|
|
|
of Option
|
|
|
Grant Date
|
|
Name
|
|
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Stock
Units
|
|
|
Options
|
|
|
Awardsb
|
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Dell
|
|
3/9/06
|
|
$
|
0
|
|
|
$
|
1,900,000
|
|
|
$
|
12,825,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Carty
|
|
7/21/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,775
|
c
|
|
$
|
19.55
|
|
|
$
|
104,367
|
|
|
|
7/21/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,780
|
c
|
|
|
|
|
|
|
|
|
|
|
152,099
|
|
|
|
1/2/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000
|
d
|
|
|
25.27
|
|
|
|
1,414,984
|
|
|
|
1/2/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
e
|
|
|
|
|
|
|
|
|
|
|
1,263,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Bell
|
|
3/9/06
|
|
|
0
|
|
|
|
550,000
|
|
|
|
3,712,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
90,000
|
f
|
|
|
108,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,605,500
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,000
|
g
|
|
|
28.95
|
|
|
|
1,543,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Felice
|
|
3/9/06
|
|
|
0
|
|
|
|
425,000
|
|
|
|
2,868,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
75,000
|
f
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,171,250
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
g
|
|
|
28.95
|
|
|
|
1,963,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Rollins
|
|
3/9/06
|
|
|
0
|
|
|
|
2,850,000
|
|
|
|
19,237,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
150,000
|
f
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,342,500
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
g
|
|
|
28.95
|
|
|
|
4,208,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Schneider
|
|
3/9/06
|
|
|
0
|
|
|
|
570,000
|
|
|
|
3,847,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
75,000
|
f
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,171,250
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
g
|
|
|
28.95
|
|
|
|
1,963,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Parra
|
|
3/9/06
|
|
|
0
|
|
|
|
550,000
|
|
|
|
3,712,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
75,000
|
f
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,171,250
|
|
|
|
3/9/06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
g
|
|
|
28.95
|
|
|
|
1,963,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Because we did not achieve either revenue growth or operating
income margin threshold goals, no annual incentive payouts were
made for Fiscal 2007. See Compensation Discussion and
Analysis Individual Compensation
Components Annual Incentive Bonus.
|
|
b
|
The exercise price is calculated using the average of the high
and low sales prices for Dell common stock on the date of grant.
The closing sales price of Dell common stock on March 9,
2006 was $28.90, the closing price on July 21, 2006 was
$19.91, and the closing price on December 29, 2006 (the
last trading day prior to the January 2, 2007 grant date)
was $25.09.
|
|
c
|
These awards were made to Mr. Carty in his capacity as a
member of the Board of Directors prior to his becoming an
executive officer. These awards are subject to the same vesting
and expiration terms as the other director awards described
under Director Compensation During Fiscal 2007. The
stock award includes, 3,944 shares of restricted stock
granted as an annual restricted stock award and
3,836 shares of restricted stock was granted in lieu of
Mr. Cartys $75,000 annual retainer. As an executive
officer, he will no longer receive additional compensation for
serving on the Board of Directors.
|
|
d
|
Mr. Cartys equity awards have the same expiration
provisions as described in footnote g, except that all
unvested awards will continue to vest upon Mr. Cartys
termination of employment so long as he remains a member of the
Board of Directors.
|
|
e
|
Represents restricted stock that vests ratably over five years
(20% per year) beginning on the first anniversary of the date of
grant. All unvested restricted stock will be forfeited upon
Mr. Cartys resignation or termination as a Dell
employee and member of the Board of Directors.
|
|
|
f |
Represents PBUs granted, assuming all shares were earned at the
target level. The actual number of shares earned was zero
because the company failed to achieve the applicable performance
targets. See Compensation Discussion and
Analysis Long Term Incentives PBUs.
|
|
|
g |
Represents stock options with an exercise price equal to the
fair market value of Dell common stock on the date of grant.
These options vest and become exercisable ratably over five
years (20% per year) beginning on the first anniversary of the
date of grant. All unvested options expire upon the termination
of employment for any reason other than death or permanent
disability. All unvested options vest immediately upon death or
permanent disability, and all options expire one year later. If
employment is terminated for conduct detrimental to the company,
all options (whether or not vested) expire immediately. If
employment is terminated as a result of normal retirement,
vested options expire the third year after such retirement. If
employment is terminated for any other reason, all vested
options expire 90 days after such termination. In any
event, the options expire ten years
|
www.dell.com/investor
37
|
|
|
from the date of grant unless
otherwise expired as described above. All options are
transferable to family members under specified circumstances.
|
The following table sets forth certain information about
outstanding option and stock awards held by the Named Executive
Officers as of the end of Fiscal 2007.
Outstanding Equity Awards at Fiscal 2007 Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Units or
|
|
|
Number of
Securities Underlying
|
|
Option
|
|
Option
|
|
Stock that
|
|
Stock that
|
|
Other Rights
|
|
Other Rights
|
|
|
Unexercised
Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Vested
|
|
Vesteda
|
|
Not
Vested
|
|
Not
Vesteda
|
|
|
Mr. Dell
|
|
|
4,800,000
|
|
|
|
|
|
|
$
|
28.90
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
805,595
|
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
900,000
|
|
|
|
|
|
|
|
43.44
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
145,555
|
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
37.59
|
|
|
|
8/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
22.94
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
307,285
|
|
|
|
|
|
|
|
21.72
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
100,000
|
b
|
|
|
27.64
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64,940
|
|
|
|
|
|
|
|
21.39
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
|
|
160,000
|
c
|
|
|
26.19
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
34.24
|
|
|
|
9/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
32.99
|
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Carty
|
|
|
192,000
|
d
|
|
|
|
|
|
|
9.26
|
|
|
|
7/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,492
|
d
|
|
|
|
|
|
|
28.90
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,284
|
d
|
|
|
|
|
|
|
43.91
|
|
|
|
7/16/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,298
|
d
|
|
|
|
|
|
|
52.16
|
|
|
|
7/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,080
|
d
|
|
|
|
|
|
|
28.24
|
|
|
|
7/19/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,420
|
d
|
|
|
|
|
|
|
26.32
|
|
|
|
7/18/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,996
|
d
|
|
|
|
|
|
|
33.35
|
|
|
|
7/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,492
|
d
|
|
|
|
|
|
|
35.60
|
|
|
|
7/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,539
|
d
|
|
|
|
|
|
|
40.91
|
|
|
|
7/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,775
|
d
|
|
|
|
|
|
|
19.55
|
|
|
|
7/21/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000
|
e
|
|
|
25.27
|
|
|
|
1/2/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,576
|
f
|
|
$
|
1,330,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Bell
|
|
|
36,800
|
|
|
|
|
|
|
|
9.26
|
|
|
|
7/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,996
|
|
|
|
|
|
|
|
16.67
|
|
|
|
3/5/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
346,060
|
|
|
|
|
|
|
|
28.90
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,461
|
|
|
|
|
|
|
|
30.43
|
|
|
|
3/26/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,700
|
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
43.44
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,679
|
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
37.59
|
|
|
|
8/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
22.94
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,656
|
|
|
|
|
|
|
|
21.72
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
22.10
|
|
|
|
9/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
|
40,000
|
b
|
|
|
27.64
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
|
|
|
40,000
|
g
|
|
|
25.45
|
|
|
|
9/5/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
60,000
|
c
|
|
|
26.19
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
34.24
|
|
|
|
9/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
32.99
|
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
35.35
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
40.17
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,000
|
h
|
|
|
28.95
|
|
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
i
|
|
|
2,116,800
|
|
www.dell.com/investor
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Units or
|
|
|
Number of
Securities Underlying
|
|
Option
|
|
Option
|
|
Stock that
|
|
Stock that
|
|
Other Rights
|
|
Other Rights
|
|
|
Unexercised
Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Vested
|
|
Vesteda
|
|
Not
Vested
|
|
Not
Vesteda
|
|
|
Mr. Felice
|
|
|
80,000
|
|
|
|
|
|
|
|
41.13
|
|
|
|
2/22/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
41.00
|
|
|
|
8/12/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,350
|
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,191
|
|
|
|
|
|
|
|
45.94
|
|
|
|
3/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,686
|
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,600
|
|
|
|
|
|
|
|
37.59
|
|
|
|
8/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,796
|
|
|
|
|
|
|
|
22.94
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,774
|
|
|
|
|
|
|
|
22.10
|
|
|
|
9/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,567
|
|
|
|
7,567
|
b
|
|
|
27.64
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,144
|
|
|
|
21,572
|
g
|
|
|
25.45
|
|
|
|
9/5/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,120
|
|
|
|
16,240
|
c
|
|
|
26.19
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,280
|
|
|
|
|
|
|
|
34.24
|
|
|
|
9/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,515
|
|
|
|
|
|
|
|
32.99
|
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,705
|
|
|
|
|
|
|
|
35.35
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,635
|
|
|
|
|
|
|
|
40.17
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
|
|
|
|
40.63
|
|
|
|
8/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
h
|
|
|
28.95
|
|
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000i
|
|
|
|
1,764,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,893j
|
|
|
|
279,723
|
|
|
|
|
|
|
|
|
|
Mr. Rollinsm
|
|
|
400,000
|
k
|
|
|
|
|
|
|
9.26
|
|
|
|
7/18/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
10.16
|
|
|
|
12/22/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
353,584
|
|
|
|
|
|
|
|
12.74
|
|
|
|
3/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259,540
|
k
|
|
|
|
|
|
|
28.90
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,577
|
|
|
|
|
|
|
|
30.43
|
|
|
|
3/26/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,365
|
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,545
|
l
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
43.44
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,727
|
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
37.59
|
|
|
|
8/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
22.94
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213,442
|
|
|
|
|
|
|
|
21.72
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,800,000
|
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200,000
|
l
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
100,000
|
b
|
|
|
27.64
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45,586
|
|
|
|
|
|
|
|
21.39
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
240,000
|
|
|
|
160,000
|
c
|
|
|
26.19
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
34.24
|
|
|
|
9/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
32.99
|
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
800,000
|
|
|
|
|
|
|
|
35.60
|
|
|
|
7/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
650,000
|
|
|
|
|
|
|
|
40.17
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
h
|
|
|
28.95
|
|
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
i
|
|
|
3,528,000
|
|
Mr. Schneider
|
|
|
121,600
|
|
|
|
|
|
|
|
3.33
|
|
|
|
3/21/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
179,940
|
l
|
|
|
|
|
|
|
12.74
|
|
|
|
3/20/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,376
|
|
|
|
|
|
|
|
28.90
|
|
|
|
5/3/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,870
|
|
|
|
|
|
|
|
30.43
|
|
|
|
3/26/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,320
|
|
|
|
|
|
|
|
44.69
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
|
|
|
|
|
|
|
43.44
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,339
|
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
37.59
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
22.94
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
140,000
|
|
|
|
|
|
|
|
22.10
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
27.64
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
|
|
25.45
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
26.19
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
34.24
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
32.99
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
35.35
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
40.17
|
|
|
|
5/3/2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
www.dell.com/investor
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Units or
|
|
|
Number of
Securities Underlying
|
|
Option
|
|
Option
|
|
Stock that
|
|
Stock that
|
|
Other Rights
|
|
Other Rights
|
|
|
Unexercised
Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Vested
|
|
Vesteda
|
|
Not
Vested
|
|
Not
Vesteda
|
|
|
Mr. Parran
|
|
|
17,304
|
l
|
|
|
|
|
|
|
28.90
|
|
|
|
7/17/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,510
|
l
|
|
|
|
|
|
|
44.69
|
|
|
|
9/23/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
l
|
|
|
|
|
|
|
43.44
|
|
|
|
3/2/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,679
|
l
|
|
|
|
|
|
|
45.90
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
l
|
|
|
|
|
|
|
37.59
|
|
|
|
8/22/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
l
|
|
|
|
|
|
|
22.94
|
|
|
|
2/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
l
|
|
|
|
|
|
|
24.09
|
|
|
|
6/18/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
l
|
|
|
|
|
|
|
22.10
|
|
|
|
9/6/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
l
|
|
|
40,000
|
b
|
|
|
27.64
|
|
|
|
3/7/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
l
|
|
|
40,000
|
g
|
|
|
25.45
|
|
|
|
9/5/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
l
|
|
|
60,000
|
c
|
|
|
26.19
|
|
|
|
3/6/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
l
|
|
|
|
|
|
|
34.24
|
|
|
|
9/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
l
|
|
|
|
|
|
|
32.99
|
|
|
|
3/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
l
|
|
|
|
|
|
|
35.35
|
|
|
|
9/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
40.17
|
|
|
|
3/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,000
|
h
|
|
|
28.95
|
|
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
i
|
|
|
1,764,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Value is based on the closing price
of Dell common stock on February 2, 2007 ($23.52).
|
|
b
|
These options became exercisable on
March 7, 2007.
|
|
c
|
Of these options, 50% became
exercisable on March 6 of 2007 and 50% become exercisable on
March 6, 2008.
|
|
d
|
These awards were granted to
Mr. Carty in his capacity as a member of the Board of
Directors prior to his becoming an executive officer.
|
|
e
|
These options become exercisable
ratably on January 2 of 2008 through 2012.
|
|
f
|
Represents unvested restricted
stock. Of these shares, 6,576 were granted to Mr. Carty in
his capacity as a member of the Board of Directors prior to his
becoming an executive officer, and vest as follows:
1,165 shares vested on July 1, 2007; 374 shares
vested on July 16, 2007; 375 shares will vest on
July 16, 2008 and July 16, 2009; 1,166 shares
will vest on July 1 of 2008, 2009 and 2010; and 789 shares
will vest on July 1, 2011. The remaining 50,000 shares
were granted to Mr. Carty as an employee and will vest
ratably on January 2 of 2008, 2009, 2010, 2011 and 2012.
|
|
g
|
Options became exercisable on
September 5, 2007.
|
|
h
|
Of these options 20% became
exercisable on March 9, 2007 and the remainder become
exercisable ratably on March 9 of 2008 through 2011.
|
|
i
|
Represents the target number of
PBUs assuming shares earned at the target level pursuant to
established performance targets. The actual number of units
earned was zero because the performance targets were not
achieved.
|
|
j
|
Restricted stock vesting ratably on
March 3 of 2009 through 2012.
|
|
k
|
These options were transferred
without consideration to an irrevocable trust for the benefit of
Mr. Rollins children.
|
|
l
|
These options were transferred
without consideration to a limited partnership wholly owned by
the executives family members, entities wholly owned by
family members or trusts for the benefit of family members.
|
|
m
|
Mr. Rollins employment
terminated on May 4, 2007 and all unvested options expired
on that date. The grants with expiration dates of
3/20/2008,
3/26/2009,
3/24/2010,
3/23/2011
and
3/22/2012,
were unaffected by his termination. All other grants expired
unexercised pursuant to the terms of the option agreements.
Mr. Rollins was not able to exercise the options prior to
expiration because we suspended option exercises once we were
unable to file our Annual Report on
Form 10-K
for Fiscal 2007 on a timely basis. We agreed to pay cash for
those expired options, as described in the Compensation
Discussion and Analysis.
|
|
n
|
Mr. Parras employment
terminated on April 20, 2007 and all unvested options
expired on that date. The grant with an expiration date of
3/24/2010
was unaffected by his termination. All other grants expired
unexercised, pursuant to the terms of the option agreements.
Mr. Parra was not able to exercise the options prior to
expiration because we suspended option exercises once we were
unable to file our Annual Report on
Form 10-K
for Fiscal 2007 on a timely basis. We agreed to pay cash for
those expired options, as described in the Compensation
Discussion and Analysis.
|
www.dell.com/investor
40
The following table sets forth certain information about option
exercises and vesting of restricted stock during Fiscal 2007 for
the Named Executive Officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Exercises and Stock Vested During Fiscal
2007
|
|
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
Acquired
|
|
|
Value Realized
|
|
|
Shares
Acquired
|
|
|
Value Realized
|
|
Name
|
|
on
Exercise
|
|
|
upon
Exercisea
|
|
|
on
Vesting
|
|
|
on
Vestingb
|
|
|
|
|
Mr. Dell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr.
Cartyc
|
|
|
384,000
|
|
|
$
|
7,634,995
|
|
|
|
2,585
|
|
|
$
|
70,723
|
|
Mr. Bell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Felice
|
|
|
|
|
|
|
|
|
|
|
7,556
|
|
|
|
196,415
|
|
Mr.
Rollinsd
|
|
|
1,120,000
|
|
|
|
25,826,752
|
|
|
|
|
|
|
|
|
|
Mr. Schneider
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Parra
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a
|
Computed using the fair market value of the stock on the date of
exercise.
|
|
b
|
Computed using the fair market value of the stock on the date of
vesting.
|
|
c
|
Represents the exercise of options granted to Mr. Carty in
his capacity as a member of the Board of Directors prior to his
becoming an executive officer. Mr. Carty paid cash to
exercise these options and continues to hold the shares.
|
|
d
|
Mr. Rollins paid cash to exercise these options.
|
Equity
Compensation Plans
Equity
Compensation Plans Approved by Stockholders
Stock Option Plans Stockholders have approved
the 1989 Stock Option Plan, the 1994 Incentive Plan and the 2002
Long-Term Incentive Plan. Although options are still outstanding
under the 1989 and 1994 plans, no shares are available for
future awards. We currently use the 2002 Long-Term Incentive
Plan for stock-based incentive awards. These awards can be in
the form of stock options, stock appreciation rights, stock
bonuses, restricted stock, restricted stock units, performance
units or performance shares.
Employee Stock Purchase Plan We maintain an
employee stock purchase plan that is available to substantially
all employees. This plan has been approved by stockholders.
Under the plan, participating employees may contribute up to 15%
of their base compensation (subject to certain IRS limits) to
purchase common stock at the end of each participation period.
The participation periods are three-month periods running from
January to March, April to June, July to September and October
to December each year and the purchase price is equal to 85% of
the fair market value of the stock on the last day of the
purchase period.
Equity
Compensation Plans Not Approved by Stockholders
Broad Based Stock Option Plan In October
1998, the Board approved the Broad Based Stock Option Plan,
which permitted awards of fair market value stock options to
non-executive employees. While there are still shares
outstanding in this plan, the plan was terminated by the Board
in November 2002, and options are no longer being awarded under
this plan.
www.dell.com/investor
41
Equity
Compensation Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Securities
|
|
|
|
|
|
|
|
|
|
Remaining
Available for
|
|
|
|
|
|
|
|
|
|
Future Issuance
Under Equity
|
|
|
|
Number of
Securities to be
|
|
|
Weighted-Average
|
|
|
Compensation
Plans
|
|
|
|
Issued Upon
Exercise of
|
|
|
Exercise Price
of
|
|
|
(excluding
securities
|
|
Plan
Category
|
|
Outstanding
Options
|
|
|
Outstanding
Options
|
|
|
reflected in
first column)
|
|
|
Plans approved by stockholders
|
|
|
328,698,214
|
|
|
$
|
32.03
|
|
|
|
281,961,451a
|
|
Plans not approved by stockholders
|
|
|
4,963,167b
|
|
|
$
|
34.65
|
|
|
|
0c
|
|
|
|
a
|
This number includes 10,611,746 shares that were available
for issuance under the Employee Stock Purchase Plan and
271,349,705 shares that were available for issuance under
the 2002 Long-Term Incentive Plan. Of the shares available under
the 2002 plan, 173,040,042 shares were available to be
issued in the form of restricted stock. All information is as of
the end of Fiscal 2007.
|
|
b
|
This is the number of shares that were issuable pursuant to
options granted under the Broad Based Stock Option Plan that
were outstanding as of the end of Fiscal 2007.
|
|
c
|
The Broad Based Stock Option Plan was terminated in November
2002, and consequently, no shares are available for future
awards.
|
401(k) Retirement Plan We maintain a 401(k)
retirement savings plan that is available to substantially all
U.S. employees. We match 100% of each participants
voluntary contributions up to 4% of the participants
compensation, and a participant vests immediately in the
matching contributions. Participants may invest their
contributions and the matching contributions in a variety of
investment choices, including a Dell common stock fund, but are
not required to invest any of their contributions in Dell common
stock.
Deferred Compensation Plan We also maintain a
nonqualified deferred compensation plan that is available to
executives. Under the terms of this plan, we match 100% of each
participants voluntary deferrals up to 3% of the
participants compensation. A participant may defer up to
50% of their base salary and up to 100% of their annual
incentive bonus. Matching contributions vests ratably over the
first five years of employment (20% per year). A
participants funds are distributed upon the
participants death or retirement (at age 65 or older)
or, under certain circumstances, at the request of the
participant during the participants employment and can be
taken in a lump sum or installments (monthly, quarterly, or
annually) over a period of up to 10 years. Vested funds may
be withdrawn, with potential penalties, at the
participants request or proof of financial hardship. The
investment choices for the deferred compensation plan
contributions generally are the same as those available in the
broader 401(k) retirement savings plan. There is no Dell common
stock fund in this plan. Upon a corporate merger, consolidation,
liquidation, or other type of reorganization that constitutes a
change of control under the plan, the plan will be terminated
and all benefits will be paid.
www.dell.com/investor
42
The following table describes the contributions, earnings, and
balance at the end of Fiscal 2007 for each of the Named
Executive Officers who participate in the deferred compensation
plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
Deferred Compensation Plan at Fiscal Year-End 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
Executive
|
|
|
Company
|
|
|
Aggregate
|
|
|
Withdrawals/
|
|
|
|
|
|
|
Contributions
in
|
|
|
Contributions
in
|
|
|
Earnings in
Last
|
|
|
Distributions
in
|
|
|
Aggregate
Balance
|
|
Name
|
|
Last Fiscal
Year
|
|
|
Last Fiscal
Year
|
|
|
Fiscal
Yeara
|
|
|
Last Fiscal
Year
|
|
|
at Fiscal
Year-end
|
|
|
|
|
Mr. Dell
|
|
|
|
|
|
|
|
|
|
$
|
714,365
|
|
|
|
|
|
|
$
|
5,843,235
|
|
Mr. Carty
|
|
|
|
|
|
|
|
|
|
|
134,564
|
|
|
|
|
|
|
|
985,723
|
|
Mr. Rollins
|
|
|
|
|
|
|
|
|
|
|
5,858
|
|
|
|
|
|
|
|
339,151
|
|
Mr. Parra
|
|
|
|
|
|
|
|
|
|
|
23,993
|
|
|
|
|
|
|
|
393,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a |
Not reported as compensation to the Named Executive Officers for
tax purposes.
|
Certain Termination Benefits All of our
equity awards contain provisions that accelerate the vesting of
the awards upon the death or permanent disability of the holder.
These provisions are generally applicable to all Dell employees,
including the executive officers. The following table sets
forth, for each of the Named Executive Officers, the aggregate
value of the awards that were subject to such vesting
acceleration at the end of Fiscal 2007.
|
|
|
|
|
|
|
|
|
Acceleration
Benefit on
|
|
Named Executive
Officer
|
|
Death or
Permanent
Disabilitya
|
|
|
|
|
Mr. Dell
|
|
$
|
|
|
Mr. Carty
|
|
|
1,393,294
|
|
Mr. Bell
|
|
|
2,116,800
|
|
Mr. Felice
|
|
|
2,043,723
|
|
Mr. Rollins
|
|
|
3,528,000
|
|
Mr. Schneider
|
|
|
|
|
Mr. Parra
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|
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1,764,000
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|
|
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|
|
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|
a |
Represents the sum of (1) the in-the-money value of
unvested stock options that were subject to vesting acceleration
in the event of death or permanent disability and (2) the
value of unvested restricted stock, restricted stock units, and
performance-based units that were subject to vesting
acceleration in the event of death or permanent disability. All
values were computed as of the end of Fiscal 2007 are based on
the closing price of Dell common stock on the last day of Fiscal
2007 ($23.52).
|
www.dell.com/investor
43
The following table sets forth certain information, as of
October 1, 2007 (except as otherwise noted below), about
the ownership of Dell common stock by (i) the directors
(including the persons nominated to be directors),
(ii) each Named Executive Officers, (iii) all current
directors and executive officers as a group, and (iv) each
person known to us to be the beneficial owner of more than 5% of
the total number of shares outstanding. Unless otherwise
indicated, each person named below holds sole investment and
voting power over the shares shown.
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Total as a
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|
|
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Options
|
|
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|
Percentage
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|
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Number of
|
|
|
Exercisable
|
|
|
Total
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|
|
of Shares
|
|
|
|
Shares
|
|
|
Within 60
|
|
|
Beneficial
|
|
|
Outstanding
|
|
Beneficial
Owner
|
|
Owned
|
|
|
Days
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|
|
Ownership
|
|
|
(if 1% or
more)a
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|
|
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|
Michael S. Dell
|
|
|
217,739,415
|
b
|
|
|
9,993,375
|
|
|
|
227,732,790
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10.14
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%
|
One Dell Way
Round Rock, Texas 78682
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|
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|
Southeastern Asset Management, Inc.
|
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|
126,067,420
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|
|
|
|
|
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|
126,067,420
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|
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5.5
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%
|
6410 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
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|
|
|
|
|
|
|
|
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|
|
|
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Donald J. Carty
|
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|
602,907
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|
|
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137,756
|
|
|
|
740,663
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|
|
|
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|
William H. Gray, III
|
|
|
12,380
|
|
|
|
70,755
|
|
|
|
83,135
|
|
|
|
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|
Sallie L. Krawcheck
|
|
|
11,832
|
|
|
|
9,465
|
|
|
|
21,297
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|
|
|
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|
Alan (A.G.) Lafley
|
|
|
11,832
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|
|
|
9,465
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|
|
|
21,297
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|
|
|
|
|
Judy C. Lewent
|
|
|
15,057
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|
|
|
145,049
|
|
|
|
160,106
|
|
|
|
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|
Thomas W. Luce, III
|
|
|
47,688
|
c
|
|
|
13,809
|
|
|
|
61,497
|
|
|
|
|
|
Klaus S. Luft
|
|
|
8,481
|
|
|
|
152,435
|
|
|
|
160,916
|
|
|
|
|
|
Alex J. Mandl
|
|
|
11,088
|
d
|
|
|
155,084
|
|
|
|
166,172
|
|
|
|
|
|
Michael A. Miles
|
|
|
562,003
|
|
|
|
149,894
|
|
|
|
711,897
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|
|
|
|
|
Sam Nunn
|
|
|
15,371
|
|
|
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169,929
|
|
|
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185,300
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|
|
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Paul D. Bell
|
|
|
7,761
|
|
|
|
3,855,352
|
|
|
|
3,863,113
|
|
|
|
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|
Stephen J. Felice
|
|
|
16,106
|
|
|
|
894,050
|
|
|
|
910,156
|
|
|
|
|
|
Kevin B. Rollins
|
|
|
1,259,658
|
e
|
|
|
908,916
|
|
|
|
2,168,574
|
|
|
|
|
|
James M.
Schneiderf
|
|
|
28,850
|
|
|
|
230,149
|
|
|
|
258,999
|
|
|
|
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|
Rosendo G.
Parraf
|
|
|
19,802
|
|
|
|
|
|
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19,802
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|
|
|
|
|
Directors and executive officers as a group (24 persons)
|
|
|
220,585,584
|
|
|
|
19,973,178
|
|
|
|
240,543,767
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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a
|
Other than the percentage reported for Southeastern Asset
Management, Inc., the percentage is based on the number of
shares outstanding (2,235,801,991) at the close of business on
October 1, 2007. The percentage reported for Southeastern
Asset Management, Inc. is based on their Form 13G filed
with the Securities and Exchange Commission on February 12,
2007.
|
|
b
|
Includes 1,482,435 shares held is a trust for the benefit
of his children of which Mr. Dell is the trustee. Does not
include 26,449,112 shares held in a separate property trust
for Mr. Dells spouse and 1,482,434 shares held
in a trust for the benefit of his children of which his spouse
is trustee.
|
|
c
|
Includes 39,778 shares held in a personal retirement plan.
|
|
d
|
Includes 400 shares held by Mr. Mandls spouse
and 1,300 shares held in an IRA for Mr. Mandls
spouse.
|
|
e
|
Includes 1,120,000 shares that have been pledged as
collateral for a loan as of May 4, 2007.
|
|
|
f |
The Number of Shares Owned reported for Mr. Rollins,
Mr. Schneider and Mr. Parra are as of the date of
their retirement (May 4, 2007 for Mr. Rollins,
January 31, 2007 for Mr. Schneider and April 20,
2007 for Mr. Parra).
|
www.dell.com/investor
44
Stock
Ownership Requirements
The Board has established stock ownership guidelines for
themselves and the executive officers to increase their equity
stake in the company and more closely link their interests with
those of other stockholders. Under those guidelines, each
director and executive officer must maintain the following
minimum investment position in Dell common stock:
|
|
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|
Non-employee directors 300% of annual retainer
|
|
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|
Chairman and Chief Executive Officer 500% of
base salary
|
|
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Other executive officers 400% of base salary
|
Persons assuming one of these roles have three years after
assuming their position to attain the specified minimum
investment position. Unexercised stock options may not be used
to satisfy these minimum ownership requirements, but unvested
restricted stock or stock units can.
Compliance is evaluated once a year using the average closing
price per share of Dell common stock during the previous fiscal
year. As of May 2007, all directors and executive officers were
in compliance with these requirements.
Report
of the Audit Committee
The Audit Committee assists the Board of Directors in its
oversight of Dells financial reporting process. The Audit
Committees responsibilities are more fully described in
its charter, which is accessible on Dells website at
www.dell.com/corporategovernance.
Management has the primary responsibility for the preparation
and integrity of Dells financial statements, accounting
and financial reporting principles and internal controls and
procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Dells
independent auditor, PricewaterhouseCoopers LLP, is responsible
for performing an independent audit of the consolidated
financial statements and expressing an opinion on the conformity
of those financial statements with generally accepted accounting
principles.
In fulfilling its oversight responsibilities, the Audit
Committee has reviewed and discussed the audited financial
statements for Fiscal 2007 with Dells management, and has
discussed with PricewaterhouseCoopers LLP the matters that are
required to be discussed by the Statement on Auditing Standards
No. 61, Communication with Audit Committees. In
addition, PricewaterhouseCoopers LLP has provided the Audit
Committee with the written disclosures and the letter required
by the Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and the
Audit Committee has discussed with PricewaterhouseCoopers LLP
its independence.
Based on these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in Dells Annual Report on
Form 10-K
for the year ended February 2, 2007, for filing with the
Securities and Exchange Commission.
THE AUDIT COMMITTEE
Thomas W. Luce, III,
Chair
William H.
Gray, III
Alex J. Mandl
Sam Nunn
www.dell.com/investor
45
Record
Date; Shares Outstanding
Stockholders of record at the close of business on
October 26, 2007, are entitled to vote their shares at the
annual meeting. As of that date, there were
2,235,845,755 shares of common stock outstanding and
entitled to be voted at the meeting. The holders of shares on
the record date are entitled to one vote per share.
More than 50% of the stockholders entitled to vote must be
represented at the meeting before any business may be conducted.
If a quorum is not present, the stockholders who are represented
may adjourn the meeting until a quorum is present. The time and
place of the adjourned meeting will be announced at the time the
adjournment is taken, and no other notice need be given. An
adjournment will have no effect on the business that may be
conducted at the meeting.
By submitting your proxy, you authorize Lawrence P. Tu and
Thomas H. Welch, Jr. to represent you and vote your shares
at the meeting in accordance with your instructions. They may
also vote your shares to adjourn the meeting and will be
authorized to vote your shares at any adjournments or
postponements of the meeting.
If you attend the meeting, and are either a record holder or
have obtained a legal proxy from the record holder,
you may vote your shares in person, regardless of whether you
have submitted a proxy or voting instruction card. See
Additional Information Voting by Street Name
Holders. In addition, you may revoke your proxy by sending
a written notice of revocation to Dells Corporate
Secretary, by submitting a later-dated proxy, or by voting in
person at the meeting.
If you submit a proxy but do not indicate any voting
instructions, your shares will be voted FOR Proposal 1
(Election of Directors), FOR Proposal 2 (Ratification of
Independent Auditor), FOR Proposal 3 (Approval of the
Amended and Restated 2002 Long-Term Incentive Plan), AGAINST
Stockholder Proposal 1 (Executive Stock Ownership
Guidelines), and AGAINST Stockholder Proposal 2
(Declaration of Dividend). If any other business properly comes
before the stockholders for a vote at the meeting, your shares
will be voted according to the discretion of the holders of the
proxy.
Voting
by Street Name Holders
If your shares are held in a brokerage account or by another
nominee, you are considered the beneficial owner of
shares held in street name, and these proxy
materials are being forwarded to you by your broker or nominee
(the record holder) along with a voting instruction
card. As the beneficial owner, you have the right to direct your
record holder how to vote your shares, and the record holder is
required to vote your shares in accordance with your
instructions. If you do not give instructions to your record
holder by 11:59 pm on December 3, 2007, the record
holder will be entitled to vote your shares in its discretion on
Proposal 1 (Election of Directors) and Proposal 2
(Ratification of Independent Auditor), but will not be able to
vote your shares on Proposal 3 (Approval of the Amended and
Restated 2002 Long-Term Incentive Plan) or either of the
Stockholder Proposals and your shares will be counted as a
broker non-vote on those proposals.
As the beneficial owner of shares, you are invited to attend the
annual meeting. Please note, however, that if you are a
beneficial owner, you may not vote your shares in person at the
meeting unless you obtain a legal proxy from the
record holder that holds your shares.
www.dell.com/investor
46
Broadridge Financial Solutions, Inc. will tabulate and certify
the votes.
If your shares are counted as a broker non-vote or abstention,
your shares will be included in the number of shares represented
for purposes of determining whether a quorum is present.
Abstentions will also be counted as shares present and entitled
to be voted. Broker non-votes, however, are not counted as
shares present and entitled to be voted with respect to the
matters on which the broker has not expressly voted. Thus,
broker non-votes will not affect the outcome of the voting on
any of the proposals.
If you own Dell shares through the Dell 401(k) plan for
employees, you can direct the trustee to vote the shares held in
your account in accordance with your instructions by returning
the enclosed proxy card or by registering your instructions via
the telephone or Internet as directed on the proxy card. If you
wish to instruct the trustee on the voting of shares held in
your account, you should submit those instructions no later than
November 29, 2007. The trustee will vote shares for which
no voting instructions were received on or before that date as
directed by the plan fiduciary.
We will bear all costs of this proxy solicitation. Proxies may
be solicited by mail, in person, by telephone, or by facsimile
by officers, directors, and regular employees. In addition, we
will utilize the services of D.F. King & Co.,
Inc., an independent proxy solicitation firm, and will pay
$17,500 plus reasonable expenses as compensation for those
services. We may also reimburse brokerage firms, custodians,
nominees, and fiduciaries for their expenses to forward proxy
materials to beneficial owners.
Director
Nomination Process
Director Qualifications The Board believes
that individuals who are nominated by the Board to be a director
should have demonstrated notable or significant achievements in
business, education, or public service; should possess the
requisite intelligence, education, and experience to make a
significant contribution to the Board and bring a range of
skills, diverse perspectives, and backgrounds to its
deliberations; and should have the highest ethical standards, a
strong sense of professionalism, and intense dedication to
serving the interests of the stockholders. The following
attributes or qualifications will be considered by the
Governance and Nominating Committee in evaluating a
persons candidacy for membership on the Board:
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|
|
|
|
Management and leadership experience Relevant
experience should include, at a minimum, a past or current
leadership role in a major public company or recognized
privately held entity; a past or current leadership role at a
prominent educational institution or senior faculty position in
an area of study important or relevant to the company; a past
elected or appointed senior government position; or a past or
current senior managerial or advisory position with a highly
visible nonprofit organization. Consideration will also be given
to relevant experience in our high priority growth areas;
demonstrated experience in major challenges we face or a unique
understanding of our business environment; and experience with,
exposure to, or reputation among a broad subset of our customer
base.
|
|
|
|
Skilled and diverse background All candidates
must possess the aptitude or experience to understand fully the
legal responsibilities of a director and the governance
processes of a public company, as well as the personal qualities
to be able to make a substantial active contribution to Board
deliberations, including intelligence and wisdom,
self-assuredness, interpersonal and communication skills,
courage, and inquisitiveness. Consideration will also be given
to financial management, reporting, and control expertise or
other experience that would qualify the candidate as a
financial expert under established standards, and
international experience. Consideration will be given to
assuring that the Board, as a whole, adequately reflects the
diversity of our constituencies and the communities in which we
conduct our business.
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|
|
|
Integrity and professionalism The following
are essential characteristics for each Board candidate: highest
standards of moral and ethical character and personal integrity;
independence, objectivity, and an intense dedication to serve as
a representative of the stockholders; a personal commitment to
Dells principles and values; and impeccable corporate
governance credentials.
|
www.dell.com/investor
47
Further, each candidate must be willing to commit, as well as
have, sufficient time available to discharge the duties of Board
membership and should have sufficient years available for
service to make a significant contribution to Dell over time.
Selection and Nomination Process Whenever a
vacancy occurs on the Board, the Governance and Nominating
Committee is responsible for identifying one or more candidates
to fill that vacancy, investigating each candidate, evaluating
his or her suitability for service on the Board, and
recommending a candidate to the full Board. In addition, the
committee is responsible for recommending nominees for election
or reelection to the Board at each annual meeting of
stockholders.
The Governance and Nominating Committee is authorized to use any
methods it deems appropriate for identifying candidates for
Board membership, including recommendations from current Board
members and recommendations from stockholders. The committee may
engage outside search firms to identify suitable candidates.
The Governance and Nominating Committee is also authorized to
engage in whatever investigation and evaluation processes it
deems appropriate, including a thorough review of the
candidates background, characteristics, qualities, and
qualifications and personal interviews with the committee as a
whole, one or more members of the committee, or one or more
other Board members.
In formulating its recommendation, the Governance and Nominating
Committee will consider not only the findings and conclusions of
its investigation and evaluation process, but also the current
composition of the Board; the attributes and qualifications of
serving Board members; additional attributes, capabilities, or
qualifications that should be represented on the Board; and
whether the candidate could provide those additional attributes,
capabilities, or qualifications. The committee will not
recommend any candidate unless that candidate has indicated a
willingness to serve as a director and has agreed to comply, if
elected, with the expectations and requirements of Board service.
Stockholder Recommendations Candidates
recommended by stockholders will be considered in the same
manner as other candidates. A stockholder who wishes to make
such a recommendation should complete a Director Recommendation
Form (available on our website at www.dell.com/boardofdirectors)
and submit it, along with appropriate supporting documentation
and information, to the Governance and Nominating Committee,
c/o Board
Liaison, Dell Inc., One Dell Way, Mail Stop RR1-33, Round Rock,
Texas 78682.
Each stockholder recommendation will be processed expeditiously
upon receipt of the completed Director Recommendation Form. If
the Governance and Nominating Committee determines that a
stockholder-recommended candidate is suitable for Board
membership, it will include the candidate in the pool of
candidates to be considered for nomination upon the occurrence
of the next Board vacancy or in connection with the next annual
meeting of stockholders. Stockholders who are recommending
candidates for nomination in connection with the next annual
meeting of stockholders should submit their completed Director
Recommendation Forms no later than March 1 of the year of that
meeting.
Stockholder Nominations Stockholders who wish
to nominate a person for election as a director (as opposed to
making a recommendation to the Governance and Nominating
Committee) must follow the procedures described in
Article III, Section 12 of the Bylaws, either in
addition to or in lieu of making a recommendation to the
committee. Those procedures are described under
Stockholder Proposals for Next Years
Meeting Bylaw Provisions below.
Re-Election of Existing Directors In
considering whether to recommend directors who are eligible to
stand for re-election, the Governance and Nominating Committee
may consider a variety of factors, including a directors
contributions to the Board and ability to continue to contribute
productively, attendance at Board and committee meetings, and
compliance with the Corporate Governance Principles (including
satisfying the expectations for individual directors), as well
as whether the director continues to possess the attributes,
capabilities, and qualifications considered necessary or
desirable for Board service, the results of the annual Board
self-evaluation, the independence of the director, and the
nature and extent of the directors non-Dell activities.
www.dell.com/investor
48
Stockholder
Proposals for Next Years Meeting
Bylaw Provisions In accordance with
Dells Bylaws, a stockholder who desires to present a
proposal for consideration at next years annual meeting
(which is currently scheduled for July 18, 2008) must
submit the proposal no later than the close of business on
May 19, 2008. The submission should include the proposal
and a brief statement of the reasons for it, the name and
address of the stockholder (as they appear in our stock transfer
records), the number of Dell shares beneficially owned by the
stockholder, and a description of any material direct or
indirect financial or other interest that the stockholder (or
any affiliate or associate) may have in the proposal. Proposals
should be addressed to Corporate Secretary, Dell Inc., One Dell
Way, Mail Stop RR1-33, Round Rock, Texas 78682.
Inclusion in Next Years Proxy Statement
A stockholder who desires to present a proposal for
inclusion in next years proxy statement must deliver the
proposal to our principal executive offices no later than the
close of business on February 1, 2008. Submissions should
be addressed to Corporate Secretary, Dell Inc., One Dell Way,
Mail Stop RR1-33, Round Rock, Texas 78682, and should comply
with all applicable Securities and Exchange Commission rules.
Presentation at Meeting For any proposal that
is not submitted for inclusion in next years proxy
statement, but is instead sought to be presented directly at
next years annual meeting, Securities and Exchange
Commission rules permit management to vote proxies in its
discretion if (a) we receive notice of the proposal before
the close of business on April 25, 2008, and advise
stockholders in next years proxy statement about the
nature of the matter and how management intends to vote on such
matter, or (b) we do not receive notice of the proposal
prior to the close of business on April 25, 2008.
Section 16(a)
Beneficial Ownership Reporting Compliance
In December 2006, Joan Hooper, former chief accounting officer,
inadvertently failed to timely report the withholding of
870 shares to settle the withholding taxes on a vesting of
restricted shares on December 27, 2006. The report was
filed on January 3, 2007, two days after the deadline.
Related
Party Transactions
We purchase services, supplies, and equipment in the normal
course of business from many suppliers and sell or lease
products and services to many customers. In some instances,
these transactions occur with companies with which members of
our Board of Directors have relationships as directors or
executive officers. For Fiscal 2007, none of these transactions
was material, either individually or collectively.
Certain of our executive officers own private aircraft, either
outright or through fractional share ownership arrangements.
Under our executive travel policy, which has been approved by
the Leadership Development and Compensation Committee of the
Board of Directors, we reimburse certain executive officers for
the cost of using their private aircraft while traveling on Dell
business. Our reimbursement covers variable costs, plus a pro
rata portion of the management fees, attributable to the
executives Dell business travel, but does not cover any
depreciation or other reimbursement for capital costs or
purchase price. During Fiscal 2007, we reimbursed the following
executive officers (or wholly-owned entities through which they
own their aircraft) the following amounts:
|
|
|
|
|
|
|
Executive
Officer
|
|
Reimbursement
Amount
|
|
|
|
|
Mr. Dell
|
|
$
|
1,861,356
|
|
Mr. Parra
|
|
|
206,423
|
|
Mr. Rollins
|
|
|
2,489,321
|
|
Mr. Schneider
|
|
|
199,294
|
|
|
|
|
|
|
|
The Audit Committee of the Board of Directors, pursuant to its
written charter, is charged with the responsibility of reviewing
and approving or ratifying any transaction required to be
disclosed as a related party transaction under
applicable law, rules, or regulations, including the rules and
regulations of the Securities and Exchange Commission. The Audit
Committee has not adopted any specific procedures for conducting
such reviews and considers each transaction in light of the
specific facts and circumstances presented. Other than as
described above, no such transactions occurred during Fiscal
2007 that were submitted to the Audit Committee for approval as
a related party transaction.
www.dell.com/investor
49
We maintain a Code of Conduct (entitled Winning with
Integrity) that is applicable to all of our employees
worldwide, including the Chief Executive Officer, the Chief
Financial Officer and the Chief Accounting Officer. That Code of
Conduct, which satisfies the requirements of a code of
ethics under applicable Securities and Exchange Commission
rules, contains written standards that are designed to deter
wrongdoing and to promote honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of
interest; full, fair, accurate, timely, and understandable
public disclosures and communications, including financial
reporting; compliance with applicable laws, rules, and
regulations; prompt internal reporting of violations of the
code; and accountability for adherence to the code. A copy of
the Code of Conduct is posted on our website at
www.dell.com/codeofconduct.
We will post any waivers of the Code of Conduct or amendments to
the Code of Conduct that are applicable to our Chief Executive
Officer, Chief Financial Officer, or Chief Accounting Officer on
our website at www.dell.com/codeofconduct.
For at least ten days prior to the meeting, a list of the
stockholders entitled to vote at the annual meeting will be
available for examination, for purposes germane to the meeting,
during ordinary business hours at our principal executive
offices. The list will also be available for examination at the
meeting.
Stockholders
Sharing the Same Last Name and Address
We are sending only one copy of the 2007 annual meeting
materials to stockholders who share the same last name and
address, unless they have notified us that they want to continue
receiving multiple packages. This practice, known as
householding, is intended to eliminate duplicate
mailings, conserve natural resources, and help us reduce our
printing and mailing costs.
If you received a householded mailing this year and you would
like an additional copy of our Proxy Statement or our Annual
Report on
Form 10-K
mailed to you, we will deliver a copy promptly upon your request
in one of the following manners:
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|
|
|
|
Email Dells Investor Relations department at Investor
Relations@dell.com
|
|
|
|
Send your request by mail to Dell Inc., Investor Relations, One
Dell Way, Round Rock, Texas 78682
|
|
|
|
Call Dell Investor Relations at
(512) 728-7800.
|
You may also download a copy of any of these materials at
www.dell.com/investor.
To opt out of householding for future mailings, you should mark
the No box next to the householding election when
you vote your proxy, or notify us using the above contacts for
the Dell Investor Relations Department in one of the manners
described above.
If you received multiple copies of the annual meeting material
and would prefer to receive a single copy in the future, please
mark the Yes box next to the householding election
when you vote your proxy.
Householding for bank and brokerage accounts is limited to
accounts within the same bank or brokerage firm. For example, if
you and your spouse share the same last name and address, and
you and your spouse each have two accounts containing Dell stock
at two different brokerage firms, your household will receive
two copies of our annual meeting materials one from
each brokerage firm.
Annual
Report on
Form 10-K
Our Fiscal 2007 Annual Report on
Form 10-K
(with exhibits) is available at the website maintained by the
Securities and Exchange Commission (www.sec.gov). In addition,
the report (without exhibits) is available at our website
(www.dell.com/investor). You may submit a request for a printed
version in one of the following manners:
|
|
|
|
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Email our Investor Relations department at Investor
Relations@dell.com
|
|
|
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Send your request by mail to Dell Inc., Investor Relations, One
Dell Way, Round Rock, Texas 78682
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|
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Call Dell Investor Relations at
(512) 728-7800
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www.dell.com/investor
50
DELL INC.
2002 LONG-TERM
INCENTIVE PLAN
Capitalized terms used herein shall have the respective
meanings ascribed to them in Section 5.1(a) below.
ARTICLE I
General
1.1 Purpose. The 2002
Long-Term Incentive Plan (the Plan)
has been established by Dell Inc., a Delaware corporation (the
Company), to attract and retain
qualified employees, consultants and directors and to motivate
them to achieve long-term goals, to provide incentive
compensation opportunities that are competitive with those of
similar companies and to further align Participants
interests with those of the Companys other stockholders
through compensation alternatives based on the Companys
common stock, as well as other performance-based compensation
alternatives, thereby promoting the long-term financial
interests of the Company and enhancing long-term stockholder
return.
1.2 Term. The Plan became
effective as of July 18, 2002 (the date on which it was
originally approved by the Companys stockholders) (the
Effective Date), and unless the Plan
is sooner terminated by the Board, no Award shall be granted
under the plan after the tenth anniversary of the Effective Date.
ARTICLE II
Administration
and Operation
2.1 The Committee.
(a) Constitution. The Plan
will be administered by a committee of the Board (the
Committee) consisting of two or more
directors designated from time to time by the Board. Each member
of the Committee shall qualify as a Non-Employee
Director (as defined for purposes of
Rule 16b-3
under the Exchange Act), as an outside director (as
defined for purposes of Section 162(m) of the Code) and as
an independent director (as defined for purposes of
the Companys Corporate Governance Principles).
(b) Authority.
(1) The Committee shall have complete and absolute
authority to construe and interpret the Plan and Awards granted
hereunder, to establish and amend rules for Plan administration
and to make all other determinations that it deems necessary or
advisable for the effective administration of the Plan.
(2) Subject to the provisions of the Plan, the Committee
shall have complete and absolute authority to select Award
recipients, to determine the types of Awards, to establish the
terms, conditions, performance criteria, restrictions and other
provisions of Awards and to amend, modify or suspend Awards. In
making Award determinations, the Committee may take into account
the nature of services rendered by the recipient, his or her
present and potential contribution to the Companys success
and such other factors as the Committee deems relevant.
(3) In all matters relating to the Plan, the Committee
shall act in a manner that is consistent with the Companys
certificate of incorporation and by-laws and all applicable
laws. The decisions and determinations of the Committee shall be
made in accordance with its judgment as to the best interests of
the Company and its stockholders and in accordance with the
purposes of the Plan. All decisions relating to the Plan and any
Award shall be final and binding on all persons. No member of
the Committee shall be personally liable for any action or
determination relating to the Plan or any Award that was taken
or made in good faith.
(c) Delegation. The
Committee may delegate any or all of its authority and
responsibilities with respect to the Plan and Awards, on such
terms and conditions as it considers appropriate, to the Chief
Executive Officer or the President of the Company or to such
other members of the Companys management as it may
determine; provided, however, that determinations and decisions
regarding Awards or other benefits under the Plan to the
Executive Officers may not be delegated and shall be made by the
Committee. All
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references to Committee herein shall include those
persons to whom the Committee has properly delegated authority
and responsibility pursuant to this subsection.
2.2 Eligibility.
(a) The Eligible Recipients shall consist of (1) all
employees of the Company and its Subsidiaries, (2) all
Non-Employee Directors and (3) any consultants, independent
contractors or advisors to the Company or its Subsidiaries whom
the Committee identifies as having a direct and significant
effect on the performance of the Company or any of its
Subsidiaries. No Eligible Recipient shall be entitled to receive
any Award under the Plan unless and until such Eligible
Recipient has been designated by the Committee to be a
Participant and such Eligible Recipient has actually received
such Award. The designation of an Eligible Recipient to receive
any Award under the Plan shall not require the Committee to
designate that person to receive any other Award under the Plan.
In selecting Eligible Recipients to be Participants and in
determining the type and amount of their respective Awards, the
Committee shall consider any and all factors that it deems
relevant or appropriate.
(b) The Plan does not constitute a contract of employment
with any Eligible Recipient or Participant, and selection as a
Participant will not give any Eligible Recipient the right to be
retained in the employ of the Company or any Subsidiary or to
continue to provide services to the Company or any Subsidiary.
2.3 Withholding of
Taxes. All distributions under the Plan
(including the grant of Awards and the issuance of Stock, cash
or other consideration pursuant to an Award) are subject to
withholding of all applicable taxes, and the Committee may
condition the delivery of any Award, or the issuance of any
Stock, cash or other consideration pursuant to an Award, on the
satisfaction of applicable withholding obligations. The
Committee, subject to such requirements as it may impose, may
permit such withholding obligations to be satisfied through cash
payment by the Participant, through the surrender of shares of
Stock that the Participant already owns or through the surrender
or withholding of shares of Stock to which the Participant is
otherwise entitled under the Plan.
ARTICLE III
Shares
Available For Awards
3.1 Authorized Shares. The
number of Authorized Shares shall be 383,584,780, which was the
number of shares of Stock that, at the Effective Date, remained
available for issuance under the Companys 1994 Incentive
Plan (the 1994 Plan). In addition, any
shares of Stock underlying outstanding awards under the 1994
Plan that expire without being exercised or would otherwise
again be available for issuance under the 1994 Plan shall
constitute Authorized Shares hereunder.
3.2 Available Shares. At any
time, the number of shares that may then be issued pursuant to
Awards under the Plan (the Available
Shares) shall be equal to the difference between
(a) the number of Authorized Shares at such time and
(b) the sum of (1) the number of shares of Stock
subject to issuance upon exercise or settlement of then
outstanding Awards and (2) the number of shares of Stock
that have been previously issued upon exercise or settlement of
outstanding Awards.
3.3 Restoration of
Shares. If Stock subject to any Award is not
issued or ceases to be issuable for any reason, including
because the Award is forfeited, terminated, expires unexercised,
is settled in cash in lieu of Stock or is exchanged for other
Awards, the shares of Stock that were subject to that Award
shall no longer be charged against the number of Authorized
Shares in calculating the number of Available Shares under
Section 3.2 and shall again be included in Available
Shares. In addition, any shares of Stock that are issued by the
Company in connection with, through the assumption of or in
substitution for outstanding awards previously granted by an
entity acquired by the Company shall not be charged against the
number of Authorized Shares in calculating the number of
Available Shares under Section 3.2.
3.4 Adjustments to Number of Authorized Shares
and Available Shares. If there is any change
in the number of outstanding shares of Stock by reason of a
stock dividend, split, spin-off, recapitalization, merger,
consolidation, combination, extraordinary dividend, exchange of
shares or other similar change, the number of Authorized Shares
and the number of Available Shares, as well as the exercise
price, the number of shares and other appropriate terms of any
outstanding Award, will be automatically adjusted to accurately
and equitably reflect the effect thereon of such change;
provided, however, that, pursuant to Section 3.6, no
fractional shares will be issued as a result of such adjustment.
The adjustments required by this Section 3.4 will
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be made by the Committee, and its determination as to what
adjustments must be made and the extent thereof will be final,
binding and conclusive.
3.5 Source of Stock. Shares
of Stock issued under the Plan may consist in whole or in part
of authorized and unissued shares or treasury shares.
3.6 No Fractional Shares. No
fractional shares shall be issued under the Plan or upon
exercise or settlement of any Award. The Committee may determine
to pay cash in lieu of any fractional share that would otherwise
be issuable or may determine to cancel such fractional share
with no payment of consideration.
3.7 Limitation on Certain Awards.
(a) The maximum number of Authorized Shares that may be
issued pursuant to Restricted Awards (as defined below) shall be
193,642,890, which is the number of shares of Stock that, at the
Effective Date, remained available for issuance as Stock
Awards under the 1994 Plan; provided, however, that this
limitation shall not apply with respect to shares of Stock
issued in connection with the exercise or settlement of an Award
other than a Restricted Award, whether or not such shares of
Stock are subject to a substantial risk of forfeiture when
issued. The term Restricted Award
means a Stock Award or a Stock Option with an exercise
price that is less than 100% of the Fair Market Value per share
of the Stock on the date of grant (provided, however, that a
Stock Option shall not be considered to be a Restricted Award if
the Participant pays or otherwise foregoes value to the Company
in an amount at least equal to the difference between the Fair
Market Value per share of Stock on the date of grant and the
exercise price).
(b) Except for Restricted Awards relating to shares in the
Unrestricted Pool (as defined below), all Restricted Awards
shall either be subject to a vesting period of three years or
more or be subject to vesting (over a period of at least one
year) that is contingent upon specified performance standards. A
Restricted Award that relates to shares in the Unrestricted Pool
may be subject to whatever vesting restriction the Committee
specifies, if any. The term Unrestricted Pool
shall mean a number of shares of Stock that is equal to
5% of the total number of Available Shares as of
December 4, 2007.
(c) No Participant shall receive in any fiscal year
(1) Stock Options to which more than 10,000,000 shares
of Stock are subject or (2) Awards (other than Stock
Options) to which more than 3,000,000 shares of Stock are
subject.
(d) No Participant shall receive in any fiscal year cash in
payment for or settlement of a Performance Unit in excess of
0.5% of the Companys aggregate consolidated operating
income (as reported on the Companys audited consolidated
financial statements) during the Vesting Years.
Vesting Years shall mean the number of
fiscal years of the Company immediately preceding the fiscal
year in which the Performance Unit vests equal to the number of
years required for vesting of the Performance Unit as set forth
in the applicable Award Agreement.
ARTICLE IV
Awards
4.1 General. Subject to the
provisions of the Plan, the Committee shall determine the type
of Award to grant to a Participant. Awards may be granted singly
or in combination with other Awards. Awards also may be made in
combination with, in replacement of, as alternatives to or as
the payment form for grants or rights under any other
compensation plan, contract or agreement of the Company.
4.2 Award Terms.
(a) Subject to the provisions of the Plan, the Committee
shall have complete and absolute authority to determine and
establish the terms and provisions of each Award, including (as
applicable) (1) the number of shares of Stock subject to
the Award, (2) the exercise price or base price per share,
(3) the vesting and exercisability schedule (including
provisions regarding acceleration of vesting and
exercisability), (4) the conditions under which the Award
is cancelled or forfeited, (5) whether the Award is
transferable and, if so, the circumstances under which such
Award may be transferred and (6) the termination and
expiration of the Awards. It shall be expressly within the
discretion of the Committee to include in any Award terms that
provide for the acceleration of vesting and lapse of
restrictions, as applicable, upon or following a
Participants death, Permanent Disability or Normal
Retirement or upon the occurrence of a Change in Control.
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(b) Notwithstanding the provisions of subsection (a)
of this Section, the following limitations shall apply to the
Committees exercise of its discretion (in addition to any
other limitations that may be contained in other provisions of
the Plan):
(1) The exercise price per share for an Incentive Stock
Option shall be not less than 100% of Fair Market Value of the
Stock on the date of grant.
(2) The exercise price per share for a Non-Qualified Option
shall not be less than 100% of the Fair Market Value of the
Stock on the date of grant unless the exercise price per share
is not less than 85% of the Fair Market Value of the Stock on
the date of grant and the Participant pays or otherwise foregoes
value to the Company in an amount at least equal to the
difference between the Fair Market Value per share of Stock on
the date of grant and the exercise price.
(3) The base price for a Stock Appreciation Right shall not
be less than 100% of the Fair Market Value of the Stock on the
date of grant unless the Stock Appreciation Right is granted
retroactively in tandem with or in substitution for a Stock
Option, in which case the base price shall not be less than the
exercise price of such tandem or replaced Stock Option.
(4) No Award (or any portion thereof) may expire more than
ten years after the date of grant, except that the Committee may
extend the expiration of an Award to no more than fifteen years
after the date of grant if necessary, appropriate or desirable
under laws, rules or regulations applicable in any foreign
jurisdiction.
4.3 Award Agreements. Each
Award will be evidenced by a written Agreement issued by the
Company and setting forth the terms, provisions and conditions
of such Award (an Award Agreement).
Each Award Agreement shall be in such form as may be specified
by the Committee and may be evidenced by an electronic
transmission (including an
e-mail or
reference to a website or other URL) sent to the recipient
through the Companys normal process for communicating
electronically with its employees. As a condition to receiving
an Award, the Committee may require the proposed Eligible
Recipient to affirmatively accept the Award and agree to the
terms, provisions and conditions set forth in the Award
Agreement by physically or electronically executing the Award
Agreement or by otherwise physically or electronically
acknowledging such acceptance and agreement. With or without
such affirmative acceptance and agreement, however, the
Committee may prescribe conditions (including the exercise or
attempted exercise of any benefit conferred by the Award) under
which the proposed Eligible Recipient may be deemed to have
accepted the Award and agreed to the terms, provisions and
conditions set forth in the Award Agreement.
4.4 Performance Based
Compensation. The Committee may designate any
Award as performance-based compensation for purposes
of Section 162(m) of the Code. Any Awards designated as
performance-based compensation shall be conditioned
on the achievement of one or more Performance Measures, and the
measurement may be stated in absolute terms or relative to
comparable companies. Notwithstanding any other provision of the
Plan, the Committee may grant an Award that is not contingent on
performance goals or is contingent on performance goals other
than the Performance Measures, so long as the Committee has
determined that such Award is not required to satisfy the
requirements for qualified performance-based
compensation within the meaning of Section 162(m) of
the Code.
4.5 Transferability of
Awards. The Committee may limit or provide
for the transferability of Awards by Participants and may grant
an Award that otherwise would be granted to an Eligible
Recipient to a permitted transferee of such Eligible Recipient.
4.6 Prohibition on
Repricing. Notwithstanding any other
provision of the Plan, the Committee shall not
reprice any Stock Option granted under the Plan if
the effect of such repricing would be to decrease the exercise
price per share applicable to such Stock Option. For this
purpose, a repricing would include a tandem
cancellation and regrant or any other amendment or action that
would have substantially the same effect as decreasing the
exercise price of outstanding Stock Options.
4.7 Prohibition on Loans to
Participants. The Company shall not loan
funds to any Participant for the purpose of paying the exercise
or base price associated with any Award or for the purpose of
paying any taxes associated with the exercise or vesting of an
Award.
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4.8 Prohibition on Reload
Provisions. No Stock Option granted under the
Plan shall contain any reload provision entitling
the Participant to the automatic grant of additional Stock
Options in connection with any exercise of the original Stock
Option.
4.9 Dividends and Dividend
Equivalents. An Award may provide the
Participant with the right to receive dividend payments or
dividend equivalent payments with respect to Stock subject to
the Award (both before and after such Stock is earned or
vested), which payments may be either made currently or credited
to an account for the Participant and may be settled in cash or
Stock, as determined by the Committee. Any such settlements, and
any such crediting of dividends or dividend equivalents or
reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited
amounts in Stock equivalents.
4.10 Settlement of
Awards. The obligation to make payments and
distributions with respect to Awards may be satisfied through
cash payments, the delivery of shares of Stock, the granting of
replacement Awards or any combination thereof, as the Committee
shall determine. Satisfaction of any such obligations under an
Award may be subject to such conditions, restrictions and
contingencies as the Committee shall determine. The Committee
may permit or require the deferral of any Award payment, subject
to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or
dividend equivalents and may include converting such credits
into deferred Stock equivalents.
4.11 Awards to Non-Employee
Directors. Non-Employee Directors shall not
be eligible to receive any Awards under the Plan other than the
Awards specified in this Section.
(a) Discretionary
Awards. The Committee may, in its discretion,
grant a Non-Qualified Option or Restricted Stock to any
Non-Employee Director; provided, however, that no Non-Employee
Director may receive Awards (not including Awards granted in
lieu of Annual Cash Retainer pursuant to subsection (b) of
this Section) covering more than 50,000 shares of Stock in
any Service Year (or, in the case of a newly-elected
Non-Employee Director, covering more than two times the annual
limit in the Service Year in which such Non-Employee Director is
first elected or appointed to the Board). Awards under this
Section are discretionary, and until the Committee grants an
Award to a Non-Employee Director, such Non-employee Director
shall not have any right or claim to any Award. The receipt of
an Award under the Plan shall not give any Non-Employee Director
any right or claim to receive any other Award under the Plan,
and the Committee or the Board may determine that any or all
Non-Employee Directors are not eligible to receive Awards under
the Plan for an indefinite period or for specified Service Years.
(b) Awards in Lieu of Annual Cash
Retainer. In addition to any Awards granted
pursuant to subsection (a) of this Section, the Committee,
in its discretion, may permit a Non-Employee Director to elect
to receive a Non-Qualified Option or Restricted Stock in lieu of
all or a portion of his or her Annual Cash Retainer for any
Service Year. If the Committee permits any such election, it, in
its discretion, shall determine the appropriate terms of such
Award (including the appropriate number of shares of Stock
subject to the Award and, in the case of a Non-Qualified Option,
the appropriate exercise price per share). Any such election, if
permitted by the Committee, shall be made in accordance with
such procedures as are adopted from time to time by the
Committee.
(c) Terms of Non-Employee Director
Awards. In connection with the grant of an
Award under this Section, the Committee, in its discretion
pursuant to Section 4.2, shall establish the terms and
provisions of such Award, subject to the following limitations
(in addition to any other applicable limitations that may be
contained in other provisions of the Plan):
(1) The exercise price per share of any Stock Option
granted pursuant to this Section shall not be less than 100% of
the Fair Market Value of the Stock on the date of grant;
(2) No Stock Option (or any portion thereof) granted
pursuant to this Section may be exercisable earlier than six
months from the date of grant; and
(3) No Restricted Stock (or any portion thereof) granted
pursuant to this Section may be transferable earlier than six
months from the date of grant.
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ARTICLE V
General
Provisions
5.1 Use of Terms.
(a) Defined Terms. As used
herein, the following terms shall have the respective meanings
indicated below:
Annual Cash Retainer means the annual cash
retainer fee, in such amount as is established from time to time
by resolution of the Board, payable to a Non-Employee Director
for his or her services as a director of the Company.
Authorized Shares means the aggregate number
of shares of Stock that may be issued pursuant to Awards under
the Plan, as specified in Section 3.1.
Available Shares has the meaning specified in
Section 3.2.
Award means an award granted under the Plan.
An Award may be in the form of Stock Options, Stock Appreciation
Rights, Stock Bonuses, Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares.
Award Agreement has the meaning specified in
Section 4.3.
Board means the Board of Directors of the
Company.
Change in Control has the meaning specified
from time to time by the Committee.
Code means the Internal Revenue Code of 1986.
Committee has the meaning specified in
Section 2.1(a).
Company has the meaning specified in
Section 1.1.
Effective Date has the meaning specified in
Section 1.2.
Eligible Recipient means any person who is
eligible to receive an Award under the Plan, as specified in
Section 2.2(a).
Exchange Act means the Securities Exchange
Act of 1934.
Executive Officer means an Executive Officer
of the Company, as designated from time to time by the Board.
Fair Market Value of a share of Stock on a
particular date shall be equal to the final closing market price
of the Stock reported by The NASDAQ Stock Market or the stock
exchange composite tape on that date, or if no prices are
reported on that date, on the last preceding date on which such
prices of the Stock are so reported. If the Stock is traded over
the counter at the time a determination of Fair Market Value is
required to be made hereunder, the Fair Market Value shall be
deemed to be equal to the final closing price of Stock on the
most recent date on which Stock was publicly traded. In the
event Stock is not publicly traded at the time a determination
of Fair Market Value is required to be made hereunder, the
determination of Fair Market Value shall be made by the
Committee in such manner as it deems appropriate.
Notwithstanding the foregoing, the Committee may use any other
definition of Fair Market Value consistent with applicable tax,
accounting and other rules.
Incentive Stock Option means a Stock Option
that is intended to satisfy the requirement applicable to an
incentive stock option as that term is described in
Section 422(b) of the Code.
1994 Plan has the meaning specified in
Section 3.1.
Non-Employee Director means a member of the
Board who is not an employee of the Company or any of its
Subsidiaries.
Non-Qualified Option means a Stock Option
that is not intended to satisfy the requirement applicable to an
incentive stock option as that term is described in
Section 422(b) of the Code.
Normal Retirement has the meaning specified
from time to time by the Committee.
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Participant means any person who receives an
Award under the Plan.
Performance Measures mean (1) total
stockholder return (Stock price appreciation plus dividends),
(2) net income, (3) earnings per share,
(4) return on sales, (5) return on equity,
(6) return on assets, (7) return on invested capital,
(8) increase in the market price of Stock or other
securities, (9) revenues (10) operating income,
(11) operating margin (operating income divided by
revenues), (12) cash flow, (13) the performance of the
Company in any of the items mentioned in clause (1) through
(12) in comparison to the average performance of the
companies included in the Dow Jones Computer Index or successor
index or (14) the performance of the Company in any of the
items mentioned in clause (1) through (12) in
comparison to the average performance of the companies used in a
self-constructed peer group established before the beginning of
the period for measuring performance under an Award; and any
other performance objective approved by the stockholders of the
Company in accordance with Section 162(m) of the Code.
Performance Share is a grant of Stock subject
to the satisfaction of specified conditions or the achievement
of specified performance goals.
Performance Unit is a right to receive a cash
payment subject to the satisfaction of specified conditions or
the achievement of specified performance goals.
Permanent Disability has the meaning
specified from time to time by the Committee.
Plan has the meaning specified in
Section 1.1.
Restricted Award has the meaning specified in
Section 3.7(a).
Restricted Stock is Stock that is subject to
a risk of forfeiture or other restrictions that will lapse upon
the satisfaction of specified conditions or the achievement of
specified performance goals.
Restricted Stock Unit is a right to receive
Stock in the future, with the right to future delivery of such
Stock being subject to a risk of forfeiture or other
restrictions that will lapse upon the satisfaction of specified
conditions or the achievement of specified performance goals.
Securities Act means the Securities Act of
1933.
Service Year means the approximately annual
period commencing at an annual meeting of the Companys
stockholders and ending at the next annual meeting of the
Companys stockholders.
Stock means the common stock, $0.01 par
value per share, of the Company.
Stock Appreciation Right is a right to
receive an amount, payable in cash or shares of Stock, equal to
the excess of the Fair Market Value of a specified number of
shares of Stock on the date of exercise over a base price for
such number of shares of Stock set forth in the applicable Award
Agreement.
Stock Award is an Award consisting of
Restricted Stock, Restricted Stock Units, Performance Shares or
a Stock Bonus.
Stock Bonus is a grant of Stock that is not
subject to a substantial risk of forfeiture or other conditions.
Stock Option is a right to purchase a
specified number of shares of Stock at a specified price. A
Stock Option may be an Incentive Stock Option or a Non-Qualified
Option.
Subsidiary means any entity of which 50% or
more of the total combined voting power of all classes of
securities entitled to vote is owned, directly or indirectly, by
the Company. Notwithstanding the foregoing, the Committee may
use any other definition of Subsidiary it deems
necessary or desirable in accordance with its judgment as to the
best interests of the Company and its stockholders and in
accordance with the purposes of the Plan.
Unrestricted Pool has the meaning specified
in Section 3.7(b).
Vesting Years has the meaning specified in
Section 3.7(d).
(b) Other Definitional Provisions.
(1) Words of any gender (whether masculine, feminine or
neuter) shall be deemed to include all other genders. Words of
the singular number shall be deemed to include the plural
number, and vice versa, where applicable.
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(2) When used herein, the word including means
including, without limitation.
(3) Unless otherwise specified, references herein to
Articles or Sections shall be deemed to be references to
Articles or Sections, as applicable, of the Plan. When used
herein, the words hereof, herein and
hereunder and words of similar import shall refer to
the Plan as a whole and not to any particular provision of the
Plan.
5.2 Amendment and
Termination. The Board or the Committee may
at any time and in any way amend, suspend or terminate the Plan
or any Award granted under the Plan; provided, however, that no
such amendment, suspension or termination may materially impair
any Award then outstanding without the consent of the holder of
such Award; and provided further, however, that without the
requisite vote of the Companys stockholders, no amendment
to the Plan may increase the number of shares available for
issuance under the Plan or modify any of the limitations
described in Section 3.7, 4.2(b), 4.6, 4.7 or 4.8 in such a
manner as to materially reduce such limitation.
5.3 Liability of the
Company. By accepting any benefits under the
Plan, each Participant and each person claiming under or through
such Participant shall be conclusively deemed to have indicated
acceptance and ratification of, and consented to, any action
taken or made under the Plan by the Company, the Board, the
Committee or any other committee appointed by the Board. No
Participant or any person claiming under or through a
Participant shall have any right or interest, whether vested or
otherwise, in the Plan or in any Award hereunder, contingent or
otherwise, unless and until such Participant shall have complied
with all of the terms, conditions and provisions of the Plan and
the Award Agreement relating thereto. Neither the Company, its
directors, officers or employees, nor any Subsidiary, shall be
liable to any Participant or other person if it is determined
for any reason by the Internal Revenue Service or any court
having jurisdiction that any Incentive Stock Option granted
hereunder does not qualify for tax treatment as an incentive
stock option under Section 422 of the Code. Neither the
Company, the Board nor the Committee shall be required to give
any security or bond for the performance of any obligation which
may be created by the Plan.
5.4 Unfunded Plan. Insofar
as it provides for Awards, the Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to
Participants who are granted Awards, any such accounts will be
used merely as an administrative convenience. Except for the
holding of Restricted Stock in escrow, the Company shall not be
required to segregate any assets that may at any time be
represented by Awards, nor shall the Plan be construed as
providing for such segregation, nor shall the Company, the Board
or the Committee be deemed to be a trustee of Stock or cash to
be awarded under the Plan. Any liability of the Company to any
Participant with respect to an Award shall be based solely upon
any contractual obligations that may be created by the Plan; no
such obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property of the Company.
5.5 Rights as
Stockholder. No Award under the Plan shall
confer upon a Participant any right as a stockholder of the
Company prior to the date on which he or she fulfills all
service requirements and other conditions for receipt of shares
of Stock. If the transfer of Stock is restricted, certificates
representing such Stock may bear a legend referring to such
restrictions.
5.6 Compliance With Applicable
Laws. Notwithstanding any other provision of
the Plan or any Award Agreement, the Company shall have no
obligation to issue any shares of Stock under the Plan or
pursuant to any Award unless such issuance would comply with all
applicable laws and the applicable requirements of any
securities exchange or similar entity. Prior to the issuance of
any shares of Stock under the Plan or pursuant to an Award, the
Company may require a written statement that the recipient is
acquiring the shares for investment and not for the purpose or
with the intention of distributing the shares. The certificates
representing the shares of Stock issued pursuant to an Award
under the Plan may bear such legend or legends as the Committee
deems appropriate in order to assure compliance with applicable
securities laws and regulations.
5.7 Governing Law and
Venue. The Plan and Awards granted hereunder
(including Award Agreements evidencing such Awards) will be
governed by and construed in accordance with the laws of the
State of Delaware, United States of America, other than with
respect to choice of laws, rules and principles. Venue for any
and all disputes arising out of or in connection with the Plan,
any Award hereunder or any Award Agreement shall exclusively be
in Williamson County, Texas, United States of America, and the
courts sitting in Williamson County, Texas, United States of
America shall have exclusive jurisdiction to adjudicate such
disputes.
A-8
5.8 Foreign
Jurisdictions. To the extent that the
Committee determines that the material terms set by the
Committee or imposed by the Plan preclude the achievement of the
material purposes of the Plan in jurisdictions outside the
United States, the Committee will have the authority and
discretion to modify those terms and provide for such additional
terms and conditions as the Committee determines to be
necessary, appropriate or desirable to accommodate differences
in local law, policy or custom or to facilitate administration
of the Plan. The Committee may adopt or approve sub-plans,
appendices or supplements to, or amendments, restatements or
alternative versions of, the Plan as it may consider necessary,
appropriate or desirable, without thereby affecting the terms of
the Plan as in effect for any other purpose. The special terms
and any appendices, supplements, amendments, restatements or
alternative versions, however, shall not include any provisions
that are inconsistent with the terms of the Plan as then in
effect, unless the Plan could have been amended to eliminate
such inconsistency without further approval by the stockholders.
A-9
Admission Ticket
to the
DELL INC.
2007 Annual Meeting of Stockholders
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Date:
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December 4, 2007
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Time:
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8:00 a.m., Central Time
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Place:
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Dell Headquarters Building 1
401 Dell Way
Round Rock, Texas 78682
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Please present this ticket and proper photo identification at
the door for admission to the Dell Annual Meeting of
Stockholders.
www.dell.com/investor
Proxy Form Proxy Form
DELL INC.
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 4, 2007
AND ANY ADJOURNMkD |
ENTS OR POSTPONEMENTS THEREOF |
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF DELL INC. |
By casting your voting instructions on the reverse side, you hereby (a) acknowledge receipt of the
proxy statement related to the above-referenced meeting, (b) appoint the individuals named in such
proxy statement, and each of them, as proxies, with full power of substitution, to vote all shares
of Dell common stock that you would be entitled to cast if personally present at such meeting and
at any postponement or adjournment thereof and (c) revoke any proxies previously given. |
This proxy will be voted as specified by you. If no choice is specified, the proxy will be voted
according to the Board of Director Recommendations indicated on the reverse side, and according to
the discretion of the proxy holders for any other matters that may properly come before the meeting
or any postponement or adjournment thereof. |
OPTIONS FOR SUBMITTING PROXY |
www.dell.com
C/O PROXY SERVICES VOTE BY INTERNET www.proxyvote.com
P.O. BOX 9141 Use the Internet to transmit your voting
instructions up until 11:59 p.m. Eastern Time
on December 3, 2007. Have your proxy card in
hand when you access the website and follow the
instructions to obtain your records and create
an electronic voting instruction form.
FARMINGDALE, NY 11735-9769 |
VOTE BY PHONE 1-800-690-6903
Use any touch-tone telephone to transmit your
voting instructions up until 11:59 p.m. Eastern
Time on December 3, 2007. Have your proxy card
in hand when you call and then follow the
simple instructions. |
VOTE BY MAIL
Mark, sign and date this proxy card and return
it in the postage-paid envelope weve provided
or return it to Dell Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717. Your proxy card must
be received by December 3, 2007. |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
Proposal 1 Election of Directors For Withhold For All To withhold authority to vote for any individual,
The Board of Directors Recommends a Vote FOR all nominees All All Except: mark For All Except and write the nominees
Nominees: number on the line below.
(01) Donald J. Carty (07) Klaus S. Luft
(02) Michael S. Dell (08) Thomas W. Luce, III
(03) William H. Gray,III (09) Alex J. Mandl
(04) Sallie L. Krawcheck (10) Michael A. Miles
(05) Alan (A.G.) Lafley (11) Samuel A. Nunn, Jr.
(06) Judy C. Lewent |
Proposal 2 Ratification of Independent For Against Abstain Stockholder Proposal 1 For Against
Abstain
Auditor Executive Stockownership Guidelines
The Board of Directors Recommends a Vote FOR The Board of Directors Recommends a Vote
the Ratification of Independent Auditor AGAINST the Stockholder Proposal Relating to
Executive Stockownership Guidelines |
Proposal 3 Approval of the Amended and For Against Abstain Stockholder Proposal 2 For Against &nbs
p; Abstain
Restated 2002 Long-Term Incentive Plan Declaration of Dividend
The Board of Directors Recommends a Vote FOR The Board of Directors Recommends a Vote
the Approval of the 2002 Incentive Plan AGAINST the Stockholder Proposal Relating to
Declaration of Dividend |
Each joint owner should sign. Signatures should correspond with the names printed on this Proxy. Attorneys, executors, administrators, guardians, trustees, corporate officers or others signing in a representative
capacity should give full title.
In their discretion, the Proxies are authorized to vote on such other business as may properly come before the meeting or any postponement or adjournment thereof. |
HOUSEHOLDING ELECTION Please indicate if you consent to receive future investor
communications in a single package per household.
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Signature (PLEASE SIGN WITHIN THE BOX) Date Signature (Joint Owners) Date |