Post-Employment Obligations

In February 2006, the Company entered into change of control severance agreements with each of the Company’s NEOs other than Mr. Rembolt. The specific terms of the agreements are described in detail on page 28 of this proxy statement. The agreements were entered into with the executive officers of the Company after extensive review by the Committee and the Board and negotiation with the officers to replace previously existing employment agreements. Consideration was given to possible inclusion of severance compensation to be paid to the officers in the event of their termination of employment without cause (or for good reason) without regard to the existence of a change of control of the Company. No such provisions were included and severance compensation is payable only following a termination of employment without “cause” or for “good reason” within 2 years following a “change of control” of the Company (as the quoted terms are defined in the severance agreements). On October 14, 2008, the Board approved a change of control severance agreement for Mr. Rembolt on the same terms and conditions as are included in the agreements with the other NEOs.

The Committee believes that the change of control severance agreements help ensure the best interests of stockholders by fostering continuous employment of key management personnel. As is the case in many public companies, the possibility of an unsolicited change of control exists. The uncertainty among management that can arise from a possible change of control can result in the untimely departure or distraction of key employees. Reasonable change of control severance agreements reinforce continued attention and dedication of executives to their assigned duties and support the Compensation Committee’s objective of retaining high quality executives.

Overall Reasonableness of Compensation

The Committee believes that the Company is achieving its compensation objectives and in particular, rewards executive officers for driving operational success and stockholder value creation. Based on reviews of tally sheets and a pay-for-performance analysis by the Committee, and in light of the Company’s compensation objectives, the Compensation Committee and the Board believe that the pay mix and target pay position relative to market for each of the NEOs are reasonable and appropriate.

Fiscal Year 2009 Compensation Decisions

In October 2008, the Committee considered peer group survey data as well as company and individual performance, and the CEO’s recommendations for other NEO compensation decisions. Based on the Committee’s analysis and review of these considerations, the Committee approved the following base salary, maximum incentive award payout and RSU grants for the NEOs:

1. The Incentive Bonus Maximum amounts represent the maximum amount of each NEO’s annual bonus opportunity under the Company’s Performance Incentive program as described in the Performance Incentive Bonus section above.
2. All RSUs provide for vesting over a period of 3 years from the grant date. 34% of the RSUs will vest on the first vesting date and 33% of the RSUs will vest on each of the second and third vesting date. Shares of the Company’s common stock equal to the number of vested RSUs will be issued as of the vesting date. The vesting date each year will be the 3^rd business day following the release of the Company’s annual earnings for the preceding fiscal year, but not later than November 15. Payment of required withholding taxes due with respect to the vesting of the RSUs, if any, will be covered through withholding of shares by the Company. The Company will issue a net number of shares for the vested RSUs after withholding shares having a value as of the vesting date equal to the required withholding tax obligation.
3. The Grant Date Fair Value of $32.46 per RSU has been determined as of the October 14, 2008 grant date based on the closing price of the Company’s shares as of October 14, 2008.
4. Mr. Noble’s fiscal year 2009 base salary and incentive bonus target amounts are converted from pounds sterling at an average annual exchange rate for fiscal year 2008 of $2.0059 per pound.

Other Considerations

Equity Grant Practices

The Company’s historical practice has been to approve annual stock option grants at the October meetings of the Committee and the Board. The exercise price for all stock option awards under the Company’s stock option plans has been equal to the price of the Company’s shares as of the date of the meetings. For fiscal year 2008 equity awards, the Committee reviewed the CEO’s recommendation for stock option grants for all participating employees, including the other executive officers and the Committee presented a proposal to the Board for the grant of stock options to participant employees, including a proposal for the grant of stock options to the CEO. With input from the full Board, the Committee approved the award of stock options to all employees, including the NEOs. The grant exercise price for the options was set at the closing price for the Company’s shares on the grant date. The approved pool of stock options granted to all employees was 337,340 shares for fiscal year 2008.

For fiscal year 2009, the Committee recommended an award of 79,084 restricted stock units (“RSUs”) to participant employees under the Company’s 2007 Stock Incentive Plan approved by stockholders at the 2007 Annual Meeting. Information relating to the decision to award RSUs instead of stock options is provided in the Equity Compensation section above.

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