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SEC Filings
QLOGIC CORP filed this Form DEF 14A on 07/23/1996
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<PAGE>   13
1934, as amended (the "Exchange Act"), that might incorporate future filings,
including this Proxy Statement, in whole or in part, this report and the graph
which follows this report shall not be incorporated by reference into any such
filings, and such information shall be entitled to the benefits provided in Item
     The Compensation Committee reviews the performance of the executives of the
Company, makes recommendations to the Board of Directors as to the compensation
of the executives of the Company and its subsidiaries and reviews the
compensation programs for other key employees, including salary and cash
incentive payment levels and stock awards under the QLogic Corporation Stock
Awards Plan.
     Compensation Policies and Philosophy. The Company's executive compensation
policies are designed to attract, retain and reward executives who contribute to
the Company's success, to provide economic incentives for executives to achieve
the Company's business objectives by linking the executives' compensation to the
performance of the Company, to strengthen the relationship between executive pay
and stockholder value and to reward individual performance. The Company uses a
combination of base salary, cash incentive payments and stock awards to achieve
the aforementioned objectives.
     In carrying out these objectives, the Compensation Committee considers a
number of factors which include the level and types of compensation paid to
executives in similar positions by comparable companies. In addition, the
Compensation Committee evaluates corporate performance by looking at factors
such as performance relative to competitors, performance relative to business
conditions, and the success of the Company in meeting its financial objectives.
The Compensation Committee also reviews the individual performance of each
executive, including a review of the ability of a given executive to meet
individual performance objectives, demonstration of job knowledge and skills,
and the ability to work with others toward the achievement of the Company's
     Components of Compensation. Executives' salaries are established in
relation to a range of salaries for comparable positions among a peer group of
other computer companies of comparable size and complexity. The Company seeks to
pay its executives salaries that are commensurate with the qualifications,
duties and responsibilities and that are competitive in the marketplace. In
general, the Company attempts to set executive compensation between the 50th and
75th percentile of salaries paid to executives of the Company's peer group of
corporations. In making its annual salary recommendations, the Compensation
Committee looks at the Company's financial position and performance, the
contribution of the individual executive during the prior fiscal year in helping
to meet the Company's financial and business objectives as well as the
executives' performance of their individual responsibilities.
     Executives' annual cash incentive payments are used to provide executives
with financial incentives to meet annual performance targets of the Company or
its operating divisions. Performance targets and cash incentive payment
recommendations for executives other than principal executives are proposed by
the management of the Company's principal operating divisions, reviewed and,
when appropriate, revised by the Compensation Committee and approved by the
Board of Directors. Personal goals and cash incentive payment recommendations
for the principal executives of the Company are recommended by the Compensation
Committee and approved by the Board.
     The Compensation Committee believes that equity ownership by executives
provides incentives to build stockholder value and align the interests of
executives with the stockholders. Upon hiring executives, the Compensation
Committee typically recommends stock option or stock awards grants to the
officers under the QLogic Corporation Stock Awards Plan, subject to applicable
vesting periods. Thereafter, the Compensation Committee periodically considers
awarding additional grants under the QLogic Corporation Stock Awards Plan. The
Compensation Committee believes that these additional grants provide incentives
for executives to remain with the Company. Stock options and awards generally
have value only if the price of the Company's common stock increases over the
exercise or grant price. The size of options or awards is usually based upon
factors such as comparable equity compensation offered by other computer
companies, the seniority of the executive and the contribution that the
executive is expected to make to the Company. In determining the size of the
periodic grants, the Compensation Committee considers prior grants to the
executive, the executive's

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