DEF 14A
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. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
PRG-SCHULTZ INTERNATIONAL, 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):
þ |
|
No fee required. |
|
o |
|
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
|
1) |
|
Title of each class of securities to which transaction applies:
|
|
|
2) |
|
Aggregate number of securities to which transaction applies:
|
|
|
3) |
|
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):
|
|
|
4) |
|
Proposed maximum aggregate value of transaction:
|
|
|
5) |
|
Total fee paid:
|
o |
|
Fee paid previously with preliminary materials. |
|
o |
|
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. |
|
1) |
|
Amount Previously Paid:
|
|
|
2) |
|
Form, Schedule or Registration Statement No.:
|
|
|
3) |
|
Filing Party:
|
|
|
4) |
|
Date Filed:
|
PRG-SCHULTZ INTERNATIONAL, INC.
600 GALLERIA PARKWAY
SUITE 100
ATLANTA, GA 30339
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 27, 2009
TO THE SHAREHOLDERS OF
PRG-SCHULTZ INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of PRG-SCHULTZ INTERNATIONAL,
INC. (the Company) will be held at the Companys offices, 600 Galleria Parkway, Atlanta, Georgia
30339, on May 27, 2009 at 3:00 p.m., for the following purposes:
|
1. |
|
To elect two Class I directors to serve until the Annual Meeting of
Shareholders to be held in 2012 or until their successors are elected and qualified; |
|
|
2. |
|
To ratify BDO Seidman, LLP as our independent registered public accounting firm
for the fiscal year 2009; and |
|
|
3. |
|
To transact such other business as may properly come before the meeting or any
adjournments thereof. |
The proxy statement is attached. Only record holders of the Companys common stock at the
close of business on April 15, 2009 will be eligible to vote at the meeting.
If you are not able to attend the meeting in person, please complete, sign, date and return
your completed proxy in the enclosed envelope. If you attend the meeting, you may revoke your
proxy and vote in person. However, if you are not the registered holder of your shares you will
need to get a proxy from the registered holder (for example, your broker or bank) in order to
attend and vote at the meeting.
|
|
|
|
|
|
By Order of the Board of Directors:
|
|
|
/s/ Patrick G. Dills |
|
|
Patrick G. Dills, Chairman |
|
|
April 23, 2009
A copy of the Companys Annual Report on Form 10-K for the year ended December 31, 2008 is
enclosed with this notice and proxy statement.
TABLE OF CONTENTS
PRG-SCHULTZ INTERNATIONAL, INC.
600 GALLERIA PARKWAY
SUITE 100
ATLANTA, GA 30339
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
May 27, 2009
GENERAL INFORMATION
The Board of Directors of PRG-Schultz International, Inc. (which we refer to in this proxy
statement as PRG-Schultz, the Company, we, us or our) is furnishing you this proxy
statement to solicit proxies on its behalf to be voted at the 2009 Annual Meeting of Shareholders.
The annual meeting will be held on Wednesday, May 27, 2009, at 3:00 p.m., at the Companys offices,
600 Galleria Parkway, Atlanta, Georgia 30339. The proxies may also be voted at any adjournments or
postponements of the meeting.
This proxy statement and the accompanying form of proxy are first being mailed to shareholders
on or about April 23, 2009. You must complete and return the proxy in order for your shares of
common stock to be voted.
Any shareholder who has given a proxy may revoke it at any time before it is exercised at the
meeting by:
|
|
|
delivering to the Secretary of the Company a written notice of revocation dated
later than the date of the proxy; |
|
|
|
|
executing and delivering to the Secretary a subsequent proxy relating to the same shares; or |
|
|
|
|
attending the meeting and voting in person, unless you are a street name holder
without a legal proxy, as explained below. Attending the meeting will not in and of
itself constitute revocation of a proxy. |
Shareholders who hold shares in street name (e.g., in a bank or brokerage account) must obtain a
legal proxy form from their bank or broker in order to attend and vote at the meeting. You will
need to bring the legal proxy with you to the meeting, or you will not be able to attend or vote at
the meeting.
All communications to the Secretary should be addressed to the Secretary at the Companys
offices, 600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339. Any proxy which is not revoked
will be voted at the annual meeting in accordance with the shareholders instructions. If a
shareholder returns a properly signed and dated proxy card but does not mark any choices on one or
more items, his or her shares will be voted in accordance with the recommendations of the Board of
Directors as to such items. The proxy card gives authority to the proxy holders to vote shares in
their discretion on any other matter properly presented at the annual meeting.
The Company will pay all expenses in connection with the solicitation of proxies, including
postage, printing and handling and the expenses incurred by brokers, custodians, nominees and
fiduciaries in forwarding proxy material to beneficial owners. In addition to solicitation by
mail, solicitation of proxies may be made personally or by telephone, facsimile or other means by
directors, officers and employees of the Company and its subsidiaries. Directors, officers and
1
employees of the Company will receive no additional compensation for any such further
solicitation. The Company may also engage a proxy solicitation firm to assist in the solicitation.
The fee to be paid for such services is estimated not to exceed $10,000 plus reasonable out of
pocket expenses.
Voting Requirements
Only holders of record of the Companys common stock at the close of business on April 15,
2009 (the Record Date) are entitled to notice of, and to vote at, the annual meeting. Holders on
the Record Date are referred to as the Record Holders in this discussion. On the Record Date,
the Company had outstanding a total of 22,068,725 shares of common stock. Each share of common
stock will have one vote per share held.
In order to constitute a quorum with respect to each matter to be presented at the annual
meeting, there must be present, in person or by proxy, a majority of the total votes entitled to be
cast by Record Holders of the common stock.
With respect to Proposal 1 regarding the election of Class I directors, assuming a quorum, the
two candidates receiving a plurality of the votes cast by the Record Holders of the common stock,
will be elected Class I directors. Under plurality voting, assuming a quorum is present, the two
candidates receiving the most votes will be elected, regardless of whether they receive a majority
of the votes cast. Abstentions and broker non-votes will have no effect on the outcome.
With respect to Proposal 2 regarding approval of the 2009 independent registered public
accounting firm, ratification of this appointment requires that a quorum be present and that more
shares vote for than against it. Abstentions and broker non-votes will have no effect on the
outcome.
Votes cast by proxy or in person at the annual meeting will be counted by the person or
persons appointed by the Company to act as inspector(s) of election for the meeting. Prior to the
meeting, the inspector(s) will sign an oath to perform their duties in an impartial manner and to
the best of their abilities. The inspector(s) will ascertain the number of shares outstanding and
the voting power of each of such shares, determine the shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots and perform certain other duties as
required by law.
It is expected that shares owned by current executive officers and directors of the Company
will be voted in favor of the nominees for director that have been recommended by the Board and in
favor of the other proposals. As of April 15, 2009, shares owned by executive officers and
directors of the Company and entitled to vote at the annual meeting represented in the aggregate
approximately 22.53% of the shares of common stock outstanding on that date.
Any other proposal not addressed herein but properly presented at the meeting will be approved
if a proper quorum is present and the votes cast in favor of it meet the threshold specified by the
Companys Articles, Bylaws and by Georgia law with respect to the type of matter presented. No
shareholders have submitted notice of intent to present any proposals at the annual meeting as
required by the Companys Bylaws.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be
Held on May 27, 2009
In accordance with rules adopted by the United Stated Securities and Exchange Commission
(SEC), the Company is also making this proxy statement and its annual report available to
stockholders electronically via the Internet. To access this proxy statement and the Companys
annual report on Form 10-K on the Internet please visit www.prgx.com/proxy.
2
PROPOSAL 1: ELECTION OF DIRECTORS
The Company currently has six directors. The Board is divided into three classes of
directors, designated as Class I, Class II and Class III. The directors in each class serve
staggered three-year terms. Shareholders annually elect directors to serve for the three-year term
applicable to the class for which such directors are nominated or until their successors are
elected and qualified. At the annual meeting, shareholders will be voting to elect two directors
to serve as Class I directors. The terms of Romil Bahl and Steven P. Rosenberg, currently serving
as Class I directors, will expire at the annual meeting unless they are re-elected.
The persons named in the proxy intend to vote FOR election of all the nominees named below as
directors of the Company, unless otherwise specified in the proxy. Those directors of the Company
elected at the annual meeting to be held on May 27, 2009 to serve as Class I directors will each
serve a three-year term or until their successors are elected and qualified. Each of the nominees
has consented to serve on the Board of Directors if elected. Should any nominee become unable to
accept nomination or election, which is not anticipated, it is the intention of the persons named
in the proxy, unless otherwise specifically instructed in the proxy, to vote for the election of
such other person as the Board of Directors may nominate.
Set forth below are the name, age and director class of each director nominee and director
continuing in office following the annual meeting and the period during which each has served as a
director.
The Boards Nominees for Class I Directors are:
|
|
|
|
|
|
|
Nominee |
|
Age |
|
Service as Director |
Romil Bahl
|
|
|
40 |
|
|
Since January 2009 |
Steven P. Rosenberg (1)(2)
|
|
|
50 |
|
|
Since March 2006 |
|
|
|
(1) |
|
Member of the Audit Committee. |
|
(2) |
|
Member of the Nominating and Corporate Governance Committee. |
The Board of Directors of the Company recommends a vote FOR the election of each of the
nominees named above for election as director.
Directors Continuing in Office
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term |
|
|
Continuing Director |
|
Age |
|
Class |
|
Expires |
|
Service as Director |
Patrick G. Dills (1) (2)
|
|
|
55 |
|
|
Class II
|
|
|
2010 |
|
|
Since March 2006 |
N. Colin Lind (3)
|
|
|
53 |
|
|
Class II
|
|
|
2010 |
|
|
Since March 2006* |
David A. Cole (2)(3)
|
|
|
66 |
|
|
Class III
|
|
|
2011 |
|
|
Since July 2005 |
Philip J. Mazzilli, Jr. (1)(2)
|
|
|
68 |
|
|
Class III
|
|
|
2011 |
|
|
Since March 2006 |
|
|
|
(1) |
|
Member of the Audit Committee. |
|
(2) |
|
Member of the Compensation Committee. |
|
(3) |
|
Member of the Nominating and Corporate Governance Committee. |
|
* |
|
Mr. Lind previously served as a director of the Company from May 2002 to
October 2005. |
3
Information about Nominees for Election as Class I Directors
Romil Bahl is the Companys President and Chief Executive Officer. Prior to joining the
Company, Mr. Bahl held a number of senior leadership positions with Infosys Technologies Limited, a
publicly traded global technology and consulting services company, since April 2004. Mr. Bahl was
one of the founders and a Managing Director of Infosys Consulting, Inc., a wholly-owned subsidiary
of Infosys Technologies, and from November 2007 until January 2009, he led Infosys global Systems
Integration business unit. Prior to joining Infosys in 2004, Mr. Bahl led the global Consulting
Services business of EDS and between 1995 and 2002 he held a number of senior roles at the
management consulting firm of A.T. Kearney, last serving as the leader of the firms European
Strategic Technology and Transformation Practice based in London. From 1992 to 1995, Mr. Bahl
served in a number of roles at Deloitte Consulting.
Steven P. Rosenberg is President of SPR Ventures, Inc., a private investment company he
founded in 1997 and President of SPR Packaging LLC. From 1992 to 1997 he was President of the
Arrow subsidiary of ConAgra Foods Inc., a packaged food company. Mr. Rosenberg also serves as a
director of Texas Capital Bancshares, Inc., a bank holding company, and Cinemark Holdings, Inc., a
motion picture exhibition company.
Information about the Class II Directors whose Terms will Expire at the 2010 Annual Meeting of
Shareholders
Patrick G. Dills is Chairman of the Board of MSC Care Management, a nationwide leader in the
delivery of medical products and services to the workers compensation industry. MSC Care
Management is a successor, as of June 2008, to certain of the business interests and assets of
Medical Services Company, where Mr. Dills was also Chairman of the Board. Prior to joining Medical
Services Company in 2006, Mr. Dills served from 1988 to 2005 in several executive roles at First
Health Group Corp., which was acquired by Coventry Health Care in 2005. Mr. Dills last position
with First Health Group was Executive Vice President. He was also President of two wholly owned
subsidiaries of First Health Group, CCN and Health Net Plus, from 2001 to 2005 and 2003 to 2005,
respectively. Mr. Dills also served as Interim President and Chief Executive Officer of PRG-Schultz
from December 1, 2008 to January 21, 2009.
N. Colin Lind is the Managing Partner of Blum Capital Partners, L.P. (Blum L.P.), a public
strategic block and private equity investment firm he joined in 1986 which is currently responsible
for managing over $2 billion in assets. Mr. Lind previously served as a director of four public
and eight private companies.
Information about the Class III Directors whose Terms will Expire at the 2011 Annual Meeting of
Shareholders
David A. Cole is the retired Chairman of the Board and Chief Executive Officer of Kurt Salmon
Associates, Inc. (KSA), an international management consulting firm serving the retail, consumer
products and health care industries. He was appointed president of KSA in 1983, served as its
chief executive officer from 1988 through 1998 and served as its chairman from 1988 to 2001. Mr.
Cole currently serves as a director of AMB Property Corporation, a global owner and operator of
industrial real estate, and as a director of Americorp Holdings, Inc., a privately held operator of
healthcare clinics. Mr. Cole also currently serves on the Deans Advisory Council of Goizueta
Business School at Emory University.
Philip J. Mazzilli, Jr. is a financial and general business consultant. From 2000 to 2003 he
was Executive Vice President and Chief Financial Officer of Equifax Corporation, an international
provider of consumer credit information and information database management. From 1999 to 2000 he
was Executive Vice President and Chief Financial Officer of Nova Corporation, a payment services
company.
Messrs. Patrick G. Dills, N. Colin Lind, Philip J. Mazzilli, Jr., and Steven P. Rosenberg were
previously selected for appointment to the Board by the previous Board in consultation with the Ad
Hoc Bondholders Committee pursuant to a restructuring support agreement which was entered into
with the Ad Hoc Bondholders Committee in furtherance of the Companys restructuring and exchange
offer which closed on March 17, 2006 (the Restructuring Support Agreement). As a result of the
completion of the restructuring and exchange offer, the terms of the Restructuring Support
Agreement
4
are no longer in effect. Mr. Rosenberg was re-elected to the Board by the shareholders at the
2006 annual meeting. Messrs. Dills and Lind were re-elected to the Board by the shareholders at
the 2007 annual meeting, and Mr. Mazzilli was re-elected to the Board by the shareholders at the
2008 annual meeting.
Blum L.P., pursuant to its Investor Rights Agreement with the Company, as amended (the
Investor Rights Agreement), has the right to name one nominee for election to the Board. This
right is currently satisfied by the election at the 2007 annual meeting of Mr. Lind to a three-year
term as a Class II director. Also pursuant to the Investor Rights Agreement, Blum L.P. has the
right to designate an observer to attend the Companys Board meetings.
5
PROPOSAL 2: RATIFY THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Our Board of Directors, upon the recommendation of our Audit Committee, has appointed BDO
Seidman, LLP (BDO Seidman) as the Companys independent registered public accounting firm for the
2009 fiscal year. A proposal will be presented at the annual meeting to ratify the appointment of
BDO Seidman as our independent registered public accounting firm for the 2009 fiscal year.
Shareholder ratification of the selection of BDO Seidman as our independent registered public
accounting firm is not required but is being presented to our shareholders as a matter of good
corporate practice. Notwithstanding shareholder ratification of the appointment of the independent
registered public accounting firm, the Audit Committee, in its discretion, may direct the
appointment of a new independent registered public accounting firm if the Audit Committee believes
that such a change would be in our best interests and the best interests of our shareholders. If
the shareholders do not ratify the appointment, the Audit Committee will reconsider the appointment
of BDO Seidman. We have been advised that a representative from BDO Seidman will be present at the
annual meeting, will be given an opportunity to speak, and will be available to answer appropriate
questions.
The Board of Directors recommends a vote FOR approval to ratify the appointment of the 2009
independent registered public accounting firm.
6
INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD OF DIRECTORS
Independence
The Board of Directors has evaluated the independence of each Board member and has determined
that the following directors, which constitute a majority of the Board, are independent in
accordance with the Nasdaq and SEC rules governing director independence: Messrs. Cole, Dills,
Lind, Mazzilli and Rosenberg.
Meetings of the Board of Directors and Attendance at the Annual Meeting of Shareholders
During 2008, there were eight meetings of the Board of Directors. Each incumbent director
attended more than 75 percent of the aggregate of all meetings of the Board of Directors held while
he was a director and any committees on which that director served.
The Board of Directors does not have a policy requiring director attendance at the annual
shareholders meeting. However, directors are encouraged to attend. All of our directors attended
the 2008 Annual Meeting of Shareholders.
Director Compensation
The following table presents information relating to total compensation of the directors for
the fiscal year ended December 31, 2008. Information with respect to the compensation of Mr.
McCurry is included below under Executive Compensation. Mr. Bahl did not join the Company until
January 2009, and as an executive officer of the Company, does not receive compensation for his
service as a director. Information regarding the compensation of Mr. Dills for his service as an
officer is included below under Executive Compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
Stock |
|
Option |
|
All Other |
|
|
Name |
|
Paid In Cash |
|
Awards(1) |
|
Awards(1) |
|
Compensation |
|
Total |
|
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
David A. Cole |
|
|
60,000 |
|
|
|
29,584 |
|
|
|
277,469 |
(2) |
|
|
|
|
|
|
367,053 |
|
Patrick G. Dills |
|
|
67,500 |
|
|
|
29,584 |
|
|
|
177,113 |
|
|
|
|
|
|
|
274,197 |
|
N. Colin Lind |
|
|
46,000 |
|
|
|
29,584 |
|
|
|
177,113 |
|
|
|
|
|
|
|
252,697 |
|
Philip J. Mazzilli, Jr. |
|
|
69,750 |
|
|
|
29,584 |
|
|
|
177,113 |
|
|
|
|
|
|
|
276,447 |
|
Steven P. Rosenberg |
|
|
55,750 |
|
|
|
29,584 |
|
|
|
177,114 |
|
|
|
|
|
|
|
262,447 |
|
|
|
|
(1) |
|
Represents the compensation expense recorded in 2008
computed in accordance with Statements of Financial Accounting
Standards No. 123R (FAS 123R), Share-Based Payment. Additional
information about assumptions used in these calculations is available
in Note 1(l) to the Companys Consolidated Financial Statements in the
Companys Form 10-K for the year ended December 31, 2008. |
|
(2) |
|
The amount included in Option Awards for Mr. Cole consists
of compensation expense associated with the options granted to all
non-employee directors in 2006, 2007, and 2008 as well as the option
granted to Mr. Cole in 2005, each of which is described in greater
detail in the narrative below. |
Each non-employee member of the Board is paid a $30,000 annual retainer for their service on
the Board. Non-employee members of Board committees are paid annual committee retainers of $12,000
for the Audit Committee, $9,000 for the Compensation Committee and $6,000 for the Nominating and
Corporate Governance Committee. Chairs of each
7
of these committees are paid supplemental annual committee retainers equal to the amount of
the applicable member retainer for the particular committee. Non-employee directors also receive
an additional $1,500 attendance fee for attendance at Board meetings and the annual meeting of
shareholders, if the annual meeting of shareholders is not held in conjunction with a Board
meeting. Effective June 1, 2008, as a result of the change to compensating directors for committee
service through the payment of an annual retainer, attendance fees are no longer paid for
attendance at meetings of the Audit Committee, the Compensation Committee or the Nominating and
Corporate Governance Committee. Directors are reimbursed for all out-of-pocket expenses, if any,
incurred in attending Board and committee meetings.
In 2005, the Company entered into a Retainer Agreement with Mr. Cole in connection with his
service as non-executive Chairman of the Board. Under the terms of the Retainer Agreement, Mr.
Cole received a non-qualified option to purchase 45,000 shares of the common stock of the Company
at an exercise price of $31.60 per share, equal to the closing price of the Companys common stock
on the Nasdaq Stock Market on July 29, 2005, as adjusted to give effect to the reverse stock split
effected in August 2006. The terms of Mr. Coles option grant are as follows: the time-vesting
tranche of his option, representing the right to purchase 15,000 shares was initially scheduled to
become exercisable on the earlier of the 2006 annual meeting of shareholders and June 30, 2006, but
was accelerated with all of the other out-of-the-money options on December 15, 2005, in order avoid
adverse accounting consequences; and the performance-vesting tranche, representing the balance of
his option, will be exercisable as follows: (a) Tier 1, representing the right to purchase 10,000
shares will become exercisable at any time after June 30, 2006 (the 2006 Vesting Date), if the
Company attains a specified target common stock trading price for 45 consecutive trading days after
the 2006 Vesting Date; (b) Tier 2, representing the right to purchase an additional 10,000 shares
will become exercisable at any time after the 2006 Vesting Date, if the Company attains a specified
target common stock trading price for 45 consecutive trading days after the 2006 Vesting Date; and
(c) Tier 3, representing the right to purchase an additional 10,000 shares, will become exercisable
at any time after the earlier of the 2007 annual meeting of shareholders and June 30, 2007 (the
2007 Vesting Date), if the Company attains a specified target common stock trading price for 45
consecutive trading days after the 2007 Vesting Date. Unless sooner terminated, the option will
expire on July 29, 2012. As of the date hereof, none of the target trading prices have been
attained and therefore, none of the performance-vesting options have vested.
In September 2006, the Board established the position of Presiding Director to oversee
meetings of the independent members of the Board. The Presiding Director was elected by the
independent members of the Board for a one year term. Patrick G. Dills served as Presiding
Director from September 2006 until December 2008. Upon Mr. Dills election as Chairman, the Board
determined that the Presiding Director position is not necessary so long as the Chairman is an
independent director.
In addition to cash compensation, the Board may grant nonqualified stock option grants or
other equity awards to the non-employee directors from time to time. On May 29, 2008, options to
purchase 12,027 shares of the Companys common stock were granted to each of the Companys
non-employee directors. The Board also granted 5,065 shares of restricted stock to each
non-employee director. All of the options have an exercise price of $9.87, the closing price of
the Companys common stock on the date of grant, and vest upon the earlier of (i) the date of the
2009 Annual Meeting of Shareholders (May 27, 2009) or (ii) May 29, 2009. The options expire on May
28, 2015. The restricted stock vests upon the earlier of (i) the date of the 2009 Annual Meeting
of Shareholders (May 27, 2009) or (ii) May 29, 2009.
Stock Ownership Guidelines
On May 29, 2008, the Nominating and Corporate Governance Committee adopted stock ownership
guidelines for non-employee directors to better align the interests of non-employee directors with
shareholders. The guidelines require non-employee directors to own shares of Company stock with a
value equal to or greater than four times the amount of the annual retainer paid to the
non-employee director for Board service. Directors have three years to achieve compliance with the
guidelines. Shares must be owned directly by the director or his immediate family residing in the
same household or in trust for the benefit of the non-employee director or his immediate family.
Restricted stock units, unvested shares of
8
restricted stock and stock options (vested or unvested) do not count toward satisfaction of
the guidelines. The Nominating and Corporate Governance Committee has authority to grant
exceptions to the guidelines in rare circumstances.
Audit Committee
The Companys Audit Committee consists of three independent directors: Messrs. Dills,
Mazzilli and Rosenberg. Mr. Mazzilli currently serves as Chairman of the Audit Committee, and the
Board has determined that Mr. Mazzilli is an audit committee financial expert, as such term is
defined in Item 407(d) of SEC Regulation S-K. The Board of Directors has determined that the
current Audit Committee members satisfy the independence criteria included in the current listing
standards for the Nasdaq Global Market and by the SEC for audit committee membership. The Audit
Committee met 12 times in 2008. The Audit Committee has sole authority to retain the Companys
independent registered public accounting firm and reviews the scope of the Companys annual audit
and the services to be performed for the Company in connection therewith. The Audit Committee also
formulates and reviews various Company policies, including those relating to accounting practices
and the internal control structure of the Company, and the Companys procedures for receiving and
investigating reports of alleged violations of the Companys policies and applicable regulations by
the Companys directors, officers and employees. The Audit Committee also reviews and approves any
related party transactions. The Board has adopted a written Audit Committee Charter which is
available at the Companys website address: www.prgx.com or upon written request to the Secretary
of the Company at 600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339. See Report of the
Audit Committee.
Audit Committee Pre-Approval Policies and Procedures. Each engagement of the Companys
principal accountants for audit and non-audit related services and its associated projected fees is
approved by the Audit Committee in advance of such engagement.
Compensation Committee
The Companys Compensation Committee consists of three independent directors: Messrs. Cole,
Dills and Mazzilli. Mr. Dills is Chairman of the Compensation Committee. The Board of Directors
has determined that each of the Compensation Committee members is independent based on the current
listing standards for the Nasdaq Global Market.
The Compensation Committee held nine meetings in 2008. The Compensation Committee determines
the compensation of the executive officers of the Company. The Compensation Committee also
administers the Companys benefit plans, including the 2008 Equity Incentive Plan, the Stock
Incentive Plan, the Performance Bonus Plan, and the 2006 Management Incentive Plan and makes
recommendations to the Nominating and Corporate Governance Committee regarding director
compensation. All rights to determine awards of stock-based compensation to individuals who file
reports pursuant to Section 16 of the Securities Exchange Act of 1934 (the Exchange Act) are
determined by the Compensation Committee, each member of which is a nonemployee director, as such
term is defined in Rule 16b-3 promulgated pursuant to the Exchange Act. Messrs. Cole and Mazzilli
are outside directors, as such term is defined in the regulations promulgated pursuant to Section
162(m) of the Internal Revenue Code of 1986 (the Code). Due to his service as Interim CEO and
President of the Company from December 1, 2008 to January 21, 2009, Mr. Dills does not meet the
definition of an outside director under Section 162(m) of the Code. Therefore, Mr. Dills will
abstain from voting on Compensation Committee matters which may be deemed to be performance-based
and intended to meet the requirements of Section 162(m). The Compensation Committees charter
requires that all members of the Committee shall be independent from the Company and that at least
two members shall satisfy the definition of nonemployee director described above. The
Compensation Committee Charter is available at the Companys website address: www.prgx.com and
upon written request to the Secretary at 600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339.
For information regarding the Companys 2008 executive compensation, see Compensation Discussion
and Analysis.
9
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee (NCG Committee) consists of three
independent directors: Messrs. Cole, Lind and Rosenberg. The Board of Directors has determined
that each of the NCG Committee members is independent based on the listing standards for the Nasdaq
Global Market. Mr. Cole serves as Chairman of the NCG Committee. The NCG Committee met three
times in 2008. The NCG Committee has the responsibility to consider and recommend nominees for the
Board of Directors and its committees, to oversee review and assessment of the performance of the
Board, set Board compensation, and monitor and recommend governance principles and guidelines for
adoption by the Board.
Since February 2003, the NCG Committee has been delegated the responsibility for evaluating
current Board members at the time they are considered for re-nomination. After considering the
appropriate skills, expertise and experience needed on the Board, the independence, expertise,
experience, skills and performance of the current membership of the Board, and the willingness of
Board members whose terms are expiring to be re-nominated, the NCG Committee recommends to the
Board whether those directors should be re-nominated.
In preparation for the annual meeting, the NCG Committee considers whether the Board would
benefit from adding a new member, and if so, the skills, expertise and experience to be sought with
the new member. If the Board determines that a new member would be beneficial, the NCG Committee
sets the qualifications for the position and conducts a search to identify qualified candidates.
Such search may utilize the services of an executive search firm that would receive a fee for its
services. The NCG Committee (or its Chairman) screens the available information about the
potential candidates. Based on the results of the initial screening, interviews with the viable
candidates are scheduled with NCG Committee members, other members of the Board and senior members
of management. Upon completion of these interviews and other due diligence, the NCG Committee may
recommend to the Board the election or nomination of a candidate. All potential candidates,
regardless of whether they are developed through the executive search firm or otherwise, are
reviewed and evaluated under the same process.
When an executive search firm is engaged, using the desired qualifications identified by the
NCG Committee, the search firm performs research to identify and qualify potential candidates,
contacts such qualified candidates to ascertain their interest in serving on the Companys board,
collects resumes and other data about the interested candidates and recommends candidates for
further consideration by the NCG Committee.
The NCG Committee has no set minimum criteria for selecting Board nominees, although its
preference is that a substantial majority of all non-executive directors possess the qualifications
of independence that satisfy the listing standards established for companies listed on the Nasdaq
Global Market; significant leadership experience at the corporate level in substantial and
successful organizations; relevant, but non-competitive, business experience; the ability and
commitment to devote the time required to fully participate in Board and committee activities;
strong communication and analytical skills; and a personality that indicates an ability to work
effectively with the other members of the Board and management. In any given search, the NCG
Committee may also define particular characteristics for candidates to balance the overall skills
and characteristics of the Board with the perceived needs of the Company. The NCG Committee
believes that it is necessary for at least one independent Board member to possess significant
operational experience, and at least one with financial expertise. However, during any search the
NCG Committee reserves the right to modify its stated search criteria for exceptional candidates.
The NCG Committee will also consider nominating candidates recommended by shareholders. Such
recommendations will only be considered by the NCG Committee if they are submitted to the NCG
Committee in accordance with the requirements of the Companys Bylaws and accompanied by all the
information that is required to be disclosed in connection with the solicitation of proxies for
election of director nominees pursuant to Regulation 14A under the Exchange Act, including the
candidates written consent to serve as director, if nominated and elected. To be considered by
the NCG Committee, shareholder recommendations for director nominees to be elected at the 2010
Annual Meeting of Shareholders, together with the requisite consent to serve and proxy disclosure
information in written form,
10
must be received by Victor A. Allums, Secretary, at the offices of the Company at 600 Galleria
Parkway, Suite 100, Atlanta, Georgia 30339, no earlier than December 24, 2009 and no later than
January 23, 2010.
As of April 23, 2009, the Company had not received any shareholder recommendations of director
candidates for election at the 2009 Annual Meeting.
The NCG Committee is a standing committee of the Board and its charter is available at the
Companys website address: www.prgx.com or upon written request to the Secretary of the Company at
600 Galleria Parkway, Suite 100, Atlanta, Georgia 30339.
Shareholder Communications to the Board of Directors
In addition to recommendations for director nominees, the Board of Directors welcomes hearing
from shareholders regarding the management, performance and prospects for the Company. To
facilitate complete and accurate transmittal of shareholder communications to the directors, it is
requested that all shareholder communication to the Board or any of its members be made in writing
and addressed to the Companys Secretary, Victor A. Allums, at PRG-Schultz International, Inc., 600
Galleria Parkway, Suite 100, Atlanta, Georgia 30339. It is also helpful if the communication
specifies whether it is directed to one or more individual directors, all the members of a Board
committee, the independent members of the Board, or all members of the Board and the address to
which any reply should be addressed. On receipt, Mr. Allums will forward the communication to the
director(s) to whom it is addressed as specified by the shareholder. If the shareholder does not
specify which directors should receive the communication, Mr. Allums will distribute the
communication to all directors.
11
REPORT OF THE AUDIT COMMITTEE
The purpose of the Audit Committee is to assist the Board in its general oversight of the
Companys financial reporting, internal controls and audit functions. The Board has adopted a
written Audit Committee Charter that sets out the organization, purpose, duties and
responsibilities of the Audit Committee.
Management is responsible for the preparation, presentation and integrity of the Companys
financial statements; accounting and financial reporting principles; establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)); establishing and
maintaining internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f));
evaluating the effectiveness of disclosure controls and procedures; evaluating the effectiveness of
internal control over financial reporting; and evaluating any change in internal control over
financial reporting that has materially affected, or is reasonably likely to materially affect,
internal control over financial reporting. The Companys independent registered public accounting
firm is responsible for performing an independent audit of the consolidated financial statements
and expressing an opinion on the conformity of those financial statements with U.S. generally
accepted accounting principles, as well as expressing an opinion on the effectiveness of internal
control over financial reporting.
In fulfilling its oversight responsibilities with respect to the year ended December 31, 2008,
the Audit Committee:
|
|
|
reviewed and discussed the consolidated financial statements of the Company set
forth in the Companys Annual Report on Form 10-K for the year ended December 31,
2008 with management of the Company and BDO Seidman, LLP, independent registered
public accounting firm for the Company; |
|
|
|
|
discussed with BDO Seidman, LLP the matters required to be discussed by Statement
on Auditing Standards No. 61, Communications with Audit Committees, as modified
and supplemented to date; |
|
|
|
|
obtained a formal written statement from BDO Seidman, LLP delineating all
relationships between the auditors and the Company consistent with the applicable
requirements of the Public Company Accounting Oversight Board and discussed with the
auditors all significant relationships the auditors have with the Company which may
affect the auditors independence; and |
|
|
|
|
based on the review and discussions with management of the Company and BDO
Seidman, LLP referred to above, recommended to the Board of Directors that the
audited financial statements be included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2008. |
AUDIT COMMITTEE
Philip J. Mazzilli, Jr., Chairman
Patrick G. Dills
Steven P. Rosenberg
Notwithstanding anything to the contrary which is or may be set forth in any of the Companys
filings under the Securities Act of 1933 or the Exchange Act that might incorporate Company
filings, including this proxy statement, in whole or in part, the preceding Report of the Audit
Committee shall not be incorporated by reference into any such filings.
COMPENSATION DISCUSSION AND ANALYSIS
As discussed above under Information About the Board of Directors and Committees of the Board
of Directors, the Compensation Committee of the Board of Directors has the overall responsibility
for our executive compensation plans, policies and programs. The Compensation Committee approves
the compensation of each of our named executive officers as well as other key officers of the
Company (which is defined in the Compensation Committees charter to include the Chief Executive
Officer, those officers that directly report to the CEO, and other officers designated from time to
time by the Compensation Committee). The Compensation Committee is also responsible for
recommending to the
12
Nominating and Corporate Governance Committee the compensation and compensation plans,
policies and programs for our directors. The Compensation Committee consists of three members who
are independent directors under the Companys corporate governance guidelines and the rules of
The Nasdaq Stock Market LLC.
Executive Compensation Philosophy
We strive to establish compensation practices which attract, retain and reward our key
officers, and strengthen the mutuality of interests between our key officers and our shareholders.
We believe that the most effective executive compensation program is one that is conservative, but
competitive, and which aligns executive compensation with the creation of shareholder value. Under
the oversight of the Compensation Committee, we have developed and implemented a
pay-for-performance executive compensation program that rewards key officers for the achievement of
certain financial performance objectives. The philosophies of pay-for-performance and aligning
executive compensation with shareholder value creation are achieved primarily by providing a
substantial portion of each key officers total annual compensation through annual performance
bonuses and grants of long-term equity compensation. In each of the past three years, the
Compensation Committee established financial performance objectives for payment of target and
maximum bonuses under our Performance Bonus Plan. As further evidence of our
pay-for-performance philosophy, in September 2008, the Compensation Committee tied the vesting of
a significant portion of stock options and restricted stock granted to key officers to the
achievement of certain financial performance goals in addition to a time-vesting component. Our
2008 Performance Bonus Plan is described in greater detail below under Cash Bonus and equity
grants are described in more detail under Long-Term Equity Incentive Compensation.
Background
In the latter half of 2005 and into 2006, we undertook a significant financial and operational
restructuring with the objective of improving our operating results and strengthening our financial
condition. During this same time period, there was significant turnover among the members of our
senior management team and the Board of Directors. In connection with the financial restructuring,
we entered into a Restructuring Support Agreement with certain of our bondholders, which
contemplated that we would adopt a new equity-based management incentive plan to incentivize our
key officers, including our named executive officers, to strengthen our financial condition and
remain with the Company. This plan, the 2006 Management Incentive Plan (MIP), was approved by
our shareholders at the 2006 Annual Meeting of Shareholders. Additionally, in an effort to reward
our key officers for achieving short-term performance objectives, we also adopted a Performance
Bonus Plan (a short-term cash incentive bonus plan with annual performance goals) for our key
officers, including the named executive officers, and other key employees. A Performance Bonus
Plan has been utilized by the Company each year since 2006.
In March 2008, the performance units granted under the MIP fully vested for most of our
executive officers. In addition, since our existing long-term equity incentive compensation plan
was expiring in June 2008, the Compensation Committee approved in 2008 a new long-term equity
incentive program that provided the Compensation Committee with the ability to grant equity and
cash awards tied to the achievement of performance goals in order to further motivate our
employees, including the key officers, to continue to achieve improved operating results for the
Company. In May 2008, our shareholders approved this new plan, the PRG-Schultz International, Inc.
2008 Equity Incentive Plan (the 2008 Equity Incentive Plan). The MIP, the Performance Bonus Plan
and the 2008 Equity Incentive Plan are each discussed in more detail below.
13
Elements of the Companys Compensation Program
Our compensation program for key officers is designed to provide our key officers, including
the named executive officers, with a combination of cash (guaranteed and incentive-based) and
long-term equity incentive compensation to align the officers interests with those of our
shareholders. During 2008, our executive compensation program primarily consisted of the following
elements:
|
|
|
base salary; |
|
|
|
|
cash performance bonuses; and |
|
|
|
|
long-term equity incentive awards. |
Although the Compensation Committee has not established a policy for allocating between the
different forms of compensation, cash bonus opportunities and long-term incentive award
opportunities are generally a function of each key officers base salary. In allocating total
compensation among these various elements, the Compensation Committee strives to achieve an
appropriate mix between the different forms of compensation in order to:
|
|
|
motivate the key officers to deliver superior performance in the short-term by
providing competitive base salaries and annual cash performance bonuses; |
|
|
|
|
align the interests of the key officers with the long-term interests of the
shareholders through the grant of equity incentive compensation; and |
|
|
|
|
provide an overall compensation package that is competitive and therefore
promotes executive recruitment and retention. |
Process for Establishing Executive Compensation
Role and Use of Compensation Consultants. The Compensation Committee from time to time
engages compensation consultants to assist the Compensation Committee in making compensation
decisions. In early 2007, the Compensation Committee engaged Mercer Human Resource Consulting
(Mercer), an independent compensation consulting firm, to perform a study on executive
compensation and to evaluate and provide recommendations regarding the level of compensation for
the Companys key officers. With the assistance of Mercer, the Compensation Committee reviewed the
base salary, annual bonus and long term incentive awards for the key officers by comparing their
compensation to the compensation of a select group of 14 companies within the professional/business
services industry, including auditing, consulting and professional staffing companies. The
Compensation Committee recognized that it was challenging to identify a traditional peer group
for this study, as we operate within a niche market and have few public company competitors.
Accordingly, for analysis and comparison purposes, public companies within the industries noted
above, with annual revenues between 50% and 250% of our annual revenue, with a comparable number of
employees and certain per employee ratios, and with similar financial condition and market
capitalizations to the Company were identified. It was determined that the base salaries for our
executive team were near the 50th percentile and the total cash compensation was between
the 50th and 75th percentile for this comparison group of companies. In
addition, the Compensation Committee determined that the 2006 performance unit grants under the MIP
would likely provide adequate retention incentives for our executives for 2007. Although no
adjustments to the named executive officers base salaries or short term cash bonus opportunities
were recommended by Mercer for 2007, it was recommended that executives be granted long term
incentive awards in 2008 based on a pay strategy of achieving total direct compensation (comprised
of salary, target bonus, and target equity) at the 75th percentile of the comparison
group.
In September 2008, the Compensation Committee again engaged an independent compensation
consulting firm, Pearl Meyer & Partners (Pearl Meyer), to provide advice on executive
compensation. The Compensation Committee chose Pearl Meyer due primarily to the fact that the
individual compensation consultant who had advised the Company in prior years had joined Pearl
Meyer in 2008. Pearl Meyer presented the Compensation Committee with an analysis of the Companys
compensation program for its key officers and made certain recommendations to the Compensation
14
Committee to better align our executive compensation programs with the compensation programs
of other similarly situated companies, and to achieve greater uniformity in the terms of employment
for the Companys key officers.
Benchmarking. To assist the Compensation Committee in the review of executive compensation,
Pearl Meyer provided compensation data for a peer group of 18 publicly-traded companies consisting
primarily of professional/business services companies, including auditing, consulting, professional
staffing and healthcare industry services companies, with annual revenues ranging from
approximately $189 million to $1 billion. The peer group consisted of largely the same companies
analyzed by the Compensation Committee in 2007. However, additional companies were included in the
peer group in 2008, including three healthcare industry services companies, due to our increasing
focus on services to the healthcare industry. The companies in the peer group consist of the
following:
|
|
|
Advisory Board Company*
|
|
Huron Consulting Group, Inc. |
Analysts International Corp.
|
|
ICF International, Inc. |
CBIZ, Inc.
|
|
LECG Group* |
CRA International, Inc.
|
|
Maximus, Inc.* |
Exponent, Inc.
|
|
MedAssets, Inc.* |
FTI Consulting, Inc.
|
|
Navigant Consulting, Inc. |
GP Strategies Corp.
|
|
Portfolio Recovery Association, Inc. |
HMS Holdings Corp.*
|
|
RCM Technologies, Inc. |
Hooper Holmes, Inc.
|
|
Resources Connection, Inc. |
The Compensation Committee analyzed the compensation data of the peer group which showed that
the base salaries of our named executive officers were generally within the 50th to
75th percentile. However, in order to generally position total cash compensation
(salary plus target bonus) between the 50th and 75th percentiles and total
direct compensation near the 75th percentile when the Company is achieving targeted
financial performance, Pearl Meyer recommended that (i) the amount payable for the achievement of
the target financial performance objective under the annual performance bonus program be
increased to 50% of base salary for executive officers (other than the Chief Executive Officer) and
to 100% of base salary for the Chief Executive Officer and (ii) that annual equity grant values be
established at 200% of base salary for the Chief Executive Officer and 110% of base salary for
other executive officers. In addition, it was recommended that the Company grant multiple types of
awards under the 2008 Equity Incentive Plan in 2008 and add a performance-based vesting component
to the 2008 long-term equity-based incentive compensation awards. Based on the analysis discussed
above, the Compensation Committee decided to (i) increase the amounts payable to certain key
officers, including Messrs. Limeri, Robinson, and Roos under the Performance Bonus Plan and the
applicable employment agreements for meeting the target performance objectives, and (ii) grant to
certain key officers, including Messrs. Limeri, Robinson, and Roos, stock options subject to time
vesting and restricted stock, some of which vests with the passage of time and the rest of which
vests based on our financial performance over three years.
Compensation of the CEO. In mid 2008, James B. McCurry, our former Chairman of the Board of
Directors, Chief Executive Officer and President informed the Board of Directors of his decision to
resign from the Company by the end of 2008. The independent members of our board of directors
appointed a Search Committee, led by our Presiding Director, Patrick G. Dills, to conduct a
national search for Mr. McCurrys successor. The Search Committee interviewed numerous candidates
to fill the roles of Chief Executive Officer and President of the Company. Effective November 30,
2008, Mr. McCurry resigned as Chairman of the Board, Chief Executive Officer and President. The
Board of Directors appointed Mr. Dills, a member of our Board of Directors since March 2006 and our
Presiding Director, to serve as our interim Chief Executive Officer and interim President until the
Board of Directors appointed a new permanent Chief Executive Officer and President. At this time,
Mr. Dills was also appointed to serve as our Chairman of the Board with his service as Chairman to
extend beyond his service as an interim officer. For his service in his interim officer capacity,
15
Mr. Dills was paid a monthly salary of $35,000 in December 2008 and $45,000 in January 2009,
as determined by the Compensation Committee. After an extensive search, on January 9, 2009, the
Board of Directors announced the appointment of Romil Bahl as our new Chief Executive Officer and
President, effective January 21, 2009.
In connection with Mr. Bahls appointment as our Chief Executive Officer and President, the
Compensation Committee took into account the recommendations of Pearl Meyer and Mr. Bahls
compensation arrangement with his former employer in establishing Mr. Bahls compensation package.
The Compensation Committee reviewed compensation data regarding the compensation of other CEOs of
the Companys peer group companies and targeted Mr. Bahls base salary, annual target performance
bonus and long-term equity compensation at the 75th percentile of this peer group. Mr.
Bahls overall compensation package was established through arms length negotiations in a process
that was led by the Compensation Committee. Mr. Bahls employment agreement provides for an annual
base salary of $600,000 and that Mr. Bahl will be eligible for an annual target performance bonus
equal to 100% of his annual base salary and a maximum performance bonus equal to 150% of his annual
base salary under the Companys Performance Bonus Plan, based on the achievement of certain
performance objectives to be set by the Companys Compensation Committee.
In addition to his salary and annual performance bonus, the Compensation Committee agreed to
pay Mr. Bahl a one-time bonus in the aggregate amount of $1 million payable on the last payroll
date in July 2010, subject to Mr. Bahls continued employment at such time. Mr. Bahl also received
on January 21, 2009, the day that he joined the Company, a one-time, equity inducement grant award
of 296,296 non-qualified stock options and 344,445 shares of restricted stock, subject to
time-vesting requirements. The non-qualified stock options have a seven year term, and an exercise
price of $3.57, which was the closing price of the Companys common stock on the date of the grant.
111,111 of the non-qualified stock options and 233,334 shares of the restricted stock
(collectively, the Initial Equity) will vest in equal increments over a period of four years.
The remaining 185,185 options and 111,111 shares of restricted stock (collectively, the One-Time
Equity Awards) will vest in equal increments on the second and fourth anniversaries of the date of
the grant. The $1 million cash bonus and One-Time Equity Awards were specifically intended to
compensate Mr. Bahl for his vested cash compensation awards at his former employer that were
forfeited when he accepted the position as our Chief Executive Officer and President.
The compensation package of Mr. McCurry, our former President and Chief Executive Officer, was
essentially the same in 2008 as the package that was negotiated when Mr. McCurry joined the Company
in 2005. Mr. McCurrys 2005 base salary was set at slightly above the 50th percentile
of base salaries of CEOs in companies of comparable size, and his bonus amount was set at the
70th percentile of bonuses for CEOs in companies of comparable size. Mr. McCurrys
bonus was aligned with a higher percentile in order to overweight the performance-based portion of
Mr. McCurrys cash compensation. In connection with the negotiation of Mr. McCurrys employment
agreement in 2005, the Compensation Committee decided to eliminate the practice of providing the
Chief Executive Officer and other executive officers with certain perquisites that had historically
been provided to the Companys executive officers prior to Mr. McCurrys arrival. Mr. McCurry did
not receive any increase in his base salary in 2006, 2007 or 2008. Due to the announcement of his
resignation in 2008, Mr. McCurry also did not receive any equity grants in 2008. In connection
with his resignation, we entered into a release agreement with Mr. McCurry which superseded his
employment agreement. The terms of Mr. McCurrys release agreement are more fully described under
Employment and Severance Arrangements.
Compensation of Other Named Executive Officers. At the time of the hiring of Mr. McCurry in
2005, the Search Committee was also searching for a new Chief Financial Officer. Accordingly, in
connection with the negotiation of Mr. Limeris employment agreement in late 2005, the Compensation
Committee utilized data similar to that used in connection with the hiring of Mr. McCurry. In
connection with the hiring of Mr. White in June 2006, in order to ensure that his compensation was
properly benchmarked, the Compensation Committee reviewed survey data from the Economic Research
Institute, which provides geographic-specific survey data derived from 14,000 U.S. publicly-traded
corporations proxy statements, annual and other reports filed with the SEC (1994 to present), loan
and employment applicant earnings verifications and digitized public records. The Compensation
Committee established parameters for Mr. Whites compensation based upon benchmarks for the
business services industry by surveying companies with $250-
16
$500 million in revenue and targeting total cash compensation at the 60th
percentile of the survey data. With respect to the other named executive officers, Messrs. Roos
and Robinson, the primary components of their compensation packages were established prior to 2005;
however, annual adjustments to their compensation packages, if any, have been determined as set
forth below.
The Compensation Committee reviews the performance and compensation of our Chief Executive
Officer each year. In evaluating the compensation of the Chief Executive Officer, the Compensation
Committee considers factors such as market data regarding the compensation of other comparable
executive officers at comparable companies and the skills and relevant experience of the Chief
Executive Officer.
The Chief Executive Officer annually reviews the performance of each of our other key
officers, including the named executive officers, and makes recommendations to the Compensation
Committee regarding compensation for the other named executive officers. After taking into
consideration the recommendations of the Chief Executive Officer, the Compensation Committee then
determines the amount of compensation for our other named executive officers for the upcoming year.
With respect to these other officers, the Compensation Committee and the Chief Executive Officer
consider multiple factors in establishing the terms of their executive compensation packages,
including market data regarding the compensation of comparable executive officers at comparable
companies, the recent performance of the executive at the Company and the skills and relevant
experience of each executive.
Base Salary
The annual base salary component of the executive compensation program provides each named
executive officer with a fixed minimum amount of annual cash compensation. Salaries for our named
executive officers are generally determined through their employment agreements, subject to annual
review and adjustment by the Compensation Committee. There were no increases in the salaries of
our named executive officers in 2006 or in 2007 as the Compensation Committee determined that the
salaries for our named executive officers were appropriate in order for the Companys compensation
to remain competitive.
Although the Compensation Committee did not increase the salaries for Mr. White or Mr. Roos in
2008, the Compensation Committee increased Mr. Limeris salary from $220,000 to $260,000, effective
on March 31, 2008, based upon a review of survey data of the compensation of the chief financial
officers of public companies provided by Mercer in March of 2008. In addition, based on its
analysis of the peer group information, the Compensation Committee further increased Mr. Limeris
salary from $260,000 to $300,000, effective October 1, 2008, resulting in Mr. Limeris salary
falling slightly above the 50th percentile of salaries for other chief financial
officers in the Companys peer group. Mr. Robinsons salary was also increased in 2008 to include
certain amounts that were previously paid separately from his base salary.
17
The following table sets forth the 2008 base salaries for each of our named executive
officers:
|
|
|
|
|
Named Executive Officer |
|
Base Salary |
James B. McCurry |
|
$ |
500,000 |
* |
Peter Limeri |
|
$ |
300,000 |
** |
Bradley T. Roos |
|
$ |
323,000 |
|
Larry Robinson |
|
$ |
419,269 |
|
N. Lee White |
|
$ |
325,000 |
|
|
|
|
* |
|
Mr. McCurry resigned as
Chairman, President, and Chief Executive
Officer of the Company effective November 30,
2008. |
|
** |
|
Mr. Limeris salary set
forth in this table reflects his base salary
effective October 1, 2008. |
Cash Bonus
2008 Performance Bonus Plan. We provided cash bonus awards to certain of our senior
employees, including all of our named executive officers, through the 2008 Performance Bonus Plan.
The 2008 Performance Bonus Plan was a cash incentive program designed to recognize and reward
employees who were expected to make significant contributions towards achieving our 2008 business
plan.
Cash bonuses awarded under the 2008 Performance Bonus Plan were contingent upon our
achievement of certain 2008 financial performance objectives. Each of our named executive officers
participated in the 2008 Performance Bonus Plan. Under the terms of the 2008 Performance Bonus
Plan, no bonuses were to be earned under the plan until our consolidated 2008 adjusted EBITDA
reached a specified threshold. Adjusted EBITDA is earnings from continuing operations before
interest, taxes, depreciation and amortization, as adjusted for unusual and other significant items
that management views as distorting our operating results from period to period. If this threshold
level of adjusted EBITDA was achieved, then the participant was entitled to receive 50% of the
target bonus amount set forth in the participants employment agreement. If consolidated 2008
adjusted EBITDA reached the specified target level, then the participant was entitled to receive
the target bonus amount set forth in the participants employment agreement. If consolidated
2008 adjusted EBITDA reached the specified maximum level, then the participant was entitled to
receive the maximum bonus amount set forth in the participants employment agreement. Bonus
payouts under the 2008 Performance Bonus Plan were to be increased on a pro rata basis to the
extent that our consolidated adjusted EBITDA exceeded the minimum threshold for one bonus tier, but
did not meet the minimum threshold for the next higher bonus tier. In no event, however, were the
participants to receive a bonus that exceeded the maximum bonus amount set forth in the
participants employment agreement. The bonus amounts payable upon the achievement of the annual
target adjusted EBITDA goal and the annual maximum adjusted EBITDA goal in 2008 are set forth
as a percentage of base salary in each named executive officers employment agreement.
The annual target and maximum adjusted EBITDA goals under the 2008 Performance Bonus Plan
were established by the Compensation Committee in December 2007 after the Board of Directors
completed its annual financial planning and budgeting process. Since it is the primary measure we
use to measure and manage our operating performance, the Compensation Committee believed that
adjusted EBITDA was the most appropriate financial measure to which bonus payments under the plan
should be linked. In setting these performance objectives, the target adjusted EBITDA goal was
lowered for 2008 as compared to 2007 because our contract under the demonstration project with the
Centers for Medicare & Medicaid Services was expiring in March 2008, and we did not expect to
receive any significant
18
additional revenues from the demonstration project in 2008. However, the Compensation Committee
raised the maximum adjusted EBITDA goal for 2008, both in absolute terms and as a percentage of
the target adjusted EBITDA goal, from approximately 115% of the target goal to approximately 135%
of the target goal. For 2008, the target adjusted EBITDA goal was $35.10 million and the
maximum adjusted EBITDA goal was $47.26 million. We exceeded the target adjusted EBITDA goal
for 2008, therefore entitling the participants, including our named executive officers, to receive
annual performance bonuses under the Performance Bonus Plan.
Upon our achievement of the target and maximum adjusted EBITDA goals, our named executive
officers were entitled to receive the following bonus amounts (reflected as a percentage of base
salary) under the 2008 Performance Bonus Plan:
|
|
|
|
|
|
|
|
|
|
|
Target Bonus |
|
Maximum Bonus |
Name |
|
(% of Base Salary) |
|
(% of Base Salary) |
James B. McCurry |
|
|
70 |
% |
|
|
140 |
% |
Peter Limeri* |
|
|
50 |
% |
|
|
100 |
% |
Bradley T. Roos* |
|
|
50 |
% |
|
|
100 |
% |
Larry Robinson* |
|
|
50 |
% |
|
|
100 |
% |
N. Lee White |
|
|
40 |
% |
|
|
80 |
% |
|
|
|
* |
|
Reflects an increase from applicable percentages of 40% and 80% in 2006 and 2007. |
If the Companys performance fell between the target and maximum adjusted EBITDA goals, our
named executive officers were entitled to receive an amount between the target and maximum
bonus amounts, according to a formula established by the Compensation Committee.
Since the Company exceeded its annual target adjusted EBITDA performance goal for 2008, each
of the named executive officers earned the following bonus amounts as a result of their
participation in the 2008 Performance Bonus Plan:
|
|
|
|
|
Named Executive Officer |
|
2008 Bonus Amount |
James B. McCurry |
|
$ |
372,158 |
* |
Peter Limeri |
|
$ |
174,300 |
|
Bradley T. Roos |
|
$ |
187,663 |
|
Larry Robinson |
|
$ |
243,595 |
|
N. Lee White |
|
$ |
151,060 |
|
|
|
|
* |
|
Mr. McCurrys bonus reflected is
his annual performance bonus under the 2008 Performance
Bonus Plan pro-rated through November 30, 2008. |
In addition to our named executive officers, approximately 80 current U.S. and international
employees participated in the 2008 Performance Bonus Plan. We paid approximately $3.6 million in
cash bonuses to the participating employees based on the Companys level of EBIDTA performance in
2008.
Long-Term Equity Incentive Compensation
Issuance of Stock Options and Restricted Stock. Prior the adoption of the 2008 Equity
Incentive Plan, we granted stock options and restricted stock awards under the Amended Stock
Incentive Plan (the Stock Incentive Plan) to our named executive officers and other key
management personnel responsible for the growth of the Company. In connection with the 2008 annual
meeting of shareholders, the Board of Directors recommended that the shareholders adopt the 2008
Equity Incentive Plan because of the limited number of shares available for future issuance under
the Stock Incentive Plan and the impending expiration date of the current Stock Incentive Plan in
June 2008. Our
19
shareholders approved the 2008 Equity Incentive Plan on May 29, 2008. The 2008 Equity
Incentive Plan expires on March 25, 2018, and permits the grant of stock options (both incentive
stock options and non-qualified stock options), stock appreciation rights, restricted stock,
restricted stock units, and other incentive awards.
As a result of the equity grants under the MIP in 2006 (as discussed below), the Compensation
Committee did not grant any stock options or restricted stock to our named executive officers in
2006 or 2007. In 2008, however, the Compensation Committee determined that we should provide
long-term incentive compensation to our key officers, including our named executive officers, in
the form of service-based restricted stock, performance-based restricted stock, and time-vesting
stock options. The Compensation Committee believes that this three-part approach to long-term
incentive compensation provides appropriate long-term incentives from both executive retention and
Company performance perspectives. Since a key officer will benefit from a stock option award only
to the extent our stock price appreciates above the exercise price of the stock option, stock
options align the interests of the key officers with those of shareholders and ensure that key
officers achieve gains only to the extent that share value has appreciated. The performance-based
restricted stock is designed to focus key officers on the achievement of specific financial goals
over a three-year performance period, which correlates restricted stock vesting to
intermediate-term operating performance. The performance-based restricted stock vests only if
performance goals are attained, and this generally supports the objective of ensuring financial
efficiency in the overall compensation program. Service-based restricted stock which vests over
three years serves the dual objectives of aligning key officers interests with stockholders by
creating an ownership interest and attracting and retaining highly skilled executives. The
retention objective is further supported through the three-year time vesting schedule in the stock
option awards and the three-year financial performance objective included in the performance-based
restricted stock awards.
In considering the specific allocation between various elements of long-term incentive
compensation for 2008, the Compensation Committee analyzed market data with respect to the
allocation of various types of long-term incentive compensation. Overall, the Compensation
Committee established the awards at levels designed to place the executives between the
50th and 75th percentile of the market with respect to total direct
compensation.
On September 17, 2008, the Compensation Committee made grants of equity incentive awards to
certain of our officers and employees, including the grants of restricted stock and non-qualified
stock options to the following named executive officers:
Shares of Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service- |
|
Performance- |
|
Non-Qualified |
Name |
|
Based Shares |
|
Based Shares |
|
Options |
Peter Limeri |
|
|
16,222 |
|
|
|
18,333 |
|
|
|
12,222 |
|
Bradley T. Roos |
|
|
16,784 |
|
|
|
19,739 |
|
|
|
13,159 |
|
Larry Robinson |
|
|
19,138 |
|
|
|
25,622 |
|
|
|
17,081 |
|
Given that Mr. McCurry had previously announced his intention to resign from the Company, Mr.
McCurry did not receive an equity award in September 2008. In recognition of the need for
additional retention measures for certain of our key officers during the search process for a new
CEO and our transition to a new CEO, in September 2008, the Compensation Committee awarded
additional service-based restricted stock to Messrs. Limeri, Roos and Robinson and certain other
executive officers as an incentive for such individuals to remain with the Company. These
retention awards are included in the table presented above.
The service-based restricted shares granted on September 17, 2008 will vest in three equal
installments on each of September 17, 2009, 2010 and 2011. The performance-based restricted shares
will vest in part if the Company exceeds a cumulative minimum Adjusted EBITDA threshold (the
Minimum Adjusted EBITDA) which was established by the
20
Compensation Committee on the grant date for the three-year period ending December 31, 2011
(the Measurement Period) and will fully vest if the Company achieves a significantly higher
cumulative Adjusted EBITDA objective for the Measurement Period (the Target Adjusted EBITDA). In
the event the Company does not achieve the Target Adjusted EBITDA, the number of performance-based
restricted shares that vest will be on a pro-rata basis, based on the amount by which the Companys
actual cumulative Adjusted EBITDA for the Measurement Period exceeds the Minimum Adjusted EBITDA.
The Target Adjusted EBITDA amounts described above will be very challenging for us to achieve as it
will require significant increases in our Adjusted EBITDA performance. Unvested shares of
restricted stock with performance-based vesting will be forfeited in the event the officer ceases
to be employed by the Company. In accordance with the terms of the officers respective employment
agreements, however, unvested shares of restricted stock with service-based vesting will
automatically vest in the event an officers employment is terminated without cause, the officer
terminates employment for good reason, or the Company chooses to not extend the term of an
officers employment agreement. All shares of restricted stock will become 100% vested upon a
change of control.
The non-qualified stock options granted on September 17, 2008, will vest in three equal
installments on each of September 17, 2009, 2010 and 2011 and will expire on September 16, 2015.
In accordance with the terms of the officers respective employment agreements, all unvested
options will automatically vest in the event an officers employment is terminated without cause,
the officer terminates employment for good reason, or the Company chooses to not extend the term
of an officers employment agreement. In such circumstances, the vested options remain outstanding
until the earlier of (i) one year after the termination of employment or (ii) the original
expiration date of the options. If an officers employment with the Company terminates for any
other reason, all unvested options are immediately forfeited. The options will become 100% vested
upon a change of control. It is our standard practice to grant options with an exercise price
equal to the closing price our common stock on the date of grant. The non-qualified stock options
have a seven year term, and an exercise price of $9.51, which was the closing price of our common
stock on the date of the grant.
Issuance of Performance Units under Management Incentive Plan. In 2006, as contemplated by
our financial restructuring, we modified the long-term incentive program for key officers to
include a performance share component to complement stock option and restricted stock awards under
the Stock Incentive Plan. This component of our long term incentive program, the MIP, contains the
material terms that were delineated for such plan in the Restructuring Support Agreement that we
entered into with certain of our bondholders as part of the financial restructuring. The MIP was
approved by the independent members of the Board of Directors and the Compensation Committee,
subject to the approval of our shareholders. In August 2006, our shareholders approved the
adoption of the MIP. Under the MIP, the Compensation Committee may award performance units to
key officers and other key employees, as determined in the sole discretion of the Compensation
Committee. In September 2006, the Compensation Committee granted performance units to Mr. McCurry,
our Chief Executive Officer and President at that time, and to Messrs. Limeri, Roos, Robinson and
White. In December 2007, the Compensation Committee, in light of the extension of the transition
rule under Section 409A of the Internal Revenue Code of 1976, approved amendments to the
outstanding 2006 MIP awards that permitted each executive to change the payment schedule for his or
her vested performance units.
Each performance unit entitles the holder, after the vesting of such performance unit, to
receive on the payment date the fair market value of one share of our common stock on the
payment date, subject to applicable tax withholding. The payment dates are established by each
participants performance unit agreement. The Compensation Committee has determined that the fair
market value is equal to the closing price of our common stock on the applicable payment date.
Payments for vested performance units on the payment date are to be made 40% in cash and 60% in
shares of common stock of the Company.
At the time of the adoption of the MIP and in accordance with the terms of the Restructuring
Support Agreement that was entered into with certain of our bondholders in March 2006, 40% of the
performance units available for issuance under the MIP were reserved for issuance to the Chief
Executive Officer. Under the terms of Mr. Whites employment agreement, we agreed to use our best
efforts to ensure that Mr. White participated in the MIP at a level no less than the participation
level of the members of our other executive officers, and the agreement contemplated that Mr. White
would receive grants of performance units under the MIP equal to 12.5% of the common stock reserved
for issuance under the
21
plan. With respect to the other named executive officers listed below, the Compensation
Committee determined the amount of performance units to be awarded based upon the recommendation of
the Chief Executive Officer.
On September 29, 2006, the Compensation Committee approved the following awards of MIP
performance units to our named executive officers:
|
|
|
|
|
|
|
MIP |
Name |
|
Performance Units |
James B. McCurry |
|
|
295,048 |
|
Peter Limeri |
|
|
73,762 |
|
Bradley T. Roos |
|
|
55,322 |
|
Larry Robinson |
|
|
55,322 |
|
N. Lee White |
|
|
92,203 |
|
Until payout, the performance units are subject to anti-dilution adjustments for certain
corporate events, such as the conversions into common stock of the Companys Series A Preferred
Stock and 10% Senior Convertible Notes which occurred in 2006 and 2007. In 2006 and 2007, as a
result of the conversion into common stock of the Companys Series A Preferred Stock and 10%
Convertible Notes, additional performance units accrued to our named executive officers as follows:
|
|
|
|
|
|
|
Accrued |
Name |
|
Performance Units |
James B. McCurry |
|
|
661,335 |
|
Peter Limeri |
|
|
165,334 |
|
Bradley T. Roos |
|
|
124,001 |
|
Larry Robinson |
|
|
124,001 |
|
N. Lee White |
|
|
206,668 |
|
One half of the performance units vested upon the grant of such performance units, and one
half vested in installments equal to 1/36th of the total number of performance units
granted beginning October 17, 2006 and continuing on the 17th day of each succeeding
month such that the performance units became fully vested in March 2008.
22
The following is a schedule of performance unit payouts:
|
|
|
|
|
|
|
Percentage of Performance |
|
Percentage of Performance |
|
|
Units Paid |
|
Units Payable |
|
|
& |
|
& |
Name |
|
Payment Dates |
|
Future Payment Dates |
James B. McCurry |
|
25% paid on April 30, 2008 |
|
75% to be paid in June 2009* |
|
|
|
|
|
Peter Limeri |
|
None paid to date |
|
50% payable on April 30, 2009 |
|
|
|
|
25% payable on April 30, 2010 |
|
|
|
|
25% payable on April 30, 2011 |
|
|
|
|
|
Bradley T. Roos |
|
25% paid on April 30, 2008 |
|
25% payable on April 30, 2009 |
|
|
|
|
25% payable on April 30, 2010 |
|
|
|
|
25% payable on April 30, 2011 |
|
|
|
|
|
Larry Robinson |
|
25% paid on April 30, 2008 |
|
25% payable on April 30, 2009 |
|
|
|
|
25% payable on April 30, 2010 |
|
|
|
|
25% payable on April 30, 2011 |
|
|
|
|
|
N. Lee White |
|
25% paid on April 30, 2008 |
|
75% to be paid in July 2009* |
|
|
|
* |
|
As a result of separation from service on November 30, 2008 (McCurry) and December 31,
2008 (White). |
As noted above, on April 30, 2008, we settled a portion of the performance units in accordance
with the various officers individual payout schedules. Such settlements resulted in the issuance
of shares of the Companys common stock (60% of the value of the settled performance units) and
cash (40% of the value of the settled performance units) to Messrs. McCurry, Roos, Robinson and
White, as follows:
|
|
|
|
|
|
|
|
|
|
|
No. of Shares of |
|
|
Name |
|
Common Stock |
|
Cash Payments |
James B. McCurry |
|
|
143,457 |
|
|
$ |
946,824 |
|
Bradley T. Roos |
|
|
26,898 |
|
|
$ |
177,535 |
|
Larry Robinson |
|
|
26,898 |
|
|
$ |
177,535 |
|
N. Lee White |
|
|
44,830 |
|
|
$ |
295,890 |
|
The total value of the performance units was calculated based upon the closing price of our common
stock on The NASDAQ Global Select Market on April 30, 2008 of $9.90.
Employment and Severance Arrangements
On November 28, 2008, we entered into new executive employment agreements with Messrs. Limeri,
Roos and Robinson. These new employment agreements were entered into primarily in order to
standardize the terms of employment for our named executive officers. Other than the increase of
Mr. Limeris base salary from $260,000 to $300,000 and the increase in the percentage of base
salary payable upon achieving the target and maximum performance targets under our Performance
Bonus Plan, many of the material terms of the new employment agreements
23
are substantially similar to the material terms of the named executive officers previous
employment arrangements. Each of these agreements is described in more detail below.
Mr. Limeris executive employment agreement provides for him to serve as the Companys Chief
Financial Officer and Treasurer at an annual salary of $300,000 for an initial term of one year
that will automatically be extended for additional one-year periods, unless either party notifies
the other in writing at least thirty days prior to the end of the original term or any additional
term of its intention not to extend the agreement. Mr. Limeri will be eligible to earn an annual
performance bonus under the Companys Performance Bonus Plan as described above under Cash Bonus-
2008 Performance Bonus Plan. Mr. Limeris executive employment agreement provides for standard
expense reimbursement, vacation time, and other standard executive benefits. In addition, Mr.
Limeris executive employment agreement contains standard non-competition and non-solicitation
provisions. Mr. Limeri is also eligible to receive stock options, restricted stock, stock
appreciation rights and/or other equity awards under the Companys applicable equity plans on such
basis as the Compensation Committee may determine. See Potential Payments Upon Termination or
Change of Control below for more information regarding severance payments payable to Mr. Limeri in
the event of the termination of his employment.
Mr. Robinsons executive employment agreement provides for him to serve as the Companys
Senior Vice President and President Americas at an annual salary of $419,269 for an initial term
of one year that will automatically be extended for additional one-year periods, unless either
party notifies the other in writing at least thirty days prior to the end of the original term or
any additional term of its intention not to extend the agreement. Mr. Robinson will be eligible to
earn an annual performance bonus under the Companys Performance Bonus Plan as described above
under Cash Bonus- 2008 Performance Bonus Plan. Mr. Robinsons executive employment agreement
further provides for standard expense reimbursement, vacation time, and other standard executive
benefits. Under the terms of Mr. Robinsons executive employment agreement, Mr. Robinson also
receives the following additional compensation in connection with his assignment to Dallas, Texas:
|
|
|
a housing allowance; |
|
|
|
|
a one-time relocation allowance; |
|
|
|
|
a payment to cover certain out of pocket medical expenses related to his
assignment to the United States; |
|
|
|
|
reimbursement of applicable costs for a work permit/visa; |
|
|
|
|
an auto allowance; |
|
|
|
|
tax preparation assistance; and |
|
|
|
|
a benefit to protect him against any incremental tax liability from living in the
United States as compared to Canada. |
In addition, Mr. Robinsons executive employment agreement contains standard non-competition
and non-solicitation provisions. Mr. Robinson is also eligible to receive stock options,
restricted stock, stock appreciation rights and/or other equity awards under the Companys
applicable equity plans on such basis as the Compensation Committee may determine. See Potential
Payments Upon Termination or Change of Control below for more information regarding severance
payments payable to Mr. Robinson in the event of the termination of his employment.
24
Mr. Roos executive employment agreement provides for him to serve as the Companys Senior
Vice President and President Europe and Asia Pacific at an annual salary of $323,000 for an
initial term of one year that will automatically be extended for additional one-year periods,
unless either party notifies the other in writing at least thirty days prior to the end of the
original term or any additional term of its intention not to extend the agreement. Mr. Roos will
be eligible to earn an annual performance bonus under the Companys Performance Bonus Plan as
described above under Cash Bonus- 2008 Performance Bonus Plan. Mr. Roos executive employment
agreement provides for standard expense reimbursement, vacation time, and other standard executive
benefits. Under the terms of Mr. Roos executive employment agreement, Mr. Roos also receives the
following additional compensation in connection with his international assignment in the United
Kingdom:
|
|
|
occupation of a house leased by the Company; |
|
|
|
|
two home travel leaves per calendar year for Mr. Roos and his family; |
|
|
|
|
tax consultation and preparation assistance; |
|
|
|
|
an education allowance for Mr. Roos children to attend the American school; and |
|
|
|
|
an annual tax equalization benefit designed to ensure that Mr. Roos bears a total
tax liability approximately equivalent to the tax liabilities he would have incurred
if working for the Company in the United States. |
In addition, Mr. Roos executive employment agreement contains standard non-competition and
non-solicitation provisions. Mr. Roos is also eligible to receive stock options, restricted stock,
stock appreciation rights and/or other equity awards under the Companys applicable equity plans on
such basis as the Compensation Committee may determine. See Potential Payments Upon Termination
Or Change of Control below for more information regarding severance payments payable to Mr. Roos
in the event of the termination of his employment. The Company has reported that Mr. Roos will be
leaving the Company effective May 8, 2009.
On December 1, 2008, in connection with Mr. McCurrys resignation, we entered into a Release
Agreement with Mr. McCurry which superseded and replaced Mr. McCurrys employment agreement. In
accordance with the terms of his employment agreement, the Release Agreement provided, among other
things, that the Company pay to Mr. McCurry a pro-rated portion (through November 30, 2008) of the
2008 annual incentive bonus that Mr. McCurry would have received had he remained employed with the
Company in accordance with the 2008 Performance Bonus Plan. Mr. McCurry also released and fully
discharged, except for certain specified preserved rights, the Company and its subsidiaries and
their officers and directors from all claims, rights and causes of action of all nature, known and
unknown, in any way arising out of, connected with or related to his employment. Other than the
right to receive a pro-rated portion of the 2008 annual incentive bonus under the 2008 Performance
Bonus Plan, Mr. McCurry did not receive any other severance benefits from the Company in connection
with his departure from the Company.
On November 30, 2008, we entered into a Separation Agreement with Mr. White, the Companys
Executive Vice President. The Separation Agreement superseded and replaced Mr. Whites employment
agreement. The Company and Mr. White agreed in the Separation Agreement that Mr. Whites
employment would end effective December 31, 2008. The Separation Agreement provided, among other
things, that in accordance with the terms of his employment agreement with the Company, Mr. White
would receive severance payments in an amount equal to his current salary for 26 bi-weekly pay
periods following December 31, 2008. Mr. White will also receive the 2008 annual incentive bonus
that he would have received for calendar year 2008 had he remained employed until the time of
payment. Mr. White also agreed to provide consulting services to the Company at no charge until
March 31, 2009, after which the Company would pay Mr. White a consulting fee of $150 per hour, as
well as reimbursement for reasonable out-of-pocket expenses; however, we do not anticipate that Mr.
White will be providing any such consulting services after March 31, 2009. As a condition to the
receipt of his severance benefits, Mr. White also entered into a Release Agreement that provided,
among other things, that Mr. White released and fully discharged, except for certain specified
preserved rights, the Company and its
25
subsidiaries and their officers and directors from all claims, rights and causes of action of
all nature, known and unknown, in any way arising out of, connected with or related to his
employment.
On January 8, 2009, we entered into an executive employment agreement with Mr. Bahl, the
Companys Chief Executive Officer and President. The term of Mr. Bahls executive employment
agreement is four years, which will automatically be extended for additional one-year periods,
unless either party notifies the other in writing at least 90 days prior to the end of the original
term or any additional term of its intention not to extend the agreement. Mr. Bahls executive
employment agreement provides for an annual base salary of $600,000 and that Mr. Bahl will be
eligible for an annual target performance bonus equal to 100% of his annual base salary and a
maximum performance bonus equal to 150% of his annual base salary under the Companys Performance
Bonus Plan, based on the achievement of certain performance objectives to be set by the Companys
Compensation Committee. Mr. Bahl will also be eligible to receive an additional one-time, cash
bonus in the aggregate amount of $1 million payable on the last regular payroll date in July 2010,
subject to Mr. Bahls continued employment until such time. Under the terms of his executive
employment agreement, Mr. Bahl received a one-time, equity inducement grant of an aggregate of
296,296 non-qualified stock options and 344,445 shares of restricted stock. In addition, Mr.
Bahls executive employment agreement contains standard non-competition and non-solicitation
provisions. Mr. Bahl is also eligible to receive stock options, restricted stock, stock
appreciation rights and/or other equity awards under the Companys applicable equity plans on such
basis as the Compensation Committee may determine. Mr. Bahls executive employment agreement
further provides for standard expense reimbursement, vacation time, and other standard executive
benefits. Finally, the Company provided Mr. Bahl with relocation benefits in an amount up to
$75,000 in connection with his relocation to Atlanta, Georgia.
401(k) Plan
We currently sponsor a 401(k) plan for all of our eligible employees. This plan (the 401(k)
Plan) is a tax-qualified retirement plan designed to meet the requirements of Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended. Under the 401(k) Plan, participants may
elect to make pre-tax savings deferrals of from 1 percent to 60 percent of their compensation each
year, subject to annual limits on such deferrals (e.g., $15,500 in 2008) imposed by the Code. We
may also in our discretion, on an annual basis, make a matching contribution with respect to a
participants elective deferrals and/or may make additional Company contributions. In 2008, we
made matching contributions to the named executive officers that participated in the 401(k) plan,
which amounts are included under the heading All Other Compensation in the Summary Compensation
Table under Executive Compensation. The only form of benefit payment under the 401(k) Plan is a
single lump-sum payment equal to the vested balance in the participants account. Under the 401(k)
Plan, the vested portion of a participants accrued benefit is payable upon such employees
termination of employment, attainment of age 59 1/2, retirement, total and permanent disability or
death. Participants may also make in-service withdrawals from their pre-tax contributions under the
plan for certain specified instances of hardship.
Perquisites
We provide our named executive officers with perquisites and other personal benefits that the
Company and the Compensation Committee believe are reasonable and consistent with our overall
compensation program. In 2008, we provided perquisites to Mr. Roos and Mr. Robinson, who were
working for at least a portion of the year outside of the United States. In addition, in 2008, we
granted Mr. Robinson certain perquisites in connection with his re-assignment from Canada to
Dallas, Texas. The perquisites made available to Mr. Roos and Mr. Robinson are described above
under Employment and Severance Arrangements, and include housing assistance, relocation expenses,
tax preparation expenses and tax equalization payments.
Income Deduction Limitations
Section 162(m) of the Code generally sets a limit of $1 million on the amount of compensation
that the Company may deduct for federal income tax purposes in any given year with respect to the
compensation of each of our named executive officers. However, certain performance-based
compensation that complies with the requirements of Section
26
162(m) is not included in the calculation of the $1 million cap. The Compensation Committee
generally considers Section 162(m)s conditions for deductibility when structuring compensation
arrangements for its officers, including the named executive officers. However, it is also true
that we need flexibility to pursue our incentive and retention objectives, even if this means that
a portion of executive compensation may not be deductible by the Company. Accordingly, the
Compensation Committee has from time to time approved elements of compensation for certain officers
that are not fully deductible, and will likely do so in the future under appropriate circumstances.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and
Analysis section of this proxy statement with management and, based on such review and discussion,
the Compensation Committee recommends to the Board of Directors that it be included in this proxy
statement.
|
|
|
|
|
|
COMPENSATION COMMITTEE
Patrick G. Dills, Chairman
David A. Cole
Philip J. Mazzilli, Jr.
|
|
Notwithstanding anything to the contrary which is or may be set forth in any of the Companys
filings under the Securities Act of 1933 or the Exchange Act that might incorporate Company
filings, including this proxy statement, in whole or in part, the preceding Compensation Committee
Report shall not be incorporated by reference into any such filings.
27
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the Company to the Chief
Executive Officer, the Interim Chief Executive Officer, the Chief Financial Officer and the other
three most highly paid executive officers of the Company in 2008 (collectively, the named
executive officers). Mr. Bahl, the Companys current President and Chief Executive Officer did
not join the Company until January 2009, and as such did not receive any compensation from the
Company for 2008 or years prior.
Summary Compensation Table for 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
All Other |
|
|
Principal Position |
|
Year |
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Compensation |
|
Total |
|
|
|
|
|
|
($) |
|
($) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($) |
|
($) |
James B. McCurry |
|
|
2008 |
|
|
|
463,942 |
|
|
|
|
|
|
|
(260,098 |
) |
|
|
|
|
|
|
372,158 |
|
|
|
|
|
|
|
576,002 |
|
Chairman, President and |
|
|
2007 |
|
|
|
500,000 |
|
|
|
|
|
|
|
8,422,592 |
|
|
|
|
|
|
|
700,000 |
|
|
|
15,708 |
|
|
|
9,638,300 |
|
Chief
Executive Officer(1) |
|
|
2006 |
|
|
|
500,000 |
|
|
|
|
|
|
|
1,489,067 |
|
|
|
2,567,623 |
|
|
|
700,000 |
|
|
|
|
|
|
|
5,256,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Limeri |
|
|
2008 |
|
|
|
260,000 |
|
|
|
|
|
|
|
(189,386 |
) |
|
|
36,487 |
|
|
|
174,300 |
|
|
|
3,000 |
|
|
|
284,401 |
|
Chief Financial Officer(5) |
|
|
2007 |
|
|
|
220,000 |
|
|
|
|
|
|
|
2,105,648 |
|
|
|
28,332 |
|
|
|
176,000 |
|
|
|
3,000 |
|
|
|
2,532,980 |
|
|
|
|
2006 |
|
|
|
220,000 |
|
|
|
|
|
|
|
372,267 |
|
|
|
28,332 |
|
|
|
176,000 |
|
|
|
|
|
|
|
796,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley T. Roos |
|
|
2008 |
|
|
|
323,000 |
|
|
|
|
|
|
|
(26,317 |
) |
|
|
7,986 |
|
|
|
187,663 |
|
|
|
91,204 |
|
|
|
583,536 |
|
Executive Vice President and
|
|
|
2007 |
|
|
|
323,000 |
|
|
|
|
|
|
|
1,620,506 |
|
|
|
|
|
|
|
258,400 |
|
|
|
1,031,328 |
|
|
|
3,233,235 |
|
President Europe(6) |
|
|
2006 |
|
|
|
323,000 |
|
|
|
|
|
|
|
320,455 |
|
|
|
|
|
|
|
258,400 |
|
|
|
368,655 |
|
|
|
1,179,510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Robinson |
|
|
2008 |
|
|
|
419,269 |
|
|
|
|
|
|
|
(31,317 |
) |
|
|
10,366 |
|
|
|
243,595 |
|
|
|
55,785 |
|
|
|
697,698 |
|
Senior Vice President Asia |
|
|
2007 |
|
|
|
385,414 |
|
|
|
|
|
|
|
1,579,254 |
|
|
|
|
|
|
|
331,740 |
|
|
|
42,808 |
|
|
|
2,339,216 |
|
Pacific,
Latin America and
Canada(7) |
|
|
2006 |
|
|
|
371,561 |
|
|
|
|
|
|
|
279,203 |
|
|
|
|
|
|
|
300,501 |
|
|
|
38,880 |
|
|
|
990,145 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N. Lee White |
|
|
2008 |
|
|
|
325,000 |
|
|
|
|
|
|
|
(81,281 |
) |
|
|
|
|
|
|
151,060 |
|
|
|
3,000 |
|
|
|
397,779 |
|
Executive Vice President
U.S.(8) |
|
|
2007 |
|
|
|
325,000 |
|
|
|
|
|
|
|
2,632,066 |
|
|
|
|
|
|
|
260,000 |
|
|
|
|
|
|
|
3,217,066 |
|
|
|
|
2006 |
|
|
|
168,750 |
|
|
|
69,808 |
|
|
|
465,336 |
|
|
|
|
|
|
|
69,808 |
|
|
|
4,981 |
|
|
|
778,683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick G. Dills(9) |
|
|
2008 |
|
|
|
35,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
Interim Chief Executive Officer and
President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. McCurry resigned from the Company effective November 30, 2008. Mr. McCurrys
reported Option Awards compensation in 2006 relates entirely to an inducement option award
granted in connection with his joining the Company in 2005. During 2006, Mr. McCurry
voluntarily surrendered for cancellation his option to purchase all shares under the grant,
thus causing an acceleration of the related compensation expense. This compensation expense
was based on a Black-Scholes calculation of the expected value of the option at the time of
its grant. Because of the cancellation of the option, Mr. McCurry has not and will not
realize any actual value from the option grant. Mr. McCurrys All Other Compensation in 2007
relates to reimbursement for attorneys fees and a matching contribution under the Companys
401(k) Plan. |
|
(2) |
|
Stock Awards compensation reported for all named executive officers relates to
awards of restricted stock granted pursuant to the 2008 Equity Incentive Plan and awards of
Performance Units granted pursuant to the Companys 2006 Management Incentive Plan. See
Compensation Discussion and Analysis Long-Term Equity Incentive Compensation for a
description of such plans. Mr. Roos Stock Awards compensation for 2008, 2007, and 2006 also
includes $7,147, $41,252, and $41,252, respectively, related to a restricted stock award
granted in 2005. The amounts in this column represent the compensation expense recorded in
2008, 2007, and 2006 computed in accordance with Statements of Financial Accounting Standards
No. |
28
|
|
|
|
|
123R (FAS 123R), Share-Based Payment. Additional information about assumptions used
in these calculations is
available in Note 1(l) to the Companys Consolidated Financial Statements in the Companys
Form 10-K for the year ended December 31, 2008. Due to a partial cash settlement feature,
portions of Performance Units are considered liability-classified awards, thus negative
compensation may result from remeasurement at each balance sheet date based on the market
value of the Companys common stock. |
|
(3) |
|
Represents the compensation expense recorded in 2006, 2007, and 2008 as computed in
accordance with Statements of Financial Accounting Standards No. 123R (FAS 123R),
Share-Based Payment. Additional information about assumptions used in these calculations
is available in Note 1(l) to the Companys Consolidated Financial Statements in the Companys
Form 10-K for the year ended December 31, 2008. |
|
(4) |
|
Non-Equity Incentive Plan Compensation reported for all named executive officers
consists of compensation earned pursuant to the Companys Performance Bonus Plans in 2006,
2007, and 2008; which amounts were paid in March 2007, 2008, and 2009, respectively. See
Compensation Discussion and Analysis Cash Bonus for a description of the Performance
Bonus Plan. |
|
(5) |
|
Mr. Limeris reported Option Awards compensation relates to options granted under
the 2008 Equity Incentive Plan as well as an inducement option award granted in connection
with his joining the Company in 2005. Mr. Limeris All Other Compensation represents a
matching contribution in 2008 and 2007 under the Companys 401(k) Plan. |
|
(6) |
|
The Company has reported that Mr. Roos will be leaving the Company effective May 8,
2009. Mr. Roos reported All Other Compensation includes education assistance and housing
assistance of $86,597 and $1,607, respectively in 2008, $84,986 and $943,341, respectively,
in 2007 and $69,030 and $297,875, respectively, in 2006. The amount in 2007 includes
$768,995 related to the prepayment of rent for Mr. Roos through 2009. It also includes a
$3,000 matching contribution for each of 2008 and 2007 and a $1,750 matching contribution for
2006 under the Companys 401(k) Plan. Amounts paid for education assistance and housing
assistance are paid in the British Pound. For purposes of this proxy statement, such amounts
have been converted to the U.S. Dollar using the average of all daily exchange rates for the
British Pound to the U.S. Dollar for 2006, 2007, and 2008 (approximately US$1.844, US$2.001,
and US$1.850 per British Pound in 2006, 2007, and 2008, respectively). |
|
(7) |
|
Mr. Robinsons reported All Other Compensation includes a relocation payment of
$23,188, life and health insurance related supplements of $29,597 and an auto allowance of
$3,000 for 2008, life and health insurance related supplements of $25,445 and an auto
allowance of $17,365 for 2007, and life and health insurance related supplements of $22,941
and an auto allowance of $15,939 for 2006. Mr. Robinsons salary and bonus were paid in the
Canadian Dollar during 2006 and 2007 and a portion of 2008. For purposes of this proxy
statement, such amounts have been converted to the U.S. Dollar using the average of all daily
exchange rates for the Canadian Dollar to the U.S. Dollar for 2006, 2007, 2008 (approximately
US$0.858, US$0.935, and US$0.986 respectively, per Canadian Dollar). |
|
(8) |
|
Mr. Whites reported Bonus for 2006 represents a discretionary bonus which was paid
in March 2007. Mr. Whites reported All Other Compensation for 2008 represents a matching
contribution under the Companys 401(k) Plan and for 2006 relates to a reimbursement for
professional services incurred in connection with his employment. |
|
(9) |
|
Mr. Dills served as Interim Chief Executive Officer and President of the Company
from December 1, 2008 until January 1, 2009. |
Employment Agreements
The Company has entered into employment agreements with all of its current named executive
officers, the terms of which are described under Compensation Discussion and Analysis- Employment
and Severance Agreements.
29
Potential Payments Upon Termination or Change of Control
Under the terms of the employment agreements and other arrangements with its named executive
officers, the Company has agreed to make severance payments to the named executive officers upon
the termination of their employment. The following table shows the estimated payments and benefits
for each named executive officer under the various employment termination scenarios set forth in
their respective employment agreements assuming the triggering event took place on December 31,
2008. The payments to be made to Messrs. McCurry and White in connection with their separation
from the Company are described below. In accordance with SEC regulations, we do not report any
amount to be provided to a named executive officer under any arrangement which does not
discriminate in scope, terms, or operation in favor of our executive officers and which is
available generally to all salaried employees. Notwithstanding the amounts described below, other
than accrued obligations, an executives right to receive any payments or benefits upon termination
of his employment is contingent upon the executives executing a separation and release agreement
in a form acceptable to the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
Termination |
|
|
|
|
|
|
|
|
|
|
without Cause or |
|
without Cause or |
|
|
|
|
|
Death, Disability |
|
|
|
|
Resignation with Good |
|
Resignation with Good |
|
|
|
or Resignation |
|
|
|
|
Reason- No Change of |
|
Reason-Change of |
|
Termination |
|
without Good |
Name |
|
Benefit |
|
Control(1) |
|
Control(2) |
|
with Cause(3) |
|
Reason(4) |
|
|
|
|
($) |
|
($) |
|
($) |
|
($) |
Peter Limeri |
|
Severance Payment |
|
|
300,000 |
|
|
|
450,000 |
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
|
174,300 |
|
|
|
174,300 |
|
|
|
|
|
|
|
174,300 |
|
|
|
Health Care Coverage |
|
|
11,777 |
|
|
|
17,666 |
|
|
|
|
|
|
|
|
|
|
|
Vested Options and Restricted Stock |
|
|
214,014 |
|
|
|
388,361 |
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley T. Roos(5) |
|
Severance Payment |
|
|
323,000 |
|
|
|
484,500 |
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
|
187,663 |
|
|
|
187,663 |
|
|
|
|
|
|
|
187,663 |
|
|
|
Health Care Coverage |
|
|
13,378 |
|
|
|
20,068 |
|
|
|
|
|
|
|
|
|
|
|
Vested Options and Restricted Stock |
|
|
219,607 |
|
|
|
407,325 |
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
|
|
Relocation Benefits(5) |
|
|
65,906 |
|
|
|
65,906 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Robinson |
|
Severance Payment |
|
|
516,023 |
|
|
|
628,903 |
|
|
|
|
|
|
|
|
|
|
|
Bonus |
|
|
243,595 |
|
|
|
243,595 |
|
|
|
|
|
|
|
243,595 |
|
|
|
Health Care Coverage |
|
|
6,012 |
|
|
|
7,327 |
|
|
|
|
|
|
|
|
|
|
|
Vested Options and Restricted Stock |
|
|
262,289 |
|
|
|
505,955 |
|
|
|
|
|
|
|
|
|
|
|
Outplacement Services |
|
|
20,000 |
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
30
|
|
|
(1) |
|
Other than within two years after a change of control, if a named executive officer:
(x) terminates his employment for good reason (y) is terminated by the Company without cause
(as defined in the Employment Agreements), or (z) terminates his employment upon the Companys
failure to renew the Agreement, then the named executive officer is entitled to the following:
(i) payment of the named executive officers annual base salary for the period equal to the
greater of one year or the sum of four weeks for each full year of continuous service the
named executive officer has with the Company (the Severance Period); (ii) payment of any
actual earned full-year bonus (pro-rated) for the year in which the named executive officers
employment termination occurs; (iii) continuation of health care plan coverage for the
Severance Period; (iv) payment of accrued obligations; (v) vesting in full of the named
executive officers outstanding unvested options, restricted stock and other equity-based
awards that would have vested solely based on the continued employment of the named executive
officer, as well as the continuation of outstanding stock options, until the earlier of one
year after the date of termination of the named executive officers employment or the original
expiration date of the options; and (vi) payment of up to $20,000 of outplacement services. |
|
(2) |
|
If a termination described in footnote (1) above occurs within two years of a change
of control, then the named executive officer would receive the same payments and benefits
except that (i) the payment of the named executive officers annual base salary shall be for
the period equal to the greater of 18 months or the sum of four weeks for each full year of
continuous service the named executive officer has with the Company (the Change in Control
Severance Period), (ii) the named executive officers health care plan coverage shall
continue for the Change in Control Severance Period, and (iii) in addition to the equity
vesting and term benefits described in footnote (1) above, the performance-based restricted
stock would have become fully vested upon the Change in Control. |
|
(3) |
|
If the Company terminates a named executive officer employment for cause, the
Employment Agreements terminate and the Company will have no further obligations to the named
executive officer other than to pay accrued obligations, which shall not include any bonus
otherwise payable to the named executive officer. |
|
(4) |
|
If the named executive officers employment is terminated for reason of death or
incapacity he shall be entitled to receive payment of an amount equal to the actual full-year
bonus earned for the year that includes his death or incapacity, prorated based on the number
of days the executive is employed for the year. If a named executive officer resigns without
good reason, he is entitled to receive any bonus earned for any completed fiscal year of the
Company which has not been paid as of the date of the executives resignation. Bonus amounts
reflected in this column represent bonuses earned in 2008 which were payable in 2009 only if
the named executive officer completed a full year of service in 2008. |
|
(5) |
|
The Company has reported that Mr. Roos will be leaving the Company effective May 8,
2009. As of December 31, 2008, upon any termination of Mr. Roos without cause (initiated by
the Company), the Company was required to reimburse Mr. Roos for certain costs relating to his
relocation to the United States, as well as temporary living expenses up to 60 days. |
In connection with the Release Agreement with Mr. McCurry, the Company will pay to Mr. McCurry
$372,158 on or about June 1, 2009, such amount to constitute the pro-rated portion through November
2008 of Mr. McCurrys 2008 annual performance bonus. In connection with the Separation Agreement
with Mr. White, the Company will make severance payments in the amount of $12,500 for 26 bi-weekly
pay periods following December 31, 2008, his 2008 full year annual performance bonus of $151,060,
and $11,365 for continued medical coverage.
31
Plan-Based Awards
The following tables set forth certain information regarding awards made under the Companys
various incentive plans. For additional information regarding these incentive plans and awards,
please see Compensation Discussion and Analysis above.
GRANTS OF PLAN-BASED AWARDS FOR FISCAL YEAR 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All other |
|
All other |
|
|
|
|
|
Grant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
|
|
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards |
|
Awards: |
|
Exercise |
|
Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
Number of |
|
Or Base |
|
Of Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of Shares |
|
Securities |
|
Price of |
|
And |
|
|
Grant |
|
Estimated Future Payouts Under |
|
Estimated Future Payouts Under |
|
of Stock |
|
Underlying |
|
Option |
|
Option |
Name |
|
Date |
|
Non-Equity Incentive Plan Awards(1) |
|
Equity Incentive Plan Awards |
|
or Units |
|
Options |
|
Awards |
|
Awards(5) |
|
|
|
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
|
|
|
|
|
|
|
|
($/Sh) |
|
($) |
|
|
|
|
|
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James B. McCurry |
|
|
|
|
|
|
160,137 |
|
|
|
320,274 |
|
|
|
640,548 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Limeri |
|
|
|
|
|
|
75,000 |
|
|
|
150,000 |
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,222 |
(4) |
|
|
9.51 |
|
|
|
77,353 |
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,333 |
(2) |
|
|
|
|
|
|
16,222 |
(3) |
|
|
|
|
|
|
|
|
|
|
328,618 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley T. Roos |
|
|
|
|
|
|
80,750 |
|
|
|
161,500 |
|
|
|
323,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,159 |
(4) |
|
|
9.51 |
|
|
|
83,283 |
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,739 |
(2) |
|
|
|
|
|
|
16,784 |
(3) |
|
|
|
|
|
|
|
|
|
|
347,334 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Robinson |
|
|
|
|
|
|
104,817 |
|
|
|
209,635 |
|
|
|
419,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,081 |
(4) |
|
|
9.51 |
|
|
|
108.106 |
|
|
|
|
9/17/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,622 |
(2) |
|
|
|
|
|
|
19,138 |
(3) |
|
|
|
|
|
|
|
|
|
|
425,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N. Lee White |
|
|
|
|
|
|
65,000 |
|
|
|
130,000 |
|
|
|
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The Threshold, Target and Maximum Payouts reported for all named executive officers
were based upon the Companys attainment of specified adjusted EBITDA levels as defined in the
Companys 2008 Performance Bonus Plan. The Company exceeded the specified target levels but
did not achieve the maximum level under the 2008 Performance Bonus Plan. The payouts for each
of the named executive officers are as follows: Mr. McCurry: $372,158, Mr. Limeri: $174,300,
Mr. Roos: $187,663, Mr. Robinson: $243,595, and Mr. White: $151,060. The amounts in the
preceding sentence were paid to Messrs. Limeri, Roos, and Robinson in March 2009 and the
amounts will be paid to Mr. McCurry and Mr. White in June 2009 and July 2009, respectively, in
accordance with Section 409A of the Internal Revenue Code. See Compensation Discussion and
Analysis Cash Bonus for a description of the 2008 Performance Bonus Plan. |
|
(2) |
|
Grant of restricted stock pursuant to the 2008 Equity Incentive Plan which vests
subject the Companys meeting a cumulative Adjusted EBITDA target for the three-year period
ending December 31, 2011. |
|
(3) |
|
Grant of restricted stock pursuant to the 2008 Equity Incentive Plan, which vests in
three equal installments on each of September 17, 2009, 2010 and 2011. |
|
(4) |
|
Grant of options pursuant to the 2008 Equity Incentive Plan which vests in three
equal installments on each of September 17, 2009, 2010, and 2011. |
|
(5) |
|
Computed in accordance with Statements of Financial Accounting Standards No. 123R
(FAS 123R), Share-Based Payment. Additional information about assumptions used in these
calculations is available in Note 1(l) to the Companys Consolidated Financial Statements in
the Companys Form 10-K for the year ended December 31, 2008. |
32
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
Payout |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
Number of |
|
Value of |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
Number |
|
Value of |
|
Unearned |
|
Unearned |
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
of Shares |
|
Shares or |
|
Shares, Units |
|
Shares, Units |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
or Units |
|
Units of |
|
or Other |
|
or Other |
|
|
Unexercised |
|
Unexercised |
|
Option |
|
Option |
|
of Stock |
|
Stock that |
|
Rights that |
|
Rights that |
|
|
Options: |
|
Options: |
|
Exercise |
|
Expiration |
|
that Have |
|
Have Not |
|
Have Not |
|
Have Not |
Name |
|
Exercisable |
|
Unexercisable |
|
Price |
|
Date |
|
Not Vested |
|
Vested |
|
Vested |
|
Vested |
|
|
(#) |
|
(#) |
|
($) |
|
|
|
|
|
(#) |
|
($)(1) |
|
(#) |
|
($)(1) |
James B. McCurry |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Limeri |
|
|
9,375 |
(2) |
|
|
40,625 |
(2) |
|
|
2.80 |
|
|
|
11/11/2012 |
|
|
|
16,222 |
(4) |
|
|
66,185 |
|
|
|
18,333 |
(4) |
|
|
74,799 |
|
|
|
|
|
|
|
|
12,222 |
(3) |
|
|
9.51 |
|
|
|
09/16/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bradley T. Roos |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,784 |
(5) |
|
|
68,479 |
|
|
|
19,739 |
(5) |
|
|
80,535 |
|
|
|
|
2,000 |
|
|
|
|
|
|
|
184.69 |
|
|
|
03/01/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500 |
|
|
|
|
|
|
|
41.60 |
|
|
|
02/25/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
|
|
|
|
|
49.50 |
|
|
|
03/05/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,159 |
(3) |
|
|
9.51 |
|
|
|
09/16/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry Robinson |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,138 |
(6) |
|
|
78,083 |
|
|
|
25,622 |
(6) |
|
|
104,538 |
|
|
|
|
1,125 |
|
|
|
|
|
|
|
221.67 |
|
|
|
01/20/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600 |
|
|
|
|
|
|
|
257.50 |
|
|
|
01/05/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750 |
|
|
|
|
|
|
|
41.60 |
|
|
|
02/25/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
750 |
|
|
|
|
|
|
|
49.50 |
|
|
|
03/05/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,081 |
(3) |
|
|
9.51 |
|
|
|
09/16/2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N. Lee White |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Based on $4.08 per share; the closing market price of the Companys common stock
on December 31, 2008. |
|
(2) |
|
Mr. Limeris options were granted in two tranches, the first of which,
pertaining to 12,500 shares vests over four years. The second tranche is subject to
specific performance criteria and will become exercisable in three tiers of 12,500 shares
each, as follows: Tier 1 will become exercisable at any time after July 29, 2006, if the
closing market price per share of the Companys common stock is $45.00 or higher for 45
consecutive trading days after July 29, 2006. Tier 2 will become exercisable at any time
after July 29, 2007, if the closing market price per share of the Companys common stock
is $65.00 or higher for 45 consecutive trading days after July 29, 2007. Tier 3 will
become exercisable at any time after July 29, 2008, if the closing market price per share
of the Companys common stock is $80.00 or higher for 45 consecutive trading days after
July 29, 2008. These options were granted as an inducement outside of an equity incentive
plan. |
|
(3) |
|
These options will vest in three equal installments on each of September 17,
2009, 2010 and 2011. Unvested options will terminate in the event the officer ceases to
be employed by the Company. The options will become 100% vested upon a change of control. |
|
(4) |
|
Grant of restricted stock, of which 16,222 shares will vest in three equal
installments on each of September 17, 2009, 2010 and 2011. Vesting of the remaining
18,333 shares is subject the Companys meeting a cumulative Adjusted EBITDA target for the
three-year period ending December 31, 2011. Unvested shares of restricted stock with
performance-based vesting will be forfeited in the event the officer ceases to be employed
by the Company. In accordance with the terms of the officers respective employment
agreements, however, unvested shares of restricted stock with service-based vesting will
automatically vest in the event an officers employment is terminated without cause, the
officer terminates employment for good reason, or the Company chooses to not extend the
term of an officers employment agreement. All shares of restricted stock will become
100% vested upon a change of control. |
|
(5) |
|
Grant of restricted stock, of which 16,784 shares will vest in three equal
installments on each of September 17, 2009, 2010 and 2011. Vesting of the remaining
19,739 shares is subject the Companys meeting a cumulative Adjusted EBITDA target for the
three-year period ending December 31, 2011. Unvested shares of restricted stock with
performance-based vesting |
33
|
|
|
|
|
will be forfeited in the event the officer ceases to be employed by the Company. In
accordance with the terms of the officers respective employment agreements, however,
unvested shares of restricted stock with service-based vesting will automatically vest in
the event an officers employment is terminated without cause, the officer terminates
employment for good reason, or the Company chooses to not extend the term of an officers
employment agreement. All shares of restricted stock will become 100% vested upon a change
of control. |
|
(6) |
|
Grant of restricted stock, of which 19,138 shares will vest in three equal
installments on each of September 17, 2009, 2010 and 2011. Vesting of the remaining
25,622 shares is subject the Companys meeting a cumulative Adjusted EBITDA target for the
three-year period ending December 31, 2011. Unvested shares of restricted stock with
performance-based vesting will be forfeited in the event the officer ceases to be employed
by the Company. In accordance with the terms of the officers respective employment
agreements, however, unvested shares of restricted stock with service-based vesting will
automatically vest in the event an officers employment is terminated without cause, the
officer terminates employment for good reason, or the Company chooses to not extend the
term of an officers employment agreement. All shares of restricted stock will become
100% vested upon a change of control. |
STOCK VESTED
FOR FISCAL YEAR 2008
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
|
Number of Shares |
|
Value Realized |
Name |
|
Acquired on Vesting |
|
on Vesting |
|
|
(#)(1) |
|
($)(2) |
James B. McCurry |
|
|
79,698 |
|
|
|
325,168 |
|
Peter Limeri |
|
|
19,925 |
|
|
|
81,294 |
|
Bradley T. Roos |
|
|
17,444 |
|
|
|
71,171 |
|
Larry Robinson |
|
|
14,944 |
|
|
|
60,971 |
|
Lee White |
|
|
24,906 |
|
|
|
101,616 |
|
|
|
|
(1) |
|
Except for Mr. Roos, reported amount represents the portion of Performance
Units granted pursuant to the Companys 2006 Management Incentive Plan that vested
during 2008. Mr. Roos amount represents both Performance Units and 2,500 shares of
restricted stock which cliff vested on March 4, 2008. |
|
(2) |
|
Based on $4.08 per share; the closing market price of the Companys common
stock on December 31, 2008. The actual amounts to be realized by the named
executive officers upon settlement of the vested Performance Units are dependent
upon the fair value of the common stock at the future settlement dates. |
CERTAIN TRANSACTIONS
We may enter into business transactions in the ordinary course of business with our directors
and officers, including members of their families or corporations, partnerships or other
organizations in which these directors and officers have a controlling interest. If transactions
between the Company and any of our directors or officers occur, the transaction:
|
|
|
will be on substantially the same terms, including as those prevailing at the
time for comparable transactions with unrelated parties; |
|
|
|
|
will be on terms no less favorable than could be obtained from an unrelated third
party; and |
|
|
|
|
will be approved by a majority of the directors who do not have an interest in
the transaction. |
34
As required by Nasdaq Listing Standards Rule 4350(h) and the Companys Audit Committee
Charter, all related party transactions are reviewed and approved by the Audit Committee. For
purposes of this review and approval, the term related party transaction is generally defined as
any transaction (or series of related transactions) in which the Company is a participant and the
amount involved exceeds $120,000, and in which any director, director nominee, or executive officer
of the Company, any holder of more than 5% of the outstanding voting securities of the Company, or
any immediate family member of the foregoing persons will have a direct or indirect interest.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cole, Dills and Mazzilli currently comprise the Compensation Committee. None of the
members of the Compensation Committee had any interlocks within the meaning of Item 407(e)(4) of
the SEC Regulation S-K during fiscal 2008.
35
OWNERSHIP OF DIRECTORS, PRINCIPAL SHAREHOLDERS
AND CERTAIN EXECUTIVE OFFICERS
The following tables set forth certain information regarding the beneficial ownership of the
Companys common stock as of April 15, 2009, by (i) each person (or group of affiliated persons)
known by the Company to be the beneficial owner of more than 5 percent of the outstanding common
stock of the Company; (ii) each director and director nominee of the Company; (iii) the current
Named Executive Officers; and (iv) all of the Companys executive officers and directors as a
group. Except as otherwise indicated in the footnotes to this table, the Company believes that the
persons named in this table have sole investment and voting power with respect to all the shares of
common stock indicated.
|
|
|
|
|
|
|
|
|
|
|
Total Beneficial |
|
Percent of Shares |
Beneficial Owner |
|
Ownership |
|
Beneficially Owned(1) |
Blum Capital Partners, L.P.(2)
|
|
|
3,781,462 |
|
|
|
17.13 |
% |
909 Montgomery St., Ste. 400
San Francisco, CA 94133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JANA Partners LLC(3)
|
|
|
2,297,932 |
|
|
|
10.41 |
% |
767 Fifth Avenue, 8th Floor
New York, NY 10153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renaissance Technologies LLC(4)
|
|
|
1,300,701 |
|
|
|
5.89 |
% |
800 Third Avenue
New York, NY 10022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weintraub Capital Management, L.P.(5)
|
|
|
1,521,200 |
|
|
|
6.85 |
% |
44 Montgomery St., Ste. 4100
San Francisco, CA 94104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors, NA (6)
|
|
|
1,412,128 |
|
|
|
6.39 |
% |
400 Howard Street
San Francisco, CA 95105 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Applicable percentage ownership at April 15, 2009 is based upon 22,068,725
shares of common stock outstanding, adjusted in the case of certain options and other
conversion rights. Shares of common stock subject to options and rights that are
currently exercisable or convertible, or will become exercisable or convertible
within 60 days of April 15, 2009 are deemed outstanding for computing the percentage
ownership of the person holding such options or rights, but are not deemed
outstanding for computing the percentage ownership of any other persons. Beneficial
ownership is determined in accordance with the rules of the SEC under which shares
are beneficially owned by the person or entity that holds investment and/or voting
power. |
|
(2) |
|
Blum Capital Partners, L.P., a California limited partnership (Blum
L.P.); Richard C. Blum & Associates, Inc., a California corporation (RCBA Inc.);
Blum Strategic GP, L.L.C., a Delaware limited liability company (Blum GP); Blum
Strategic GP II, L.L.C., a Delaware limited liability company (Blum GP II); and
Blum Strategic Partners II, L.P. (Blum Strategic II), a Delaware limited
partnership, are referred to herein as the Blum Reporting Persons. Blum L.P.s
principal business is acting as a general partner for investment partnerships and
providing investment advisory services. Blum L.P. is an investment advisor
registered with the Securities and Exchange Commission. Voting and investment power
concerning the above shares are held solely by Blum LP, Blum GP and Blum GP II. The
Reporting Persons may be deemed to have beneficial ownership of an aggregate of
3,781,462 shares of Common Stock. As the sole general partner of Blum LP, RCBA Inc.
may be deemed to be the beneficial owner of the securities of which Blum LP has
voting and investment power. Information is based on publicly reported holdings as
of the date of the most recently filed amendment to Schedule 13D, as filed on January
5, 2009. |
36
|
|
|
|
|
RBCA Inc., Blum LP, Blum GP and GP II disclaim beneficial ownership over the shares
except to the extent of their pecuniary interest therein. |
|
(3) |
|
Information is based on publicly reported holdings as of the date of the
most recently filed amendment to Schedule 13G, as filed on February 17, 2009. |
|
(4) |
|
Information is based on publicly reported holdings as of the date of the
most recently filed Schedule 13G, as filed on February 13, 2009. Renaissance
Technologies LLC (RTC) and James H. Simon (Simon) are referred to as the
Reporting Persons. The reporting persons may be deemed to beneficially own 1,300,701
shares. Simon is deemed to beneficially own the shares owned by RTC because of
Simons position as a control person of RTC. |
|
(5) |
|
Information is based on publicly reported holdings as of the date of the
most recently filed amendment to Schedule 13G, as filed on February 17, 2009.
Weintraub Capital Management, L.P. (Capital) is a registered investment adviser.
Weintraub Capital Management GP, LLC (GP) is the general partner of Weintraub
Capital Management, L.P. and Jerald M. Weintraub (Weintraub) is the manager of
Weintraub Capital Management GP, LLC. Each of Capital, GP, and Weintraub report that
they may be deemed to beneficially own 1,521,200 shares. Prism Partners IV Leveraged
Offshore Fund (Prism) reports that it may be deemed to beneficially own 1,139,172
shares. The address of Prism is c/o Citi Hedge Fund Services, Ltd., Hemisphere
House, 9 Church Street, Hamilton, HM11, Bermuda. The filers filed the Schedule 13G
jointly, but not as members of a group and each of them expressly disclaims
membership in a group. Each filer disclaimed beneficial ownership of the Stock
except to the extent of that filers pecuniary interest therein. In addition, the
filing of the Schedule 13G on behalf of Prism should not be construed as an admission
that it is, and it disclaims that it is, the beneficial owner, as defined in rule
13d-3 under the Act, of any of the securities covered by this Schedule 13G. |
|
(6) |
|
Information is based on publicly reported holdings as of the date of the
most recently filed Schedule 13G, as filed on February 5, 2009. The Reporting
Persons and their applicable beneficial ownership are as follows: Barclays Global
Investors, NA 1,052,162 shares; Barclays Global Fund Advisors 359,966 shares;
Barclays Global Investors, LTD 0 shares; Barclays Global Investors Japan Limited 0
shares; Barclays Global Investors Canada Limited 0 shares; Barclays Global Investors
Australia Limited 0 shares; Barclays Global Investors (Deutschland) AG 0 shares. |
37
Directors, Named Executive Officers and Directors and Officers as a Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain |
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
|
|
|
|
|
|
Beneficial |
|
Subject to |
|
|
|
|
|
Percent of |
|
|
Holdings |
|
Options and |
|
Total |
|
Shares |
|
|
(Excluding |
|
Other Stock |
|
Beneficial |
|
Beneficially |
Beneficial Owner |
|
Options) |
|
Awards(1) |
|
Ownership |
|
Owned(2) |
Romil Bahl |
|
|
344,445 |
|
|
|
0 |
|
|
|
344,445 |
|
|
|
1.56 |
% |
David A. Cole |
|
|
5,565 |
|
|
|
104,418 |
|
|
|
109,983 |
|
|
|
* |
|
Patrick G. Dills |
|
|
34,465 |
|
|
|
49,418 |
|
|
|
83,883 |
|
|
|
* |
|
Peter Limeri |
|
|
34,555 |
|
|
|
118,603 |
|
|
|
153,158 |
|
|
|
* |
|
N. Colin Lind(3) |
|
|
3,786,527 |
|
|
|
58,418 |
|
|
|
3,844,945 |
|
|
|
17.38 |
% |
Philip J. Mazzilli, Jr. |
|
|
15,065 |
|
|
|
58,418 |
|
|
|
73,483 |
|
|
|
* |
|
Larry Robinson |
|
|
89,634 |
|
|
|
28,248 |
|
|
|
117,882 |
|
|
|
* |
|
Bradley T. Roos |
|
|
65,921 |
|
|
|
30,398 |
|
|
|
96,319 |
|
|
|
* |
|
Steven P. Rosenberg |
|
|
5,065 |
|
|
|
58,418 |
|
|
|
63,483 |
|
|
|
* |
|
All current directors and
executive officers as a
group (13 persons) |
|
|
4,526,716 |
|
|
|
575,649 |
|
|
|
5,102,365 |
|
|
|
22.53 |
% |
|
|
|
* |
|
Represents holdings of less than one percent. |
|
(1) |
|
Represents shares that may be acquired currently or within 60 days
after April 15, 2008 through the exercise of stock options and those that
will be received upon the settlement of additional Performance Units under
the 2006 Management Incentive Plan which is expected to occur on April 30,
2009. |
|
(2) |
|
Applicable percentage ownership at April 15, 2009 is based upon
22,068,725 shares of common stock outstanding, adjusted in the case of
certain options and other conversion rights. Shares of common stock subject
to options and rights that are currently exercisable or convertible, or will
become exercisable or convertible within 60 days of April 15, 2009 are deemed
outstanding for computing the percentage ownership of the person holding such
options or rights, but are not deemed outstanding for computing the
percentage ownership of any other persons. Beneficial ownership is
determined in accordance with the rules of the SEC under which shares are
beneficially owned by the person or entity that holds investment and/or
voting power. |
|
(3) |
|
Mr. Lind is a Managing Partner of Blum L.P. Mr. Lind has
informed the Company that he disclaims beneficial ownership of the shares
beneficially owned by Blum L.P., except to the extent of any pecuniary
interest therein. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Companys executive officers and directors and
persons who beneficially own more than 10% of the Companys stock to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of forms received by it pursuant to Section 16(a) of the
Exchange Act, and written representations from certain reporting persons, the Company believes that
with respect to 2008, all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10 percent beneficial owners were timely satisfied.
38
EXECUTIVE OFFICERS
Each of the executive officers of the Company was appointed by the Board of Directors to serve
at the pleasure of the Board of Directors or until their successors are elected or until their
earlier resignation, removal or death. The following table lists the current executive officers of
the Company and their ages and offices with the Company.
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Employed in |
Name |
|
Age |
|
Current Position |
Romil Bahl, President and Chief Executive Officer
|
|
|
40 |
|
|
Since January 2009 |
|
|
|
|
|
|
|
Peter Limeri, Chief Financial Officer and Treasurer
|
|
|
43 |
|
|
Since February 2006 |
|
|
|
|
|
|
|
Victor A. Allums, Senior Vice President, General Counsel and
Secretary
|
|
|
50 |
|
|
Since May 2006 |
|
|
|
|
|
|
|
Jennifer Moore, Senior Vice President Human Resources
|
|
|
38 |
|
|
Since September 2005 |
|
|
|
|
|
|
|
Larry M. Robinson, Senior Vice President and President
Americas
|
|
|
53 |
|
|
Since October 2005 |
|
|
|
|
|
|
|
Bradley T. Roos, Senior Vice President and President- Europe and
Asia Pacific*
|
|
|
46 |
|
|
Since June 2005 |
|
|
|
|
|
|
|
P. David Schroeder, Senior Vice President and Chief Information
Officer
|
|
|
54 |
|
|
Since January 2007 |
|
|
|
|
|
|
|
James R. Shand, Chief Innovation and Strategy Officer
|
|
|
43 |
|
|
Since March 2009 |
|
|
|
* |
|
The Company has reported that Mr. Roos will be leaving the
Company effective May 8, 2009. |
For biographical information regarding Mr. Bahl, please see Information About The Class I
Directors Whose Terms Will Expire At The 2009 Annual Meeting Of Shareholders above.
Peter Limeri, Chief Financial Officer and Treasurer, served as Chief Restructuring Officer
from November 2005 to February 2006. Prior to joining the Company, Mr. Limeri served as Chief
Financial Officer and Chief Operating Officer of Nationwide Furniture Inc., a portfolio company of
Sun Capital Partners, a private equity firm, from May 2004 to November 2005. Prior to that he
served as the Chief Financial Officer at Anderson Press, Inc., a publishing and consumer packaged
goods company, from December 1999 to April 2004. Before joining Anderson Press, Inc., he served as
Vice President-Finance of Cluett American, where he was part of the team that led that companys
financial restructuring and business turnaround.
Victor A. Allums, Senior Vice President, General Counsel and Secretary, joined the Company in
February 2006 and was Senior Vice President and Assistant Secretary prior to his appointment to his
current position in May 2006. For nine years prior to joining the Company, Mr. Allums was Senior
Vice President and General Counsel of GE Business Productivity Solutions, a subsidiary of General
Electric Capital Corporation. Prior to his tenure with GE, he served as Assistant General Counsel
of ALLTEL Information Services Healthcare Division. Mr. Allums began his career with the Atlanta
law firm of Troutman Sanders.
Jennifer Moore, Senior Vice President Human Resources, is responsible for the Companys
domestic and international human resource activities. Before joining the Company, Ms. Moore was
Vice President of Human Resources with Howard Schultz & Associates from May 1999 until the
Companys acquisition of it in 2002. Ms. Moore
39
joined the Company as Vice President of Human Resources in January 2002. In April 2004, she
became Senior Vice President Human Resources, US Operations. Prior to that, she worked in human
resources management in the telecommunications, semi-conductor and mortgage industries.
Larry M. Robinson, Senior Vice President and President-Americas, is responsible for operations
and sales in the U.S., Canada, and Latin America. Prior to joining the Company, Mr. Robinson held
various senior accounting and audit assignments for Sears Canada Inc., one of Canadas largest
retailers. He joined the company in 1992 as General Manager of the Canadian division, and later
assumed additional responsibility for the Asia Pacific and Latin America regions.
P. David Schroeder, Senior Vice President and Chief Information Officer, is responsible for
the Companys information technology worldwide. Prior to joining the Company in January 2007, Mr.
Schroeder served as an independent CIO-level consultant advising companies on acquisitions and
technology strategy from April 2005 to December 2006. From November 2002 to March 2005, Mr.
Schroeder served as Chief Technology Officer for the Hobart West Group, the parent company of
Esquire Deposition Services, one of the largest court reporting firms in the U.S. From April 2000
to July 2002, he served as Chief Technology Officer for Law.com, a major website targeting lawyers
and legal professionals. Prior to his position at Law.com, Mr. Schroeder held senior technology
management roles at innovative consulting organizations such as iXL, Inc. and IBMs Interactive
Media division.
James R. Shand, Chief Innovation and Strategy Officer, joined the Company in March 2009.
Prior to joining the Company, Mr. Shand led the Global Information Technology Strategy Practice at
Infosys Consulting, Inc., the business consulting subsidiary of Infosys Technologies Limited, since
August 2004. Prior to Infosys, Mr. Shand was a Principal Consultant at A.T. Kearney, a global
management consulting company. Before A.T. Kearney, Mr. Shand was a founder and Managing Director
of Churchill Software Ltd in London, UK, which provided IT services to the UK Government.
40
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
The Company incurred the following fees for services performed by its independent registered
public accounting firm for 2008 and 2007. All of the services described below were approved by
the Audit Committee.
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
Audit Fees (1) |
|
$ |
1,047,000 |
|
|
$ |
1,180,500 |
|
Aggregate fees for professional services for
the audit of the Companys annual financial
statements and reviews of financial
statements included in the Companys Forms
10-Q |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit-Related Fees (2) |
|
$ |
15,000 |
|
|
$ |
12,000 |
|
Aggregate fees billed for assurance and
related services that are reasonably related
to the performance of the audit or review of
the Companys financial statements and are
not reported above |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
|
|
Aggregate fees billed for professional
services for tax compliance, tax consulting
and tax planning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other Fees (3) |
|
$ |
59,673 |
|
|
$ |
81,763 |
|
Aggregate fees billed for products and
services provided other than the services
reported above |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit Fees consist of fees for professional services rendered in connection
with the audits of (i) annual financial statements of the Company and its subsidiaries,
and (ii) the effectiveness of internal control over financial reporting. This category
also includes reviews of financial statements included in Form 10-Q filings of the
Company and its subsidiaries and services normally provided in connection with statutory
and regulatory filings or engagements |
|
(2) |
|
Audit-Related Fees consist of fees for professional services that are
reasonably related to the performance of the audit or review of the Companys financial
statements and are not reported under Audit Fees. For all periods presented,
Audit-Related Fees relate to an employee benefit plan audit. |
|
(3) |
|
All Other Fees consist of fees paid to affiliates of BDO Seidman, LLP for other
compliance work in foreign jurisdictions. |
41
SHAREHOLDER PROPOSALS
Shareholders who, in accordance with Securities and Exchange Commission Rule 14a-8, wish to
present proposals for inclusion in the Companys proxy materials to be distributed in connection
with next years annual meeting of Shareholders must submit their proposals so that they are
received at the Companys principal executive offices no later than the close of business on
December 24, 2009. As the rules of the SEC make clear, simply submitting a proposal does not
guarantee that it will be included.
In accordance with the Companys Bylaws, in order to be properly brought before the 2010
Annual Meeting, a shareholders notice of the matter the shareholder wishes to present, or the
person or persons the shareholder wishes to nominate as a director, must be delivered to the
Secretary of the Company at its principal executive offices no less than 90 days, and no more than
120 days before the first anniversary of the date the Company mailed the preceding years proxy
statement. As a result, any notice given by a shareholder pursuant to these provisions of the
Companys Bylaws (and not pursuant to the SECs Rule 14a-8) must be received no earlier than
December 24, 2009, and no later than January 23, 2010, unless the Companys annual meeting date in
2010 is more than 30 days before or after May 27, 2010. SEC rules permit management to vote
proxies in its discretion with respect to such matters if we advise shareholders how management
intends to vote. If the Companys 2010 Annual Meeting date is advanced or delayed by more than 30
days from May 27, 2010, then proposals must be received no later than the close of business on the
later of the 90th day before the 2010 Annual Meeting or the 10th day following the date on which
the meeting date is first publicly announced.
To be in proper form, a shareholders notice must include the specified information concerning
the proposal or nominee as described in the Companys Bylaws. A shareholder who wishes to submit a
proposal or nomination is encouraged to seek independent counsel about the requirements imposed by
the Companys Bylaws and SEC regulations. The Company will not consider any proposal or nomination
that does not meet the Bylaw requirements and the SECs requirements for submitting a proposal or
nomination.
NOTICES OF INTENTION TO PRESENT PROPOSALS AT THE 2010 ANNUAL MEETING SHOULD BE ADDRESSED TO
SECRETARY, PRG-SCHULTZ INTERNATIONAL, INC., 600 GALLERIA PARKWAY, SUITE 100, ATLANTA, GEORGIA
30339. THE COMPANY RESERVES THE RIGHT TO REJECT, RULE OUT OF ORDER, OR TAKE OTHER APPROPRIATE
ACTION WITH RESPECT TO ANY PROPOSAL THAT DOES NOT COMPLY WITH THESE AND OTHER APPLICABLE
REQUIREMENTS.
42
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
Only one copy of this proxy statement and the documents accompanying it is being delivered to
multiple beneficial shareholders who share an address, unless the Company or its authorized agents
have received contrary instructions from any such shareholder. These documents are available on
the Companys web site, www.prgx.com. In addition, the Company will deliver promptly, upon written
or oral request, a separate copy of this proxy statement and all other enclosed documents to any
shareholder to which a single copy was delivered at a shared address. Any instructions to receive
a separate copy of such mailings in the future, or request to receive a copy of this proxy
statement or enclosed documents, may be made in writing or by telephone to the Companys Secretary,
Victor A. Allums, at PRG-Schultz International, Inc., 600 Galleria Parkway, Suite 100, Atlanta,
Georgia 30339, (770) 779-3900. If you are a beneficial holder and have previously provided a
broker with permission to receive only one copy of these materials at a shared address, you must
provide any revocation of such permission to that broker.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND
THE MEETING IN PERSON ARE URGED TO SIGN, COMPLETE, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED
ENVELOPE, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
|
|
|
|
|
|
By Order of the Board of Directors:
|
|
|
/s/ Patrick G. Dills |
|
|
Patrick G. Dills |
|
|
Chairman |
|
|
Dated: April 23, 2009
43
PRG-SCHULTZ INTERNATIONAL, INC.
COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS ON MAY 27, 2009
The undersigned shareholder hereby appoints Romil Bahl, Peter Limeri and Victor A. Allums, or
any of them, with full power of substitution, to act as proxy for, and to vote the stock of, the
undersigned at the Annual Meeting of Shareholders of PRG-Schultz International, Inc. (the
Company) to be held on May 27, 2009, and any adjournments thereof. The undersigned acknowledges
receipt of the Notice of Annual Meeting of Shareholders and the accompanying Proxy Statement, and
grants authority to said proxies, or their substitutes, and ratifies and confirms all that said
proxies may lawfully do in the undersigneds name, place and stead. The undersigned instructs said
proxies to vote as indicated hereon.
THE PROXIES SHALL VOTE AS SPECIFIED ON THE REVERSE, OR IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR EACH OF THE LISTED NOMINEES AND FOR PROPOSAL 2 DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side.) |
ANNUAL MEETING OF SHAREHOLDERS OF
PRG-SCHULTZ INTERNATIONAL, INC.
COMMON STOCK PROXY CARD
May 27, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting and Proxy Statement and 2008 Annual Report on Form 10-K are available at
www.prgx.com/proxy.
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
20230000000000000000 0 052709
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE x
1. Election of Directors: 2. Ratification of Appointment of BDO Seidman, LLP as PRG-Schultzs
independent registered public accounting firm for fiscal NOMINEES: CLASS I DIRECTORS: year
2009. FOR ALL NOMINEES O Romil Bahl
O Steven P. Rosenberg
3. In the discretion of the proxies, upon such other matters as may properly come
WITHHOLD AUTHORITY
FOR ALL NOMINEES before the meeting or any adjournment thereof.
FOR ALL EXCEPT THE PROXIES SHALL VOTE AS SPECIFIED ABOVE OR IF NO DIRECTION IS
(See instructions below)
GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF THE LISTED NOMINEES AND FOR PROPOSAL 2.
PRG-SCHULTZ INTERNATIONAL, INC.
COMMON STOCK PROXY CARD
INSTRUCTIONS:To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and
fill in the circle next to each nominee you wish to withhold, as shown here:
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method.
Signature of Shareholder Date: Signature of Shareholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |