def14a
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
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
Virtusa Corporation
(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)(1) 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: |
July 28, 2008
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Virtusa Corporation to be held at
9:00 a.m., local time, on Thursday, September 25, 2008
at the offices of Virtusa Corporation located at 2000 West
Park Drive, Westborough, Massachusetts 01581.
At this annual meeting, you will be asked to (i) elect one
(1) class I director, as nominated by our board of
directors, for a three-year term, (ii) ratify the
appointment of our independent registered public accountants,
and (iii) ratify our 2007 stock option and incentive plan.
The board of directors unanimously recommends that you vote FOR
election of the director nominee, FOR ratification of
appointment of our independent registered public accountants and
FOR the ratification of our 2007 stock option and incentive plan.
Details regarding the matters to be acted upon at this annual
meeting appear in the accompanying proxy statement. Please give
this material your careful attention.
Whether or not you plan to attend the annual meeting, we urge
you to sign and return the enclosed proxy so that your shares
will be represented at the annual meeting. If you attend the
annual meeting, you may vote in person even if you have
previously returned your proxy card. Your prompt cooperation
will be greatly appreciated.
Very truly yours,
Kris Canekeratne
Chairman and Chief Executive Officer
TABLE
OF CONTENTS
|
|
|
|
|
|
|
|
1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
5
|
|
|
|
|
7
|
|
|
|
|
9
|
|
|
|
|
12
|
|
|
|
|
14
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
35
|
|
|
|
|
36
|
|
|
|
|
42
|
|
|
|
|
42
|
|
|
|
|
42
|
|
|
|
|
43
|
|
|
|
|
43
|
|
|
|
|
I-1
|
|
Virtusa
Corporation
2000 West Park Drive
Westborough, Massachusetts 01581
(508) 389-7300
To Be Held on Thursday,
September 25, 2008
To the Stockholders of Virtusa Corporation:
The annual meeting of stockholders of Virtusa Corporation, a
Delaware corporation (the Company), will be held on
Thursday, September 25, 2008, at 9:00 a.m., local
time, at Virtusa Corporation located at 2000 West Park
Drive, Westborough, Massachusetts 01581, for the following
purposes:
1. To elect one (1) class I director, as
nominated by our board of directors, to our board to serve for a
three-year term and until his successor has been duly elected
and qualified or until his earlier resignation or removal;
2. To ratify the appointment of the accounting firm of KPMG
LLP as the Companys independent registered public
accountants for the current fiscal year;
3. To ratify the Companys 2007 Stock Option and
Incentive Plan; and
4. To transact such other business as may properly come
before the annual meeting and any adjournments or postponements
thereof.
Proposal 1 relates solely to the election of one
(1) class I director nominated by the Company and does
not include any other matters relating to the election of
directors, including without limitation, the election of
directors nominated by any stockholder of the Company.
Only stockholders of record at the close of business on
August 18, 2008, are entitled to notice of and to vote at
the annual meeting and at any adjournment or postponement
thereof.
All stockholders are cordially invited to attend the annual
meeting in person. However, to assure your representation at the
annual meeting, we urge you, whether or not you plan to attend
the annual meeting, to sign and return the enclosed proxy so
that your shares will be represented at the annual meeting. If
you attend the annual meeting in person, you may vote in person
even if you have previously returned your proxy card.
By Order of the Board of Directors,
Thomas R. Holler
Executive Vice President of Finance,
Chief Financial Officer,
Treasurer and Secretary
Westborough, Massachusetts
July 28, 2008
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER TO ASSURE
REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE
PROXY CARD IS MAILED IN THE UNITED STATES.
IN ACCORDANCE WITH OUR SECURITY PROCEDURES, ALL PERSONS
ATTENDING THE ANNUAL MEETING WILL BE REQUIRED TO PRESENT PICTURE
IDENTIFICATION.
VIRTUSA
CORPORATION
2000 West Park Drive
Westborough, Massachusetts 01581
For the annual meeting of
stockholders
To Be Held on Thursday,
September 25, 2008
July 28,
2008
This proxy statement is furnished in connection with the
solicitation of proxies by the board of directors of Virtusa
Corporation, a Delaware corporation (the Company),
for use at the annual meeting of stockholders to be held on
Thursday, September 25, 2008, at 9:00 a.m., local
time, at the offices of Virtusa Corporation located at
2000 West Park Drive, Westborough, Massachusetts 01581, and
any adjournments or postponements thereof. An annual report to
stockholders, containing financial statements for the fiscal
year ended March 31, 2008, is being mailed together with
this proxy statement to all stockholders entitled to vote at the
annual meeting. This proxy statement and the form of proxy are
expected to be first mailed to stockholders on or about
August 5, 2008.
The purposes of the annual meeting are to elect one class I
director, as nominated by our board of directors, for a
three-year term, to ratify the appointment of the Companys
independent registered public accountants and to ratify the 2007
Stock Option and Incentive Plan (the 2007 Option
Plan). Only stockholders of record at the close of
business on August 18, 2008 will be entitled to receive
notice of and to vote at the annual meeting. As of June 30,
2008, 23,452,663 shares of common stock, $.01 par
value per share, of the Company were issued and outstanding. The
holders of common stock are entitled to one vote per share
on any proposal presented at the annual meeting.
Stockholders may vote in person or by proxy. If you attend the
annual meeting, you may vote in person even if you have
previously returned your proxy card. Any proxy given pursuant to
this solicitation may be revoked by the person giving it at any
time before it is voted. Proxies may be revoked by
(i) filing with the Secretary of the Company, before the
taking of the vote at the annual meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly
completing a later-dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking
of the vote at the annual meeting, or (iii) attending the
annual meeting and voting in person (although attendance at the
annual meeting will not in and of itself constitute a revocation
of a proxy). Any written notice of revocation or subsequent
proxy should be sent so as to be delivered to Virtusa
Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581, Attention: Secretary, before the taking of
the vote at the annual meeting.
The representation in person or by proxy of at least a majority
of the outstanding shares of common stock entitled to vote at
the annual meeting is necessary to constitute a quorum for the
transaction of business. Votes withheld from any nominee,
abstentions and broker non-votes are counted as
present or represented for purposes of determining the presence
or absence of a quorum for the annual meeting. A
non-vote occurs when a nominee holding shares for a
beneficial owner votes on one proposal but does not vote on
another proposal because, with respect to such other proposal,
the nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
For Proposal 1, the election of one class I director,
the nominee receiving the highest number of affirmative votes of
the shares present or represented and entitled to vote at the
annual meeting shall be elected as a director. For
Proposal 2, the ratification of the appointment of KPMG LLP
as the Companys independent registered public accountants
for the current fiscal year, an affirmative vote of a majority
of the shares present, in person or represented by proxy, and
voting on each such matter is required for approval. For
Proposal 3, the ratification of the 2007 Option Plan, an
affirmative vote of a majority of the shares present, in person
or represented by proxy, and voting on each such matter is
required for approval. Abstentions are included in the number of
shares present or represented and voting on each matter. Broker
non-votes are not considered voted for the
particular matter and have the effect of reducing the number of
affirmative votes
required to achieve a majority for such matter by reducing the
total number of shares from which the majority is calculated.
The persons named as attorney-in-fact in the proxies, Thomas R.
Holler, Executive Vice President of Finance, Chief Financial
Officer, Treasurer and Secretary of the Company, and Paul D.
Tutun, Vice President, General Counsel and Assistant Secretary,
were selected by the board of directors. All properly executed
proxies returned in time to be counted at the annual meeting
will be voted by such person at the annual meeting. Where a
choice has been specified on the proxy with respect to the
foregoing matters, the shares represented by the proxy will be
voted in accordance with the specifications. If no such
specifications are indicated, such proxies will be voted FOR
election of the director nominee, FOR ratification of the
appointment of our independent registered public accountants and
FOR ratification of the 2007 Option Plan.
Aside from the election of a director, the ratification of the
appointment of the independent registered public accountants and
the ratification of the 2007 Option Plan, the board of directors
knows of no other matters to be presented at the annual meeting.
If any other matter should be presented at the annual meeting
upon which a vote properly may be taken, shares represented by
all proxies received by the board of directors will be voted
with respect thereto in accordance with the judgment of the
persons named as attorney-in-fact in the proxies.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of our common stock as of March 31,
2008: (i) by each person who is known by us to beneficially
own more than 5% of the outstanding shares of common stock;
(ii) by each director or nominee; (iii) by each named
executive officer; and (iv) by all directors and executive
officers as a group. Unless otherwise noted below, the address
of each person listed on the table is
c/o Virtusa
Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percentage
|
|
|
Beneficially
|
|
Beneficially
|
Name of Beneficial Owner
|
|
Owned(1)
|
|
Owned(2)
|
|
Five percent stockholders:
|
|
|
|
|
|
|
|
|
Sigma Partners(3)
|
|
|
4,525,570
|
|
|
|
19.67
|
%
|
1600 Camino Real, Suite 280
Menlo Park, CA 94025
|
|
|
|
|
|
|
|
|
Charles River Ventures(4)
|
|
|
2,577,611
|
|
|
|
11.20
|
%
|
1000 Winter Street, Suite 3300
Waltham, MA 02451
|
|
|
|
|
|
|
|
|
Executive officers and directors:
|
|
|
|
|
|
|
|
|
Kris A. Canekeratne(5)
|
|
|
2,568,483
|
|
|
|
11.16
|
%
|
Danford F. Smith(6)
|
|
|
698,882
|
|
|
|
2.95
|
%
|
Thomas R. Holler(7)
|
|
|
174,667
|
|
|
|
*
|
|
Roger Keith Modder(8)
|
|
|
181,645
|
|
|
|
*
|
|
T.N. Hari(9)
|
|
|
35,143
|
|
|
|
*
|
|
Robert E. Davoli(10)
|
|
|
4,626462
|
|
|
|
20.11
|
%
|
Andrew P. Goldfarb(11)
|
|
|
255, 900
|
|
|
|
1.11
|
%
|
Izhar Armony(12)
|
|
|
2,593,585
|
|
|
|
11.26
|
%
|
Ronald T. Maheu(13)
|
|
|
82,873
|
|
|
|
*
|
|
Martin Trust(14)
|
|
|
574,183
|
|
|
|
2.49
|
%
|
Rowland T. Moriarty(15)
|
|
|
315,412
|
|
|
|
1.37
|
%
|
All executive officers, directors and nominees as a
group (16) (11 persons)
|
|
|
12,107,235
|
|
|
|
50.09
|
%
|
|
|
|
* |
|
Represents less than 1% of the outstanding common stock. |
3
|
|
|
(1) |
|
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and includes voting
and investment power with respect to shares. Unless otherwise
indicated below, to our knowledge, all persons listed above have
sole voting and investment power with respect to their shares of
common stock, except to the extent authority is shared by
spouses under applicable law. Pursuant to the rules of the
Securities and Exchange Commission, the number of shares of
common stock deemed outstanding for a person or group includes
shares issuable pursuant to options held by such person or group
that are currently exercisable or may be exercised within
60 days of March 31, 2008. |
|
(2) |
|
Applicable percentage of beneficial ownership for a person as of
March 31, 2008 is based upon 23,008,411 shares issued
and outstanding at March 31, 2008, and those shares
issuable pursuant to options held by such person or group that
are currently exercisable or may be exercised within
60 days of March 31, 2008. We did not deem these
shares outstanding, however, for the purpose of computing the
percentage ownership of any other person. |
|
(3) |
|
Consists of 3,533,396 shares held by Sigma Partners V,
L.P., 784,800 shares held by Sigma Associates V, L.P.
and 207,374 shares held by Sigma Investors V, L.P.
Mr. Davoli is a managing director and the general partner
of Sigma Partners V, L.P., Sigma Associates V, L.P.
and Sigma Investors V, L.P. and may be deemed to share
voting and investment power with respect to all shares held by
those entities. Mr. Davoli disclaims beneficial ownership
of the shares held by each of the funds managed by Sigma
Partners except to the extent of his pecuniary interest therein,
if any. |
|
(4) |
|
Consists of 2,501,152 shares held by Charles River
Partnership XI, L.P., 63,174 shares held by Charles River
Friends XI-A, L.P. and 13,285 shares held by Charles River
Friends XI-B, L.P. Mr. Armony is a general partner or
managing member, as applicable, of the general partner of each
of Charles River Partnership XI, L.P., Charles River Friends
XI-A, L.P. and Charles River Friends XI-B, L.P. and may be
deemed to share voting and investment power with respect to all
shares held by those entities. Mr. Armony disclaims
beneficial ownership of the shares held by each of the entities
managed by its respective general partnership of which
Mr. Armony is the general partner or managing member,
except to the extent of his pecuniary interest therein, if any. |
|
(5) |
|
Consists of 1,476,221 shares owned by Mr. Canekeratne,
970,298 shares owned by Tushara Canekeratne, the spouse of
Mr. Canekeratne and former executive officer of the
Company, 60,982 shares held by the Kris Canekeratne
Irrevocable Trust and 60,982 shares held by the Tushara
Canekeratne Irrevocable Trust. |
|
(6) |
|
Includes 698,882 shares issuable to Mr. Smith upon the
exercise of stock options exercisable within 60 days of
March 31, 2008. |
|
(7) |
|
Includes 58,827 shares issuable to Mr. Holler upon the
exercise of stock options exercisable within 60 days of
March 31, 2008. |
|
(8) |
|
Includes 181,645 shares issuable to Mr. Modder upon
the exercise of stock options exercisable within 60 days of
March 31, 2008. |
|
(9) |
|
Includes 35,143 shares issuable to Mr. Hari upon the
exercise of stock options exercisable within 60 days of
March 31, 2008. |
|
(10) |
|
Consists of 3,533,396 shares held by Sigma Partners V,
L.P., 784,800 shares held by Sigma Associates V, L.P.,
207,374 shares held by Sigma Investors V, L.P. and
100,892 shares held directly by Mr. Davoli.
Mr. Davoli is a managing director and the general partner
of Sigma Partners V, L.P., Sigma Associates V, L.P.
and Sigma Investors V, L.P. and may be deemed to share
voting and investment power with respect to all shares held by
those entities. Mr. Davoli disclaims beneficial ownership
of the shares held by each of the funds managed by Sigma
Partners except to the extent of his pecuniary interest therein,
if any. |
|
(11) |
|
Consists of 31,493 shares held directly by
Mr. Goldfarb, 14,318 shares beneficially owned by the
Goldfarb Group, LLC, a limited liability company in which
Mr. Goldfarb is a member and an investor,
194,629 shares held by JAFCO USIT Fund III, L.P., and
15,010 shares held by JAV Management Associates III,
L.L.C., the general partner of the JAFCO USIT Fund III,
L.P. Mr. Goldfarb is executive managing partner of
Globespan Capital Management, LLC and a managing member of JAV
Management Associates III, L.L.C., the general partner of
JAFCO USIT Fund III, L.P. and may be deemed to share voting
and investment power with respect to such shares and shares held
by JAV Management Associates |
4
|
|
|
|
|
III, L.L.C. Mr. Goldfarb disclaims beneficial ownership of
the shares held by each of the funds managed by Globespan and
held by The Goldfarb Group, except to the extent of his
pecuniary interest therein, if any. The address for
Mr. Goldfarb is c/o Globespan Capital Partners, One Boston
Place, Suite 2810, Boston, Massachusetts 02108. |
|
(12) |
|
Consists of 2,501,153 shares held by Charles River
Partnership XI, L.P., 63,173 shares held by Charles River
Friends XI-A, L.P., 13,285 shares held by Charles River
Friends XI-B, L.P and 15,974 shares issuable to
Mr. Armony upon exercise of stock options held by
Mr. Armony exercisable within 60 days of
March 31, 2008. Mr. Armony is a general partner or
managing member, as applicable, of the general partner of each
of Charles River Partnership XI, L.P., Charles River Friends
XI-A, L.P. and Charles River Friends XI-B, L.P. and may be
deemed to share voting and investment power with respect to all
shares held by those entities. Mr. Armony disclaims
beneficial ownership of the shares held by each of the entities
managed by its respective general partnership of which
Mr. Armony is the general partner or managing member,
except to the extent of his pecuniary interest therein, if any.
Pursuant to the terms of the Charles River Partnership XI, L.P.
agreement, Mr. Armony is obligated to transfer the stock
options held by him, or the underlying shares or proceeds from
the exercise and sale thereof, to charity. |
|
(13) |
|
Consists of 23,748 shares of our common stock held by TNR
Partnership, a limited partnership, of which
Mr. Maheus spouse is the general partner and
59,125 shares issuable to Mr. Maheu upon the exercise
of stock options exercisable within 60 days of
March 31, 2008. Mr. Maheu disclaims beneficial
ownership of the shares held by TNR Partnership, except to the
extent of his pecuniary interest therein, if any. |
|
(14) |
|
Consists of 503,850 shares of our common stock held by the
Martin Trust 2006 GRAT, a trust, and 70,333 shares
issuable to Mr. Trust upon the exercise of stock options
exercisable within 60 days of March 31, 2008.
Mr. Trust disclaims beneficial ownership of the shares held
by the Martin Trust 2006 GRAT except to the extent of his
pecuniary interest therein, if any. |
|
(15) |
|
Consists of 263,897 shares held directly by
Mr. Moriarty, 10,000 shares purchased by Rubex LLC, a
limited liability company of which Mr. Moriarty is chief
investment officer and a managing member and 41,515 shares
issuable to Mr. Moriarty upon the exercise of stock options
exercisable within 60 days of March 31, 2008.
Mr. Moriarty disclaims any beneficial ownership of the
shares held by Rubex LLC, except to the extent of his pecuniary
interest, if any. |
|
(16) |
|
Includes an aggregate of 1,156,474 shares issuable upon
exercise of stock options exercisable within 60 days of
March 31, 2008 held by eleven (11) executive officers
and directors. |
PROPOSAL 1
ELECTION
OF DIRECTORS
Nominees
Our board of directors currently consists of eight members. Our
seventh amended and restated certificate of incorporation
divides the board of directors into three classes. One class is
elected each year for a term of three years. The directors are
elected by a plurality of votes cast by stockholders.
Mr. Davoli and Mr. Goldfarb are class I directors
whose terms expire at this annual meeting. The board of
directors is also composed of (i) three class II
directors (Izhar Armony, Rowland Moriarty and Martin Trust),
whose terms expire upon the election and qualification of
directors at the annual meeting of stockholders to be held in
2009 and (ii) three class III directors (Kris
Canekeratne, Ronald T. Maheu and Danford F. Smith) whose terms
expire upon the election and qualification of directors at the
annual meeting of stockholders to be held in 2010.
Mr. Canekeratne is our chief executive officer and the
chairman of the board.
Pursuant to our seventh amended and restated certificate of
incorporation and our amended and restated by-laws, our board of
directors has the authority to increase or decrease the number
of directors and fill or eliminate any vacancies on the board of
directors. Mr. Goldfarb has notified the Company of his
intention not to stand for re-election to our board of
directors. In connection with Mr. Goldfarbs
departure, the board of directors has decreased the number of
directors constituting our board from eight members to seven,
effective
5
as of the annual meeting. Mr. Goldfarbs departure did
not result from any disagreement with the Company on any matter
relating to our operations, policies or practices.
The board of directors, upon the recommendation of the
nominating and corporate governance committee, has nominated
Robert E. Davoli and recommended that he be elected to the board
of directors as a class I director, to hold office until
the annual meeting of stockholders to be held in the year 2011
and until his successor has been duly elected and qualified or
until his earlier death, resignation or removal. The board of
directors knows of no reason why Mr. Davoli would be unable
or unwilling to serve, but if he should for any reason be unable
or unwilling to serve, the proxies will be voted for the
election of such other person for the office of director as the
board of directors may recommend in the place of
Mr. Davoli. Unless otherwise instructed, the proxy holders
will vote the proxies received by them FOR the nominee named
below.
For Proposal 1, the election of one class I director,
the nominee receiving the highest number of affirmative votes of
the shares present or represented and entitled to vote at the
annual meeting shall be elected as a director.
Recommendation
of the Board
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE NOMINEES LISTED
BELOW.
The following table sets forth the nominee to be elected at the
annual meeting and continuing directors, the year each such
nominee or director was first elected a director, the positions
with us currently held by such nominee and director, the year
such nominees or directors current term will expire
and such nominees and directors current class:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
Nominees or Directors Name and
|
|
|
|
Current Term
|
|
Current Class
|
Year First Became a Director
|
|
Position(s) with the Company
|
|
Will Expire
|
|
of Director
|
|
Nominee for Class I Director:
|
|
|
|
|
|
|
|
|
|
|
Robert E. Davoli
|
|
Director
|
|
|
2008
|
|
|
|
I
|
|
2000
|
|
|
|
|
|
|
|
|
|
|
Continuing Directors:
|
|
|
|
|
|
|
|
|
|
|
Izhar Armony
|
|
Director
|
|
|
2009
|
|
|
|
II
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
Rowland T. Moriarty
|
|
Director
|
|
|
2009
|
|
|
|
II
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Martin Trust
|
|
Director
|
|
|
2009
|
|
|
|
II
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
Kris Canekeratne
|
|
Chief Executive Officer
|
|
|
2010
|
|
|
|
III
|
|
1996
|
|
Chairman of the Board and Director
|
|
|
|
|
|
|
|
|
Ronald T. Maheu
|
|
Director
|
|
|
2010
|
|
|
|
III
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
Danford F. Smith
|
|
President, Chief Operating
|
|
|
2010
|
|
|
|
III
|
|
2004
|
|
Officer and Director
|
|
|
|
|
|
|
|
|
6
EXECUTIVE
OFFICERS AND DIRECTORS
The following table sets forth the executive officers, director
nominees to be elected at the annual meeting, and the directors
of the Company, their ages, and the positions currently held by
each such person with the Company immediately prior to the
annual meeting.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Kris Canekeratne
|
|
|
42
|
|
|
Chairman and Chief Executive Officer and Class III Director
|
Danford F. Smith
|
|
|
47
|
|
|
President and Chief Operating Officer and Class III Director
|
Thomas R. Holler
|
|
|
45
|
|
|
Executive Vice President of Finance and Chief Financial
Officer, Treasurer and Secretary
|
Roger Keith Modder
|
|
|
44
|
|
|
Executive Vice President and Managing Director Asian
Operations
|
T.N. Hari
|
|
|
43
|
|
|
Senior Vice President and Global Head of Human Resources
|
Robert E. Davoli(1)
|
|
|
60
|
|
|
Class I Director
|
Andrew P. Goldfarb(*)
|
|
|
40
|
|
|
Class I Director
|
Izhar Armony(2)
|
|
|
44
|
|
|
Class II Director
|
Martin Trust(1)(3)
|
|
|
73
|
|
|
Class II Director
|
Rowland T. Moriarty(2)(3)
|
|
|
61
|
|
|
Class II Director
|
Ronald T. Maheu(2)(3)
|
|
|
66
|
|
|
Class III Director
|
|
|
|
(1) |
|
Member of the compensation committee. |
|
(2) |
|
Member of the nominating and corporate governance committee |
|
(3) |
|
Member of the audit committee |
|
* |
|
Mr. Goldfarb has notified the Company of his intention not
to stand for re-election to our board of directors. |
Kris A. Canekeratne, one of our co-founders, has served
as chairman of our board of directors from our inception and
chief executive officer from 1996 to 1997 and from 2000 to the
present. In 1997, Mr. Canekeratne co-founded eDocs, Inc., a
provider of electronic account management and customer care,
later acquired by Oracle Corporation. In 1989,
Mr. Canekeratne was one of the founding team members of
INSCI Corporation, a supplier of digital document repositories
and integrated output management products and services and
served as its senior vice president from 1992 to 1996.
Mr. Canekeratne obtained his B.S. in Computer Science from
Syracuse University.
Danford F. Smith has served as our president and chief
operating officer and a member of our board of directors since
joining us in September 2004. Prior to joining us,
Mr. Smith worked for Cognizant Technology Solutions
Corporation, a consulting services company, where he held roles
of increasing responsibility since 1998, most recently as
general manager from 2002 to 2004. Mr. Smith was a partner
at CSC Consulting from 1990 to 1998. Mr. Smith earned his
B.A. in Political Science from Williams College and his M.B.A.
from Rutgers University.
Thomas R. Holler serves as our executive vice president
of finance, chief financial officer, treasurer and secretary,
and has been responsible for our finance, legal and
administration functions since joining us in 2001. Before
joining us, from 1996 to 2001, Mr. Holler was chief
financial officer and vice president of finance at Cerulean
Technology, Inc., a global supplier of wireless mobile
applications and services, which was later acquired by Aether
Systems Inc. Mr. Holler earned his B.S. in Business
Administration from Wayne State University and his M.B.A. from
Northeastern University.
Roger Keith Modder joined us in 2001 and serves as our
executive vice president and managing director, Asian
operations. Mr. Modder also was a member of our board of
directors from April 2004 to October 2004.
7
Prior to joining us, Mr. Modder worked for the John Keells
Group where he held managing director positions for two IT
solutions companies in the John Keells Group. Mr. Modder is
a member of the board of directors of the Lanka Software
Foundation and has been a member of the ICT Advisory Committee
of the Sri Lanka Export Development Board.
Hari Thokalahalli Narasimha (T.N. Hari) joined us in
March 2006 and serves as our senior vice president and global
head of human resources since March 2006. Prior to joining us,
from October 2002 to March 2006, Mr. Hari held various
positions at IBM-Daksh, a BPO company in India, including the
position vice president strategic human resources from April
2005 to March 2006. Prior to IBM-Daksh, from 1988 to September
2002, Mr. Hari held various positions at Tata Steel,
including as head of human resources (new initiatives) from 2000
to September 2002. Mr. Hari has a Bachelors Degree in
Mechanical Engineering from the Indian Institute of Technology,
Chennai, India and a Post Graduate Diploma in Management from
the Indian Institute of Management, Kolkata, India.
Robert E. Davoli has served as a member of our board of
directors since 2000. Mr. Davoli has been managing director
of Sigma Partners, a venture capital investment firm, since
November 1995. From February 1993 to September 1994,
Mr. Davoli was president and chief executive officer of
Epoch Systems, Inc., a vendor of client-server data management
software products. From 1990 to 1992, Mr. Davoli served as
an executive officer of Sybase, Inc. (which acquired SQL
Solutions). In 1985, Mr. Davoli founded SQL Solutions, a
purveyor of services and tools for the relational database
market where he was president and chief executive officer from
1985 to 1990. Mr. Davoli holds a B.A. in History from
Ricker College and studied Computer Science at Northeastern
University for two years.
Izhar Armony has served as a member of our board of
directors since April 2004. Mr. Armony has been a partner
at Charles River Ventures, a venture capital investment firm,
since 1997. Mr. Armony is also a member of the Advisory
Board of the Invention Science Fund. Prior to joining Charles
River Ventures, Mr. Armony was with Onyx Interactive, an
interactive training company based in Tel Aviv where he served
as vice president of marketing and business development.
Mr. Armony also served as an officer in the Israeli Army.
Mr. Armony received an M.B.A. from the Wharton School of
Business and an M.A. in Cognitive Psychology from the University
of Tel Aviv in Israel.
Ronald T. Maheu has served as a member of our board of
directors since April 2004. Mr. Maheu retired in July 2002
from PricewaterhouseCoopers LLP. Mr. Maheu was a senior
partner at PricewaterhouseCoopers LLP from 1998 to July 2002.
Mr. Maheu was a founding member of Coopers &
Lybrands board of partners. Following the merger of Price
Waterhouse and Coopers & Lybrand in 1998,
Mr. Maheu served on both the United States and global
boards of partners and principals of PricewaterhouseCoopers
until 2001. Mr. Maheu currently serves as a member of the
board of directors of Wright Express Corporation and CRA
International, Inc.
Martin Trust has served as a member of our board of
directors since October 2004. Mr. Trust is chief executive
officer of Samtex (USA), Inc., a holding company engaged in the
production of apparel and textile products, a position he has
held since October 2003. Mr. Trust was senior advisor to
Limited Brands, a retailer of apparel and personal care
products, from 2001 to October 2003. Prior to that,
Mr. Trust served as president and chief executive officer
of Mast Industries, Inc., a contract manufacturer, importer and
wholesaler of womens apparel and wholly-owned subsidiary
of Limited Brands, from 1970 to 2001. Mr. Trust has served
in the capacity of cleared advisor to the United States
Department of Commerce with regard to textile trade issues.
Mr. Trust has been a member of the board of directors of
Staples, Inc. since 1987 and currently serves as chairman of its
compensation committee of its board of directors.
Rowland T. Moriarty has served as a member of our board
of directors since July 2006. Mr. Moriarty is currently
chairman of the board of directors of CRA International, Inc., a
worldwide economic and business consulting firm.
Mr. Moriarty also serves as a member of the board of
directors of Wright Express Corporation and Staples, Inc.
Mr. Moriarty has been the president and chief executive
officer of Cubex Corporation, a privately-held consulting
company, since 1981. From 1981 to 1992, Mr. Moriarty was
Professor of Business Administration at Harvard Business School.
He received a D.B.A. from Harvard University, an M.B.A. from the
Wharton School of Business and a B.A. from Rutgers University.
Our executive officers are elected by the board of directors on
an annual basis and serve until their successors have been duly
elected and qualified or until their earlier death, resignation
or removal.
8
CORPORATE
GOVERNANCE AND BOARD MATTERS
Independence
of members of the Board of Directors
The board of directors has determined that Messrs. Armony,
Davoli, Goldfarb, Maheu, Moriarty and Trust, are independent
within the meaning of the director independence standards of The
NASDAQ Stock Market, Inc., or NASDAQ, and the Securities and
Exchange Commission, including
Rule 10A-3(b)(1)
under the Securities Exchange Act of 1934, as amended, or the
Exchange Act. Furthermore, the board of directors has determined
that each member of each of the committees of the board of
directors is independent within the meaning of the director
independence standards of NASDAQ and the Securities and Exchange
Commission.
Executive
sessions of independent directors
Executive sessions of the independent directors are held
immediately after each regularly scheduled in-person meeting of
the board of directors. Executive sessions do not include any of
our non-independent directors and are chaired by a lead
independent director who is appointed annually by the board of
directors from our independent directors. Mr. Martin Trust
currently serves as the lead independent director. In this role,
Mr. Trust serves as chairperson of the independent director
sessions and assists the board in assuring effective corporate
governance. The independent directors of the board of directors
met in executive session four (4) times in our fiscal year
ending March 31, 2008.
Policies
governing director nominations
Director
qualifications
The nominating and corporate governance committee of the board
of directors is responsible for reviewing with the board of
directors from time to time the appropriate qualities, skills
and characteristics desired of members of the board of directors
in the context of the needs of the business and current
make-up of
the board of directors. This assessment includes consideration
of the following minimum qualifications that the nominating and
corporate governance committee believes must be met by all
directors:
|
|
|
|
|
nominees must have experience at a strategic or policy making
level in a business, government, non-profit or academic
organization of high standing;
|
|
|
|
nominees must be highly accomplished in his or her respective
field, with superior credentials and recognition;
|
|
|
|
nominees must be well regarded in the community and shall have a
long-term reputation for the highest ethical and moral standards;
|
|
|
|
nominees must have sufficient time and availability to devote to
the affairs of the Company, particularly in light of the number
of boards on which the nominee may serve; and
|
|
|
|
nominees must be free of conflicts of interest and potential
conflicts of interest, in particular with relationships with
other boards.
|
The board of directors seeks members from diverse professional
backgrounds who combine a broad spectrum of relevant industry
and strategic experience and expertise that, in concert, offer
us and our stockholders diversity of opinion and insight in the
areas most important to us and our corporate mission. In
addition, nominees for director are selected to have
complementary, rather than overlapping, skill sets. All
candidates for director nominee must have time available to
devote to the activities of the board of directors. The
nominating and corporate governance committee also considers the
independence of candidates for director nominee, including the
appearance of any conflict in serving as a director. Candidates
for director nominee who do not meet all of these criteria may
still be considered for nomination to the board of directors, if
the nominating and corporate governance committee believes that
the candidate will make an exceptional contribution to us and
our stockholders.
9
Process
for identifying and evaluating director nominees
The board of directors is responsible for selecting its own
members. The board of directors delegates the selection and
nomination process to the nominating and corporate governance
committee, with the expectation that other members of the board
of directors, and of management, will be requested to take part
in the process as appropriate.
Generally, the nominating and corporate governance committee
identifies candidates for director nominees in consultation with
management, through the use of search firms or other advisors,
through the recommendations submitted by stockholders or through
such other methods as the nominating and corporate governance
committee deems to be helpful to identify candidates. Once
candidates have been identified, the nominating and corporate
governance committee confirms that the candidates meet all of
the minimum qualifications for director nominees established by
the nominating and corporate governance committee. The
nominating and corporate governance committee may gather
information about the candidates through interviews, detailed
questionnaires, comprehensive background checks or any other
means that the nominating and corporate governance committee
deems to be helpful in the evaluation process. The nominating
and corporate governance committee then meets as a group to
discuss and evaluate the qualities and skills of each candidate,
both on an individual basis and taking into account the overall
composition and needs of the board of directors. Based on the
results of the evaluation process, the nominating and corporate
governance committee recommends candidates for the board of
directors approval as director nominees for election to
the board of directors. The nominating and corporate governance
committee also recommends candidates to the board of directors
for appointment to the committees of the board of directors.
Procedures
for recommendation of director nominees by
stockholders
The nominating and corporate governance committee will consider
director nominee candidates who are recommended by our
stockholders. Stockholders, in submitting recommendations to the
nominating and corporate governance committee for director
nominee candidates, shall follow the following procedures:
All recommendations for nomination must be in writing and
include the following:
|
|
|
|
|
Name and address of the stockholder making the recommendation,
as they appear on our books and records, and of such record
holders beneficial owner;
|
|
|
|
Number of shares of our capital stock that are owned
beneficially and held of record by such stockholder and such
beneficial owner;
|
|
|
|
Name, age, business and residential address, educational
background, current principal occupation or employment, and
principal occupation or employment for the preceding five full
fiscal years of the individual recommended for consideration as
a director nominee;
|
|
|
|
All other information relating to the recommended candidate that
would be required to be disclosed in solicitations of proxies
for the election of directors or is otherwise required, in each
case pursuant to Regulation 14A under the Exchange Act,
including the recommended candidates written consent to
being named in the proxy statement as a nominee and to serving
as a director if approved by the board of directors and
elected; and
|
|
|
|
A written statement from the stockholder making the
recommendation stating why such recommended candidate meets our
criteria and would be able to fulfill the duties of a director.
|
Nominations must be sent to the attention of our secretary by
U.S. mail (including courier or expedited delivery service)
to Virtusa Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581.
Our secretary will promptly forward any such nominations to the
nominating and corporate governance committee. The nominating
and corporate governance committee must receive any such
recommendation for nomination not later than the close of
business on the 120th day nor earlier than the close of
business on the 150th day prior to the first anniversary of
the date of the proxy statement delivered to stockholders in
connection with the preceding years annual meeting. Once
the nominating and corporate governance
10
committee receives the nomination of a candidate and the
candidate has complied with the minimum procedural requirements
above, such candidacy will be evaluated and a recommendation
with respect to such candidate will be delivered to the board of
directors.
Policy
governing security holder communications with the board of
directors
The board of directors provides to every security holder the
ability to communicate with the board of directors as a whole
and with individual directors on the board of directors through
an established process for security holder communication.
Any of our security holders who wish to communicate directly
with the board of directors or an individual member of the board
of directors may do so by sending such communication by
U.S. Mail (including courier or expedited delivery service)
addressed to the chairman of the board, as a representative of
the entire board of directors, or to the individual director or
directors, in each case,
c/o Secretary,
Virtusa Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581.
We will forward any such security holder communication to the
chairman of the board of directors, as a representative of the
board of directors, or to the director to whom the communication
is addressed, on a periodic basis.
Policy
governing director attendance at annual meetings of
stockholders
Our policy is to encourage all of our directors to be present at
our annual stockholder meetings. We did not hold an annual
stockholder meeting for our fiscal year ended March 31,
2007.
Board of
directors evaluation program
The board of directors performs annual self-evaluations of its
composition and performance, including evaluations of its
standing committees and individual evaluations for each
director. In addition, each of the standing committees of the
board of directors conducts it own self-evaluation, which is
reported to the board of directors. The board of directors
retains the authority to engage its own advisors and consultants.
Code of
ethics
We have adopted a code of ethics, as defined by
regulations promulgated under the Securities Act of 1933, as
amended, and the Exchange Act, that applies to all of our
directors and employees worldwide, including our principal
executive officer, principal financial officer, principal
accounting officer and controller, or persons performing similar
functions. A current copy of the Code of Business Conduct and
Ethics is available at the Corporate Governance section of our
website at
http://www.virtusa.com.
A copy of the Code of Business Conduct and Ethics may also be
obtained, free of charge, from us upon a request directed to:
Virtusa Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581, Attention: Investor Relations. We intend to
disclose any amendment to or waiver of a provision of the Code
of Business Conduct and Ethics that applies to our principal
executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, by posting such information on our website available
at
http://www.virtusa.com
and/or in
our public filings with the Securities and Exchange Commission.
For more corporate governance information, you are invited to
access the Corporate Governance section of our website available
at
http://www.virtusa.com.
11
THE BOARD
OF DIRECTORS AND ITS COMMITTEES
Board of
directors
The board of directors met ten (10) times during the fiscal
year ended March 31, 2008, and took action by unanimous
written consent four (4) times. Each of the directors
attended at least 75% of the aggregate of the total number of
meetings of the board of directors and the total number of
meetings of all committees of the board of directors on which
they served during the fiscal year ended March 31, 2008.
The board of directors has the following standing committees:
audit committee; compensation committee; and nominating and
corporate governance committee, each of which operates pursuant
to a separate charter that has been approved by the board of
directors. A current copy of each charter is available at
http://www.virtusa.com.
Each committee reviews the appropriateness of its charter at
least annually. Each committee retains the authority to engage
its own advisors and consultants. The composition and
responsibilities of each committee are summarized below.
Audit
committee
The audit committee of the board of directors currently consists
of Messrs. Maheu, Trust and Moriarty, each of whom is an
independent director within the meaning of the director
independence standards of NASDAQ and the Securities and Exchange
Commission, or SEC, including
Rule 10A-3(b)(1)
under the Exchange Act. Mr. Maheu serves as the chairman of
the audit committee. In addition, the board of directors has
determined that Mr. Maheu qualifies as an audit
committee financial expert under the rules of the SEC.
Stockholders should understand that this designation is a
disclosure requirement of the SEC related to
Mr. Maheus experience and understanding with respect
to certain accounting and auditing matters. The designation does
not impose upon Mr. Maheu any duties, obligations or
liability that are greater than are generally imposed on him as
a member of the audit committee and the board of directors, and
his designation as an audit committee financial expert pursuant
to this SEC requirement does not affect the duties, obligations
or liability of any other member of the audit committee or the
board of directors.
The audit committee met twelve (12) times during the fiscal
year ended March 31, 2008. The audit committee operates
under a written charter adopted by the board of directors, a
current copy of which is available at the Corporate Governance
section of our website at
http://www.virtusa.com.
As described more fully in its charter, the audit committee
oversees our accounting and financial reporting processes,
internal controls and audit functions. In fulfilling its role,
the audit committee responsibilities include:
|
|
|
|
|
appointing, approving the compensation of, and assessing the
independence of our independent registered public accounting
firm;
|
|
|
|
approving audit and permissible non-audit services, and the
terms of such services, to be provided by our independent
registered public accounting firm;
|
|
|
|
reviewing and discussing with management and the independent
registered public accounting firm our annual and quarterly
financial statements and related disclosures;
|
|
|
|
coordinating the oversight and reviewing the adequacy of our
internal control over financial reporting;
|
|
|
|
establishing policies and procedures for the receipt and
retention of accounting related complaints and concerns; and
|
|
|
|
preparing the audit committee report required by SEC rules to be
included in our annual proxy statement.
|
Compensation
committee
The compensation committee of the board of directors currently
consists of Messrs. Trust, Davoli, and Goldfarb, each of
whom is an independent director within the meaning of the
director independence standards of NASDAQ, a non-employee
director as defined in
Rule 16b-3
of the Exchange Act, and an outside director
12
pursuant to Rule 162(m) of the Internal Revenue Code.
Mr. Goldfarb has notified the Company of his intention not
to stand for re-election to our board of directors.
Mr. Trust serves as the chairman of the compensation
committee. The compensation committees responsibilities
include:
|
|
|
|
|
annually reviewing and approving corporate goals and objectives
relevant to compensation of our chief executive officer;
|
|
|
|
evaluating the performance of our chief executive officer in
light of such corporate goals and objectives and determining the
compensation of our chief executive officer;
|
|
|
|
|
|
overseeing and administering our compensation, welfare, benefit
and pension plans and similar plans; and
|
|
|
|
|
|
reviewing and making recommendations to the board with respect
to director compensation.
|
The compensation committee met four (4) times and took
action by unanimous written consent four (4) times during
the fiscal year ended March 31, 2008. The compensation
committee operates under a written charter adopted by the board
of directors, a current copy of which is available at the
Corporate Governance section of our website at
http://www.virtusa.com.
Nominating
and corporate governance committee
The nominating and corporate governance committee of the board
of directors currently consists of Messrs. Moriarty, Armony
and Maheu, each of whom is an independent director within the
meaning of the director independence standards of NASDAQ.
Mr. Moriarty serves as the chairman of the nominating and
corporate governance committee. The nominating and corporate
governance committees responsibilities include:
|
|
|
|
|
developing and recommending to the board criteria for board and
committee membership;
|
|
|
|
establishing procedures for identifying and evaluating director
candidates including nominees recommended by stockholders;
|
|
|
|
identifying individuals qualified to become board members;
|
|
|
|
recommending to the board the persons to be nominated for
election as directors and to each of the boards committees;
|
|
|
|
developing and recommending to the board a code of business
conduct and ethics and a set of corporate governance
guidelines; and
|
|
|
|
overseeing the evaluation of the board and management.
|
The nominating and corporate governance committee met three
(3) times during the fiscal year ended March 31, 2008.
The nominating and corporate governance committee operates under
a written charter adopted by the board of directors, a current
copy of which is available at the Corporate Governance section
of our website at
http://www.virtusa.com.
Compensation
committee interlocks and insider participation
During our fiscal year ended March 31, 2008,
Messrs. Trust, Davoli and Goldfarb served as members of the
compensation committee. No member of the compensation committee
was an employee or former employee of us or any of our
subsidiaries, or had any relationship with us requiring
disclosure herein.
During our fiscal year ended March 31, 2008, no executive
officer of the Company served as: (i) a member of the
compensation committee (or other committee of the board of
directors performing equivalent functions or, in the absence of
any such committee, the entire board of directors) of another
entity, one of whose executive officers served on our
compensation committee; (ii) a director of another entity,
one of whose executive officers served on our compensation
committee; or (iii) a member of the compensation committee
(or other committee of the board of directors performing
equivalent functions or, in the absence of any such committee,
the entire board of directors) of another entity, one of whose
executive officers served as a director of the Company.
13
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
No portion of this audit committee report shall be deemed to
be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, through any general statement
incorporating by reference in its entirety the proxy statement
in which this report appears, except to the extent that the
Company specifically incorporates this report or a portion of it
by reference. In addition, this report shall not be deemed filed
under either the Securities Act or the Exchange Act.
The board of directors appointed us as an audit committee to
monitor the integrity of Virtusa Corporations consolidated
financial statements, its system of internal controls and the
independence and performance of its internal auditor and
independent registered public accounting firm. As an audit
committee, we select the independent registered public
accounting firm.
We are governed by a written charter adopted by the Audit
Committee, which is available through the Investor Relations
page of our website at www.virtusa.com.
Our committee consisted of three members, Messrs. Maheu,
Trust and Moriarty, all non-employee directors at the time that
the actions of the committee described in this report were
undertaken during our fiscal year ended March 31, 2008.
None of the members of the audit committee is an officer or
employee of the Company, and the board of directors has
determined that each member of the audit committee meets the
independence requirements promulgated by NASDAQ and the
Securities and Exchange Commission, including
Rule 10A-3(b)(1)
under the Exchange Act. Mr. Maheu is an audit
committee financial expert as is currently defined under
SEC rules. The audit committee operates under a written charter
adopted by the board of directors.
Virtusa Corporations management is responsible for the
financial reporting process, including the system of internal
controls, and for the preparation of consolidated financial
statements in accordance with generally accepted accounting
principles. Virtusa Corporations independent registered
public accounting firm is responsible for auditing those
financial statements. Our responsibility is to monitor and
review these processes. However, we are not professionally
engaged in the practice of accounting or auditing. We have
relied, without independent verification, on the information
provided to us and on the representations made by Virtusa
Corporations management and the independent registered
public accounting firm.
In fulfilling our oversight responsibilities, we discussed with
representatives of KPMG LLP, the independent registered public
accounting firm for our fiscal year ended March 31, 2008,
the overall scope and plans for their audit of the consolidated
financial statements for the fiscal year ended March 31,
2008. We met with them, with and without the Companys
management present, to discuss the results of their
examinations, their evaluations of the Companys internal
control over financial reporting and the overall quality of the
Companys financial reporting. We reviewed and discussed
the audited consolidated financial statements for the fiscal
year ended March 31, 2008 with management and the
independent registered public accounting firm.
We also reviewed the report of management contained in the
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008, filed with the
SEC, as well as the Report of Independent Registered Public
Accounting Firm included in the Annual Report on
Form 10-K
related to KPMGs audit of our consolidated financial
statements. We continue to oversee the Companys efforts
related to its internal control over financial reporting and
managements preparations for the evaluation in the
Companys fiscal year ending March 31, 2009.
We discussed with the independent registered public accounting
firm the matters required to be discussed by Statement of
Auditing Standards No. 61, Communication with Audit
Committees, as amended, as adopted by the Public Company
Accounting Oversight Board, including a discussion of the
Companys accounting principles, the application of those
principles, and the other matters required to be discussed with
audit committees under generally accepted auditing standards.
In addition, we received from the independent registered public
accounting firm a letter containing the written disclosures
required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as adopted by
the Public Company Accounting Oversight Board, and discussed the
disclosures with them, as well as other matters relevant to
their independence from management and Virtusa
14
Corporation. In evaluating the independence of our independent
registered public accountant, we considered whether the services
they provided beyond their audit and review of the consolidated
financial statements were compatible with maintaining their
independence. We also considered the amount of fees they
received for audit and non-audit services.
Based on our review and these meetings, discussions and reports,
and subject to the limitations on our role and responsibilities
referred to above and in the audit committee charter, we
recommended to the board of directors that the audited
consolidated financial statements for the fiscal year ended
March 31, 2008 be included in the annual report on
Form 10-K.
THE AUDIT COMMITTEE
Ronald T. Maheu, Chair
Martin Trust
Rowland T. Moriarty
15
REPORT OF
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
No portion of this compensation committee report shall be
deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, through any general statement
incorporating by reference in its entirety the proxy statement
in which this report appears, except to the extent that the
Company specifically incorporates this report or a portion of it
by reference. In addition, this report shall not be deemed filed
under either the Securities Act or the Exchange Act.
The compensation committee of the board of directors, which is
comprised solely of independent directors within the meaning of
applicable rules of The NASDAQ Stock Market, Inc., outside
directors within the meaning of Section 162 of the Internal
Revenue Code of 1986, as amended, and non-employee directors
within the meaning of
Rule 16b-3
under the Securities Exchange Act of 1934, as amended, is
responsible for developing executive compensation policies and
advising the board of directors with respect to such policies
and administering the Companys cash incentive, stock
option and employee stock purchase plans. The compensation
committee sets performance goals and objectives for the chief
executive officer and the other executive officers, evaluates
their performance with respect to those goals and sets their
compensation based upon the evaluation of their performance. In
evaluating executive officer pay, the compensation committee may
retain the services of a compensation consultant and consider
recommendations from the chief executive officer with respect to
goals and compensation of the other executive officers. The
compensation committee assesses the information it receives in
accordance with its business judgment. The compensation
committee also periodically reviews director compensation. All
decisions with respect to executive and director compensation
are approved by the compensation committee and recommended to
the full board for ratification. Martin Trust, Robert E. Davoli
and Andrew P. Goldfarb are the current members of the
compensation committee.
The compensation committee has reviewed and discussed the
Compensation Discussion and Analysis (the CD&A)
for the fiscal year ended March 31, 2008 with management.
In reliance on the reviews and discussions referred to above,
the compensation committee recommended to the board of
directors, and the board of directors has approved, that the
CD&A be included in the proxy statement for the fiscal year
ended March 31, 2008 for filing with the SEC.
Respectfully submitted by the
Compensation Committee,
Martin Trust (chairman)
Robert E. Davoli
Andrew P. Goldfarb
16
COMPENSATION
AND OTHER INFORMATION CONCERNING DIRECTORS AND
OFFICERS
Compensation
discussion and analysis
Overview
We believe that the compensation of our executive officers
should focus executive behavior on the achievement of near-term
corporate targets as well as long-term business objectives and
strategies. We place significant emphasis on pay-for-performance
compensation programs, which reward our executives when we
achieve certain financial and business goals and create
stockholder value. We use a combination of base salary, annual
cash incentive compensation programs, a long-term equity
incentive compensation program and a broad-based benefits
program to create a competitive compensation package for our
executive management team. We describe below our compensation
philosophy, policies and practices with respect to our chief
executive officer, chief financial officer and our other
executive officers, who are collectively referred to as our
named executive officers.
Administration
and objectives of our executive compensation
program
Our compensation committee is responsible for establishing and
administering our policies governing the compensation for our
executive officers, including executive officer salaries,
bonuses and equity incentive compensation. Until May 2006, our
chief executive officer served on our compensation committee and
played a significant role in the determination of base salary,
signing or retention bonuses, variable compensation and other
forms of cash and equity-based compensation to be paid to our
executive officers (other than his own). We restructured our
compensation committee in May 2006 to be composed entirely of
independent directors.
Our compensation committee has designed our overall executive
compensation program to achieve the following objectives:
|
|
|
|
|
attract and retain talented and experienced executives;
|
|
|
|
motivate and reward executives whose knowledge, skills and
performance are critical to our success;
|
|
|
|
provide a competitive compensation package that aligns the
interests of our executive officers and stockholders by
including a significant variable component which is weighted
heavily toward performance-based rewards, based upon achievement
of certain measurable operating results such as revenue and
operating profit;
|
|
|
|
ensure fairness among the executive management team by
recognizing the contributions each executive makes to our
success;
|
|
|
|
foster a shared commitment among executives by aligning their
individual goals with our corporate goals; and
|
|
|
|
compensate our executives to manage our business to meet our
near-term and long-term objectives.
|
We use a mix of short-term compensation (base salaries and cash
incentive bonuses) and long-term compensation (equity incentive
compensation) to provide a total compensation structure that is
designed to achieve these objectives. We determine the
percentage mix of compensation structures that we think is
appropriate for each of our executive officers. In general, the
compensation committee believes that a substantial percentage of
the compensation of our executive officers should be
performance-based. The compensation committee uses its judgment
and experience and the recommendations of the chief executive
officer (except for his own compensation) to determine the
appropriate mix of compensation for each individual. In
addition, beginning in 2007, our compensation committee retained
Hewitt Associates, a human resources consulting firm, to assist
the committee in developing our overall executive compensation
and director compensation program for our 2008 fiscal year, as
more described below. For our fiscal year ended March 31,
2007 and prior periods, however, we did not use a formal peer
group or any formal benchmarking in determining our total
executive compensation or the primary components thereof. In
determining whether to
17
adjust the compensation of any one of our executive officers,
including our named executive officers, we annually take into
account the changes, if any, in the following:
|
|
|
|
|
market compensation levels;
|
|
|
|
the contributions made by each executive officer;
|
|
|
|
the performance of each executive officer;
|
|
|
|
the increases or decreases in responsibilities and roles of each
executive officer;
|
|
|
|
the business needs for each executive officer;
|
|
|
|
the relevance of each executive officers experience to
other potential employers; and
|
|
|
|
the readiness of each executive officer to assume a more
significant role within the organization.
|
In addition to the processes and factors listed above, with
respect to base salary, cash incentive compensation and long
term incentives, for our fiscal year 2008, our compensation
committee engaged a consultant, Hewitt Associates, to conduct a
peer group analysis and to help us analyze applicable
compensation data to determine the appropriate compensation
levels for our named executive officers, including base, bonus
and equity components, against the peer group and industry
practices. The peer group included companies which were publicly
held, had between $200 million and $1 billion in
annual revenues, were engaged principally in the IT services
and/or IT
consulting industries focused on services
and/or
technology, were primarily based or headquartered in the United
States and included companies against which the Company competes
for recruiting and hiring employees. These peer group companies
were Analysts International Corporation, Answerthink, Inc.,
CIBER, Cognizant Technologies, Inc., Computer Task Group, Inc.,
Covansys Corporation, eFunds Corporation, iGate Corporation,
Infocrossing, Inc., Intelligroup, Inc., Kanbay International
Inc., Keane, Inc., Sapient Corporation, Syntel Inc. and TechTeam
Global Inc. We believe that the practices of this peer group of
companies provide us with appropriate compensation benchmarks
because these companies have similar organizational structures
and tend to compete with us to attract executives and other
employees. For benchmarking executive compensation, we typically
review the compensation data we collected from this group of
companies, as well as a subset of the data from companies with
revenues, numbers of employees and market capitalizations
similar to our profile. While we generally target the market
median of our peer group in recommending and approving
compensation for our executive officers to remain competitive,
we also consider the other factors listed in this section.
With the input of our compensation consultants and based on the
peer group analysis described in this section, the chief
executive officer makes recommendations to the compensation
committee regarding base salary levels, target incentive awards,
performance goals for incentive compensation and equity awards
for named executive officers, other than his own. The
compensation committee carefully considers the recommendations
of the chief executive officer when making decisions on setting
base salary, bonus payments under the prior years
incentive compensation plan, target amounts and performance
goals for the current years incentive compensation plan,
and any other special adjustments or bonuses.
The compensation committee determines compensation for our chief
executive officer using the same factors it uses for other
executive officers, placing relatively less emphasis on base
salary, and instead, creating greater performance-based
opportunities through long-term equity and short term cash
incentive compensation, which we believe better aligns our chief
executive officers interests with our success and the
interests of our stockholders. In assessing the compensation
paid to our chief executive officer, the compensation committee
relies on both information from our selected peer group and its
judgment with respect to the factors described in this section.
We will annually reassess the relevance of our peer group and
make changes when judged appropriate. We believe that the use of
a peer group analysis and generally targeting the market median
of our peer group are important factors in remaining competitive
with our peers and furthering our objective of attracting,
motivating and retaining highly qualified personnel.
18
Executive
compensation components
Our executive compensation program is primarily composed of base
salary, annual incentive cash compensation payable on a
semi-annual and annual basis and equity compensation. Our
compensation committee has not adopted a formal policy for
allocating between various forms of compensation. However, we
generally strive to provide our named executive officers with a
balance of short-term and long-term incentives to encourage
consistently strong performance and be competitive within our
peer group. With respect to various equity-based awards, we
typically grant stock options or restricted stock awards as a
means of providing longer-term equity-based incentives to our
executives. In addition, we provide our executives with benefits
that are generally available to our salaried employees,
including medical, dental, vision, group life and accidental
death and dismemberment insurance and our 401(k) plan. Prior to
April 2007, we had employment agreements with
Messrs. Canekeratne, Smith, Modder and Holler which set
forth their respective salaries, bonuses and, in certain cases,
stock option awards and severance and change in control
provisions. These agreements were each terminated, with respect
to any severance or change in control provisions and certain
other terms, in April 2007 upon the execution by our executive
officers of the executive agreements discussed below in the
section entitled Potential payments upon termination or
change in control.
Within the context of the overall objectives of our compensation
programs, we determined the specific amounts of compensation,
including base salary, incentive cash compensation and equity
compensation, to be paid to each of our executives for our
fiscal year ended March 31, 2008 based on a number of
factors, including:
|
|
|
|
|
ensuring that our compensation programs are competitive with the
peer group companies reviewed by our compensation committee in
the IT services
and/or IT
consulting industries (as set forth above) and that our
executive compensation is generally targeted at the market
median (50th percentile);
|
|
|
|
the roles and responsibilities of our executives;
|
|
|
|
the individual experience and skills of, and expected
contributions from, our executives;
|
|
|
|
the amounts of compensation being paid to our other executives;
|
|
|
|
our executives historical compensation at our
Company; and
|
|
|
|
the provisions of applicable employment agreements.
|
In addition to the criteria above, the actual amount and
allocation of total compensation (i.e., base salary, variable
incentive cash compensation awards and equity awards) paid or
issued to our named executive officers also reflects the timing
and circumstances of when the executive joined us, the equity
holdings of the executive officer and the geographic location of
such executive officer. For instance, our founder, chairman and
chief executive officer, Mr. Canekeratne, has a substantial
equity interest in us and his current cash and equity
compensation partially reflects this situation, while cash and
equity compensation of Mr. Smith, who joined us as
president and chief operating officer in September 2004,
partially reflects a negotiated employment and compensation
package based on the then-current market conditions. In
addition, the compensation paid to Mr. Modder, who joined
us in 2001 and resides in Sri Lanka, and to Mr. Hari, who
joined us in 2006 and resides in India, partially reflects the
lower-cost geographies of Sri Lanka and India, respectively.
Although no formal policy for allocating between various forms
of compensation has been adopted, our overall compensation, and
each element of compensation, for these executives, in part,
reflects our objective of targeting the median compensation of
our peer group companies which we have selected for our
compensation benchmarking for our fiscal year 2008.
In our most recent fiscal years, equity compensation has been
less significant as an element of compensation. This is due, in
part, because our chief executive officer held a significant
amount of equity as a founder and had not, until July 2007, been
awarded any option awards by our board of directors. Similarly,
our president and chief operating officer and our global head of
human resources received substantial equity grants when they
were hired but have not received any subsequent equity awards.
Only our chief financial officer and managing director of Asian
operations received equity grants on a periodic basis. However,
by the fiscal year ended March 31, 2008, our executive
officers, as a group, will hold relatively small amounts of
19
unvested equity awards. Thus, while no officer except for
Mr. Canekeratne received any equity awards during our
fiscal year ending March 31, 2008, for our fiscal year
ending March 31, 2009, we would expect that equity
compensation as an element of overall executive compensation
will rise on a relative basis as we seek to provide long-term
equity incentives to our executive officers.
We discuss each of the primary elements of our executive
compensation in detail below. While we have identified
particular compensation objectives that each element of
executive compensation serves, our compensation programs
complement each other and collectively serve all of our
executive compensation objectives described above. Accordingly,
whether or not specifically mentioned below, we believe that, as
a part of our overall executive compensation, each element to a
greater or lesser extent serves each of our objectives.
Base salary. Our compensation committee
annually reviews salary ranges and individual salaries for our
executive officers. We have historically established base
salaries for each of our executives based on many factors,
including competition in the marketplace to hire and retain
executives, experiences of our directors and leadership team
with respect to salaries and compensation of executives in
similarly situated companies in the IT industry and other
similar industries, as well as additional factors which we
believe enables us to hire and retain our leadership team in an
extremely competitive environment. In March 2007, we also
engaged Hewitt Associates to assist the compensation committee
in conducting formal peer review analysis and developing our
overall executive compensation program and philosophy for fiscal
year 2008, as described in more detail above. Salaries are
structured so that they are at least comparable with salaries
paid by the peer companies (listed in the section above)
reviewed by the compensation committee in the IT services
and/or IT
consulting industries focused on services. We generally target
base salaries for each of our executives at the market median
(50th percentile) in this peer group and also take into
consideration many additional factors that we believe enable us
to attract, motivate and retain our leadership team in an
extremely competitive environment.
Based on the factors listed above, for our fiscal year ended
March 31, 2008, the compensation committee established
annual base salaries for our chief executive officer, our
president and chief operating officer, our chief financial
officer, our managing director of Asian operations and our
senior vice president and global head of human resources of
$300,000, $250,000, $200,000, $150,000 and $125,000,
respectively. Although we establish the annual base salary
amounts in U.S. dollars for our managing director of Asian
operations (based in Sri Lanka) and our senior vice president
and global head of human resources (based in India), we pay
these salaries in Sri Lankan and Indian rupees, respectively.
Therefore the amounts we pay our Asia-based executives may vary
slightly from the established base salary amount because of
fluctuations in foreign exchange rates during the year.
The fiscal 2008 annual base salaries represent an average
increase of approximately 13.0% over the fiscal year 2007 fiscal
year base salaries for the named executive officers. We believe
that the base salaries paid to our executive officers during our
fiscal year ended March 31, 2008 achieve our executive
compensation objectives and are competitive with those of
similarly-situated companies.
Variable incentive cash compensation award
program. We have designed our variable incentive
cash compensation award program, or VCCP, to reward our
executive officers upon the achievement of certain annual and
semi-annual revenue and operating profit goals, as approved in
advance by our compensation committee and board of directors.
Our VCCP emphasizes pay-for-performance and is intended to
closely align executive compensation with achievement of certain
operating results and an increase in stockholder value. The
compensation committee communicates the bonus criteria to the
named executive officers at the beginning of the fiscal year.
For our fiscal year ended March 31, 2008, our compensation
committee (with board approval) set the revenue target at
$170 million and annual operating profit at
$17 million (excluding SFAS 123(R) expense). The
performance goals and bonus criteria established by the
compensation committee under the VCCP are based on our
historical operating results and growth rates as well as our
expected future results, and are designed to require significant
effort and operational success on the part of our executives and
the Company. In this regard, our fiscal 2008 revenue and
operating profit targets represented a 36.4% and a 20.1%
increase, respectively, over our actual fiscal 2007 revenue and
operating profit (excluding SFAS 123(R)
20
expense). Our actual fiscal 2008 revenue and operating profit
(excluding SFAS 123(R) expense) increased 32.5% and 36.9%,
respectively, over fiscal 2007 results. For our fiscal year
2008, we measured such bonus criteria against actual operating
results on an annual basis.
While our compensation committee approved of a semi-annual
payout in our fiscal year 2007, our compensation committee
determined that it was in the best interest of the Company, and
more aligned with industry practices, to have the VCCP be
measured and paid only on an annual basis for our fiscal 2008.
In our VCCP, we measure our actual annual revenue and operating
income against the annual bonus criteria. In addition, 40% of
each executive officers bonus is tied to achievement of
the fiscal 2008 revenue target of the Company and 60% of the
executive officers bonus is tied to achievement of the
fiscal 2008 operating income target of the Company. If achieved,
we pay our executives their applicable annual bonuses within
75 days of the end of our fiscal year. In addition, our
fiscal 2008 VCCP provided for bonus adjustments of up to 150%,
130%, 130%, 125% and 120% of the applicable target bonus amount
in the case of our chief executive officer, president and chief
operating officer, chief financial officer, managing director of
Asian operations and global head of human resources,
respectively, and down to 75% of the applicable target bonus
payout, if, and to the extent, that our actual operating results
were above the target bonus criteria or fell short of those
criteria. For instance, for our fiscal year ended March 31,
2008, if we achieved revenue of $165 million or 97.0% of
the revenue target and $17 million in operating income or
100% of the operating income target, we would pay only 87.5% of
the applicable bonus based on revenue achievement (which is
targeted at 40% of total eligible bonus) and 100% of the
applicable bonus based on operating income (which is targeted at
60% of the total eligible bonus). If we achieved
$160 million in revenue and operating income of
$14.4 million, we would pay the minimum bonus of 75% of the
targeted bonus amount. We would pay no bonus under our VCCP if
we did not achieve the minimum revenue and operating income.
Based on our operating results for our fiscal year ended
March 31, 2008, actual bonus payouts represented 106% to
119% of the applicable fiscal 2008 targeted bonus for our
executive officers, dependent on the executive officers
specific plan and opportunity to exceed targeted bonus amounts.
All payouts under our VCCP are based on actual results of
operations and must be approved by our compensation committee
and board of directors.
Our VCCP represents a significant percentage of our executive
officers base salaries and varies depending on the
seniority and position of the executive officer, thus aligning
our executives compensation to our performance and
creation of stockholder value. For our fiscal year ended
March 31, 2008, the target bonuses under our VCCP for each
of our named executive officers, as a percentage of base salary,
were 58.3%, 80.0%, 40.0%, 40.0% and 40.0% for our chief
executive officer, president and chief operating officer, chief
financial officer, managing director of Asian operations and
senior vice president and global head of human resources,
respectively. As a result of upward bonus adjustments under our
VCCP based on our fiscal 2008 operating results, actual bonus
payouts for our fiscal year ended March 31, 2008
represented 67.7%, 84.6%, 42.3%, 42.8% and 45.1% of the base
salaries for our chief executive officer, president and chief
operating officer, chief financial officer, managing director of
Asian operations and senior vice president and global head of
human resources, respectively.
Our compensation committee and board of directors established
the fiscal 2008 target bonuses for each individual executive
officer based on the historical targets for such executive, the
seniority and ability of the executive to drive corporate
performance, the geographies in which such executive is located,
provisions of their respective employment agreements that were
negotiated at the time of hire, as well as our objective to
target cash incentives generally at the 50th percentile of
similar cash incentives provided to officers in peer group
companies in the IT services
and/or IT
consulting industries, as reviewed by the compensation
committee, as described in more detail above. In addition, for
fiscal year 2008, our compensation committee engaged Hewitt
Associates to assist the committee to establish the parameters
of our VCCP.
Equity compensation. We also use stock options
and equity-based incentive programs to attract, retain, motivate
and reward our executive officers. Through our equity-based
grants, we seek to align the interests of our executive officers
with our stockholders, reward and motivate both near-term and
long-term executive performance and provide an incentive for
retention. Our decisions regarding the amount and type of equity
incentive compensation, the allocation of equity and relative
weighting of these awards within total executive compensation
have been based on our understanding and individual experiences
of market practices of
21
similarly-situated companies and our negotiations with our
executives in connection with their initial employment or
promotion. For our fiscal year 2008, we also engaged Hewitt
Associates and used our peer group analysis as described above,
to assist us with assessing the allocation and use of equity
compensation as a component of total compensation. Equity-based
incentive awards are intended to be the longer-term components
of our overall executive compensation program. While annual
incentive cash compensation is designed to encourage
shorter-term performance, generally performance over a one-year
period, equity-based awards are designed to encourage our named
executives performance over several years.
To date, all grants of equity-based awards to our executive
officers have been subject to approval first by the compensation
committee and then by the board of directors at regularly
scheduled meetings during the year. In April 2007, we adopted an
equity award grant policy for 2007, effective as of
August 2, 2007, that formalizes how we grant equity awards
to our officers and employees in the future. Under our equity
award grant policy, all grants must be approved by the
compensation committee. Our practice is also to obtain full
board approval of all equity awards approved by the compensation
committee. All equity awards will be made at fair market value
based on the closing market price of our common stock on the
NASDAQ Global Market on the effective date of grant. While our
current equity incentive plans may permit the granting of equity
awards at any time, our equity award grant policy provides that
we will generally only grant incentive awards on a regularly
scheduled basis, as follows:
|
|
|
|
|
grants made in connection with the hiring of a new employee or
promotion of an existing employee will be made on a regular
quarterly basis on the third trading day after we first publicly
release our financial results for the quarter or year, as the
case may be; and
|
|
|
|
grants made to existing employees, other than in connection with
a promotion will be made, if at all, on an annual basis and will
generally be made effective on the third trading day after we
first publicly release our financial results for the prior
quarter or year.
|
A number of factors are considered in determining the amount of
equity incentive awards, if any, to grant to our executives,
including:
|
|
|
|
|
ensuring that our allocation of long term equity incentive
awards are competitive with the peer group companies reviewed by
our compensation committee in the IT services
and/or IT
consulting industries and that our executive compensation is
generally targeted at the market median
(50th percentile);
|
|
|
|
the number of shares subject to, and exercise prices of,
outstanding options, both vested and unvested, held by our
executives;
|
|
|
|
the vesting schedule of the unvested stock options held by our
executives; and
|
|
|
|
the amount and percentage of our total equity on a diluted basis
held by our executives.
|
Equity compensation awards to our named executive officers has
primarily consisted of stock option awards. Stock option awards
provide our executive officers with the right to purchase shares
of our common stock at a fixed exercise price typically for a
period of up to ten (10) years, subject to continued
employment with our Company. Stock options are earned on the
basis of continued service to us and generally, for an initial
grant, vest over four (4) years, beginning with 25% vesting
one year after the date of grant, then pro-rata vesting
quarterly thereafter, and, for incumbent grants, generally vest
quarterly over four (4) years in sixteen (16) equal
installments.
In addition to stock option grants, our board of directors, upon
approval and recommendation of our compensation committee, has
also granted certain named executives immediately exercisable
stock options which provide that the underlying shares of common
stock will be subject to repurchase by us at the exercise price
paid by the executive upon any termination event, with respect
to the exercised shares which have not yet vested. The vesting
of the shares underlying these option grants to our executive
officers is the same as the vesting for stock option awards
generally. Thus, while the executive is able to exercise the
options immediately to take advantage of beneficial tax
treatment in certain circumstances, the executives ability
to retain the shares, and any appreciation of such shares are
still dependent upon the executives continued service, the
continued vesting of the shares so exercised and our growth and
operational success. Our compensation
22
committee has also considered the use of restricted stock awards
to our executive officers, which are subject to vesting. While
the executive officer would have immediate voting rights as a
holder of shares of restricted stock, the officers right
to continue to hold the shares (and thus any appreciation of
such shares) and the right to sell such shares without
restriction are still dependent upon the executives
continued service, the continued vesting of the shares and our
growth and operational success. Shares of restricted stock that
do not vest are subject to repurchase or forfeiture. Thus, these
grants continue to align the interests of the executive with
those of the stockholders. Our compensation committee has
authorized these equity awards, in its discretion and on a case
by case basis to provide for an additional long-term incentive
and to facilitate the long-term tax planning of the executive
involved.
For instance, in March and May 2008, our board, based on the
approval and recommendation of the compensation committee,
awarded Mr. Holler, our chief financial officer, an option
exercisable for 80,000 shares and 120,000 shares of
restricted stock, respectively, effective on May 23, 2008,
pursuant to the terms of our equity award policy. Such equity
awards are subject to a 4 year quarterly vesting and may be
accelerated by 12 months if, by March 31, 2010, the
Company and Mr. Holler achieve certain performance based
milestones.
Other
benefits
We believe that establishing competitive benefit packages for
our employees is an important factor in attracting and retaining
highly qualified personnel. Executive officers are eligible to
participate in all of our employee benefit plans, such as
medical, dental, vision, group life and accidental death and
dismemberment insurance and our 401(k) plan, in each case on the
same basis as other employees. We do not currently provide a
matching contribution under our 401(k) plan to any executive
officers but do offer limited matching to our
non-highly
compensated, non-executive employees. Moreover, with the
exception of plans mandated by the governments of India and Sri
Lanka, we do not offer retirement benefits. Consistent with our
compensation philosophy, we intend to continue to maintain our
current benefits and perquisites for our executive officers. The
compensation committee in its discretion may revise, amend or
add to the officers executive benefits and perquisites if
it deems it advisable. In our fiscal year ended March 31,
2008, the only perquisites we provided to any of our named
executive officers other than those normally provided to all
salaried employees were those made available to Mr. Modder,
who resides in Sri Lanka. We provided Mr. Modder with full
company-paid family life insurance, golf and athletic club
memberships and the use of company-owned automobiles. These
perquisites are considered normal and similar to those
customarily provided to other Sri Lankan-based executives.
Severance
and change in control benefits
In March 2007, our compensation committee engaged Hewitt
Associates to provide advice, as well as a peer group analysis,
for the purpose of the provision of severance and change in
control benefits to our executive officers. Our peer group for
these purposes consisted of 13 companies that are publicly
held, have between $200 million and $800 million in
annual revenues, are engaged principally in the IT services or
IT consulting industries focused on services or technology and
are based or headquartered in the United States. This peer group
was slightly smaller in number than the peer group used for our
executive compensation analysis and did not include the largest
global IT services companies so that our peer group reflected
only companies of comparable size and benefit offerings. These
companies included Analysts International Corporation,
Answerthink, Inc., Computer Task Group, Inc., Covansys
Corporation, iGate Corporation, Infocrossing, Inc.,
Intelligroup, Inc., Kanbay International Inc., Patni Computer
Systems, Inc., Sapient Corporation, Syntel Inc., TechTeam Global
Inc. and WNS (Holdings) Limited. The compensation committee
reviewed terms of severance programs and arrangements maintained
by these peer companies, such as coverage (who amongst the
executive officers are covered), benefit triggers (i.e.,
terminating events, like termination without cause, or
resignation for good reason both prior to and after
a change in control), coverage period (how long after a change
in control would the benefits trigger or severance benefits be
applicable), cash severance, continuation of health care
benefits post termination and acceleration of vesting. Our goal
in adopting severance and change in controls benefits was to
offer competitive benefits to attract and retain our executive
officers.
23
In April 2007, we entered into executive agreements with each of
our executive officers that provide for certain severance and
change in control payments based on the factors listed above.
See Potential payments upon termination of change in
control set forth below for a more detailed discussion.
We have entered into indemnification agreements with each of our
executive officers and directors, providing for indemnification
against expenses and liabilities reasonably incurred in
connection with their service for us on our behalf.
Tax
deductibility of executive compensation
In general, under Section 162(m) of the Internal Revenue
Code of 1986, as amended, or the Code, we cannot deduct, for
federal income tax purposes, compensation in excess of
$1,000,000 paid to certain executive officers. This deduction
limitation does not apply, however, to compensation that
constitutes qualified performance-based compensation
within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder. We have considered the
limitations on deductions imposed by Section 162(m) of the
Code and it is our present intention, for so long as it is
consistent with our overall compensation objective, to structure
executive compensation to minimize application of the deduction
limitations of Section 162(m) of the Code and to be cost
and tax effective. Therefore, the compensation committee intends
to preserve corporate tax deductions, while maintaining the
flexibility in the future to approve arrangements that it deems
to be in our best interests and the best interests of our
stockholders, even if such arrangements do not always qualify
for full tax deductibility.
Executive
compensation summary
The following table sets forth summary compensation information
for the Companys chief executive officer, chief financial
officer and the three other most highly compensated executive
officers for the fiscal years ended March 31, 2008 and 2007:
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Kris Canekeratne,
|
|
|
2008
|
|
|
|
300,000
|
|
|
|
118,320
|
|
|
|
202,876
|
|
|
|
|
|
|
|
|
|
|
|
621,196
|
|
Chairman and Chief Executive Officer
|
|
|
2007
|
|
|
|
225,000
|
|
|
|
|
|
|
|
192,500
|
|
|
|
|
|
|
|
|
|
|
|
417,500
|
|
Thomas R. Holler,
|
|
|
2008
|
|
|
|
200,000
|
|
|
|
32,198
|
|
|
|
84,626
|
|
|
|
|
|
|
|
|
|
|
|
316,824
|
|
Executive Vice President of Finance and Chief Financial Officer
|
|
|
2007
|
|
|
|
190,000
|
|
|
|
37,042
|
|
|
|
66,000
|
|
|
|
|
|
|
|
|
|
|
|
293,042
|
|
Danford F. Smith,
|
|
|
2008
|
|
|
|
250,000
|
|
|
|
1,038,232
|
(3)
|
|
|
211,565
|
(3)
|
|
|
|
|
|
|
|
|
|
|
1,499,797
|
|
President and Chief Operating Officer
|
|
|
2007
|
|
|
|
250,000
|
|
|
|
1,038,232
|
(3)
|
|
|
220,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
1,508,232
|
|
Roger Keith Modder,
|
|
|
2008
|
|
|
|
148,523
|
|
|
|
53,945
|
|
|
|
63,563
|
|
|
|
10,380
|
(5)
|
|
|
29,822
|
(6)
|
|
|
306,233
|
|
Executive Vice President and Managing Director Asian
Operations(4)
|
|
|
2007
|
|
|
|
128,022
|
|
|
|
62,416
|
|
|
|
46,486
|
|
|
|
1,555
|
(5)
|
|
|
29,116
|
(6)
|
|
|
267,595
|
|
T.N. Hari,
|
|
|
2008
|
|
|
|
131,511
|
|
|
|
45,314
|
|
|
|
59,350
|
|
|
|
1,004
|
(8)
|
|
|
|
|
|
|
237,179
|
|
Senior Vice President and Global Head of Human Resources(7)
|
|
|
2007
|
|
|
|
114,959
|
|
|
|
30,719
|
|
|
|
22,504
|
|
|
|
893
|
(8)
|
|
|
|
|
|
|
169,075
|
|
24
|
|
|
(1) |
|
All stock options were granted at the fair market value on the
date of grant under either our 2007 Stock Option and Incentive
Plan (the 2007 Option Plan) or 2000 Amended and
Restated Stock Option Plan (the 2000 Option Plan),
except for Mr. Smiths options, which at the date of
grant were granted outside of the 2000 Stock Option Plan. We
account for stock option-based compensation under the provisions
of SFAS 123(R). The value reported above for each named
executive officer is the amount of SFAS 123(R) compensation
expense recognized for financial statement reporting purposes
for the respective fiscal year ended March 31, assuming no
option award forfeitures. For a discussion of the assumptions
used for SFAS 123(R) valuations and compensation expense
for the respective fiscal years ended March 31, see
note 2 to our consolidated financial statements included as
part of our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008. |
|
(2) |
|
The non-equity incentive plan compensation amounts are the
annual payouts under our VCCP award program approved by our
compensation committee and the board of directors. |
|
(3) |
|
In November 2005, our board of directors approved the re-pricing
of Mr. Smiths stock option award from the original
$6.89 per share price to $2.38 per share, the fair market value
of our common stock at that time. The cumulative amount of
additional compensation to be recognized due to this option
re-pricing over the remaining service period is $501,546, of
which $181,145 is included in the table above. In connection
with this re-pricing, we amended Mr. Smiths eligible
performance-based cash bonus under our VCCP to reduce the target
of $250,000 per year to $200,000 in each of the fiscal years
ending March 31, 2008 and 2007. |
|
(4) |
|
All cash amounts are paid and recorded in Sri Lankan rupees and
were translated into U.S. dollars using the annual average
exchange rates of $0.00909 and $0.00944 per rupee for the fiscal
years ended March 31, 2008 and 2007, respectively. |
|
(5) |
|
Represents the year-over-year change in the value of accumulated
pension benefits to be paid under the government-mandated Sri
Lanka Defined Benefit Gratuity Plan. |
|
(6) |
|
Includes the value of the following perquisites: imputed
interest at 8.5% on a $29,000 non-interest bearing loan ($2,260
in fiscal 2007 and $0 in fiscal 2008 as Mr. Modder repaid
the loan in full in March 2007), company-paid health insurance
premium ($6,375 in fiscal 2008 and $5,237 in fiscal 2007), golf
and athletic club memberships ($1,353 in fiscal 2008 and $1,350
in fiscal 2007), employee provident fund and employee trust fund
contributions ($13,090 in fiscal 2008 and $10,191 in fiscal
2007) and company-owned auto expenses ($9,005 in fiscal
2008 and $10,078 in fiscal 2007). |
|
(7) |
|
All cash amounts are paid and recorded in Indian rupees and were
translated into U.S. dollars using the annual average exchange
rates of $0.02484 and $0.02210 per rupee for the fiscal years
ended March 31, 2008 and 2007, respectively. |
|
(8) |
|
Represents the year-over-year change in the value of accumulated
pension benefits to be paid under the government-mandated
Virtusa (India) Private Limited Employee Gratuity Scheme. |
25
2008
grants of plan-based awards
The compensation committee approves all of our equity-based and
non-equity-based awards to all of our employees, including our
executive officers. The expected payout under our VCCP discussed
above, is recorded in the fiscal year to which it applies and
there are no provisions for future payouts under the VCCP.
GRANT OF
PLAN BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Number of
|
|
|
or Base
|
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity
|
|
|
Securities
|
|
|
Price of
|
|
|
Fair Value
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
|
Underlying
|
|
|
Option
|
|
|
of Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Options
|
|
|
Awards
|
|
|
Awards(1)
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
($/Share)
|
|
|
($)
|
|
|
Kris Canekeratne
|
|
|
|
|
|
|
131,250
|
|
|
|
175,000
|
|
|
|
262,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/2/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
14.00
|
|
|
|
714,320
|
|
Thomas R. Holler
|
|
|
|
|
|
|
60,000
|
|
|
|
80,000
|
|
|
|
104,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Danford F. Smith
|
|
|
|
|
|
|
150,000
|
|
|
|
200,000
|
|
|
|
260,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger Keith Modder
|
|
|
|
|
|
|
45,000
|
|
|
|
60,000
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.N. Hari
|
|
|
|
|
|
|
37,500
|
|
|
|
50,000
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts reported in this column reflect the grant date fair
value of all options awards computed under SFAS 123(R). |
Discussion
of summary compensation and grants of plan-based awards
tables
Our executive compensation policies and practices, pursuant to
which the compensation set forth in the summary compensation
table and the fiscal 2008 grants of plan-based awards table was
paid or awarded, are described above under Compensation
discussion and analysis. A summary of certain material
terms of our compensation plans and arrangements is set forth
below.
2007
stock option and incentive plan
For a detailed discussion of our 2007 Option Plan see
Proposal 3 Ratification of the 2007 Stock
Option and Incentive Plan. For a copy of the 2007 Option
Plan, see Appendix I to this proxy statement.
Amended
and restated 2000 stock option plan
Our 2000 Stock Option Plan, or the 2000 Option Plan, was
approved on May 5, 2000 and was subsequently amended and
restated on April 17, 2002. On March 31, 2008,
2,091,033 shares have been reserved for issuance upon
exercise of outstanding stock options under the 2000 Option
Plan. As of March 31, 2008, incentive stock options and
non-qualified stock options to purchase an aggregate of 194,810
and 1,896,223 shares of our common stock, respectively,
were outstanding under the 2000 Option Plan. In the event that
any option outstanding under the 2000 Option Plan terminates
without being exercised, the number of shares underlying such
option becomes available for grant under the 2007 Option Plan.
Options granted under this plan generally expire 10 years
after the date of grant. Effective upon the adoption of our 2007
Option Plan, our board of directors decided not to grant any
further awards under our 2000 Option Plan.
Our compensation committee administers the 2000 Option Plan. The
compensation committee may select award recipients, determine
the size, types and terms of awards, interpret the plan and
prescribe, amend and rescind rules and make all other
determinations necessary or desirable for the administration of
the 2000 Option Plan. Our current practice is to have the full
board of directors approve any recommendations for awards and
plan changes.
The per share exercise price of the incentive stock options
awarded under the 2000 Option Plan must be at least equal to the
fair market value of a share of our common stock on the date of
grant. The per share
26
exercise price of non-statutory stock options or stock awards
awarded under the 2000 Option Plan must be equal to the fair
market value of a share of our common stock on the date of
grant, or such other price that the compensation committee may
determine is appropriate. Notwithstanding the foregoing, if an
option is granted to an individual who owns or is deemed to own
more than 10% of the combined voting power of all classes of our
stock, the exercise price can be no less than 110% of the fair
market value of a share of our common stock on the date of grant.
Options may be exercised only to the extent that they have
vested. To exercise an option, an option holder must deliver an
exercise notice to us and pay us the aggregate exercise price.
In the event of the termination of an option holders
service relationship with us, all portions of the option
holders award that remain unvested shall immediately
expire and be null and void. If the option holder is terminated
with cause, his or her options shall immediately terminate and
shall not be exercisable. Otherwise, upon the termination of the
option holder for other than cause, options may be exercised for
a period of three months following such termination, except in
the case of death or disability, in which case the option holder
(or the option holders estate, or any other person who
acquires the stock option by reason of the option holders
death), may exercise the stock option within a period of
12 months after such death or disability.
Under the 2000 Option Plan, for each option grant issued and
outstanding, 25% of the total number of shares which are not
vested and exercisable as of the date of an acquisition under
such option grant immediately become vested and exercisable. For
purposes of our option agreements, an acquisition includes any
of the following:
|
|
|
|
|
a merger, reorganization or consolidation between us and another
entity (other than a holding company or parent or subsidiary of
us) as a result of which the holders of our outstanding voting
stock immediately prior to the transaction hold less than a
majority of the outstanding voting stock of the surviving entity
immediately after the transaction;
|
|
|
|
the sale, transfer, or other disposition of all or substantially
all of our assets to one or more persons (other than any
wholly-owned subsidiary) in a single transaction or series of
related transactions; and
|
|
|
|
the direct or indirect sale or exchange in a single or series of
related transactions by our stockholders of more than 50% of our
common stock to an unrelated person or entity as a result of
which the holders of our outstanding voting stock immediately
prior to the transaction hold less than a majority of the
surviving entity immediately after the transaction.
|
Options granted under the 2000 Option Plan are not generally
transferable or assignable by the option holder, other than by
will or the laws of descent and distribution.
27
2008
outstanding equity awards at fiscal year-end
The Company made one option grant to its chief executive officer
during the fiscal year ended March 31, 2008 as detailed in
the table below. The following table also sets forth certain
information concerning the number of outstanding option awards
held by our named executive officers that are exercisable and
unexercisable at March 31, 2008:
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Kris Canekeratne
|
|
|
|
|
|
|
100,000
|
(1)
|
|
|
14.00
|
|
|
|
8/2/2017
|
|
Thomas R. Holler
|
|
|
25,483
|
|
|
|
|
|
|
|
1.57
|
|
|
|
5/21/2013
|
|
|
|
|
11,501
|
|
|
|
14,058
|
(2)
|
|
|
5.48
|
|
|
|
4/28/2014
|
|
|
|
|
8,985
|
|
|
|
14,976
|
(3)
|
|
|
4.19
|
|
|
|
8/7/2016
|
|
Danford F. Smith
|
|
|
698,881
|
|
|
|
99,841
|
(4)
|
|
|
2.38
|
|
|
|
9/22/2014
|
|
Roger Keith Modder
|
|
|
47,923
|
|
|
|
|
|
|
|
1.57
|
|
|
|
1/24/2011
|
|
|
|
|
15,974
|
|
|
|
|
|
|
|
1.57
|
|
|
|
8/22/2011
|
|
|
|
|
27,520
|
|
|
|
|
|
|
|
1.57
|
|
|
|
4/17/2012
|
|
|
|
|
39,043
|
|
|
|
|
|
|
|
0.31
|
|
|
|
5/21/2013
|
|
|
|
|
26,165
|
|
|
|
31,981
|
(2)
|
|
|
5.48
|
|
|
|
4/28/2014
|
|
|
|
|
8,985
|
|
|
|
14,976
|
(3)
|
|
|
4.19
|
|
|
|
8/7/2016
|
|
T.N. Hari
|
|
|
35,143
|
|
|
|
35,144
|
(5)
|
|
|
4.19
|
|
|
|
8/7/2016
|
|
|
|
|
(1) |
|
100% of the shares in this grant will vest on July 31,
2011 with this vesting subject to acceleration to 50% of
the shares granted on both March 31, 2009 and 2010 if the
Company achieves certain performance based milestones. |
|
(2) |
|
10% of the shares in this grant vested one year from date of
grant or April 28, 2005, and the remaining shares vest 15%
on the second anniversary date, 20% on the third anniversary
date, 25% on the fourth anniversary date, and the remaining 30%
on the fifth anniversary date or April 28, 2009. |
|
(3) |
|
6.25% of the shares in this grant vested on November 7,
2006, and the remaining shares vest 6.25% every 3 months
thereafter through August 7, 2010. |
|
(4) |
|
25% of the shares in this grant vested on September 13,
2005, and the remaining shares vest 6.25% every 3 months
thereafter through September 13, 2008. |
|
(5) |
|
25% of the shares in this grant vested on March 31, 2007
and the remaining shares vest 6.25% every 3 months
thereafter through March 31, 2010. |
2008
option exercises and stock vested
None our named executive officers acquired shares of our common
stock from the exercise of stock options or had restricted stock
that vested during the fiscal year ended March 31, 2008.
Pension
benefits
Our subsidiaries, Virtusa (India) Private Limited and Virtusa
(Sri Lanka) Private Limited, each contribute to a defined
benefit plan covering their respective employees in India and
Sri Lanka as mandated by the Indian and Sri Lankan governments.
Benefits are based on the employees years of service and
compensation level. Except for Messrs. Modder and Hari,
none of our other named executive officers is covered by a
pension plan or other similar benefit plan that provides for
payments or other benefits at, following, or in connection with
retirement. Under the terms of the Virtusa (India) Private
Limited Employees Gratuity Scheme, Mr. Hari will not have
any vested benefits under the plan until after five years of
continuous service.
28
The following table summarizes the defined benefit plan of our
subsidiaries as applied to Messrs. Modder and Hari for our
fiscal year ended March 31, 2008
2008
Pension benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
Payments
|
|
|
|
|
|
Number of Years
|
|
|
Accumulated
|
|
|
During Last
|
|
|
|
|
|
Credited Service
|
|
|
Benefits
|
|
|
Fiscal Year
|
|
Name
|
|
Plan Name
|
|
(#)
|
|
|
($)(1)
|
|
|
($)
|
|
|
Roger Keith Modder
|
|
Sri Lanka Benefit Gratuity Plan
|
|
|
8
|
|
|
|
29,665
|
(2)
|
|
|
|
|
T.N. Hari
|
|
Virtusa (India) Private Limited
Employees Gratuity Scheme
|
|
|
2
|
|
|
|
2,022
|
(3)
|
|
|
|
|
|
|
|
(1) |
|
Under the plan, an employees pension (gratuity) benefits
vest after five years of credited service, and are payable in a
lump sum amount upon retirement or separation of employment from
the Company in an amount equal to one-half of an employees
basic monthly salary times the number of years of credited
service. The amount reflected in the table represents the
accumulated benefits payable at the end of fiscal 2008. |
|
(2) |
|
Amounts are recorded in Sri Lankan rupees and were translated
into U.S. dollars using the fiscal year 2008 year end
exchange rate of $0.009270 per rupee. |
|
(3) |
|
Amounts are recorded in Indian rupees and were translated into
U.S. dollars using the fiscal year 2008 year end exchange
rate of $0.025034 per rupee. |
Nonqualified
deferred compensation
None of our named executive officers is covered by a defined
contribution or other plan that provides for the deferral of
compensation on a basis that is not tax-qualified.
Potential
payments upon termination of change in control
In April 2007, we entered into executive agreements with each of
our executive officers that provide for certain severance and
change in control payments. The following summaries set forth
potential payments payable to our executive officers upon
termination of employment by us other than for cause or by the
executive for good reason, or a change in control of us under
the executive agreements and our other compensation programs.
Cause is defined under these agreements to include willful
misconduct or non-performance of duties, certain violations of
our policies, the commission of a felony or misdemeanor
involving moral turpitude and the failure to cooperate in
certain internal or other investigations. Good reason includes a
material reduction in the executives annual base salary or
targeted annual cash compensation, a substantial diminution of
the executives responsibility or authority or a more than
50 mile relocation of the executives primary business
location. The compensation committee may in its discretion
revise, amend or add to the benefits if it deems advisable.
Termination by us other than for cause, or termination by
executive for good reason, prior to a change in
control. Our executive agreements provide that if
we terminate such executives employment other than for
cause, or if such executive terminates his employment for good
reason, the executive is entitled to a lump-sum severance
payment (less applicable withholding taxes) equal to:
|
|
|
|
|
100% of Messrs. Canekeratnes and Smiths annual
base salary and 50% of the annual base salary of each other
executive officer; and
|
|
|
|
a prorated share of the annual bonus, if any, which the
executive officer would have earned in the year in which the
termination of employment occurs.
|
In addition, upon any such termination, Messrs. Canekeratne
and Smith are entitled to continued health benefits for
12 months and each other executive officer is entitled to
six months of continued health benefits. All equity awards
granted to Mr. Smith will have their vesting accelerated by
12 months upon a termination of
29
Mr. Smiths employment other than for cause, or if
Mr. Smith terminates his employment for good reason. The
foregoing benefits are subject to the execution of a general
release by the executive officer.
Termination by us for cause or by executive for other than
good reason; death or disability. Regardless of
any change in control, we are not obligated to make any cash
payment or benefit to our executive officers if their employment
is terminated by us for cause or by the executive without good
reason other than the payment of unpaid salary and accrued and
unused vacation pay. We do not provide any death or disability
benefits for any of our executive officers that are not also
available to our employees generally.
Termination by us other than for cause or termination by
executive for good reason following a change in
control. Our executive agreements with each of
our executive officers provide that, in the event of a
termination of employment other than for cause, or if such
executive terminates his employment for good reason, within
24 months following a change in control in the case of
Messrs. Canekeratne and Smith and 12 months following
a change in control in the case of each other executive officer,
the executive is entitled to a lump-sum severance payment (less
applicable withholding taxes) equal to:
|
|
|
|
|
200% of Messrs. Canekeratnes and Smiths annual
base salary and 50% of the annual base salary of each other
executive officer; and
|
|
|
|
200% in the case of Messrs. Canekeratne and Smith, and 100%
in the case of each other executive officer of the prorated
share of the annual bonus, if any, which the executive officer
would have earned in the year in which the termination of
employment occurs.
|
In addition, upon any such termination, Messrs. Canekeratne
and Smith are entitled to continued health benefits for
24 months and each other executive officer is entitled to
six months of continued health benefits. All unvested equity
awards held by each such executive officer also become
fully-vested and immediately exercisable. The foregoing benefits
are subject to the execution of a general release by the
executive officer.
Automatic acceleration of vesting upon a change in
control. The terms of our executive agreements
with our executive officers provide that the equity awards
granted to each of our executive officers will have their
vesting accelerated by 12 months upon any change in
control, regardless of whether there is a subsequent termination
of employment, except for the equity awards granted to
Messrs. Holler, Modder and Hari prior to the effective date
of their agreements. These awards and all other equity awards
granted under our 2000 Option Plan are subject to the provisions
of the plan, which provides that 25% of the total number of
shares that are not vested and exercisable as of a date of a
change of control become vested and exercisable.
Kris
Canekeratne
The following table describes the potential payments and
benefits upon employment termination or change in control for
Kris Canekeratne, our chairman and chief executive officer, as
if his employment terminated as of March 31, 2008, the last
business day of our last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
|
|
|
Company for Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
Executive Benefits
|
|
Voluntary
|
|
|
Termination by
|
|
|
Resignation for Good
|
|
|
Acceleration
|
|
and Payments Upon
|
|
Resignation for
|
|
|
Company for Other
|
|
|
Reason Following
|
|
|
Following Change
|
|
Termination
|
|
Good Reason
|
|
|
Than Cause
|
|
|
Change in Control
|
|
|
in Control
|
|
|
Base salary
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
|
$
|
600,000
|
|
|
$
|
|
|
Bonus(1)
|
|
|
202,275
|
|
|
|
202,275
|
|
|
|
404,550
|
|
|
|
|
|
Equity acceleration
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
|
|
(2)
|
Continued health benefits
|
|
|
10,515
|
|
|
|
10,515
|
|
|
|
21,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
512,790
|
|
|
$
|
512,790
|
|
|
$
|
1,025,580
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The bonus amounts reflected are based on the annual payouts
under our VCCP for our fiscal year ended March 31, 2008. |
30
|
|
|
(2) |
|
As noted above, Mr. Canekeratnes equity awards are
subject to 12 month acceleration of vesting following a
change in control, and become 100% fully-vested and immediately
exercisable upon termination of his employment by the Company
for other than cause or voluntary resignation for good reason
following a change in control. However, at March 31, 2008
the closing market price for the common stock issuable upon
exercise of his option was less than the exercise price and,
therefore, no intrinsic value or benefit would be derived. |
Thomas R.
Holler
The following table describes the potential payments and
benefits upon employment termination or change in control for
Thomas R. Holler, our executive vice president and chief
financial officer, as if his employment terminated as of
March 31, 2008, the last business day of our last fiscal
year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
|
|
|
Company for Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
Executive Benefits
|
|
Voluntary
|
|
|
Termination by
|
|
|
Resignation for Good
|
|
|
Acceleration
|
|
and Payments Upon
|
|
Resignation for
|
|
|
Company for Other
|
|
|
Reason Following
|
|
|
Following Change
|
|
Termination
|
|
Good Reason
|
|
|
Than Cause
|
|
|
Change in Control
|
|
|
in Control
|
|
|
Base salary
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
|
|
Bonus(1)
|
|
|
84,625
|
|
|
|
84,625
|
|
|
|
84,625
|
|
|
|
|
|
Equity acceleration
|
|
|
|
|
|
|
|
|
|
|
143,585
|
|
|
|
60,715
|
|
Continued health benefits
|
|
|
6,190
|
|
|
|
6,190
|
|
|
|
6,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
189,630
|
|
|
$
|
189,630
|
|
|
$
|
333,215
|
|
|
$
|
60,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The bonus amounts reflected are based on the annual payouts
under our VCCP for our fiscal year ended March 31, 2008. |
Danford
F. Smith
The following table describes the potential payments and
benefits upon employment termination or change in control for
Danford F. Smith, our president and chief operating officer, as
if his employment terminated as of March 31, 2008, the last
business day of our last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
|
|
|
Company for Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
Executive Benefits
|
|
Voluntary
|
|
|
Termination by
|
|
|
Resignation for Good
|
|
|
Acceleration
|
|
and Payments Upon
|
|
Resignation for
|
|
|
Company for Other
|
|
|
Reason Following
|
|
|
Following Change
|
|
Termination
|
|
Good Reason
|
|
|
Than Cause
|
|
|
Change in Control
|
|
|
In control
|
|
|
Base salary
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
$
|
500,000
|
|
|
$
|
|
|
Bonus(1)
|
|
|
211,565
|
|
|
|
211,565
|
|
|
|
423,130
|
|
|
|
|
|
Equity acceleration
|
|
|
|
|
|
|
|
|
|
|
736,827
|
|
|
|
736,827
|
|
Continued health benefits
|
|
|
10,515
|
|
|
|
10,515
|
|
|
|
21,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
472,080
|
|
|
$
|
472,080
|
|
|
$
|
1,680,987
|
|
|
$
|
736,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The bonus amounts reflected are based on the annual payouts
under our VCCP for our fiscal year ended March 31, 2008. |
31
Roger
Keith Modder
The following table describes the potential payments and
benefits upon employment termination or change in control for
Roger Keith Modder, our executive vice president and managing
director, Asian operations, as if his employment terminated as
of March 31, 2008, the last business day of our last fiscal
year. All cash amounts in U.S. dollars in the table below
would be paid in Sri Lankan rupees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
|
|
|
Company for Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
Executive Benefits
|
|
Voluntary
|
|
|
Termination by
|
|
|
Resignation for Good
|
|
|
Acceleration
|
|
and Payments Upon
|
|
Resignation for
|
|
|
Company for Other
|
|
|
Reason Following
|
|
|
Following Change
|
|
Termination
|
|
Good Reason
|
|
|
Than Cause
|
|
|
Change in Control
|
|
|
in Control
|
|
|
Base salary
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
|
$
|
|
|
Bonus(1)
|
|
|
62,785
|
|
|
|
62,785
|
|
|
|
62,785
|
|
|
|
|
|
Equity acceleration
|
|
|
|
|
|
|
|
|
|
|
220,595
|
|
|
|
95,582
|
|
Continued health benefits
|
|
|
3,175
|
|
|
|
3,175
|
|
|
|
3,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
140,960
|
|
|
$
|
140,960
|
|
|
$
|
361,555
|
|
|
$
|
95,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The bonus amounts reflected are based on the annual payouts
under our VCCP for our fiscal year ended March 31, 2008. |
T.N.
Hari
The following table describes the potential payments and
benefits upon employment termination or change in control for
T.N. Hari, our senior vice president and global head of human
resources, as if his employment terminated as of March 31,
2008, the last business day of our last fiscal year. All cash
amounts in U.S. dollars in the table below would be paid in
Indian rupees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination by the
|
|
|
|
|
|
|
|
|
|
|
|
|
Company for Other
|
|
|
|
|
|
|
|
|
|
|
|
|
Than Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
Executive Benefits
|
|
Voluntary
|
|
|
Termination by
|
|
|
Resignation for Good
|
|
|
Acceleration
|
|
and Payments Upon
|
|
Resignation for
|
|
|
Company for Other
|
|
|
Reason Following
|
|
|
Following Change
|
|
Termination
|
|
Good Reason
|
|
|
Than Cause
|
|
|
Change in Control
|
|
|
in Control
|
|
|
Base salary
|
|
$
|
62,500
|
|
|
$
|
62,500
|
|
|
$
|
62,500
|
|
|
$
|
|
|
Bonus(1)
|
|
|
51,375
|
|
|
|
51,375
|
|
|
|
51,375
|
|
|
|
|
|
Equity acceleration
|
|
|
|
|
|
|
|
|
|
|
195,752
|
|
|
|
97,875
|
|
Continued health benefits
|
|
|
69
|
|
|
|
69
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
113,944
|
|
|
$
|
113,944
|
|
|
$
|
309,696
|
|
|
$
|
97,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The bonus amounts reflected are based on the annual payouts
under our VCCP for our fiscal year ended March 31, 2008. |
Director
compensation
In April 2007, upon recommendation of the compensation
committee, our board of directors approved a non-employee
director compensation policy that provides for annual
compensation of $80,000, of which we will make an annual stock
option grant to each non-employee director with an economic
value of $48,000 (based on a Black-Scholes valuation on the date
of grant) and an annual retainer fee of $32,000 payable in cash.
In addition, the chairmen of our audit, compensation and
nominating and corporate governance committees will receive an
annual fee of $18,000, $11,000 and $7,000, respectively. All
cash payments will be made on a quarterly basis.
32
In addition, we will make, under our 2007 Option Plan, a
one-time, initial grant of options to purchase up to
6,389 shares of our common stock to any new non-employee
director who joins the board of directors.
Each stock option award granted to a non-employee director under
the non-employee director compensation policy will be made at
the board of directors meeting immediately following our
annual meeting, and will have a four-year vesting period, with
25% vesting after one year and with the remaining shares vesting
in equal installments each three-month period thereafter. The
vesting of all of the options granted to our non-employee
directors will also accelerate by 12 months in the event of
a change in control.
We reimburse all non-employee directors for their reasonable
out-of-pocket expenses incurred in attending meetings of our
board of directors or any committees thereof.
The following table sets forth a summary of the compensation we
paid to our non-employee directors in our fiscal year ended
March 31, 2008:
2008
DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
and Nonqualified
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)(1)
|
|
|
($)
|
|
|
($)(2)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Izhar Armony
|
|
|
21,333
|
|
|
|
|
|
|
|
16,999
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,332
|
|
Robert E. Davoli
|
|
|
21,333
|
|
|
|
|
|
|
|
6,702
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,035
|
|
Andrew P. Goldfarb
|
|
|
21,333
|
|
|
|
|
|
|
|
6,702
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,035
|
|
Ronald T. Maheu
|
|
|
33,333
|
|
|
|
|
|
|
|
16,708
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,041
|
|
Rowland T. Moriarty
|
|
|
26,000
|
|
|
|
|
|
|
|
60,844
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,844
|
|
Martin Trust
|
|
|
28,667
|
|
|
|
|
|
|
|
56,400
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
85,067
|
|
|
|
|
(1) |
|
Represent the cash fees earned since August 2, 2007, the
effective date of our non-employee director compensation policy,
to March 31, 2008. We pay these fees promptly after the
quarter in which they are earned. |
|
(2) |
|
All stock options were granted at the fair market value on the
date of grant under our 2000 Option Plan and 2007 Option Plans,
except for options granted to Mr. Trust in fiscal 2004,
which were granted outside of the 2000 Option Plan. We account
for stock option-based compensation under the provisions of
SFAS 123(R). The value reported above for each named
director is the amount of SFAS 123(R) compensation expense
recognized for financial statement reporting purposes for the
fiscal year ended March 31, 2008, assuming no option award
forfeitures. For a discussion of the assumptions used for
SFAS 123(R) valuations and compensation expense, see the
information appearing in note 2 to our consolidated
financial statements included as part of our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008. |
|
(3) |
|
Consists of stock-based compensation expense for the fiscal year
ended March 31, 2008 for (a) a stock option award
granted on August 2, 2007, to purchase 6,719 shares of
common stock at an exercise price of $14.00 per share which
vests 25% after one (1) year and 6.25% each three
(3) month period thereafter (total grant date fair value
was $47,995) and (b) a stock option granted on
September 3, 2004, to purchase 15,974 shares of common
stock at an exercise price of $6.89 per share which vested in
equal quarterly installments over a three-year period and was
fully vested as of September 3, 2007 (total grant date fair
value was $68,500). |
|
(4) |
|
Consists of stock-based compensation expense for the fiscal year
ended March 31, 2008 for a stock option award granted on
August 2, 2007, to purchase 6,719 shares of common
stock at an exercise price of $14.00 per share which vests 25%
after one (1) year and 6.25% each three (3) month
period thereafter (total grant date fair value was $47,995). |
|
(5) |
|
Consists of stock-based compensation expense for the fiscal year
ended March 31, 2008 for (a) a stock option award
granted on August 2, 2007 to purchase 6,719 shares of
common stock at an exercise price of |
33
|
|
|
|
|
$14.00 per share which vests 25% after one (1) year and
6.25% each three (3) month period thereafter (total grant
date fair value was $47,995) and (b) a stock option award
granted on April 28, 2004, to purchase 62,873 shares
of common stock at an exercise price of $5.48 per share, which
vested in equal quarterly installments over a three-year period
and was fully vested as of April 28, 2007 (total grant date
fair value was $220,984). |
|
(6) |
|
Consists of stock-based compensation expense for the fiscal year
ended March 31, 2008 for (a) a stock option award
granted on August 2, 2007 to purchase 6,719 shares of
common stock at an exercise price of $14.00 per share which
vests 25% after one (1) year and 6.25% each three
(3) month period thereafter (total grant date fair value
was $47,995) and (b) a stock option award granted on
August 7, 2006, to purchase 71,168 shares of common
stock at an exercise price of $4.19 per share, which vests in
equal quarterly installments over a three-year period (total
grant date fair value was $175,555). |
|
(7) |
|
Consists of stock-based compensation expense for the fiscal year
ended March 31, 2008 for (a) a stock option award
granted on August 2, 2007 to purchase 6,719 shares of
common stock at an exercise price of $14.00 per share which
vests 25% after one (1) year and 6.25% each three
(3) month period thereafter (total grant date fair value
was $47,995) and (b) a stock option award granted on
September 22, 2004, to purchase 70,333 shares of
common stock at an exercise price of $6.89 per share, which
vested in equal quarterly installments over a three-year period
and was fully vested as of September 22, 2007 (total grant
date fair value was $305,843). |
|
(8) |
|
The non-employee members of our board of directors who held such
positions as of March 31, 2008 held the following aggregate
number of unexercised options as of such date: |
|
|
|
|
|
|
|
Number of
|
|
|
|
Securities
|
|
|
|
Underlying
|
|
|
|
Unexercised
|
|
Name
|
|
Options
|
|
|
Izhar Armony
|
|
|
22,963
|
|
Robert E. Davoli
|
|
|
30,680
|
|
Andrew P. Goldfarb
|
|
|
22,963
|
|
Ronald T. Maheu
|
|
|
69,592
|
|
Rowland T. Moriarty
|
|
|
77,887
|
|
Martin Trust
|
|
|
77,052
|
|
|
|
|
(9) |
|
The following table presents the fair value of each grant of
stock options during the fiscal year ended March 31, 2008
to the non-employee members of our board of directors computed
in accordance with SFAS 123(R): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Price of
|
|
|
Grant Date
|
|
|
|
|
|
|
Underlying
|
|
|
Options
|
|
|
Fair Value of
|
|
|
|
|
|
|
Unexercised
|
|
|
Awarded
|
|
|
Options
|
|
Name
|
|
Grant Date
|
|
|
Options
|
|
|
($)
|
|
|
($)
|
|
|
Izhar Armony
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Robert E. Davoli
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Andrew P. Goldfarb
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Ronald T. Maheu
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Rowland T. Moriarty
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Martin Trust
|
|
|
8/2/2007
|
|
|
|
6,719
|
|
|
|
14.00
|
|
|
|
47,995
|
|
Transactions
with related persons
Other than compensation agreements and other arrangements which
are described below, since April 1, 2007, there has not
been and there is not currently proposed, any transaction or
series of similar transactions to which we were or will be a
party in which the amount involved exceeded or will exceed
$120,000 and in
34
which any director, executive officer, holder of five percent or
more of any class of our capital stock or any member of their
immediate family had or will have a direct or indirect material
interest.
In our fiscal year ended March 31, 2008, we engaged Lotus
Air Travel Services, Inc. as a travel agent incurring fees of
approximately $387,000 in connection with services from Lotus
Air Travel Services. The managing director of Lotus Air Travel
Services, Inc. is the
mother-in-law
of Mr. Canekeratne.
We believe that we have executed the transaction set forth above
on terms no less favorable to us than we could have obtained
from unaffiliated third parties. The transaction set forth above
was approved or ratified by our audit committee. In April 2007,
our board of directors adopted a written related party
transaction approval policy, which sets forth our policies and
procedures for the review, approval or ratification of any
transaction required to be reported in our filings with the
Securities and Exchange Commission. Our policy with regard to
related party transactions is that all related party
transactions are to be reviewed by our general counsel, who will
determine whether the contemplated transaction or arrangement
requires the approval of the board of directors, the audit
committee, both or neither.
PROPOSAL 2
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTANTS
The audit committee of the board of directors has retained the
firm of KPMG LLP, independent registered public accountants, to
serve as independent registered public accountants for our 2009
fiscal year. KPMG LLP has served as our independent registered
public accounting firm since 2004. The audit committee reviewed
and discussed its selection of, and the performance of, KPMG LLP
for our 2008 fiscal year. As a matter of good corporate
governance, the audit committee has determined to submit its
selection to stockholders for ratification. If the selection of
independent registered public accountants is ratified, the audit
committee at its discretion may select a different independent
registered public accounting firm at any time during the fiscal
year if it determines that such a change would be in the best
interests of us and our stockholders.
The audit committee of the board of directors has implemented
procedures under our audit committee pre-approval policy for
audit and non-audit services, or the Pre-Approval Policy, to
ensure that all audit and permitted non-audit services to be
provided to us have been pre-approved by the audit committee.
Specifically, the audit committee pre-approves the use of KPMG
LLP for specific audit and non-audit services, within approved
monetary limits. If a proposed service has not been pre-approved
pursuant to the Pre-Approval Policy, then it must be
specifically pre-approved by the audit committee before it may
be provided by KPMG LLP. Any pre-approved services exceeding the
pre-approved monetary limits require specific approval by the
audit committee. For additional information concerning the audit
committee and its activities with KPMG LLP, see The Board
of Directors and Its Committees and Report of the
Audit Committee of the Board of Directors.
Representatives of KPMG LLP attended ten (10) of the twelve
(12) meetings of the audit committee in our fiscal year
ended March 31, 2008. We expect that a representative of
KPMG LLP will attend the annual meeting, and the representative
will have an opportunity to make a statement if he or she so
desires. The representative will also be available to respond to
appropriate questions from stockholders.
35
Fees
billed by KPMG LLP
The following table shows the aggregate fees for professional
services rendered by KPMG LLP to us during the fiscal years
ended March 31, 2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
Audit Fees
|
|
$
|
2,434,000
|
(1)
|
|
$
|
1,346,000
|
(2)
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
3,000
|
|
|
|
3,000
|
|
All Other Fees
|
|
|
8,000
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,445,000
|
|
|
$
|
1,356,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of $1,418,000 of fees related to our registration
statement on
Form S-1
and our initial public offering which closed on August 8,
2007; and $1,016,000 of annual audit fees for our fiscal year
2008. |
|
(2) |
|
Consists of $682,000 of fees related to our registration
statement on Form S-1 as stated above; and $664,000 of annual
audit fees for our fiscal year 2007. |
Audit
fees
Audit fees for both years consist of fees for professional
services associated with the annual audits and registration
statements.
Audit-related
fees
KPMGs Fees for audit-related services were zero for both
2008 and 2007.
Tax
fees
Tax Fees consist of fees for professional services rendered for
assistance with international statutory tax compliance. The
audit committee has determined that the provision of these
services to us by KPMG is compatible with maintaining their
independence.
All
other fees
All other fees relate to permissible advisory services.
For Proposal 2, the ratification of the appointment of KPMG
LLP as the Companys independent registered public
accountants for the current fiscal year, an affirmative vote of
a majority of the shares present, in person or represented by
proxy, and voting on each such matter is required for approval.
Recommendation
of the board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE RATIFICATION OF KPMG LLP
AS VIRTUSA CORPORATIONS INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
FOR FISCAL YEAR ENDED MARCH 31, 2009.
PROPOSAL 3
RATIFICATION
OF THE 2007 STOCK OPTION AND INCENTIVE PLAN
2007
Stock Option and Incentive Plan
Prior to our initial public offering, the board of directors and
our stockholders approved the 2007 Stock Option and Incentive
Plan (the 2007 Option Plan). Under pertinent IRS
regulations, grants made to Covered Employees (as
defined in Section 162(m) of the Internal Revenue Code of
1986, as amended (the Code))
36
under our 2007 Option Plan prior to the earlier of (i) the
material modification of our 2007 Option Plan or (ii) our
2011 annual stockholders meeting (the Reliance
Period) are not subject to the cap on the Companys
tax deduction imposed by Section 162(m) of the Code of 1986
with respect to compensation in excess of $1,000,000 per Covered
Employee in any year. The board of directors seeks
stockholders ratification of the 2007 Option Plan so that
certain grants made to Covered Employees under the 2007 Option
Plan, including stock options, stock appreciation rights, and
restricted stock and deferred stock subject to performance-based
vesting, will continue to qualify as performance-based
compensation under Section 162(m) of the Code beyond
the Reliance Period and therefore be exempt from the cap on the
Companys tax deduction imposed by Section 162(m) of
the Code. If our stockholders do not ratify our 2007 Option
Plan, we will either not make grants to Covered Employees under
our 2007 Option Plan after the Reliance Period or we will seek
stockholder approval of a new stock plan before the end of the
Reliance Period.
The material features of our 2007 Option Plan are:
|
|
|
|
|
In connection with our 2007 Option Plan, 830,670 shares of
our common stock have been initially reserved for the issuance
of awards under our 2007 Option Plan. Our 2007 Option Plan
provides that the number of shares reserved and available for
issuance thereunder will automatically increase each
April 1, beginning in 2008, by 2.9% of the outstanding
number of shares of our common stock on the immediately
preceding March 31;
|
|
|
|
The shares issued by us under our 2007 Option Plan will be
authorized but unissued shares. The shares underlying any awards
that are forfeited, canceled, expire or are terminated (other
than by exercise) under our Amended and Restated 2000 Option
Plan and our 2005 Stock Appreciation Rights Plan (the Old
Plans) and our 2007 Option Plan are added back to the
shares available for issuance under our 2007 Option Plan. Shares
tendered or held back upon exercise of an option or settlement
of an award granted under our 2007 Option Plan to cover the
exercise price or tax withholding are available for future
issuance under our 2007 Option Plan;
|
|
|
|
The award of stock options (both incentive and non-qualified
options), stock appreciation rights, restricted stock, and
deferred stock is permitted;
|
|
|
|
Any material amendment (other than an amendment that curtails
the scope of the 2007 Option Plan) is subject to approval by our
stockholders; and
|
|
|
|
Our 2007 Option Plan is administered by the compensation
committee of our board of directors. Our compensation committee
has full power and authority to select the participants to whom
awards will be granted, to make any combination of awards to
participants, to accelerate the exercisability or vesting of any
award and to determine the specific terms and conditions of each
award, subject to the provisions of our 2007 Option Plan.
|
Based solely on the closing price of our common stock as
reported on the NASDAQ Global Market on March 31, 2008 and
the maximum number of shares that would have been available for
awards as of such date (and assuming that no outstanding awards
under our Old Plans and our 2007 Option Plan are forfeited,
cancelled or terminated as of such date), the maximum aggregate
market value of the shares that could potentially be issued
under our 2007 Option Plan is $4,496,666.
To ensure that certain awards granted under our 2007 Option
Plan, including awards of restricted stock and deferred stock,
to a Covered Employee qualify as performance-based
compensation under Section 162(m) of the Code, our
2007 Option Plan provides that our compensation committee may
require that the vesting of such awards be conditioned on the
satisfaction of performance criteria related to objectives of
the Company or of a subsidiary, division, operating unit or
business segment of the Company or subsidiary in which the
relevant participant is employed, such as: (i) the
Companys return on equity, assets, capital or investment;
(ii) pre-tax or after-tax profit levels of the Company or
any subsidiary, a division, an operating unit or a business
segment of the Company, or any combination of the foregoing;
(iii) cash flow, funds from operations or similar measure;
(iv) total stockholder return; (v) changes in the
market price of the Companys common stock; (vi) sales
or market share; or (viii) earnings per share. The
compensation committee will select the particular performance
criteria within 90 days following the commencement of a
performance cycle. Subject to adjustments for stock
37
splits and similar events, no more than 958,466 shares may
be granted to any one individual during any one fiscal year.
Our board of directors believes that it is important to maintain
our flexibility to make awards to Covered Employees beyond the
Reliance Period and to preserve our tax deduction for such
awards that qualify as performance-based
compensation under Section 162(m) of the Code.
Vote
required
The vote required for the ratification of the 2007 Option Plan
is the affirmative vote of a majority of the shares cast (in
person or by proxy) and entitled to vote on the proposal. An
abstention from voting on the proposal will have the effect of a
no vote.
Recommendation
of the board
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THE RATIFICATION OF THE 2007 STOCK OPTION AND INCENTIVE
PLAN.
Summary
of the 2007 option plan
The following description of certain features of the 2007 Option
Plan is intended to be a summary only. The summary is qualified
in its entirety by the full text of the 2007 Option Plan that is
attached hereto as Appendix I.
Overview and Evergreen. Our 2007 Stock
Option and Incentive Plan, or 2007 Option Plan, was adopted by
our board of directors and approved by our stockholders in May
2007. The 2007 Option Plan permits us to make grants of
incentive stock options, non-qualified stock options, stock
appreciation rights, deferred stock awards, restricted stock
awards, unrestricted stock awards and dividend equivalent
rights. We initially reserved 830,670 shares of our common
stock for the issuance of awards under the 2007 Option Plan. The
2007 Option Plan provides that the number of shares reserved and
available for issuance under the plan will be automatically
increased each April 1, beginning in 2008, by 2.9% of the
outstanding number of shares of common stock on the immediately
preceding March 31 or such lower number of shares of common
stock as determined by the board of directors. This number is
subject to adjustment in the event of a stock split, stock
dividend or other change in our capitalization. Generally,
shares that are forfeited or canceled from awards under the 2007
Option Plan also will be available for future awards. In
addition, available shares under our Amended and Restated 2000
Stock Option Plan and 2005 Stock Appreciation Rights Plan,
including as a result of the forfeiture, expiration,
cancellation, termination or net issuances of awards, are
automatically made available for issuance under the 2007 Option
Plan.
Plan Administration. The 2007 Option
Plan may be administered by either our compensation committee of
at least two non-employee directors, or by our full board of
directors. The administrator has full power and authority to
select the participants to whom awards will be granted, to make
any combination of awards to participants, to accelerate the
exercisability or vesting of any award and to determine the
specific terms and conditions of each award, subject to the
provisions of the 2007 Option Plan. The 2007 Option Plan is
currently administered by our compensation committee. Our
practice is to have all recommendations of equity awards and
approvals or amendments regarding the 2007 Option Plan as
approved or recommended by the compensation committee to be
voted upon and approved by our board of directors.
Eligibility and Limitations on Grants
All full-time and part-time officers, employees,
non-employee directors and other key persons (including
consultants and prospective employees) are eligible to
participate in the 2007 Option Plan, subject to the discretion
of our compensation committee. There are certain limits on the
number of awards that may be granted under the 2007 Option Plan.
For example, no more than 958,466 shares of common stock
may be granted in the form of stock options or stock
appreciation rights to any one individual during any one
calendar year period.
Stock Options. The 2007 Option Plan
permits the granting of (1) stock options intended to
qualify as incentive stock options under Section 422 of the
Code and (2) stock options that do not so qualify. Options
38
granted under the 2007 Option Plan will be non-qualified options
if they fail to qualify as incentive options or exceed the
annual limit on incentive stock options. Non-qualified options
may be granted to any persons eligible to receive incentive
options and to non-employee directors and key persons. The
option exercise price of each option will be determined by the
compensation committee but may not be less than 100% of the fair
market value of our common stock on the date of grant. The
maximum number of shares that can be granted in the form of
incentive stock options cannot exceed 1,661,341 shares.
The term of each option will be fixed by the compensation
committee and may not exceed ten years from the date of grant.
The compensation committee will determine at what time or times
each option may be exercised. Options may be made exercisable in
installments and the exercisability of options maybe accelerated
by the compensation committee. Options may be exercised in whole
or in part with written notice to the Company.
Upon exercise of options, the option exercise price must be paid
in full either in cash, by certified or bank check or other
instrument acceptable to the compensation committee, or by
delivery (or attestation to the ownership) of shares that are
beneficially owned by the optionee. Subject to applicable law,
the exercise price may also be delivered to the Company by a
cashless exercise through a broker pursuant to
irrevocable instructions to the broker from the optionee.
To qualify as incentive options, options must meet additional
federal tax requirements, including a $100,000 limit on the
value of shares subject to incentive options that first become
exercisable by a participant in any one fiscal year and a
shorter term and higher minimum exercise price in the case of
certain large stockholders.
Exercise Price. The exercise price of
stock options awarded under the 2007 Option Plan may not be less
than the fair market value of our common stock on the date of
the option grant and the term of each option may not exceed ten
years from the date of grant. The administrator will determine
at what time or times each option may be exercised and, subject
to the provisions of the 2007 Option Plan, the period of time,
if any, after retirement, death, disability or other termination
of employment during which options may be exercised.
Stock Appreciation Rights. Stock
appreciation rights may be granted under our 2007 Option Plan.
Stock appreciation rights allow the recipient to receive the
appreciation in the fair market value of our common stock
between the exercise date and the date of grant. The
administrator determines the terms of stock appreciation rights.
Restricted Stock. Restricted stock may
be granted under our 2007 Option Plan. Restricted stock awards
are shares of our common stock that vest in accordance with
terms and conditions established by the administrator. The
administrator will determine the number of shares of restricted
stock granted to any employee. The administrator may impose
whatever conditions to vesting it determines to be appropriate.
For example, the administrator may set restrictions based on the
achievement of specific performance goals. Shares of restricted
stock that do not vest are subject to our right of repurchase or
forfeiture.
Deferred and Unrestricted
Stock. Deferred and unrestricted stock awards
may be granted under our 2007 Option Plan. Deferred stock awards
are units entitling the recipient to receive shares of stock
paid out on a deferred basis, and are subject to such
restrictions and conditions as the administrator shall
determine. Our 2007 Option Plan also gives the administrator
discretion to grant stock awards free of any restrictions.
Dividend Equivalent Rights. Dividend
equivalent rights may be granted under our 2007 Option Plan.
Dividend equivalent rights are awards entitling the grantee to
current or deferred payments equal to dividends on a specified
number of shares of stock. Dividend equivalent rights may be
settled in cash or shares and are subject to other conditions as
the administrator shall determine.
Cash-based awards. Cash-based awards
may be granted under our 2007 Option Plan. Each cash -based
award shall specify a cash-denominated payment amount, formula
or payment ranges as determined by the administrator. Payment,
if any, with respect to a cash-based award may be made in cash
or in shares of stock, as the administrator determines.
39
Transfers. Unless the administrator
provides otherwise, our 2007 Option Plan does not allow for the
transfer of awards and only the recipient of an award may
exercise an award during his or her lifetime.
Change in Control Provisions. In the
event of a merger, sale or dissolution, or a similar sale
event, unless assumed or continued by any successor
entity, all stock options and stock appreciation rights granted
under the 2007 Option Plan will automatically become fully
exercisable, all other awards granted under the 2007 Option Plan
will become fully vested and non-forfeitable and awards with
conditions and restrictions relating to the attainment of
performance goals may become vested and non-forfeitable in
connection with a sale event in the administrators
discretion. In addition, upon the effective time of any such
sale event, the 2007 Option Plan and all awards will terminate
unless the parties to the transaction, in their discretion,
provide for appropriate substitutions or assumptions of
outstanding awards.
Duration, Amendment and Termination. No
awards may be granted under the 2007 Option Plan after
May 22, 2017. Our board of directors adopted the 2007
Option Plan on May 14, 2007 and the 2007 Option Plan became
effective on May 22, 2007, the date it was approved by our
stockholders. Awards of incentive options may be granted under
the 2007 Option Plan until ten years from the date the 2007
Option Plan was approved by our board of directors. No other
awards may be granted under the 2007 Option Plan after the date
that is ten years from the date of stockholder approval. In
addition, our board of directors may amend or discontinue the
2007 Option Plan at any time and our compensation committee may
amend or cancel any outstanding award for the purpose of
satisfying changes in law or for any other lawful purpose. No
such amendment may adversely affect the rights under any
outstanding award without the holders consent. Other than
in the event of a necessary adjustment in connection with a
change in the Companys stock or a merger or similar
transaction, the administrator may not reprice or
otherwise reduce the exercise price of outstanding stock options
or stock appreciation rights. Further, any material amendments
to the 2007 Option Plan will be subject to approval by our
stockholders, including any amendment that (i) increases
the number of shares available for issuance under the 2007
Option Plan, (ii) expands the types of awards available
under, the eligibility to participate in, or the duration of,
the plan, (iii) materially changes the method of
determining fair market value for purposes of the 2007 Option
Plan, (iv) is required by the NASDAQ Global Market rules,
or (v) is required by the Code to ensure that incentive
options are tax qualified.
Tax Withholding. Participants in the
2007 Option Plan are responsible for the payment of any Federal,
state or local taxes that we are required by law to withhold
upon any option exercise or vesting of other awards.
Participants may elect to have the minimum tax withholding
obligations satisfied either by authorizing us to withhold
shares to be issued pursuant to an option exercise or other
award, making a cash payment to us or subject to approval by the
compensation committee, by transferring to us shares having a
value equal to the amount of such taxes.
Tax
aspects under the code
The following is a summary of the principal federal income tax
consequences of certain transactions under the 2007 Option Plan.
It does not describe all federal tax consequences under the 2007
Option Plan, nor does it describe state or local tax
consequences.
Incentive Options. No taxable income is
generally realized by the optionee upon the grant or exercise of
an incentive option. If shares issued to an optionee pursuant to
the exercise of an incentive option are sold or transferred
after two years from the date of grant and after one year from
the date of exercise, then (1) upon sale of such shares,
any amount realized in excess of the option price (the amount
paid for the shares) will be taxed to the optionee as a
long-term capital gain, and any loss sustained will be a
long-term capital loss, and (2) there will be no deduction
for us for federal income tax purposes. The exercise of an
incentive option will give rise to an item of tax preference
that may result in alternative minimum tax liability for the
optionee.
If shares acquired upon the exercise of an incentive option are
disposed of prior to the expiration of the two-year and one-year
holding periods described above (a disqualifying
disposition), generally (a) the optionee will realize
ordinary income in the year of disposition in an amount equal to
the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized on a sale of such
shares ) over
40
the option price thereof, and (b) we will be entitled to
deduct such amount. Special rules will apply where all or a
portion of the exercise price of the incentive option is paid by
tendering shares.
If an incentive option is exercised at a time when it no longer
qualifies for the tax treatment described above (e.g., if the
holding periods described above are not satisfied), the option
is treated as a non-qualified option. In addition, an incentive
option will not be eligible for the tax treatment described
above if it is exercised more than three months following
termination of employment (or one year in the case of
termination of employment by reason of disability). In the case
of termination of employment by reason of death, the three-month
rule does not apply.
Non-Qualified Options. No income is
realized by the optionee at the time the option is granted.
Generally (i) at exercise, ordinary income is realized by
the optionee in an amount equal to the difference between the
option price and the fair market value of the shares on the date
of exercise, and we receive a tax deduction for the same amount,
and (ii) at disposition, appreciation or depreciation after
the date of exercise is treated as either short-term or
long-term capital gain or loss depending on how long the shares
have been held. Special rules will apply where all or a portion
of the exercise price of the non-qualified option is paid by
tendering shares. Upon exercise, the optionee will also be
subject to Social Security taxes on the excess of the fair
market value over the exercise price of the option.
Parachute
payments
The vesting of any portion of an option or other award that is
accelerated due to the occurrence of a change in control may
cause a portion of the payments with respect to such accelerated
awards to be treated as parachute payments as
defined in the Code. Any such parachute payments may be
non-deductible to the Company, in whole or in part, and may
subject the recipient to a non-deductible 20% federal excise tax
on all or a portion of such payment (in addition to other taxes
ordinarily payable).
Limitation
on the Companys deductions
As a result of Section 162(m) of the Code, the
Companys deduction for certain awards under the 2007
Option Plan may be limited to the extent that the chief
executive officer or other executive officer whose compensation
is required to be reported in the summary compensation table
receives compensation in excess of $1,000,000 a year (other than
performance-based compensation that otherwise meets the
requirements of Section 162(m) of the Code). Grants under
the 2007 Option Plan through the Reliance Period is exempt from
the cap imposed by Section 162(m) of the Code. If
stockholders approve Proposal 3, certain grants under the
2007 Option Plan, including stock options, stock appreciation
rights, and restricted stock and deferred stock units subject to
performance vesting, will qualify as performance-based
compensation after the Reliance Period.
2007
option plan benefits
The number of shares that may be granted to the Companys
chief executive officer, executive officers, non-employee
directors and non-executive officers under the 2007 Option Plan
is not determinable at this time, as such grants are subject to
the discretion of the compensation committee. The following
table provides
41
information with respect to the number of shares granted under
the 2007 Option Plan for the fiscal year ended March 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Average Exercise
|
|
Name and Position
|
|
Dollar Value
|
|
|
Number
|
|
|
Price
|
|
|
Kris Canekeratne, Chairman and Chief Executive Officer
|
|
$
|
714,320
|
|
|
|
100,000
|
|
|
$
|
14.00
|
|
Izhar Armony, Director
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Robert E. Davoli, Director
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Andrew P. Goldfarb, Director
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Ronald T. Maheu, Director
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Rowland T. Moriarty
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Martin Trust
|
|
$
|
47,995
|
|
|
|
6,719
|
|
|
$
|
14.00
|
|
Equity
compensation plan information
For a description of the shares of common stock that may be
issued under our existing compensation plans. please see
Item 5 Market for Our Common Equity,
Related Stockholder Matters and Purchases of Equity
Securities Equity Compensation Plan
Information, in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2008 as filed with the
SEC.
OTHER
MATTERS
The board of directors knows of no other matters to be brought
before the annual meeting. If any other matters are properly
brought before the annual meeting, the persons appointed in the
accompanying proxy intend to vote the shares represented thereby
in accordance with their best judgment on such matters, under
applicable laws.
STOCKHOLDER
PROPOSALS
Proposals of stockholders intended for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote
at our 2009 annual meeting of stockholders, pursuant to
Rule 14a-8
promulgated under the Exchange Act by the Securities and
Exchange Commission, must be received at the Companys
principal executive offices not later than May 29, 2009.
Stockholders who wish to make a proposal at the 2009 annual
meeting other than one that will be included in the
Companys proxy statement must notify us
between May 29, 2009 and June 27, 2009. If a
stockholder who wishes to present a proposal fails to notify us
by June 27, 2009 and such proposal is brought before the
2009 annual meeting, then under the Securities and Exchange
Commissions proxy rules, the proxies solicited by
management with respect to the 2009 annual meeting will confer
discretionary voting authority with respect to the
stockholders proposal on the persons selected by
management to vote the proxies. If a stockholder makes a timely
notification, the proxies may still exercise discretionary
voting authority under circumstances consistent with the
Securities and Exchange Commissions proxy rules. In order
to curtail controversy as to the date on which we received a
proposal, it is suggested that proponents submit their proposals
by Certified Mail, Return Receipt Requested, to Virtusa
Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581, Attn: Secretary.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors,
executive officers and persons who own more than ten percent of
a registered class of our equity securities to file reports of
ownership and changes in ownership with the Securities and
Exchange Commission. Such persons are required by regulations of
the Securities and Exchange Commission to furnish us with copies
of all such filings. Based solely on our review of copies of
such filings we believe that all such persons complied on a
timely basis with all Section 16(a) filing requirements
during the fiscal year ended March 31, 2008.
42
EXPENSES
AND SOLICITATION
The cost of solicitation of proxies will be borne by us and, in
addition to soliciting stockholders by mail through its regular
employees, we may request banks, brokers and other custodians,
nominees and fiduciaries to solicit their customers who have our
stock registered in the names of a nominee and, if so, will
reimburse such banks, brokers and other custodians, nominees and
fiduciaries for their reasonable
out-of-pocket
costs. Solicitation by our officers and employees may also be
made of some stockholders in person or by mail, telephone,
e-mail or
telegraph following the original solicitation. We may also
retain an independent proxy solicitation firm to assist in the
solicitation of proxies.
HOUSEHOLDING
OF PROXY MATERIALS
Our 2008 Annual Report, including audited financial statements
for the fiscal year ended March 31, 2008 is being mailed to
you along with this proxy statement. In order to reduce printing
and postage costs, Broadridge Financial Solutions has undertaken
an effort to deliver only one Annual Report and one proxy
statement to multiple shareholders sharing an address. This
delivery method, called householding, is not being
used, however, if Broadridge has received contrary instructions
from one or more of the stockholders sharing an address. If your
household has received only one Annual Report and one proxy
statement, we will deliver promptly a separate copy of the
Annual Report and the proxy statement to any shareholder who
sends a written request to Virtusa Corporation, 2000 West
Park Drive, Westborough, Massachusetts 01581
Attn: Secretary,
(508) 389-7300.
If your household is receiving multiple copies of our Annual
Report or proxy statement and you wish to request delivery of a
single copy, you may send a written request to Virtusa
Corporation, 2000 West Park Drive, Westborough,
Massachusetts 01581 Attn: Secretary.
43
APPENDIX I
VIRTUSA
CORPORATION
2007
STOCK OPTION AND INCENTIVE PLAN
|
|
|
|
Section 1.
|
GENERAL PURPOSE OF THE PLAN; DEFINITIONS
|
The name of the plan is the Virtusa Corporation 2007 Stock
Option and Incentive Plan (the Plan). The purpose of
the Plan is to encourage and enable the officers, employees,
Non-Employee Directors and other key persons (including
consultants and prospective employees) of Virtusa Corporation
(the Company) and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for
the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such
persons with a direct stake in the Companys welfare will
assure a closer identification of their interests with those of
the Company and its stockholders, thereby stimulating their
efforts on the Companys behalf and strengthening their
desire to remain with the Company.
The following terms shall be defined as set forth below:
Act means the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
Administrator means either the Board or the
compensation committee of the Board or a similar committee
performing the functions of the compensation committee and which
is comprised of not less than two Non-Employee Directors who are
independent.
Award or Awards, except
where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards,
Restricted Stock Awards, Unrestricted Stock Awards, Cash-based
Awards and Dividend Equivalent Rights.
Award Agreement means a written or electronic
agreement setting forth the terms and provisions applicable to
an Award granted under the Plan. Each Award Agreement is subject
to the terms and conditions of the Plan.
Board means the Board of Directors of the
Company.
Cash-based Award means an Award entitling the
recipient to receive a cash-denominated payment.
Code means the Internal Revenue Code of 1986,
as amended, and any successor Code, and related rules,
regulations and interpretations.
Covered Employee means an employee who is a
Covered Employee within the meaning of
Section 162(m) of the Code.
Deferred Stock Award means an Award of
phantom stock units to a grantee.
Dividend Equivalent Right means an Award
entitling the grantee to receive credits based on cash dividends
that would have been paid on the shares of Stock specified in
the Dividend Equivalent Right (or other award to which it
relates) if such shares had been issued to and held by the
grantee.
Effective Date means the date on which the
Plan is approved by stockholders as set forth in Section 19.
Exchange Act means the Securities Exchange
Act of 1934, as amended, and the rules and regulations
thereunder.
Fair Market Value of the Stock on any given
date means the fair market value of the Stock determined in good
faith by the Administrator; provided, however, that if the Stock
is admitted to quotation on the National Association of
Securities Dealers Automated Quotation System
(NASDAQ), NASDAQ Global Market or another national
securities exchange, the determination shall be made by
I-1
reference to market quotations. If there are no market
quotations for such date, the determination shall be made by
reference to the last date preceding such date for which there
are market quotations, provided further, however, that if the
date for which Fair Market Value is determined is the first day
when trading prices for the Stock are reported on a national
securities exchange, the Fair Market Value shall be the
Price to the Public (or equivalent) set forth on the
cover page for the final prospectus relating to the
Companys Initial Public Offering.
Incentive Stock Option means any Stock Option
designated and qualified as an incentive stock
option as defined in Section 422 of the Code.
Initial Public Offering means the
consummation of the first fully underwritten, firm commitment
public offering pursuant to an effective registration statement
under the Act covering the offer and sale by the Company of its
equity securities, or such other event as a result of or
following which the Stock shall be publicly held.
Non-Employee Director means a member of the
Board who is not also an employee of the Company or any
Subsidiary.
Non-Qualified Stock Option means any Stock
Option that is not an Incentive Stock Option.
Option or Stock Option
means any option to purchase shares of Stock granted
pursuant to Section 5.
Restricted Stock Award means an Award
entitling the recipient to acquire, at such purchase price
(which may be zero) as determined by the Administrator, shares
of Stock subject to such restrictions and conditions as the
Administrator may determine at the time of grant.
Sale Event shall mean (i) the sale of
all or substantially all of the assets of the Company on a
consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation in which the outstanding
shares of Stock are converted into or exchanged for securities
of the successor entity and the holders of the Companys
outstanding voting power immediately prior to such transaction
do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such
transaction, or (iii) the sale of all of the Stock of the
Company to an unrelated person or entity.
Sale Price means the value as determined by
the Administrator of the consideration payable, or otherwise to
be received by stockholders, per share of Stock pursuant to a
Sale Event.
Section 409A means Section 409A of
the Code and the regulations and other guidance promulgated
thereunder.
Stock means the Common Stock, par value $0.01
per share, of the Company, subject to adjustments pursuant to
Section 3.
Stock Appreciation Right means an Award
entitling the recipient to receive shares of Stock having a
value equal to the excess of the Fair Market Value of the Stock
on the date of exercise over the exercise price of the Stock
Appreciation Right multiplied by the number of shares of Stock
with respect to which the Stock Appreciation Right shall have
been exercised.
Subsidiary means any corporation or other
entity (other than the Company) in which the Company has at
least a 50 percent interest, either directly or indirectly.
Ten Percent Owner means an employee who owns
or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than 10 percent of
the combined voting power of all classes of stock of the Company
or any parent or subsidiary corporation.
Unrestricted Stock Award means an Award of
shares of Stock free of any restrictions.
|
|
|
|
Section 2.
|
ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
GRANTEES AND DETERMINE AWARDS
|
(a) Administration of Plan. The
Plan shall be administered by the Administrator.
I-2
(b) Powers of Administrator. The
Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and
authority:
i. to select the individuals to whom Awards may from time
to time be granted;
ii. to determine the time or times of grant, and the
extent, if any, of Incentive Stock Options,
Non-Qualified
Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Deferred Stock Awards, Unrestricted Stock Awards,
Cash-based Awards and Dividend Equivalent Rights, or any
combination of the foregoing, granted to any one or more
grantees;
iii. to determine the number of shares of Stock to be
covered by any Award;
iv. to determine and modify from time to time the terms and
conditions, including restrictions, not inconsistent with the
terms of the Plan, of any Award, which terms and conditions may
differ among individual Awards and grantees, and to approve the
form of written instruments evidencing the Awards;
v. to accelerate at any time the exercisability or vesting
of all or any portion of any Award;
vi. subject to the provisions of Section 5(a)(ii), to
extend at any time the period in which Stock Options may be
exercised; and
vii. at any time to adopt, alter and repeal such rules,
guidelines and practices for administration of the Plan and for
its own acts and proceedings as it shall deem advisable; to
interpret the terms and provisions of the Plan and any Award
(including related written instruments); to make all
determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the
Plan; and to otherwise supervise the administration of the Plan.
All decisions and interpretations of the Administrator shall be
binding on all persons, including the Company and Plan grantees.
(c) Delegation of Authority to Grant
Options. Intentionally Deleted.
(d) Award Agreement. Awards under
the Plan shall be evidenced by Award Agreements that set forth
the terms, conditions and limitations for each Award which may
include, without limitation, the term of an Award, the
provisions applicable in the event employment or service
terminates, and the Companys authority to unilaterally or
bilaterally amend, modify, suspend, cancel or rescind an Award.
(e) Indemnification. Neither the
Board nor the Administrator, nor any member of either or any
delegate thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith
in connection with the Plan, and the members of the Board and
the Administrator (and any delegate thereof) shall be entitled
in all cases to indemnification and reimbursement by the Company
in respect of any claim, loss, damage or expense (including,
without limitation, reasonable attorneys fees) arising or
resulting therefrom to the fullest extent permitted by law
and/or under
the Companys articles or bylaws or any directors and
officers liability insurance coverage which may be in
effect from time to time
and/or any
indemnification agreement between such individual and the
Company.
(f) Foreign Award
Recipients. Notwithstanding any provision of
the Plan to the contrary, in order to comply with the laws in
other countries in which the Company and its Subsidiaries
operate or have employees or other individuals eligible for
Awards, the Administrator, in its sole discretion, shall have
the power and authority to: (i) determine which
Subsidiaries shall be covered by the Plan; (ii) determine
which individuals outside the United States are eligible to
participate in the Plan; (iii) modify the terms and
conditions of any Award granted to individuals outside the
United States to comply with applicable foreign laws;
(iv) establish subplans and modify exercise procedures and
other terms and procedures, to the extent the Administrator
determines such actions to be necessary or advisable (and such
subplans
and/or
modifications shall be attached to this Plan as appendices);
provided, however, that no such subplans
and/or
modifications shall increase the share limitations contained in
Section 3(a) hereof; and (v) take any action, before
or after an Award is made, that the Administrator determines to
be necessary or advisable to obtain approval or comply with any
local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Administrator may not take
any actions hereunder, and no Awards shall be granted, that
would violate the Exchange Act or any other
I-3
applicable United States securities law, the Code, or any other
applicable United States governing statute or law.
|
|
|
|
Section 3.
|
STOCK ISSUABLE UNDER THE PLAN; MERGERS;
SUBSTITUTION
|
(a) Stock Issuable. The maximum
number of shares of Stock reserved and available for issuance
under the Plan shall be the sum of
(i) 2,600,000 shares, (ii) the number of Shares
under the Companys Amended and Restated 2000 Stock Option
Plan and 2005 Stock Appreciation Rights Plan (together, the
Prior Plans) which are not needed to fulfill the
Companys obligations for awards issued under the Prior
Plans as a result of forfeiture, expiration, cancellation,
termination or net issuances of awards thereunder, and
(iii) on April 1, 2008 and on each April 1 thereafter,
an additional number of shares equal to the lower of
(A) two and nine tenths percent (2.9%) of the outstanding
number of shares of Stock on the immediately preceding
March 31, or (B) such lower number of shares of Stock
as may be determined by the Board of Directors, in each case
subject to adjustment as provided in Section 3(b). For
purposes of this limitation, the shares of Stock underlying any
Awards that are forfeited, canceled, held back upon exercise of
an Option or settlement of an Award to cover the exercise price
or tax withholding, reacquired by the Company prior to vesting,
satisfied without the issuance of Stock or otherwise terminated
(other than by exercise) (including any such Awards under the
Prior Plans) shall be added back to the shares of Stock
available for issuance under the Plan. Subject to such overall
limitations, shares of Stock may be issued up to such maximum
number pursuant to any type or types of Award; provided,
however, that (i) Incentive Stock Options may be granted
with respect to no more than 2,600,000 shares, plus on each
April 1, starting April 1, 2008, an additional number
of shares equal to the lesser of (A) two and nine tenths
percent (2.9%) of the outstanding number of shares of Stock on
the immediately preceding March 31 and
(B) 2,600,000 shares of Stock and (ii) Stock
Options or Stock Appreciation Rights with respect to no more
than 3,000,000 shares of Stock may be granted to any one
individual grantee during any one calendar year period. The
shares available for issuance under the Plan may be authorized
but unissued shares of Stock or shares of Stock reacquired by
the Company.
(b) Changes in Stock. Subject to
Section 3(c) hereof, if, as a result of any reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar change in the
Companys capital stock, the outstanding shares of Stock
are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or
additional shares or new or different shares or other securities
of the Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities, or, if, as
a result of any merger or consolidation, sale of all or
substantially all of the assets of the Company, the outstanding
shares of Stock are converted into or exchanged for securities
of the Company or any successor entity (or a parent or
subsidiary thereof), the Administrator shall make an appropriate
or proportionate adjustment in (i) the maximum number of
shares reserved for issuance under the Plan, (ii) the
number of Stock Options or Stock Appreciation Rights that can be
granted to any one individual grantee, (iii) the number and
kind of shares or other securities subject to any then
outstanding Awards under the Plan, (iv) the repurchase
price, if any, per share subject to each outstanding Restricted
Stock Award and (v) the price for each share subject to any
then outstanding Stock Options and Stock Appreciation Rights
under the Plan, without changing the aggregate exercise price
(i.e., the exercise price multiplied by the number of Stock
Options and Stock Appreciation Rights) as to which such Stock
Options and Stock Appreciation Rights remain exercisable. The
Administrator shall also make equitable or proportionate
adjustments in the number of shares subject to outstanding
Awards and the exercise price and the terms of outstanding
Awards to take into consideration cash dividends paid other than
in the ordinary course or any other extraordinary corporate
event. The adjustment by the Administrator shall be final,
binding and conclusive. No fractional shares of Stock shall be
issued under the Plan resulting from any such adjustment, but
the Administrator in its discretion may make a cash payment in
lieu of fractional shares.
(c) Mergers and Other
Transactions. Except as the Administrator may
otherwise specify with respect to particular Awards in the
relevant Award documentation, in the case of and subject to the
consummation of a Sale Event, all Options and Stock Appreciation
Rights that are not exercisable immediately prior to the
effective time of the Sale Event shall become fully exercisable
as of the effective time of the Sale Event, all other Awards
with time-based vesting, conditions or restrictions shall become
fully vested and nonforfeitable as of the effective time of the
Sale Event and all Awards with conditions and restrictions
relating to the
I-4
attainment of performance goals may become vested and
nonforfeitable in connection with a Sale Event in the
Administrators discretion, unless, in any case, the
parties to the Sale Event agree that Awards will be assumed or
continued by the successor entity. Upon the effective time of
the Sale Event, the Plan and all outstanding Awards granted
hereunder shall terminate, unless provision is made in
connection with the Sale Event in the sole discretion of the
parties thereto for the assumption or continuation of Awards
theretofore granted by the successor entity, or the substitution
of such Awards with new Awards of the successor entity or parent
thereof, with appropriate adjustment as to the number and kind
of shares and, if appropriate, the per share exercise prices, as
such parties shall agree (after taking into account any
acceleration hereunder). In the event of such termination,
(i) the Company shall have the option (in its sole
discretion) to make or provide for a cash payment to the
grantees holding Options and Stock Appreciation Rights, in
exchange for the cancellation thereof, in an amount equal to the
difference between (A) the Sale Price multiplied by the
number of shares of Stock subject to outstanding Options and
Stock Appreciation Rights (to the extent then exercisable (after
taking into account any acceleration hereunder) at prices not in
excess of the Sale Price) and (B) the aggregate exercise
price of all such outstanding Options and Stock Appreciation
Rights; or (ii) each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale
Event as determined by the Administrator, to exercise all
outstanding Options and Stock Appreciation Rights held by such
grantee.
(d) Substitute Awards. The
Administrator may grant Awards under the Plan in substitution
for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the
merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation.
The Administrator may direct that the substitute awards be
granted on such terms and conditions as the Administrator
considers appropriate in the circumstances. Any substitute
Awards granted under the Plan shall not count against the share
limitation set forth in Section 3(a).
Section 4. ELIGIBILITY
Grantees under the Plan will be such full or part-time officers
and other employees, Non-Employee Directors and key persons
(including consultants and prospective employees) of the Company
and its Subsidiaries as are selected from time to time by the
Administrator in its sole discretion.
Section 5. STOCK
OPTIONS
Any Stock Option granted under the Plan shall be in such form as
the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to employees of the Company or any
Subsidiary that is a subsidiary corporation within
the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Stock Option,
it shall be deemed a Non-Qualified Stock Option.
(a) Stock Options Granted to Employees and Key
Persons. The Administrator in its discretion
may grant Stock Options to eligible employees and key persons of
the Company or any Subsidiary. Stock Options granted pursuant to
this Section 5(a) shall be subject to the following terms
and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so
determines, Stock Options may be granted in lieu of cash
compensation at the optionees election, subject to such
terms and conditions as the Administrator may establish.
i. Exercise Price. The exercise
price per share for the Stock covered by a Stock Option granted
pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than
100 percent of the Fair Market Value on the date of grant.
In the case of an Incentive Stock Option that is granted to a
Ten Percent Owner, the option price of such Incentive Stock
Option shall be not less than 110 percent of the Fair
Market Value on the grant date.
ii. Option Term. The term of each
Stock Option shall be fixed by the Administrator, but no Stock
Option shall be exercisable more than ten years after the date
the Stock Option is granted. In the case of
I-5
an Incentive Stock Option that is granted to a Ten Percent
Owner, the term of such Stock Option shall be no more than five
years from the date of grant.
iii. Exercisability; Rights of a
Stockholder. Stock Options shall become
exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or
after the grant date. The Administrator may at any time
accelerate the exercisability of all or any portion of any Stock
Option. An optionee shall have the rights of a stockholder only
as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.
iv. Method of Exercise. Stock
Options may be exercised in whole or in part, by giving written
notice of exercise to the Company, specifying the number of
shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods to the extent
provided in the Option Award Agreement:
(A) In cash, by certified or bank check or other instrument
acceptable to the Administrator;
(B) Through the delivery (or attestation to the ownership)
of shares of Stock that have been purchased by the optionee on
the open market or that are beneficially owned by the optionee
and are not then subject to restrictions under any Company plan.
Such surrendered shares shall be valued at Fair Market Value on
the exercise date. To the extent required to avoid variable
accounting treatment under FAS 123R or other applicable
accounting rules, such surrendered shares shall have been owned
by the optionee for at least six months; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions
to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price;
provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of
indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The
transfer to the optionee on the records of the Company or of the
transfer agent of the shares of Stock to be purchased pursuant
to the exercise of a Stock Option will be contingent upon
receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the
Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Option
Award Agreement or applicable provisions of laws (including the
satisfaction of any withholding taxes that the Company is
obligated to withhold with respect to the optionee). In the
event an optionee chooses to pay the purchase price by
previously-owned shares of Stock through the attestation method,
the number of shares of Stock transferred to the optionee upon
the exercise of the Stock Option shall be net of the number of
shares attested to. In the event that the Company establishes,
for itself or using the services of a third party, an automated
system for the exercise of Stock Options, such as a system using
an internet website or interactive voice response, then the
paperless exercise of Stock Options may be permitted through the
use of such an automated system.
v. Annual Limit on Incentive Stock
Options. To the extent required for
incentive stock option treatment under
Section 422 of the Code, the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. To
the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
(b) Stock Options Granted to Non-Employee
Directors. The Administrator in its
discretion may grant Non-Qualified Stock Options to Non-Employee
Directors. Any such grant may vary among individual Non-Employee
Directors. Non-Qualified Stock Options granted pursuant to this
Section 5(b) shall be subject to the following terms and
conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Administrator shall deem desirable. If the Administrator so
determines,
I-6
Non-Qualified
Stock Options may be granted in lieu of cash compensation at the
optionees election, subject to such terms and conditions
as the Administrator may establish.
i. Exercise Price. The exercise
price per share for the Stock covered by a Stock Option granted
under this Section 5(b) shall be equal to the Fair Market
Value of the Stock on the date the Stock Option is granted.
ii. Exercise; Termination.
(A) Options shall become exercisable at such time or times,
whether or not in installments, as shall be determined by the
Administrator at or after the grant date. The Administrator may
at any time accelerate the exercisability of all or any portion
of any Stock Option. An Option issued under this
Section 5(b) shall not be exercisable after the expiration
of ten years from the date of grant.
(B) Options granted under this Section 5(b) may be
exercised only by written notice to the Company specifying the
number of shares to be purchased. Payment of the full purchase
price of the shares to be purchased may be made by one or more
of the methods specified in Section 5(a)(iv). An optionee
shall have the rights of a stockholder only as to shares
acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
Section 6. STOCK
APPRECIATION RIGHTS
(a) Exercise Price of Stock Appreciation
Rights. The exercise price of a Stock
Appreciation Right shall not be less than 100 percent of
the Fair Market Value of the Stock on the date of grant (or more
than the Stock Option exercise price per share, if the Stock
Appreciation Right was granted in tandem with a Stock Option).
(b) Grant and Exercise of Stock Appreciation
Rights. Stock Appreciation Rights may be
granted by the Administrator in tandem with, or independently
of, any Stock Option granted pursuant to Section 5 of the
Plan. In the case of a Stock Appreciation Right granted in
tandem with a Non-Qualified Stock Option, such Stock
Appreciation Right may be granted either at or after the time of
the grant of such Option. In the case of a Stock Appreciation
Right granted in tandem with an Incentive Stock Option, such
Stock Appreciation Right may be granted only at the time of the
grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted
in tandem with a Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related
Option.
(c) Terms and Conditions of Stock Appreciation
Rights. Stock Appreciation Rights shall be
subject to such terms and conditions as shall be determined from
time to time by the Administrator, subject to the following:
i. Stock Appreciation Rights granted in tandem with Options
shall be exercisable at such time or times and to the extent
that the related Stock Options shall be exercisable.
ii. Upon exercise of a Stock Appreciation Right, the
applicable portion of any related Option shall be surrendered.
iii. Stock Appreciation Rights may have a term of no more
than ten years.
Section 7. RESTRICTED
STOCK AWARDS
(a) Nature of Restricted Stock
Awards. The Administrator shall determine the
restrictions and conditions applicable to each Restricted Stock
Award at the time of grant. Conditions may be based on
continuing employment (or other service relationship)
and/or
achievement of pre-established performance goals and objectives.
The grant of a Restricted Stock Award is contingent on the
grantee executing the Restricted Stock Award Agreement. The
terms and conditions of each such Award Agreement shall be
determined by the Administrator, and such terms and conditions
may differ among individual Awards and grantees.
(b) Rights as a Stockholder. Upon
execution of the Restricted Stock Award Agreement and payment of
any applicable purchase price, a grantee shall have the rights
of a stockholder with respect to the voting of the Restricted
Stock, subject to such conditions contained in the Restricted
Stock Award Agreement. Unless the
I-7
Administrator shall otherwise determine, (i) uncertificated
Restricted Stock shall be accompanied by a notation on the
records of the Company or the transfer agent to the effect that
they are subject to forfeiture until such Restricted Stock are
vested as provided in Section 7(d) below, and
(ii) certificated Restricted Stock shall remain in the
possession of the Company until such Restricted Stock is vested
as provided in Section 7(d) below, and the grantee shall be
required, as a condition of the grant, to deliver to the Company
such instruments of transfer as the Administrator may prescribe.
(c) Restrictions. Restricted Stock
may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein
or in the Restricted Stock Award Agreement. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 16 below, in writing after
the Award Agreement is issued, if any, if a grantees
employment (or other service relationship) with the Company and
its Subsidiaries terminates for any reason, any Restricted Stock
that has not vested at the time of termination shall
automatically and without any requirement of notice to such
grantee from or other action by or on behalf of, the Company be
deemed to have been reacquired by the Company at its original
purchase price (if any) from such grantee or such grantees
legal representative simultaneously with such termination of
employment (or other service relationship), and thereafter shall
cease to represent any ownership of the Company by the grantee
or rights of the grantee as a stockholder. Following such deemed
reacquisition of unvested Restricted Stock that are represented
by physical certificates, a grantee shall surrender such
certificates to the Company upon request without consideration.
(d) Vesting of Restricted
Stock. The Administrator at the time of grant
shall specify the date or dates
and/or the
attainment of pre-established performance goals, objectives and
other conditions on which the
non-transferability
of the Restricted Stock and the Companys right of
repurchase or forfeiture shall lapse. Subsequent to such date or
dates and/or
the attainment of such pre-established performance goals,
objectives and other conditions, the shares on which all
restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed vested. Except as may otherwise be
provided by the Administrator either in the Award Agreement or,
subject to Section 16 below, in writing after the Award
Agreement is issued, a grantees rights in any shares of
Restricted Stock that have not vested shall automatically
terminate upon the grantees termination of employment (or
other service relationship) with the Company and its
Subsidiaries and such shares shall be subject to the provisions
of Section 7(c) above.
Section 8. DEFERRED
STOCK AWARDS
(a) Nature of Deferred Stock
Awards. The Administrator shall determine the
restrictions and conditions applicable to each Deferred Stock
Award at the time of grant. Conditions may be based on
continuing employment (or other service relationship)
and/or
achievement of pre-established performance goals and objectives.
The grant of a Deferred Stock Award is contingent on the grantee
executing the Deferred Stock Award Agreement. The terms and
conditions of each such Award Agreement shall be determined by
the Administrator, and such terms and conditions may differ
among individual Awards and grantees. At the end of the deferral
period, the Deferred Stock Award, to the extent vested, shall be
settled in the form of shares of Stock.
(b) Election to Receive Deferred Stock Awards in Lieu
of Compensation. The Administrator may, in
its sole discretion, permit a grantee to elect to receive a
portion of future cash compensation otherwise due to such
grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company
no later than the date specified by the Administrator and in
accordance with Section 409A and such other rules and
procedures established by the Administrator. Any such future
cash compensation that the grantee elects to defer shall be
converted to a fixed number of phantom stock units based on the
Fair Market Value of Stock on the date the compensation would
otherwise have been paid to the grantee if such payment had not
been deferred as provided herein. The Administrator shall have
the sole right to determine whether and under what circumstances
to permit such elections and to impose such limitations and
other terms and conditions thereon as the Administrator deems
appropriate.
(c) Rights as a Stockholder. A
grantee shall have the rights as a stockholder only as to shares
of Stock acquired by the grantee upon settlement of a Deferred
Stock Award; provided, however, that the grantee may be credited
with Dividend Equivalent Rights with respect to the phantom
stock units underlying his Deferred Stock Award, subject to such
terms and conditions as the Administrator may determine.
I-8
(d) Termination. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 16 below, in writing after
the Award Agreement is issued, a grantees right in all
Deferred Stock Awards that have not vested shall automatically
terminate upon the grantees termination of employment (or
cessation of service relationship) with the Company and its
Subsidiaries for any reason.
Section 9. UNRESTRICTED
STOCK AWARDS
Grant or Sale of Unrestricted
Stock. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase
price determined by the Administrator) an Unrestricted Stock
Award under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in
lieu of cash compensation due to such grantee.
Section 10. CASH-BASED
AWARDS
(a) Grant of Cash-based
Awards. The Administrator may, in its sole
discretion, grant Cash-based Awards to any grantee in such
number or amount and upon such terms, and subject to such
conditions, as the Administrator shall determine at the time of
grant. The Administrator shall determine the maximum duration of
the Cash-based Award, the amount of cash to which the Cash-based
Award pertains, the conditions upon which the Cash-based Award
shall become vested or payable, and such other provisions as the
Administrator shall determine. Each Cash-based Award shall
specify a cash-denominated payment amount, formula or payment
ranges as determined by the Administrator. Payment, if any, with
respect to a Cash-based Award shall be made in accordance with
the terms of the Award and may be made in cash or in shares of
Stock, as the Administrator determines.
Section 11. DIVIDEND
EQUIVALENT RIGHTS
(a) Dividend Equivalent Rights. A
Dividend Equivalent Right may be granted hereunder to any
grantee as a component of another Award or as a freestanding
award. The terms and conditions of Dividend Equivalent Rights
shall be specified in the Award Agreement. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be
paid currently or may be deemed to be reinvested in additional
shares of Stock, which may thereafter accrue additional
equivalents. Any such reinvestment shall be at Fair Market Value
on the date of reinvestment or such other price as may then
apply under a dividend reinvestment plan sponsored by the
Company, if any. Dividend Equivalent Rights may be settled in
cash or shares of Stock or a combination thereof, in a single
installment or installments. A Dividend Equivalent Right granted
as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or
payment of, or lapse of restrictions on, such other Award, and
that such Dividend Equivalent Right shall expire or be forfeited
or annulled under the same conditions as such other Award. A
Dividend Equivalent Right granted as a component of another
Award may also contain terms and conditions different from such
other Award.
(b) Interest Equivalents. Any
Award under this Plan that is settled in whole or in part in
cash on a deferred basis may provide in the grant for interest
equivalents to be credited with respect to such cash payment.
Interest equivalents may be compounded and shall be paid upon
such terms and conditions as may be specified by the grant.
(c) Termination. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 16 below, in writing after
the Award Agreement is issued, a grantees rights in all
Dividend Equivalent Rights or interest equivalents granted as a
component of another Award that has not vested shall
automatically terminate upon the grantees termination of
employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.
Section 12. TRANSFERABILITY
OF AWARDS
(a) Transferability. Except as
provided in Section 12(b) below, during a grantees
lifetime, his or her Awards shall be exercisable only by the
grantee, or by the grantees legal representative or
guardian in the event of the grantees incapacity. No
Awards shall be sold, assigned, transferred or otherwise
encumbered or disposed of by a grantee other than by will or by
the laws of descent and distribution. No Awards shall be
I-9
subject, in whole or in part, to attachment, execution, or levy
of any kind, and any purported transfer in violation hereof
shall be null and void.
(b) Administrator
Action. Notwithstanding Section 12(a),
the Administrator, in its discretion, may provide either in the
Award Agreement regarding a given Award or by subsequent written
approval that the grantee (who is an employee or director) may
transfer his or her Awards (other than any Incentive Stock
Options) to his or her immediate family members, to trusts for
the benefit of such family members, or to partnerships in which
such family members are the only partners, provided that the
transferee agrees in writing with the Company to be bound by all
of the terms and conditions of this Plan and the applicable
Award.
(c) Family Member. For purposes of
Section 12(b), family member shall mean a
grantees child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
including adoptive relationships, any person sharing the
grantees household (other than a tenant of the grantee), a
trust in which these persons (or the grantee) have more than
50 percent of the beneficial interest, a foundation in
which these persons (or the grantee) control the management of
assets, and any other entity in which these persons (or the
grantee) own more than 50 percent of the voting interests.
(d) Designation of
Beneficiary. Each grantee to whom an Award
has been made under the Plan may designate a beneficiary or
beneficiaries to exercise any Award or receive any payment under
any Award payable on or after the grantees death. Any such
designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a
deceased grantee, or if the designated beneficiaries have
predeceased the grantee, the beneficiary shall be the
grantees estate.
Section 13. TAX
WITHHOLDING
(a) Payment by Grantee. Each
grantee shall, no later than the date as of which the value of
an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the grantee for
Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment
of, any Federal, state, or local taxes of any kind required by
law to be withheld by the Company with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment
of any kind otherwise due to the grantee. The Companys
obligation to deliver evidence of book entry (or stock
certificates) to any grantee is subject to and conditioned on
tax withholding obligations being satisfied by the grantee.
(b) Payment in Stock. Subject to
approval by the Administrator, a grantee may elect to have the
Companys minimum required tax withholding obligation
satisfied, in whole or in part, by authorizing the Company to
withhold from shares of Stock to be issued pursuant to any Award
a number of shares with an aggregate Fair Market Value (as of
the date the withholding is effected) that would satisfy the
withholding amount due.
|
|
|
|
Section 14.
|
ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED
COMPENSATION UNDER SECTION 409A
|
In the event any Stock Option or Stock Appreciation Right under
the Plan is materially modified and deemed a new grant at a time
when the Fair Market Value exceeds the exercise price, or any
other Award is otherwise determined to constitute
nonqualified deferred compensation within the
meaning of Section 409A (a 409A Award), the
following additional conditions shall apply and shall supersede
any contrary provisions of this Plan or the terms of any
agreement relating to such 409A Award.
(a) Exercise and
Distribution. Except as provided in
Section 14(b) hereof, no 409A Award shall be exercisable or
distributable earlier than upon one of the following:
i. Specified Time. A specified
time or a fixed schedule set forth in the written instrument
evidencing the 409A Award.
I-10
ii. Separation from
Service. Separation from service (within the
meaning of Section 409A) by the 409A Award grantee;
provided, however, that if the 409A Award grantee is a key
employee (as defined in Section 416(i) of the Code
without regard to paragraph (5) thereof) and any of the
Companys Stock is publicly traded on an established
securities market or otherwise, exercise or distribution under
this Section 14(a)(ii) may not be made before the date that
is six months after the date of separation from service.
iii. Death. The date of death of
the 409A Award grantee.
iv. Disability. The date the 409A
Award grantee becomes disabled (within the meaning of
Section 14(c)(ii) hereof).
v. Unforeseeable Emergency. The
occurrence of an unforeseeable emergency (within the meaning of
Section 14(c)(iii) hereof), but only if the net value
(after payment of the exercise price) of the number of shares of
Stock that become issuable does not exceed the amounts necessary
to satisfy such emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the exercise, after taking
into account the extent to which the emergency is or may be
relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the grantees other assets
(to the extent such liquidation would not itself cause severe
financial hardship).
vi. Change in Control Event. The
occurrence of a Change in Control Event (within the meaning of
Section 14(c)(i) hereof), including the Companys
discretionary exercise of the right to accelerate vesting of
such grant upon a Change in Control Event or to terminate the
Plan or any 409A Award granted hereunder within 12 months
of the Change in Control Event.
(b) No Acceleration. A 409A Award
may not be accelerated or exercised prior to the time specified
in Section 14(a) hereof, except in the case of one of the
following events:
i. Domestic Relations Order. The
409A Award may permit the acceleration of the exercise or
distribution time or schedule to an individual other than the
grantee as may be necessary to comply with the terms of a
domestic relations order (as defined in
Section 414(p)(1)(B) of the Code).
ii. Conflicts of Interest. The
409A Award may permit the acceleration of the exercise or
distribution time or schedule as may be necessary to comply with
the terms of a certificate of divestiture (as defined in
Section 1043(b)(2) of the Code).
iii. Change in Control Event. The
Administrator may exercise the discretionary right to accelerate
the vesting of such 409A Award upon a Change in Control Event or
to terminate the Plan or any 409A Award granted thereunder
within 12 months of the Change in Control Event and cancel
the 409A Award for compensation.
(c) Definitions. Solely for
purposes of this Section 14 and not for other purposes of
the Plan, the following terms shall be defined as set forth
below:
i. Change in Control Event means the
occurrence of a change in the ownership of the Company, a change
in effective control of the Company, or a change in the
ownership of a substantial portion of the assets of the Company
(as defined in
Section 1.409A-3(g)
of the proposed regulations promulgated under Section 409A
by the Department of the Treasury on September 29, 2005 or
any subsequent guidance).
ii. Disabled means a grantee who
(i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than
12 months, or (ii) is, by reason of any medically
determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months
under an accident and health plan covering employees of the
Company or its Subsidiaries.
iii. Unforeseeable Emergency means a
severe financial hardship to the grantee resulting from an
illness or accident of the grantee, the grantees spouse,
or a dependent (as defined in Section 152(a) of
I-11
the Code) of the grantee, loss of the grantees property
due to casualty, or similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control
of the grantee.
Section 15. TRANSFER,
LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one
Subsidiary to another; or
(b) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if
the employees right to re-employment is guaranteed either
by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Administrator
otherwise so provides in writing.
Section 16. AMENDMENTS
AND TERMINATION
The Board may, at any time, amend or discontinue the Plan and
the Administrator may, at any time, amend or cancel any
outstanding Award for the purpose of satisfying changes in law
or for any other lawful purpose, but no such action shall
adversely affect rights under any outstanding Award without the
holders consent unless otherwise required by, or necessary
to comply with, applicable law. Except as provided in
Section 3(b) or 3(c), in no event may the Administrator
exercise its discretion to reduce the exercise price of
outstanding Stock Options or Stock Appreciation Rights or effect
repricing through cancellation and re-grants. Any material Plan
amendments (other than amendments that curtail the scope of the
Plan), including any Plan amendments that (i) increase the
number of shares reserved for issuance under the Plan,
(ii) expand the type of Awards available under, materially
expand the eligibility to participate in, or materially extend
the term of, the Plan, or (iii) materially change the
method of determining Fair Market Value, shall be subject to
approval by the Company stockholders entitled to vote at a
meeting of stockholders. In addition, to the extent determined
by the Administrator to be required by the Code to ensure that
Incentive Stock Options granted under the Plan are qualified
under Section 422 of the Code or to ensure that
compensation earned under Awards qualifies as performance-based
compensation under Section 162(m) of the Code, Plan
amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 16 shall limit the
Administrators authority to take any action permitted
pursuant to Section 3(c).
Section 17. STATUS
OF PLAN
With respect to the portion of any Award that has not been
exercised and any payments in cash, Stock or other consideration
not received by a grantee, a grantee shall have no rights
greater than those of a general creditor of the Company unless
the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the
Administrator may authorize the creation of trusts or other
arrangements to meet the Companys obligations to deliver
Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements
is consistent with the foregoing sentence.
Section 18. GENERAL
PROVISIONS
(a) No Distribution. The
Administrator may require each person acquiring Stock pursuant
to an Award to represent to and agree with the Company in
writing that such person is acquiring the shares without a view
to distribution thereof.
(b) Delivery of Stock
Certificates. Stock certificates to grantees
under this Plan shall be deemed delivered for all purposes when
the Company or a stock transfer agent of the Company shall have
mailed such certificates in the United States mail, addressed to
the grantee, at the grantees last known address on file
with the Company. Uncertificated Stock shall be deemed delivered
for all purposes when the Company or a Stock transfer agent of
the Company shall have given to the grantee by electronic mail
(with proof of receipt) or by United States mail, addressed to
the grantee, at the grantees last known address on file
with the Company, notice of issuance and recorded the issuance
in its records (which may include electronic book
entry
I-12
records). Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any
certificates evidencing shares of Stock pursuant to the exercise
of any Award, unless and until the Board has determined, with
advice of counsel (to the extent the Board deems such advice
necessary or advisable), that the issuance and delivery of such
certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the
requirements of any exchange on which the shares of Stock are
listed, quoted or traded. All Stock certificates delivered
pursuant to the Plan shall be subject to any stop-transfer
orders and other restrictions as the Administrator deems
necessary or advisable to comply with federal, state or foreign
jurisdiction, securities or other laws, rules and quotation
system on which the Stock is listed, quoted or traded. The
Administrator may place legends on any Stock certificate to
reference restrictions applicable to the Stock. In addition to
the terms and conditions provided herein, the Board may require
that an individual make such reasonable covenants, agreements,
and representations as the Board, in its discretion, deems
necessary or advisable in order to comply with any such laws,
regulations, or requirements. The Administrator shall have the
right to require any individual to comply with any timing or
other restrictions with respect to the settlement or exercise of
any Award, including a window-period limitation, as may be
imposed in the discretion of the Administrator.
(c) Stockholder Rights. Until
Stock is deemed delivered in accordance with Section 18(b),
no right to vote or receive dividends or any other rights of a
stockholder will exist with respect to shares of Stock to be
issued in connection with an Award, notwithstanding the exercise
of a Stock Option or any other action by the grantee with
respect to an Award.
(d) Other Compensation Arrangements; No Employment
Rights. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific
cases. The adoption of this Plan and the grant of Awards do not
confer upon any employee any right to continued employment with
the Company or any Subsidiary.
(e) Trading Policy
Restrictions. Option exercises and other
Awards under the Plan shall be subject to such Companys
insider trading policy and procedures, as in effect from time to
time.
(f) Forfeiture of Awards under Sarbanes-Oxley
Act. If the Company is required to prepare an
accounting restatement due to the material noncompliance of the
Company, as a result of misconduct, with any financial reporting
requirement under the securities laws, then any grantee who is
one of the individuals subject to automatic forfeiture under
Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any Award received by
such individual under the Plan during the
12-month
period following the first public issuance or filing with the
United States Securities and Exchange Commission, as the case
may be, of the financial document embodying such financial
reporting requirement.
Section 19. EFFECTIVE
DATE OF PLAN
This Plan shall become effective upon approval by the holders of
a majority of the votes cast at a meeting of stockholders at
which a quorum is present or pursuant to written consent. No
grants of Stock Options and other Awards may be made hereunder
after the tenth anniversary of the Effective Date and no grants
of Incentive Stock Options may be made hereunder after the tenth
anniversary of the date the Plan is approved by the Board.
Section 20. GOVERNING
LAW
This Plan and all Awards and actions taken thereunder shall be
governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts, applied without regard to
conflict of law principles.
DATE APPROVED BY BOARD OF DIRECTORS: MAY 14, 2007
DATE APPROVED BY STOCKHOLDERS: MAY 22, 2007
I-13
Virtusa Corporation
Proxy for Annual Meeting of Stockholders
July 28, 2008
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas R. Holler and Paul D. Tutun, together, and
each of them singly, proxies, with full power of substitution to vote all shares of stock of
Virtusa Corporation (the Company) which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of Virtusa Corporation to be held on Thursday, September 25, 2008 at 9:00 a.m.,
local time, at the offices of Virtusa Corporation located at 2000 West Park Drive, Westborough,
Massachusetts 01581, and at any adjournments or postponements thereof, upon matters set forth in
the Notice of Annual Meeting of Stockholders and Proxy Statement dated July 28, 2008, a copy of
which has been received by the undersigned.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, AND
3, AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
SEE REVERSE SIDE
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED
þ Please mark votes as in this example.
The Board of Directors recommends a vote FOR items 1, 2 and 3.
1. |
|
To elect one member to the board of
directors, nominated by the board of
directors, to serve for a three-year
term as a Class I director, such
director to serve for such term and
until his respective successor has
been duly elected and qualified, or
until his earlier death, resignation
or removal. The Board recommends a
vote FOR such nominee. |
|
|
|
NOMINEE: Robert E. Davoli |
2. |
|
To ratify the selection of the firm of KPMG LLP, as our independent
registered public accounting firm, for the fiscal year ending March
31, 2009. The Board recommends a vote FOR this proposal number 2. |
o FOR o AGAINST o ABSTAIN
3. |
|
To ratify the Companys 2007 Stock Option and Incentive Plan. The Board recommends a vote
FOR this proposal number 3. |
o FOR o AGAINST o ABSTAIN
4. |
|
To transact such other business as may properly come before the annual meeting and any adjournment thereof. |
o MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW